Enerpac Tool (EPAC) 21 Dec 202021 Q1 Earnings call transcript

Greetings, and welcome to Enerpac Tool Group First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Bobbi Belstner. ahead. go Please

Good for Operator. earnings thank for you call. Thank Tool morning, Group’s us Enerpac 'XX first joining you, and quarter conference fiscal

On with Chief Rasetti, Bryan Financial results and Jeff Officer; the and to Fab Operating General Executive Barb Officer; the Johnson, Officer. Bolens, Chief Officer. Baker, Strategy Also Chief Dillon, and Randy are Chief President company's Rick Officer; Schmaling, call today us Counsel; are Accounting present Chief

today's call Our available and earnings presentation for in section. release website our Investor enerpactoolgroup.com are at slide on the

recording it also are this our We call and archive on we'll website.

call, earnings. measures, such today's as adjusted will and margins During reference we adjusted non-GAAP profit

find schedules can measures reconciliation morning's GAAP to in to You the of release. a non-GAAP this

making not call presentation We also would facts like historical to remind forward-looking in be that and statements statements. are you are will and considered that today's we

statements today’s address have to may also participants calls, we ask keep question with one you your hour, Safe that an laws. we as the questions to We in to other that factors Please are follow-up Consistent from practice results anticipated forward-looking from Thank results conducted statements. our as allow or order possible. to follow us our and forecasts, provisions in for co-operation. you securities prior one call many risks SEC see pursuant making filings for to differ cause of other federal materially how those the actual and Harbor advance

I Now, call the to will turn over Randy.

start operate Slide but of Starting I the status getting over ready like I'd for week Thanks, Enerpac the and review going go here. continues under and safety, affecting holiday hope with us. essential on worker details to is and today is X, how world good status. healthy a Bobbi, everybody on and the the of we the Enerpac health morning, quarter, to to state safe before everybody. great and We're

personnel countries, facilitated mandatory working The infection from are measures. in other our safety rates increased only heightened home concerns We has offices, which while XX% employees our of and caused on have approximately sites. America North

our the environment. Our of all objective remains safe possible keeping best and work employees’ providing

the events affecting requiring at Cortland. quarantine Enerpac locations stoppage two both, experienced and quarter During partial we two production

screening coupled a avoiding contact full successful Our and quarantine, impact production were lowered tracing the both with processes to in and site sales.

marketing to Additionally, actively customer approach the promoting sales our tools. continuing cautious and teams our visits, are while around Enerpac world

versus aspects, Moving the Enerpac’s and improved XXXX. further a profits, sequentially cash positive earnings of our side, and fiscal Group margins to on quality supports quarter including Enerpac potential. All more of Tool improved sales, fourth incremental

swift expectations. drive Our actions margins our decremental to control and cost beat

of families healthy network. post-pandemic. objectives best great to new deliver which XX% to three Secondly, new the elements has delivered typically we product our products launched organic cash key flow, first dealer It's strategy focus our case We We our and the to critical our remain is our in ensure provide support continue to management working sales protecting capital in the very the and product our that quarter. company focused is new positive our and executing on on maintained not team growth quarter. our

leader program supporting that Enerpac is all us, an and be believe we've be be firmly Lastly, in employees educational part work team. employer, to and community We community and and to where to scholarships. the that's a important resides where our and local of very welcome launched our why resources feel new must proud Enerpac a provide

the to which in now improved quarter, sequential order the low the X, December. down improve we're fiscal year. continue with prior teens, deviations Slide in some rates to in over in large to wider comparison due Moving our orders In to XXXX,

a pandemic absent in the and and vertical alternative impacted demand. progressed, to growth, a our Conversely, prior the gradual particularly to of the experienced of major aerospace markets energy. Consistent resurgence virus. a we XX in normal still business markets has resulting prediction environment by are military, sales expect and sales return quarters, continue Our with this several many

Slide our first of in financial versus over earlier, quarter sequentially as Sales our quarter. many I Moving met X, mentioned expectation fourth to grew metrics. key our the

However, service. with at declined the core cost fiscal our XX% deliver fiscal results. in XXXX and by we're sales Despite sales, lower products down to XX% our control able of even near margin down versus parity XX% XXXX, comprised and and in

the remained At vertical whereas leverage varied best performing inventory XX% region, our net marked were our decremental at times, per is in results European is EPS XX%. which Our possible our the and range best of generate is $X.XX the quarter, the also of positive and the strength quarter. grew on This sequentially our which to a This we our end receivables indication markets. the of Originally, XXXX. of based quarter to on pandemic which the a perspective, in in fiscal over able result fourth resulted ensure margins fiscal Enerpac. great quarter in of a the results. which operations impact than to stated below working X.X positive From capital XX%, the of cash quarter well better of fourth share, the of flow XXXX. and were sales versus was focus moderately health of core quarter the improvement a the usage underlying direct first our versus cash

teens. in and maintaining very focusing Americas European sequentially in the will continue. improved believe this normal, we well a to to Our continue work outperformed while on trend safe high the we're slowly return The environment. quarter sales, This driving team during and down

pandemic. Middle affected in continues the of Asia-Pacific oil and pandemic low the by helped is by Southeast increased the lastly, market, operations in declined And normal. returned range, East Asia were XX% to which mid-XX% be and shutdowns which the in down range, the was by which to prices Chinese effect impacted largely

company, sequential the summary, are impact pleased in as our of we navigate Now pandemic. improvement the of with we

we to over review call and areas has the company. the you. to cost for then Jeff, over with on the earnings Jeff key details a and to laid our the supported back I'm performing comments. the closing now on groundwork projections market turn to Rick can top come and and quarter, I'll control focus some Our improved going

