Applied Industrial Technologies Inc (AIT) 2023 Q3 法說會逐字稿

Welcome to the Fiscal 2023 Third Quarter Earnings Call for Applied Industrial Technologies. My name is Frank, and I'll be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded. I will now turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.

歡迎來到應用工業技術 2023 財年第三季度財報電話會議。我叫弗蘭克，今天的電話我是你的接線員。 （操作員說明）請注意，正在錄製此會議。我現在將把電話轉給投資者關係和財務總監 Ryan Cieslak。瑞安，你可以開始了。

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

好的。謝謝，弗蘭克，大家早上好。今天早上，我們發布了收益發布和補充投資者資料，詳細介紹了我們第三季度的業績。這兩份文件均可在 applied.com 的投資者關係部分獲得。

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. 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 statements. In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents.

在我們開始之前，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預期，受某些風險和不確定因素影響，包括我們向美國證券交易委員會提交的文件中詳述的風險和不確定因素。實際結果可能與前瞻性陳述中表達的結果存在重大差異。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 財務措施，這些措施受這些文件中引用的資格限制。

Our speakers today include Neil Schrimsher, Applied's President and Chief Executive Officer; and Dave Wells, our Chief Financial Officer. With that, I'll turn it over to Neil.

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。有了這個，我會把它交給尼爾。

Thanks, Ryan, and good morning, everyone. As usual, I'll begin with some perspective and highlights on the key drivers of our results, including an update on industry conditions as well as expectations going forward. Dave will follow with more detail on the quarter's financials and provide additional color on our outlook and guidance, and then I'll close with some final thoughts.

謝謝，瑞安，大家早上好。像往常一樣，我將從一些觀點開始，重點介紹我們業績的主要驅動因素，包括行業狀況的最新情況以及未來的預期。戴夫將詳細介紹本季度的財務狀況，並為我們的前景和指導提供更多色彩，然後我將以一些最後的想法結束。

So overall, we had another solid quarter, demonstrating our industry position and operational focus. We grew EBITDA by 29% and adjusted EPS by 36% on approximately 15% sales growth. This is on top of similar levels of growth in the prior year period, so very strong compounding growth in earnings power that we believe is top tier within our core marketplace. Digging further into the results, we expanded both gross margins and EBITDA margins, further enhanced our return on capital metrics and generated stronger cash flow both year-over-year and sequentially. We did this against the backdrop of ongoing inflationary pressures and supply chain constraints as well as some moderation in broader market activity. I want to thank our entire team for their ongoing effort and focus on optimizing and positioning the company to achieve these results.

總的來說，我們有另一個穩定的季度，展示了我們的行業地位和運營重點。我們將 EBITDA 增長了 29%，並將 EPS 調整了 36%，銷售額增長了約 15%。這是在去年同期類似增長水平之上的，因此我們認為盈利能力的複合增長非常強勁，這是我們核心市場中的頂級水平。進一步挖掘結果，我們擴大了毛利率和 EBITDA 利潤率，進一步提高了我們的資本回報率指標，並產生了同比和環比更強的現金流。我們這樣做是在持續的通脹壓力和供應鏈限制以及更廣泛的市場活動有所放緩的背景下進行的。我要感謝我們整個團隊的不懈努力，並專注於優化和定位公司以取得這些成果。

So a few key points to emphasize and provide more detail on. In terms of underlying demand, customer activity remained generally positive during the quarter. Feedback from our teams on the ground continues to highlight a relatively productive marketplace. Growth was strongest in many of our top industry verticals and across our larger national account base. We're also capturing new business opportunities from our industry position and technical capabilities as customers address increased maintenance requirements, continue to work through backlogs, consolidate their spend across our comprehensive product and solution set. We're seeing more and more examples of cross-selling success, expanding wallet share with strategic accounts and engaging new local account relationships. These are strong and sustainable self-help growth tailwinds that we look to build on into the future.

因此，需要強調並提供更多細節的幾個關鍵點。就潛在需求而言，本季度客戶活動總體上保持積極。來自我們實地團隊的反饋繼續強調一個相對高效的市場。在我們的許多頂級垂直行業和我們更大的國民賬戶基礎上，增長最為強勁。我們還從我們的行業地位和技術能力中捕捉新的商機，因為客戶解決了增加的維護需求，繼續處理積壓的工作，整合他們在我們全面的產品和解決方案集中的支出。我們看到越來越多的交叉銷售成功案例，擴大與戰略客戶的錢包份額並建立新的本地客戶關係。這些是我們希望在未來發展的強大且可持續的自助增長順風。

As expected, we did see broader market activity normalize some as the quarter progressed following a relatively busy production backdrop over the past several years. Shipment activity tied to system assemblies and engineered solutions also moderated slightly following strong backlog conversion during December and January, again, largely what we had anticipated. Sales month-to-date in April are trending up a high single-digit percent on an organic basis versus the prior year.

正如預期的那樣，在過去幾年相對繁忙的生產背景下，隨著本季度的進展，我們確實看到更廣泛的市場活動有所正常化。在 12 月和 1 月強勁的積壓訂單轉換之後，與系統組裝和工程解決方案相關的出貨活動也略有放緩，這在很大程度上也符合我們的預期。與上一年相比，4 月份的月度銷售額在有機基礎上呈高個位數百分比增長。

As reflected in our updated guidance, we remain mindful of ongoing macro headwinds that could weigh on near-term market activity. That said, as we highlighted before, we are favorably positioned to continue to outperform the broader market, reflecting our industry position and internal growth initiatives. Part of this reflects our ability to capitalize on key secular growth trends gaining momentum across the North American industrial sector. This includes greater infrastructure spending, reshoring an aging and scarce technical labor force and incremental growth from government stimulus spending.

正如我們更新後的指引所反映的那樣，我們仍然關注可能影響近期市場活動的持續宏觀逆風。也就是說，正如我們之前強調的那樣，我們有能力繼續跑贏大盤，這反映了我們的行業地位和內部增長計劃。這在一定程度上反映了我們利用北美工業部門獲得動力的主要長期增長趨勢的能力。這包括增加基礎設施支出、回流老齡化和稀缺的技術勞動力以及政府刺激支出帶來的增量增長。

We believe all of these dynamics are positively influencing our underlying growth today and could have an even greater impact into the future. This is particularly true across our Service Center segment, which had another solid quarter with organic sales growth of 16% and strong incremental margins. On a 2-year stack basis, segment organic growth was up nearly 30% during the quarter, while year-to-date segment operating margins are up nearly 240 basis points from an adjusted operating margin levels 2 years ago. Reflecting on these results, it's clear our Service Center network is much stronger and more productive business today following a number of initiatives, investments, talent additions and process improvements made in recent years.

