Applied Industrial Technologies Inc (AIT) 2022 Q4 法說會逐字稿

Welcome to the fiscal 2022 Fourth Quarter Earnings Call for Applied Industrial Technologies. My name is Ingrid and I'll be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.

歡迎來到應用工業技術公司 2022 財年第四季度財報電話會議。我的名字是英格麗德，今天我將擔任您的接線員。 （操作員說明）請注意，本次會議正在錄製中。

I will now turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.

我現在將把電話轉給投資者關係和財務總監 Ryan Cieslak。瑞恩，你可以開始了。

Thanks, Ingrid, and good morning to everyone on the call. This morning, we issued our earnings release and supplemental investor deck detailing our fourth quarter results. Both of these documents are available in the Investor Relations section of applied.com.

謝謝，英格麗德，大家早上好。今天早上，我們發布了收益報告和補充投資者資料，詳細介紹了我們的第四季度業績。這兩份文件都可以在applied.com 的投資者關係部分找到。

Before we begin, just a reminder, we'll discuss our business outlook and make forward-looking statements. All forward-looking statements are based on current expectations subject to certain risks and uncertainties, including those detailed in our SEC filings.

在開始之前，提醒一下，我們將討論我們的業務前景並做出前瞻性陳述。所有前瞻性陳述均基於當前的預期，受制於某些風險和不確定性，包括我們提交給美國證券交易委員會的文件中詳述的那些。

Actual results may differ materially from those expressed in the forward-looking statements. The company undertakes no obligation to update publicly or revise any forward-looking statement. In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents.

實際結果可能與前瞻性陳述中表達的結果大不相同。公司不承擔公開更新或修改任何前瞻性陳述的義務。此外，電話會議將使用非 GAAP 財務指標，這些指標受這些文件中提及的資格的限制。

Our speakers today include Neil Schrimsher, Applied's President and Chief Executive Officer; and Dave Wells, our Chief Financial Officer.

我們今天的演講者包括 Applied 總裁兼首席執行官 Neil Schrimsher；和我們的首席財務官 Dave Wells。

With that, I'll turn it over to Neil.

有了這個，我會把它交給尼爾。

Thanks, Ryan, and good morning, everyone. We appreciate you joining us. I'll start today with some perspective on our fourth quarter results, current industry conditions and our expectations going forward. Dave will follow with more specific detail on the quarter's performance and our forward outlook, including fiscal 2023 guidance, and I'll then close with some final thoughts.

謝謝，瑞恩，大家早上好。我們感謝您加入我們。今天我將從對我們第四季度業績、當前行業狀況和我們未來預期的一些看法開始。戴夫將隨後詳細介紹本季度的業績和我們的前瞻前景，包括 2023 財年的指導，然後我將以一些最後的想法結束。

So overall, very encouraged how we ended the year. We achieved another quarter of record performance across sales and earnings. EBITDA grew 27% and EPS was up 34% on 19% sales growth. We also continued to expand EBITDA margins, achieving new highs above 11% for the second straight quarter despite ongoing inflationary headwinds.

所以總的來說，非常鼓勵我們如何結束這一年。我們在銷售額和收益方面又取得了創紀錄的四分之一。 EBITDA 增長 27%，每股收益增長 34%，銷售額增長 19%。我們還繼續擴大 EBITDA 利潤率，連續第二個季度創下 11% 以上的新高，儘管存在持續的通脹逆風。

All these numbers include meaningful LIFO headwinds as well. In total, these are strong results to end the year that included significant progress on many fronts, including continuing to position the company for long-term success through continuous improvement actions, growth investments and reinforcing our balance sheet through debt reduction.

所有這些數字也包括有意義的 LIFO 逆風。總體而言，這些都是截至今年年底的強勁業績，其中包括在許多方面取得了重大進展，包括通過持續改進行動、增長投資和通過減少債務加強我們的資產負債表，繼續為公司長期成功做好準備。

We also drove significant improvement in our return on capital metrics throughout the year. I want to thank our Applied team for their ongoing commitment and strong execution. Our outperformance throughout the year validates our industry-leading position and strategy, and we're very excited to build on this momentum going forward.

我們還推動了全年資本回報率的顯著提高。我要感謝我們的應用團隊的持續承諾和強有力的執行。我們全年的出色表現證明了我們在行業中的領先地位和戰略，我們很高興能夠在這一勢頭的基礎上繼續前進。

So several key points to highlight in more detail. First, underlying demand remains strong across both segments through the quarter with trends accelerating during June. Trends were positive in all our key industry verticals with particular strength in metals, aggregates, mining, pulp and paper, chemicals, lumber and wood and other various heavy industries.

因此，需要更詳細地強調幾個關鍵點。首先，整個季度這兩個細分市場的潛在需求依然強勁，6 月份趨勢加速。我們所有主要垂直行業的趨勢都是積極的，尤其是在金屬、骨料、採礦、紙漿和造紙、化工、木材和木材以及其他各種重工業方面。

In addition, we believe, we're capturing incremental growth opportunities from our industry position and service capabilities. Combined with ongoing price contribution, year-over-year organic sales growth of approximately 19% represented the strongest quarterly performance for all of our fiscal 2022, even though we're facing more difficult prior year comparisons. Growth was also strongest in June, and we're seeing mid-teens year-over-year sales growth sustained into early fiscal 2023.

此外，我們相信，我們正在從我們的行業地位和服務能力中抓住增量增長機會。結合持續的價格貢獻，約 19% 的有機銷售額同比增長代表了我們 2022 財年最強勁的季度業績，儘管我們面臨著更困難的上一年比較。 6 月份的增長也最為強勁，我們看到 2023 財年初的銷售額同比增長保持在十幾歲左右。

We know there's been a lot of discussion and questions around broader macro uncertainty and if that's impacting our business. Needless to say, we're keeping a close eye on various cross currents, but we have not seen any meaningful signs of slowing in our business to date. And on of the messages, I want to reinforce here today, we believe the results you're seeing from Applied particularly reflect our differentiated industry position and benefits from various initiatives, we executed on in recent years, which have strengthened our internal capabilities and growth profile. We have great confidence, our strategy and company-specific unities provide sustainable growth and margin catalyst going forward.

