The Timken Company (NYSE:TKR) Q4 2022 Earnings Call Transcript

And then, as you know, M&A comes in at really an EBITDA margin, when you back it out, our organic incrementals with the pricing and operational execution cost moderating I mean, the organic incremental implied in the guide would be much closer to 30% versus 20% and I think that speaks to a lot of the work we’ve been doing the last year, year plus in getting the price cost move in our favor.

Dillon Cumming: Very helpful. Thank you, Phil.

Philip Fracassa: Thanks, Dillon.

Richard Kyle: Thanks.

Operator: Thank you, Dillon. Our next question comes from Joe Ritchie from Goldman Sachs. Joe, your line is now open.

Joe Ritchie: Thank you. Good morning, guys.

Richard Kyle: Good morning.

Joe Ritchie: So, guess my first question, just a clarification question. So, you’re starting off the year with high-single-digit growth. But then kind of the midpoint of your guidance is at 3%. So, I mean it sounds like you’re expecting the second-half to turn negative, I just want to be clear that that is kind of like the expectation into your guide for the second-half of the year?

Richard Kyle: Let’s say we’re probably starting off the year closer to the, the highest single-digit price at the higher end of our guide. So, I’d start there. So, the year is off to a strong start, if you but yes, to go up high-single-digits we’re not expecting anything that would that’s coming off of 10. So, if you go from 10 to 7.5 would be high, the low end of high single-digits, or 8 or 9. To get down to the fourth quarter, you probably got to be down to a 0 to 1 sort of number to come to the midpoint of the guidance. But I would say we’re also as I said, we’re starting the year pretty strong, probably starting more towards the higher end of the guidance.

Philip Fracassa: Yes, I would say, Joe, we like to think of it as, as seen in the back half, we’re sort of the outlook sort of implies a flattening out in the back half of the year as opposed to a decline and as we said, we don’t have great visibility beyond the second quarter. So, we will have to see how things develop over the next couple of months, how the order book fills in. And then, we’ll be able to kind of assess how accurate that is as we moved through the year.

Joe Ritchie: Yes, that’s helpful. And I know you guys are a fairly short cycle business, but because of supply chain issues, some companies have had a little bit more visibility I guess at the start of the year than they normally would. So, I want to hear maybe some comment around whether your visibility is little bit higher than normal today? And then also, Rich, if I just could ask you more broader question like what concerns you — what’s your biggest concern around the year? I want to hear your thoughts on that as well.