我們相信所有這些動態都對我們今天的潛在增長產生積極影響，並可能對未來產生更大的影響。我們的服務中心部門尤其如此，該部門又迎來了一個穩健的季度，有機銷售額增長了 16%，利潤率增長強勁。在 2 年的基礎上，該部門的有機增長在本季度增長了近 30%，而年初至今的部門營業利潤率比 2 年前調整後的營業利潤率水平提高了近 240 個基點。回顧這些結果，很明顯，在近年來採取了一系列舉措、投資、人才補充和流程改進之後，我們的服務中心網絡如今變得更加強大和高效。

Similar to last quarter, we did see some slowing in select end markets during the quarter, such as metals and lumber and wood. However, overall booking levels remained relatively stable. And in end markets that are slowing across our Service Center network, the underlying trend is manageable to date and not indicative of a material correction. In addition, many of our top industry verticals in the U.S. remained strong in the quarter with greater than 20% growth within food and beverage, pulp and paper, chemicals and mining. We believe our Service Center customers remain focused on sustaining appropriate MRO activity on core production equipment in the current backdrop as they mitigate supply chain risk and position production capacity for growth in the years to come, especially when considering potential reshoring, infrastructure spending and increased CapEx requirements.

與上一季度類似，我們確實看到本季度特定終端市場有所放緩，例如金屬、木材和木材。然而，整體預訂水平保持相對穩定。在我們的服務中心網絡正在放緩的終端市場中，迄今為止，基本趨勢是可控的，並不表示出現實質性修正。此外，我們在美國的許多頂級垂直行業在本季度保持強勁，食品和飲料、紙漿和造紙、化工和採礦業的增長超過 20%。我們認為，在當前背景下，我們的服務中心客戶仍然專注於在核心生產設備上維持適當的 MRO 活動，因為他們可以降低供應鏈風險並為未來幾年的增長定位產能，尤其是在考慮潛在的回流、基礎設施支出和資本支出增加時要求。

Within our Engineered Solutions segment, which includes our fluid power, flow control and automation offerings, we had another solid quarter of double-digit growth with organic sales up 13% from the prior year. While moderating from the plus 20% growth we saw last quarter, this partially reflects more normalized shipment activity and backlog conversion following the strong trends we saw late last quarter. We continue to see solid growth in our industrial and off-highway mobile fluid power verticals where our technical solutions and engineering capabilities remain in high demand as OEMs face required technology, energy efficiency and safety enhancements for their systems and equipment. Growth across our specialty flow control operations was also favorable in the quarter, reflecting steady MRO activity and maintenance project spending on process infrastructure and continued growth opportunities emerging from our customers' decarbonization efforts.

在我們的工程解決方案部門（包括我們的流體動力、流量控制和自動化產品）中，我們又實現了兩位數的穩定增長，有機銷售額比上一年增長了 13%。雖然我們在上個季度看到的 20% 以上的增長率有所放緩，但這部分反映了在我們上個季度末看到的強勁趨勢之後更加正常化的出貨活動和積壓訂單轉換。我們繼續看到我們的工業和非公路移動流體動力垂直領域的穩健增長，因為原始設備製造商面臨其係統和設備所需的技術、能源效率和安全增強，我們的技術解決方案和工程能力仍然有很高的需求。本季度我們專業流量控制業務的增長也很有利，反映出穩定的 MRO 活動和過程基礎設施維護項目支出以及我們客戶的脫碳努力帶來的持續增長機會。

Underlying demand within our automation platform remains positive driven by strong secular tailwinds and our expansion initiatives. This level of sales growth in the third quarter moderated from the over 20% growth we saw last quarter, though primarily reflecting shipment timing and ongoing supply chain constraints. Year-to-date, organic sales across our automation platform are up a healthy double-digit level despite ongoing supply chain headwinds, and we continue to see favorable growth in many of our core industry verticals and applications.

在強勁的長期順風和我們的擴張計劃的推動下，我們自動化平台內的潛在需求仍然是積極的。第三季度的這一銷售增長水平低於上一季度超過 20% 的增長，但主要反映了發貨時間和持續的供應鏈限制。年初至今，儘管供應鏈持續存在逆風，但我們自動化平台的有機銷售額仍處於健康的兩位數水平，並且我們繼續看到我們的許多核心行業垂直和應用程序的良好增長。

We remain very excited about the potential of our automation platform, including an active pipeline of strategic M&A opportunities that we expect to further scale and optimize our competitive position going forward. In early April, we announced the acquisition of Advanced Motion Systems, which represents the sixth automation acquisition over the past 4 years. With annual sales of around $10 million, the transaction is on the smaller end, but is a great accretive bolt-on automation business that optimizes our footprint in the Upper Northeast region with strong capabilities in machine vision, motion control and related services. We welcome AMS and look forward to leveraging their capabilities going forward.

我們仍然對我們自動化平台的潛力感到非常興奮，包括積極的戰略併購機會管道，我們希望進一步擴大和優化我們未來的競爭地位。 4 月初，我們宣布收購 Advanced Motion Systems，這是過去 4 年中的第六次自動化收購。年銷售額約為 1000 萬美元，交易規模較小，但卻是一項具有巨大增值效應的附加自動化業務，憑藉在機器視覺、運動控制和相關服務方面的強大能力，優化了我們在上東北部地區的足跡。我們歡迎 AMS，並期待在未來利用他們的能力。

In addition to our sales performance, we had another strong quarter of margin improvement both at the gross margin and EBITDA margin level. We're managing ongoing inflationary pressures through channel execution and countermeasures. Combined with our cost discipline and efficiency gains, we grew EBITDA nearly twice the rate of sales growth and expanded EBITDA margin sequentially and year-over-year. Year-to-date, EBITDA is nearly 60% higher on an adjusted basis than it was 4 years ago prior to the pandemic. While some of that growth is tied to the bolt-on automation acquisitions we've completed, the core driver is organic execution from our team in enhancing our growth profile, productivity, business mix and cost structure in recent years. The expansion of our underlying earnings power is a strong testament to our strategy, commitment to operational excellence and industry position.

