Lincoln Electric (LECO) 31 Oct 242024 Q3 Earnings call transcript

Greetings, and welcome to the Lincoln Electric 2024 Third Quarter Financial Results Conference Call. [Operator Instructions] This call is being recorded.

It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you, and you may begin.

Thank you, Kayla, and good morning, everyone. Third Conference Electric's Lincoln to Quarter Call. XXXX Welcome earlier you call can released Relations presentation our our and results financial section. Investor the this We find today, release lincolnelectric.com in at slide and

today call and Officer; our the on Bruno, me is Hedlund, Chief Gabe President Officer. Financial Steve Chief Executive and Joining

to Following happy questions. take prepared our we're your remarks,

from to But start XX-K our actual statements number call this during forward-looking, factors before which discussion, and certain and due and on we are our may may our results our of risk materially provided Forms differ made filings XX-Q. SEC a press please note expectations in be uncertainties, and that release in

measures that not which GAAP financial addition, comparable Investor U.S. the to measure website discussed is In of found non-GAAP available lincolnelectric.com. tables is conform Relations release, the do earnings we section in our our in most GAAP. measures the to in financial again of A reconciliation at

I'll over that, the with call Hedlund. to Steve? turn And Steve

Thank you, everyone. morning, Amanda. Good

Turning quarter and performance, results end despite due dynamics to challenging broad XXX% profile. a mix deceleration with solid conversion a cash to third generated generation and profit in cash market strong demand X. our We Slide rate

incentive temporary cycle, of resilience with business benefits of align All strategic results highlight business the strong initial model through through conditions measures. the our execution disciplined management, compensation our costs, adjustments now employee-related which the cost the and initiatives, our of cost-saving made to

The had basis year impact and our XX.X% income result, lower prior is operating steady adjusted which in favorable gross sequentially. income modestly a our profit margin As achieved adjusted point incentive and a a a margin. we to increase adjustment slight versus operating XX compensation relatively margin,

extremely not standard our While are top easy margins target holding quarter, as above we line average of higher challenges. am despite pleased with XX% performance I our an

to return ROIC share balanced in continues through investing growth to cash and $XX cycle, remains continue shareholders maintaining in dividend disciplined XX.X% capital strong, despite million strategy the our also repurchases. stewardship. projects and are acquisitions, at both internal capital and our in and We reinforce allocation quarter the weaker to our

Turning in large our the impacting weakness of decline customer broad X% in all X. to organic reflects quarter a mix product third base, among Slide The areas. sales

to continue more our see general customers discretionary from purchases. which a macroeconomic industry is We uncertainty, posture cautious equipment given delaying

consumables customers industry to to heavy to customers rightsize channels, their EV dealer continued sector activity as automotive despite continue powertrains. levels rebalance quoting capital plans their delay Our their impact product hybrid across inventories high production demand. curtail which they continues ICE, in And to projects and

sales trends market We are mix, relative has as seeing very the different impacted which a our whole. performance channel sales by to

at Welding distribution the notable organic steady brand, and rate performance Our programs products and our OEM demonstrating was year-over-year, double sales sales of where in distribution region's sales. channel declined is strength relative Americas resilience. Most our the channel our the of

short the sales automation, key impact as of in the Given customer And in the we these weakness of cycle slowing XXXX industrial through the through the automation current Europe, XXXX. orders first portfolio nature cautious could remain given plans long expect to term. trends in regions first half shifts automotive of we OEM like sector's and quarter persist

to when sentiment orders accelerate. automation pivot progress quarter, sector-specific and rates, monitoring back we be As production will will growth to the PMI through when market the and fourth gauge industrial announcements we better will

once mitigating track of execution delivering which System the superior has strategic pleased profit I the performance Lincoln for reshaping interim, cost the initiatives. the lower And teams end our impact and Business playbook, performance deploying and strong business our am of record of markets our we are through recover. In that the a margin by aggressively volumes, are savings