我們知道圍繞更廣泛的宏觀不確定性以及這是否會影響我們的業務進行了很多討論和問題。不用說，我們正在密切關注各種交叉流，但迄今為止，我們還沒有看到任何有意義的業務放緩跡象。關於這些信息，我今天想在這裡強調一下，我們相信您從 Applied 看到的結果特別反映了我們差異化的行業地位以及我們近年來執行的各種舉措帶來的好處，這些舉措增強了我們的內部能力和增長輪廓。我們有很大的信心，我們的戰略和公司特定的單位提供了可持續的增長和未來的利潤催化劑。

So to provide some more detail across the various areas of our business, we're seeing very encouraging trends within our service center network. Sales in our Service Center segment were up 1% organically over prior year levels. This is one of the strongest quarterly growth rates we've seen in this segment in some time. Volumes continue to build as the quarter progressed, and we're now up a healthy double-digit percentage over prepandemic levels of fiscal 2019. Into early fiscal 2023, positive momentum is sustaining in the shorter-cycle area of our business with segment orders and booking rates remaining supportive.

因此，為了在我們業務的各個領域提供更多詳細信息，我們在服務中心網絡中看到了非常令人鼓舞的趨勢。我們的服務中心部門的銷售額比去年同期增長了 1%。這是一段時間以來我們在該領域看到的最強勁的季度增長率之一。隨著季度的進展，銷量繼續增加，我們現在比 2019 財年大流行前的水平高出健康的兩位數百分比。進入 2023 財年初，我們業務的較短週期領域的積極勢頭正在持續，部分訂單和預訂率仍然支持。

We believe this performance highlights structural growth and earnings improvement that is materializing within our service center network as we play an increasingly critical role across the industrial sector today. Part of this reflects greater required maintenance activity and technical support needs from our customers. With U.S. manufacturing capacity utilization near a 20-year high, our service center customers are increasing the frequency of maintenance and repair activity and releasing new capital spending and maintenance projects on production infrastructure.

我們認為，隨著我們在當今工業領域發揮越來越重要的作用，這一業績突顯了我們服務中心網絡中正在實現的結構性增長和盈利改善。這部分反映了我們客戶對維護活動和技術支持的需求更大。隨著美國製造能力利用率接近 20 年來的最高水平，我們的服務中心客戶正在增加維護和維修活動的頻率，並在生產基礎設施方面發布新的資本支出和維護項目。

Our scale, local and consistent service capabilities and technical knowledge of higher engineered motion control products and solutions are driving greater growth opportunities across both legacy and emerging end markets. We're also seeing solid traction across our strategic initiatives focused on talent, sales process optimization and analytics. This is driving greater and more efficient capture of new business, which is contributing to solid cost leverage and operating margin expansion across the segment. Overall, our service centers are in a solid position to sustain this favorable performance moving forward.

我們的規模、本地和一致的服務能力以及高級工程運動控制產品和解決方案的技術知識正在推動傳統和新興終端市場的更大增長機會。我們還看到了我們專注於人才、銷售流程優化和分析的戰略計劃的強大牽引力。這正在推動更大、更有效地獲取新業務，這有助於穩固的成本槓桿和整個部門的營業利潤率擴張。總體而言，我們的服務中心處於穩固的地位，可以繼續保持這種良好的業績。

Positive underlying demand is also persisting across our Fluid Power and Flow Control segment. Within Fluid Power, our backlog remains at historical highs, with firm order trends sustaining within all 3 of our core application verticals, including industrial, off-highway mobile and technology.

積極的潛在需求也在我們的流體動力和流量控制部門持續存在。在 Fluid Power 中，我們的積壓訂單仍處於歷史高位，在我們所有 3 個核心應用垂直領域（包括工業、非公路移動設備和技術）中保持穩定的訂單趨勢。

Our design, engineering and software coding expertise earn greater demand as customers focus on reducing power consumption and CO2 emissions, navigate a tight labor market, and integrate more predictive maintenance into their equipment.

隨著客戶專注於降低功耗和二氧化碳排放、應對緊張的勞動力市場以及將更多的預測性維護集成到他們的設備中，我們的設計、工程和軟件編碼專業知識贏得了更大的需求。

In addition, we're seeing smart machine technology accelerate at a rapid pace. Our Fluid Power team is deploying some of the most advanced solutions tied to IoT, telematics and electrification for fluid power systems. Component delays and supply bottlenecks remain hurdles within the system build and assembly focused area of our business, but our team is doing a great job managing these dynamics and our backlog provides growth visibility into fiscal 2023.

此外，我們看到智能機器技術正在快速發展。我們的流體動力團隊正在為流體動力系統部署一些與物聯網、遠程信息處理和電氣化相關的最先進的解決方案。組件延遲和供應瓶頸仍然是我們業務的系統構建和組裝重點領域的障礙，但我們的團隊在管理這些動態方面做得很好，我們的積壓工作為 2023 財年的增長提供了可見性。

In addition, demand continues to expand for our higher-margin process flow control products and solutions. (inaudible) activity and capital spending on process infrastructure remains positive in core end markets, such as chemicals, refining, petrochemical, utilities and metals. Our flow control solutions are increasingly used in applications tied to our customers' decarbonization efforts and other required infrastructure investment as end markets transition around new energy requirements.

此外，對我們利潤率更高的工藝流程控制產品和解決方案的需求繼續擴大。在化工、煉油、石化、公用事業和金屬等核心終端市場，（聽不清）工藝基礎設施的活動和資本支出仍然積極。隨著終端市場圍繞新能源需求進行轉型，我們的流量控制解決方案越來越多地用於與客戶脫碳工作和其他所需基礎設施投資相關的應用中。

Additionally, we're seeing notable progress in cross-selling our flow control solutions through our service center network as we connect strategic and local accounts to these leading process capabilities. We see further momentum building into fiscal 2023 as we execute on this meaningful opportunity. As it relates to our expanding automation platform focused on next-generation robotics, machine vision and digital solutions, we continue to see strong growth in orders and backlog. Customer interest in new business opportunities are being reinforced by our labor constraints and evolving production considerations post the pandemic.

此外，我們看到通過我們的服務中心網絡交叉銷售我們的流量控制解決方案取得了顯著進展，因為我們將戰略和本地客戶與這些領先的流程能力聯繫起來。隨著我們抓住這個有意義的機會，我們看到 2023 財年的勢頭進一步增強。由於它與我們專注於下一代機器人、機器視覺和數字解決方案的不斷擴大的自動化平台有關，我們繼續看到訂單和積壓的強勁增長。大流行後我們的勞動力限制和不斷變化的生產考慮加強了客戶對新商機的興趣。

These trends are expanding the need for automation and our leading engineering capabilities across functions such as material handling, production inspection, machine tending, palletizing and quality control. We're making traction with our greenfield expansion initiatives and developing new approaches to best serve our embedded customer base and further enhance our market position, including through proprietary turnkey solutions and leading application expertise. We see significant potential to further scale this platform into fiscal 2023 and beyond both M&A and organic initiative. Overall, the growth momentum sustaining across our core operations and emerging solutions is encouraging.

