Alamo Group Inc (ALG) 2022 Q3 法說會逐字稿

Greetings, and welcome to the Alamo Group, Inc. Third Quarter 2022 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

問候，歡迎來到 Alamo Group, Inc. 2022 年第三季度電話會議。 （操作員說明）提醒一下，正在錄製此會議。

It is now my pleasure to introduce your host, Edward Rizzuti, Executive Vice President, General Counsel, and Secretary. Thank you, sir. You may begin.

現在我很高興向您介紹主持人、執行副總裁、總法律顧問兼秘書 Edward Rizzuti。謝謝你，先生。你可以開始了。

Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746, and we will send you a release, and make sure you are on the company's distribution list.

謝謝你。到目前為止，你們應該都收到了一份新聞稿。但是，如果有人遺失一份副本並希望收到一份，請致電 212-827-3746 與我們聯繫，我們將向您發送一份新聞稿，並確保您在公司的分發名單上。

There will be a replay of the call, which will begin 1 hour after the call and run for 1 week. The replay can be accessed by dialing 1-888-203-1112 with the passcode 13733267. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days.

通話重播將在通話後 1 小時開始，持續 1 週。撥打 1-888-203-1112 並輸入密碼 13733267 即可收聽重播。此外，公司網站 www.alamo-group.com 上正在對此次通話進行網絡直播，重播時間為 60 天。

On the line with me today are Jeff Leonard, President and Chief Executive Officer; Richard Wehrle, Executive Vice President, Chief Financial Officer and Treasurer; and Dan Malone, Executive Vice President and Chief Sustainability Officer. Management will make some opening remarks, and then we'll open up the line for your questions.

今天和我一起在線的是總裁兼首席執行官 Jeff Leonard； Richard Wehrle，執行副總裁、首席財務官兼財務主管；執行副總裁兼首席可持續發展官 Dan Malone。管理層將發表一些開場白，然後我們將開通您的問題熱線。

During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release.

在今天的電話會議中，管理層可能會在他們的評論中引用某些非 GAAP 數字。這些非 GAAP 結果與適用的 GAAP 數字的對賬包含在我們的收益發布的附件中。

Before turning the call over to Jeff, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results.

在將電話轉給 Jeff 之前，我想就前瞻性陳述發表一些評論。我們今天將根據 1995 年私人證券訴訟改革法案的安全港條款作出前瞻性陳述。前瞻性陳述涉及已知和未知的風險和不確定性，可能導致公司未來期間的實際結果與預測結果存在重大差異。

Among those factors which could cause actual results to differ materially are the following: market demand; COVID-19 impacts, including operational and supply chain disruptions; competition; weather; seasonality; currency-related issues; geopolitical issues; and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date.

可能導致實際結果出現重大差異的因素包括：市場需求； COVID-19 影響，包括運營和供應鏈中斷；競賽;天氣;季節性；貨幣相關問題；地緣政治問題；以及公司 SEC 報告中不時列出的其他風險因素。公司不承擔任何更新此處包含的信息的義務，這些信息僅在該日期有效。

I would now like to introduce Jeff Leonard. Jeff, please go ahead.

我現在想介紹傑夫倫納德。傑夫，請繼續。

Thank you, Ed. We want to thank all of you for joining us today. Richard will begin our call with a review of our financial results for the third quarter of 2022. I will then provide additional comments on the results. Following our formal remarks, we look forward to taking your questions.

謝謝你，埃德。我們要感謝大家今天加入我們。理查德將首先審查我們 2022 年第三季度的財務業績。然後我將對結果提供更多評論。在我們的正式發言之後，我們期待著回答您的問題。

Richard, please go ahead.

理查德，請繼續。

Thanks, Jeff, and good morning, everyone. Alamo Group's third quarter 2022 closed with a solid performance with record sales and net income. Results for the quarter were driven by strong demand for our products but with continued supply chain challenges and labor shortages. Third quarter consolidated net sales for 2022 were USD368.8 million, an increase of 9% compared to USD338.3 million in the third quarter of last year. Sales were negatively impacted over 3% due to currency translation as the U.S. dollar continued to strengthen against the foreign currencies. Gross margin dollars in the quarter improved compared to the third quarter of 2021 by USD6.1 million, although gross margin% declined by 50 basis points. Both margin dollars and percentage were negatively affected by supply chain issues, labor shortages, under absorption in our manufacturing operations, and freight surcharges on inbound inventory. Product mix was also less favorable as parts grew at a slower pace than new equipment.

謝謝，傑夫，大家早上好。 Alamo Group 2022 年第三季度業績穩健，銷售額和淨收入創歷史新高。本季度的業績是由對我們產品的強勁需求推動的，但供應鏈面臨持續挑戰和勞動力短缺。 2022 年第三季度合併淨銷售額為 3.688 億美元，比去年第三季度的 3.383 億美元增長 9%。由於美元兌外幣繼續走強，貨幣換算對銷售額造成了超過 3% 的負面影響。本季度的毛利率與 2021 年第三季度相比提高了 610 萬美元，但毛利率下降了 50 個基點。利潤率美元和百分比都受到供應鏈問題、勞動力短缺、我們的製造業務吸收不足以及入境庫存運費附加費的負面影響。產品組合也不太有利，因為零件的增長速度低於新設備。

Consolidated net income for the third quarter of 2022 was USD25.8 million, or USD2.16 per diluted share, an increase of 47% versus net income of USD17.5 million or USD1.47 per diluted share for the third quarter of 2021. Continued solid control of cost and expenses helped support the increase in profitability.

2022 年第三季度的合併淨收入為 2580 萬美元，或攤薄後每股收益 2.16 美元，比 2021 年第三季度的淨收入 1750 萬美元或攤薄後每股收益 1.47 美元增長 47%。持續穩健的成本和費用控制有助於支持盈利能力的提升。

The Vegetation Management division had a solid third quarter as markets remained strong. Third quarter 2022 net sales were USD228.5 million, an increase of 9% compared to USD209.8 million for the third quarter of 2021. The division continues to see strong demand for forestry, tree care, and agricultural and governmental mowing products in both North America and Europe. Margins during the third quarter of 2022 were up 40 basis points as compared to the prior year quarter despite labor shortages and supply chain disruptions. Income from operations for the third quarter of 2022 was USD27.1 million, up 27% versus USD21.4 million for the same period in 2021.

由於市場保持強勁，植被管理部門第三季度業績穩健。 2022 年第三季度淨銷售額為 2.285 億美元，與 2021 年第三季度的 2.098 億美元相比增長 9%。北美和歐洲。儘管勞動力短缺和供應鏈中斷，但與去年同期相比，2022 年第三季度的利潤率上升了 40 個基點。 2022 年第三季度的運營收入為 2710 萬美元，較 2021 年同期的 2140 萬美元增長 27%。

Industrial Equipment division net sales in the third quarter were USD140.3 million, up just over 9% compared to USD128.5 million for the third quarter of 2021. This was due to a solid performance of snow removal products and, to a lesser extent, improved net sales in the division's excavator, vacuum truck, and sweeper product lines. While truck chassis delivery showed no real improvement this quarter, other component part shortages continue to have a significant impact on this division's operations, which in turn drove unfavorable manufacturing efficiencies and under-absorption.

工業設備部門第三季度的淨銷售額為 1.403 億美元，與 2021 年第三季度的 1.285 億美元相比增長略高於 9%。這是由於除雪產品的穩健表現，以及在較小程度上, 提高了該部門挖掘機、吸塵車和掃地機產品線的淨銷售額。雖然本季度卡車底盤交付沒有明顯改善，但其他零部件短缺繼續對該部門的運營產生重大影響，這反過來又導致不利的製造效率和吸收不足。

Income from operations in the third quarter of 2022 was USD8.7 million, unchanged compared to the third quarter of 2021. Consolidated net sales for the first 9 months of 2022 were USD1.1 billion, up 13% compared to USD997.1 million for the first 9 months of 2021. Strong demand for our products in both of Alamo's divisions, along with positive impact of pricing initiatives, were the main drivers of the increase.

