Enerpac Tool (EPAC) 28 Jun 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Enerpac Tool Group's Third Quarter Earnings Conference Call.

During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, June 28, 2022. pleasure Director the Strategy. of my Bobbi over now Senior Belstner, Investor is to conference turn to It Relations and go ahead. Please

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

today Also the company's Chief call Officer Barb Chief with President us Paul results Colucci, Tony and present Officer; VP Officer. Strategy and Executive is Accounting Chief and to of Bryan Chief the are Sternlieb, On and Financial Finance Johnson, Officer. Bolens,

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

are will archive We it call website. recording also this on and our

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

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

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

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

will over Now turn Paul. it I to

to ASCEND an pleased you our everyone. to for update quarter results provide I'm with QX call. and on discuss Bobbi, Okay, third good joining morning you program. our our thanks, have transformation the opportunity and earnings Thank

to Tony I started, excited CFO us as we him team. May joined want Tony onboard. get Enerpac are we XX, to very and have to on welcome the Colucci first Before

the quickly business only impact. and up already here to short making on he’s four getting While he weeks, an been has speed

touch many on quarter, it the that was demand quarter, overall the across a end of to markets solid strong serve. Now key driven by we

million and to that Excluding expectations. of line positive on we Operating were overall $XX.X the receivable MENAC reserves our our in a QX spoke results with agent additional call. about related

While certainly this to country one is additional reserve operations for the disappointing, our and it there. need in very not is agent impacted isolated has one

an serviced reserve, The XX.X% the was believe fiscal we course. this few do margin EBITDA the business high QX indication Without to achieved adjusted continue that the in right end we're early last are region quarter. I an the and with margin in We additional provide on previously color moments. working for on will of XXXX, financial MENAC adjusted the through time been results have agent. additional in customers Tony QX that would directly EBITDA a this is which were

As and our we launched in value. organic enhance our ASCEND growth, efficiency last excellence greater to call, SG&A driving earnings shareholder and productivity focused program improvement, operational announced on we on transformation

us months, three employees associated hard and of initiatives identifying over benefits costs of several vetting past and significant will the more dozens and help developing the numerous across plans, have we organization, that With the work the and our detailed made functions milestones, throughout progress objectives. help and achieve

restructuring as $XX million We of XXXX. will we be which to run will and rate charges. million be we expect fiscal believe between $XX exit anticipate We the to XX investment the in incremental deliver our of adjusted $X $XX ASCEND million million to continue which $XX incremental million EBITDA million to between achieve to be will EBITDA,

the a development this expenses and anticipate fiscal of result benefit in million QX, ‘XX. do related to ASCEND-related costs While of phase we've we ASCEND the begun not until $X.X of we program as quarter incur a to recorded

Some initiatives progress footprint such as longer take will to rationalization.

create go strategies, However, actions, several near-term such as that structure strategic to enhancements initiatives. impact, market pricing will skew to more rationalization, there others our are and cost

During information and but our I'm I of organic much we'll few will cost fiscal New ASCEND only which not impacts would on call There our operational restructuring further more much efficiency like to transformation and and will to comments in program. of a very program, is like high Day, ASCEND in a regarding progress and Also, with Enerpac. and City. details QX productivity. to make associated, on around September, is than for ASCEND provide we Investor expectations view growth earnings our also York on reiterate focus XXXX. along and in a degree a not We our restructuring more discipline ASCEND held program, our at with innovation announce as be the targets progress provide a I in here pleased milestones transformation program, specific mid-November would structure,

key work improve and teams within at our vertical hard to so to points innovation gathering safety industry pain continue on unmet we customer on within As their can workspace. and markets, are product how understand opportunities insights efficiency needs, explore we

join innovation to remain In our roadmap. and continuing pipeline I about to end I direct It's feedback. program multiple month one in our product several review fact, excited and customer process and visits, customer had earlier see gather this on our prototypes drive the great improvements the of teams to opportunity to teams

of and that we part As connectivity center. to continue front roadmap, digital and keep

our XC downloaded X new we would frequency past, to fact, mobile pumps, calendar of this where [ph] to manually software and nearby would customers center or starting XC technicians over new giving later will their the limited updates. consuming which process the tools a trained OTA installed required we are app. our new updates, service our and This required the In users and through access have time to battery we year, bring our Connect directly Enerpac firmware. upload with releasing air be was In

digital and products for Enerpac our of for also to enhance a our connectivity clear products. about opportunities is additional the characteristics gives excited savings continue I'm more as time engineering and teams downtime OTA build updating we Connect to out customers, efficient of the our capabilities. Our reduces win method new potential our

