Kennametal Inc (KMT) 2022 Q3 法說會逐字稿

Good morning, and welcome to the Kennametal Third Quarter Fiscal 2022 Earnings Call. (Operator Instructions) Please note, this event is being recorded.

早上好，歡迎參加 Kennametal 2022 財年第三季度財報電話會議。 （操作員說明）請注意，此事件正在記錄中。

I'd now like to turn the conference over to Kelly Boyer. Please go ahead.

我現在想把會議交給凱利博耶。請繼續。

Thank you, operator. Welcome, everyone, and thank you for joining us to review Kennametal's Third Quarter Fiscal 2022 Results. Yesterday evening, we issued our earnings press release and posted our presentation slides on our website. We will be referring to that slide deck throughout today's call. I'm Kelly Boyer, Vice President of Investor Relations. Joining me on the call today are Chris Rossi, President and Chief Executive Officer; and Damon Audia, Vice President and Chief Financial Officer. After Chris and Damon's prepared remarks, we will open the line for questions.

謝謝你，接線員。歡迎大家，並感謝您加入我們審查肯納金屬公司 2022 財年第三季度業績。昨天晚上，我們發布了我們的收益新聞稿，並在我們的網站上發布了我們的演示幻燈片。我們將在今天的電話會議中提到該幻燈片。我是投資者關係副總裁 Kelly Boyer。今天和我一起參加電話會議的是總裁兼首席執行官 Chris Rossi；以及副總裁兼首席財務官 Damon Audia。在 Chris 和 Damon 準備好發言後，我們將打開電話提問。

At this time, I would like to direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that constitute forward-looking statements, and as such, involve a number of assumptions, risks and uncertainties that could cause the company's actual results, performance or achievements to differ materially from those expressed in or implied by such statements. These risk factors and uncertainties are detailed in Kennametal's SEC plans. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliations to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and on our Form 8-K on our website.

此時，我想請您注意我們的前瞻性披露聲明。今天的討論包含構成前瞻性陳述的評論，因此涉及許多假設、風險和不確定性，可能導致公司的實際結果、業績或成就與此類陳述中表達或暗示的內容存在重大差異。這些風險因素和不確定性在 Kennametal 的 SEC 計劃中有詳細說明。此外，我們將在今天的電話會議上討論非 GAAP 財務措施。可以在幻燈片背面和我們網站上的 8-K 表格中找到我們認為最直接可比的 GAAP 財務指標的對賬。

And with that, I'll turn the call over to Chris.

有了這個，我會把電話轉給克里斯。

Thanks, Kelly. Good morning, everyone, and thanks for joining today's call. I'm going to start with an overview of the quarter, highlighting some key points on our continuing strong results despite the changing macroeconomic environment, followed by our expectations for Q4. Damon will then go over the Q3 financial results and Q4 outlook in more detail. And finally, I'll make some summary comments before opening the call for questions.

謝謝，凱利。大家早上好，感謝您加入今天的電話會議。我將從本季度的概述開始，強調儘管宏觀經濟環境不斷變化，我們仍將取得強勁業績的一些關鍵點，然後是我們對第四季度的預期。然後，達蒙將更詳細地介紹第三季度財務業績和第四季度展望。最後，在開始提問之前，我會做一些總結性評論。

Beginning on Slide 2 in the presentation deck, we posted strong operating leverage again this quarter as well as improving margins through the disciplined execution of our commercial and operational excellence initiatives. We delivered sales of $512 million, an increase of 8% organically year-over-year and 5% sequentially. This was slightly above our normal sequential trend despite continuing challenges in transportation, China, and stopping sales in Russia late in the quarter. By end market, the strongest year-over-year performance was in aerospace at 29% growth and energy at 25%, followed by earthworks at 13% and general engineering at 8%.

從演示文稿中的幻燈片 2 開始，我們在本季度再次發布了強大的運營槓桿，並通過嚴格執行我們的商業和卓越運營計劃來提高利潤率。我們實現了 5.12 億美元的銷售額，同比增長 8%，環比增長 5%。儘管運輸、中國和本季度末俄羅斯停止銷售仍面臨挑戰，但這仍略高於我們正常的連續趨勢。從終端市場來看，最強勁的同比表現是航空航天，增長 29%，能源增長 25%，其次是土方工程，增長 13%，通用工程增長 8%。

Transportation decreased by 7% year-over-year, however, was better than expected. All end markets increased sequentially. Transportation continues to be affected by supply chain challenges, most notably in China due to COVID-19-related lockdowns, as well as more recent disruptions due to the Ukraine conflict. We continue to believe underlying transportation demand remains strong, and as such, we expect that a recovery will follow the resolution of supply chain issues.

交通運輸同比下降 7%，但好於預期。所有終端市場均環比增長。運輸繼續受到供應鏈挑戰的影響，尤其是在中國，由於與 COVID-19 相關的封鎖，以及最近因烏克蘭衝突而造成的中斷。我們仍然認為潛在的運輸需求依然強勁，因此，我們預計供應鏈問題解決後將出現復甦。

On a regional basis, we saw a strong year-over-year growth of 15% in the Americas and 9% in EMEA. Asia Pacific declined at a rate of 4%. As was the case last quarter, outside of China, the rest of Asia Pacific performed well. Despite these challenges, our commercial and operational excellence initiatives drove strong operating leverage and improved margins. Adjusted EBITDA margin increased significantly by 300 basis points year-over-year to 18.3%. Adjusted operating expense as a percentage of sales declined by 160 basis points year-over-year to 20.7%, close to our target of 20%.

在區域範圍內，我們看到美洲地區同比強勁增長 15%，歐洲、中東和非洲地區增長 9%。亞太地區以 4% 的速度下降。與上個季度一樣，除中國以外，亞太地區其他地區表現良好。儘管存在這些挑戰，我們的商業和運營卓越計劃推動了強大的運營槓桿和提高了利潤率。調整後的 EBITDA 利潤率同比大幅增長 300 個基點至 18.3%。調整後的營業費用佔銷售額的百分比同比下降 160 個基點至 20.7%，接近我們 20% 的目標。

Adjusted EPS improved to $0.47 compared to $0.32 in the prior year quarter, and free operating cash flow was $13 million. We bought back $15 million of shares, reflecting the confidence we have in our strategy to drive growth and margin improvement over the long term. So in summary, Q3 was a solid quarter despite the significant and unexpected macroeconomic disruptions created by the Ukraine conflict, and the China COVID-19 lockdowns that transpired after the quarter began.