這些趨勢正在擴大對自動化的需求以及我們在材料處理、生產檢查、機器管理、碼垛和質量控制等功能方面的領先工程能力。我們正在推動我們的綠地擴張計劃並開發新方法，以最好地服務於我們的嵌入式客戶群並進一步提高我們的市場地位，包括通過專有的交鑰匙解決方案和領先的應用專業知識。我們看到了將該平台進一步擴展到 2023 財年及超越併購和有機計劃的巨大潛力。總體而言，我們核心業務和新興解決方案的增長勢頭令人鼓舞。

At the same time, our teams remain focused on driving strong returns as this growth continues to manifest through both consistent execution, and continuous improvement actions. We saw this once again during the fourth quarter where we responded well to inflationary pressures industry-wide by implementing further price actions and other countermeasures. Cost leverage also remained solid. Combined, these dynamics continue to drive strong EBITDA margin expansion despite ongoing LIFO expense headwinds.

與此同時，我們的團隊仍然專注於推動強勁的回報，因為這種增長通過一致的執行和持續的改進行動繼續體現出來。我們在第四季度再次看到了這一點，我們通過實施進一步的價格行動和其他對策很好地應對了全行業的通脹壓力。成本槓桿也保持穩定。綜合起來，儘管 LIFO 費用持續存在逆風，但這些動態繼續推動強勁的 EBITDA 利潤率擴張。

When looking at fiscal 2022 in total, we recorded $26.5 million of LIFO expense, which represented an over 70 basis point headwind and on our margin trends during the year. Despite this meaningful hurdle, we held gross margins relatively unchanged and expanded EBITDA margins by over 90 basis points to new record levels. This is a tremendous accomplishment by our team and provides strong evidence of the underlying margin and return improvement potential across supply as we continue to execute our strategy.

總體來看 2022 財年，我們記錄了 2650 萬美元的 LIFO 費用，這代表了超過 70 個基點的逆風和我們年內的利潤率趨勢。儘管存在這個有意義的障礙，我們保持毛利率相對不變，並將 EBITDA 利潤率擴大了 90 多個基點，達到了新的紀錄水平。這是我們團隊的一項巨大成就，並提供了強有力的證據，證明隨著我們繼續執行我們的戰略，整個供應的潛在利潤率和回報改善潛力。

Lastly, we ended fiscal 2022 with a healthy balance sheet with net leverage at 1.2x and over $1 billion in balance sheet capacity. We remain disciplined and focused on deploying capital that enhances our scale, growth profile and competitive position going forward. This includes organic investment opportunities as well as through additional M&A with an active pipeline that we look to execute on during fiscal 2023.

最後，我們以健康的資產負債表結束了 2022 財年，淨槓桿率為 1.2 倍，資產負債表容量超過 10 億美元。我們保持紀律並專注於部署資本，以提高我們的規模、增長概況和未來的競爭地位。這包括有機投資機會以及通過我們希望在 2023 財年執行的積極管道的額外併購。

While our capital deployment priorities have not changed, we remain flexible to return capital through other avenues, if necessary, including opportunistic share buybacks. Given our long-term earnings potential and the intrinsic value we see across our company, as you saw in our release today, our Board approved a new 1.5 million share repurchase program that refreshes our buyback capacity for future share repurchase activity.

雖然我們的資本部署優先事項沒有改變，但我們仍然可以靈活地通過其他途徑（如有必要）返還資本，包括機會性股票回購。鑑於我們的長期盈利潛力和我們在整個公司看到的內在價值，正如您在今天的新聞稿中所看到的，我們的董事會批准了一項新的 150 萬股股票回購計劃，該計劃刷新了我們未來股票回購活動的回購能力。

Now at this time, I'll turn the call over to Dave for additional detail on our financial results and outlook.

現在，我將把電話轉給戴夫，以獲取有關我們財務業績和前景的更多詳細信息。

Thanks, Neil. And just another reminder before I begin. As in prior quarters, we have posted a quarterly supplemental investor presentation to our investor site. This is available for your additional reference as we discuss most recent quarter results and our fiscal 2023 guidance.

謝謝，尼爾。在我開始之前還有一個提醒。與前幾個季度一樣，我們在我們的投資者網站上發布了季度補充投資者介紹。當我們討論最近的季度業績和我們的 2023 財年指導時，這可供您額外參考。

Turning now to our results for the quarter. Consolidated sales increased 18.5% over the prior year quarter. Acquisitions contributed 30 basis points of growth which was more than offset by a 50 basis point headwind from foreign currency translation. The number of selling days in the quarter was consistent year-over-year. Many of these factors, sales increased 18.7% on an organic basis. Average daily sales rates increased over 9% sequentially versus the prior quarter and were above almost seasonal patterns.

現在轉向我們本季度的業績。合併銷售額比去年同期增長 18.5%。收購貢獻了 30 個基點的增長，這被外匯換算帶來的 50 個基點的逆風所抵消。本季度的銷售天數與去年同期持平。在這些因素中，銷售額有機增長了 18.7%。與上一季度相比，日均銷售額環比增長超過 9%，幾乎高於季節性模式。

As it relates to pricing, we estimate the contribution of product pricing on year-over-year sales growth was approximately 500 basis points in the quarter. Just a reminder, this assumption only reflects measurable top line contribution from price increase on SKUs sold in both year-over-year periods.

由於它與定價有關，我們估計本季度產品定價對同比銷售增長的貢獻約為 500 個基點。提醒一下，這一假設僅反映了兩個同比銷售的 SKU 價格上漲對收入的可衡量貢獻。

Turning now to sales performance by segment as highlighted on Slides 6 and 7 of the presentation. Sales in our Service Center segment increased 21% year-over-year on an organic basis when excluding the impact of foreign currency. Growth was solid across all of our core end markets, the strongest within mining, metals, pulp and paper, energy, aggregates, rubber and plastics and lumber and wood. Segment growth also continues to benefit from traction with our sales process initiatives and ongoing pricing actions. Within our Fluid Power and Flow Control segment, sales increased 15% over the prior year quarter, with acquisitions contributing 1 point of growth.

現在轉到演示文稿的幻燈片 6 和 7 中突出顯示的細分銷售業績。排除外匯影響後，我們服務中心部門的銷售額同比增長 21%。我們所有核心終端市場的增長都很穩健，其中最強勁的是採礦、金屬、紙漿和造紙、能源、骨料、橡膠和塑料以及木材和木材。細分市場的增長也繼續受益於我們的銷售流程舉措和持續定價行動的牽引力。在我們的流體動力和流量控制部門，銷售額比去年同期增長了 15%，其中收購貢獻了 1 個增長點。

On an organic basis, segment sales increased 14% year-over-year and over 30% on a 2-year stack basis. Segment sales continue to benefit from strong demand within technology end markets as well as across metals, chemicals, refining, utilities, pulp and paper and mining verticals. Extended supplier lead times and inbound component delays weighed a bit on segment sales growth during the quarter, but the overall impact remains limited to date.

