(MSM) 2023 Q3 法說會逐字稿

Good morning, and welcome to the MSC Industrial Supply Fiscal 2023 Third Quarter Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Ryan Mills, Head of Investor Relations. Please go ahead.

早上好，歡迎參加 MSC 工業供應 2023 財年第三季度電話會議。 （操作員說明）請注意，正在記錄此事件。我現在想將會議交給投資者關係主管 Ryan Mills。請繼續。

Thank you, and good morning, everyone. I'm excited to have joined MSC just last week, and I look forward to getting to know each of you over the coming months. Welcome to our third quarter fiscal 2023 earnings call. Erik Gershwind, our Chief Executive Officer; and Kristen Actis-Grande, our Chief Financial Officer, are both on the call with me today. During today's call, we will refer to various financial and management data in the presentation slides that accompany our comments as well as our operational statistics, both of which can be found on our Investor Relations web page.

謝謝大家，大家早上好。我很高興上週加入 MSC，並期待在接下來的幾個月裡認識你們每一個人。歡迎參加我們的 2023 財年第三季度財報電話會議。埃里克·格甚溫德 (Erik Gershwind)，我們的首席執行官；我們的首席財務官 Kristen Actis-Grande 今天都與我通話。在今天的電話會議中，我們將參考演示幻燈片中的各種財務和管理數據以及我們的評論以及我們的運營統計數據，這兩者都可以在我們的投資者關係網頁上找到。

Let me reference our safe harbor statement, a summary of which is on Slide 2 of the accompanying presentation. Our comments on this call as well as the supplemental information we are providing on the website contain forward-looking statements within the meaning of the U.S. securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements. Information about these risks are noted in our earnings press release and our other SEC filings.

讓我參考一下我們的安全港聲明，其摘要位於隨附演示文稿的幻燈片 2 中。我們對本次電話會議的評論以及我們在網站上提供的補充信息包含美國證券法含義內的前瞻性陳述。這些前瞻性陳述涉及風險和不確定性，可能導致實際結果與這些陳述預期的結果存在重大差異。有關這些風險的信息已在我們的收益新聞稿和其他 SEC 文件中註明。

In addition, during this call, we may refer to certain adjusted financial results, which are non-GAAP measures. Please refer to the GAAP versus non-GAAP reconciliations in our presentations or on our website. which contain the reconciliations of the adjusted financial measures to the most directly comparable GAAP measures. I'll now turn the call over to Erik.

此外，在本次電話會議中，我們可能會參考某些調整後的財務業績，這些都是非公認會計原則衡量標準。請參閱我們的演示文稿或我們網站上的 GAAP 與非 GAAP 調節表。其中包含調整後的財務指標與最直接可比的公認會計準則指標的調節表。我現在將把電話轉給埃里克。

Thank you, Ryan. Good morning, everybody, and thanks for joining us today. On today's call, I'll begin with some perspective on our recent performance and our longer-term outlook. I'll then provide color on the current environment. Kristen will provide more specifics on our fiscal third quarter mission-critical accomplishments, our financial performance and updated expectations for the balance of the fiscal year. I'll then wrap things up before we open up the line for questions.

謝謝你，瑞安。大家早上好，感謝您今天加入我們。在今天的電話會議上，我將首先對我們近期的業績和長期前景發表一些看法。然後我將提供當前環境的顏色。克里斯汀將提供有關我們第三財季關鍵任務成就、財務業績以及對本財年剩餘時間的最新預期的更多細節。然後，在我們開始提問之前，我將總結一下事情。

Before I dig into our performance, though, I'd like to discuss 2 topics. The first is to welcome Ryan Mills, our new Head of Investor Relations who joined us earlier this month. He brings several years of investor relations and sell-side experience, including the coverage of MSC and our peers. We're thrilled to have Ryan on the MSC team as we continue striving to increase shareholder value. The second topic is the recent agreement with the Jacobson and Gershwind family to eliminate the company's high voting Class B shares. The details of the agreement and the associated shareholder benefits are outlined in the press release that we issued last week, and more information will be provided in a proxy statement that will be filed with the SEC later on this summer.

不過，在深入研究我們的表現之前，我想討論兩個主題。首先是歡迎本月早些時候加入我們的新任投資者關係主管 Ryan Mills。他帶來了多年的投資者關係和賣方經驗，包括 MSC 和我們同行的報導。我們很高興 Ryan 加入 MSC 團隊，我們將繼續努力提高股東價值。第二個話題是最近與 Jacobson 和 Gershwind 家族達成協議，取消公司高投票權的 B 類股票。我們上週發布的新聞稿中概述了該協議的細節和相關股東利益，更多信息將在今年夏天晚些時候向美國證券交易委員會提交的委託書中提供。

At a high level, though, we're confident that this will make MSC a more attractive investment and broadened scope of investors through several aspects, such as replacing the 2/3 voting rule to approve mergers, asset sales and other significant transactions to instead a simple majority of votes outstanding standard. Limiting the family's voting to 15% of shares outstanding, adding a new independent director and exploring share repurchases to offset dilution from the transaction.

不過，從高層來看，我們相信這將使 MSC 成為更具吸引力的投資，並通過多個方面拓寬投資者範圍，例如取代批准合併、資產出售和其他重大交易的 2/3 投票規則。簡單多數票優秀標準。將家族的投票權限制在已發行股票的 15%，增加一名新的獨立董事，並探索股票回購以抵消交易帶來的稀釋。

I'd also note that our families receipt of the premium in shares increases our economic ownership position and reinforces our belief in the long-term outlook of this business. The reclassification is subject to a number of closing conditions, most importantly, the approval of the transaction by the company's shareholders. We look forward to completing the process and successfully closing the transaction. I'll now move on to our quarterly performance.

我還要指出的是，我們的家族獲得的股票溢價增加了我們的經濟所有權地位，並增強了我們對這項業務長期前景的信心。重新分類須滿足多項成交條件，最重要的是，該交易需獲得公司股東的批准。我們期待完成該流程並成功完成交易。我現在將繼續討論我們的季度業績。

Ongoing share gains and successful execution of our mission-critical initiatives were the primary drivers behind our strong growth. They resulted in fiscal third quarter sales growth of approximately 10%, despite one less selling day or nearly 12% on an average daily sales basis. This continues the trend of outgrowing the IP or industrial production index in excess of our long-term target.

持續的份額增長和成功執行我們的關鍵任務計劃是我們強勁增長的主要驅動力。儘管銷售日減少了 1 個，但第三財季的銷售額仍實現了約 10% 的增長，即日均銷售額增長了近 12%。這延續了知識產權或工業生產指數增長超出我們長期目標的趨勢。

As a reminder, our 5 growth priorities include metalworking, solutions, digital, selling the portfolio and diversified end markets with an emphasis on the public sector. Today, I'll highlight a few of these, beginning with the public sector. We've described for the past several quarters now that we see a building momentum in our public sector business. And this quarter was particularly strong with public sector growth of more than 80% year-over-year. That was driven by penetration of existing contracts, along with the addition of some significant wins.

提醒一下，我們的 5 個增長重點包括金屬加工、解決方案、數字化、銷售產品組合和多元化的終端市場，重點是公共部門。今天，我將重點介紹其中的一些內容，首先是公共部門。我們在過去幾個季度中已經描述過，我們看到公共部門業務正在形成勢頭。本季度的表現尤其強勁，公共部門同比增長超過 80%。這是由於現有合同的滲透以及一些重大勝利的推動。

In particular, approximately 2/3 of the public sector growth this quarter benefited from a large number of small capital purchases from a recent contract win. While wins of this nature are below company average margins, they provide near- and long-term benefits. Starting with the near-term. These wins require modest investments in working capital and they bolster our cash flow. And this allows us to accelerate investments in other areas to further strengthen our market position, and I'll touch on that momentarily.

特別是，本季度大約 2/3 的公共部門增長受益於最近贏得的合同帶來的大量小額資本購買。雖然這種性質的勝利低於公司平均利潤率，但它們提供了近期和長期利益。從近期開始。這些勝利需要對營運資本進行適度的投資，並且它們可以增強我們的現金流。這使我們能夠加快在其他領域的投資，以進一步加強我們的市場地位，我將立即談到這一點。

Over the longer-term, we believe these wins improve our position for additional share gains and higher margin opportunities across the sector, which helps to diversify our business. Looking forward, we expect revenues from the recent contract win to continue in Q4 and into fiscal 2024, albeit at a lesser pace. On the solutions front, we continue to achieve strong growth across our [in-plant] vending and vendor-managed inventory offerings.

從長遠來看，我們相信這些勝利將改善我們在整個行業的額外份額收益和更高利潤機會的地位，這有助於實現我們的業務多元化。展望未來，我們預計最近贏得的合同帶來的收入將在第四季度持續到 2024 財年，儘管增速放緩。在解決方案方面，我們的[廠內]自動售貨和供應商管理的庫存產品繼續實現強勁增長。

These high touch, high retention solutions continue to grow double digits, and we see plenty of runway for future share gains given the market size and the customers' appetite for value-add solutions. In fact, our fiscal third quarter represented our high watermark in terms of new in-plant signings, and that bodes well for continued sales growth in the future. Moving to e-commerce. We strengthened our position for future growth through an exclusive agreement with Machining Cloud, which was announced earlier this quarter.