與去年同期的 0.32 美元相比，調整後的每股收益提高到 0.47 美元，自由經營現金流為 1300 萬美元。我們回購了 1500 萬美元的股票，這反映了我們對長期推動增長和利潤率提高的戰略充滿信心。因此，總而言之，儘管烏克蘭衝突造成了重大且出乎意料的宏觀經濟破壞，以及該季度開始後發生的中國 COVID-19 封鎖，但第三季度仍是一個穩健的季度。

Looking ahead to Q4, we believe the macroeconomic environment will remain dynamic and difficult to predict due to continuing supply chain issues, the effects of COVID-19 lockdowns in China, which have already significantly limited sales thus far in Q4, and the repercussions of the Ukraine conflict, especially in Europe. These disruptions are masking what would otherwise be strong revenue growth due to the strength of most of our end markets, particularly aerospace, energy and earthworks. Overall, we expect Q4 sales to be in the range of approximately flat to positive 3% year-over-year, including a negative effect of 3% from foreign exchange. We expect cost inflation to continue in Q4. However, our proactive pricing actions and productivity improvements are helping dampen the effect on margins. Damon will go into more detail on the outlook later in the presentation.

展望第四季度，我們認為，由於持續的供應鏈問題、中國 COVID-19 封鎖的影響（迄今為止，第四季度已顯著限制了銷售）以及疫情的影響，宏觀經濟環境將保持動態且難以預測。烏克蘭衝突，尤其是在歐洲。由於我們大多數終端市場的實力，尤其是航空航天、能源和土方工程，這些中斷正在掩蓋原本強勁的收入增長。總體而言，我們預計第四季度銷售額將同比增長約持平至正 3%，包括來自外彙的 3% 的負面影響。我們預計第四季度成本通脹將繼續。然而，我們積極的定價行動和生產力的提高正在幫助抑制對利潤率的影響。 Damon 將在演示文稿的後面部分詳細介紹前景。

Now let's turn to Slide 3, where we have highlighted a wide range of recent wins that were made possible by leveraging our strengths in sales, application engineering and product innovation, as well as efficient and consistent manufacturing performance to drive higher levels of customer service. We posted another major win with an electric vehicle manufacturer. In this case, we provided a solution on an additional family of EV components, thus broadening our leadership position in the space. We also saw a share gain in wind energy by expanding into other turbine components, reflecting our ability to deliver innovative products for improving customer productivity.

現在讓我們轉向幻燈片 3，我們在幻燈片 3 中重點介紹了最近通過利用我們在銷售、應用工程和產品創新方面的優勢以及高效和一致的製造性能來推動更高水平的客戶服務而取得的一系列成功。我們發布了與電動汽車製造商的另一項重大勝利。在這種情況下，我們為額外的 EV 組件系列提供了解決方案，從而擴大了我們在該領域的領導地位。通過擴展到其他渦輪機組件，我們還看到了風能份額的增長，這反映了我們提供創新產品以提高客戶生產力的能力。

In mining, we won incremental share of lot with an existing customer after helping them drive productivity improvement in other areas of their business. In the energy space, a large oilfield services company selected us as a sole source supplier due to our ability to optimize the complex product design and consistently manufacture. And finally, in process industries, our expertise in additive manufacturing and material science allowed us to shorten lead times and provide greater design flexibility in flow control devices, which drives increased productivity for the customer. These wins give us confidence that our commercial and operational excellence initiatives will continue to drive growth, share gain, and improve margins as we demonstrated this quarter.

在採礦方面，在幫助現有客戶提高其他業務領域的生產力後，我們贏得了增量份額。在能源領域，一家大型油田服務公司選擇我們作為唯一來源供應商，因為我們有能力優化複雜的產品設計和持續製造。最後，在流程工業中，我們在增材製造和材料科學方面的專業知識使我們能夠縮短交貨時間並為流量控制設備提供更大的設計靈活性，從而提高客戶的生產力。這些勝利讓我們相信，我們的商業和卓越運營計劃將繼續推動增長、分享收益並提高利潤率，正如我們本季度所展示的那樣。

And with that, I'll turn the call over to Damon.

有了這個，我會把電話轉給 Damon。

Thank you, Chris, and good morning, everyone. I will begin on Slide 4 with a review of Q3 operating results on both the reported and adjusted basis. We posted strong results again this quarter. Sales increased by 6% year-over-year and 8% on an organic basis with business days contributing positive 2% and FX negative 4%. On a sequential basis, sales increased by 5%, slightly above the normal Q2 to Q3 seasonal trend despite worsening conditions in China due to COVID-19 lockdowns and the effects on our Shanghai distribution center and customers, as well as in EMEA, and the broader effects related to the Ukraine conflict.

謝謝你，克里斯，大家早上好。我將從幻燈片 4 開始，在報告和調整的基礎上審查第三季度的運營結果。我們本季度再次發布了強勁的業績。銷售額同比增長 6%，有機增長 8%，工作日貢獻正 2%，外匯負 4%。儘管由於 COVID-19 封鎖以及對我們上海配送中心和客戶以及歐洲、中東和非洲地區的影響，中國的情況惡化，但銷售額環比增長 5%，略高於正常的第二季度至第三季度的季節性趨勢。與烏克蘭衝突有關的更廣泛影響。

As Chris mentioned, we stopped selling in Russia towards the end of the quarter. The effect was not material in the quarter, but will reduce our sales by approximately $20 million on an annual basis. Adjusted gross profit margin increased 90 basis points sequentially and 110 basis points year-over-year to 32.7%. Adjusted operating expenses as a percentage of sales decreased 160 basis points year-over-year to 20.7%. Adjusted EBITDA margin was up significantly by 300 basis points to 18.3%. The strong year-over-year margin performance was mainly due to price, more than offsetting raw material increases, volume and associated absorption, partially offset by higher manufacturing costs, including COVID-19 absenteeism and higher depreciation.

正如克里斯所說，我們在本季度末停止了在俄羅斯的銷售。該季度的影響並不重大，但將使我們的銷售額每年減少約 2000 萬美元。調整後的毛利率環比增長 90 個基點，同比增長 110 個基點至 32.7%。調整後的營業費用佔銷售額的百分比同比下降 160 個基點至 20.7%。調整後的 EBITDA 利潤率大幅上升 300 個基點至 18.3%。強勁的同比利潤率表現主要是由於價格，不僅抵消了原材料增長、銷量和相關吸收，部分被更高的製造成本抵消，包括 COVID-19 缺勤和更高的折舊。

The adjusted effective tax rate in the quarter was 27.7%, in line with our outlook of 26% to 28%. We reported GAAP earnings per share of $0.42 versus $0.26 in the prior year period. On an adjusted basis, EPS was $0.47 versus $0.32 in the prior year. The main drivers of our improved adjusted EPS performance are highlighted on the bridge on Slide 5.