在有機基礎上，細分市場銷售額同比增長 14%，在 2 年堆棧基礎上增長超過 30%。分部銷售繼續受益於技術終端市場以及金屬、化學品、精煉、公用事業、紙漿和造紙和採礦垂直市場的強勁需求。延長的供應商交貨時間和入站組件延遲對本季度的細分市場銷售增長造成了一定影響，但迄今為止總體影響仍然有限。

Moving to gross margin performance. As highlighted on Page 8 of the deck, gross margin of 28.9% declined 47 basis points compared to the prior year level of 29.4%. During the quarter, we recognized LIFO expense of $10.8 million compared to $3.7 million of LIFO income in the prior year quarter. The resulting net LIFO headwind had an unfavorable 136 basis point year-to-year impact on gross margins during the quarter and reflects supplier product inflation and ongoing inventory expansions year-to-date.

轉向毛利率表現。正如第 8 頁所強調的那樣，毛利率為 28.9%，與去年的 29.4% 相比下降了 47 個基點。在本季度，我們確認了 1080 萬美元的 LIFO 費用，而去年同期為 370 萬美元的 LIFO 收入。由此產生的淨 LIFO 逆風對本季度的毛利率產生了 136 個基點的不利影響，並反映了供應商產品通脹和年初至今的持續庫存擴張。

As a reminder, the LIFO income recorded in the prior year period were related to year-end adjustments for inventory layer liquidations. Overall, underlying gross margin trends were in line with our expectations during the quarter. Our team continues to respond well to broader inflationary dynamics, reflecting broad-based channel execution, pricing actions and ongoing margin countermeasures as well as solid freight expense management. As it relates to our operating costs, selling, distribution and administrative expenses increased 8.5% compared to prior year levels.

提醒一下，上一年記錄的 LIFO 收入與庫存層清算的年終調整有關。總體而言，本季度的潛在毛利率趨勢符合我們的預期。我們的團隊繼續對更廣泛的通脹動態做出良好反應，反映了基礎廣泛的渠道執行、定價行動和持續的利潤對策以及可靠的貨運費用管理。由於與我們的運營成本有關，銷售、分銷和管理費用與去年同期相比增加了 8.5%。

SD&A expense was 18.6% of sales during the quarter down from 20.3% during the prior year quarter. We are pleased with what was another solid quarter of cost control and operating leverage. While we are facing ongoing inflationary headwinds including higher employee-related expenses, we continue to see strong cost discipline and efficiencies from our operational excellence initiatives, shared services model and technology investments. SD&A During the quarter also benefited from slight favorability tied to our self-insurance performance as well as lower deferred compensation expenses.

本季度 SD&A 費用佔銷售額的 18.6%，低於去年同期的 20.3%。我們對另一個可靠的季度成本控制和運營槓桿感到滿意。雖然我們正面臨持續的通貨膨脹逆風，包括與員工相關的費用增加，但我們繼續看到我們的卓越運營計劃、共享服務模式和技術投資帶來了強大的成本紀律和效率。 SD&A 本季度還受益於與我們的自我保險業績相關的輕微支持以及較低的遞延補償費用。

Overall, our solid sales growth gross margin improvement and cost leverage drove a 26.5% increase in EBITDA over prior year levels, which represents an over 43% increase when excluding the impact of LIFO in both periods.

總體而言，我們穩健的銷售增長毛利率改善和成本槓桿推動 EBITDA 比去年同期增長 26.5%，如果不計兩個時期 LIFO 的影響，則增長超過 43%。

In addition, EBITDA margin of 11.3% increased 72 basis points compared to prior year levels. This includes the unfavorable 136 basis point year-over-year adverse impact attributed to LIFO. Including reduced interest expense, reported earnings per share of $2.02, was up over 34% from prior year earnings per share levels.

此外，與去年同期相比，EBITDA 利潤率為 11.3%，增加了 72 個基點。這包括歸因於 LIFO 的不利的 136 個基點的同比不利影響。包括減少的利息費用，報告的每股收益為 2.02 美元，比上年每股收益水平增長了 34% 以上。

Moving now to our cash flow performance. Cash generated from operating activities during the fourth quarter was $53.7 million, while free cash flow totaled $47.3 million. For the full year, we generated free cash of $169 million, which represents 66% of net income. We continue to see solid cash generation across our business despite greater working capital investment over the past year. As it relates to capital deployment, we remain active throughout fiscal 2022, including reducing debt by $139 million or 17% from prior year period-end levels.

現在轉到我們的現金流表現。第四季度經營活動產生的現金為 5370 萬美元，而自由現金流總計 4730 萬美元。全年，我們產生了 1.69 億美元的自由現金，占淨收入的 66%。儘管過去一年的營運資本投資增加，但我們繼續在整個業務中看到穩健的現金產生。由於與資本部署有關，我們在整個 2022 財年保持活躍，包括將債務比上年期末水平減少 1.39 億美元或 17%。

We also deployed $73 million towards dividends, share buybacks and M&A during the year. We ended June with approximately $185 million of cash on hand and net leverage at 1.2x EBITDA, which is below the prior year level of 1.8x adjusted EBITDA. Our revolver currently has approximately $490 million of available capacity and an additional $500 million accordion option. We also have incremental capacity on our AR securitization facility and uncommitted private shelf facility. So overall, our liquidity remains strong.

年內，我們還為股息、股票回購和併購部署了 7300 萬美元。截至 6 月末，我們手頭現金約為 1.85 億美元，淨槓桿率為 1.2 倍 EBITDA，低於去年調整後 EBITDA 的 1.8 倍。我們的左輪手槍目前有大約 4.9 億美元的可用容量和另外 5 億美元的手風琴選項。我們的 AR 證券化設施和未承諾的私人貨架設施也有增量容量。因此，總體而言，我們的流動性仍然強勁。

I'll turn now to our outlook, which is detailed on Page 10 of our presentation. We are establishing full year fiscal 2023 guidance, including EPS in the range of $6.65 to $7.30 based on sales growth of 3% to 7% and EBITDA margins of 10.8% to 11.1%. Our sales outlook takes into consideration the greater economic uncertainty that has manifested itself in recent months. While we have not seen any meaningful signs of slowdown to date, we remain constructive on our company-specific growth opportunities. And we believe it is prudent to take a balanced approach to our initial outlook given the current economic backdrop. Of note, our sales guidance assumes decelerating underlying sales growth trends as the year progresses.