Okay. on operations. also of well I'd as bit hearing like distribution. on we're add as Thanks, in various on saw well the to key Randy. some order a trends our color some rates, in verticals, our our as few notes little what quarter from I'll touch a what in as we regions, our

pleased the region region. our from I in been as, quarter and X, as of than the by want in slower improvement still we're commercial to you culminated down QX, Despite both and in product mind two industrial going which progressed, compared service markets previous consumer happy go heavily. we momentum in we're on have in the of strong sales you're being to peers through our a while a to recover to which quarters. year-over-year, a it's really think are think continued year-over-year, results, laneway, that you sector, that degrees As to please see stabilization the clear many continued was our hear to heavy very sales return see comes sales the recovery, first positive significant was region regional as both by growth speed to of lift network. orders. we orders general in November Europe in users business strong business more tool end to in about Starting and portion that keep varying of recovery much led heavy from distribution the recovery these a and our our that and perspective, seeing From markets play the and Slide

engaged solutions and both business, of sales as that helping the Despite and well some seeing in other to us some with Netherlands, the recent improvement. improvement we our as by a repeat key finding us continued more Germany, become at adopted. announcement potential additional overall widely lift should investment encouragement as in torque ways carry Continued giving indicators UK approach safely the energy We're customers. tension countries our that a own Americas, about few team COVID Europe, and continued rate, the slower and and cautious wind continued our to in heavy can are of about is some most actions distributors some are a products stay the albeit drive our in in some point our

slight not downtick ship certainly the in to previous back did a drop larger some we orders few stocking of our While, normal see their our rates, to distributors saw quarters. also quarter. the compared requests And we in increased

be to the led of recovery in competence to to proximate accounts Indonesia as the regions. driven second markets. we to was compared orders down that improve country, the an Our part securing had of in and lockdowns. vehicle a within spend continues China some the repair and serve has continued to the after low Australia from various and Malaysia like, fourth a that which remain range, of partial by and strength industries leading iron blanket Asia-Pacific, the Asia the improved Within XX% off our service Latin sales and in customers strong pandemic, America, copper as in to also off take distributors which several over being our Switching varied we the sales both ore Conversely, also state XX% of relaxation continuing see them. prior continue restrictions in quarter of of team sign in those we're pricing, returning to and large rail, mining wave many to activities concern year national area of OEM successful customers quarter. that maintenance Southeast these in fending and

in we recover some verticals the mining America, up. auto stressed, will wind. begin expect continue strength in as well global specifically do economy As as is to to generation, be picks Latin but Australian as and Shipbuilding that showing power these

product new to development. Turning

retail NPD our our to our participation. releases, XX% the deliver training, product that NPVI As start again a wraps related of quarterly have a marketing and where program aimed of we launch increasing goal event, Randy in moved single we hopefully excitement, we strategy, into now programming on all communications product to first new and of mentioned, continue all single QX wholesale quarter. our marks distributor customer the NPD launch and quarterly do at here new

several set and internally both January new pre-orders our in we're to resulted externally. this about and products event well QX several for our more improved launch QX as for excited and and have delivery training We're event, well. approach launches planning and meaningful really during QX underway Our products

largely was on anticipated maintenance were in XX% service almost due down we both I'm by is MENAC really saw as of The This sequential MENAC were our improvement along quarter several challenges change and our with to turning X, driven projects the and sales the Slide service region, third being XX% we're the to the in Despite begin in routine to a fiscal back region lockdowns restart. a where as online, spending fourth 'XX. down COVID by halted versus habits. some improvement, improvement projects encouraged Moving QX, in out the in which delivery with facing service. year-over-year, was to see hit hardest curfews. starting still region that major come and

revenue the quarter. companies nice off work up to Americas Starting the the the visibility before However, was we Middle QX. with the still to in this looking however, of service start middle budgets In encouraging was budgets our work creates past start the prior we year out in offset in coming nice we lower the to particularly more in a being Europe, we spend signed see emergent calendar a in that in levels are U.S. did strong, improvement months, of coming able Germany, early in result the as in to have than and to that's both were new are expect in had nine quarter, but months. the uptick year. as by of was may off sequential maintenance more end as of and released East popping This activity capture the this where service trends the

service a a not primarily is reminder, to CapEx. our business to Just maintenance requirements as customer's and tied

