Oct 27, 2026 earnings call — Engineered Solutions order strength and margin gains
Q1 EPS was $2.97, up 12.7%, and full-year EPS guidance modestly raised to $11.70-$12.20.
Revenue $1.3B (est $1.3B) · EPS $2.97 (est $2.89)
Key quotes
"Segment order trends also remained positive during the quarter, increasing by more than 30% year-over-year, with backlog continuing to strengthen and book-to-bill at its highest level in more than four years."
"Demand conditions were strongest across the U.S. Service Center operations during the quarter, where organic sales increased approximately 6% over the prior year, with break fix and technical MRO activity remaining firm throughout the quarter."
"Excluding LIFO expense, gross margins were up nearly 50 basis points year over year, reflecting ongoing progress with our internal margin initiatives, solid channel execution, and favorable mix."
Analyst Q&A 6
ES orders growth and delivery timing
Q (Chris Dankert · D.A. Davidson): He asked for more detail on Engineered Solutions orders up 30%+, specifically delivery timelines and whether this implies double-digit growth in 2027. He also asked what could go wrong to hit the low end of the guide for the quarter.
A: Management said they are pleased: Engineered Solutions is delivering double-digit growth for the fourth straight quarter and backlog/book-to-bill are strong. Delivery timing can vary and "It can be a 90 to 180-day turn." They also said some blanket orders impacted the quarter and that they are being prudent about pricing, tariffs, and geopolitical risks, noting November/December comparables are a couple hundred basis points tougher.
"It can be a 90 to 180-day turn." — Neil Schrimsher (CEO)
Service Center margins and automation growth
Q (Andrew Obin · BofA): He asked what drove the weaker Service Center margin and whether any unusual corporate items affected results. He also asked if automation strength was better than expected.
A: Management said Service Center margins were muted mainly due to higher LIFO expense and a prior-year favorable AR provision, plus softer volumes outside the U.S. and higher employee medical costs. They expect these impacts to normalize in Q2 and margin trends to improve. On automation, they reported strong orders and backlog in collaborative and mobile robots, with growth in the 20s for two quarters and investments to add capacity this quarter.
"If you combine those, that was a 3.3 percentage point headwind to year-over-year EBITDA growth, as well as 40 basis points headwind to the EBITDA margins." — Neil Schrimsher (CEO)
Canada/Mexico impact and incremental margins
Q (Ken Newman · KeyBanc): He asked how much lower demand in Canada and Mexico reduced Service Center margins and whether October's improvement shows recovery. He also asked about expected incremental margins for the full year and whether the back half could reach high teens/low 20s.
A: Management said they are seeing recovery in Canada and Mexico but those softer volumes were a smaller factor versus LIFO and AR provisioning, which combined for a 3.3 percentage point headwind to EBITDA growth and 40 basis points to margin. They noted employee healthcare costs also weighed on Service Centers. On incremental margins, they expect midpoint incrementals in the mid- to high-teens, with the guidance midpoint assuming 16%-17% incrementals and the high end assuming 18%; Q2 midpoint incrementals would be 17% versus 15% in Q1.
"With the midpoint on the guide assuming 16%-17% incrementals, then at the high end, assuming 18% incrementals." — Dave Wells (CFO)
Order sizes and ES margin drivers
Q (Brett Linzey · Mizuho): He asked whether average ticket sizes are increasing or if acceleration is just pent-up projects converting. He also asked whether the ES margin uptick reflects higher-value engineered content and where normalized margins might land.
A: Management said ticket sizes on Engineered Solutions are often a few hundreds of thousands of dollars, not multimillion-dollar projects, and interest/solutions scope are expanding rather than just pent-up conversions. They said it's early to fully call normalized margins but are encouraged by higher-value work, increased service, and flow control starting to grow; flow control is a higher-margin part of the mix and should help margins.
"These on the Engineered Solutions side are still often a few hundreds of thousands of dollars and not these multimillion-dollar investments." — Neil Schrimsher (CEO)
Monthly comps and quarter progression
Q (David Manthey · Baird): He asked why sequential growth this quarter was only 5% after strong prior quarters and whether November and December are each about 200 basis points harder than October. He wanted to know the pattern for the rest of the quarter.
A: Management said the November and December period on average is about 200 basis points more difficult than October, with November probably a little more difficult than December. October is off to a strong start at 10% month-to-date, with Engineered Solutions up double digits and Service Centers up high single digits. They view the 6%-8% guide as consistent with prior expectations and noted the quarter follows a very strong fourth quarter, so some normalization was expected.
"the November and December period on average is about 200 basis points more difficult than October." — Ryan Cieslak
Automation tech areas and linear motion
Q (Patrick Schuchard · Oppenheimer): He asked which automation technologies beyond robotics and vision are important today, where linear motion fits, and which capabilities are growing.
A: Management said linear motion remains part of the offering, along with IoT connectivity devices to extract equipment data and establish KPIs, plus vision and robotics (including mobile and collaborative robots). They said linear motion is used where very fine precision movement is required and they work with customers on the whole solution rather than just reselling components.
"Depending on the application, there is more because linear motion allows for very fine precision movement that can be required into the area." — Neil Schrimsher (CEO)