這些高接觸、高保留的解決方案繼續以兩位數的速度增長，考慮到市場規模和客戶對增值解決方案的需求，我們認為未來的份額增長還有很大的空間。事實上，我們的第三財季在新廠內簽約方面代表了我們的高水平，這預示著未來銷售的持續增長。轉向電子商務。通過本季度早些時候宣布的與 Machining Cloud 的獨家協議，我們鞏固了未來增長的地位。

This partnership brings a great deal of excitement to MSC to machining cloud and to the end user community. It gets MSC closer to the early stages of the manufacturing process, which expands MSC's reach to new decision-makers such as engineers and programmers who are key influencers in the procurement process. The customer will benefit from MSC's brand offering, which will save time and money when selecting the ideal tools needed for their jobs. And while we're still in the integration process, the end user community's excitement is building as visits to machine and cloud site have increased significantly since announcement.

這種合作關係給 MSC、加工雲和最終用戶社區帶來了極大的興奮。它使 MSC 更接近製造過程的早期階段，從而將 MSC 的影響範圍擴大到新的決策者，例如工程師和程序員，他們是採購過程中的關鍵影響者。客戶將受益於 MSC 的品牌產品，這將在選擇工作所需的理想工具時節省時間和金錢。雖然我們仍處於集成過程中，但隨著自發布以來對機器和雲站點的訪問量顯著增加，最終用戶社區的興奮感正在增強。

I'll now turn to the external environment. As expected, when we outlined our framework for the fiscal year, conditions have moderated as we move through the quarters. This is consistent with contractionary readings from the sentiment indices, such as the Metalworking Business Index and declining IP index readings. We have seen some more softening across some areas of the business during the fiscal third quarter, but the tone on the ground is one of leveling rather than significant declines. We're seeing stable volume and customer activity levels.

我現在談談外部環境。正如預期的那樣，當我們概述本財年的框架時，隨著季度的進展，情況已經有所緩和。這與金屬加工業務指數和知識產權指數等情緒指數的收縮讀數一致。在第三財季，我們看到一些業務領域出現了更多的疲軟，但總體基調是趨於平穩，而不是大幅下降。我們看到穩定的銷量和客戶活動水平。

In addition, we see favorable conditions in several end markets such as automotive and aerospace. On the pricing front, conditions have also moderated as expected. We continue to achieve benefits from pricing, but this has narrowed as we lap high price increases in the prior year while higher product costs continue to work through our P&L. As supply chains have normalized, customers are increasing their focus on achieving competitive prices just as we are doing with our suppliers.

此外，我們還看到汽車和航空航天等幾個終端市場的有利條件。在定價方面，情況也如預期有所緩和。我們繼續從定價中獲得收益，但隨著我們上一年的價格大幅上漲，而更高的產品成本繼續影響我們的損益表，這種收益已經縮小。隨著供應鏈的正常化，客戶越來越注重實現有競爭力的價格，就像我們對供應商所做的那樣。

Overall, we would describe the environment both on the demand and the pricing fronts as leveling. Regardless of the environment, I remain confident about our prospects for continued growth. In the near-term, as I described earlier, many of our growth drivers are just starting to hit their stride. Our value proposition, which is anchored in our technical and high-touch approach, is yielding customer wins at a higher rate than we've seen in the past.

總體而言，我們將需求和定價方面的環境描述為趨於平衡。無論環境如何，我對我們持續增長的前景仍然充滿信心。正如我之前所描述的，短期內，我們的許多增長動力才剛剛開始發揮作用。我們的價值主張植根於我們的技術和高接觸方法，正在以比我們過去看到的更高的速度贏得客戶。

Many of these wins are not close to full maturity or revenue run rate. So we're not yet seeing the full benefits in our numbers. This has given us confidence to accelerate strategic investments despite market uncertainty to further strengthen our position. For example, we're accelerating investments in our e-commerce platform, including an advanced search and product discovery function. We expect these enhancements to increase future growth, particularly with smaller customers and spot buys.

其中許多勝利尚未接近完全成熟或收入運行率。因此，我們還沒有看到我們的數據帶來的全部好處。這讓我們有信心在市場不確定的情況下加快戰略投資，以進一步鞏固我們的地位。例如，我們正在加速對電子商務平台的投資，包括高級搜索和產品發現功能。我們預計這些增強功能將促進未來的增長，特別是對於較小的客戶和現貨購買。

Looking beyond the near-term, there are several dynamics that we believe will benefit MSC over the longer-term. First, the reshoring trend continues as we see an increased number of new client construction projects that will drive incremental domestic manufacturing activity. Second, elongated production backlogs in commercial aerospace driven by increased post-COVID demand, provide a long runway of growth in that end market.

展望未來，我們認為有幾個動態將在長期內使 MSC 受益。首先，回流趨勢仍在繼續，因為我們看到新客戶建設項目數量的增加將推動國內製造業活動的增量。其次，受疫情后需求增加的推動，商業航空航天領域的生產積壓時間延長，為該終端市場提供了一條漫長的增長之路。

And third, we see opportunities to further penetrate new higher growth end markets such as medical and electric vehicles by leveraging our technical expertise and new capabilities from recent acquisitions. Moving on to productivity. I'm also encouraged by the outlook for continued progress, which we believe will be driven by several factors. First, as I mentioned before, our mission-critical program is transitioning to a continuous improvement mindset and initiative under the leadership of our COO, Martina McIsaac and Kristen. Second and related, -- we'll continue evaluating our business for structural cost opportunities. And lastly, we're making nice progress on our category line reviews.

第三，我們看到了利用我們的技術專長和最近收購的新能力進一步滲透新的更高增長的終端市場（例如醫療和電動汽車）的機會。轉向生產力。我也對持續進步的前景感到鼓舞，我們相信這將由幾個因素推動。首先，正如我之前提到的，在我們的首席運營官 Martina McIsaac 和 Kristen 的領導下，我們的關鍵任務計劃正在轉變為持續改進的心態和舉措。其次，相關的是——我們將繼續評估我們的業務是否存在結構性成本機會。最後，我們在品類審核方面取得了良好進展。

We're now winding down the first 2 waves of product categories, and we're pleased with supplier responses. In some cases, we're getting cost reductions on the heels of market indices pulling back. And in others, we're having exciting growth discussions. For example, we're seeing early success with consolidation of suppliers and SKUs where a broad assortment isn't as necessary through the eyes of our customer. This approach will simplify our search, find and buy experience increased engagement and share gain with the select suppliers who partner with us, streamline our DC operations and should also drive meaningful savings in fiscal '24.

我們現在正在逐步結束前兩波產品類別，我們對供應商的反應感到滿意。在某些情況下，我們會在市場指數回落後降低成本。在其他方面，我們正在進行令人興奮的增長討論。例如，我們看到供應商和 SKU 整合取得了早期成功，而在客戶看來，廣泛的品種並不是必需的。這種方法將簡化我們的搜索、查找和購買體驗，增加與我們合作的精選供應商的參與度和分享收益，簡化我們的 DC 運營，並且還應在 24 財年推動有意義的節省。

In summary, I'm excited to see MSC becoming the mission-critical partner on the plant floor that we envisioned years ago. We're gaining momentum on growth above the IP index and we're translating that growth into profitability improvements. I'll now turn things over to Kristen.

總之，我很高興看到 MSC 成為我們多年前設想的工廠車間的關鍵任務合作夥伴。我們正在獲得高於知識產權指數的增長動力，並且我們正在將這種增長轉化為盈利能力的提高。我現在把事情交給克里斯汀。

Thank you, Erik. And good morning, everyone. Please turn to Slide 5 of our presentation where you can see key metrics for the fiscal third quarter on a reported basis. Slide 6 reflects the adjusted results, which will be my primary focus this morning. Before I dive into the numbers, as Erik mentioned, public sector growth was very strong this quarter, primarily driven by a recent contract win related to small capital purchases. Wins like these are dilutive to margins but have strong cash flow attributes.

謝謝你，埃里克。大家早上好。請參閱我們演示文稿的幻燈片 5，您可以在其中查看報告的第三財季的關鍵指標。第 6 張幻燈片反映了調整後的結果，這將是我今天早上的主要關注點。在我深入研究這些數字之前，正如埃里克提到的，公共部門本季度的增長非常強勁，主要是受到最近與小額資本購買相關的合同贏得的推動。此類勝利會稀釋利潤，但具有很強的現金流屬性。

This is causing some compression in growth in operating margins during the back half of our fiscal year. As a result, I will provide some color on the impact from related sales as I walk through our results and updated outlook. Moving on to third quarter performance, successful execution across our mission-critical initiatives resulted in ongoing share gains and strong cash generation. Combined with a 4% contribution from bolt-on acquisitions and more modest benefits from price due to actions taken in the prior year average daily sales improved 11.7% year-over-year to $1.054 billion.