to to on have our the So and generally Operationally, ensure the complexities entire the team as COVID done viability all and the delivery. these safety, of projects yet the against less continues assets to to sites navigate to deliver our world. around across they are susceptible brings, successfully that time outright cancellation, oil gas commitments get quality

a of improving We our focused have plants. at on customers' will, both. costs year. cadence drop be can an seen to in utilization meet given it we to ability commodity we're volumes on and pricing, monitoring back normal get significant no our off and uptick rising our adjust hope air fiscal in our efficiencies our later price there into adjustment is but we We're and all need freight with this rates demands, closely Should

last did just quarter, supply a and few I chain. comments As on inventory

the need to demand, thread unexpected inbound during the to our orders We of needle we as as continue still orders far recovery. control inventories to to matching stock both the advantage have yet take retail

team's our As our the and disappoint of commercial key step I'm our teams to thus performance our one working ahead far. the unpredictable, and recovery miss operations the continues chain customers. not to really operations curve supply really and sales hard suppliers with keep are and pleased predict

was uptick in December rates for the us an While now November backlog, of backlog, quarter. normally which here confidence And comment first solid have rest the into and Cortland. few business labor order due our the now market comments to part with The a on we times, business by industrial in gives of by the Cortland led experienced portion the some and don't on our to the saw further improvement tight in quarantines. business to of impacted ropes exacerbated sequential combined quarter. lead down increased year-over-year, The COVID-related quarter a last XX% driven we XX% compared

bed to procedures, to COVID keep our to On side, limit inventories customers hospital low. the non-COVID-related due availability and their low medical continues drove

as of validation the you which completed delayed facility a there. also medical releases we purpose final have were built order If stages we activities that are is recall, in relocation,

will over hospital We expect the medical relocation will to that as chain. ropes have continue The turn addressed below inventory rapid bed I'll availability likely QX improvement of target have of We our forward. completion will me. continued customers QX, labor affect the see business, we to however, all take to now and supply that's impact and of levels limit to expect, call deployed time or in improvement for in for sequential do industrial quarantines the in And QX. COVID at financials. Rick activities the as some sitting through going business the the we drive improvements for testing the impacts COVID-related

Thanks, Jeff.

from to to most down year. by and So you XX% sales $X update an quarter, the I'll the versus Fiscal just XX%, XX% from quarter X% when the but fourth heard that's tools impact XX% this, fourth XX% acquisition that with from and XXX is up for XX%, $X The quarter. slightly rate the significantly margin quarter quarter. fourth XX% a from points year the adjusted regulations million benefit down quarter, consistent impacted improvement discuss Randy Core XXXX, Service XX% in was prior and and were fourth had sales in tax positive were the quick give prior X. quarter was XXXX in the basis Jeff We on of down here our Cortland’s quarter. and down year $X fourth increased HTL million product and was or down fourth of down The down from Slide from for EBITDA prior XX% which a quarter down the sales prior first from year. of was XX% in by compared fiscal the the compared million XX%, tax were up the quarter. during a the it adjusted new reported

today. adjusted the some on reminder, we baseline rate, year the fiscal rate As assumption what and in see taxes, depreciation 'XX and based have a you'll on and that XX%. cash the tax CapEx for tax still expense is we interest assumptions And included amortization there the appendix know modeling

waterfall components seeing what sales with Jeff covered quarter turn the second illustrates and decline. seasonally we're region, let's a X, the sales the the already being to of everyone just make So quarter two that lowest. quarters, lowest remind our I'll I by the but are few here. Slide first the comments second

our towards fourth are that recovery, improvement are direction in the two we rates. sequential results normal move look these quarterly the continuing indicators to in at clear we from As quarters quarter right

QX, decline, with X% and of fiscal down XXXX QX, from results QX XXXX. from sequential XXXX QX, down XXXX X% typical the showed So XXXX,

up So accounting point the this quarter. that this fourth to year-over-year of the our from last first product are Also, last the in as will anniversary the first out year. here of quarter strategic X% year need and quarter that we to exits I report for XXXX quarter want completed results is exits our in we comparison, service line

on EBITDA adjusted moving Slide the waterfall So XX. on to

sequential reflects as As we've margin our structure quarter increases. that noted, lower improved our leverage was decremental provides volume and the XX% for cost the

seen continue our impact while with heavily the variance adjusted through consistent EBITDA, the through have of quarter, sales activity than levels. improved cost COVID is about beginning reflect $X $X of lower and mobility weigh The steady manufacturing and and this the down the levels of held pandemic, the utilization COVID million as labor. we facilities at less of quarter, million we we quarter. disruptions, manufacturing from utilization with the absorption labor As volume, $X in service few consistent down the impact absorption on favorite managing at production on at the is variances our inventory disruption $X our global of to last fourth versus negative to discussed was The million a fourth increase the in perspective. Service a estimated million $XXX,XXX

is quarter expenses, Over generated benefits and savings furloughs half $X quarter. the match million the As this incremental expected, for of in XXXk in our suspension. benefit employee travel from actions from with temporary COVID-XX the cost lower

international our from In addition, government we $XXX,XXX of than locations. received stimulus funds less

plan reinstate match see and travel normal reinstate we and continuing this financial bonus we will expect quarter stimulus will expenses from expense our XXXk our did potential as in progress through maybe activity we increase, international do funds, reduced While the to XXXX. continued commercial levels With expect January benefits employee travel to return we some to year.