除了我們的銷售業績外，我們在毛利率和 EBITDA 利潤率水平上還有另一個強勁的利潤率改善季度。我們正在通過渠道執行和對策來管理持續的通脹壓力。結合我們的成本控制和效率提升，我們的 EBITDA 增長率幾乎是銷售增長率的兩倍，並且 EBITDA 利潤率環比和同比擴大。今年迄今為止，經調整後的 EBITDA 比 4 年前大流行之前高出近 60%。雖然其中一些增長與我們完成的附加自動化收購有關，但核心驅動力是我們團隊的有機執行，以提高我們近年來的增長狀況、生產力、業務組合和成本結構。我們潛在盈利能力的擴大有力地證明了我們的戰略、對卓越運營的承諾和行業地位。

Lastly, we're in a strong position to take full advantage of our future organic growth and M&A opportunities moving forward. Our balance sheet has modest leverage currently, and we expect stronger cash generation going forward as our working capital requirements moderate following heavy investment in recent years. As it relates to M&A and capital deployment opportunities, we're holding firm to our return requirements and balancing broader macro dynamics. Our top M&A priorities remain focused on automation, fluid power and flow control where we have an active pipeline. We'll also continue to evaluate options to strengthen our Service Center network where appropriate through ongoing IT investments as well as select acquisition opportunities aimed at optimizing our market coverage, talent and service capabilities. In addition, we'll continue to evaluate share buybacks and ongoing dividend growth as secondary options to deploy capital and drive returns.

最後，我們處於充分利用未來有機增長和併購機會的有利地位。我們的資產負債表目前杠桿率適中，我們預計隨著近年來大量投資後我們的營運資金需求有所緩和，現金產生能力將增強。由於它涉及併購和資本部署機會，我們堅持我們的回報要求並平衡更廣泛的宏觀動態。我們的首要併購優先事項仍然集中在我們擁有活躍管道的自動化、流體動力和流量控制上。我們還將繼續評估選項，通過持續的 IT 投資以及選擇旨在優化我們的市場覆蓋、人才和服務能力的收購機會，在適當的時候加強我們的服務中心網絡。此外，我們將繼續評估股票回購和持續的股息增長，作為部署資本和推動回報的次要選擇。

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

此時，我會將電話轉給戴夫，了解有關我們財務業績和前景的更多詳細信息。

Thanks, Neil, and good morning, everyone. First, another reminder that our quarterly supplemental investor presentation is available on our Investor site for your additional reference.

謝謝，尼爾，大家早上好。首先，再次提醒我們，我們的投資者網站上提供了我們的季度補充投資者介紹，供您額外參考。

Turning now to details of our financial performance in the quarter. Consolidated sales increased 15.4% over the prior year quarter. Acquisitions contributed 70 basis points of growth, which was partially offset by a 30 basis point headwind from foreign currency translation. The number of selling days in the quarter was consistent year-over-year. Netting these factors, sales increased 15% on an organic basis. As it relates to pricing, we estimate product pricing was around a mid-single-digit percent contributor to year-over-year sales growth in the quarter. As a reminder, this assumption only reflects measurable top line contribution from price increases on SKUs sold in both year-over-year periods.

現在轉向我們本季度財務業績的細節。綜合銷售額比上年同期增長 15.4%。收購貢獻了 70 個基點的增長，部分被外幣換算帶來的 30 個基點的逆風所抵消。本季度的銷售天數與去年同期持平。扣除這些因素後，銷售額有機增長了 15%。由於與定價有關，我們估計產品定價對本季度銷售額同比增長的貢獻率約為中個位數百分比。提醒一下，這一假設僅反映了兩個同比期間銷售的 SKU 價格上漲帶來的可衡量的收入貢獻。

Turning now to sales performance by segment. As highlighted on Slides 6 and 7 of the presentation, sales in our Service Center segment increased 16.1% year-over-year on an organic basis when excluding the impact of foreign currency. Year-over-year sales growth was strongest across our large national accounts during the quarter, though we continue to see nice contribution from our smaller local accounts albeit at a more modest pace as market activity normalizes against difficult comparisons. We also continue to see solid fluid power aftermarket sales growth, reflecting strong execution and service support from our fluid power MRO specialist network.

現在轉向按部門劃分的銷售業績。正如演示文稿的幻燈片 6 和 7 所強調的那樣，在排除外匯影響的情況下，我們服務中心部門的銷售額同比有機增長 16.1%。本季度我們大型國民賬戶的同比銷售額增長最為強勁，儘管我們繼續看到我們較小的本地賬戶做出了不錯的貢獻，儘管隨著市場活動在艱難的比較中恢復正常，但增速更為溫和。我們還繼續看到穩固的流體動力售後市場銷售增長，反映出我們流體動力 MRO 專家網絡的強大執行力和服務支持。

Within our Engineered Solutions segment, sales increased 15.2% over the prior year quarter with acquisitions contributing 2.1 points of growth. On an organic basis, segment sales increased 13.1% year-over-year. Segment sales growth continues to be supported by strong performance and backlog levels across our fluid power division, including healthy activity within industrial and off-highway mobile applications as well as sustained customer MRO and CapEx spending into process flow infrastructure. This was partially offset by slower activity within fluid power technology verticals and ongoing inbound component delays impacting the timing of system shipments and backlog conversion. Sales from our automation operations were up by a mid-single-digit percent organically over the prior year period. This follows over 20% growth during the December quarter. As previously noted, automation growth in the quarter was partially impacted by ongoing supply chain constraints and shipment timing.

在我們的工程解決方案部門，銷售額比去年同期增長 15.2%，收購貢獻了 2.1 個百分點的增長。在有機基礎上，分部銷售額同比增長 13.1%。我們流體動力部門的強勁業績和積壓水平繼續支持部門銷售增長，包括工業和非公路移動應用程序中的健康活動以及持續的客戶 MRO 和資本支出對流程基礎設施的支出。這部分被流體動力技術垂直領域的活動放緩和持續的入庫組件延遲影響系統發貨和積壓轉換的時間所抵消。與去年同期相比，我們自動化業務的銷售額有機增長了中個位數百分比。這是繼 12 月季度超過 20% 的增長之後。如前所述，本季度的自動化增長部分受到持續的供應鏈限制和發貨時間的影響。

Moving to gross margin performance. As highlighted on Page 8 of the deck, gross margin of 29.4% increased 13 basis points compared to the prior year level of 29.3%. During the quarter, we recognized LIFO expense of $8.2 million compared to $7.4 million in the prior year quarter. The net LIFO headwind had an unfavorable 7 basis point year-over-year impact on gross margins during the quarter. On a sequential basis, gross margin improved 33 basis points during the quarter and was slightly ahead of our expectations. We continue to manage broader inflation dynamics well. At the same time, we are benefiting from our gross margin initiatives, including enhanced analytics, freight recovery and channel execution, while favorable growth in our higher-margin flow control operations is also providing support.