這導致我們本財年後半段的營業利潤率增長受到一定程度的壓縮。因此，當我瀏覽我們的結果和更新的前景時，我將提供一些有關相關銷售的影響的信息。轉向第三季度的業績，我們關鍵任務計劃的成功執行帶來了持續的份額增長和強勁的現金生成。加上補強收購帶來的 4% 貢獻以及上一年採取的行動帶來的更溫和的價格收益，日均銷售額同比增長 11.7% 至 10.54 億美元。

That compares favorably to the IP index, which grew just 30 basis points year-over-year during the quarter. By customer type, on a year-over-year average daily sales basis, public sector sales increased over 80%, while national accounts as well as core and other customers grew in the mid-single-digit range. Despite the sequential step down in national accounts growth since last quarter, we feel good about our prospects for ongoing growth based upon new customer wins.

與 IP 指數相比，該指數在本季度僅同比增長 30 個基點。按客戶類型劃分，按日均銷售額計算，公共部門銷售額增長超過 80%，而國民賬戶以及核心和其他客戶則實現中個位數增長。儘管自上季度以來國民賬戶增長連續下降，但我們對基於新客戶贏得的持續增長前景感到樂觀。

Looking at our sales through the lens of our mission-critical growth drivers, we continue to make strong progress. Erik mentioned the 5 growth initiatives earlier. I will run through each of them briefly. In metalworking, our ability to improve customer productivity levels through our best-in-class technical expertise, product breadth and service levels continues to drive competitive differentiation. This places us at the spindle with our customers, where we play a critical role in helping them optimize production and increase productivity.

從我們的關鍵任務增長驅動力的角度來看我們的銷售，我們繼續取得強勁進展。 Erik 之前提到了 5 項增長舉措。我將簡要介紹它們中的每一個。在金屬加工領域，我們通過一流的技術專長、產品廣度和服務水平提高客戶生產力水平的能力繼續推動競爭優勢。這使我們成為客戶的中心，在幫助他們優化生產和提高生產力方面發揮著關鍵作用。

Additionally, as our manufacturing customers face an aging and shrinking skilled labor workforce. Our value proposition is more important than ever. Looking ahead, our competitive strengths position us well to take share and further penetrate high-growth end markets. We continue to capture share with our vending and in-plant solutions. Vending machine ADS continued to grow 10% year-over-year and represents 15.3% of total company sales compared to 15.5% in the prior year.

此外，我們的製造業客戶面臨著熟練勞動力的老齡化和萎縮。我們的價值主張比以往任何時候都更加重要。展望未來，我們的競爭優勢使我們能夠很好地佔據份額並進一步滲透高增長的終端市場。我們繼續通過自動售貨和廠內解決方案佔領市場份額。自動售貨機 ADS 繼續同比增長 10%，占公司總銷售額的 15.3%，而上一年為 15.5%。

In-plant signings remained strong in Q3 and sales grew 13% year-over-year representing 13% of total sales, an improvement of 40 basis points sequentially. It's worth noting that the vending and in-plant percentage of total sales would have been higher without the impact of the strong public sector performance as much of the growth among those customers did not transact through our solutions. In e-commerce, which includes all aspects of MSC's digital engagement, we continue to experience solid growth. As a percent of total sales, e-commerce sales declined year-over-year to 60%, but would have increased over prior year's 62%, if not for public sector growth that transacted through different channels.

第三季度廠內簽約依然強勁，銷售額同比增長 13%，佔總銷售額的 13%，比上一季度提高了 40 個基點。值得注意的是，如果沒有公共部門強勁業績的影響，自動售貨和廠內銷售佔總銷售額的百分比將會更高，因為這些客戶的增長大部分不是通過我們的解決方案進行交易的。在電子商務領域，包括 MSC 數字化參與的各個方面，我們繼續實現穩健增長。電子商務銷售額佔總銷售額的百分比同比下降至 60%，但如果不是通過不同渠道進行交易的公共部門增長，電子商務銷售額將比上年的 62% 有所增長。

Looking ahead, we are positioning ourselves to capture additional digital and small customer growth with a portion of our accelerated investments being focused on strengthening our digital capabilities, as Erik mentioned. We continue to successfully execute across our other 2 initiatives in selling the portfolio to increase share of wallet, vendor-managed inventory, which is primarily our Class C consumables experienced ADS growth in the low double-digit range.

展望未來，正如埃里克提到的那樣，我們將自己定位為捕捉更多的數字和小客戶增長，我們加速投資的一部分專注於加強我們的數字能力。我們繼續成功執行其他兩項銷售產品組合的舉措，以增加錢包份額、供應商管理的庫存（主要是我們的 C 類消耗品），ADS 增長處於較低的兩位數範圍內。

Progress on our diversification initiative continues with public sector growth in excess of 80%, as I previously mentioned. Our gross margin for the quarter was 40.7%, down roughly 220 basis points compared to the prior year. The year-over-year decline was driven by a 160 basis point headwind primarily attributable to the recent contract win discussed previously and to customer mix related to public sector growth. Acquisitions drove another 40 basis points of headwind. The remaining 20 basis points reflects more modest pricing benefits from prior year actions and higher cost inventories working through the P&L.

正如我之前提到的，我們的多元化舉措繼續取得進展，公共部門增長超過 80%。本季度毛利率為 40.7%，比去年同期下降約 220 個基點。同比下降是由 160 個基點的逆風推動的，這主要歸因於之前討論的最近贏得的合同以及與公共部門增長相關的客戶組合。收購又帶來 40 個基點的逆風。剩下的 20 個基點反映了上一年行動帶來的更溫和的定價收益以及損益表中較高成本的庫存。

Sequentially, without the impact of the public sector contract, gross margins improved nicely as expected. Reported operating expenses in the quarter were approximately $292 million versus $271 million in the prior year quarter. On an adjusted basis, operating expenses were approximately $290 million and declined 80 basis points year-over-year to 27.5% of total sales. In dollar terms, the increase was primarily driven by variable selling expenses tied to higher volume, labor costs, higher-than-expected health care costs and accelerated digital investments to drive revenue growth.

因此，在沒有公共部門合同的影響的情況下，毛利率如預期良好改善。本季度報告的運營費用約為 2.92 億美元，而去年同期為 2.71 億美元。調整後的運營費用約為 2.9 億美元，同比下降 80 個基點，佔總銷售額的 27.5%。以美元計算，這一增長主要是由與銷量增加、勞動力成本、高於預期的醫療保健成本以及加速數字投資以推動收入增長相關的可變銷售費用推動的。

With respect to health care costs, we are self-insured. And this past quarter, we experienced roughly 2 million more in claims than we have been running. This is primarily a result of our associates undergoing increased elective procedures, which we believe reflects deferred demand. These increases were partially offset by mission-critical-related savings of approximately $4 million in the quarter. This brings fiscal year-to-date savings to $14 million and total cumulative savings to $99 million, positioning us to exceed our target of $100 million by fiscal year-end.

關於醫療費用，我們是自我保險的。上個季度，我們收到的索賠數量比以往增加了約 200 萬。這主要是由於我們的員工接受了更多的選擇性程序，我們認為這反映了遞延的需求。這些增長被本季度約 400 萬美元的關鍵任務相關節省部分抵消。這使得本財年迄今為止的節省額達到 1,400 萬美元，累計節省總額達到 9,900 萬美元，使我們能夠在本財年結束時超越 1 億美元的目標。

Reported operating margin was 12.8% compared to 14.3% in the prior year period. On an adjusted basis, operating margin of 13.1% declined approximately 150 basis points compared to the prior year. The year-over-year decline was driven by lower gross margin with a partial offset from decreased operating expenses as a percent of sales. We reported GAAP earnings per share of $1.69 compared to $1.78 in the prior year period.

報告營業利潤率為 12.8%，上年同期為 14.3%。調整後的營業利潤率為 13.1%，較上年下降約 150 個基點。同比下降的原因是毛利率下降，部分抵消了營業費用佔銷售額百分比的下降。我們公佈的 GAAP 每股收益為 1.69 美元，而去年同期為 1.78 美元。

On an adjusted basis, EPS was $1.74 and versus $1.82 in the prior year. Turning to Slide 7 to review our balance sheet and cash flow. We continue to maintain a healthy balance sheet with net debt of approximately $406 million and a net leverage ratio of approximately 0.7x at quarter end. Our liquidity position remains strong with cash on hand of $58 million and nearly all of our $600 million revolving credit facility is available. Additionally, we made progress on inventory levels, which ended the quarter at $727 million, down $20 million from Q2 levels.

調整後每股收益為 1.74 美元，上一年為 1.82 美元。轉向幻燈片 7 來回顧我們的資產負債表和現金流。我們繼續保持健康的資產負債表，季度末淨債務約為 4.06 億美元，淨槓桿率約為 0.7 倍。我們的流動性狀況依然強勁，手頭現金為 5800 萬美元，而且我們的 6 億美元循環信貸額度幾乎全部可用。此外，我們在庫存水平方面取得了進展，本季度末庫存水平為 7.27 億美元，比第二季度水平減少了 2000 萬美元。

Strong operating cash flow conversion during the quarter of 158% and 104% fiscal year-to-date has us well on track to achieve the 100% target for the fiscal year. Capital expenditures of approximately $24 million during the quarter resulted in third quarter free cash flow of $127 million, up nearly 100% year-over-year. Our solid balance sheet and cash generation support our capital allocation strategy, including our desire to offset dilution from the reclassification of Class B shares. We will continue to focus capital on creating value for shareholders by reinvesting into the business, shareholder returns in the form of ordinary dividends and share buybacks as well as pursuing high-return tuck-in acquisitions.