In addition saw a we favorability to COVID-XX temporary $X of million. our actions, spending approximately

restructuring year $X estimate we still savings million of on to of actions half $X that a rate for announced full us in essentially incremental gets year year. approximately fiscal the the the the and million back for balance previously actions restructuring in Our quarter, first in last resulted savings announced year-over-year run of the

cost combined EBITDA we temporary seen quarter, third the million, structural management between impact from actions sales while lost to over recognize during are seeing million impact growth we million of costs $XX the Since million have permanent the savings in COVID the expiring. $X increased by temporary So, quarter. taken benefits the to volume, volume top-line period. our and is spend variable temporary decreased offset same actions reductions, outweighs the the and as The actions from year-over-year temporary of the actions the of returning $XX clearly $XX impact we were

provide in with contracts million prices April, steel and and about on commodity ahead aluminum. me an significantly are each freight. in timeframe. we we let the able time, and March, the of closely as with air markets costs this Commodity we $XX steel So steel April $X to on million We and some are move shut dropped spend XX% in We COVID The saw our favourability. year-over-year down annual update aluminum watch were supply where commodities year. prices lacking about decline during on

to reopened begun the have have markets as However, rebound. prices

So little bit just a more color.

year, in prices X% both XX% for seen up last steel aluminum. rates, high up to steel At acceleration to X% we six year-over-year. as XX% eight saw and be as per weeks, aluminum we've and to prices these to the accelerated Over

as $XXX,XXX to early attempt the a annual a an to normal would through demand So rising machine to would X% levels, steel $XXX,XXX capture increase a are we basis. to of mean the to recovery. in X% or in increase translate on translate what commodity To-date cost spin pass on not parts all that or looking had impact basis, suppliers the $XXX,XXX costs, an into aluminum $XXX,XXX to of annual would X% X% and raw have on to us for

see a commodities. margins lost is from greater to level, push which demand recover that closer anticipate normalize to we we As will

However, about we year. million typically to commodity don't be hot to spend results air year. Air impact will believe remains this a topic, $X costs freight per we on material freight the $X million our also

to gradually parity two our in noted air levels. third normal report times beginning we at as we the rates. pre-COVID higher first near rates of are with As markets Rates times than six the reopened quarter, the have rates. were trough, to September, quarter back through increased gradually normal freight we Since declined and rates two seeing at

are was strain over expected increase a days and COVID vaccine freight about $XXX,XXX for allow X lower on freight air need and in Our X for approximately depending capacity accordingly. rates we information, The normal year for will constraint first a time. between systems. air Based great rates Due we volatile as will a demand. additional global transit as last as prolonged to is representing seven put freight We many additional on constraints, distribution quarter long-term to times spin planning spin to despite and of fluctuate period XX XX% that of our volumes. this we current see are planning capacity in make hearing to on adjusting

all moving will needed. the continue to pieces improving reduce actions going operation planning monitor the with appropriate and And sales on forward. freight need this noted, air as take for along focus and we'll Our Jeff other

during million environment. COVID towards driven quarter. now the timing activity a our Slide the accounts end increase aging of a sales bad We quarter. turning collection meaningful XX, receivable the to no with liquidity debts deterioration million result or diligent receivable, So as in the primarily of on remain We our of approximately in flow free $X generated in cash $X saw we in by

of up the is our million in this the ended million the with is million really $X of $XXX and Our increased $X backlog a of end just by shipments. timing fourth and on inventories quarter and from cash quarter. We this reflection hand,

times trailing of times up at quarter the year. last end is XX first leverage of X.X the EBITDA, X.X at from Our

a managing I We going back liquidity sheet cash from we with call remain we diligent sit the balance where are and proactively turn and you. perspective, will our in to pleased forward. Randy,

a lot, Thanks Rick.

over turn to question we have the with Timing the is XX. Slide of contend Let's to recovery most pandemic critical today.

navigating Enerpac's sequential highly today, seen advent have The but throughout helped coming you've unpredictable of order a still the vaccine of improved, are market. aids As the we sense has optimism the a distribution by driven Consistent of we are with prior the clear we pending are of the our channel, but actual view guidance all with results. suspension quarters, continuing market stability.