我現在要談談我們的展望，這在我們演示文稿的第 10 頁上有詳細說明。我們正在製定 2023 財年全年指引，包括基於 3% 至 7% 的銷售額增長和 10.8% 至 11.1% 的 EBITDA 利潤率在 6.65 美元至 7.30 美元範圍內的每股收益。我們的銷售前景考慮到近幾個月來表現出來的更大的經濟不確定性。雖然迄今為止我們沒有看到任何有意義的放緩跡象，但我們對公司特定的增長機會仍然持建設性態度。我們認為，鑑於當前的經濟背景，對我們的初步展望採取平衡的態度是謹慎的做法。值得注意的是，我們的銷售指導假設隨著時間的推移，潛在的銷售增長趨勢會放緩。

At the midpoint, we're assuming high single-digit year-over-year growth in the first half of the year and low single-digit growth in the second half of the year. In addition, based on quarter-to-date sales trends through early August, we currently project fiscal first quarter organic sales to grow by a low double-digit percent over the prior year quarter.

在中點，我們假設今年上半年的同比增長率為高個位數，下半年的增長率為低個位數。此外，根據截至 8 月初的季度至今銷售趨勢，我們目前預計第一財季有機銷售額將比去年同期低兩位數百分比增長。

From a margin and cost perspective, we assume ongoing inflationary pressures including year-over-year LIFO expense headwinds as well as ongoing growth investments and the impact of our annual merit pay increase on January 1. Our LIFO assumptions assume a sustained impact from supplier price increases and ongoing inventory investment, but some easing in LIFO expense in the second half of the year as these dynamics begin to tail off. combined with lower top line growth and lingering supply chain constraints. Guidance assumes more modest operating leverage relative to fiscal 2022, pending further transparency on broader economic and inflationary trends.

從利潤率和成本的角度來看，我們假設持續的通貨膨脹壓力，包括同比後進先出的費用逆風以及持續的增長投資以及我們在 1 月 1 日的年度績效工資增長的影響。我們的後進先出假設假設供應商價格的持續影響增加和持續的庫存投資，但隨著這些動態開始減弱，後進先出法費用在下半年有所緩解。加上較低的收入增長和揮之不去的供應鏈限制。指導假設相對於 2022 財年的經營槓桿更為溫和，有待更廣泛的經濟和通脹趨勢進一步透明化。

Lastly, in regards to cash generation, we expect free cash flow to be higher year-over-year in fiscal 2023. We expect ongoing investment in our operational inventory levels but a more modest build relative to fiscal 2022, including some benefit from the conversion of work-in-process inventories as well as progress on other working capital initiatives.

最後，在現金產生方面，我們預計 2023 財年的自由現金流量將同比增加。我們預計對我們的運營庫存水平進行持續投資，但相對於 2022 財年的增長較為溫和，包括轉換帶來的一些好處在製品庫存以及其他營運資金計劃的進展。

With that, I will now turn the call back over to Neil for some closing comments.

有了這個，我現在將把電話轉回給尼爾，以徵求一些結束意見。

Thanks, Dave. So as we begin fiscal 2023, which is our 100th year as a company. There is a strong sense of pride and excitement throughout Applied. Underlying this is our view that we're playing an increasingly critical role across the industrial space today, especially when you consider customers' labor constraints, equipment optimization initiatives and increased manufacturing investments across North America.

謝謝，戴夫。因此，當我們開始 2023 財年時，這是我們公司成立的第 100 年。整個應用程序都有一種強烈的自豪感和興奮感。在此基礎上，我們認為我們在當今整個工業領域發揮著越來越重要的作用，尤其是考慮到客戶的勞動力限制、設備優化計劃和北美各地增加的製造投資。

We're also motivated by our ongoing evolution as a company as we enhance and leverage our core service center operations while expanding across higher engineered solutions tied to advanced automation, industrial power and process technologies. The progress we're making on this evolution is optimizing our growth and margin trajectory for the future. We're keeping a close eye on the broader macro environment. The current backdrop is driving greater uncertainty as to how industrial activity might track in coming quarters.

隨著我們增強和利用我們的核心服務中心運營，同時擴展與先進自動化、工業動力和工藝技術相關的更高工程解決方案，我們也受到公司不斷發展的激勵。我們在這一演變上取得的進展正在優化我們未來的增長和利潤軌跡。我們正在密切關注更廣泛的宏觀環境。當前的背景正在推動未來幾個季度工業活動如何追踪的更大不確定性。

As such, we're taking a prudent initial approach with our fiscal 2023 guidance. We're focused on continuing to execute on our commitments and remain constructive, given the positive momentum sustaining across our business today, which we believe partially reflects various structural demand tailwinds within our core end markets and channels. We also believe our diversification and expansion into verticals such as technology, life sciences and other higher-growth areas, combined with a greater mix of longer cycle markets has enhanced the breadth and durability of our growth trajectory -- greater evidence of manufacturing reshoring and investment in U.S. production capacity are other encouraging signs, and there remains significant potential to gain further traction with our cross-selling initiative.

因此，我們在 2023 財年的指導中採取了謹慎的初始方法。我們專注於繼續履行我們的承諾並保持建設性，鑑於我們今天的業務保持積極勢頭，我們認為這部分反映了我們核心終端市場和渠道內的各種結構性需求順風。我們還相信，我們向技術、生命科學和其他高增長領域等垂直領域的多元化和擴張，加上更長周期市場的更多組合，增強了我們增長軌蹟的廣度和持久性——製造業回流和投資的更多證據美國生產能力的增加是其他令人鼓舞的跡象，並且我們的交叉銷售計劃仍有很大的潛力來獲得進一步的牽引力。

Long term, we see great potential to further scale our industry position and EBITDA margin profile. Our multifaceted strategy is presenting many new and relevant catalysts, which will drive an ongoing evolution at Applied and further enhance our market position. Given these dynamics and our team's operational discipline today, we're establishing new intermediate financial targets, including sales over $5 billion and EBITDA margins over 12%. We believe these objectives are well within the company's capability and can be achieved within the next 5 years or sooner depending on broader macro, macro conditions, the cadence of M&A and other factors.

從長遠來看，我們看到了進一步擴大我們的行業地位和 EBITDA 利潤率的巨大潛力。我們的多方面戰略正在展示許多新的相關催化劑，這將推動應用材料公司的持續發展並進一步提升我們的市場地位。鑑於這些動態和我們團隊今天的運營紀律，我們正在製定新的中間財務目標，包括超過 50 億美元的銷售額和超過 12% 的 EBITDA 利潤率。我們認為，這些目標完全在公司的能力範圍內，可以在未來 5 年或更短時間內實現，具體取決於更廣泛的宏觀環境、宏觀條件、併購節奏和其他因素。

Overall, our team is engaged and ready to execute on these next milestones, which we believe provides the framework for significant value creation for all stakeholders. Once again, we thank you for your continued support. And with that, we'll open up the lines for your questions.