Slide moving balance include important strategy to aspect through repurchases. an shareholders capital Now opportunistic allocation of share capital to returning continues on X, our to

for per earnings we company's in $XX of call, Board announced share XX our total approved we value million have share. believe This shares $XX.XX million business. reflect intrinsic our the X.X us strategy ability third we and reflects the confidence program our the quarter, to does stock. repurchased buy As at gives value we Directors million of stock to in of an price QX price up the ability in the repurchase share In of our purchase the a when create shareholder shares new of nearly average shares a or our and program common not of to

serve. on continue strong provide that strong we're update with our the a four in Americas. we three the that Turning to we I'll within Slide seeing am to quarter see particularly regions what X, markets I pleased an demand in of

challenges. their to speak chain quarter, But challenges continued to supply want expected, and day-to-day operations members managing As for in sincere will and team my chain the reiterate I logistics global hard work to supply these our thanks persisted which detail. more throughout Tony

QX, COVID-related the while the there and experienced quarter almost growth business also showing prices the was also oil, maintenance to by exposure the be for that and quarter. actions South continue all caution confidence the continue of sales to service year-over-year In the impacts, quarter Distributor in third Europe, including favorable This not the have and region. the increasing suppliers material in impacts to Europe. although reduce due in additional demand challenges, lockdown Tool on and distributors America, quarter, challenges at are field I'll the driven business and and We full percent season favorable ship to with nice in from demand from Ukraine, related The manage mid-twenties cover for MRO up key strong continue continued being in driving related delayed sales. some the China work to production service regional in minimal in both Group distribution. Russia a primarily impact methods has across Enerpac in to higher provide turnaround while our third commodity was recovery positive demand. refineries the pressures, run dialogue in shutdown product industrial developed Further, refineries, in the ancillary the detail including and inflationary preserve was region verticals by and to as plant lower oil commodity and seasonal sentiment in The some Oil dealer take continue continued costs lockdowns, quarter, swing. increased national Russian within top in foreign within mining building. higher distributor our we to supply very dependency to core parts or was to maintained driven product had our improvement. China. was to perspective, to now were pricing the part solid gas to growth with as margin. impact XX% varied line due in costs, continues quite others Americas key currency verticals business service we globe the frequent steady solid strong by driven we chain machine our strong of the a all particularly being does and with and prices war was activity to General

decline a a to that to project as dependency service experienced and service of by Moving on primarily due region large delayed XX% repeat oil continued coming core to operate on Europe, gas work pipelines to did year-over-year, a decrease Russia. driven in not reduce this from approximately maintenance and

infrastructure spending region vertical government gas and wind oil infrastructure tailwind aging Military strong Russian the markets, of the the reducing to relation a Europe. And for within crisis was on focus demand nice Ukraine. favorable continued a result spending defense dependency in was and at throughout as to due in experience market. in the government to on Looking also

to was projects to for Western and being while positive, Eastern distributors within the Europe due third Ukraine the Europe sentiment and more have down conflict. in activity Sea cautious with North favorable the we region region. started in Mainland are Europe we both be service increased to While wind the and infrastructure Distributor some in in continue the see varies expect quarter, to

the delivered shutdowns year-over-year despite Asia core sales Moving in to China. mid-single digit growth, COVID-related Pacific, region