Turning to X. Slide

permanent, million at run the $XX and fourth cost per permanent million quarters and and segment temporary million $XX at to both will initiated third the of in savings, to the ramp the in quarter. we approximately to which $XX and annualized million Americas savings quarter, expected savings primarily combined with to recognized starting be approximately approximately quarter, low million balance X in generate range in temporary the We actions, International The benefit a third half Welding. Welding $X $XX half the end the During quarter. in

by with aggressively attrition through cost and implemented savings by demand in maintaining replacement aligning reduction temporary spending a slower hiring hours We through have significant voluntary turnover. discretionary net productive of

until this improve. conditions will We posture maintain

Americas cost savings the temporary We in all expect be benefits will substantially Welding. of

Both profitable changes also are organization to charges align structure million In cost business to cycle. and and the warehouse the Despite to manufacturing we growth changes hallmark permanent of America locations. our to remain ability in charges, North our additional playbook. fourth an streamlining noncash include of in better innovation structural our and temporary structural and incentive compensation expenses. savings savings next initiatives on the cost outperform cost to growth, the $X These $XX expect headwinds, launched incurred our million strengthen conditions, include with our not addition, We across international consolidation market which customers in third and we several improve in quarter. conditions initiatives focused rationalization our and a business is implementing short-term facilities long-term cyclical do quarter to the align of and and serve

returns. last a confident differentiate X. to launched investments our show. superior generate represents R&D and trade over report will to and in of products Turning XX our new leadership that brand, position years, at and acquisitions extend our This we our pleased largest launch new that to continue Slide recent I'm industry the I'm X products

in new Our solutions the laser, as plasma of handheld areas operations launch thermal Lase our customer portfolio like productivity and heating, strategically of driving underpenetrated on and focused presence well higher expanding our laser. Flex as TIG, including

automation market. including deliver Zeman, RedViking, as Fori, This featuring X a system and line the our recent how an Inrotech automated different included of breadth production to integrator. from fully automated the acquisitions also solutions showcased we technologies functions in-house highlighting We to are Vanair integrating capabilities unique

how improved Lastly, safety, as and integral we designs. lower product sustainability efficiency, emissions emphasize recyclability as are energy well to ergonomics, our and

and the to the have discuss balance to cover quarter I outlook strategic would company business, pass our execution like performance up in initiatives strong have year, profit in initiatives growth our we exceed and for the Gabe I the to reiterate Before our positioned and prospects. confidence call strategic our The long-term third of results our cycle goals. to the the of outperform

the Bruno. Gabe pass to will I now call And

Thank you, Steve.

Slide Moving X. to

volumes. primarily acquisitions contributed and quarter to X% lower from declined higher, third sales. sales Pricing Our was $XXX X% to X% million, X.X%

Gross Margin gross profit which management versus million, increased on profit approximately XX with efficiencies, prior year. X% dollars operational $XXX and decreased which points softer cost the effective the improved to offset volumes. unfavorable a of basis XX.X% impact margin,

$X.X LIFO quarter. the a million recognized in benefit also We

versus recorded and approximate a programs, sales $XXX adjustment of costs held from in incentive on Our lower sharing at million higher steady related an and Employee-related corporate. programs basis was lower SG&A largely million sales. XX include XX.X% as $X increased percent by to year in to a prior points acquisitions performance-based variable relatively largely reduction offset expense costs. profit which as labor SG&A SG&A costs other employee-related are

not and to to would $X fourth be the adjustment expect to programs, significant do closer another incentive quarter, ahead corporate million. to we performance-based expense Looking expect our

$XX $XX step-up The and $XXX million the was Reported $XX charges, XX% a Steve million primarily operating to declined income of in for million. discussed, million substantially inventories. in charge, $X rationalization to charge special a or which decline item due from million value acquired the previously

margin $XX million adjustment. margin a Excluding from basis special items, or point The adjusted a incentive declined to basis operating X% to approximately XX benefit our points the $XXX operating adjusted modest XX.X%. and million, income declined XX compensation to includes income

Interest expense quarter the issued $XXX net in of to reflecting August. increased XX% $XX million debt in million, the

expense interest relatively We to continue year prior versus the full XXXX flat to be net for expect year. the our

We which reported quarter, of million to primarily pension $X $X.X settlement plan expense charge non-U.S. net the a of pension the offset million due other from a noncash termination income. a other in

compared was prior income Excluding special with the $XXX,XXX as million in $X.X items, other year.