本季度調整後的有效稅率為 27.7%，符合我們 26% 至 28% 的預期。我們報告的 GAAP 每股收益為 0.42 美元，而去年同期為 0.26 美元。經調整後，每股收益為 0.47 美元，而去年為 0.32 美元。在幻燈片 5 的橋上突出顯示了我們改進的調整後 EPS 性能的主要驅動因素。

The effects from operations this quarter were $0.19, including approximately $0.03 of simplification/modernization carryover benefits. The factors contributing to the substantial improvement in EPS year-over-year are the same as the drivers of our strong margin performance this quarter that I just reviewed. The year-over-year quarterly EPS was negatively affected by $0.05 related to taxes and negative $0.02 due to currency.

本季度運營產生的影響為 0.19 美元，其中包括約 0.03 美元的簡化/現代化結轉收益。促成每股收益同比大幅改善的因素與我剛剛回顧的本季度強勁利潤率表現的驅動因素相同。與去年同期相比，季度每股收益受到與稅收相關的 0.05 美元和因貨幣影響為負 0.02 美元的負面影響。

Slide 6 and 7 detailed performance of our segments this quarter. Metal cutting sales increased 5% organically year-over-year versus flat in the prior year period. Currency was a negative 5% effect in the quarter and business days was a positive 2%. On a year-over-year basis, all end markets, excluding transportation, posted gains this quarter with aerospace continuing its strong momentum at 29%, general engineering at 10%, and energy at 9%. Although transportation declined by 7% year-over-year, it was better than expected. Sequentially, all end markets improved, including transportation.

幻燈片 6 和 7 本季度我們細分市場的詳細表現。金屬切削銷售額同比增長 5%，而去年同期持平。貨幣在本季度產生了 5% 的負面影響，工作日為 2% 的正面影響。與去年同期相比，除交通運輸外的所有終端市場本季度均錄得增長，其中航空航天繼續保持強勁勢頭，增長 29%，通用工程增長 10%，能源增長 9%。儘管運輸量同比下降 7%，但好於預期。隨後，所有終端市場都有所改善，包括交通運輸。

Regionally, the Americas led with year-over-year sales growth of 11%, followed by EMEA at 9%. Asia Pacific declined by 7%. Like last quarter, the decline was concentrated in China due to COVID-19 lockdowns, mainly affecting transportation and energy end markets. As Chris mentioned, we continue to believe underlying transportation demand remains strong. And as such, we expect that a recovery will follow the resolution of supply chain issues.

從地區來看，美洲地區銷售額同比增長 11%，其次是歐洲、中東和非洲地區，增幅為 9%。亞太地區下降了 7%。與上個季度一樣，由於 COVID-19 封鎖，下降主要集中在中國，主要影響運輸和能源終端市場。正如克里斯所說，我們仍然相信潛在的運輸需求仍然強勁。因此，我們預計供應鏈問題將在解決後出現復甦。

Adjusted operating margin increased 290 basis points to 11.1%. The increase was driven mainly by favorable pricing versus raw material increases and higher volume and associated absorption, partially offset by higher manufacturing costs, including COVID-19 absenteeism and higher depreciation. Our growth initiatives remain on track, and we are continuing our pricing actions to ensure we price for the value of our products and look to cover the inflationary pressures in the current environment. Operational excellence is also on track as we continue to drive productivity and leverage our modernized facilities.

調整後的營業利潤率增加 290 個基點至 11.1%。這一增長主要是由於有利的定價相對於原材料的增長以及更高的產量和相關吸收，部分被更高的製造成本所抵消，包括 COVID-19 缺勤和更高的折舊。我們的增長計劃仍在進行中，我們將繼續採取定價行動，以確保我們為產品的價值定價，並努力應對當前環境下的通脹壓力。隨著我們繼續提高生產力並利用我們的現代化設施，卓越運營也步入正軌。

Turning to Slide 7 for Infrastructure. Organic sales increased by 12% year-over-year versus a 3% decline in the prior year period. There was a positive effect of 1% due to business days and a negative effect of 1% due to currency. Regionally, the Americas continued its strong year-over-year growth at 20%, followed by EMEA at 13%. Asia Pacific was flat year-over-year. As in the first and second quarters of the fiscal year, the strength in the Americas was driven mainly by improvements in the U.S. oil and gas market as seen in the continued increase in the U.S. land-only rig count.

轉向幻燈片 7 了解基礎設施。有機銷售額同比增長 12%，而去年同期下降 3%。工作日產生了 1% 的正面影響，貨幣產生了 1% 的負面影響。從地區來看，美洲繼續保持強勁的同比增長 20%，其次是歐洲、中東和非洲地區，增長率為 13%。亞太地區同比持平。與本財年第一季度和第二季度一樣，美洲地區的強勁增長主要是由美國石油和天然氣市場的改善推動的，這一點從美國陸地鑽機數量的持續增長中可以看出。

By end market, energy was up 33% year-over-year. Earthworks was up 13% and general engineering was up slightly at 1% growth year-over-year. Sequentially, energy continued its strong growth followed by earthworks. Adjusted operating margin improved by 190 basis points year-over-year to 12%. This increase was mainly driven by price exceeding raw material cost increases in higher volume and associated absorption. As in the case of metal cutting, we remain on track with our commercial and operational excellence initiatives.

按終端市場，能源同比增長 33%。土方工程增長 13%，通用工程同比小幅增長 1%。隨後，能源繼續強勁增長，其次是土方工程。調整後的營業利潤率同比增長 190 個基點至 12%。這一增長主要是由於價格超過原材料成本的增加以及相關的吸收。與金屬切削一樣，我們的商業和運營卓越計劃仍然步入正軌。

Now turning to Slide 8 to review our balance sheet and free operating cash flow. We continue to maintain a strong liquidity position, healthy balance sheet and debt maturity profile. At quarter end, we had combined cash and revolver availability of $773 million and were well within our financial covenants. In dollar terms, primary working capital increased year-over-year and sequentially to $676 million due mainly to an increase in inventory, resulting from higher material costs, the unexpected decline in sales in China, as well as strategic decisions on safety stock due to continuing supply chain issues. On a percentage of sales basis, primary working capital was relatively flat sequentially at 31.2% and a significant decrease on a year-over-year basis. Net capital expenditures were $22 million, relatively flat year-over-year. We now expect fiscal year '22 capital expenditures to be approximately $105 million, slightly lower than previously forecast due to supply chain constraints with suppliers, longer lead times and COVID-19 absenteeism.