demand, in COVID but cases. While lockdowns in affected to place restrictions energy region infrastructure COVID-related favorable and positive across gas China, out positive Australia. removed, raw COVID quarter, for on outbreaks. have market still with demand Australia, spending positive projects, to major the been growth continued been was mostly some materials and in ease of and areas have projects have government was Japan. mining activity by by capital for in by started Australia, The in third due driven trends are restrictions particularly the China, driven were sustained Oil In in

to the Middle solid Moving delivered year-over-year the MENAC region, East MENAC mid-twenties core percent. growth in or

the XX and opportunities up. find of a started service oil plus development seeing new in on quarter, oil create companies gas oil for substitute for phase will eventually busy exploration spending last activity Russian which Europe, we additional out. are As gas to of to National continued months downstream overall about pick in business the our to region fields

shutdowns including sales prices. production, being all and region revenues have related Travel on to the to expected are started right QX oil COVID leverage high now restrictions been continue expansions some across nearly visits. customers for and to in with and on the builds in lifted to projects, pushed has the sites certain allow fiscal maintenance work XXXX, While work new

returns customer quarter oil meetings, national contracts. region gas From is product prices and on in projects in to region, significant having As demands and resulting new are from an renewable The company the reinvestment to The hit higher to natural opportunities. meet favorable economic a increase energy facing more in vertical perspective, driving move are our the with the invest was in oil spending improve we service continues new orders market related and rate projects. within with gas trend electricity oil helping to generation investment to service in the it product infrastructure increasing including long-term power and also sources. with

products the the core in to XX% the Cortland, quarter cardiovascular business, the off Several quarter. experienced above and we in or the in demand for on of to pre-COVID final run with in the third fourth to of levels levels the rates. see launched qualification orthopedic orthopedic entered growth projects new recently at quarter Starting Moving stage order year-over-year quarter. medical side continued to prove business the activity expect and

the to including ropes the on to times and industrial, the in also remained [ph] improvement business, Tony recreational overall improve, update supply saw through well Moving by demand and operations. demand, economy. driven to logistics in but strong the Cortland continues in consumer see on-time Tony? of off-road we and I'll improvement we to the as the With delivery side industrial shackles Lead that, and tools supply challenges. and it and continued financials us as over as to chain business, an take chain hand tow

Thanks, and morning, good Paul everyone.

here have leading Enerpac. was finance portfolio, Let company. story saying very the transformation, and attracted be the and IT forward to of looking joined such by me I'm to CFO talented start and Enerpac glad creation end ASCEND at I a I'm May recognition, organization. first great to and the product quality to as value also the that excited I'm to contributing professional much of brand at the

Now XX% up XX%. charge reserves Adjusted unfavorable quarter compared increase Cortland sales quarter to The were were XXX an that million, which X, adjusted Net which This the X%, were turning margin impact third the rate sales performance tax EBITDA on margin Paul $XXX EBITDA in earlier. basis mentioned of to Service point was for was quarter. the let's had approximate compared sales core up from EPS sales year. in and This to XX%, review quarter in increase XXXX. the of results. the Slide year. product when core in a XX%. an prior the down $X.XX Tool fiscal third impact increase X% including XX% sales $X.XX, $X.XX a up adjusted is resulted reflects receivable reserve, to prior core in in related the the the receivable in were

our to sales. resulted of sales the Turning X% on related million U.S. The of dollar increase in year-over-year just tools to the strengthening XX% the $X and attributable sales to reduction net for roughly Euro details to remainder increased to shy a Slide X primarily GBP in Cortland. performance. and of approximately with our Product products, the

in conflict. wind that regions, product saw current discussed, a also and repeat gas offset the As tools was our to largely impacted strong the Paul back largely oil across growth benefited the Service many large project Europe, conflict growth from APAC latter MENAC in Americas ESSA, year and and on the we not the year the except which Russia-Ukraine linked in solid did was the customers maintenance. of as and opportunities in by all prior declines Russia-Ukraine by of are postponing