總體而言，我們的團隊已經投入並準備好執行這些下一個里程碑，我們相信這些里程碑為所有利益相關者創造重大價值提供了框架。我們再次感謝您一直以來的支持。有了這個，我們將為您的問題開闢道路。

(Operator Instructions) Our first question comes from the line of Ken Newman with KeyBanc Capital Markets.

（操作員說明）我們的第一個問題來自 KeyBanc Capital Markets 的 Ken Newman。

So for my first question, I just want to try to balance some of the optimistic comments you made versus the guidance that you put up this morning, particularly for the first quarter and the second half. I think you mentioned that sales were up mid-teens through early August and the guidance calling for organic to be up low double digits. I just want to clarify whether that is really driven by higher conservatism? Or is there something -- that you want to pull the reins in a bit?

因此，對於我的第一個問題，我只想嘗試平衡您發表的一些樂觀評論與您今天早上提出的指導意見，尤其是第一季度和下半年的指導意見。我想你提到過 8 月初的銷售額增長了十幾歲，而指導要求有機增長達到兩位數的低位。我只是想澄清這是否真的是由更高的保守主義驅動的？或者有什麼東西——你想稍微控制一下？

I can start as we look for the -- continuing on the first quarter, right? We talk about what we're seeing in the mid-teens now. Our guidance really around tje first quarter would say organic sales would be up low double digit. We think gross margins are likely unchanged, perhaps slightly down to the fourth quarter that we closed. And we think our incremental margins would be like in the fourth quarter, say, around that 17%. And then as we look out further at the guide, right, we could see if conditions moderate, sales would be more high single digits for the first half and potentially a little more softening in the second half.

我可以開始尋找——繼續第一季度，對吧？我們談論我們現在在十幾歲時所看到的。我們在第一季度的指導實際上會說有機銷售額將達到兩位數的低位。我們認為毛利率可能保持不變，可能略低於我們關閉的第四季度。而且我們認為我們的增量利潤率會像第四季度那樣，比如 17% 左右。然後，當我們進一步查看指南時，我們可以看到如果條件溫和，上半年銷售額將更高個位數，下半年可能會更加疲軟。

So today, right, we do not see that in our customer interactions and dialogue, work with suppliers and others. But we're mindful as we said in remarks, right, on cross currents and other things that could influence...

所以今天，對，我們沒有看到在我們的客戶互動和對話中，與供應商和其他人合作。但正如我們在評論中所說的那樣，我們要注意交叉流和其他可能影響...

I'd just add, Ken, that we do have a little bit tougher comp when you look at the August, September time frame around out the quarter, which gives us that low double-digit expectation for growth for Q1. I'd also add that on the 3% to 7% full year organic growth guidance, that does include in the back half of the year, market contraction, then it went into that spectrum you're looking at.

我只想補充一點，肯，當您查看本季度 8 月和 9 月的時間框架時，我們確實有一些更艱難的競爭，這使我們對第一季度的增長預期低兩位數。我還要在 3% 到 7% 的全年有機增長指導中補充一點，這確實包括今年下半年的市場收縮，然後它進入了你正在關注的範圍。

So we're offsetting that with the positive momentum that we see coming into the year, a nice backlog position, particularly in our project-oriented fluid power, flow control automation businesses, some positive price contribution carrying through as well as thinking about our flow control business, and some of the longer later cycle that's lags from the other areas of the business and came back and it's going to continue to provide some momentum.

因此，我們正在用今年的積極勢頭、良好的積壓情況來抵消這一點，特別是在我們以項目為導向的流體動力、流量控制自動化業務、一些積極的價格貢獻以及對我們流量的思考控制業務，以及一些滯後於其他業務領域的較長後期週期並回來，它將繼續提供一些動力。

So that coupled with cross-selling opportunities shrinking momentum, offsetting what we're assuming to still be a kind of negative trend in terms of market for the back half of the year.

因此，再加上交叉銷售機會的勢頭減弱，抵消了我們假設的下半年市場仍是一種負面趨勢。

Got it. Yes. So it sounds like it's mostly a conservatism and maybe a little bit more comps at the top end of the guide here.

知道了。是的。所以聽起來這主要是一種保守主義，也許在指南的頂端還有更多的組合。

First of all, exactly. Yes.

首先，確切地說。是的。

Right. From a follow-up, I'm just curious, can you talk a little bit about what's embedded in the current guide in terms of the pricing cadence. Obviously, price was up sequentially from the prior quarter. Would you expect price contributions to be up sequentially from fiscal 4Q? And when do you think we start to see a peak in some of those prices just given that you're a little bit more exposed to some of these later-cycle industries versus your competitors?

正確的。從後續行動中，我很好奇，您能否談談當前指南中嵌入的定價節奏。顯然，價格比上一季度環比上漲。您是否預計價格貢獻會從第四財季開始依次上升？鑑於與競爭對手相比，您更容易接觸到這些後期週期行業中的一些，您認為我們何時開始看到其中一些價格達到頂峰？

Yes. I would say overall, now we're not going to guide on price. But perhaps as color or starter, we could say price contribution overall for '23 could be similar to fiscal '22. But as you would expect, right, the cadence will reverse. So perhaps starts higher as we go into the first half, and we finished this calendar year and then starts to moderate back in the second half. But I think a starter guide would be similar for the full year in '23 as it was in '22.

是的。總的來說，我會說，現在我們不打算指導價格。但也許作為顏色或首發，我們可以說 23 年的整體價格貢獻可能與 22 財年相似。但正如你所料，對，節奏會逆轉。因此，當我們進入上半年時，可能會開始走高，我們完成了這個日曆年，然後在下半年開始放緩。但我認為 23 年全年的入門指南與 22 年類似。

Our next question comes from the line of Chris Dankert with Loop Capital.

我們的下一個問題來自 Loop Capital 的 Chris Dankert。

I guess on the intermediate term numbers you guys gave here, that 12% EBITDA margin figure, is that -- should we think about that as a cross-cycle number, just because if I look at the EBITDA margin, you guys put up this year, add back life, you're already pretty well into the 11 -- so just trying to get my arms around how to think about that EBITDA margin outlook or target over time.