本季度迄今為止，運營現金流轉換率強勁，分別為 158% 和 104%，這使我們有望實現本財年 100% 的目標。本季度資本支出約為 2400 萬美元，第三季度自由現金流為 1.27 億美元，同比增長近 100%。我們穩健的資產負債表和現金生成支持我們的資本配置策略，包括我們希望抵消 B 類股票重新分類帶來的稀釋作用。我們將繼續將資本集中在為股東創造價值上，通過對業務進行再投資，以普通股息和股票回購的形式為股東帶來回報，以及追求高回報的收購。

As a reminder, we have 4.4 million shares remaining on our current repurchase authorization. Now let's turn to our updated fiscal year 2023 outlook on Slide 10. Given strong sales performance fiscal year-to-date, we are raising our annual average daily sales growth guidance to a range of 10% to 11%. This compares favorably to the prior range of 5% to 9%. As a reminder, we have 5 fewer selling days year-over-year in the fourth quarter. We now expect adjusted operating margin to be around 12.7% for the full year. Our updated outlook includes 2 factors that were not part of our original outlook.

提醒一下，我們目前的回購授權還剩 440 萬股。現在讓我們轉向幻燈片 10 上更新的 2023 財年展望。鑑於本財年迄今為止的強勁銷售業績，我們將年平均每日銷售增長指導提高至 10% 至 11%。這比之前 5% 至 9% 的範圍要有利。提醒一下，第四季度我們的銷售天數同比減少了 5 個。我們目前預計全年調整後營業利潤率約為 12.7%。我們更新後的展望包括兩個不屬於我們最初展望的因素。

First, the margin dilution related to the in-year acquisitions of Buckeye Supply and Tru-Edge. Second, the impact of the outsized public sector growth in the second half. Lastly, we continue to expect strong cash generation for the full year with operating cash flow conversion above 100% in fiscal '23. And with that, I will turn it back to Erik for closing remarks.

首先，利潤攤薄與年內收購 Buckeye Supply 和 Tru-Edge 有關。其次，下半年公共部門大幅增長的影響。最後，我們繼續預計全年現金流將強勁，23 財年運營現金流轉換將超過 100%。接下來，我將把它轉回給埃里克做結束語。

Thank you, Kristen. We are nearing the end of our 3-year mission-critical program, and I'm pleased to see how our team has performed. We remain on track to meet or exceed all goals we outlined nearly 3 years ago. As we look to the future, we view the next quarter, not at the end of the journey but rather as the first base camp along our march to fulfill our mission of being the best industrial distributor in the world as measured by all 4 of our stakeholders.

謝謝你，克里斯汀。我們為期 3 年的關鍵任務計劃即將結束，我很高興看到我們團隊的表現。我們仍然有望實現或超越我們近 3 年前製定的所有目標。當我們展望未來時，我們將下個季度視為旅程的終點，而不是我們前進的第一個大本營，以履行我們成為世界上最好的工業分銷商的使命（以我們的所有四個指標來衡量）利益相關者。

I thank all of our associates for all their hard work, and I'll now open up the line for questions.

我感謝所有同事的辛勤工作，現在我將開通提問熱線。

(Operator Instructions) The first question comes from David Manthey with Baird.

（操作員說明）第一個問題來自 David Manthey 和 Baird。

Thank you. Good morning, everybody. So first question on the new business. You talked about this as a contract win, but then you said it's a large number of small capital purchases. If you can give us details on what that means and then any concrete numbers you can give us in terms of revenues, I think, Kristen, based on what you said, I'm thinking maybe it's $20 million in the current quarter.

謝謝。大家早上好。第一個問題是關於新業務的。您談到這是合同勝利，但後來您說這是大量小額資本購買。如果你能給我們詳細說明這意味著什麼，然後你能給我們提供任何具體的收入數字，我想，克里斯汀，根據你所說的，我想本季度的收入可能是 2000 萬美元。

But what does that look like in the fourth quarter and then kind of run rate at [24], if you can help us there.

但是，如果你能幫助我們的話，第四季度的情況會是什麼樣子，然後[24]的運行率會是什麼樣子。

I'll take the first part, Kristen.

我將參加第一部分，克里斯汀。

I'll answer the follow-up Yes.

後續我會回答“是”。

You got it. So just so a little more color, Dave. I'll put the caveat that we're going to be a little bit nondescript here. This is, as you can imagine, competitively sensitive in terms of the contract win itself. But just to put some more color on it, by a contract win, what we mean is there's an ongoing relationship with an entity here as opposed to just a one and done or a onetime order. Inclusive in the contract, though, were a number of specific items that we described as small capital purchases. And what I mean by a small capital purchase is something akin to a small machine as opposed to a consumable.

你說對了。所以，再多一點顏色，戴夫。我要警告的是，我們在這裡會有點不倫不類。正如您可以想像的那樣，這對於贏得合同本身而言具有競爭敏感性。但為了增加一些色彩，通過贏得合同，我們的意思是與這裡的實體存在持續的關係，而不僅僅是一勞永逸或一次性訂單。不過，合同中包含了一些我們稱之為小額資本購買的具體項目。我所說的小額資本購買是指類似於小型機器而不是消耗品的東西。

And the reason that's relevant is those -- the capital purchases, capital-like purchases tend to come with lower gross margins than consumables do. So what you're going to see is you saw a pretty big healthy clip of that in the third quarter. I'm infringing a little bit on Kristen's part of the question. You'll see some more in the fourth quarter, probably at around -- somewhere around half of what we saw in the third quarter, and then there'll be some continuation into fiscal '24.

相關的原因是——資本購買、類似資本的購買往往比消費品的毛利率更低。所以你將看到的是，你在第三季度看到了一個相當大的健康片段。我有點侵犯了克里斯汀的問題部分。你會在第四季度看到更多的情況，可能大約是我們在第三季度看到的一半左右，然後會有一些延續到 24 財年。

I think a couple of points, Dave, on the benefits here. Obviously, there's an immediate revenue impact on the machines. There's also higher margin business that follows along it, consumable type of business that follows along and then I think most importantly, what I see happening with the public sector team is we're using these contract wins to establish a relationship with customers or entities that we may have not had a big relationship with before, and that creates the opportunity for creating an ongoing permanent revenue stream with more general MRO product.

戴夫，我認為這裡有幾點好處。顯然，這對機器的收入產生了直接影響。隨之而來的還有更高利潤的業務，隨之而來的是消費品類型的業務，然後我認為最重要的是，我看到公共部門團隊正在發生的事情是，我們正在利用這些合同贏得來與客戶或實體建立關係，我們以前可能沒有建立過很大的關係，這為通過更通用的 MRO 產品創造持續的永久收入流創造了機會。

And Dave, to add on to your question about kind of sizing it, the way I would suggest thinking about it, if you refer to the [ops stat] the public sector growth as a percentage of revenue, for Q3 '23 and Q3 '22, I would take about 2/3 of that and attribute it to the win that Erik is discussing. And then you can apply similar logic. We mentioned in the prepared remarks about 160 basis points of gross margin headwind from mix.

戴夫，補充一下你關於規模調整的問題，如果你參考[運營統計]公共部門增長佔收入的百分比，23年第三季度和第三季度，我建議你考慮一下它的方式22，我會把其中大約 2/3 歸因於埃里克正在討論的勝利。然後你可以應用類似的邏輯。我們在準備好的評論中提到了混合帶來的毛利率逆風約 160 個基點。

I would apply a similar 2/3 logic to that to try to size gross margin. And then in terms of how to translate it to profit, the orders do come with a lower cost to serve, but I wouldn't let the normal variable OpEx rate on that. I would have find maybe (inaudible) or so on the to the number you come up with on the top line. That will kind of frame for you what happened in the third quarter with the noise from that win out of the picture. And perhaps a simpler way to say it is, if you take the impact of that went out and the noise that's created in the margin, we performed as we would have expected to, the one sort of unanticipated item being the health care cost that we discussed in the prepared remarks.

我會應用類似的 2/3 邏輯來嘗試確定毛利率的大小。然後就如何將其轉化為利潤而言，訂單的服務成本確實較低，但我不會讓正常的可變運營支出率影響這一點。我可能會找到（聽不清）或者你在頂行得出的數字。這將為你勾勒出第三節發生的事情，以及那場胜利帶來的噪音。也許更簡單的說法是，如果考慮到這種情況的影響以及邊際產生的噪音，我們的表現正如我們預期的那樣，其中一種意想不到的項目是我們的醫療保健成本在準備好的發言中進行了討論。

And then for the fourth quarter, I would think about the impact being about half the size of what we saw in the third quarter.

然後，對於第四季度，我認為影響的大小約為第三季度的一半。

Okay. That's helpful. And just along the same lines here of the operating income and the change in guidance, just a couple of thoughts there. If I take the midpoint of the new guidance and compare it to the midpoint of the old guidance, it looks like operating income dollars are up just slightly. And as you said, if you assume a low margin on the that government business, that would tell me that expectations underlying that new government win would be roughly the same.