Lastly, to pricing $X million the actions line. contributed top over

exceeding Transition Slide peak the year-over-year quarter net quarter. with the each adjusted to the in discussing to demand product the of five month EBITDA. spend like reflects and years continued change XX, IT XX, to third prior Turning sales the to strong time in I'd Slide some as COVID range

the quarter to last charge all agent to we longstanding MENAC $XX charge fully in addition me we outstanding recorded owed to that collection initially now around million quarter in business XXXX. is late the us agent. doing with reserves to the receivable that that We receivable reserve. million began This calendar by let due amounts QX year $X ceased recorded increase fiscal of briefly charge the First, last former and revisit our challenges

circumstances, XXX QX efforts it On reasonable appropriate collectability all to of believe point impact over current collect end charge this had adjusted based margin. facts this continue on we EBITDA exhaust to to the we asset amounts, While basis on its current of reflect the was a own, as and QX. of the these that

country business dollar the mentioned, that versus in now EBITDA. contributed million basis. growth sales, of direct U.S. a an sales the reducing million on stronger product Higher With previously $X to continue to volumes transact profitability, $X had impact approximately we to unfavorable year. EBITDA Paul As the by roughly prior

to have the million. of price and the cost implement realization resulted quarter, As by taken net expected, that we actions the in and $X previously continue proactively manage margin increasing to pricing inflation approximately communicated, in impact

stronger summarize cost favorable year, from was travel by restructuring primarily and employee significant The benefits from the hitting To by were SG&A costs higher reserve levels than compared fiscal receivable realization implemented prior leadership XXXX. primarily medical to Excluding reserves due was travel our quarter, for than teams, from the in employee charge. million claims several year. the were the when product to the quarter, volume COVID with despite QX growth resulting along impact more in approximately impacted actions up commercial the $X than earlier in EBITDA the increase incremental the the offset receivable and the margin normal price gains and which increase fiscal dollar, driven higher from to of

XX% the expected incremental foreign approximately been is our reserve, within currency, which have would margin Excluding our receivable excluding range.

anticipate Like most Moving operations on COVID the have these third to and compounded started happened were effects Shanghai the the remainder specifically Results bottlenecks, We our ocean China easing to unexpectedly inflation, chain third to by although U.S. during on also conflict, from the in during our caused challenges steel by lockdowns continue pricing calendar supply operations. quarter. impacted many for around quarter. recently impact the of to continued supply to and chain companies, Russia-Ukraine we logistic and challenges constraints minimal freight some logistic see costs, the that the of year, in and China. by certain

being resulted During China expectations within the as in And minimal fell of sales short temporarily in our a operations million. quarter, region a our our China chain tie result lockdowns down. COVID $X shut

Shanghai of in of would anticipated products XX our $X to slower in at to of with challenges, inventory downwards to April we the and next occur continue China a able components lockdowns. in trended suppliers’ that typically the pace resulting as and to other out Additionally, million have shipments on-time rerouted global to reopened, a also Shanghai days. May through go partners roughly result these port and Ningbo we quickly were XX our ship at our to albeit ports Despite China ports. cleared, the backups, to is delivery which be since waiting as

Shanghai the at additional ports. European ports anticipate that we congestion result this at congestion As in up, our and U.S. will free

decisions orders summer, of strike purchase we last Coast our for during discussed the our port recent Because As port Vancouver, alternate impact quarter availability in minimal of product customers. West selectively ability anticipation combined to congestion through forward ensure on commitments. with these preemptive the and actions, U.S. this pulled believe product call, union reroute to should our like ports our anticipated we fourth a execute on have strike to

to We situation. will continue closely monitor the

Russia-Ukraine up costs, our energy including a on anticipated, conflict had direct and effect As logistics, which to continued processing material drive prices, oil costs. manufacturing raw the and

that Given hours. in only are castings, materials some are long labor. the for to some our very the struggle long, availability we and with We fluidity challenges quotes for the and prices, in components of remain anticipate components do with suppliers U.S. these costs and forgings and especially electrical as Lead continues. valid from and continue suppliers not seeing as times associated as such XX conflict subsiding, plastic

the quarter, did subside availability inflationary and We see the issues. alleviate continue volatility still uncertainty cost not implement global in future, the markets. alternatives elevated at environment given do We anticipate to we rates. identify these this yet in many and purchased, to categories we in stabilize on near Late to the