2022 年第三季度的運營收入為 870 萬美元，與 2021 年第三季度相比沒有變化。2022 年前 9 個月的合併淨銷售額為 11 億美元，相比 2022 年前 9 個月的 9.971 億美元增長 13% 2021 年前 9 個月。Alamo 的兩個部門對我們產品的強勁需求，以及定價舉措的積極影響，是增長的主要驅動力。

Year-to-date gross margin was up almost USD28 million versus the comparison period gross margin of 2021. Margin percentage was down about 50 basis points as we continue to experience inflationary pressures in material costs, purchase components, as well as higher inbound freight costs and labor shortages. Net income for the first 9 months of 2022 was USD72.8 million, or USD6.10 per diluted share, versus net income of USD61 million or USD5.13 per diluted share for the first 9 months of 2021, an increase of 19%.

年初至今的毛利率比 2021 年同期的毛利率增加了近 2800 萬美元。由於我們繼續承受材料成本、採購組件的通脹壓力以及更高的入境運費，利潤率下降了約 50 個基點和勞動力短缺。 2022 年前 9 個月的淨收入為 7280 萬美元，或攤薄後每股收益 6.10 美元，而 2021 年前 9 個月的淨收入為 6100 萬美元，或攤薄後每股收益 5.13 美元，增長 19%。

Excluding onetime charges in both 2022 and 2021, adjusted net income was USD73.8 million compared to USD58.5 million, an increase of 26%. For the first 9 months of 2022, net sales for the Vegetation Management division were USD704.5 million compared to USD68.3 million for 2021, up 16%. The division experienced robust demand in all product categories, particularly in forestry, tree care, land clearing, and in both North American and European agricultural and governmental mowing.

不計入 2022 年和 2021 年的一次性費用，調整後的淨收入為 7380 萬美元，高於 5850 萬美元，增長 26%。 2022 年前 9 個月，植被管理部門的淨銷售額為 7.045 億美元，而 2021 年為 6830 萬美元，增長 16%。該部門在所有產品類別中都經歷了強勁的需求，特別是在林業、樹木護理、土地清理以及北美和歐洲的農業和政府割草方面。

Year-to-date 2022 income from operations was USD78.3 million, up 29% versus USD60.8 million for 2021. For the first 9 months of 2022, net sales for the Industrial Equipment division were USD422.5 million compared to USD388.7 million for the same period of 2021, an increase of almost 9%. Sales of excavators, vacuum trucks, and street sweepers led the way with modest support from snow removal. For the first 9 months of 2022, income from operations was USD27.6 million versus USD28.3 million for the first 9 months of 2021, a decrease of 2%. This division's results were negatively impacted by constrained chassis deliveries, supply chain disruption, under-absorption, and higher input costs in both material and inbound freight.

2022 年年初至今的運營收入為 7830 萬美元，較 2021 年的 6080 萬美元增長 29%。2022 年前 9 個月，工業設備部門的淨銷售額為 4.225 億美元，高於 388 美元。 2021年同期700萬，增長近9%。在除雪的適度支持下，挖掘機、吸塵車和掃路車的銷量一路領先。 2022 年前 9 個月，運營收入為 2760 萬美元，而 2021 年前 9 個月為 2830 萬美元，下降 2%。該部門的業績受到底盤交付受限、供應鏈中斷、吸收不足以及材料和入境貨運投入成本增加的負面影響。

Order bookings increased during the third quarter of 2022 compared to the second quarter of 2022, driving our backlog up to just over USD909 million. Our backlog was also up 41% compared to the end of the third quarter of 2021. If you factor out the impact of currency translation on our sales volume, I mentioned earlier, our backlog would have been higher. Backlog is also up compared to the end of 2021 by over 13%.

與 2022 年第二季度相比，2022 年第三季度的訂單預訂量有所增加，使我們的積壓訂單達到略高於 9.09 億美元。與 2021 年第三季度末相比，我們的積壓訂單也增加了 41%。如果你排除貨幣換算對我們銷量的影響，我之前提到過，我們的積壓訂單會更高。與 2021 年底相比，積壓訂單也增加了 13% 以上。

Turning to a few additional financial items for the third quarter of 2022, our balance sheet remains healthy. Working capital increased USD138 million to USD558 million or USD440 million at the end of Q3 2021. The increase in working capital came from higher accounts receivable and inventory. Accounts receivable were almost USD302 million, up 23% from a year ago on solid sales volume; were also up 27% compared to the end of 2021. We are really pleased with the receivables and have experienced no major issues on collections and incoming cash remains steady.

轉向 2022 年第三季度的一些額外財務項目，我們的資產負債表保持健康。截至 2021 年第三季度末，營運資金增加 1.38 億美元至 5.58 億美元或 4.4 億美元。營運資金的增加來自應收賬款和存貨的增加。應收賬款接近 3.02 億美元，同比增長 23%，銷量穩健；與 2021 年底相比也增長了 27%。我們對應收賬款非常滿意，在收款方面沒有遇到重大問題，現金收入保持穩定。

Inventory was up almost USD68 million compared to the third quarter of 2021 and is up USD42 million compared to the end of 2021. This is a reflection of higher work in process, material cost inflation, as well as our efforts to support the growing demand for our products by purchasing higher levels of key components and service parts for our customers during this time of constrained supplies. The increase since the end of the year is also reflected in our modestly high debt levels. Finally, the company's trailing 12 months EBITDA is USD179 million. It's up 10% compared to the full year of 2021.

與 2021 年第三季度相比，庫存增加了近 6800 萬美元，與 2021 年底相比增加了 4200 萬美元。這反映了在製品增加、材料成本上漲以及我們為支持不斷增長的需求所做的努力通過在供應受限的這段時間內為我們的客戶購買更高水平的關鍵部件和服務零件來提高我們的產品質量。自年底以來的增長也反映在我們適度高的債務水平上。最後，公司過去 12 個月的 EBITDA 為 1.79 億美元。與 2021 年全年相比增長了 10%。

For the balance of this year, cash flow should remain strong as our focus on the balance sheet will be to reduce both inventory and debt levels. We will be disciplined in controlling costs and expenses as inflation is expected to continue to pressure our margins. We will continue to adjust prices as needed based on changes in material and transportation costs in order to maintain target margins. We're also very focused on improving supply chain deliveries to help reduce work-in-process inventory.

對於今年的餘額，現金流應保持強勁，因為我們對資產負債表的關注將是減少庫存和債務水平。由於預計通貨膨脹將繼續對我們的利潤率構成壓力，因此我們將嚴格控製成本和費用。我們將繼續根據材料和運輸成本的變化按需調整價格，以維持目標利潤率。我們還非常專注於改善供應鏈交付，以幫助減少在製品庫存。

Our biggest opportunity will be in meeting the heightened demand for our products throughout the company, given the current supply chain constraints and labor shortages. As we did in the first and second quarters of this year, the company approved a quarterly dividend of USD0.18 per share for the third quarter of 2022, a 29% increase over the third quarter of 2021.

鑑於當前的供應鏈限制和勞動力短缺，我們最大的機會將是滿足整個公司對我們產品的高需求。正如我們在今年第一季度和第二季度所做的那樣，公司批准了 2022 年第三季度每股 0.18 美元的季度股息，比 2021 年第三季度增長 29%。

With that, I'll turn the call back over to Jeff.

有了這個，我會把電話轉回給傑夫。

Thank you, Richard. I'd like to again thank everyone who's taken their time to join the call today. During the third quarter, activity in most of our markets remained strong. Order intake was excellent and backlog of USD909 million once again approached the record level set earlier this year. Although third quarter order bookings were down 19% compared to the exceptional third quarter of 2021, they were 16% higher than the third quarter of 2020, and excluding the Morbark and Timberwolf acquisitions, the company was 29% higher than the pre-pandemic third quarter of 2019.