compares prior our tax XX.X% Our rate mix of the effective we full our XXXX quarter expect due to earnings, XX.X%, rate Year-to-date, tax rate tax XX.X% to adjusted an to effective tax in discrete the year effective of the which extent and be effective with of is to the third in year. subject anticipated mix continue was rate adjusted earnings of and mid-XX% range, to items. low tax adjusted

quarter per share Third was earnings $X.XX. diluted

include share was per earnings results incentive EPS the $X.XX $X.XX. diluted compensation benefit adjusted adjustment. from a items, special Excluding

end large equipment segments slowing transportation in product compression orders. our Americas reportable Slide in as to production and across X.X% on X% quarter, automation due as X Moving decreased the lower Welding reflecting sales industries heavy areas, X. among well lower rates volumes many with primarily all and to customers

X% contributed benefits Price and of approximately sales acquisitions the and growth. our RedViking Vanair

We price uptick expect fourth and quarter. in an the be to in sequentially acquisition recognize positive sales

of segment's were prior effective Welding XX.X%, versus costs in X% year basis the EBIT to decreased adjusted management, approximately third and cost adjusted automation. employee-related Americas volumes and operational $XXX million. which lower XX points by to improvements declined acquisitions, lower quarter EBIT margin reflecting partially The impact offset

generate discussed to XX% the September, margin range year. in As an for segment EBIT to the we expect the XX% in

weak relatively in automation International sales Asia was volumes. sales demand X. Welding by Regional declined Western persistent approximately Pacific on Turkey. and demand industrial in Europe Slide to XX% offset Moving XX% and lower growth steady

holiday Price the managing recognize mix due effectively declined seasonally benefits to lower The basis XX savings of EBIT their The weaker the volumes X% and margin initial points impact reflects measures. in a quarter. of the of team cost adjusted and quarter costs, is in schedules.

of to performance the volume to margin expect in full segment's be EBIT the range. year extent the XX% Given we XXXX XX% compression,

the Slide XX. Moving Group to Harris Products on

increased demand, on X%, costs, demand. X% industrial was which by softer by X% HVAC offset by retail quarter was offset year a rising the volumes. in prior approximately declines predominantly stead relatively lower channel which sector sales partially reflect metal led higher challenging comparison and sector price silver, Third Volume

XX.X%, million. increased effective Adjusted and operational points cost X% adjusted The efficiencies. to XX management EBIT due EBIT margin to approximately [ basis ] increased $XX to primarily

expect team to for generate continue XX% EBIT to We the of range XX% to in the balance year. the margins the

in in quarter, the cash resulting Moving generated from million We operations flows a in $XXX conversion. to cash Slide XXX% XX.

well XX.X% as Our sales average from as lower levels. acquisitions capital higher increased capital to operating working working from

$XXX We shareholders Slide dividend higher XX. million in to million returned from $XXX approximately through CapEx and repurchases. growth million in $XX $XX of $XX the in share and in payout invested to We quarter Moving million our acquisitions. million

and For the end. generation, recently remain We announced balanced have confident strong disciplined approach creation through X our dividend to capital returns rate flow cash XXXX. to $X we consecutive the at our share continues allocation XXth in per cycle, demonstrated and quarter increase our strategy annual our generate the which months, XX.X% first to long-term at in value strong in

expect to As the sales the organic XXXX year we decline balance percent September. single-digit to look high as continue of outlined our we to in to full mid- year,

decline third range. Given percent single-digit the the expect deceleration organic quarter, fourth in in the high quarter sales we to

our performance, high updated year assumption our at savings benefits operating the costs. now year reductions be prior income versus full This of playbook our have at profit a margin margin. steady and We employee-related around cost on in adjusted XXXX are teens and decremental relatively reflects expecting to and XX.X%

maintaining We assumptions. other are all

maintain a of and posture continue in excellence shareholders. as to monitor the to risk, invest return to ability growth, portion will to cycle, changing and this navigate operating as operational and we sheet our continue ample to we cash in to market balance our confident well strong conditions adjust liquidity are While

the now And I turn like for over call would to questions.