$XX inventory Regarding growth, remained backlog the strike. Offsetting ports complete port to ship essentially strategic inventory, receiving components incremental products. the to the pressure coupled the for million the anticipation inventory flat on backlog, end West continued our order in the roughly XX%, resulted the end and And continued quarter was million finished pull from challenges order in the on continued focus sales million to at we QX. of Shifting shipments Shanghai forward as along sequentially chain with of to to second greater last in product despite customer due levels order strong now, demand again $X supply by while increased with our our rates $X past over delayed increased strong Coast at quarter inventory sequential of global which pre-COVID $X to our this at shipments put demand than levels. product

slightly continues key components missing team supply We QX due to bring to our goods the in expect decrease expanded finished past with and chain to to as parts base finalize supply in backlog for work shipment. our

Now to let's pricing. turn

call, to period. known -- During pricing rate over all inflation cost first largely on the top through run as The additional half actions quarter price regions actions covered the as we that January to Xst of up based response the X% year costs took worsening last environment. in and referred a inflationary across categories are this expected we Pricing increase cost our referenced the price quarter implemented basis and actions the increases. X% to realization of deliver on on during

As discussed of cost impact anticipated. in the as EBITDA margin the walk, we increases the outweigh saw pricing incremental the

monitor actions to react forward necessary. continue as additional pressures will with We inflationary going and pricing

up with due in free stronger sales wrap quarter. on quarter. Slide million increased increased the primarily during So XX. generated the capital flow end by Working cash on of through receivables million, $XX We $X sequentially the to I will liquidity

a of the sequential included third generated at coupled reasons expenditures essentially quarter. in inventory the snapping Shanghai prior the sales. for quarter, in minimize U.S. $XX in China seasonal trend. Supply seasonal previously main from with of have were sale flat chains the building. Although million to which million $XX sequentially higher intentional trends mentioned decrease cash of $X seen In free Capital our normal were transaction proceeds we would congestion we charges million net the the increases year, the to port and strikes the remained logistic in ports, in potential constraints, the inventory the under and exposure flow

bad repurchase by line is primarily Our prior in our as driven reserve. debt program, the The the EBITDA related year. at increase reduction, our was use share of from the to as leverage with sequential times X.X cash well

on EBITDA anticipated the and improve We year-over-year expect quarter in cash will generation. fourth leverage higher our

$XX.XX our XXXX As during the million price earlier, X.X $XX share. under of quarter roughly million mentioned repurchase approximately authorization, we purchased per for average an Paul share shares March, at

Our us stewards transformation investments, ensure M&A internal capital disciplined to and balanced to remain our shareholders support With we to Paul. back priorities, for create will including return along our well of that, liquidity And long-term program we positions our continue to allocation capital I our turn the growth. select ASCEND with value shareholders. call to will

Thanks Tony.

net refined $XXX While demand we previously million strong, to issued million $XXX remained be our stronger fiscal now sales guidance net million. $XXX range the for full of Due and to XXXX. full our have U.S. year year are to the narrowing sales impact ongoing to we $XXX of dollar expect we

potential have to continue growth, cautious. we could that we help remain support While tailwinds

expect the to XX% currency impact third continue quarter adjusted the excluding EBITDA related incremental XX% receivable foreign of reserve We to in a profitability the of MENAC and incremental agent. to

environment. guidance foreign the and macroeconomic on based as current economic Our exchange such conditions, is

to on the open we Investor forward Day transformation regarding enthusiasm our made program sharing details progress in you with like questions, ASCEND reiterate the for my line our look more at I'd Before we to we've fall. the and

like world initiatives. our As and for Tool customers our their their dedication serving employees ASCEND all excellent around to always, our I would Group driving hard in for efforts and work the Enerpac thank to