轉向毛利率表現。正如幻燈片第 8 頁所強調的那樣，與去年同期的 29.3% 相比，29.4% 的毛利率增加了 13 個基點。本季度，我們確認 LIFO 費用為 820 萬美元，而去年同期為 740 萬美元。後進先出淨逆風對本季度的毛利率產生了 7 個基點的同比不利影響。按順序計算，本季度毛利率提高了 33 個基點，略高於我們的預期。我們繼續很好地管理更廣泛的通脹動態。與此同時，我們正受益於我們的毛利率舉措，包括增強分析、貨運回收和渠道執行，而我們利潤率較高的流量控制業務的有利增長也提供了支持。

As it relates to our operating costs, selling, distribution and administrative expenses increased 7% on an organic constant currency basis compared to prior year levels. SD&A expense was 18.2% of sales during the quarter, down from 19.5% during the prior year quarter. We continue to show strong execution in controlling costs in the current environment as we leverage our operational excellence initiatives, shared services model and technology investments to help offset wage inflation, required talent additions and medical cost inflation. In addition, our ongoing AR collection initiatives are helping control bad debt levels year-to-date.

由於與我們的運營成本、銷售、分銷和管理費用相關，與上一年的水平相比，在有機固定貨幣基礎上增加了 7%。本季度 SD&A 費用佔銷售額的 18.2%，低於去年同期的 19.5%。在當前環境下，我們在控製成本方面繼續表現出強大的執行力，因為我們利用卓越運營計劃、共享服務模型和技術投資來幫助抵消工資上漲、所需人才增加和醫療成本上漲。此外，我們正在進行的應收賬款催收計劃有助於控制年初至今的壞賬水平。

Combined with double-digit sales growth, EBITDA increased 29% over prior year levels, while EBITDA margins expanded 132 basis points over the prior year to 12.4%. This includes an unfavorable 7 basis point year-over-year impact due to LIFO. Combined with the reduced interest expense, we reported adjusted EPS of $2.38, representing a 36% increase from prior year EPS levels. As highlighted in our press release, adjusted EPS in the quarter excludes a net tax benefit of $3.7 million resulting from the release of a deferred tax valuation allowance within our Canadian operations.

加上兩位數的銷售額增長，EBITDA 比上年增長 29%，而 EBITDA 利潤率比上年增長 132 個基點，達到 12.4%。這包括後進先出法導致的 7 個基點同比不利影響。加上利息支出減少，我們報告調整後的每股收益為 2.38 美元，比去年每股收益水平增長 36%。正如我們在新聞稿中所強調的那樣，本季度調整後的每股收益不包括因在加拿大業務中釋放遞延稅估值津貼而產生的 370 萬美元的淨稅收收益。

Moving to our cash flow performance. Cash generated from operating activities during the third quarter was $75.2 million, while free cash flow totaled $67.2 million. Compared to the prior year, free cash increased nearly 39%, reflecting higher earnings and stabilizing working capital investment. Year-to-date, we have generated over $143 million of free cash, which is up 17% from the prior year, inclusive of greater working capital investment and CapEx spend. Looking ahead, we expect working capital investment to ease going forward, which will provide a path for stronger free cash generation during our fiscal fourth quarter and into fiscal 2024, pending the direction of broader macro dynamics and partially balanced by our ongoing growth initiatives and related investments.

轉向我們的現金流量表現。第三季度經營活動產生的現金為 7520 萬美元，自由現金流總計為 6720 萬美元。與上一年相比，自由現金增加了近 39%，反映了更高的收益和穩定的營運資本投資。年初至今，我們產生了超過 1.43 億美元的自由現金，比上年增長 17%，其中包括更多的營運資本投資和資本支出。展望未來，我們預計營運資本投資將在未來放緩，這將為我們第四財季和 2024 財年更強勁的自由現金產生提供途徑，等待更廣泛的宏觀動態的方向，並通過我們持續的增長計劃和相關的部分平衡投資。

From a balance sheet perspective, we ended March with approximately $182 million of cash on hand and net leverage at slightly below 1x EBITDA. Our leverage remains below our normalized range of 2 to 2.5x, partially reflecting the significant EBITDA growth we have experienced in recent years as well as ongoing debt reduction. We also remain disciplined with our M&A approach, focused on targets and valuation supporting our return requirements and strategic priorities.

從資產負債表的角度來看，截至 3 月末，我們的手頭現金和淨槓桿率約為 1.82 億美元，略低於 1 倍 EBITDA。我們的槓桿率仍低於 2 至 2.5 倍的正常範圍，部分反映了我們近年來經歷的顯著 EBITDA 增長以及持續的債務削減。我們還嚴格遵守我們的併購方法，專注於支持我們的回報要求和戰略重點的目標和估值。

Turning now to our outlook. As indicated in today's press release and detailed on Page 10 of our presentation, we are adjusting full year fiscal 2023 guidance, including tightening our sales guidance to the high end of the prior range and increasing guidance for EBITDA margins and EPS following our third quarter performance. We now project full year fiscal 2023 adjusted EPS in the range of $8.40 (sic) [$8.47] to $8.60 per share based on a sales growth of 14% to 15% and EBITDA margins of 11.7% to 11.8%. Previously, our guidance assumed EPS of $8.10 to $8.50 per share, sales growth of 13% to 15% and EBITDA margins of 11.5% to 11.7%. The updated adjusted EPS guidance range excludes the $3.7 million net tax benefit in the most recent quarter related to the tax valuation allowance adjustment.