謝謝你，理查德。我想再次感謝今天抽出時間參加電話會議的所有人。第三季度，我們大部分市場的活動依然強勁。訂單量非常好，9.09 億美元的積壓訂單再次接近今年早些時候創下的記錄水平。儘管與 2021 年異常出色的第三季度相比，第三季度的訂單預訂量下降了 19%，但比 2020 年第三季度高出 16%，並且不包括 Morbark 和 Timberwolf 的收購，該公司比大流行前的第三季度高出 29% 2019 年四分之一。

In our Vegetation Management division, orders for forestry and tree care equipment were lower compared to the very strong third quarter of 2021. This was primarily due to order timing as backlog in this segment of the division's business was just under 120% higher than the prior year. Demand for the division's large industrial wood recycling equipment remained strong amid sustained investment in waste-to-energy capacity.

在我們的植被管理部門，與 2021 年非常強勁的第三季度相比，林業和樹木護理設備的訂單有所減少。這主要是由於訂單時間安排，因為該部門業務的這一部分積壓訂單比之前高出近 120%年。由於對垃圾焚燒發電能力的持續投資，對該部門大型工業木材回收設備的需求依然強勁。

Sentiment among North American farmers improved somewhat during the quarter, although concerns about rising input costs and higher interest rates were evident. The division's North American orders for mowers and other ag equipment were slightly lower, but consistent with lower demand reported by the AEM for tractors less than 100 horsepower, the category that's most important for Alamo Group.

本季度北美農民的情緒有所改善，儘管對投入成本上升和利率上升的擔憂顯而易見。該部門在北美的割草機和其他農業設備訂單略有下降，但與 AEM 報告的低於 100 馬力的拖拉機需求下降一致，這是 Alamo Group 最重要的類別。

Orders were also lower as the company did not conduct a preseason program this year given the high backlog and extended lead times. Governmental customers continued to invest in their roadside maintenance fleets. Orders received from governmental customers for the division's specialized [boom-mounted] mowers were exceptionally strong and backlog for these special-purpose machines set the company for the record -- set a record for the company.

考慮到大量積壓和延長的交貨時間，該公司今年沒有開展季前賽計劃，因此訂單也有所減少。政府客戶繼續投資於他們的路邊維修車隊。從政府客戶那裡收到的該部門專用 [吊桿式] 割草機的訂單異常強勁，這些專用機器的積壓使公司創下了記錄——為公司創下了記錄。

Orders for this division's products from Europe and South America were stable in local currencies but lower on a U.S. dollar basis due to the significant movement in exchange rates year-over-year. Concerns about the war in Ukraine continue to weigh on markets in Europe, while in Brazil, there was caution pending the outcome of national elections. Vegetation Management division sales were 9% higher than the prior year. Forestry, tree care, and governmental mowing produced strong results as sales in these segments rose more than 20% compared to the third quarter of 2021. Sales of mowers, ag equipment, and specialty products in North and South America were up 3%, while sales of ag equipment and governmental mowers in Europe increased in local currencies but declined 3% when consolidated in U.S. dollars.

該部門來自歐洲和南美的產品訂單以當地貨幣計算穩定，但由於匯率同比大幅波動，以美元計算的訂單減少。對烏克蘭戰爭的擔憂繼續對歐洲市場造成壓力，而在巴西，在等待全國大選結果之前，市場保持謹慎。植被管理部門的銷售額比上年增長 9%。與 2021 年第三季度相比，林業、樹木護理和政府割草產生了強勁的業績，這些領域的銷售額增長了 20% 以上。割草機、農業設備和特種產品在北美和南美的銷售額增長了 3%，而歐洲農業設備和政府割草機的銷售額以當地貨幣計算有所增長，但以美元合併計算則下降了 3%。

Currency translation effects also impacted sales in the division by more than USD8 million, representing almost 4% of sales. This division continued to experience supply chain constraints across a variety of industrial components. However, shortages of skilled labor were more significant constraining factor during the third quarter. Despite these issues, the division's margin improved and operating income rose 27% compared to the third quarter of 2021.

貨幣換算效應也對該部門的銷售額產生了超過 800 萬美元的影響，幾乎佔銷售額的 4%。該部門繼續經歷各種工業組件的供應鏈限制。然而，熟練勞動力短缺是第三季度更為重要的製約因素。儘管存在這些問題，但與 2021 年第三季度相比，該部門的利潤率有所提高，營業收入增長了 27%。

Increased sales, healthy margin, and good control of expenses drove Vegetation Management's third quarter operating margin percentage up 170 basis points compared to the third quarter of 2021 to 12% of sales. Industrial Equipment division orders declined 12% versus the extraordinarily strong comparison period last year. However, backlog increased 79% year-over-year with all product lines showing significant increases. Vacuum truck order bookings were modestly higher, while street sweeper orders were slightly lower. After a very strong second quarter, snow removal bookings were also lower. However, this was the result of a timing shift to preseason orders that normally occur in the third quarter into the second quarter because of longer lead times for truck chassis.

銷售額增加、利潤率穩健以及對費用的良好控制使 Vegetation Management 第三季度的營業利潤率與 2021 年第三季度相比上升了 170 個基點，達到銷售額的 12%。與去年異常強勁的比較期相比，工業設備部門的訂單下降了 12%。然而，積壓訂單同比增長 79%，所有產品線均出現顯著增長。真空卡車訂單預訂量略有增加，而掃路車訂單則略有下降。在第二季度非常強勁之後，除雪預訂量也有所下降。然而，這是由於卡車底盤的交貨時間較長，通常在第三季度到第二季度發生的季前賽訂單的時間轉移的結果。

Third quarter sales in the Industrial Equipment division were 9% higher than the prior year. Currency translation negatively affected division sales by nearly 2% during the third quarter. Sales of vacuum trucks and street sweepers showed modest gains, while snow removal sales were up 37% compared to the third quarter of 2021. Truck chassis allocations continue to constrain sales across all the division's product lines during the quarter.

工業設備部門第三季度銷售額比去年同期增長 9%。第三季度貨幣換算對部門銷售額產生了近 2% 的負面影響。與 2021 年第三季度相比，真空卡車和街道清掃車的銷售額略有增長，而除雪銷售額增長了 37%。本季度，卡車底盤分配繼續限制該部門所有產品線的銷售。

As we reported in the second quarter, our Industrial Equipment division, again, experienced significant supply chain-driven manufacturing flow disruptions resulting in lower absorption and lower margin in the third quarter. Concurrently, the division continued to ramp up its investment in product electrification during the quarter and also incurred certain onetime costs associated with an ongoing plant consolidation in its snow removal segment. Although the division demonstrated good control over expenses, operating margin percentage for the quarter declined 50 basis points compared to the third quarter of 2021.

正如我們在第二季度報告的那樣，我們的工業設備部門再次經歷了由供應鏈驅動的製造流程中斷，導致第三季度吸收率和利潤率下降。同時，該部門在本季度繼續加大對產品電氣化的投資，並且還產生了與除雪部門正在進行的工廠整合相關的某些一次性成本。儘管該部門表現出對費用的良好控制，但與 2021 年第三季度相比，本季度的營業利潤率下降了 50 個基點。

Alamo Group continued to confront significant supply chain and recruitment headwinds in an operating environment that remained challenging in the third quarter. Chassis availability did not meaningfully improve during the quarter and allocations again constrained sales in our Industrial Equipment division. Certain other industrial components also remained in short supply, including, for example, in heavy axles, high-pressure pumps, heat exchangers, and wiring harnesses to name a few. It was gratifying that despite the headwinds we encountered, the company's third quarter sales reflected a nice improvement in both sales and earnings versus the third quarter of 2021 and again set new company records. While sales growth was more modest than expected for the reasons described, it's worth noting that sales growth, excluding currency translation effects, would have been in double digits.