question line from Our the first with comes Oppenheimer. of Bryan Instructions] [Operator Blair

some offer on markets, major across rates order detail could you hoping was end geographies. product October categories, I

a cautious You mentioned 'XX. quarter the first posture through

of own its trends orders a trying get QX better underlying experience on diverged and key point sense get answer for from sense next picture I'm any areas of here. year? have a off just those that's So of to the ultimately whether just big in comping

comments, we the expect fourth to Bryan, in my be organic as down high mentioned single I quarter in digits. the Yes,

which saw, quarter. we dynamics the in the of third continuation decelerated a implies that So

the of more same. see profile, So automation we equipment and profile, consumable the the profile the

PMI, nothing such of activity So to different point industrial is when to really the production. you pointing external such as any as level measures

organic. high So internal and we're seeing the of same down more on standpoint, from for the impressing single-digit an

temporary Understood. the Okay. segment. cost if split cost savings missed parse specific or by [ savings ]? you out can automation your apologize detail, I I strategy of actions this mentioned but structural And you and to

automation particularly Well, specific teens in the improvements on the quarter but we integrating to into business. seen, pressures comment within we were that, our acquisitions automation, low EBIT -- on I with our third didn't We business. did on the we've can the that operational on despite tracking comment

know, be average cycle. our into track which as on average, that Bryan, you to continue corporate through on at target, we the So XX% is to

our So we're pleased with the automation performance of business.

question your line the of Angel next Stanley. Castillo with And from comes Morgan

Just get little bit wanted more a to color.

You heading And just thinking and neutral. you How into in that could price price of through? as about supply kind flow pieces, X kind to you of into those Just about of kind think the environment reiterated are about 'XX? cost the talk price you XXXX? and kind heading the cost -- this increases if of continue

Yes.

posture our neutral. cost to is Angel, strategically price So be

inflationary trends. as So we'll pricing protect types implement model we see and our business of

we see seeing is But in in the maintain what level market market. that of the a our posture in pricing currently generally to right we're now

the we of aligned for third beginning because the of as pressures the inflationary Harris. the is up at metals of saw Our costs, the as quarter, actions performance, for took the X% well as some that you to year being

we'll same So that with continue posture.

helpful. That's you then it. talk the about little Got and And unpack a automation that maybe more. could bit business just if

so first had you regarding visibility of the half kind of question X And maybe the You and months in -- historically, it the mentioned first visibility. there. again,

in shaping that next your Just for kind in of how growth visibility is what the and implies year? terms automation up in year-over-year of half first of that

down You automation organic we saw pointed double our that digits. to being low

particularly more on we talking driven side capital And we're of -- seeing making, in air pocket of automotive been decision So decision markets. same. the by that the have the about the

programs. seeing of decline week what the in mid-teens has comparison of that last at years versus progression key And what we a were the when into programs. XXXX, you or they things released of One you're is the the market in track been look XXXX in the program April, just the so, the about just

in seeing of an and terms just that is in engagement, hybrid, And active of ICE, what got continued is quoting making very a type while strength what in activity delay we're of level EV we've the is what investment. decisions

seeing should XXXX. that we're So in business, that into and extend our

are be Now is a when you But team years, the of program on. seems that that focused those important out XXXX, very XXXX. keeping lot moved to look at indicators to much our

And your Mig question of from next line with comes Dobre the Baird.

challenge in on persists Yes. automation. It And that just that on through sounds a XXXX. discussion follow-up auto the

you from Is automotive? in business to to fill Or of that M&A? how year? automotive going other additional are do to it longer-term I help that think So as given try other Do this hole XXXX could some to markets out make guess that I'm have some with you're us wondering, maybe about running you it there progresses? next adjustments changes end in maybe some opportunities the