現在轉向我們的展望。正如今天的新聞稿和我們演示文稿第 10 頁所指出的那樣，我們正在調整 2023 財年全年指引，包括將我們的銷售指引收緊到先前範圍的高端，並在我們第三季度業績後增加對 EBITDA 利潤率和每股收益的指引.基於 14% 至 15% 的銷售額增長和 11.7% 至 11.8% 的 EBITDA 利潤率，我們現在預計 2023 財年全年調整後每股收益在 8.40 美元（原文如此）[8.47 美元] 至 8.60 美元之間。此前，我們的指導假設每股收益為 8.10 美元至 8.50 美元，銷售額增長 13% 至 15%，EBITDA 利潤率為 11.5% 至 11.7%。更新後的調整後每股收益指導範圍不包括最近一個季度與稅收估值津貼調整相關的 370 萬美元淨稅收優惠。

Our updated guidance implies a fiscal fourth quarter EPS range of $2.07 to $2.20 on low to mid-single-digit sales growth over the prior year and 11.6% EBITDA margin at the midpoint. Our fourth quarter sales growth guidance is relatively unchanged from our prior outlook provided in January and takes into consideration sales trends month-to-date in April, broader economic uncertainty, ongoing inflationary pressures, moderate market activity near term and more modest pricing contribution. We will face more difficult sales growth comparisons as well as the fourth quarter progresses.

我們更新後的指引意味著第四財季每股收益範圍為 2.07 美元至 2.20 美元，銷售額較上年同期增長中低個位數，中點為 11.6% 的 EBITDA 利潤率。我們的第四季度銷售增長指引與我們在 1 月份提供的先前展望相比基本沒有變化，並考慮了 4 月份當月至今的銷售趨勢、更廣泛的經濟不確定性、持續的通脹壓力、近期溫和的市場活動以及更溫和的定價貢獻。我們將面臨更艱難的銷售增長比較以及第四季度的進展。

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

有了這個，我現在將把電話轉回給 Neil 以徵求一些最終意見。

Thanks, Dave. As we prepare to close out fiscal 2023, I'm extremely proud of the progress we've made and excited about the significant opportunity that still lies ahead for our organization. Our value proposition, technical industry focus and expansion into emerging industrial solutions provides a clear path for favorable growth and strong returns going forward.

謝謝，戴夫。在我們準備結束 2023 財年之際，我為我們取得的進展感到非常自豪，並對我們組織仍然面臨的重大機遇感到興奮。我們的價值主張、技術行業重點和向新興工業解決方案的擴張為未來的有利增長和豐厚回報提供了一條清晰的道路。

As we expected, broader market activity is moderating slightly as the economy adjusts to higher interest rates, tighter credit conditions and lingering uncertainty on many levels. We continue to believe any near-term slowdown within our core end markets will be transitional and short in nature given positive tailwinds underpinning the industrial sector, a greater focus on supply chain reliability and capacity investments in the wake of meaningful shocks faced in recent years.

正如我們預期的那樣，隨著經濟適應更高的利率、收緊的信貸條件和許多層面揮之不去的不確定性，更廣泛的市場活動正在略有放緩。我們仍然認為，鑑於支撐工業部門的積極順風、在近年來面臨重大衝擊後更加關注供應鏈可靠性和產能投資，我們的核心終端市場近期的任何放緩都將是過渡性和短期性的。

In addition, we have many self-help levers building across our business today that support our growth trajectory beyond cycle conditions. This includes our exposure to secular tailwinds tied to reshoring and investment in U.S. industrial infrastructure, which could represent notable tailwinds across our business for years to come. We also anticipate benefits from our cross-selling strategy, expansion into new market verticals and a more diversified end market mix relative to prior cycles. Additionally, we'll continue to evaluate and develop new commercial solutions that fully leverage our technical capabilities and application expertise as legacy industrial infrastructure converges with new emerging technologies. This includes greater growth opportunities around IoT, telematics and electrification for fluid power systems as well as the ongoing build-out of our automation platform.

此外，我們今天在我們的業務中建立了許多自助槓桿，支持我們超越週期條件的增長軌跡。這包括我們面臨與美國工業基礎設施回流和投資相關的長期順風，這可能代表我們未來幾年業務的顯著順風。我們還預計，我們的交叉銷售戰略、向新市場垂直領域的擴張以及相對於之前週期更加多元化的終端市場組合都會帶來好處。此外，隨著傳統工業基礎設施與新興技術的融合，我們將繼續評估和開發新的商業解決方案，充分利用我們的技術能力和應用專業知識。這包括圍繞物聯網、遠程信息處理和流體動力系統電氣化的更大增長機會，以及我們自動化平台的持續擴建。

Today, our automation offering is approaching $200 million of annualized sales and 15% of our Engineered Solutions segment, and we expect to further scale this platform going forward both organically and through strategic acquisitions. We expect strong secular and structural demand for these next-generation industrial solutions, which should be nicely additive to our growth both near term and more meaningfully on a longer-term basis.

今天，我們的自動化產品年銷售額接近 2 億美元，占我們工程解決方案部門的 15%，我們希望通過有機和戰略收購進一步擴展該平台。我們預計對這些下一代工業解決方案的長期和結構性需求強勁，這應該會很好地促進我們的短期增長，並在長期基礎上更有意義。

Lastly, we see ongoing margin expansion over the long term, reflecting a diverse set of opportunities tied to mixed tailwinds and system investments, plus a competitive moat from the critical nature of our core product set, application expertise and customized solutions. Near term, we'll remain diligent and ready to adjust if the environment slows or presents a more meaningful pullback. As our historical track record shows, we have the playbook to execute in any environment while generating strong countercyclical cash flow.

最後，我們看到長期持續的利潤率增長，反映出與混合順風和系統投資相關的各種機會，以及來自我們核心產品集、應用專業知識和定制解決方案的關鍵性質的競爭護城河。短期內，如果環境放緩或出現更有意義的回調，我們將保持勤奮並準備好進行調整。正如我們的歷史記錄所示，我們擁有可在任何環境下執行的劇本，同時產生強勁的反週期現金流。

As always, we thank you for your continued support. And with that, we'll open up the lines for your questions.

一如既往，我們感謝您一直以來的支持。有了這個，我們將為您的問題打開線路。

(Operator Instructions) Our first question comes from Chris Dankert with Loop Capital.

（操作員說明）我們的第一個問題來自 Loop Capital 的 Chris Dankert。

Congrats on the quarter here. I guess, first off, if I'm looking at gross margin, typically, we see kind of a seasonal step-up into the fourth quarter. I guess given the impact of LIFO and freight and some of the other moving parts here, should we see a typical seasonal move into the fourth quarter? Or just maybe you could walk us through just the impact of some of the moving parts in gross margin near term here.