在第三季度仍然充滿挑戰的經營環境中，Alamo Group 繼續面臨重大的供應鍊和招聘逆風。底盤可用性在本季度沒有顯著改善，分配再次限制了我們工業設備部門的銷售。某些其他工業部件也仍然供不應求，例如重型車軸、高壓泵、熱交換器和線束等。令人欣慰的是，儘管我們遇到了不利因素，但公司第三季度的銷售額與 2021 年第三季度相比在銷售額和收益方面都有了不錯的改善，並再次刷新了公司記錄。由於上述原因，銷售增長低於預期，但值得注意的是，如果不考慮貨幣換算影響，銷售增長將達到兩位數。

Third quarter operating income improved significantly, up 80 basis points to 9.7% of sales from 8.9% of sales in the comparison period of 2021. The 47% improvement in fully diluted earnings per share was achieved despite higher interest charges incurred this quarter. On balance, while company performance was again constrained by the supply chain challenges, labor shortages and currency effects, we were pleased with the ongoing strength displayed by our markets, especially in the governmental segment. While order bookings were lower relative to an exceptional comparison period last year, they nonetheless showed excellent growth versus the third quarter in 2019 and 2020.

第三季度營業收入顯著改善，佔銷售額的比例從 2021 年同期的 8.9% 上升 80 個基點至 9.7%。儘管本季度產生了更高的利息費用，但完全攤薄後的每股收益仍實現了 47% 的改善。總的來說，雖然公司業績再次受到供應鏈挑戰、勞動力短缺和貨幣影響的限制，但我們對我們的市場（尤其是政府部門）顯示出的持續實力感到滿意。儘管訂單預訂量低於去年的特殊比較期，但與 2019 年和 2020 年第三季度相比仍顯示出出色的增長。

Our backlog increased sequentially and continues to hover close to the all-time high achieved earlier this year. Material cost inflation, while still evident in the third quarter, was less impactful than it had been earlier in the year, and the margin in backlog continued to improve. As we look forward to the fourth quarter and into early 2023, we expect the company's financial results to continue to improve as the supply chain constraints we've been experiencing for the past several quarters eventually abate. The timing of the anticipated improvement in supply chain performance remains uncertain as new delays and shortages seem to appear as quickly as the older ones are resolved.

我們的積壓訂單依次增加，並繼續徘徊在今年早些時候達到的歷史最高水平附近。材料成本通脹雖然在第三季度仍然很明顯，但影響不如今年早些時候，積壓訂單的利潤率繼續提高。展望第四季度和 2023 年初，我們預計公司的財務業績將繼續改善，因為我們在過去幾個季度遇到的供應鏈限制最終會減輕。供應鏈績效預期改善的時間點仍然不確定，因為新的延誤和短缺似乎與舊問題得到解決一樣迅速出現。

The increasingly critical shortage of skilled labor is expected to persist. We will continue to mitigate this to the greatest extent possible by strengthening our employee retention programs and accelerating investments in production process automation. So while we expect supply-side headwinds to persist in the short term, the ongoing strength of our markets, combined with our near-record backlog and healthy balance sheet, position us for continued profitable growth for the near future. We, therefore, remain optimistic about the company's prospects for the next several quarters.

熟練勞動力日益嚴重的短缺預計將持續存在。我們將繼續通過加強我們的員工保留計劃和加速對生產過程自動化的投資來最大程度地緩解這種情況。因此，雖然我們預計短期內供應方面的逆風將持續存在，但我們市場的持續強勁，加上我們接近創紀錄的積壓訂單和健康的資產負債表，使我們在不久的將來能夠實現持續的盈利增長。因此，我們對公司未來幾個季度的前景保持樂觀。

This concludes our prepared remarks. We're now ready to take your questions. So operator, please go ahead.

我們準備好的發言到此結束。我們現在準備好回答您的問題了。所以接線員，請繼續。

(Operator Instructions) Our first question comes from Chris Moore with CJS Securities.

（操作員說明）我們的第一個問題來自 CJS 證券公司的 Chris Moore。

I'm wondering is there any way that you can quantify or approximate the amount of incremental revenue you could have generated in Q3 without supply chain issues or with significantly lower supply chain challenges. And is any of that lost moving forward?

我想知道有沒有什麼方法可以量化或估算在沒有供應鏈問題或供應鏈挑戰明顯減少的情況下第三季度可能產生的增量收入。那些失去的東西會繼續前進嗎？

It's not loss moving forward, Chris. It'd be very difficult to quantify. We have close to USD30 million in our WIP. And again, any piece of that, there's a good chance that we could have had opportunities here. With supply chain support, we could have shipped a lot of that.

克里斯，這不是前進的損失。很難量化。我們的 WIP 中有近 3000 萬美元。再一次，無論是哪一部分，我們很有可能在這裡獲得機會。有了供應鏈的支持，我們本可以運送很多東西。

Got it. That's helpful. Maybe talk a little bit about the drivers of dealer inventories on the ag side. You had mentioned in Q2, with steel prices coming down, may have given some pause in purchasing while dealers made sure that lower-priced steel was fully priced in the equipment. What are you seeing on that front? And what are you seeing in terms of overall demand there?

知道了。這很有幫助。也許談談 ag 方面經銷商庫存的驅動因素。您在第二季度曾提到，隨著鋼材價格下跌，可能會暫停採購，同時經銷商確保低價鋼材在設備中得到充分定價。你在前面看到了什麼？您對那裡的總體需求有何看法？

The dealer orders for ag equipment stabilized during the quarter very nicely, Chris, and we haven't seen any further dealers attempting to reprice backlog. We did see some of that in Q2, as you referenced, we really didn't experience any of that in Q3 that was material to the company at all. I think what you're seeing right now on the ag side is just caution because backlogs are out so far. And I think dealers just -- they don't have to order now because they can't get the equipment. So I think it's just what Rick Raborn likes to refer to as backlog fatigue, which I think is a very adequate description of what's going on.

克里斯，本季度經銷商的 ag 設備訂單非常穩定，我們還沒有看到任何其他經銷商試圖重新定價積壓訂單。正如你所提到的，我們確實在第二季度看到了其中的一些，我們在第三季度真的沒有經歷過任何對公司來說很重要的事情。我認為你現在在 ag 方面看到的只是謹慎，因為到目前為止積壓的工作已經完成。而且我認為經銷商只是 - 他們現在不必訂購，因為他們無法獲得設備。所以我認為這正是 Rick Raborn 喜歡稱之為積壓疲勞的東西，我認為這是對正在發生的事情的非常充分的描述。

One other thing to add to that, though, Chris, too, we may have seen steel prices come down on raw materials, but what we haven't seen our component parts that we purchase that have steel in that [actual] part itself, none of those prices have abated. They've stayed up high.

還有一件事要補充，雖然，克里斯，我們可能已經看到原材料的鋼材價格下降，但我們還沒有看到我們購買的零部件本身在 [實際] 部分中含有鋼材，這些價格都沒有降低。他們一直居高不下。

Yes, one other thing, we don't really have a preseason program we're in. We don't really have a preseason program on the ag side. Because the backlogs are so high, there wasn't a preseason program this year. That would normally drive orders up this time of year.

是的，還有一件事，我們並沒有真正的季前賽計劃。我們在 ag 方面並沒有真正的季前賽計劃。因為積壓太多，所以今年沒有季前賽計劃。這通常會推動每年這個時候的訂單增加。

Got it. That's helpful. And maybe just last one for me. I think you talked about 12% operating margins, a medium-term goal. Now that Q3 is done, you're a month into Q4, any updated thoughts in terms of 12% visibility, timing? Is that a 2024 target at this point in time? Just any thoughts there?