現在轉到幻燈片 8，查看我們的資產負債表和自由經營現金流。我們繼續保持強勁的流動性狀況、健康的資產負債表和債務到期狀況。在季度末，我們的現金和左輪手槍可用性合計為 7.73 億美元，完全符合我們的財務契約。以美元計算，主要營運資金同比增加，環比增加至 6.76 億美元，主要是由於材料成本上升導致庫存增加、在中國的銷售額意外下降以及安全庫存戰略決策導致持續的供應鏈問題。按銷售額百分比計算，主要營運資金環比持平，為 31.2%，同比顯著下降。淨資本支出為 2200 萬美元，同比持平。我們現在預計 22 財年的資本支出約為 1.05 億美元，略低於先前的預測，原因是供應商的供應鏈限制、交貨時間較長和 COVID-19 缺勤。

Our third quarter free operating cash flow was $13 million versus $47 million in the prior year quarter. The decrease in free operating cash flow is due to greater-than-expected increase in working capital, mainly inventory, reflecting the unexpected and rapid change in the external environment this quarter that I touched on a moment ago. We paid a dividend of $17 million in the quarter. And finally, we repurchased $15 million of shares during the quarter. Since inception of the program earlier this fiscal year, we have repurchased $50 million in shares as part of our $200 million program. The full balance sheet can be found on Slide 13 in the appendix.

我們第三季度的自由經營現金流為 1300 萬美元，而去年同期為 4700 萬美元。自由經營現金流的減少是由於營運資本（主要是存貨）的增長超出預期，反映了我剛才談到的本季度外部環境的意外和快速變化。我們在本季度支付了 1700 萬美元的股息。最後，我們在本季度回購了 1500 萬美元的股票。自本財年早些時候啟動該計劃以來，我們已經回購了 5000 萬美元的股票，作為我們 2 億美元計劃的一部分。完整的資產負債表可在附錄的幻燈片 13 中找到。

Now let's turn to Slide 9 to review the outlook for the fourth quarter. We expect sales to be in the range of $510 million to $530 million, which represents a year-over-year growth range of approximately flat to 3%. This outlook reflects recent market disruptions, including the broader effects of the Ukraine conflict on sales in Europe, and the elimination of sales in Russia. In addition, the outlook assumes limited China sales in April through mid-May due to the effect of COVID-19 lockdowns on our Shanghai distribution center and many of our customers. These disruptions and a continuing negative effect from foreign exchange are masking what would otherwise be a strong revenue growth, mainly in aerospace, energy and earthworks.

現在讓我們轉到幻燈片 9 來回顧第四季度的前景。我們預計銷售額將在 5.1 億美元至 5.3 億美元之間，同比增長約持平至 3%。這一前景反映了最近的市場混亂，包括烏克蘭衝突對歐洲銷售的更廣泛影響，以及俄羅斯銷售的取消。此外，由於 COVID-19 封鎖對我們的上海配送中心和我們的許多客戶的影響，該展望假設 4 月至 5 月中旬在中國的銷售額有限。這些中斷和外匯帶來的持續負面影響掩蓋了原本強勁的收入增長，主要是在航空航天、能源和土方工程領域。

On the cost side, as discussed on previous earnings calls, higher raw material costs as well as other inflationary headwinds continue. We expect to offset them through value-based pricing appropriate for this inflationary environment and productivity. Adjusted operating income is expected to be a minimum of $55 million. On a year-over-year basis, margins will be negatively affected by lower price, net raw favorability this quarter versus the prior year period and higher general inflation. However, it's important to note that sequentially margins will be relatively flat despite increasing inflationary cost. This is a solid result made possible by proactive value-based pricing and our focus on driving productivity through operational excellence.

在成本方面，正如之前的財報電話會議所討論的那樣，更高的原材料成本以及其他通脹阻力仍在繼續。我們希望通過適合這種通脹環境和生產力的基於價值的定價來抵消它們。調整後的營業收入預計至少為5500萬美元。與去年同期相比，利潤率將受到較低的價格、本季度與去年同期相比的淨原始偏好以及較高的總體通脹率的負面影響。然而，重要的是要注意，儘管通脹成本增加，但連續利潤率將相對持平。這是一個可靠的結果，這得益於積極的基於價值的定價以及我們專注於通過卓越運營來提高生產力。

On a full year basis, we expect depreciation and amortization to be approximately $135 million, increasing around $10 million year-over-year. Capital expenditures to be approximately $105 million and primary working capital as a percentage of sales to be approximately 31%. These assumptions together translate to free annual operating cash flow of approximately 75% of adjusted net income, below our long-term target of 100%, primarily due to higher working capital and lower-than-expected sales in China and Europe.

在全年的基礎上，我們預計折舊和攤銷約為 1.35 億美元，同比增加約 1000 萬美元。資本支出約為 1.05 億美元，主要營運資金佔銷售額的百分比約為 31%。這些假設共同轉化為大約 75% 的調整後淨收入的自由年度經營現金流，低於我們 100% 的長期目標，這主要是由於中國和歐洲的營運資金增加和低於預期的銷售額。

And with that, I'll turn the call back over to Chris.

有了這個，我會把電話轉回給克里斯。

Thanks, Damon. Turning to Slide 10, let me take a few minutes to summarize. We posted another solid quarter as demonstrated by our strong operating leverage and improving margins despite the rapidly changing macro environment. Our product innovations and commercial and operational excellence initiatives position us well to drive further share gains and improve margins. Our strong balance sheet and free operating cash flow give us flexibility to continue investing in our long-term strategic initiatives, while optimizing the balanced capital allocation strategy. Looking forward, underneath the recent market disruptions, we believe most of our end markets are performing well, particularly aerospace, energy and earthworks. Finally, we remain confident in our strategy and our ability to drive share gains and improve margins.

謝謝，達蒙。轉到幻燈片 10，讓我花幾分鐘時間來總結一下。儘管宏觀環境迅速變化，但我們強勁的經營槓桿和不斷提高的利潤率證明了我們又一個穩健的季度。我們的產品創新以及商業和運營卓越計劃使我們能夠很好地推動進一步的份額收益和提高利潤率。我們強大的資產負債表和自由經營現金流使我們能夠靈活地繼續投資於我們的長期戰略計劃，同時優化平衡的資本配置策略。展望未來，在近期市場動蕩的情況下，我們相信我們的大部分終端市場表現良好，尤其是航空航天、能源和土方工程。最後，我們對我們的戰略以及推動股票收益和提高利潤率的能力仍然充滿信心。

And with that, operator, please open the line for questions.

有了這個，接線員，請打開問題線。

(Operator Instructions) Our first question comes from Stephen Volkmann from Jefferies.

（操作員說明）我們的第一個問題來自 Jefferies 的 Stephen Volkmann。

Damon, I wonder if you could put a little sharper pencil on your comments around assuming continued interruptions around European demand due to Russia-Ukraine, your direct business in Russia and then China. How much do you think that is kind of a headwind in your fourth quarter thinking?