Mig. Yes,

market capabilities the the long-term we automation and to So presented we're within very in have that strategy confident the that growth believe the for trajectory markets. for we that industrial automation

the pressures that achieving bit just much in developing One higher is our in and term. we've despite disciplined dynamics long on business the a the team is touched very I model margins organic, the on that targeted of our

our to pressures navigate long So while not the are going term. make decisions we're short-term cycle, going compromise to the we and the we're of much that to ability strategy we very need grow focused But some navigating long-term driving have. in to

to going for growth, continue where drive through about to very with improve automation automation. as we're at opportunities well acquisitions to we strategy. the to continue margin of are our We're we excited profile But look and

a been lot a you reshape of into all business to already Mig, know, business team automation the of would us the we've scale that lot to work enable cycle. has and parts I able we've add a in doing multiple acquisition, of through And the sites. sites, largely higher-performing been as the Yes, just be doing multiple work across across great business to to work business built share

site of second in is of slow, lot end one overtime busy, lot dead up a labor the site the site. So don't site's first a in another incurring we and

already through question And able doing. start the activity a improved going that start is Fori, to need been the I flow is pocket see do to we're business. do order longest to we the of particularly We're -- So encouraging business we question is to really, market the is to work think to up. when of gives is will the will to that we've lot us and cycle think see in timing. air us on work that recovering for the starting The matter when picking that our navigate market the a just signs which part be confidence And intake of return.

then I And my Understood. guess Okay. follow-up.

proactive been at least as are savings well temporary ones you've math, my front tough obviously announced. with cost that looking a as very You've in fourth environment. the the in the on okay quarter permanent by the decrementals And

expectations or these a our are do while, If to progress? you going of be able something decrementals either else problem challenges, mix or should have What we a sort would these to be aware of be maintain for XXXX to XXXX? say, as continue

Yes.

So decremental. Mig, the do mention you

decrementals pointing looking heavy to the on the of our maintaining you're model. key margin think teens business we're strength our and to So automotive it's industries drivers or organic, our profile which pointing whether high within in demand, or to despite I We're pressures automation to portfolio.

the margin we're track the including strategy. a term, high XXX We've of Long cycle cycle this very points come basis stronger. postured of even and low double-digit navigate type term. improving the plus. to looking of long a by acquisition about record of robust profile think We're out But for single-digit, growth, portion had

long where so that's And we're towards navigating term.

and an through managing postured we we're the standpoint. as XXXX, uncertainty see a a in But well of markets cycle into as in from investment term, short the pressure go lot cycle. still well lot capital the as In short we of

would our never, Maybe in year. never I to hard but this given the add, XXXX in they than conditions, mix particularly getting imagine just were it's say worse much market

at earlier general you on terms of of to destock this If have automotive look for industries, all discussed transportation aware I'm call it, our we've OEMs the off significantly, prior in their well biggest been the channel. for industries, X and which sure you're heavy industries us, and on calls, reasons trying

business. persist actions actions. If to the so gets if of another set drops conditions more shoe taken XXXX, market defend other we current the profitability the we've worse, We've the I to, got the believe take of will And and somehow we need it pull. in to levers

question Saree of the next Your comes line from with Boroditsky Jefferies.

In you the implies think XX% Americas XQ a to margins. big talked about commentary, being for of margins step the year. I down XX% This

So if XQ XQ Americas? year, margins us could clear this the bridge help you the is then full just clarify or and in

Saree. Yes,

of So that the year, pressures the is you be will then higher to the that. Americas acquisitions and And and through XX% for to XX% the in full some of point it range. at end

more the quarter third what quarter. expect saw be to fourth So you the of in

And color distribution more served Is this think demand distribution Could then what just industries to distribution. investments? by you related Americas And or on automation customers? between and differential I you OEM cited in drove steady this? the else

also X, The up a channel Tier into suppliers Saree. They pick broad or industries, automotive Tier general industries, but variety distribution of serves construction Sure, Yes. primarily the industries. heavy of some X us infrastructure. for

very equipment very mining automotive. in end construction, have concentrated large are typically business direct that ag, and The that users we is

those the And so sales industry segments, does reflects more it distribution. from it in the business see direct we pressures in in that's the than why when

a a of set very in of We've products. distributor So I that distribution programs, set set relationships, our great position got a remains great of believe great strong.