好的。這很有幫助。與這裡的營業收入和指導變化一樣，我也有一些想法。如果我將新指導的中點與舊指導的中點進行比較，看起來營業收入僅略有上升。正如你所說，如果你假設該政府業務的利潤率較低，那就會告訴我，新政府獲勝的預期將大致相同。

And I'm just checking because Erik, when you talk about leveling I'm not sure if that was your expectation 90 days ago or if that's gotten worse from what you thought? I'm just trying to gauge what the expectation is in the underlying business based on the guidance you gave, excluding this government win.

我只是檢查一下，因為埃里克，當你談論升級時，我不確定這是否是你 90 天前的預期，或者情況是否比你的想法變得更糟？我只是想根據您提供的指導來評估基礎業務的預期，不包括政府的勝利。

Yes, Dave. Good question. Look, I would say that essentially, the underlying business, our outlook is unchanged. Is the punch line. If you go back even beyond 90 days ago, Dave, from the start of the year when we outlined the framework, given that we saw IP coming down, the sentiment indices, et cetera, we said, look, we project the growth rates to moderate. It doesn't mean that anything is dropping.

是的，戴夫。好問題。看，我想說的是，本質上，我們的基本業務前景沒有改變。是妙語。如果你追溯到 90 天前，戴夫，從年初我們概述框架開始，考慮到我們看到知識產權、情緒指數等下降，我們說，看，我們預計增長率為緩和。這並不意味著任何東西都在下降。

It's just that the growth rates would moderate between the leveling in the environment, the lapping higher comps, lapping pricing, and that's what's playing out. So no real surprises.

只是增長率會在環境趨於平衡、競爭更高、定價更合理之間緩和，這就是正在發生的事情。所以沒有真正的驚喜。

And Dave, on your question on the guidance, your thought on like if you think about the midpoint of what we had indicated when we spoke to you after the second quarter, the changes really 2 things. If you think about moving from the midpoint to the approximately 12.7%, it's roughly the impact of the public sector mix, 20-ish basis points and then the increased health care costs, which is about 10 basis points.

戴夫，關於你關於指導的問題，你的想法就像你想想我們在第二季度後與你交談時所指出的中點，變化確實有兩件事。如果你考慮從中點轉向大約 12.7%，這大致是公共部門組合的影響，大約 20 個基點，然後是醫療保健成本增加，大約 10 個基點。

The next question comes from Tommy Moll with Stephens.

下一個問題來自湯米·莫爾和斯蒂芬斯。

I want to start on price cost. You've addressed it a bit, but any more context you could provide there on where you sit today and based on what you know now, how the -- how that should unfold over the next few quarters would be helpful.

我想從價格成本開始。您已經解決了一些問題，但是您可以提供更多有關您今天所處位置的背景信息，並根據您現在所知道的情況，以及在接下來的幾個季度中應該如何展開，將會有所幫助。

Sure, Tommy. So in the prepared remarks, we mentioned about a 20 basis point gross margin headwind from price cost. So we're still positive in price cost on a dollar basis, but it was a headwind to gross margin in the third quarter. And then we would expect that headwind to grow in the fourth quarter, more so from the decelerating benefit of price cost, I think we mentioned last quarter, costs have peaked in Q2, and it's -- I think a peak and sort of implies you come down right away.

當然，湯米。因此，在準備好的評論中，我們提到了價格成本帶來的毛利率約 20 個基點的逆風。因此，我們對以美元計算的價格成本仍然持樂觀態度，但這對第三季度的毛利率來說是一個阻力。然後我們預計第四季度的逆風將會增加，更多的是由於價格成本的減速效益，我想我們上個季度提到過，成本在第二季度達到了峰值，我認為峰值有點意味著你馬上下來。

I'd say we've entered a [plateau] on the cost inflation that's rolling off the balance sheet. And ['24] will side some more when we get to the next quarter, but probably unsurprisingly, that pressure continues, particularly in the first half of fiscal '24, as we continue to unwind those higher product costs off the balance sheet. So more to come on '24, hopefully, it helps color Q3 and Q4 a bit more.

我想說，我們已經進入了資產負債表上的成本通脹的[穩定期]。當我們進入下一個季度時，['24] 將進一步增加，但可能並不奇怪，這種壓力持續存在，特別是在 24 財年的上半財年，因為我們繼續將這些較高的產品成本從資產負債表中剝離出來。因此，24 年將會有更多內容，希望能夠為第三季度和第四季度增添更多色彩。

That's helpful. And then maybe one for Erik here on the reclassification agreement. In terms of timing there, Erik, do you have any sense for when the shareholder vote may occur and presuming as fast as how long it would be until the change becomes effective? And if I could make this a 2-quarter hopefully, that's not too greedy, but I was just curious from a very high level of capital allocation or business strategy perspective. Could we imagine there may be a change resulting from the reclassification? Or should we think of this more as a [distinct issue].

這很有幫助。然後也許是關於重新分類協議的埃里克。就時間安排而言，埃里克，您是否知道股東投票何時發生，以及假設變更生效需要多長時間？如果我希望能夠將其定為第二季度，那並不算太貪婪，但我只是從非常高水平的資本配置或業務戰略的角度感到好奇。我們能否想像重新分類可能會帶來變化？或者我們應該將其視為一個[獨特的問題]。

Tommy, I'll take that one. I'm going to answer the first part of your question. I might ask you to just repeat the second part. We were having a little bit of trouble hearing you at the end. But let me start on the timing part of your question. So next steps with the submitted S4 to the SEC, that's followed by the proxy. So you can (inaudible) late summer is a reasonable ballpark for the proxy to be issued.

湯米，我要那個。我將回答你問題的第一部分。我可能會要求你重複第二部分。最後我們聽到你的聲音有點困難。但讓我從你問題的時間部分開始。接下來，將 S4 提交給 SEC，然後是代理。因此，您可以（聽不清）夏末是發行代理書的合理時機。

And then if everything goes according to plan, you can expect to both probably in the fall as a reasonable expectation on timing. And then assuming that, that vote is approved by shareholders, the reclassification was closed a few days after that. Can you just clarify the second part of your question again, I want to make sure I caught that right.

然後，如果一切按計劃進行，您可以預期兩者都可能在秋季作為對時間的合理預期。然後假設該投票獲得了股東的批准，重新分類將在幾天后結束。您能否再次澄清您問題的第二部分，我想確保我理解正確。

Yes and apologies for the noise. My question was regarding the reclassification and the extent to which it may have an impact on capital allocation and/or business strategy at the company or if we should think of those as for the most part, distinct issues.

是的，並對噪音表示歉意。我的問題是關於重新分類以及它可能對公司的資本配置和/或業務戰略產生影響的程度，或者我們是否應該將這些視為大多數不同的問題。

Yes. I'd say think of them as distinct issues or maybe another way of saying that is that we -- if we are able to move forward with the share repurchase and off is the dilution of about $2 million, which we're working through that now. We would absolutely be able to accommodate that and not compromise on our capital allocation priorities. We've got plenty of room in terms of available funding. We're doing some different scenario planning now, but we don't see anything that would prevent us from committing to the capital allocation priorities we've outlined previously.

是的。我想說，將它們視為不同的問題，或者也許另一種說法是，如果我們能夠推進股票回購，那麼我們正在努力解決約 200 萬美元的稀釋問題現在。我們絕對能夠適應這一點，並且不會在我們的資本配置優先事項上妥協。我們在可用資金方面有足夠的空間。我們現在正在做一些不同的情景規劃，但我們沒有看到任何會阻止我們致力於之前概述的資本分配優先事項的事情。

And Tommy, the only color I'll add is, I think Kristen answered the capital allocation portion on business strategy, look, we feel really good about the direction of the company. I mentioned in prepared remarks that the family if this goes through, would receive the premium in the form of shares, which is a sign of the confidence in the strategy that we have. So I think you can feel good that we are going to continue forging ahead on the direction that we've been on.

湯米，我唯一要補充的是，我認為克里斯汀回答了有關業務戰略的資本配置部分，看，我們對公司的方向感覺非常好。我在準備好的發言中提到，如果這件事成功，該家族將以股票的形式獲得溢價，這是對我們戰略充滿信心的標誌。因此，我認為您可以感到高興，因為我們將繼續沿著我們一直以來的方向前進。

The next question comes from Stephen Volkmann with Jefferies.

下一個問題來自杰弗里斯的斯蒂芬·福克曼。

I'm going back to the price cost kind of question. And I'm curious how this sort of plays through. Kristen, you mentioned maybe the pricing is still a little higher, I think you said in the first half of '24. Is this a situation where you have sort of deliveries that are coming in, containers that are coming in that were sort of at higher rates and that we sort of just have to work through that.

我回到價格成本之類的問題。我很好奇這是如何進行的。 Kristen，你提到定價可能還是有點高，我想你在 24 年上半年就說過。在這種情況下，您是否有某種交付、集裝箱的運輸速度較高，而我們必須解決這個問題。

And then we would expect the cost side to come down after that? Or is it that the cost is sort of unlikely to come down and that sort of a new higher level that we'll have to live with.