知道了。這很有幫助。也許對我來說只是最後一個。我想你談到了 12% 的營業利潤率，這是一個中期目標。現在第三季度已經完成，第四季度已經過去一個月了，關於 12% 的可見度、時間安排有什麼更新的想法嗎？這是 2024 年的目標嗎？有什麼想法嗎？

Chris, it's Jeff. I think we can begin running at that late next year, at least that's my hope and expectation. Again, if these chassis situations start to improve in a meaningful pace, there is so much pent-up backlog in our Industrial division at really good pricing that I think we'll get there. Our Industrial division should be doing a lot better than it is. And as I made reference to, we actually had some chassis we were expecting to receive in the third quarter and also now coming in the fourth that have been deferred into 2023. So that will give us a nice upside in 2023, assuming they do come then. They'll come out of the plant sooner or later from our suppliers, I'm referring to, and we'll get a nice kit because the backlog in the Industrial division is very strong and very healthy at the moment.

克里斯，我是傑夫。我想我們可以在明年年底開始跑步，至少這是我的希望和期望。同樣，如果這些底盤情況開始以有意義的速度改善，那麼我們的工業部門就會以非常優惠的價格積壓大量積壓，我認為我們會到達那裡。我們的工業部門應該做得比現在好得多。正如我所提到的，我們實際上有一些底盤我們預計在第三季度收到，現在也將在第四季度收到，但已推遲到 2023 年。因此，如果他們真的來了，這將給我們在 2023 年帶來不錯的好處然後。他們遲早會從我們的供應商那裡出來，我指的是，我們會得到一個很好的工具包，因為目前工業部門的積壓非常強勁而且非常健康。

And are you getting any -- from the chassis producers, have they talked at all about '23 at this point in time in terms of expectations?

你有沒有從底盤生產商那裡得到任何東西，他們是否在這個時間點談論過 23 年的期望？

Yes. At least our big chassis suppliers have. It's a tale of 2 cities. We have 2 primary chassis suppliers that we deal with, Chris. One is -- our bigger one has got very, very high reliability. In other words, we're getting what they tell us we're going to get, but not able to ramp up production enough to meet our needs. And our secondary supplier has been less reliable in just meeting what he's promised to give to us. That's the situation we face right now.

是的。至少我們的大型底盤供應商有。這是兩個城市的故事。克里斯，我們有 2 家主機架供應商。一個是 - 我們更大的一個具有非常非常高的可靠性。換句話說，我們得到了他們告訴我們將要得到的東西，但無法提高產量以滿足我們的需求。我們的二級供應商在滿足他承諾給我們的東西方面不太可靠。這就是我們現在面臨的情況。

And then lastly, a new problem arose in the quarter for the market, Isuzu trucks, who produce a lot of the smaller chassis we use on our sweepers, started to defer chassis into next year. So we're working our way through that. We have alternatives for those small sweepers. It doesn't shut us down by any means, but it just caused a bit more shuffling this quarter than what we were anticipating on our small sweepers.

最後，本季度市場出現了一個新問題，生產我們清掃車上使用的許多較小底盤的五十鈴卡車開始將底盤推遲到明年。所以我們正在努力解決這個問題。對於那些小型掃地機，我們有替代品。它並沒有以任何方式關閉我們，但它只是在本季度造成了比我們對小型清掃機的預期更多的洗牌。

Got it. All very helpful. I'll jump back in line.

知道了。一切都非常有幫助。我會跳回去排隊。

Our next question is with Greg Burns with Sidoti & Company.

我們的下一個問題是來自 Sidoti & Company 的 Greg Burns。

Thanks for all the color on the orders by product line. I just wanted to hopefully maybe get a little bit more detail there. Is it mainly a function of difficult comps from last year why you're seeing the declines? Or are you seeing a little slowdown in demand may be in specific areas?

感謝產品線訂單上的所有顏色。我只是希望能在那裡得到更多的細節。這主要是因為去年的困難比賽導致你看到下降的原因嗎？或者您是否看到特定領域的需求略有放緩？

Are you referring to the orders?

你指的是訂單嗎？

Yes, the order trends, the declines across the business that you're seeing, what are the main factors there? Is it the comps or is there other things going on?

是的，訂單趨勢，您所看到的整個業務的下降，那裡的主要因素是什麼？是比賽還是有其他事情發生？

There's a couple of things going on there. First of all, as I made reference to, if you look at our snow removal business, we had an extraordinary second quarter in bookings. That's the shift of timing because of the chassis lead times. And we've continued to take in an exceptional level of snow removal orders right now. So that business is in great shape with a record backlog.

那裡發生了幾件事。首先，正如我所提到的，如果你看看我們的除雪業務，我們第二季度的預訂量非常出色。這是由於底盤交貨時間而導致的時間變化。我們現在繼續接受大量的除雪訂單。因此，該業務狀況良好，積壓量創歷史新高。

The other one, though, if you look back into the third quarter of 2021, we had a huge order in flux in our forestry and tree care business. And we also had some timing of orders that were booked into our JD Edwards system as we converted the acquired Rayco company into JD Edwards. So we truly had some odd one-off things going on with the bookings in the third quarter of last year. But overall, all the businesses are in nice shape in the Industrial division. They're all trending up nicely on bookings, and that pace has continued up until today as far as I can tell.

另一方面，如果你回顧 2021 年第三季度，我們的林業和樹木護理業務有大量訂單在不斷變化。當我們將收購的 Rayco 公司轉換為 JD Edwards 時，我們也有一些訂單時間安排在我們的 JD Edwards 系統中。因此，去年第三季度的預訂確實發生了一些奇怪的一次性事情。但總的來說，工業部門的所有業務都狀況良好。他們的預訂量都呈上升趨勢，據我所知，這種速度一直持續到今天。

So beyond that, if you look back into Vegetation Management, again, forestries remain good and solid, at a very nice pace. Ag tipped down just a little bit. But as Dan said, that was a function of not having a preseason this year. So overall, we're in a very nice position in terms of bookings, and our markets remain really strong. The inquiry levels are good, and the order flow remains at a very nice pace. I'm very happy with that.

因此，除此之外，如果你回顧一下植被管理，你會再次發現，林業保持良好和穩固，而且發展速度非常快。 Ag 傾斜了一點點。但正如丹所說，這是今年沒有季前賽的結果。所以總的來說，我們在預訂方面處於非常有利的地位，我們的市場仍然非常強勁。詢價水平良好，訂單流保持在非常好的速度。我對此很滿意。

Our next question is with Mike Shlisky from D.A. Davidson.

我們的下一個問題是來自 D.A. 的 Mike Shlisky。戴維森。

A questions. And if I missed the last speaker asked these, feel free to have me go to the transcript later. I guess I wanted to ask firstly about seasonality in the fourth quarter. Since you bought Morbark a couple years back, I remember that was a fourth quarter. It was just a really weird situation on EBITDA because you had just made the purchase, if I recall correctly. And then pretty much since then, we've had a pandemic issue. So we haven't really seen, I feel like, a real fourth quarter yet that makes a lot of sense for what the long-term outlook is. Just give us a sense as to what's the seasonality look like in 4Q versus 3Q going forward? And might we see that happening from an earnings standpoint this particular fourth quarter?

一道題。如果我錯過了最後一位發言者提出的這些問題，請隨時讓我稍後查看筆錄。我想我想先問一下第四季度的季節性。自從幾年前你買了 Morbark，我記得那是第四季度。如果我沒記錯的話，這只是 EBITDA 的一個非常奇怪的情況，因為你剛剛進行了購買。然後幾乎從那時起，我們就遇到了大流行病問題。因此，我覺得我們還沒有真正看到真正的第四季度，但這對長期前景很有意義。只是讓我們了解第四季度和第三季度的季節性情況如何？從這個特定的第四季度的收益角度來看，我們是否會看到這種情況發生？

I think the seasonality is getting shaken out of the business to a large extent, Mike, by the backlog in forestry. Yes, normally, the fourth quarter would be a little softer in forestry, but I'm not expecting that right now at all. In fact, it's looking like it's shaping up to be a pretty nice quarter in that business. But you're right, in a typical year, without all the noise in the supply chain and the backlog, fourth quarter would be just a little bit softer than the third.