we well. the business market, users very position end-use relatively feeling the really concentrated industries for that end with large a And is where have holding [indiscernible]. so in very It's some the we're broader up

just appreciate one And that. last I squeeze if one. I could

we of the what do how see additional Given production in would to there the pickup days, the saw are or benefit a a maybe customers? lower talk some Like a if Lincoln domestic tax drive in need potential impact tariffs that election to maybe few to if maybe do And Lincoln? investment you from about rate? just you think policies any

be say. policies over, hard just Saree, points then that. that I'm campaign a to But around trail. will actual vacations worry the election going our just after be on to get to is There's what thankful the it's talking uncertainty versus so the implemented lot about of what I'll

you me definitive hard So for than a it's answer to more that. give

question the next your comes with Stifel. And line from Jones Nathan of

there geography for is Farley commentary by distribution. the wealth This of product Adam appreciate area? Nathan. are around strength, on any the market wondering, I was or and either I areas

terms shoots green green shoots -- drivers of Did -- taking say there's general, for you or or? In energy in constraints? said you

-- relative Relative strength any signs of... or

we of pretty of and investment our So in gas some do was about talked mid-single particularly of Middle we -- digits, down while strength, and steady. business. energy HVAC East see automation And specialty holding pockets being the in also types

about those optimistic markets. we're So

And then net Pac And Harris the and more side. there favorable. been are other are areas particularly that that's of trending on Harris broadly the navigating cycle, positively in Asia through

but positives, key investments are working underlying they're either cycle Harris on geographies those So driven or the certain in through in the side. cases many lot by a of again,

to on headwinds? any maybe sales introductions, then products new expect being the And help given new those in end are market, equipment term? Do the market buoy received in the you how just Okay. product near

well products extremely shows. Yes, the were by trade at received Adam, the participants

standpoint hitting So price of of the very we're from that. et point, mark feature functionality, in cetera, the about terms excited

into point, if holding a particularly orders, is cash customer when trade interest industry what translate the going your policy, rates, their happen think election, with see with I to general to with et does is enthusiasm is cetera. though, on

we're encouraged the the to positive but So shipments introduced. we got yet strong reaction to how very by we products that excitement into that translates we and and revenues, have orders see,

term. term, XXX initiatives, about and And think Adam, about products, I new we strategically, new technology XXX the to would long about catering add talk also just points contributing basis long of

we're to So heard us long it the means input of from a and what term. positive show, about we've lot excited that

question Seaport. Walt the with line comes Your from Liptak of next

wondering is to wanted was cost And the about been have I making about savings what guys ask you improvements. action. I

about automation. guys You talked

the wonder about part if future? You've slowdown maybe structural of structurally whole business. this seen we've just how in talk the of been a a or more business year I better little the that just bit the changing this you to targeting is change program, can this make

combination Walt, X. a the Yes. it's of

So if to either or you think motto an advance to about projects, initiatives or were contractors hire approach the us certain not where cost temporary help savings, general there consultants to an now us help for saying is adding we looking additional initiative. to or initiative advance an staff

what grow the very things to about we about to selective conditions and but little come And we we're now we've continue things might expand things to strategy going market don't what going of be what fund off recovery, margins which we're and postpone until to to versus and is impact a to are want better. said be business our selective continue We the we ability pursue. or fund

cost the But savings, distraction is look to trying to permanent the that keep at we been able want the when some for we've to really business with have taking in while. actions be and to a customers, serve don't really and the opportunity up disruption when potential it's you're demand business. slower the When the considering take

to more changes, be slower without at and efficient, some maybe to taking organizational where team so the consolidations, So opportunity that's really that's some structure we of able layers market spans a pull just business. can the looking it's some and address site little a our disrupting the be trigger those on can looking at management

Okay.

the I you Wondering to you it start Sounds a if the little bit benefit. just a expect savings mean those hitting? on great. of Getting and about when benefit, talked getting timing

Yes.

a million quarter, benefit is in $XX million quarter, $XX third this the about ramping quarter. but talked million to fourth of in we've $X the the of per recognized what So range we

that the accelerate quarter. we'll fourth So in

million then anniversary. In the run to million until that a $X is mature we rate $XX million provided, quarter $XX million to range will to total, a and $XX in of XXXX we

question last comes from KeyBanc. our Steve line of And the with Barger

from the those you projects When do auto Are completion? of and long the to to frame orders big installation? can conclusions potential about of deliver OEMs ship come up or platforms takes how and to and order size percentage it book typically mix, purchase