然後我們預計成本會在那之後下降？或者是成本不太可能下降，而我們必須忍受新的更高水平。

Yes, I can take that, Steve. So the way I would think about it, you've got kind of 2 parts that are relevant if you're thinking about price costs like for Q4, but then into '24 and the first part of it is what's really already sitting on the balance sheet. So because of the average costing method we've been absorbing higher priced items onto the balance sheet since this inflationary period began and the impact of that rolls off on the P&L, depending on how fast the item sells, what the inventory turns are, et cetera.

是的，我可以接受，史蒂夫。因此，我的思考方式是，如果您正在考慮第四季度的價格成本，那麼您會得到兩部分相關的內容，但進入 24 年，第一部分實際上已經存在了資產負債表。因此，由於採用平均成本計算方法，自通脹時期開始以來，我們一直在將價格較高的商品納入資產負債表，其對損益表的影響取決於商品的銷售速度、庫存周轉率等。等等。

So there's a big portion of this is really about how quickly the impact of what's on the balance sheet hits the P&L. That's a little bit easier for us to size and model now because it's in there. We know what it is. We just have to make some assumptions about the timing of the impact. But then the second thing that complicates estimating '24 is the impact of additional cost increases that may come online from our suppliers and how we would choose to respond to those through price. So that's where it gets a bit complex, especially as we start thinking later into '24.

因此，其中很大一部分實際上是關於資產負債表上的內容對損益表的影響有多快。現在我們可以更輕鬆地調整尺寸和建模，因為它就在那裡。我們知道它是什麼。我們只需對影響的時間做出一些假設。但是，使 24 年預測變得複雜的第二件事是我們的供應商可能帶來的額外成本增加的影響，以及我們將如何選擇通過價格來應對這些成本增加。所以這就是事情變得有點複雜的地方，特別是當我們稍後開始考慮 24 世紀時。

Steve, one other color I'll add here is just having been in the business for a long time, over 2 decades now. This is very -- what we're going through now is very typical of -- in the inflation cycle, early stages of the cycle when we take price, we get it right away and the cost because of our average costing system will work its way through the P&L, whereas later in a cycle, the costs are working their way. So this is largely timing and is very typical of other cycles.

史蒂夫，我要在這裡補充的另一種顏色是，他已經在這個行業工作了很長時間，現在已經有 20 多年了。這是非常 - 我們現在正在經歷的非常典型的 - 在通貨膨脹週期中，在周期的早期階段，當我們計算價格時，我們立即得到它，並且由於我們的平均成本計算系統而產生的成本將發揮其作用整個損益表，而在一個週期的後期，成本開始發揮作用。所以這很大程度上是時間安排，並且是其他週期的典型現象。

Understood. And then, Erik, I think in past calls, you've been kind enough to give us your sense of sort of the cadence of business as the quarter progressed. How was May, how does June feel? Anything to call out there?

明白了。然後，埃里克，我認為在過去的電話中，您非常友善地向我們傳達了您對本季度業務節奏的了解。五月怎麼樣，六月感覺如何？那裡有什麼要喊的嗎？

Yes. I think, Steve, the words that we used in the prepared remarks of leveling are probably the most appropriate. I mean certainly, look, we've seen a moderation. No surprise there, given IP, a moderation from where we were 6, 9 months ago, but not a big change interestingly, if you look at our numbers, the one thing that is the biggest change from Q2 to Q3 was there was a step down in our national accounts growth rate.

是的。我認為，史蒂夫，我們在準備好的調平評論中使用的詞語可能是最合適的。我的意思是，我們確實看到了一種溫和的態度。考慮到 IP，這並不奇怪，與 6、9 個月前相比有所緩和，但有趣的是，變化並不是很大，如果你看看我們的數據，從第二季度到第三季度最大的變化是出現了一步我們的國民賬戶增長率下降。

And I have to tell you, the feeling on the ground there is probably the best it's been in a long time. And sometimes what's tough to tease out there is how much of that is macro, meaning how our customers are doing and how much of that is micro because I know our team is feeling good about a number of recent wins that haven't yet hit the numbers. So it's hard to tease that out. But in general, we're not feeling like things are falling off.

我必須告訴你，那裡的感覺可能是很長一段時間以來最好的。有時很難弄清楚其中有多少是宏觀的，這意味著我們的客戶在做什麼，又有多少是微觀的，因為我知道我們的團隊對最近的一些尚未達到目標的勝利感覺良好。數字。所以很難弄清楚這一點。但總的來說，我們並沒有感覺事情正在惡化。

A lot of this, what we're seeing is the growth rate in June certainly is going to be less than it was in Q3, but we're lapping an acquisition, we're lapping higher comps that there's sequentially not a ton of change.

其中很多，我們看到的是 6 月份的增長率肯定會低於第三季度，但我們正在進行收購，我們正在進行更高的比較，因此隨後不會有太多變化。

The next question comes from Patrick Baumann with JPMorgan.

下一個問題來自摩根大通的帕特里克·鮑曼。

Just first one to clarify on the public sector win. So you said 2/3 of the 80% growth in that customer group is from, I guess, those capital purchases. So I calculate that to be close to $40 million. And then if I were to line up your prior expectations on gross margins, which I think were to kind of improve quarter-on-quarter by like 30 to 40 basis points.

這只是第一個澄清公共部門獲勝的問題。所以你說該客戶群 80% 的增長中有 2/3 來自，我猜，這些資本購買。所以我算了一下，接近 4000 萬美元。然後，如果我將您之前對毛利率的預期列出來，我認為毛利率將比上一季度提高 30 到 40 個基點。

It kind of suggests this revenue came in at 15% to 20% gross margin, all else equal, but then you're saying only 2/3 of the 160 year-over-year gross margin compression is from that public sector win. Can you just help kind of tie that all together, like am I way off on my 15% to 20%? Or is there some other part of the business that's a little bit below where you thought it would be?

這有點表明，在其他條件相同的情況下，該收入的毛利率為 15% 至 20%，但你會說，160% 的毛利率同比壓縮中只有 2/3 來自公共部門的勝利。你能幫忙把這一切聯繫起來嗎，比如我離 15% 到 20% 還差嗎？或者業務的其他部分是否略低於您的預期？

So you're a little high on the volume number, Pat, and you're a little bit high on the gross margin impact. Maybe the simplest way to put it. You mentioned the guidance we gave previously on gross margin improving 30 to 40 basis points sequentially. If you take out the impact of the contract win, that is exactly what happened.

所以你對銷量數字有點高，帕特，你對毛利率影響也有點高。也許是最簡單的表達方式。您提到我們之前給出的關於毛利率連續提高 30 至 40 個基點的指導。如果你除去合同獲勝的影響，這正是所發生的情況。

Okay. Right. So I think my math is pretty close. But okay. If I move on to the next question, if I may, kind of various adjustments related to the growth you're seeing in the mission-critical programs, vending, VMI, (inaudible) and also the government business growth. I back into kind of sales for the rest of the business that were down maybe high single digit, that 35% of sales that is kind of nonpublic nonsolution subset of customers.

好的。正確的。所以我認為我的數學非常接近。但好吧。如果我繼續討論下一個問題，如果可以的話，我想談談與您在關鍵任務計劃、自動售貨、VMI（聽不清）以及政府業務增長中看到的增長相關的各種調整。我回到了其餘業務的銷售額，可能下降了高個位數，即 35% 的銷售額來自非公開的非解決方案客戶子集。

Can you just address -- you mentioned strategic investments you're making focused on the website. In terms of driving better results in that subset? And then any other initiatives maybe to reinvigorate growth in that bucket of business? Any color you can give on any of that stuff would be helpful.

您能否談談您正在針對網站進行的戰略投資。就在該子集中推動更好的結果而言？那麼還有其他舉措可以重振該業務的增長嗎？你可以給任何這些東西上任何顏色都會有幫助。

Yes, Pat, sure. So look, I think a few years back, we made a pivot and the pivot was to enhance the value proposition to become higher touch and more technical on our customers plan for us. And a lot of the programs that you're talking about are aimed at just doing that. And we're really encouraged because we're winning there.

是的，帕特，當然。所以，我認為幾年前，我們做出了一個轉變，這個轉變是增強價值主張，使我們的客戶計劃變得更高的接觸性和更多的技術性。你所談論的許多計劃就是為了做到這一點。我們真的很受鼓舞，因為我們在那裡獲勝。

And I think what you're referring to, and I don't know -- I didn't follow all the numbers and I saw like, I can't confirm or deny exactly the numbers, but directionally, yes, where we're touching customers with the new value proposition, we're growing at much higher rates than where we're not. So you asked about where we're not touching customers, what are we doing? And we mentioned digital investments. So there's a couple of kind of pillars to our digital investments. One is e-commerce, for sure. And there's a lot of work going on right now. And we've always felt like we had a strong e-commerce program. We also have always felt that you never stand still, and we're going to be enhancing our platform. We're enhancing our product discovery so work to make the transaction with MSC even better, that's one.