邁克，我認為由於林業積壓，季節性在很大程度上正在從業務中擺脫出來。是的，通常情況下，第四季度林業會稍微疲軟一些，但我現在根本沒想到會這樣。事實上，它看起來正在成為該行業一個相當不錯的季度。但你是對的，在典型的一年中，如果沒有供應鏈中的所有噪音和積壓，第四季度會比第三季度略微疲軟。

And so is that a forestry comment, or is that -- I was talking about more like a company-wide discussion of how earnings might shape out?

那是林業評論，還是——我說的更像是全公司範圍內關於收益可能如何形成的討論？

I'm sorry. I thought you were referring that specifically to forestry. I think the seasonality is largely out of the business at the moment. And the other thing that's -- I've talked to you about few times over the years, the snow removal normally can swing fourth quarter better or worse. Snow removal is in a very, very strong position right now. But like everything else, it's constrained by truck chassis. But the orders came earlier for this year, and I'm optimistic that we'll get a few of those orders out this year. And so the fourth quarter could be a little bit better because of that.

對不起。我以為你指的是專門針對林業的。我認為目前季節性在很大程度上是不可行的。另一件事是——這些年來我和你談過幾次，除雪通常會在第四季度左右擺動。除雪現在處於非常非常強大的位置。但與其他一切一樣，它受到卡車底盤的限制。但今年的訂單來得較早，我很樂觀地認為我們今年會收到其中一些訂單。因此，第四季度可能會好一點。

And as I said just a minute ago, forestry is holding up well, ag's just a little bit soft, but that's the preseason again doing that from my point of view. So I think we should have a pretty good fourth quarter by historic standards.

正如我剛才所說，林業表現良好，ag 只是有點疲軟，但從我的角度來看，這是季前賽再次這樣做。所以我認為按照歷史標準，我們應該有一個相當不錯的第四季度。

Mike, this is Richard. I think Q4 will be more consistent than what you've seen in the last 2 years. This would be a good barometer, I think.

邁克，這是理查德。我認為第四季度將比你在過去兩年中看到的更加一致。我認為這將是一個很好的晴雨表。

Great. I appreciate that color. And then I did want to comment -- question again about the ag lack of a preseason and what that means for next year. I guess, on the one hand, it's good news because, hey, you've got a great backlog already. There's no reason to add to it, I guess. Or everything else that has been ordered -- that could be ordered has been ordered. But I guess I'm curious, what does that mean for next spring's shipments. If a farmer needs something quickly, can you get it out? Or are you just like so booked up that you'll be hamstrung from new shipments in the first part of 2023?

偉大的。我很欣賞那種顏色。然後我確實想評論——再次質疑 ag 缺乏季前賽以及這對明年意味著什麼。我想，一方面，這是個好消息，因為，嘿，你已經有很多積壓工作了。我想沒有理由添加它。或者所有其他已經訂購的——可以訂購的都已經訂購了。但我想我很好奇，這對明年春季的發貨意味著什麼。如果一個農民急需什麼東西，你能把它拿出來嗎？還是您的預訂量如此之大，以至於您將在 2023 年上半年因新發貨而受阻？

Yes. No, I don't think we're going to be hamstrung, Mike. The issue we're dealing with on that side of the business right now is people more than supply chain, just getting enough people on board to get the work out the door. I made reference on the call, the Vegetation Management division, as a whole, had a bigger impact from labor than it did from material or from supply chain in the third quarter.

是的。不，我不認為我們會受到阻礙，邁克。我們現在在業務方面處理的問題是人而不是供應鏈，只是讓足夠多的人參與進來才能完成工作。我在電話會議上提到，植被管理部門作為一個整體，在第三季度對勞動力的影響大於對材料或供應鏈的影響。

A couple other things, too, Mike. The preseason program obviously starts like in July and usually goes through November, and it's a little [bit the] increase of a higher discount for them. That doesn't mean they also -- the Ag division also has an in-season program that they usually start in the springtime. And there's probably a good chance that they'll go ahead and do that [and step-up] as well. Those aren't as large of a discount or big of a discount as the preseason program.

邁克，還有其他一些事情。季前賽計劃顯然從 7 月開始，通常會持續到 11 月，而且對他們來說，這有點 [有點] 增加了更高的折扣。這並不意味著他們也一樣——Ag 部門也有他們通常在春季開始的季節性計劃。他們很有可能會繼續這樣做 [並加強]。這些折扣不像季前賽計劃那樣大或大。

So it's all going to depend on how they look at it and the orders that they consistently have now. If it stays up, then they'll probably just decide on way or the other how they're going to handle the in-season program.

所以這一切都將取決於他們如何看待它以及他們現在一貫擁有的訂單。如果它持續存在，那麼他們可能會決定如何處理季中計劃。

Got it. I also wanted to follow up on one of Chris's questions from earlier about pricing and what's in the backlog here. I guess with steel prices coming down and other prices like aluminum coming down a bit over the last few months, do you have to adjust any pricing in your backlog down because of previously announced surcharges [as those] come off for next year? And is that a margin headwind for next year in any way?

知道了。我還想跟進 Chris 之前提出的一個關於定價的問題以及此處積壓的內容。我想隨著過去幾個月鋼鐵價格和鋁等其他價格的下跌，您是否需要調整積壓訂單中的任何定價，因為之前宣布的附加費將於明年取消？這對明年的利潤率不利嗎？

I think it's a little too soon to tell, Mike. As I said, we didn't have any of that in the third quarter to speak of with dealers trying to reprice an expectation of -- or realization of lower steel prices. So no, I don't think that's happened so far. Could it happen in the future? Well, I think if we head into a hard recession and dealers are looking to try to keep their balance sheets nice and lean, yes, that could potentially happen then. But no sign of it yet.

我認為現在下結論還為時過早，邁克。正如我所說，我們在第三季度沒有任何與試圖重新定價預期或實現較低鋼價的經銷商談論的內容。所以不，我認為到目前為止還沒有發生這種情況。將來會發生嗎？好吧，我認為，如果我們進入嚴重的經濟衰退，而經銷商正在努力保持資產負債表的良好和精簡，那麼是的，那可能會發生。但還沒有任何跡象。

Okay. And let me just squeeze one more in there, and it's about M&A. Jeff, I know you're always talking with various targets out there. I've been a little surprised as to the number of M&A deals happening in the sector over the last few months given broader market, but there is some activity out there. I'd be curious if you can tell us where some of your more larger deals stand right now or just the overall state of how targets are talking with you these days.

好的。讓我再擠一個進去，這是關於併購的。傑夫，我知道你總是在和各種各樣的目標交談。考慮到更廣泛的市場，我對過去幾個月該行業發生的併購交易數量感到有些驚訝，但確實有一些活動。我很好奇你是否能告訴我們你的一些更大的交易現在的進展情況，或者這些天目標公司與你交談的總體情況。

Well, there aren't many larger deals in the space where we're working at the moment, Mike. And as I've said, we're going to be disciplined about not wandering too far from our core with M&A at the moment. We're looking at some nice opportunities in Europe that we're working. The timing of those is still a little bit up in the air. But they're long term. We always chase prospects for a very long period of time as you know, Mike. We've talked to you about acquiring a (inaudible) company, I think, for a decade. So the market overall for M&A is probably good in some segments, but we're not invested in some of the areas of business where the deals are coming down.