恭喜這裡的季度。我想，首先，如果我看毛利率，通常情況下，我們會看到第四季度出現季節性上升。我想考慮到後進先出法和運費以及其他一些變動因素的影響，我們是否應該在第四季度看到典型的季節性變動？或者，也許您可以帶我們了解一些移動部分對近期毛利率的影響。

Yes, the guide assumes a modest decline in gross margin sequentially. Very strong performance in the quarter. There were some higher levels of vendor support and other things that contributed to that, but very -- continued -- our strong continued executional performance on really all levers in terms of our margin initiatives. So we'd expect that to moderate a little bit. Like I said, we were up over 30 basis points sequentially as we moved into Q3. So we'd expect to buck the typical seasonality just a bit as a result of that, Chris.

是的，該指南假設毛利率環比小幅下降。本季度表現非常強勁。有一些更高水平的供應商支持和其他因素對此做出了貢獻，但非常 - 持續 - 我們在我們的保證金計劃方面實際上在所有槓桿上的強勁持續執行性能。所以我們預計會有所緩和。就像我說的那樣，進入第三季度時我們連續上漲了 30 多個基點。因此，克里斯，我們希望因此而稍微扭轉典型的季節性。

Okay. Perfect. That's really, really helpful. And then I have to (inaudible) to you. Obviously, you're starting to look down the [barrel '24]. I know there's no guidance today. But just on a snapshot basis, if we kind of look at everything going on right now, I mean, would you expect to be able to hit growth given all these secular tailwinds that are pushing behind? Or just any comments maybe beyond the quarter and the end of the fiscal '23 here?

好的。完美的。這真的，真的很有幫助。然後我必須（聽不清）給你。顯然，您開始看不起 [barrel '24]。我知道今天沒有指導。但只是在快照的基礎上，如果我們看看現在發生的一切，我的意思是，鑑於所有這些落後的長期順風，你是否期望能夠實現增長？或者只是在本季度和 23 財年結束後的任何評論？

Sure. Chris, I'll start. And obviously, I mean, we'll provide color when we get to August and Q4 results and the outlook. I think for us as we think about outlook now and when we're working on our plans, but we'll probably model or think and have a cautious approach to it given the uncertainty that's out there, but clearly more to come.

當然。克里斯，我要開始了。顯然，我的意思是，當我們獲得 8 月和第 4 季度的結果和前景時，我們將提供顏色。我認為我們現在和製定計劃時都在考慮前景，但考慮到存在的不確定性，我們可能會建模或思考並對它採取謹慎的態度，但顯然還會有更多的不確定性。

Our next question comes from David Manthey with Baird.

我們的下一個問題來自 David Manthey 和 Baird。

First question, as you measure price and you think about that on the SKUs that repeat this year versus last, do you think that, that naturally underestimates the impact? The reason I mentioned is that I would think that your ability to price and get inflation and retain that and not have it competed away would be better on SKUs that are more rare that don't turn that frequently versus the ones that are more common. Any thoughts on that assumption?

第一個問題，當你衡量價格並考慮今年與去年重複的 SKU 時，你是否認為這自然低估了影響？我提到的原因是，我認為你定價和獲得通貨膨脹並保留它而不讓它競爭的能力在更罕見的 SKU 上會更好，這些 SKU 不會經常轉動，而不是更常見的 SKU。對這個假設有什麼想法嗎？

Sure. David, I can start. So you're correct, and we go off the data that we have on the matched SKUs and the third that do over the period. Obviously, we have a lot of configured products or nonstandard products that don't match in that. We do feel like with our gross margin performance in the business, we -- the team has done a very nice job at keeping pace with that inflation. To think about it in the quarter, probably a price cost match, probably view neutral maybe to slightly positive in the side. But we are intent on knowing, especially in the Engineered Solutions side of our business and these build-outs, that we price accordingly to the value and the benefits that we're generating. And so that's been our view in the past, and that -- I think that will continue forward. And we like that we have multiple levers that can help us over an up cycle on gross margins.

當然。大衛，我可以開始了。所以你是對的，我們關閉了我們在匹配的 SKU 上擁有的數據，以及在此期間的第三個數據。顯然，我們有很多配置產品或非標準產品在這方面不匹配。我們確實覺得我們在業務中的毛利率表現，我們 - 團隊在跟上通貨膨脹方面做得非常好。在本季度考慮它，可能是價格成本匹配，可能觀點中性或略微積極。但我們有意了解，尤其是在我們業務的工程解決方案方面和這些擴建部分，我們會根據我們產生的價值和收益相應地定價。所以這一直是我們過去的觀點，而且 - 我認為這將繼續下去。我們喜歡我們有多個槓桿可以幫助我們度過毛利率的上升週期。

And the things that we've done around point of sale and use of data and analytics there, we feel like we benefit from mix both customer side as we sell both large accounts and local accounts. We're doing well on more technical solutions in that. So we think all of those set up favorably for us for a gross margin standpoint over the up cycle. We do think the amount of supplier increases, as we do look forward there, they will likely moderate. There's still going to be increases. But I think from those that were multiple times a year, they'll settle back to more annual increases and lifts. But I feel like there could be -- there will be an ongoing tail to this inflation, especially when considering labor and kind of overhead expenses, things tied around medical and others.

我們圍繞銷售點以及在那裡使用數據和分析所做的事情，我們覺得我們從混合客戶方面受益，因為我們同時銷售大客戶和本地客戶。我們在這方面的更多技術解決方案上做得很好。因此，我們認為所有這些都對我們在上升週期的毛利率觀點有利。我們確實認為供應商的數量會增加，正如我們期待的那樣，他們可能會放緩。還會有漲幅。但我認為，從那些一年多次的情況來看，他們會回歸到更多的年度增長和提升。但我覺得可能會有——這種通貨膨脹會持續拖尾，尤其是考慮到勞動力和各種間接費用，以及與醫療和其他相關的事情時。

Yes, it seems that way. And just second, one of the factors that we've been hearing about is the share shift that's been driven by supply chain issues, and this probably relates more to your Service Center business than ES. But when you think about the outgrowth that you've seen over the past couple of years, do you consider that maybe some of that was driven by availability and could normalize as supply chains come back?