我想你指的是什麼，我不知道——我沒有跟踪所有的數字，我看到，我無法確切地確認或否認這些數字，但從方向上來說，是的，我們在哪裡？通過新的價值主張打動客戶，我們的增長速度比其他地區要快得多。所以你問我們在哪裡不接觸顧客，我們在做什麼？我們提到了數字投資。因此，我們的數字投資有幾個支柱。其中之一當然是電子商務。現在有很多工作正在進行。我們一直覺得我們擁有強大的電子商務計劃。我們也一直認為你永遠不會停滯不前，我們將增強我們的平台。我們正在加強我們的產品發現，因此努力使與 MSC 的交易變得更好，這就是其中之一。

Two would be digital partnerships. That extend the reach of MSC and allow us to bring our high touch and technical value proposition to a larger and larger audience of customers. So certainly, in the past, we've talked about MillMax, which has become a key ingredient now in our value proposition. We mentioned machining Cloud. So extending and the reach of MSC through digital partnerships would be the second pillar. Both of those are key areas where we've been investing and intend to drive growth in the smaller customers.

其中兩個是數字合作夥伴關係。這擴大了 MSC 的影響範圍，使我們能夠將我們的高接觸度和技術價值主張帶給越來越多的客戶群體。當然，我們過去談論過 MillMax，它現在已成為我們價值主張中的關鍵要素。我們提到了加工雲。因此，通過數字合作夥伴關係擴大 MSC 的影響力將是第二個支柱。這兩個都是我們一直在投資並打算推動小客戶增長的關鍵領域。

Understood. Any thought -- just a follow on to that, to any tweaking approach to the list price plus discount approach that you continue to have?

明白了。有什麼想法——只是對此的後續，對您繼續採用的標價加折扣方法的任何調整方法嗎？

Yes. Look, we always evaluate -- if you're talking about pricing, look, there's always a trade-off to be had between pricing and volume. And we've designed a value proposition that is high value add, higher cost because it's high touch and more technical. And we believe appropriately that we should charge for that value and we do.

是的。看，我們總是評估——如果你談論定價，看，定價和銷量之間總是需要進行權衡。我們設計了一個高附加值、更高成本的價值主張，因為它具有高接觸性和更高的技術性。我們認為我們應該對這種價值收費，我們確實這樣做了。

And we focus on customers that are looking for a total cost of ownership reduction and not just going to price up. So I would say, in general, that's our approach is the pricing we go with is commensurate with the value that we bring to customers. I'd also say that anywhere we're touching customers in those higher touch models were priced competitively. So I think what you're referencing is for customers either who are new to MSC or who don't have one of these programs in place, yes, there are times where our prices are going to look high.

我們專注於尋求降低總體擁有成本而不僅僅是提高價格的客戶。所以我想說，總的來說，我們的方法是我們的定價與我們為客戶帶來的價值相稱。我還要說的是，無論我們在哪裡接觸到客戶，那些更高觸感型號的價格都具有競爭力。因此，我認為您所指的客戶要么是 MSC 的新手，要么是沒有這些計劃之一的客戶，是的，有時我們的價格會看起來很高。

We evaluate it all the time. I think you could expect to see us tweak, but I would say, when I say tweak taking more surgical approaches as opposed to anything massive and broad brushed at one time.

我們一直在評估它。我想你可能會看到我們進行調整，但我想說的是，當我說調整時，我們會採取更多的外科手術方法，而不是一次性進行大規模和廣泛的處理。

The next question comes from Ryan Merkel with William Blair.

下一個問題來自瑞安·默克爾和威廉·布萊爾。

So I wanted to ask on gross margin. Just high level, just given it sounds like there's some puts and takes. So sort of over the next 3 to 4 quarters, could you talk about the high-level tailwinds and then the high-level headwinds, it sounds like net-net, you typically talk about gross margin mix being down like 30 to 50 bps. And it sounds like it might be in that range, maybe a little worse. Correct me if I didn't hear that right.

所以我想問一下毛利率。只是高水平，只是聽起來像是有一些投入和需要。因此，在接下來的 3 到 4 個季度中，您能否談談高水平的順風，然後是高水平的逆風，聽起來像是淨淨的，您通常會談論毛利率組合下降 30 至 50 個基點。聽起來可能就在這個範圍內，也許還差一點。如果我沒聽錯請糾正我。

I think, Ryan, you're talking about like the kind of typical way we would size the margin mix headwind from the different growth through the areas where we have more tailwinds like a public sector growth solutions, I think that you're referring to rate?

我認為，瑞安，你所說的是一種典型的方式，我們通過公共部門增長解決方案等擁有更多順風的領域來調整不同增長帶來的利潤組合逆風，我認為你指的是速度？

Right. And it sounds like with the public sector win, the price cost, it just feels like there's a little more incremental pressure. I just want to make sure I understood the puts and takes, high level, just the next couple of quarters for modeling purposes.

正確的。聽起來隨著公共部門的勝利，價格成本，感覺增量壓力更大了。我只是想確保我了解高水平的看漲期權和看跌期權，只是為了建模目的而在接下來的幾個季度中。

Yes. Yes. So you're spot on. That mix impact was definitely exacerbated in the third quarter. Public sector in general, tends to be a margin headwind for us. But then because of the nature of a good portion of that public sector growth in Q3 coming from that large contract win, which was at lower gross margins. And yes, that mix was absolutely higher than we would normally expect that be.

是的。是的。所以你是對的。這種混合影響在第三季度無疑加劇了。總體而言，公共部門往往對我們來說是利潤逆風。但隨後由於第三季度公共部門增長的很大一部分來自於毛利率較低的大型合同贏得。是的，這種組合絕對高於我們通常的預期。

In Q4, there will be a similar dynamic, but on a lower amount of revenue for the fourth quarter, probably about half the size of what you saw in Q3 and then I think we touched on this earlier, but there's a lot of moving parts in Q4. So the other thing on margin, I would just reiterate is you have decelerating price benefit the cost levels will stay relatively flattish to Q3 such that the price cost headwind on gross margin is worse than the 20 basis points that we saw in Q3.

在第四季度，將會出現類似的動態，但第四季度的收入較低，可能約為第三季度的一半，然後我認為我們之前已經談到過這一點，但有很多變化的部分在第四季度。因此，關於利潤率的另一件事，我想重申的是，價格效益正在減速，成本水平將在第三季度保持相對平穩，因此毛利率的價格成本逆風比我們在第三季度看到的 20 個基點更糟糕。

And then going into '24, it's a little hard to say so. We'll put more color on that next quarter. But because of how the costs roll off and what the inflationary period looks like, it's reasonable to think that the first half is going to be tougher on margins than the second half.

然後進入 24 年，就有點難說了。我們將在下個季度對此進行更多的闡述。但由於成本如何下降以及通貨膨脹時期的情況，有理由認為上半年的利潤率將比下半年更艱難。

Kristen, the one other thing I'd weigh it weigh in with is just Ryan. So Kristen summarized it perfectly 2 other potential tailwinds that to Kristen's point, we've got to size all of this before giving a '24 outlook would be the category line reviews, which will. So if price cost is negative and worse in the first half than the second half, category line reviews should eat into that.

克里斯汀，我要權衡的另一件事就是瑞安。因此，克里斯汀完美地總結了另外兩個潛在的有利因素，就克里斯汀的觀點而言，我們必須先衡量所有這些因素，然後再給出 24 年的前景，即類別線評論，這將是。因此，如果上半年的價格成本為負且比下半年更差，則類別線審查應該會影響到這一點。

And second is some benefit from freight as that moves through our P&L. So putting that -- those are kind of the puts and the takes. And then by next quarter, we'll put it together for you.

其次是貨運帶來的一些好處，因為貨運會影響我們的損益表。所以說，這些就是“投入”和“收穫”。然後到下個季度，我們將為您整理好。

Perfect. Okay. And then just high level, back on the macro conditions have moderated. We can all see the IP is down slightly now. What are you hearing from customers in terms of the drivers. Is it destocking? Is it higher interest rates is causing people to tighten up a bit our small and medium customers a little bit slower maybe any end market color you throw in there? I'm just trying to figure out what are the drivers here of sort of this moderating conditions.

完美的。好的。然後只是高水平，宏觀條件已經有所緩和。我們都可以看到IP現在略有下降。關於司機，您從客戶那裡聽到了什麼？是去庫存嗎？更高的利率是否導致人們對我們的中小型客戶收緊一點，速度慢一點，也許你加入了任何終端市場色彩？我只是想弄清楚這種緩和條件的驅動因素是什麼。

Yes, Ryan. So look, I would say it's definitely not a surprise to your point, given the indices. I think things have actually held up pretty well, considering what the headlines in the indices show. As we probe into it, I would say, first of all, the leveling the moderation, the pockets of softness, this is not across the board because you have pockets where things are softer, I mean, oil and gas would be one example. And then you have pockets where things are booming. Aerospace is doing well. Automotive is doing well. Medical is doing well.