達蒙，我想知道你是否可以在你的評論中更尖銳一點，假設由於俄羅斯-烏克蘭、你在俄羅斯和中國的直接業務而導致歐洲需求持續中斷。你認為這對你第四季度的想法有多大的不利影響？

Yes, I think, Steve, good question. For us, as we talked about the direct sales for Russia are around $20 million annualized. So usually a little bit more second half weighted. So let's call that $5 million to 10 -- $5 million to $7 million of a sequential headwind. When we look at China, what we've seen and what we've been able to ship in April and our assumption that it will be limited through mid-May, I would tell you that, that's affected our sequential sales in the range of $10 million to $15 million. So those would be the ones that we're sort of quantifying. There's a little bit of an indirect in Europe as well related to things like supply chain challenges for automotive or smaller.

是的，我認為，史蒂夫，好問題。對我們來說，正如我們談到的那樣，俄羅斯的直接銷售額每年約為 2000 萬美元。所以通常下半年加權多一點。因此，讓我們稱其為 500 萬美元到 10 美元——500 萬美元到 700 萬美元的連續逆風。當我們看看中國時，我們所看到的和我們能夠在 4 月份發貨的產品以及我們假設它會在 5 月中旬之前受到限制，我會告訴你，這影響了我們在1000萬至1500萬美元。所以這些將是我們正在量化的那些。在歐洲也有一些間接因素，也與汽車或更小型汽車的供應鏈挑戰有關。

And then I think the other point that I would highlight is we talked on the FX. And if you think about FX sequentially from Q3 to Q4 and where the dollar is, we would estimate that's about $5 million to $7 million of a sequential headwind as well. So when you put it all together, I would say $20 million to $30 million of an effect relative to what we thought when we talked about 3 months ago.

然後我想我要強調的另一點是我們談到了 FX。如果你從第三季度到第四季度依次考慮外匯以及美元在哪裡，我們估計這也是連續逆風的 500 萬到 700 萬美元。因此，當你把它們放在一起時，我會說 2000 萬到 3000 萬美元的影響相對於我們 3 個月前討論時的想法。

Okay. Great. That's helpful.

好的。偉大的。這很有幫助。

Let me put this -- I think the consensus that we had talked about the last call was the fourth quarter somewhere around (inaudible). So that puts us right in the middle of where we thought we'd be when we started the quarter. And then the Russian and China lockdowns, obviously, we didn't anticipate that.

讓我這麼說吧——我認為我們關於上次電話會議的共識是在第四季度的某個地方（聽不清）。因此，這使我們處於本季度開始時的預期狀態。然後俄羅斯和中國的封鎖顯然是我們沒有預料到的。

Understood. And then as a follow-up, it seems like things are really starting to take off in energy, oil and gas and mining, etc. It's been a while since that's happened. Can you just remind us, I guess, I'm expecting that should be a strong positive mix for you in those end markets. But can you just comment on whether that's still the case and how we should think about that for '23?

明白了。然後作為後續行動，能源、石油和天然氣以及採礦等領域的事情似乎真的開始起飛了。這已經有一段時間了。你能提醒我們嗎，我猜，我預計在這些終端市場上這對你來說應該是一個強大的積極組合。但是您能否評論一下是否仍然如此，以及我們應該如何考慮 23 年的情況？

Yes. I think energy, and both energy and mining, energy in particular is certainly a positive mix for us. And mining is also, but more from the perspective, maybe not so much historically, Steve. Our mining adjacencies and some of the areas we're expanding into. As we're doing that, we're realizing our value proposition is pretty sound. And so we think that, that type of business could actually be more profitable than historical. So both of those, just in simple terms to answer your question would be a positive mix for us from a profitability perspective.

是的。我認為能源，尤其是能源和採礦，尤其是能源對我們來說肯定是一個積極的組合。採礦也是，但更多地從角度來看，也許不是歷史上那麼多，史蒂夫。我們的採礦鄰近地區和我們正在擴展的一些領域。當我們這樣做時，我們意識到我們的價值主張非常合理。所以我們認為，這種類型的業務實際上可能比歷史更有利可圖。因此，從盈利能力的角度來看，這兩者，簡單地說，回答你的問題對我們來說都是一個積極的組合。

The next question comes from Steven Fisher from UBS.

下一個問題來自瑞銀的 Steven Fisher。

Just -- when you add up the puts and takes, can you maybe just kind of at least directionally give us a little help on what you're assuming in Q4 for metal cutting versus infrastructure, I guess, organic growth and volumes?

只是 - 當你加起來看跌期權時，你能否至少在方向上給我們一點幫助，說明你在第四季度對金屬切削與基礎設施的假設，我猜是有機增長和銷量？

Yes, Steve, we don't really give any specifics by business unit. But I think if you look at the outlook we gave you in the sequential and you use the midpoint, right, it's going to be up modestly. I think what you can assume in knowing our business is we do see a sequential improvement in infrastructure from Q3 to Q4 related to the road construction season. And so again, I think what you'll be seeing is that is a natural increase there. I think everything else would sort of fit within that overall outlook that we gave you.

是的，史蒂夫，我們並沒有真正按業務部門提供任何細節。但我認為，如果你看一下我們在序列中給你的前景並且你使用中點，對，它會適度上漲。我認為您在了解我們的業務後可以假設的是，我們確實看到了與道路建設季節相關的基礎設施從第三季度到第四季度的連續改善。再說一次，我認為你會看到這是一個自然的增長。我認為其他一切都符合我們為您提供的總體前景。

Okay, and just to clarify the China comment, what have you assumed sort of for the second half of the quarter after mid-May?

好的，只是為了澄清中國的評論，你對 5 月中旬之後的第二季度有什麼假設？

Yes, so our assumption right now, as I mentioned on the call, or the prior conversation is that we've assumed about a $10 million to $15 million reduction in sales here in the first half of our -- of this fiscal fourth quarter versus the third quarter, we would expect that our warehouse would begin to open here in mid-May and our customers would reopen and we would start to resume sort of, I'll call it normalized sales. We don't expect any sort of recovery in the sales that we have lost here in the first half of this quarter related to the warehouse being down in the customers, but we've sort of assumed normal in the back half.

是的，所以我們現在的假設，正如我在電話會議上提到的那樣，或者之前的談話是，我們假設我們在第四財季上半年的銷售額減少了大約 1000 萬美元到 1500 萬美元。第三季度，我們預計我們的倉庫將在 5 月中旬開始在這裡開放，我們的客戶將重新開放，我們將開始恢復某種，我稱之為正常化銷售。我們預計本季度上半年損失的銷售額不會出現任何形式的複蘇，這與客戶倉庫減少有關，但我們在後半段假設正常。

Okay, normalizing, got it. And then just lastly, you mentioned that transportation was better-than-expected. Can you just kind of give us what your expectations were and maybe kind of what drove it better than you expected? Was that something operational internally? Or was it just the market -- your expectation for the market was just much worse, and then maybe you could just level set for Q4. Thank you.