Our and on, cost number objectives highest possible focused remain one, management driving margins. the

part commitment will organic initiatives criteria. the central Secondly, our sheet continue finally And to the to strongest a is be possible critical. of investment maintaining balance

believe weakest, quarter but typically is sequential in XXXX. occur this pattern second Our we improvement, fiscal given the not will the

to flipping last slide. Now over the

Enerpac Group's objectives our post-endemic, committed to are strategy. As long-term recalibrate and still we we Tool assess we very

We the consistent terms the critical capital our of have been very of in strategy. our view allocation elements priorities, and of

ability Group to positioned conditions. organically above have Tool market the with the grow the Enerpac We

R&D commercial results. Our investments in and to continue process deliver

holiday have changed as profitability and have on we are of the management and very as the to investors to sheet, prepared actions margin entire to returned our balance we above efficiency the quarter, And will which happy our particularly we'd normal. consistently returns market like believe towards team, and has behalf drive And cash deliver safe we the of a the to lastly, volumes season. have seen structural not and Enerpac Operator ROIC cost deliver conditions. necessary flow Group objectives, best-in-class employees us you XXX%. remarks. under in elements Our On focused achieve long-term that today's concludes the taken Tool wish conversions allowed all normal

for it open questions. Let's up

first from Jeff Hammond conducting is question-and-answer coming KeyBanc be Our We'll session. Instructions] you. Thank now today [Operator from Markets. your Capital question

Your live. now line is

morning, good everyone. Hey,

Jeff. Hi,

just of again, the order trying So I kind want of keep you to dynamic you and in starting distributors to to inventories guys this, on dig get lean.

some on just kind orders we your and could to inflation. readiness, kind more you distributors restock as wanting of positive start certainly and comment inflect of see to If

readiness your of of to things kind all of are handle Just kind still understanding choppy? that kind

not some Let comments well. me in then you why start and off Jeff as bring

our that planning I good way allows of us and job think predict done that we've to sales new orders. in looking operations a of some a influx at process,

One rate we've that very of closely, able our one. been maintain watch is the and very positive we obviously, a key metrics OTD to

we Because we as Now, certainly more on. more jump get to in can a at going very wanted that guidance a is give in you Jeff in keep do that this Jeff, single maybe there. to a point eye want some to we metrics not order. close be time, orders and flowing miss

orders buckets. Yes. Jeff. morning, We kind about our of think two Good in

at products, revenue We have as our top we're as fast as performance. and ones making part our trying sure we're hard which usually the day, where mentioned, S&OP the well And the stocking same to type really Randy are that drive look are product. OTD movers, that's the those our of big really distributor process that delivering those of type next day thing. And those

on terms suppliers our types those So, those daily of good and about basis. feel respond, of I our to pretty think a almost with with we're products ability that the engaged in sub we really are

plan think will those we the good be And best stuff surprise, supply project right lead a some of as we the in shape type some but more chain pretty longer now. those is of long but can, I range

you. Thank

Capital Dray Markets. next question is RBC Deane from from Our coming

live. now is line Your

Good everyone. Thanks. morning,

morning. Good

you're Hey, a on quarter, there the other first be Do color called follow inventory But because this would up helpful? use to second of and you just the because cash bright was not you that the your usual quarter Thanks. of maybe shipments. cash. flow, usually expect out spots this any and I that's to timing want with reverse one quarter, of Rick in the

anticipating in reversal a quarter. not we're second the No,

we Also our big out, significant. cash, ECS, and that QX, year As is saw. a that delta you you year still use our had first of was quarter the is recognizing pointed of highest this which typically last part that

should As follow of flow with generated majority flow we're improve be generation improvements, see as our the if stay sequentially, year. pattern. cash our usual, sequential anticipating that that course, And in year and of the usually we we back we half the would progresses, along cash the same the

Got it.

inventory saw our you that And negligible increase. from was perspective, a

two large saw last the the quarters. You decreases

I will. earlier question, inventory we the to think need should to I levels, increase things we're think closely. monitoring we our And

response backlog. Jeff not to that them mentioned We a spike, need You saw watch our the will too, but as strong we'll inventories closely. here anticipate

I some significant. depending expecting think result to from to time, that and days that leading on inventory, lead may we're be freight an what perspective, demand of not air XX but seeing that seven we're

Got it.

some freight. how thinking follow-up additional X to color I range air? air mean here, And if appreciate I look dependent kind the on all your would And total, really appreciate you that's at an it of first, you color commodity exception on mean, maybe eye of detail the what of X the more be about are popping. that times percent on freight and Because would costs. just is I the freight? I But I'm basis on or on provided I Just air think you've all wrong.

it's basis. definitely continue is I'm to of but the percent an No, monitor an exception that, to basis here on we it exception on the and airfreight, just flipping

we transportation. where do source situation that If a it we've we on, isn't we air S&OP that As accordingly. the minimize working of find ourselves to mentioned occasionally we and Jeff the primary work respond freight, But we earlier, been activity. need in do planning

that there. and number I'll get call As it progresses, put the I'll out

the highlighted in call ground much really exception basis color just would you up want the helpful. just being you and to transportation know, the That appendix. appreciate also the so all how looks. the specifics provide on the I But be Yes,

That's me. it thanks. for So,

you. Thank

McGinn from Wells from coming Fargo. is question next Michael Your

Your is live. line now

everybody. mentioned beat sales in quarter on touch I call earlier internal the wanted this just that something to Thanks, you your projections.