是的，瑞安。所以，我想說，考慮到指數，這對你的觀點來說絕對不足為奇。考慮到指數中的標題所顯示的內容，我認為情況實際上表現得相當不錯。當我們探討這個問題時，我想說，首先，平衡適度，軟性的口袋，這並不是一刀切的，因為你有一些東西比較軟的口袋，我的意思是，石油和天然氣就是一個例子。然後你就有了蓬勃發展的口袋。航空航天業表現良好。汽車業表現良好。醫療狀況良好。

So this is not across the board at all. We didn't see -- it's always hard to gauge destocking, but we didn't see a ton of destocking. I think part of this no question, the higher interest rates having some impact. But overall, Ryan, I mean, moderating is the word I'd use as opposed to anything that would -- we don't see signs of like things falling off a cliff. I don't know if that's helpful color.

所以這根本不是一刀切的。我們沒有看到——去庫存總是很難衡量，但我們沒有看到大量的去庫存。我認為這毫無疑問是部分原因，較高的利率會產生一些影響。但總的來說，瑞安，我的意思是，我會用“調節”這個詞，而不是任何其他詞——我們沒有看到類似事情從懸崖上掉下來的跡象。不知道這個顏色有沒有用

No, it is. I appreciate it. I pass it on.

不，是的。我很感激。我把它傳遞下去。

The next question comes from Ken Newman with KeyBanc Capital Markets.

下一個問題來自 KeyBanc Capital Markets 的 Ken Newman。

This is [Katie Placer] on for Ken today. So I know you guys really aren't ready to give any full year '24 guidance yet. But I'm wondering just at a high level, we can talk about EBIT margins for next year. So if you're able to keep sales up low to mid-single digits, just given some of these mix impacts and price cost headwinds can operating margin be up or flat in fiscal '24?

這是今天為 Ken 做的 [Katie Placer]。所以我知道你們還沒有準備好提供任何 24 年全年指導。但我想知道，我們可以在較高的層面上討論明年的息稅前利潤率。因此，如果您能夠將銷售額保持在低至中個位數，那麼考慮到其中一些混合影響和價格成本逆風，24 財年的營業利潤率會上升還是持平？

I'll take that. So definitely still too early to definitively answer the question. The price cost piece is a big driver. We've got to get our arms around. And then, as Erik mentioned, we're really aggressively moving on the line reviews, sizing those, sizing other productivity opportunities that we have and looking at the horizon for when those would come online. So there are a lot of moving parts. What I would say a higher level if you do math, we're still targeting 20% incrementals over a cycle -- and more to come on the specifics of '24, we're really trying to get our arms around those moving pieces, just some scenario planning and model the sequencing for the year.

我會接受的。所以現在明確回答這個問題還為時過早。價格成本是一個很大的驅動因素。我們必須伸出雙臂。然後，正如埃里克提到的，我們確實正在積極地進行線路審查，評估它們的規模，評估我們擁有的其他生產力機會，並尋找這些機會何時上線。所以有很多活動部件。如果你做數學的話，我想說的是更高的水平，我們仍然目標是在一個週期內實現 20% 的增量——並且更多關於 24 年的細節，我們真的在努力抓住那些移動的部分，只是一些情景規劃和對今年的排序進行建模。

Okay. Yes. That makes sense. And then on -- going back to some price questions here on the public sector, is that typically a headwind to price? Just trying to get a sense of like without the impacts from that win would prices have been up more than 3.5% in the quarter.

好的。是的。這就說得通了。然後，回到公共部門的一些價格問題，這通常是價格的阻力嗎？如果不考慮這場胜利的影響，本季度價格上漲超過 3.5%。

No. It's probably maybe a little bit higher, Katie. The way I would say we think about public sector impact on gross margins. It's a little bit lower generally than the core. So like when we talk about the big growth initiatives that our margin and public sector is definitely one of them because the average gross margin, like taking the one win out, like in general, the public sector margins are below the average of the rest of the business. So we would call that a gross margin headwind on a [typical] basis.

不，可能會高一點，凱蒂。我想說的是，我們考慮公共部門對毛利率的影響。一般來說，它比核心要低一點。因此，就像當我們談論重大增長舉措時，我們的利潤率和公共部門絕對是其中之一，因為平均毛利率，就像取得一場胜利一樣，一般來說，公共部門的利潤率低於其他行業的平均水平。這生意。因此，我們將其稱為[典型]毛利率逆風。

Our last question today comes from Chris Dankert with Loop Capital.

今天我們的最後一個問題來自 Loop Capital 的 Chris Dankert。

I guess, Erik, you mentioned medical and EV has got some pretty exciting opportunities going forward here. I guess maybe if you could touch on just what does customer engagement look like there today? I mean can these be like much more meaningful markets quickly? Or is this something that we're going to really see moving the needle, say, like 5 years out?

我想，埃里克，你提到醫療和電動汽車在這裡有一些非常令人興奮的機會。我想也許您能談談今天的客戶參與度是什麼樣的嗎？我的意思是，這些市場能很快變得更有意義嗎？或者說，這是否是我們真正會看到的事情，比如 5 年後，會發生什麼變化？

Chris, look, I would say both. I think you're starting to see the impact -- medical, certainly, we're seeing the impact now. And EV, I would say we are beginning to see a bulge right now with the infrastructure for the electric vehicles and the hybrid vehicles build out by infrastructure, I don't just mean charging, but batteries, et cetera.

克里斯，聽著，我會說兩者。我想你已經開始看到它的影響了——當然，在醫學上，我們現在已經看到了它的影響。至於電動汽車，我想說，我們現在開始看到電動汽車和混合動力汽車基礎設施的激增，我指的不僅僅是充電，還有電池等等。

I think we are beginning to see benefit now. And I would say the other one that we called out, Chris is aerospace that we think has no pun intended long runway with the kind of backlog that we've seen there. So all of those, I think we're beginning to see benefit now, but we would expect good things to come for the next quarters and years. And by the way, the one other point I'd make, Chris, is we mentioned machining cloud. So partnerships like that.

我認為我們現在開始看到好處。我想說的是，我們提到的另一個問題是，克里斯是航空航天公司，我們認為它沒有雙關語，意指長跑道與我們在那裡看到的那種積壓。因此，我認為我們現在開始看到所有這些好處，但我們預計未來幾個季度和幾年將會有好的事情發生。順便說一句，克里斯，我要說的另一點是我們提到了加工雲。所以像這樣的伙伴關係。

So I talked about the reason behind the partnerships is to extend our reach and bring our value proposition to more customers. We do try to line up and partner with customers -- with partnerships and entities that are going to bring us closer to those end markets, those higher, more sophisticated end markets and machining cloud would be a great example of that.

所以我談到合作夥伴關係背後的原因是為了擴大我們的影響力並將我們的價值主張帶給更多客戶。我們確實嘗試與客戶建立合作夥伴關係，通過合作夥伴關係和實體讓我們更接近這些終端市場，那些更高、更複雜的終端市場和加工雲將是一個很好的例子。

Perfect. And then I guess on in-plant, growth has been really strong there. Any update or comment on just kind of where you see that as a percent of sales kind of the dot plot for growth there going forward?

完美的。然後我想在廠內，那裡的增長非常強勁。對於您認為未來增長點圖的銷售額百分比有什麼更新或評論嗎？

So we -- it's been going at a nice clip. I mean, look, we would say, if you look at the total addressable market, for customers with an in-plant, and we'll look at it by size and complexity of customer, Chris. And this is going -- if you go out 5 years, 10 years, this should be a pretty healthy chunk of our national accounts business that ends up with whether it's full in-plant or the full suite of solutions that makes so much sense.

所以我們——一切進展順利。我的意思是，我們會說，如果你看看整個潛在市場，對於擁有工廠的客戶，我們會根據客戶的規模和復雜性來看待它，克里斯。如果你出去 5 年、10 年，這應該是我們國民賬戶業務的一個相當健康的部分，最終決定它是完全在工廠內還是全套解決方案都非常有意義。

And we're seeing the benefit for MSC is obviously the penetration, the growth and the high retention rate, but it's a real win for the customer especially as the labor market remains challenged, the skills gap remains. Customers are putting a premium on being able to essentially outsource lower value-add functions so they can focus on the core operations, which is manufacturing. So I would tell you that over the long run, a good chunk of national accounts ought to end up with an in-plant, if not the whole suite of services.

我們看到 MSC 的好處顯然是滲透率、增長和高保留率，但這對客戶來說是真正的勝利，特別是在勞動力市場仍然面臨挑戰、技能差距仍然存在的情況下。客戶非常看重能夠從本質上外包較低附加值的功能，這樣他們就可以專注於核心業務，即製造。所以我想告訴你，從長遠來看，國民賬戶的很大一部分應該以工廠內的服務（如果不是整套服務）結束。

This concludes our question-and-answer session. I would like to turn the conference back over to Ryan Mills for any closing remarks.

我們的問答環節到此結束。我想將會議轉回瑞安·米爾斯（Ryan Mills）發表閉幕詞。

Thank you for your time and interest this morning. As a reminder, our fiscal 2023 4th quarter earnings date is set for October 25 and we look forward to seeing you in person at investor conferences or on the road in the coming months. Thank you for joining us today. Goodbye.

感謝您今天早上的時間和興趣。謹此提醒，我們的 2023 財年第四季度財報日期定於 10 月 25 日，我們期待在未來幾個月的投資者會議或路上見到您。感謝您今天加入我們。再見。

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。