好的，正則化，明白了。然後就在最後，你提到交通好於預期。你能不能告訴我們你的期望是什麼，也許是什麼讓它比你預期的更好？那是內部運作的東西嗎？或者只是市場——你對市場的預期要差得多，然後也許你可以為第四季度設定水平。謝謝你。

Yes, in terms of transportation, our expectation was that transportation actually would be flat sequentially, and it was a little bit stronger. And I think that's just reflective of the fact that, in general, the supply chain bottlenecks, they're still there for sure in transportation, but they started to recover better than we thought. And then our expectation for Q4 is that transportation will still -- still kind of remain flat. The good news is there's some signs that the chip issue is starting to resolve itself. Unfortunately, the war in Ukraine has caused some significant disruptions with wiring harnesses and stuff, and it's caused some shutdowns of production. But the car companies are clever and they're working through all that. But we think the right estimate for transportation Q3 to Q4 is still to be flat. And depending on how well they fix some of these things, there could be some upside to that.

是的，在運輸方面，我們的預期是運輸實際上會順序持平，並且會稍微強一些。而且我認為這只是反映了這樣一個事實，總的來說，供應鏈瓶頸在運輸中仍然存在，但它們開始恢復得比我們想像的要好。然後我們對第四季度的預期是運輸仍然 - 仍然保持平穩。好消息是有跡象表明芯片問題開始自行解決。不幸的是，烏克蘭的戰爭對線束和其他東西造成了一些嚴重的破壞，並導致了一些生產停工。但是汽車公司很聰明，他們正在努力解決所有這些問題。但我們認為對第三季度至第四季度交通運輸的正確估計仍然持平。根據他們修復其中一些問題的程度，可能會有一些好處。

Our next question comes from Julian Mitchell from Barclays.

我們的下一個問題來自巴克萊的 Julian Mitchell。

So just wanted to start off on the operating margin front. So as you said, I think your guidance implies operating margins year-on-year are down 140 bps or so with flattish sales. So just trying to understand -- is all of that decline sort of price net of cost? And then how do we think about that decline or that pressure on margins playing out beyond the current quarter when you look at sort of spot input costs and the price measures that you're pushing through, what impact does that have maybe looking out to September or December?

所以只是想從營業利潤率開始。正如你所說，我認為你的指導意味著營業利潤率同比下降 140 個基點左右，銷售額持平。所以只是想了解——所有這些下降都是扣除成本的價格嗎？然後，當您查看現貨投入成本和您正在推動的價格措施時，我們如何看待當前季度之後的利潤率下降或壓力，這可能會對 9 月產生什麼影響還是十二月？

Yes, Julian, I think in terms of the year-over-year difference, the big driver was the price raw favorability is less in the fourth quarter this year than it was last year and then general inflation, those are the 2 big drivers. And then I would say in terms of the reason that Damon emphasized the point that we maintained flat margins sequentially is because we -- we believe that our pricing actions which have been proactive, as you know, we've gone -- we've sort of been price positive, price raws throughout the year. And so that was part of our pricing strategy plus we're driving productivity. And we expect to, as we go through next year to do the same thing and make sure that our pricing actions are commensurate with the inflationary environment we have, and we'll continue to drive productivity, which is again, why we are emphasizing that keeping the margins flat in this environment actually was a positive and was a proactive action on our part.

是的，朱利安，我認為就同比差異而言，最大的驅動因素是今年第四季度的價格原始好感度低於去年，然後是總體通脹，這是兩大驅動因素。然後我想說的是，Damon 強調我們連續保持平穩利潤率這一點的原因是因為我們——我們相信我們的定價行動是積極主動的，正如你所知，我們已經走了——我們已經有點價格積極，全年價格原材料。所以這是我們定價策略的一部分，而且我們正在提高生產力。我們希望在明年做同樣的事情並確保我們的定價行為與我們所面臨的通貨膨脹環境相稱，我們將繼續提高生產力，這也是我們再次強調這一點的原因在這種環境下保持利潤率持平實際上是積極的，也是我們的積極行動。

I see, and then just from a sort of a year-on-year standpoint, do we think that this is the quarter of sort of maximum pressure year-on-year from price, cost and inflation and then it eases sort of gradually beyond this quarter?

我明白了，然後僅從同比的角度來看，我們是否認為這是價格、成本和通脹的同比最大壓力的季度，然後逐漸緩解本季度？

Well, I think, Julian, the answer is, when I think about the absolute delta in what we were positive price versus raws, if you remember, we were very positive in the first half of last -- of this fiscal quarter. And we've talked about the increasing cost continuing to flow into our P&L and then as we periodically priced, we see that improvement. But as I think about the first half of next year, we know these material costs and other inflationary costs are continuing to increase sequentially, which is what you're seeing in the quarter here. We know that will continue in the first half and it will continue to squeeze that price versus raw benefit we saw last year will be bigger last year than it will be in the forthcoming quarters here.

好吧，我認為，朱利安，答案是，當我考慮到我們對原始價格的正數的絕對增量時，如果你還記得的話，我們在本財季的上半期非常積極。我們已經談到不斷增加的成本繼續流入我們的損益表，然後隨著我們定期定價，我們看到了這種改善。但當我想到明年上半年時，我們知道這些材料成本和其他通脹成本將繼續連續增加，這就是你在本季度看到的情況。我們知道這將在上半年繼續，它將繼續擠壓我們去年看到的價格與原始收益相比，去年將比未來幾個季度更大。

Again, as Chris said, we're going to maintain our diligence on pricing for value and trying to make sure that we're doing our best to offset these inflationary costs and keeping margins flat in the fourth quarter is an example of our aggressiveness in looking to do that. But again, I think you got to remember what we had in the first half of last year, or this current year, and how we were significantly positive price versus raws. Thanks very much. And then my follow-up, Damon, maybe this is more one for you, just around working capital because I think that a lot of companies have complained about super strong revenues and demand putting upwards pressure on working capital and that's hurting cash flow. Now it seems the sales are falling a bit short and that's also putting upwards pressure on working capital and downwards pressure on free cash flow.

同樣，正如克里斯所說，我們將繼續盡職盡責地為價值定價，並努力確保我們正在盡最大努力抵消這些通脹成本，並在第四季度保持利潤率持平是我們積極進取的一個例子。想要這樣做。但同樣，我認為你必須記住我們在去年上半年或今年的情況，以及我們的價格與原始價格相比是如何顯著為正的。非常感謝。然後我的跟進，達蒙，也許這對你來說更重要，只是關於營運資金，因為我認為很多公司抱怨收入超強，需求給營運資金帶來上行壓力，這會損害現金流。現在看來，銷售額有點下降，這也給營運資金帶來了上行壓力，給自由現金流帶來了下行壓力。

So maybe help us understand sort of from here, how that plays out and your inventories I think close to a high 20% share of revenue. How long does it take for those to get back to that low 20s historical rate? Yes, I think, Julian, for us here is if you look in the quarter, our inventory went up just around $30 million from Q2 to Q3, and our working capital as a percentage of sales is right around 31%. And as I said, on the scripted portion, we would expect that to sort of be there at fiscal year-end is right around 31%. But if I think about what happened this quarter, there was a couple of things.