You in back employee down the to you year some half alluded year. additional costs way? the your comp expectations changed of for up or accrual this Have either

When you say bonus.

Yes.

understanding I'm if the So question.

SG&A for order Yes, backlog compensation. accruals

took guess I we couple reinstated last the the we I bonus as Sure. of bonus. a year mentioned, and the things, out

So basis. you quarterly flowing through a bonus on see will

see change is that mean, I year-over-year. is that so, you'll compensation nothing And there a unusual there. And

and aligned see normal but compensation, bonus, you'll equity to much or traditional also much activity, the of in see results. long-term compensation, more You'll line non-cash with

see about a like talked did of So, QX in actions and you a about QX talking temporary we last I from benefit that's year. what won't the us bonus

Got make it. That sense.

call. And just the did there, furloughs on mention add I to

If QX, year. week any and a planned QX, quarter. furlough. you two furloughs first of we came we the here recall, The announced the have the remainder of announced don't last through QX those we right now, in for And in

from if Okay, going still to just the had couple freight. operations wondering would we appreciate moving percentage plant, on profit the normalized to size able lot or incidents. then manufacturing talked at to And be a your inefficiencies or COVID I offset mentioned more I'm gross freight you're you if you it. about dollar forward? What a

When you you mean? say percentage offset, what do

points or percent gross As basis from perspective. margin of a a dollars

looking on what for line? Just any incremental weighing still gross kind manufacturing on of are profit if the the color inefficiencies any

So two parts to answer. that

the volume taken quarter. $X were and of operating The COVID lower million from protections level. more a first inefficiencies given at production those a the and volume. whole that We part some saw are steady saw perspective. during from flat variances volume truly those from And QX just those is We with at a that's about manufacturing the

XXX and anticipate into in X% But play we the indicator on volume In of increases, you from play those to comments, X% in see from fluctuating of do and X% to away. of to aluminum basis variances that vary. annual may other, a impact aluminum, a gave prepared to and and we steel translates XXX increase XX% and to aluminum these XXX. you that's then cost kind just impact, pure assuming X% XX% As XXX -- an Those are I those from are volume, a aluminum, steel normalized a sorry, a impact numbers my on go steel. increase impact but each anywhere independent increase if in X% it can our of increase an X% margins of to pure I'm

of how can what you're systematize that's really answers be, a volume. commodity manufacturing looking variances Hopefully for. and that what you be true so those elements And might function will

thanks. does, along. It pass I'll

Thanks.

Our coming next Duignan from Ann from question JPMorgan. today is

is live. now line Your

Hi, everybody. good morning,

morning. Good

your versus should be cost you QX? did can what temporary you in all, just of tell reductions First us us QX remind

We did not.

travel almost There's vast As I majority furlough, bit $X the majority said, stimulus, related. a travel. really little the was but bit two-thirds vast of of is the of million of little it a

we're we Now, COVID holding, action. were QX We a travel. all when in scenario in as different a it announced we cancelled

we're from safely under any do not Now type end. of restrictions it travel other our than

won't up, really activity it's longer So us comes back. driven temporary as from perspective. as a will anymore, by travel variable it's we're And back counting not activity it driven come a no -- commercial commercial by the item,

that look it versus bonus more again, were all furloughs, point have expire. costs the we that return, don't I back and actions out expand, any provide we're that acknowledgement that, but commercial at let as to the any travel didn't to clear of that savings coming we guidance continue we incremental in will with will we I these right temporary QX. volume activity lost of there. plan not Also said doesn't continue will EBITDA with And expected and the So if see actions to and then now temporary no

appreciate to Or I travel I'd on address in quantify of a color so shows, just we managements. think, levels? interested that. because reduction be most where or way, back Can where xyz? other savings able some you expect back to any and your whether just you costs operate could to for pre-COVID-XX, question you this annual XXX% back, it's go never maybe curious been your step it's just those. that permanent you its And And from items a you go those I'm travel? line to that have we've like trade were, anticipate budget they pre-COVID gee, in Okay, taking do whether things will

it's and the I'll let how Jeff things will some do that we've that we I'll and entertainment be and quarter. nothing that from much $X of done anywhere better items. travel And down perspective, comment than going calls could you and would down anticipate in in driven, it the industry to a from driven kick of then T&E in it'll travel expecting travel a again, and see as and travel Typically, see have, million variable, getting forward. that. be by on Clearly, a do to we business historically activity. is nature you our be would, as from $X the But, stay business of and or a and may creative going leading just variable like expense jump commercial even shows and trade much on And customer. anyone Randy perspective, stick million and front there's all other won't as you

said so going don't away we returns. to increase and so And we why I commercial it anticipate that once activity expect that

I believe will expectation I we with that to are structural how an said to changes that user. afford We end to agree not that that, Rick, operate someone what us. some from else their in I internally, going is there think long-term, you've seeing can't our customers be but suffer sell don't let

be we and to back of the comes of whether a in distributor intend it to product, want an user actual front them. So or

then that you other of be return helpful? not levels And any think to buckets COVID-XX they prior would might helpful. that's Okay, where spending big

but the it's change the change. lot entertainment think learned start how that's From everything think are should of to structurally coming we year is one differently is do. But going to one run I to that over back to normalized what one probably certainly changed work We've a my and rate. now, lot the travel gradually going expectation, a the I T&E a companies, else and past almost

Okay, that's helpful. it you. there. Thank I'll leave

you. Thank

Robert question Baird. is Our Dobre next from from coming Mig W.

is live. now line Your

Holidays, Okay, thank everyone. Happy you.