好吧，邁克，我們目前工作的領域沒有多少大宗交易。正如我所說，我們將受到紀律處分，不要在併購方面偏離我們的核心太遠。我們正在歐洲尋找一些我們正在努力的好機會。這些的時機仍然有點懸而未決。但它們是長期的。正如你所知，邁克，我們總是在很長一段時間內追逐潛在客戶。十年來，我們已經與您討論過收購一家（聽不清）公司的問題。因此，併購的整體市場在某些領域可能不錯，但我們沒有投資於交易減少的某些業務領域。

All right. Well, that's great color.

好的。好吧，那是很棒的顏色。

(Operator Instructions) Our next question comes from Tim Moore with EF Hutton.

（操作員說明）我們的下一個問題來自 Tim Moore 和 EF Hutton。

And I have several questions for Jeff and Richard. First, for the Industrial segment. Do you have a rough estimate of the margin drag from under-absorption in the September quarter? Is it something like 100, 150 basis points drag on gross margin? And the other part of that question is, as of today, I'm just wondering if you've achieved positive net price realization to cover your cost inflation, including freight surcharges enacted.

我有幾個問題要問 Jeff 和 Richard。首先，對於工業部門。您是否粗略估計了 9 月季度吸收不足對利潤率的拖累？毛利率會拖累 100、150 個基點嗎？這個問題的另一部分是，截至今天，我只是想知道您是否實現了正的淨價實現以彌補您的成本膨脹，包括已製定的運費附加費。

Yes, on the second one first, both our divisions are pretty aggressive about doing that. If we're getting the surcharges, as we've stated before on the freight, we're doing everything we can to pass that back on to the customer. They understand that. But I think that the key with that -- handling those increases that we're getting is staying consistent with our customers. They know it, they see it, and we tell them about it, and they're aware of it, and they're accepting it.

是的，首先是第二個，我們兩個部門都非常積極地這樣做。如果我們要收取附加費，正如我們之前在運費上所說的那樣，我們會盡一切努力將其轉嫁給客戶。他們明白這一點。但我認為，處理我們所獲得的這些增長的關鍵是與我們的客戶保持一致。他們知道，他們看到，我們告訴他們，他們知道，他們正在接受。

But I think, as Jeff mentioned earlier, I think the piece that we're probably most concerned about is, yes, if some of these additional costs are coming down, we have to do what we can to help protect that backlog and not have to reprice anything that we have. There may be chances if we do get some savings from -- not as much -- not as high inbound as high inbound freight and things of that nature, we could drop the surcharge. As long as the surcharges get dropped off of our bills, then we're more than willing to accommodate the customer on that.

但我認為，正如 Jeff 之前提到的，我認為我們最關心的可能是，是的，如果這些額外成本中的一些正在下降，我們必須盡我們所能來幫助保護積壓工作而不是重新定價我們擁有的任何東西。如果我們確實從高入境運費和類似性質的東西中獲得一些節省——不是那麼多——而不是那麼高，我們可能會降低附加費。只要附加費從我們的賬單中扣除，我們就非常願意為客戶提供便利。

And Tim, I'll give you a little bit different color on that. The actual gross margin, one, as we track it, which is material plus labor [and standard] went higher as I expect and continue to expect will happen. So the decline that we're seeing in operating margin is all a function of the inefficiencies on the shop floor and under-absorption, which in this division was several million dollars during the quarter.

蒂姆，我會給你一些不同的顏色。實際毛利率，一，正如我們跟踪的那樣，即材料加勞動力 [和標準] 如我預期並繼續預期會發生的那樣更高。因此，我們看到的營業利潤率下降完全是車間效率低下和吸收不足的結果，本季度該部門的吸收率為數百萬美元。

Yes. I was going to get back to your first question, and I'm glad Jeff jumped in, that is really tough because when we have that increase in WIP like we are, we're starting and stopping a tremendous amount, and it probably cost us USD3 million, USD4 million in the quarter of under-absorption.

是的。我正要回到你的第一個問題，我很高興 Jeff 插了進來，這真的很難，因為當我們像現在這樣增加 WIP 時，我們開始和停止了大量的工作，這可能會花費我們 300 萬美元，吸收不足的季度為 400 萬美元。

Got you. That's helpful color. That's very helpful color. And yes, I think investors understand that's more of a Industrial segment issue and then you have the labor on the Vegetation side. Another question I had was, can you provide your plan and timing to possibly assemble more products in Europe than to incur expensive transportation costs to ship them there from the U.S.? Could something like that -- leasing a plant or ramping up a bit more on European production start late next year?

明白了這是有用的顏色。這是非常有用的顏色。是的，我認為投資者明白這更多是一個工業部門的問題，然後你在植被方面有勞動力。我的另一個問題是，您能否提供您的計劃和時間安排，以可能在歐洲組裝更多產品，而不是承擔昂貴的運輸成本，將它們從美國運到那裡？明年晚些時候會不會有這樣的事情——租賃工廠或提高歐洲產量？

Yes. We just started or just completed a policy to do a little bit more make-in-market on that right now. So we're really planning on try to kick that off in the next year because it's terrible to try to move any product from one location here in the States over in Europe and vice versa. You're not going to get any margin out of this. And if we do a tremendous amount of work just getting a product over there to one of our locations, and they can't make any profit on it. So yes, make-in-market is a big deal for us. And again, we just finished our policy up, and we're just getting kicked off on that here at the end of this year.

是的。我們剛剛開始或剛剛完成一項政策，現在就做更多的市場製造。所以我們真的計劃在明年開始嘗試，因為嘗試將任何產品從美國的一個地方轉移到歐洲是很糟糕的，反之亦然。你不會從中獲得任何利潤。如果我們做了大量的工作只是將產品送到我們的一個地點，他們就無法從中獲利。所以是的，市場製造對我們來說是一件大事。再一次，我們剛剛完成了我們的政策，今年年底我們才剛剛開始。

And Tim, a little bit more color on that. Most of our material flows intercompany flow from Europe to North America, not the other way around. So that's the direction of the flow right now. We hope and expect to reverse that. We're anticipating doing an expansion of our Salford Priors facility late next year, which will give us more production capacity in the U.K. and a little bit more in France, although in France, it's a little bit more modest in terms of our expansion plans.

蒂姆，在這上面多了一點色彩。我們公司間的大部分物料流從歐洲流向北美，而不是相反。這就是現在的流程方向。我們希望並期望扭轉這一局面。我們預計在明年晚些時候擴建我們的 Salford Priors 工廠，這將使我們在英國和法國的產能增加一點，儘管在法國，我們的擴張計劃要溫和一些.

Beyond that, we've just completed an expansion of our facility in Santa Izabel in Brazil to allow us to increase our local production of forestry products there. We've got a very active and growing business in that segment, and that's one where it's very difficult to import from North America into Brazil. So once that production really ramps up, and we are a local manufacturer, we're in a very strong position.

除此之外，我們剛剛完成了對巴西 Santa Izabel 工廠的擴建，使我們能夠增加當地的林業產品產量。我們在該領域擁有非常活躍且不斷增長的業務，而這是很難從北美進口到巴西的業務。因此，一旦產量真正提高，並且我們是本地製造商，我們就處於非常有利的地位。

That's helpful. Thanks for giving details on that, and that's something that obviously will help the margin improve when that gets rolling more. Richard, a question about free cash flow. It appeared a little low in the quarter. I know that you often might have a seasonal working capital reduction from receivables collections in the very late summer that helps free cash flow. I grasped that the inventories WIP is still high, and that makes sense. You have to go back to the final assembly stages. But did receivables reduction maybe shift out to October? And I'm just wondering, do you expect pretty strong free cash flow in the fourth quarter?