所以也許可以幫助我們從這裡了解一下，它是如何發揮作用的，我認為你的庫存接近 20% 的收入份額。那些人需要多長時間才能恢復到 20 年代的歷史低點？是的，朱利安，對我們來說，如果你看一下這個季度，我們的庫存從第二季度到第三季度只增加了大約 3000 萬美元，我們的營運資金佔銷售額的百分比約為 31%。正如我所說，在腳本部分，我們預計在財政年度結束時會有大約 31%。但是，如果我考慮本季度發生的事情，就會發現有幾件事。

And in our inventory, our finished goods, a lot of that is ordered and shipped very quickly. So we always talked about having the right inventory to ship. And with what's happened here in Russia and China, we have built that inventory that's now sitting in our finished goods and looking for alternative homes for that. But in addition to that, as these material costs have continued to increase through the quarter, that's increased the overall value of our inventory. And as we look at where tungsten prices are right now, we know that we'll continue to increase the value of the inventory as we move into the fourth quarter as well. So those are probably 2 of the biggest drivers influencing the overall working capital.

在我們的庫存中，我們的成品中，很多都是很快訂購和發貨的。所以我們一直在談論擁有合適的庫存來運送。隨著俄羅斯和中國發生的事情，我們已經建立了現在存放在我們成品中的庫存，並為此尋找替代家園。但除此之外，由於這些材料成本在本季度持續增加，這增加了我們庫存的整體價值。當我們查看鎢價目前的位置時，我們知道隨著我們進入第四季度，我們將繼續增加庫存的價值。因此，這些可能是影響整體營運資金的兩個最大驅動因素。

The third one, and as we've said this before, we are being very careful to run our operations and we made some decisions to strategically add some inventory for certain materials here in the third quarter, and that was probably the third component. Our goal is to try to get closer to this 30% of sales. But again, a lot is going to depend on that top line as we need to continue to see the markets continue to recover. But we think 31%, or around 31% for the fourth quarter and then sort of hopefully trending around that to lower to 30% as revenues continue to improve.

第三個，正如我們之前所說，我們非常謹慎地運營我們的業務，我們做出了一些決定，在第三季度戰略性地為某些材料增加一些庫存，這可能是第三個組成部分。我們的目標是盡量接近這 30% 的銷售額。但是，由於我們需要繼續看到市場繼續復甦，這在很大程度上將取決於這一頂線。但我們認為第四季度為 31%，即 31% 左右，然後隨著收入的持續改善，有望將其降低至 30%。

Julian, I would just add that the -- so Damon mentioned the sales that unexpectedly went away for the reasons we talked about. But operationally, what that means is since you already loaded the factories months in advance of that and we're producing that, that higher level, we are modernized and we are lean. But for a factory to make that kind of adjustment it's going to take several months to sort of work through that. So is the suddenness of the sales coming away that was a big driver in the inventory increase.

朱利安，我只想補充一點——所以達蒙提到了由於我們談到的原因而意外消失的銷售額。但在運營上，這意味著因為你已經提前幾個月裝載了工廠，我們正在生產更高的水平，我們是現代化的，我們是精益的。但是對於一家工廠來說，進行這種調整需要幾個月的時間才能完成。銷售的突然性也是庫存增加的主要驅動力。

The next question comes from Tami Zakaria from JPMorgan.

下一個問題來自摩根大通的 Tami Zakaria。

So my first question is on incrementals. Can you help us understand how to think about incrementals for the next fiscal? More specifically, if raws prices stay where they are, do you expect to realize sort of the normal incrementals in the full fiscal next year? Or how should we think about incrementals in the first half versus the back half?

所以我的第一個問題是關於增量的。您能幫助我們了解如何考慮下一個財政年度的增量嗎？更具體地說，如果原材料價格保持在原來的水平，您是否期望在明年的整個財政年度實現某種正常的增量？或者我們應該如何看待前半場與後半場的增量？

Yes, let me just make a couple of comments on the price versus raws. That's something that we have a long history of being able to stay ahead of. And so as we operate the business going forward, that's something we still expect, as Damon and I both said, we'll expect it to at least be neutral on price raws as we can going forward through our proactive pricing actions. And then I think, Tami, to think about in terms of the incrementals, we're in a higher inflationary environment than historically we've been in. I mean, all companies are experiencing that. And so I think the thing to keep in mind is that as we adjust price to offset these raw materials and higher general inflation, price is -- price becomes -- covering cost becomes a larger portion of our revenue. As we've said before, that doesn't lever. And what we need in the factories to lever is actually revenue that generates more pieces through the factories.

是的，讓我就價格與原料的關係發表一些評論。這是我們長期以來能夠保持領先地位的事情。因此，隨著我們繼續經營業務，正如達蒙和我都說過的那樣，我們仍然期望它至少對原始價格保持中立，因為我們可以通過積極的定價行動繼續前進。然後我認為，塔米，從增量的角度考慮，我們處於比歷史上更高的通脹環境中。我的意思是，所有公司都在經歷這種情況。所以我認為要記住的是，當我們調整價格以抵消這些原材料和更高的總體通脹時，價格是 - 價格變成 - 覆蓋成本成為我們收入的更大部分。正如我們之前所說，這沒有槓桿作用。而我們在工廠中需要利用的實際上是通過工廠產生更多收益的收入。

We spent a good portion on modernization. We've got these factories that are ready to perform, but they need more piece volume. So as you're doing your models, you've got to factor in that the more of our growth that comes from price covering -- covering costs, that's not going to lever. It's got to be the revenue portion that generates more -- more volume through the factories. Do you add anything to that, Damon?

我們在現代化上花費了很大一部分。我們已經有這些工廠準備好執行，但他們需要更多的件量。所以當你在做你的模型時，你必須考慮到我們更多的增長來自於價格覆蓋——覆蓋成本，這不會產生槓桿作用。必須是通過工廠產生更多——更多產量的收入部分。你有什麼補充嗎，達蒙？

I think the only other point I would add, Tami, especially in the first half of fiscal '23 and no different than what we've talked about here in Q4 of '24 is given the positive price versus raws and the very strong operating leverage we saw in the first half of this year. Again, when you adjust for those temporary cost actions that were in effect a year and a little bit over a year ago, our leverage in the first half of this year was very strong, which we alluded to being positive price versus raws. And so again, in any quarter, when you look at Q1 of '23, you have to factor that in as you think about the -- that quarter leverage year-over-year.