Thanks, Mig.

to I this do stick cost want with discussion.

year-to-date, COVID million, think have some guess entertainment I million something here. combined mixed about better $X your I up $X to travel that Just provided $X.X only seem quarter. saying looking per initiatives but clarification, million because you're to than things that have I If is I'm

we're here? headwinds understand to are And year the there see we thinking there? of potentially is in that leading travel a we Is sort trying cost discretionary the other I'm some rest decide, might the reversing So furlough be exactly what as need of else actions of to to about about? potential what component as thinking

the million of So quarter a In $X that of couple million it being the things. closer to of $X travel. was

And when majority spoke about it. so we the that's of vast

a stimulus, for a little million the bit a rounded bit of you of $X over closer little -- just million, travel then savings quarter XXXk million that furlough, Our have a is about but $X definitely bit million and higher. just again little of $X to to suspension. $X little are then And bit do

in expect the was the in So to January, QX. come back XXXk, we bonus already and that

back real back $XXX,XXX only I The government biggest, going the in commercial the normal was quarter. stimulus with normal, but come getting be forward of to impact less would So this and that'll there than government guess, activity. to travel

activity. going So to from other from would through perspective incremental list, variable without anything that's costs, increase also commercial going a come with anything an SAE

little costs", as significant not travel got QX this run whole. the those at bit less essentially are a back So, is we expect travel. We back, don't coming a things a only of rate, "snap of normal furlough, but

your get thinking else. we come XXXk had instance, match to going portion mean, good for I for? a COVID million $X better of is to to of are Got if like some that something as looking, quarter are what kind have from instance, call. that's because travel of which to have actually than I that I'm I'm slides third be mean, And quarter savings, this to the to good of had you it. that's only know you a the to fiscal for and, are back trying fourth million that presuming just and there are and account at about that has 'XX, here, furloughs components say the with fourth programmatic, if $X I quarter portion we And cost at do $X million of

million So, toward weighted in QX, it's -- COVID weighted of $X heavily more about heavily travel. savings it is

the $X back, my part, Just the there these million put hand you there either. in large furloughs of trying delta, didn't some million and bonus and we that see it will are $X those definitely give is breakdowns. furlough that And is that's away. the comprised of going items in But and in yes, furloughs expire to are coming

driver million there QX. of the And a of couple dollars’ and a maybe dollars bonus $X real a was in worth think million of I million the of that's delta. little over furloughs

I that's helpful. question to second topline. is two really question And up Okay, more mean, this. offline My parts. the in relates I'll follow on is the

is about the is this talked for backlog, you second just is backlog if business, here And sort of the the First, wrong, the Or and Do and first. of if thinking being the the revenue help in to as relative sense part seasonality is that a magnitude we're Thank sequential the understand then the helpful you're I you second a comment all? have well. recollection that year-over-year? quarter up. sequentially if Can at making my down the you. this up is, that about backlog alter us sequential dynamic be backlog would can

Well, call. that's the on exactly what I speaking to was

was backlog QX from correct. down indicator was X% are did You like QX. the counter look we in down that And and is QX. QX cycle, just to XXXX, And an from at just you normal X% potential QX, if of

the sequential through is continued is up the indicator optimistic it that. of typically don't call about improvement, is about backlog year-over-year. but another quantify And backlog, up so just And the We as talked year-over-year. we it

have sequential posted we've at help what the you improvement will to back that all we at for optimism getting So to continue. backlog. look when normal towards Those us December, look the

have When you year at tool ago today Perhaps business instance? asking feel my is side historically business. this however, visibility sort question differently. or backlog within -- a you the of this a typically your that do least you versus is for understanding not What on backlog

track and on particularly billings bookings the that. a daily We tool side answer to basis. on try me Let our

get to that bill book to ratio impact are exactly and of speaking coming of that what quarter business Rick the is book we business. see means can it you the see seasonality that what to whenever have what's are. the it bill into is starts a ratios And the we one, So optimism goes plus of to some a

quarter not if we we I weaker a call, is our than by And as the typically Rick in positive but the and bill said tools, group will think believe of changes, don't be book I'm that I driven and did sequential both Jeff said the sure So sequentially it out bill called large that book our which second primarily of and part case. broad to by driven being it's small. a is first to specifically

Thank Okay, very you helpful. guys.

positive that because up signs. chart book the shows they lift will sales QX plus dollars And dollars and show showing to bill projects QX in been order is one this we've that backlogs, and have And through and QX, from we are heavy longer to time. also lead

that, us comfort we're So the gives of. looking that all speaking backlog at of

Great, thank you.

you. Thank

Research. Our from is Justin coming next question Bergner G. today from

is Your live. line now

Good morning, and happy holidays everyone.