是的，似乎是這樣。其次，我們聽到的其中一個因素是由供應鏈問題驅動的份額轉移，這可能與您的服務中心業務有關，而不是 ES。但是，當您考慮過去幾年中看到的結果時，您是否認為其中一些可能是由可用性驅動的，並且隨著供應鏈的恢復可能會正常化？

Well, as I think about it, I think it's from our products, it's from our solutions, that service set that we wrap around it. I think the customer expectations have continued to grow. I think many are looking at how they consolidate their spend with fewer, more capable providers. I think the breadth of what they consider or what they need today expands across our technical product range, and we're well set up for that. So I don't look at that as a change going forward. And as we think about industrial production, perhaps it was slightly less than one, obviously, there has been inflation come in to the business and to the marketplace. PPI is at 6%, to your point, right? We've had the opportunity to perform and outperform in that. I don't think that set up for the marketplace and customer expectations given the other secular trends on reshoring, the desire to do more technical work and integrate automation and how they optimize their facilities, the need to outsource more based on a challenging technical labor environment. I think those set up very well for us for multiple years to come.

好吧，正如我所想的那樣，我認為它來自我們的產品，來自我們的解決方案，我們圍繞它的服務集。我認為客戶的期望持續增長。我認為許多人正在研究如何通過數量更少、能力更強的供應商來鞏固他們的支出。我認為他們考慮的範圍或他們今天需要的範圍擴展到我們的技術產品範圍，我們為此做好了準備。所以我不認為這是未來的變化。當我們考慮工業生產時，它可能略低於一，顯然，商業和市場都出現了通貨膨脹。 PPI 為 6%，對嗎？我們有機會在這方面表現出色。考慮到回流的其他長期趨勢、做更多技術工作和集成自動化的願望以及他們如何優化設施、需要根據具有挑戰性的技術勞動力外包更多，我認為這不符合市場和客戶期望環境。我認為這些為我們未來多年的發展奠定了良好的基礎。

Okay. And maybe one more just quickly. I was looking through some of my old notes, and I had that 75% of what you used to call flow control is MRO. And first off, I'm just wondering if I have that right in the first place? And then second, when you think about the kind of the long tail aftermarket of any of the business you do in ES, primarily in that flow control area, and then with the addition of automation, I'm just wondering, has that changed the dynamic at all?

好的。也許很快就會再來一個。我正在翻閱我的一些舊筆記，我發現你過去所說的流量控制中有 75% 是 MRO。首先，我只是想知道我是否一開始就做對了？其次，當你考慮你在 ES 中從事的任何業務的長尾售後市場類型時，主要是在流量控制領域，然後加上自動化，我只是想知道，這是否改變了動態嗎？

So you have it correct on the setup with flow control being 75% MRO as automation comes into that segment. There's some flow piece into that, but that business carries project work and will build a backlog. We're encouraged in the quarter: good order rate, lighter on the volume out this quarter, but as we talked about, coming off a high second quarter in this. And so we think the setup there is that high single digit, double digit based on adoption rates around automation. Flow control being later cycle and some of the trends and needs and investments around infrastructure, we think that sets up well. And then in our fluid power business, right, where it carries most of that backlog in the area, it is still going at nice historical levels, perhaps 2 to 3x that. So we think that is favorable for us as we look forward going into '24.

因此，隨著自動化進入該部分，您在設置上的設置是正確的，流量控制為 75% MRO。其中有一些流程，但該業務進行項目工作並將積壓。我們在本季度受到鼓舞：良好的訂單率，本季度的銷量較輕，但正如我們所說，第二季度的銷量很高。因此，我們認為那裡的設置是基於自動化採用率的高個位數、兩位數。流量控制是較晚的周期以及圍繞基礎設施的一些趨勢、需求和投資，我們認為這很好。然後在我們的流體動力業務中，它承載了該地區大部分積壓的訂單，它仍然處於良好的歷史水平，可能是它的 2 到 3 倍。所以我們認為這對我們有利，因為我們期待進入 24 年。

Okay. But as it relates to MRO and maybe there's something to be said for the age of the applications, is it safe to say that automation is a lower MRO component to it than flow control does, maybe, again, because it's more mature?

好的。但由於它與 MRO 相關，也許對於應用程序的年齡有一些話要說，可以肯定地說自動化是一個比流量控制更低的 MRO 組件，也許，再一次，因為它更成熟？

Yes, I would say much lower, much lower than that. Our focus, our work is building out those systems and working with customers. And so afterwards, are there base MRO flow materials, but it would be much, much lower.

是的，我會說低得多，比那低得多。我們的重點，我們的工作是構建這些系統並與客戶合作。所以之後，是否有基本的 MRO 流量材料，但它會低得多。

(Operator Instructions) Our next question comes from Ken Newman with KeyBanc Capital Markets.

（操作員說明）我們的下一個問題來自 KeyBanc Capital Markets 的 Ken Newman。

Dave and Neil, curious -- I mean, I just wanted to touch back on the margin -- implied margin guide for 4Q. I think you mentioned some expectations for moderating price and maybe some more normalizing seasonality. But I just want to clarify, is there anything else that we should kind of be aware of, particularly within the SD&A line here or maybe the expectations from a LIFO headwind going forward?

戴夫和尼爾很好奇——我的意思是，我只是想回顧一下利潤率——第四季度的隱含利潤率指南。我想你提到了一些對價格放緩的預期，也許還有一些更正常的季節性。但我只想澄清一下，還有什麼我們應該注意的，特別是在這裡的 SD&A 線內，或者可能是對後進先出逆風的預期？

[No, the way the] -- the guide assumes normalized levels that we've seen in the last couple of quarters of both inflationary impact and LIFO (inaudible) function of the tougher comps and think about the relative sales growth that's going to put some pressure on the incremental margins. So we're calling the -- the guide would assume low double-digit incrementals as a result of kind of the continued inflationary impact that we're seeing as well as the lower relative volume leverage that we'll have in Q4 on a year-over-year basis. So nothing out of the ordinary, though, in terms of LIFO, other margin assumptions [other than what] I alluded to in Chris' question and kind of still steady SD&A rates, keeping the focus on the operational controls there.

[不，方式] - 該指南假設我們在過去幾個季度看到的通貨膨脹影響和後進先出（聽不清）功能的標準化水平，並考慮將要投入的相對銷售增長增量利潤率有一定壓力。因此，我們稱 - 由於我們看到的持續通脹影響以及我們在一年中第四季度的相對數量槓桿較低，該指南將假設低兩位數的增量- 同比。因此，就 LIFO 而言，沒有什麼不尋常的，其他保證金假設 [除了我在克里斯的問題中提到的] 和仍然穩定的 SD&A 率，將重點放在那裡的運營控制上。

Right. Well, I guess to follow up on that, I know you're not ready to guide to 2024 yet. But just listening to yours and Neil's commentary, it seems like you aren't seeing any evidence of a material slowdown yet. You mentioned decrementals in the low double-digit range and a typical down cycle, and maybe that's a little bit more conservatism. But if market conditions continue to hold in where they are, how do you think about incremental margins if sales are up, call it, low to mid-single digits in this kind of environment, all else equal?

