TKR
#Thanks, Mike.
Good morning, <UNK>.
Our auto business in North America is heavy light truck; and in Europe, it's pass car.
And we're a very small player outside of those two markets around the rest of the world.
I would say, the automotive light truck outlook for the year today, is probably a little bit stronger than what it was to start the year.
So that's really where my comment was based.
And these are relatively small percentages that we're talking about, but good.
So that was the automotive market comment.
Yes, it is a capacity reduction.
But we've been running very low utilization levels across those bearing sizes.
And it certainly would not preclude us from being able to grow that business going forward.
No, I would say there isn't one.
We have a lot that we're looking at.
When you look across the markets, and then you have the OEM versus distribution, and then you look at the geographies, there's are quite a few different ---+ I think if you had to look at one (inaudible) metric, certainly industrial production globally drives a lot of our markets.
But when you're looking out three to six months, we're in touch with all of our customers.
We're looking at our inventory levels, their inventory levels, their orders.
And beyond that, generally using a lot of industry data on how many wind turbines are going in, how many cars are going to be built, et cetera, et cetera.
Yes, good question, <UNK>.
I think, as we think about the CapEx forecast for the year, it's a mixed bag.
As we talked about, we typically run maintenance CapEx generally, call it 1% a year for maintenance.
And then the remainder would be targeted toward either growth initiatives or margin improvement initiatives.
And I would say it's a mixed bag.
We've got the new plant in Romania, which is coming in.
That has taken a significant portion of CapEx.
We've got new wind gearbox capacity that we're adding in India to really serve that market, which has grown a lot for us over the years.
So those are a couple of examples where those going to add capabilities, reduce costs, and position us well for the future.
And then in our existing plants, we constantly work at improving the productivity by employing the latest technologies, et cetera, to increase margins and reduce volatility or cyclicality where we can.
So I'd say it's a mixed bag.
Do we have a wish list beyond what is in the guide.
There's always a list of things that are on the priority list.
But I think we feel comfortable with the CapEx outlook as it sits today and feel like we can advance the initiatives that are important to us.
And really strike a good balance between growth and pushing strategic initiatives, but also managing the balance sheet and cash flow well in this environment.
Yes, I think that's a good point.
I mean, that's a good way to look at it as well.
Obviously, people to run these projects.
Big CapEx projects require teams of people across the organization.
Obviously, there is a limit on the number of projects we can work on at any given time.
And there is a cadence involved, particularly when it comes to big projects.
So we do take that into account as well.
You're right.
We're not cash-constrained, per se.
But obviously, we're going to look at all the capital allocation options that are available to us ---+ not just CapEx, but M&A and share buybacks as well.
So we look at all three.
We look at the relative returns and make the appropriate judgments.
<UNK>.
No, I think you covered it well, <UNK>.
Thanks, <UNK>.
Good morning, <UNK>.
I'd say that the North American market has been a little soft.
Our business in heavy truck is relatively heavy aftermarket and fairly global.
So I think we are holding up better than certainly the North American truck OEM build rates.
But that North American side has been a relatively soft market.
We had, on one of the slides that <UNK> went through, our Asia-Pacific numbers were pretty bad first quarter of 2016 as compared to 2015.
And that's with our two biggest markets there are China and then India.
And India is doing pretty well.
So obviously that implies some pretty rough numbers in Asia.
Our big markets there are metals, construction and heavy industries.
There have been some signs from some customers there certainly that we could be bottoming and see some improvement.
But we certainly expect for at least the next couple of quarters that to continue to be a challenging market for us sequentially.
Yes, I'll talk generally.
Most of our wins don't come in the form of gear drives for the Navy and significant platforms, per se.
They come more in the size of a few hundred thousand dollars to a couple million dollars.
But I think when you look at our mobile industries revenue numbers the last couple of quarters and reflect into that the heavy mix that we have in construction, agriculture, et cetera, I think our numbers are stacking up very well there when you look at our large OEM basis.
And again, with DeltaX, we're looking to outgrow the market 1%, 2% a year, not 5%, 6%.
And I think our numbers would support that currently.
On the process side, a little tougher with the fragmentation of the general industries markets.
But when you look at our distributors reporting, look at the some of the tough comps here with oil and gas, et cetera, I think our organic numbers are stacking up well.
And I think we're on pace to outgrow our end markets this year ---+ not a sizable number, but slightly.
And doing so while managing price in a very challenging market.
I'm not quite sure I understand the question.
Yes, we went with the year-end 2015 levels, so really didn't change that relative to the guide.
So the euro, I think back then, was around $1.09 if I am not mistaken.
So I think if you looked at year-end 2015 levels, that would be basically what's embedded in the guidance.
Thanks, <UNK>.
Yes, I would say ---+ <UNK>, this is <UNK> ---+ our guidance would assume nothing beyond what we have done in the first quarter intellectually.
I would say, quarter to quarter to quarter.
We said first quarter would be the low.
I think we came into the year saying model it fairly closely to last year.
Last year's fourth quarter was probably a little bit abnormally high on the EPS side.
But to hit the midpoint of our guidance, we have to pick up $0.04 or $0.05 a quarter off the first quarter run rate.
And I think with flattish sales, we would be seeing numbers like that through the rest of the year.
I think I would say it's relatively accurate in the first quarter, but it's not accurate generally.
It does vary quarter to quarter based on where currencies are, based on the level of activity.
So there are a lot of moving pieces, so I wouldn't view that as a rule.
I would view that as kind of the result in the first quarter but would expect it to hit mobile as well.
But again, it all depends on where the currencies go from here and the activity that we see in the quarter.
I'd say it's generally what we expected ---+ maybe a tad a little bit better.
But I'd say generally in line with what we would have expected back in February.
I would say the same to a little better.
Or maybe building confidence in what we were saying before because we had some outgrowth baked in there in a stable-ish market.
And I think our confidence on that happening has increased over the last three or four months.
Thanks, <UNK>.
Good morning, <UNK>.
Yes, I think it's a split there, <UNK>, I think is the right way to think about it.
I mean, there is ---+ volume would tend to come through at a typical gross margin level, if you will.
And then obviously the price and mix would be additive to that.
I would say it'd be ---+ call it a relatively even split between the two.
Yes, I'd say we did say that price is looking at a 0.5%-ish for the full year, and that's an okay number for the first quarter as well.
As you look at our margin compression over the last year, mix has been a big factor in it, right.
The automotive and wind OEM businesses are good businesses for us, but mix is down.
Mobile is now higher on the top line; and process, as a general statement, that mix is down.
So mix is a big factor in that because we're doing a good job of getting the costs out.
Trailing it somewhat with the volume, but we're getting the cost out on term, protecting the pricing.
And mix is a big factor in there.
That would generally be netted in cost of production.
Yes, they're certainly lower, I would say, than the top line implies obviously because of the acquisition benefit that we have in our top line.
So again, volume down, sizeably organically in the plants, and then no inventory build, and expecting some inventory reduction through the course of the year.
We don't generally add up all the apples and oranges and give you one utilization number because of the variation in that.
Generally on smaller bearings that would have a lot of automotive presence, our utilization remains relatively low from where we've been over the years.
You get into the largest of bearings we make for wind turbines and specifically for that market, it runs relatively high.
Aerospace, relatively low.
And I would say, depending on the mixes there, between 50% utilization and 90% utilization.
Thanks, <UNK>.
Thank you.
This is <UNK> <UNK> again.
Thank you for joining us today.
If you have further questions, please call me at 234-262-3223.
And with that, we'll conclude our call.