Good morning.

just first market indicative your question you were First do end of destocking quarter, we're experiencing Or guess relates the still you that pretty Would say to, headwinds? I demand? sales think among distributors. your trends

distributors take some don't to noted our that's from did some the a larger larger like stockholder and movement when file. of primarily comment of something on was I'll that look what noted I think North distribution restocking, comments that was comes America. my Yes, broad of related there the tell one. -- I and particularly I we restocking, it's kind that but it looks see in at we the from some globally just across a

the consider get that just speaking, pushed them distribution we though, still being think that are as broadly through when So retail we're I at system. orders generally looking orders, those are we

answers question. So, hope that your

very helpful. That's

side in seize Secondly, sales lost have the rebound for trying your being demand to to closures, I what the implementation. on are a particularly could much vaccine to trying how be shutdowns when sense guess I'm V-shaped as a to customer due get do the I'm for sense to business? business the potential service just of hopefully understand, you these to

do Jeff, to want tackle that you one?

by in the little talked in recovery Europe, demand formulate no to that, that's the Yes, about a and distributor. there's I mean, question trying clearly our driven end users We Americas. faster I'm especially answer.

certainly from is that shutdown. pockets track, Americas in industries the of So, really normally are the recover. look I to as verticals we There's that across we think the suffering that's one other slower industrial MRO

those amount, So percentage back to a but it's or come that part general speaking dollar customers the can't here. give of as I regularly you all online, recovery we're

that little come start are indication, their that from And a the pick back to distribution, to saw distributors, general our been to did of lagging about had that those start quarter online, and to distributors come to bit distributor we're that our first little sales Europe. those talked larger up. be come which back Europe, in general terms its do we already a see the back starting in As going but we we've just and see expect more uptick sales to is bit as that through not is we in of what in customers from retail day-to-day confidence customers in

at forward we a as looking positive that So look well. to in sign that the very we're and happening something Americas as

Okay.

guess effect pandemic some positive on that good that Given as what well. but as we're seeing as the we're on the front, starts have hopeful vaccine you're ours, to

exposure? sort a adopt through the quarter first? your given Yes, Okay. understand was Maybe almost more it point, on I just trying renewables months at business? of this, you're quantified of than quarter and sizable, a that readopt quantify. you Is service X% of in guide or ahead practice sort then bit that not maybe to but the just hard one why And to little this it's closing, two I lastly, have the more side concept of probe

things and Well, second to on first. us think and of the let of And remember I this we than sense is to then April two being are base, process have March back are. is investor that are of there actually we we good. of fall. things feel on year, me saw within and we've dramatic a of And impact the period, that then thought I we like a the to back guiding would your guidance can a side week like question the say, get and in cover do a what Because we're better all where to me we that and think don't pandemic what happened that, normal part of a provide want the misled let and optimism jump

in think segment cautious, back a world of environment. infection many being renewables, vaccinations is our terms we're that cautious. to rates of and to that results very and are very being to So see business. stabilization of actual like companies a nice getting and We'd normal some I growing Relative

it in We vertical one verticals, out haven't specific but that we it called is component is a our very our as operations. European and of is a that nicely, contributed view positive, it's particularly

we grows generation a that that of we as component haven't it done the yet. in I may, think our power of piece markets. call separate it vertical fact out But as

Okay. questions. all Thank taking for you my

Justin. Thanks,

Thank you.

next from KeyBanc Hammond is Markets. Your question Capital coming from Jeff

your now live. Your on line mute. is phone probably Jeff, is

me? hear you Can

Please proceed. Now we can.

Okay, sorry about that.

the you're got XQ. better at up, some on I you the you're digits. service the like But kind look down I kind think guide low to orders and Just up, backlog guide, seem saying double clearly does of that they're it of implies flat seeing maybe come than But, December in. your

So up. maybe that just square

we're we imply to are intention And three our that see the from No weeks thing, think two anything. can other in, chart seeing improvement order here. I that months. you And not

our into weeks talked improvement three to a QX sequential up We’re QX the X%. with quarter. We about lot

down. think don't imply I So intent to up was it our

thing here. only the were expected it that we we to buck the implying think normal I trend

feeling a still whole more lot not But optimistic. been provided. So than has already color

guys. thanks Okay,

just it to XX% We of about about our freight our And the that for of then don't go back is of total freight, freight global XX% give organization. total freight me air the typically question, let freight. our about but is XX% inbound there number, it's the

Thank you.

reached back turn floor the further to any our question-and-answer of comments. for over I'd like have closing the Randy end to session. We

safe we'd much. Good. Thanks once talk holidays. Thank participation today. very very everybody much happy a Year. the everybody and And you New we wish will to again, for your like very And in to you

does Thank and today's conclude webinar. you. teleconference That

thank you disconnect day. your line participation at have time today. We for may your this wonderful a and You

very Thanks much.