正確的。好吧，我想跟進一下，我知道你還沒有準備好引導到 2024 年。但只是聽聽你和尼爾的評論，你似乎還沒有看到任何實質性放緩的證據。你提到了低兩位數範圍內的遞減和典型的下行週期，也許這更保守一點。但是，如果市場狀況繼續保持現狀，在這種環境下，如果銷售額上升，您如何看待增量利潤率，稱之為低到中個位數，其他條件相同？

We'd still be targeting that low double digit to mid-single -- or mid-double-digit -- mid-teens margins incrementals. I think we've demonstrated historically the ability to surpass that, obviously, when we had that volume leverage. As things start to subside, we see that pull back to, like I said, that mid-teens rate. But we're going to stay very focused on the margin expansion. We'd expect to see, ultimately, LIFO start to ease. Although that does have, once again, a much longer tail on it given the range of demand that we do see in this business. And we'll stay accountable on the SD&A side to target those mid-teens incrementals or decrementals should they go that direction. But I think just being prudent in terms of our thoughts around the guide for Q4 just given the continued uncertainty that we're seeing.

我們的目標仍然是低兩位數到中個位數——或中兩位數——十幾歲中期的利潤增量。我認為我們在歷史上已經證明了超越這一點的能力，顯然，當我們擁有那個數量槓桿時。隨著情況開始消退，我們看到這種情況會回落到十幾歲左右的水平，就像我說的那樣。但我們將非常專注於利潤率的擴張。我們希望看到後進先出法最終開始放寬。儘管考慮到我們在這項業務中確實看到的需求範圍，但它確實有更長的尾巴。我們將繼續在 SD&A 方面負責，以針對那些朝這個方向發展的青少年增量或遞減。但我認為，鑑於我們所看到的持續不確定性，我們對第四季度指南的想法要謹慎。

Yes. And Ken, I'll just add, right? And we said it in the remarks and clearly, we'll be out more in August on '24, but I mean, we do believe we set up (inaudible) that we think any slowdown in kind of core end markets would be more transitional, short in nature at this point. And so we know there's many secular positive tailwinds that are out there, and I think our customers have a greater focus on supply chain and that reliability and how they continue to have their capacity to serve markets.

是的。肯，我只是補充一下，對吧？我們在評論中明確表示，我們將在 24 日的 8 月發布更多內容，但我的意思是，我們確實相信我們已經建立（聽不清）我們認為核心終端市場的任何放緩都將更具過渡性，此時本質上很短。所以我們知道那裡有許多長期的積極順風，我認為我們的客戶更加關注供應鍊和可靠性以及他們如何繼續擁有服務市場的能力。

And so if we think about this cycle, and I know you do work around the IP industrial cycles, and so perhaps there's a pullback. But I mean this could look like something maybe that's more early 2000s or even prior to that, that if there is a dip, it could be relatively short in nature and set up another 3- to 4-year run on it going forward. So how all of that plays out and it relates to the next fiscal year, I mean, clearly, we'll be providing more detail and more guidance. We think we're pretty spot on with what we're providing around Q4 and various specifics, and we'll look to be -- have more detail when we get to that August time frame.

因此，如果我們考慮這個週期，我知道你確實在圍繞 IP 產業周期開展工作，所以也許會有回調。但我的意思是，這可能看起來像是 2000 年代初甚至更早的事情，如果出現下降，它可能在本質上相對較短，並在未來建立另一個 3 到 4 年的運行。那麼所有這些如何發揮作用以及它與下一個財政年度有關，我的意思是，很明顯，我們將提供更多細節和更多指導。我們認為我們在第 4 季度前後提供的內容和各種具體細節都非常準確，我們希望在 8 月的時間框架內提供更多細節。

Right. Maybe one more here. Obviously, just thinking about the cycle, and there's some market worries, obviously, about the tighter credit lending and maybe its broader impact on industrial activity, Neil, maybe can you talk a little bit about whether you've seen a change in momentum in sales trends between your smaller and medium-sized customers versus the national accounts? I know you talked pretty positively about the secular trends, which I imagine is more heavy on the national account side.

正確的。也許這裡還有一個。顯然，只是考慮週期，顯然市場對信貸收緊及其對工業活動的更廣泛影響存在一些擔憂，尼爾，也許你能談談你是否看到了勢頭的變化您的中小型客戶與國民客戶之間的銷售趨勢？我知道你非常積極地談論了長期趨勢，我想這在國民賬戶方面更為重要。

But that's a good activity with both. And so if I think about it on our Service Center side, the team continues to have a good focus. So no, we would not see any significant material trends. We talked about our top industries, many of them running very well. We talk about the top 30. I think those declining went to 8 this quarter versus 5. But -- and those are really in the lower tail of that number, kind of the lower 10% of that. So I mean we're cognizant. We're aware. We'll be prudent. We'll be mindful. We know we can quickly react if needed. But to date, we can still remain encouraged about the market that's there.

但這是一項很好的活動。因此，如果我在我們的服務中心方面考慮它，團隊將繼續保持良好的專注。所以不，我們不會看到任何重要的材料趨勢。我們談到了我們的頂級行業，其中許多行業運行良好。我們談論前 30 名。我認為本季度下降的是 8 名，而不是 5 名。但是 - 那些確實處於該數字的尾部，即較低的 10%。所以我的意思是我們認識到了。我們知道。我們會謹慎的。我們會留心的。我們知道如果需要我們可以迅速做出反應。但迄今為止，我們仍然可以對那裡的市場感到鼓舞。

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.

此時，我表明我們沒有其他問題了。我現在將把電話轉給 Schrimsher 先生，聽取任何結束語。

I just want to thank everyone for joining us today, and we look forward to talking with many of you throughout the rest of the quarter. Thanks a lot.

我只想感謝大家今天加入我們，我們期待在本季度剩下的時間裡與你們中的許多人交談。多謝。

Ladies and gentlemen, that does conclude today's conference. You may now disconnect. Have a great day, everyone.

女士們，先生們，今天的會議到此結束。您現在可以斷開連接。祝大家有個美好的一天。