我認為我要補充的唯一一點，塔米，特別是在 23 財年上半年，與我們在 24 年第四季度討論的內容沒有什麼不同，因為價格相對於原材料價格為正以及非常強大的經營槓桿我們在今年上半年看到了。同樣，當您調整一年前和一年多前生效的臨時成本措施時，我們在今年上半年的槓桿作用非常強，我們暗示這是對原材料的正價格。同樣，在任何季度，當您查看 23 年第一季度時，您必須在考慮該季度槓桿率時將其考慮在內。

The next question comes from Dillon Cumming from Morgan Stanley.

下一個問題來自摩根士丹利的狄龍卡明。

Great. Maybe if I can stick on the line of questioning on '23 for a second, ex transportation still feels like the both of your end markets are still an improvement sequentially into the fiscal fourth quarter. I was hoping you get some normalization in China potentially Europe over the next few months. But sitting here today, are you kind of able to underwrite '23 as a growth year from a year-over-year volume perspective? I know Chris, you still kind of alluded to the incremental contribution from pricing, so would be more curious from a volume perspective. What your view is going into next year?

偉大的。也許如果我能在 23 年繼續提問，前運輸仍然感覺你們的兩個終端市場在第四財季的順序上仍然有所改善。我希望在接下來的幾個月裡，中國可能會在歐洲實現一些正常化。但是今天坐在這裡，從同比銷量的角度來看，您是否能夠將 23 年視為增長年？我知道克里斯，你仍然提到定價的增量貢獻，所以從數量的角度來看會更好奇。你對明年的看法是什麼？

Yes, I think we're obviously not giving our FY '23 guidance, but just a little color on transportation, for example. We think that the demand pattern is still strong there. There's a lot of pent-up demand. And so the supply chain issues, the fact that they've gotten worse here because of the Ukraine and a little bit on COVID in China, those will eventually rectify themselves. So we feel good that transportation still has runway ahead of it to grow. I don't see the energy situation and some of the mining improvements. I don't think those are short term. I think that's going to continue to trend in the right direction.

是的，我認為我們顯然沒有給出 23 財年的指導，例如，只是在交通上提供了一點顏色。我們認為那裡的需求格局仍然強勁。有很多被壓抑的需求。因此，供應鏈問題，由於烏克蘭和中國的一些新冠疫情，它們在這裡變得更糟的事實，這些最終都會自我糾正。因此，我們感覺良好的是，交通仍然有發展的跑道。我沒有看到能源狀況和一些採礦改進。我不認為這些是短期的。我認為這將繼續朝著正確的方向發展。

And then, transportation, excuse me, aerospace has not recovered to pre-pandemic levels. So I think we still feel pretty good about that growth trajectory there. And also general engineering, a portion of that is obviously affected by transportation. So that will -- that will improve as transportation improves. And if we look around the world, most of the prognosticators still have expanding PMIs and manufacturing indices. So we think there's the opportunity for growth -- for growth next year at this point.

然後，運輸，對不起，航空航天還沒有恢復到大流行前的水平。所以我認為我們仍然對那裡的增長軌跡感覺很好。還有一般工程，其中一部分顯然受到運輸的影響。所以這將——隨著交通的改善而改善。如果我們環顧世界，大多數預測者的 PMI 和製造業指數仍在擴大。所以我們認為有增長的機會——在這一點上明年增長。

Got it. Yes, that's a helpful color, thanks. And then maybe just my last one, a question on kind of customer inventory levels. I guess there's been some more conflicting reports in the channel with regards to customers potentially holding more inventory than needed, for the same reason I think Kennametal has been holding higher safety stock over the last few quarters here. And I think you've been clear in prior quarters that you've never really seen a restock. So I'm just kind of curious to get your view around that dynamic.

知道了。是的，這是一種有用的顏色，謝謝。然後也許只是我的最後一個問題，關於客戶庫存水平的問題。我想渠道中關於客戶可能持有比需要更多的庫存的一些更矛盾的報告，出於同樣的原因，我認為肯納金屬在過去幾個季度一直持有更高的安全庫存。而且我認為您在前幾個季度已經很清楚，您從未真正看到過補貨。所以我只是有點好奇地想了解你對這種動態的看法。

Yes, we -- I wouldn't call the -- we haven't seen a normal restocking that you would see one on, these types of businesses typically come out of a downturn. But we do see a general inventory build in some regions. But generally, as we've said before, there's still reservations on customers. They're being careful about how much of that inventory build happens. Obviously, those that are supporting things like medical, aerospace and process industries, which tend to be a little less cyclical and are growing, that's probably where that inventory build is being done to support it.

是的，我們 - 我不會稱之為 - 我們還沒有看到你會看到的正常補貨，這些類型的企業通常會從低迷中走出來。但我們確實看到一些地區的總體庫存增加。但總的來說，正如我們之前所說，仍然有客戶保留。他們對庫存增加的數量保持謹慎。顯然，那些支持醫療、航空航天和加工行業等行業的行業，這些行業的周期性往往不那麼週期性，而且正在增長，這可能就是為了支持它而建立庫存的地方。

And then I would say on the infrastructure side, the customer level -- customer inventory I'd say is sort of stable, and it's kind of normalized across markets based on the demand they see. So again, not the normal restocking you would see especially in metal cutting. But where there's positive growth trajectories that are pretty solid and long term like in medical and aerospace and some of the process industries, I think that's what's happening.

然後我會說在基礎設施方面，客戶級別 - 我會說客戶庫存有點穩定，並且根據他們看到的需求在整個市場中標準化。再說一次，不是你會看到的正常補貨，尤其是在金屬切削中。但是，在醫療、航空航天和一些加工行業等存在非常穩固和長期的積極增長軌蹟的地方，我認為這就是正在發生的事情。

There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Chris Rossi for any closing remarks.

隊列中沒有更多問題。我們的問答環節到此結束。我想把會議轉回給 Chris Rossi 做任何閉幕詞。

Thanks, operator, and thanks, everyone, for joining the call today. This quarter I think is another proof point that our strategic initiatives are working and we feel very good and confident in the investments that we've made as a company to modernize our factories and to demonstrate the return on those investments and the profitability improvements possible as we drive higher volumes through these factories. As always, we appreciate your interest and support, and please don't hesitate to reach out to Kelly if you have any questions. Have a great day. Thank you.

謝謝接線員，謝謝大家今天加入電話會議。我認為本季度是另一個證明我們的戰略舉措正在發揮作用的證據，我們對作為一家公司為實現工廠現代化所做的投資感到非常滿意和充滿信心，並展示了這些投資的回報和可能的盈利能力提升我們通過這些工廠提高產量。一如既往，我們感謝您的關注和支持，如果您有任何問題，請隨時與凱利聯繫。祝你有美好的一天。謝謝你。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。