我想你們在這裡給出的中期數字，即 12% EBITDA 利潤率數字，是 - 我們是否應該將其視為一個跨週期數字，只是因為如果我查看 EBITDA 利潤率，你們提出了這個一年，再加上生活，你已經很好地進入了 11 - 所以只是試圖讓我了解如何考慮 EBITDA 利潤率前景或隨著時間的推移目標。

Yes. So we think about it over the cycle, the contributors would be we would grow mid-single digit. We would look to continue acquisitions and so perhaps acquisitions contribute 300 basis points of growth. We would have some gross margin expansion in that period and the incrementals would be in the mid- to high teens that would go in. And so as we've talked, the timing can be impacted by just what are going to be the general market conditions in the environment. And so if there is a pullback and a slowdown in that period, perhaps we're in that longer time frame of the 5 years. If not, or more just kind of a general recessionary modest pullback, we'll have the opportunity to get there sooner.

是的。所以我們在整個週期中考慮它，貢獻者將是我們將增長中個位數。我們希望繼續收購，因此收購可能會貢獻 300 個基點的增長。在此期間，我們將有一些毛利率擴張，增量將在中高位進入。正如我們所說，時機可能會受到一般市場的影響環境中的條件。因此，如果在此期間出現回調和放緩，也許我們正處於 5 年的較長時間範圍內。如果不是這樣，或者更像是一種普遍的衰退性溫和回調，我們將有機會更快到達那裡。

Got it. That's very helpful. And then just to think about the guide for the year a little bit more granularly should we think about the growth rates across businesses being fairly similar? Or I mean, it seems like based on the performance to date that the distribution business would be growing a bit faster. So just any thoughts there would be great.

知道了。這很有幫助。然後只是稍微詳細地考慮一下今年的指南，我們是否應該考慮一下各個企業的增長率相當相似？或者我的意思是，根據迄今為止的表現，分銷業務的增長似乎會更快一些。所以只要有任何想法都會很棒。

Yes. So the guidance assumes the fluid power, flow control automation segment, slightly outpacing service center growth, just given the strong 22% that we had in that piece of the business and just that robust backlog position that we entered the year with. So slightly outpaced growth out of the project oriented business.

是的。因此，該指南假設流體動力、流量控制自動化領域的增長速度略高於服務中心的增長，僅考慮到我們在該業務領域的強勁 22% 以及我們進入這一年的強勁積壓狀況。因此，以項目為導向的業務增長略高於增長。

Got you. Got you. And then maybe just one quick kind of housekeeping question. Any comment on your corporate and other expense for the year, probably being near $100 million. Just kind of if you could size us there.

得到你。得到你。然後也許只是一種快速的家務問題。對您今年的公司和其他費用的任何評論，可能接近 1 億美元。如果你能在那兒給我們定尺碼就好了。

I see nothing really different year-over-year there, kind of in line with what you've seen historically.

我沒有看到與去年同期相比有什麼不同，這與你在歷史上看到的一致。

Got you. Congrats on the year, and really looking forward to a strong '23.

得到你。祝賀這一年，真的很期待一個強大的'23。

(Operator Instructions) Our next question comes from the line of David Manthey with Baird.

（操作員說明）我們的下一個問題來自 David Manthey 和 Baird。

I was sitting here mashing star 1, so I need to follow directions, I guess. Rational outlook makes sense. Dave, maybe you could describe gross margin outcomes, all else equal, if inflation flattens out completely. So for example, if inflation goes to 0 in a given year, do you claw back some or all of the LIFO headwinds you're seeing right now?

我坐在這裡搗碎星星 1，所以我想我需要按照指示進行操作。理性的觀點是有道理的。戴夫，如果通貨膨脹完全趨於平緩，也許你可以描述毛利率結果，其他條件相同。例如，如果通貨膨脹在某一年降到 0，你會收回你現在看到的部分或全部 LIFO 逆風嗎？

It's not going to be looking at a time, Dave, because when you think about the kind of the nature of this business and in the randomness and some of the demand that we talked before with 1/3 of the SKUs repeating in a given period, there's going to be a longer tail of LIFO, you've got the inflationary impact, kind of (inaudible) tomorrow, we'd still see a longer tail as you do replace some parts that have not been replaced in the last year plus and hit the radar.

戴夫，這不會看時間，因為當你考慮到這項業務的性質、隨機性和我們之前談到的一些需求時，1/3 的 SKU 在給定時期內重複，後進先出會有更長的尾巴，你會受到通貨膨脹的影響，明天有點（聽不清），我們仍然會看到更長的尾巴，因為你確實更換了一些去年沒有更換的零件加上並擊中雷達。

So the guidance does assume that longer tail, some of that inflationary impact continuing really through the first half of the year until things cool a bit. So the guidance generally assumes a LIFO impact limited to what we saw this year. And then the opportunity does exist then obviously, maybe you get out in the back half of the year, but more likely future years to be able to realize either by sort of the cooling of inflationary impact or certainly rare liquidation like we saw in Q4 of our fiscal '21. Some LIFO tailwinds as a result of kind of the runup that we've seen. But going to see a great deal of that materializing in our fiscal '23.

因此，該指導確實假設了較長的尾巴，其中一些通脹影響實際上會持續到今年上半年，直到情況有所降溫。因此，該指南通常假設 LIFO 影響僅限於我們今年看到的情況。然後機會確實存在，也許你會在今年下半年退出，但未來幾年更有可能通過通脹影響的降溫或肯定是罕見的清算來實現，就像我們在第四季度看到的那樣我們的財政'21。由於我們已經看到的那種加速，一些 LIFO 順風。但是會在我們的 23 財年中看到大量的實現。

Yes, makes a lot of sense. And then as a follow-up, the -- in the release, you mentioned cost leverage despite inflation. And I guess that's telling us that revenue inflation is greater than your SD&A inflation. Neil, maybe you could help me with how do you know that you're operating more efficiently versus just benefiting from generalized inflation as it affects your model.

是的，很有意義。然後作為後續行動，在新聞稿中，您提到了儘管通貨膨脹的成本槓桿。我想這告訴我們收入通脹大於您的 SD&A 通脹。尼爾，也許你可以幫助我了解你如何知道你的運營效率更高，而不是僅僅從廣義通貨膨脹中受益，因為它會影響你的模型。

So I think one would look at where we focus and that we've made investments and that we're seeing productivity in the back of the house and whether that be continued opportunities around shared services, warehouse management, other initiatives that we are operating efficiently in support of the business.

所以我認為人們會看看我們關注的重點，我們已經進行了投資，我們看到了內部的生產力，以及圍繞共享服務、倉庫管理以及我們有效運營的其他舉措是否會持續存在機會以支持業務。

And so our investments are more forward facing in engineering and technology as we expand into those solutions that are touching and impacting customers on the side. So that has been our balance. We're getting some natural inflation that comes through on medical and some other areas in. But we think, all in all, we're doing a very effective job of managing those in the model and going forward.