這很有幫助。感謝您提供詳細信息，這顯然會在滾動更多時幫助提高利潤率。理查德，關於自由現金流的問題。該季度似乎有點低。我知道您經常可能會在夏末的應收賬款中減少季節性營運資金，這有助於自由現金流。我意識到庫存 WIP 仍然很高，這是有道理的。你必須回到最後的組裝階段。但應收賬款減少可能會轉移到 10 月份嗎？我只是想知道，您是否預計第四季度會有相當強勁的自由現金流？

We'll have it, Tim, definitely through October because a lot of preseason gets paid off basically almost through that timeframe. It will drag a little bit into November. But overall, I think our DSOs are in great shape in both divisions. And as I said earlier, we're extremely pleased with the collection process. I think outside the Ag business, when you look at the Industrial pieces here, their collections are staying pretty strong and steady as well. I think our bump in collections is heavier, as I mentioned, basically in August, September and October because that's when a lot of the preseason programs from last year come due from -- in the Ag division.

蒂姆，我們肯定會堅持到 10 月，因為很多季前賽幾乎都在那個時間段內得到了回報。它將稍微拖到 11 月。但總的來說，我認為我們的 DSO 在兩個部門都處於良好狀態。正如我之前所說，我們對收集過程非常滿意。我認為在 Ag 業務之外，當你看這裡的工業產品時，他們的系列也保持相當強勁和穩定。正如我所提到的，我認為我們的收藏量增加更大，基本上是在 8 月、9 月和 10 月，因為那時很多去年的季前賽計劃都來自 Ag 部門。

And Tim, Jeff. One more thing I'd add to that. I mentioned in the script for the call that our governmental mowing business in North America is very active at the moment, very high backlogs, high orders. A good chunk of that business is scheduled to ship in the fourth quarter. So if you look at the increase in inventory that we've experienced since the start of the year, approximately 1/3 of that in monetary value is tractors to support the growth of that particular part of our business. And as I said, a good chunk of that work is scheduled to ship in the fourth quarter, and we have the tractors in our hands. They're parked 100 feet from where I'm sitting right now. So assuming all goes well, we should see a nice reduction in inventory in the fourth quarter that will help us with our cash flow.

還有蒂姆，傑夫。我還要補充一件事。我在電話腳本中提到，我們在北美的政府割草業務目前非常活躍，積壓量很大，訂單量很大。該業務的很大一部分計劃在第四季度發貨。因此，如果你看看我們自今年年初以來經歷的庫存增加，大約 1/3 的貨幣價值是拖拉機，以支持我們業務特定部分的增長。正如我所說，大部分工作計劃在第四季度交付，我們手中有拖拉機。他們停在離我現在坐的地方 100 英尺的地方。因此，假設一切順利，我們應該會在第四季度看到庫存大幅減少，這將有助於我們的現金流。

That's terrific. That's really great to hear. And yes, I'm modeling a pretty strong free cash flow for the fourth quarter. Can you give any maybe update on electrification and hybrids innovation? Is there anything compelling coming out in the pipeline next year that might launch by summer?

真了不起。這真是太好了。是的，我正在為第四季度建立一個相當強勁的自由現金流模型。您能否提供有關電氣化和混合動力創新的最新信息？明年有什麼引人注目的產品可能會在夏季推出嗎？

There are some very interesting things going on, Chris. I made reference to the call that we probably could have done a little bit better in our Industrial division in this quarter, but we've been ramping up the investment in electrification, which is keeping our expenses a little bit more elevated than would normally be the case. We're intending to launch several new products that are electrified versions of our current products at the CONEXPO in March of next year. Those are well advanced. We've set up a technology center down in Huntsville, Alabama, to produce them, and we just made a check on them last week, and we're on schedule for that.

克里斯，發生了一些非常有趣的事情。我提到了本季度我們的工業部門可能做得更好一些的呼籲，但我們一直在加大對電氣化的投資，這使我們的支出比正常情況下要高一些案子。我們打算在明年 3 月的 CONEXPO 上推出幾款新產品，它們是我們當前產品的電氣化版本。那些已經很先進了。我們已經在阿拉巴馬州的亨茨維爾建立了一個技術中心來生產它們，我們上周剛剛對它們進行了檢查，我們正在按計劃進行。

We just launched a hybrid wood chipper in the U.K. under our Timberwolf brand, which is a very interesting product that utilizes a 28-horsepower diesel engine, combined with large storage capacity capacitors that allow the power to surge up over 60 horsepower under peak load. So a very interesting product that's been very warmly received by the market so far. So yes, we have quite a bit going on there. And I think next March's CONEXPO should be exciting. I hope you can attend.

我們剛剛在英國以我們的 Timberwolf 品牌推出了一款混合木材削片機，這是一款非常有趣的產品，它採用 28 馬力的柴油發動機，結合大容量電容器，可以讓功率在峰值負載下飆升超過 60 馬力。這是一款非常有趣的產品，迄今為止受到了市場的熱烈歡迎。所以是的，我們在那裡進行了很多工作。我認為明年三月的 CONEXPO 應該會令人興奮。我希望你能參加。

That's terrific. I just have one last question. And I was just looking at the geographic sales in the 10-Q, and I realize snow removal was strong in the quarter. Was there anything else driving the very large growth of maybe 50% to 60% in Canada or Australia? I know that Australia is off a low year-ago small base, but anything else going on there with penetration or launches or new customer wins?

真了不起。我只有最後一個問題。我只是在看 10-Q 的地理銷售額，我意識到本季度的除雪工作很強勁。是否還有其他因素推動加拿大或澳大利亞實現 50% 至 60% 的大幅增長？我知道澳大利亞的基數比一年前低，但還有其他滲透或推出或贏得新客戶的事情嗎？

It's mainly our Canadian snow removal business, Tenco. We opened several new upfitting centers across Canada last year. Those are now loaded. We typically look to produce 100 trucks a year at each one of those centers. And obviously, that's also compounding our truck chassis problem because historically, we were a supplier of attachments for snowplows. And in recent years, we've changed our strategy to supply the complete product and deal directly with the end user, which in many cases, is either a governmental agency or a contractor that works for a governmental agency.

主要是我們加拿大的除雪業務，Tenco。去年，我們在加拿大開設了幾家新的裝修中心。這些現在已加載。我們通常希望每個中心每年生產 100 輛卡車。顯然，這也加劇了我們的卡車底盤問題，因為從歷史上看，我們是掃雪機附件的供應商。近年來，我們改變了戰略，提供完整的產品並直接與最終用戶打交道，在許多情況下，最終用戶要么是政府機構，要么是為政府機構工作的承包商。

That business has just shown explosive growth, and it came in the second quarter of this year. And again, we're starting to see some really exciting activity in the fourth quarter in that business. So that's the biggest single driver of what you're seeing.

該業務剛剛出現爆炸式增長，而且是在今年第二季度。再一次，我們開始在第四季度看到該業務的一些非常令人興奮的活動。所以這是你所看到的最大的單一驅動因素。

Again, I think just another point to that, too, is if you just think about the exchange rate and the currency dropping against the U.S. dollar, it would have been much higher than what's shown in the 10-Q.

同樣，我認為還有一點是，如果你只考慮匯率和貨幣對美元的匯率下跌，它會比 10-Q 中顯示的要高得多。

That's helpful. It's very impressive quarter. Well, that's it for my questions, Jeff and Richard.

這很有幫助。這是一個非常令人印象深刻的季度。好吧，傑夫和理查德，我的問題就這些了。

Thank you. There are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

謝謝你。目前沒有其他問題。我現在想將發言權交還給管理層以徵求結束意見。

Okay. Thank you very much. We thank you again for joining us today and look forward to speaking with you again on our fourth quarter and year-end 2022 call in February of next year. Thank you.

好的。非常感謝。我們再次感謝您今天加入我們，並期待在明年 2 月的第四季度和 2022 年底電話會議上再次與您交談。謝謝你。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。