Fori what They're of that really XX something months depending stations XX a might do in in X typically factory. millions a of dollars range, over and for complete single-digit is they that percent the on or be for might Steve, from project the versus completion, millions tens less individual to months within system

if frame So seat about give it's hard little that. So than a think you numbers precise you bit station, right? to more manufacturing

of that time that B, Model I'm anxious eager and I was it's was What we're Model now making to okay, A. same automakers to A, and B, really Model frame going around, is with moving thinking be see Model then the Model moving the to decisions it going forward be but with forward in B

later alluded the if couple or that will production entirely instances where platform planned projects the just originally of just date. they're a we're canceling a And as or start them that relatively call, earlier funnel one from they're moving -- out from entirely switching that's in the to to the sort another, of but maintaining And cadence a Gabe seeing programs neutral business versus from to our business. same that's than happens, when that evaporate obviously of to

to that. add to Just

you in Steve see about... Fori, items, we start first. to the should lead like So [indiscernible], And longer talk mentioned, we'll navigate to as activity progressively time like that

of meaning that 'XX, of year extends modeled percentage going you to completion 'XX, understand. some that that into the modeled then to was example use of a Model 'XX B calendar start and don't the year I from be of project becomes middle see 'XX standpoint? To work until

project, the you're Steve. It not think of will but I far depend general project off by that, idea,

are is Now the it cycle part I in is running anyway. think, as where out of, of decision-making runway we they're

to model So have that's X, even we with begin have impact point gotten the if It to year decision-making. an X it to not they and may we're it's year deliver model a Y. model now going the because not they've delayed a of say year big because may as

do you on Say, to the we XX-month an on booked initiate project. if have completion, we the percentage revenue Steve, and as because right, recognize work if order we But we'll start we're project, -- of

Understood, Right. a versus I understood. out was pandemic the inventory of XXXX, period, ] when lico also it fill focus understandable. coming environment, certainly [ But it considerations. cost And given action on maybe into the to correctly rates the is was cycle short-term maybe leaned remember

imagine you how getting And those the of you to some about balancing X are Steve, the is thinking context saying worse, it's hard just that in of business things?

to trying we serve that customer goods, thing in demand. able potential to Steve, do is uptick sufficient material raw the last to and a ensure, to that demand want because be have We're inventory, finished we miss WIP Yes.

when of there's you and customers. on at look capital our sales and serve working impact little cash further that, rate days up slowing working capital the to impacting trim ratios of a the us opportunities inventory, the said Having ability some sales to and free for to without our

of XX to That's new Steve, in working business consider a Just from points which basis capital year-over-year just navigating of just was was XX inclusion to basis change ] sales, our [ you model. acquisitions. when add, just into points, that

organic considering on had sales. increase So pressure a modest very the we've

it share this is Got I'll think with anything I about just thinking know ask I relates if on you to one ask, Or are share this it. going But to could. market markets hard in have volume to environment? end there's gauge as I weak. declines? market you more, Yes. And how do when always are

here very with that broad Steve, There are users We for Yes. market or see We losses monitor do there's pockets us. large areas position, Europe particularly distribution in in business closely. place. our the significant share that end channel product profitable the in where us where has low-margin to wasn't commodity and maintaining it's first some caused pricing shed there, discipline few very us for a not a

the is business like just of would proportion impact are helpful. proportion the want long greater now, over we've there channel a really mix the I keep the for and is cycle the isn't of we're great to There expand But mix mix product And in thing. customer cycle, grow in end high so having business. are that when time. right of say very large to periods managing and us, a that periods we having and users higher margins we just unfortunately, a got, of run, quite the the our

to I our call to concludes Bruno closing like back this now And for remarks. turn would session. Gabe the question-and-answer

thank I Electric. Thank call Lincoln everyone on would like to very for the and you continued for much. us in your joining interest today

concludes conference this And call. today's

may disconnect. You now