因此，我們的投資在工程和技術方面更具前瞻性，因為我們擴展到那些觸及和影響客戶的解決方案。這就是我們的平衡。我們在醫療和其他一些領域得到了一些自然的通貨膨脹。但我們認為，總而言之，我們在管理模型中的那些方面做得非常有效，並繼續前進。

It's been part of the improvement in our incrementals, and we think can contribute to us going forward.

這是我們增量改進的一部分，我們認為可以為我們的前進做出貢獻。

With the addition to team to look at that overall staff cost includes the delivery time and labor and really do the benchmarking based on that total cost of staffing just to demonstrate where we're seeing that productivity and kind of set that expectation as we continue to move forward, maintaining that efficiency.

除了團隊之外，還要查看總體員工成本，包括交付時間和勞動力，並根據員工的總成本真正進行基準測試，以證明我們在哪裡看到了生產力以及我們繼續設定的期望繼續前進，保持這種效率。

Our next question is the follow-up from the line of Ken Newman with KeyBanc Capital Markets.

我們的下一個問題是來自 KeyBanc Capital Markets 的 Ken Newman 的後續問題。

Thanks for the follow-up here. Sorry if I missed this in the prepared remarks, but did you give any color on how the automation business did in the -- I'm curious if you can just give some color on what run rate revenue is like for that business now (inaudible) now may just talk a little bit about the M&A pipeline for some of those targets within that sector.

感謝您的跟進。抱歉，如果我在準備好的評論中錯過了這一點，但您是否對自動化業務在) 現在可能只是談談該行業中一些目標的併購渠道。

Sure. And sales in the quarter for automation were up mid-single digits, I think, 6% plus or so in that side. We talked about order rates and backlog expanding. The automation group did prior quarter comp was a plus 40%. So competing against a high comp in that side. I think the month of June was double digit. So we remain highly pleased with the group and the opportunities that were opening up, greenfield expansion continues to progress on that side. And in our M&A priorities, automation is one of those, along with fluid power and flow control.

當然。我認為，該季度自動化的銷售額增長了中個位數，增長了 6% 左右。我們談到了訂單率和積壓訂單的擴大。自動化組上一季度的業績增長了 40%。因此，與那方面的高競爭者競爭。我認為六月是兩位數。因此，我們仍然對集團和正在開放的機會感到非常滿意，綠地擴張在這方面繼續取得進展。在我們的併購優先事項中，自動化就是其中之一，還有流體動力和流量控制。

So good activity going in developing more turnkey solutions that we feel we can take across a lot of market segments from a discrete automation side that are underpenetrated. So we think that's going to be a nice contributor for us going in. And as we think about the business going forward above the high end of the guidance, that would be the expectations for fiscal '23.

在開發更多交鑰匙解決方案方面開展瞭如此出色的活動，我們認為我們可以從尚未滲透的離散自動化方面跨越許多細分市場。因此，我們認為這將是我們進入的一個很好的貢獻者。當我們考慮到高於指導高端的業務發展時，這將是對 23 財年的預期。

We did say it too in the prepared remarks that maybe some of that growth opportunity in addition to the tougher comps was dampened just a bit by supplier constraints in May (inaudible) you do that. The team has done a very nice job of still continuing net order trajectory and nice growth against those tougher comps while managing through some of the supply chain issues.

我們在準備好的評論中也確實說過，除了更嚴格的補償之外，也許一些增長機會被 5 月份的供應商限制（聽不清）稍微抑制了，你這樣做了。該團隊在管理一些供應鏈問題的同時，仍能繼續保持淨訂單軌跡並在應對那些更艱難的情況下實現良好增長，做得非常好。

Yes. I'm curious, are you running into any installation bottleneck -- so we have heard about a couple of issues. I think from one of your supplier partners experienced a pretty big fire at their largest production line. Is that having an impact on deployments at all?

是的。我很好奇，您是否遇到了任何安裝瓶頸——所以我們聽說了幾個問題。我想你們的一個供應商合作夥伴在他們最大的生產線上經歷了一場相當大的火災。這對部署有影響嗎？

So overall for us limited to no. And I think some of that impact is more on logistics oriented market rather than engineered solutions as it goes across. So we feel like in our solutions, we are doing a nice job. I mean, obviously, there's supplier engagements and expedites and doing it. And things may move, but they're small period move out. So the product range, the engineered range that we are more focused on has not seen or had the same level of impact.

所以總體上對我們來說僅限於沒有。而且我認為其中一些影響更多地是針對物流導向的市場，而不是經過設計的解決方案。所以我們覺得在我們的解決方案中，我們做得很好。我的意思是，顯然，有供應商的參與和加速並這樣做。事情可能會發生變化，但它們只是小時期的搬出。因此，我們更關注的產品範圍，工程範圍沒有看到或產生相同程度的影響。

And maybe just one more for me. Obviously, the leverage seems to be in a really strong place. You're expecting free cash generation to be better this year. Any update how we should think about what are the primary priorities for capital deployment, whether it be for M&A or then your purchase program or something else?

也許對我來說只是一個。顯然，槓桿似乎處於一個非常強大的位置。你預計今年的自由現金產生會更好。任何更新我們應該如何考慮資本部署的主要優先事項是什麼，無論是併購還是您的購買計劃或其他什麼？

So I'd say priorities first are growth, right? And we can make organic investments in that and M&A. So those will be the first level priorities, will continue to be a dividend payer, dividend increases And then as we touched on the share repurchase authorization re-up in that. It is an opportunity. But we think in the environment, we will have opportunities for continued growth in that side. We said consistently, we'll be mindful. We will not just stack cash for long periods of time, and we can redeploy those back to shareholders. But we think the best moves that we can take would be to further grow the business across -- especially as we develop these engineered solutions.

所以我會說首要任務是增長，對吧？我們可以對此和併購進行有機投資。因此，這些將是第一級優先事項，將繼續成為股息支付者，股息增加，然後正如我們談到的股票回購授權重新增加。這是一個機會。但我們認為，在環境方面，我們將有機會在這方面繼續增長。我們一直說，我們會注意的。我們不會只是長期積累現金，我們可以將這些現金重新部署給股東。但我們認為，我們可以採取的最佳舉措是進一步發展業務——尤其是在我們開發這些工程解決方案時。

(Operator Instructions) At this time, I'm showing we have no further questions. I will now turn the call over to Mr. Schrimsher for any closing remarks.

（操作員說明）此時，我表明我們沒有進一步的問題。我現在將把電話轉給 Schrimsher 先生，請他做任何結束語。

I'll just simply thank everyone for joining us today. We look forward to talking with you throughout the quarter. Thanks, again.

我只是簡單地感謝大家今天加入我們。我們期待在整個季度與您交談。再次感謝。

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

謝謝你們，女士們，先生們。今天的會議到此結束。感謝您的參與。您現在可以斷開連接。