Please remarks. prepared up concludes Operator questions. that today's the for line open

go Please [Operator you. today question Instructions] will be Markets. first ahead. Deane coming Capital RBC Thank Dray Our from of

everyone. Thank morning, you. Good

Good morning, Deane.

morning. Good

morning. Good

in we're refiners just of you, XXxX, with up pushed that familiar when spiking Hey, periods but that hard, so different times pretty this phenomenon, couple a MRO out. came the this oil working of are get activities the and prices

times. because then to at is? us impact maintenance would the So becomes but that issue, be any it for helpful? and you it point couple came up what's they this have certain size there different a And Can safety what color do a perspective of

Paul. Deane. is Yes, Thanks Yes. this

you're I yes So We did and comment that. on think right.

there imports, significantly some offset time. to as region prices, be QX over of demands for I and it in trying impacted sort the energy high the and energy obviously given energy particularly demands traditional just running think the Europe with there the that our and in more see need of we did met countries the frankly, Russian ESSA oil were all obviously can't

So projects. we some happening do has and service that our delayed and maintenance that work of see

I forever. externally, haven't when what to We at sized that, that some point being know, to There requirements assets would continue can that -- but utilized more. is and time in run on opt Obviously you coming online up. is the they right, say a can't but also there will are you're assets, we maintenance go period back catch

So nice our see the as that ESSA business we region. the in oil in in of We service saw gas did Americas. noted even there. to in imbalance see more balance in some activity of strong more recovery we come and a the And the frankly, in we MENAC see maintenance we quarters, levels, as supply-demand expect coming particularly return we'll traditional a to kind

So to it's come back predominantly expect most quarters here. that benefit we do coming but should us ESSA, really the in in

a sounds and day say, rates, any through you the step ports all there the in signs color maybe COVID are month change revenue us And the alternative like order or of give seeing that's back as was as any growth like Thanks. slowdown, progress all ripple if the about you proactive appreciate and quarter? cadence kind really so around in really ports, and month follow by the of Great. just rates could the using effects of we the it organic you you've If on and been just disruptions the China, I a the up, in shutdowns helpful.

details at level we specific drop granular overall our we here four see and obviously, off significant no whole any haven't I an fourth in of say accounts see indications quarter level to seen in countries activity there, an into regions remained of We you signs date first any Yes, and of would Deane, did slowdown solid in demand the that any not was honestly, but overall strong, at tail actually get demand. across business, or certain QX. can book of throughout so our macro our really when across it's here, or weeks and

helpful. real you. That's Thank

Thank you. Yes.

Markets. [Operator next Hammond coming from KeyBank Jeff ahead. of Instructions] Please Capital is question go The

guys. good morning Hey,

morning, good Hi, Jeff.

Good morning.

Just strategy kind ASCEND sense and your into savings wanted kind a of to of coming being ’XX? is spending think out we as early And, is fiscal the spent. of hit maybe you one on where better what look and the started you to year get if

sure. Yes,

design work initiatives. areas. and call across an optimistic was and work a run we're $XX spent, as quarter three of and on ASCEND the we So we kind again, numbers last remarks, five dozens I'd kind of talking work up progress what continue referenced on still was pretty key exiting really a about months go as we We my $XX skew extensive really amount We’ve skews say to of strategic believe product of fiscal to lot including remain XXXX. rate done of strategy, market earlier done focus on and the ASCEND. we've EBITDA million bottoms that's made last pricing, that excited pricing. adjusted a We of I in detailed the to around in rationalizations. in incremental what is the We've communicated million

costs spend -- an quite as efficient then amount we'll analysis manufacturing extensive on sort and around more effectively that. related inflationary date, work work of on work finally making also what in be on more that. So and initiatives, then is to pricing our done able of of at pricing. And footprint. initiatives the how out can we taken be and we're over different call But I'll pricing We've overall G&A is in for to on, well strategic sourcing that as company. to done building cover that just models it we've transactional implement looking of bit that our We've is a cover

it's I close dozens as think -- been program involved the people and the deeply in date. various referenced, across initiatives aspects So pretty company, we've of to involved been XXX, of I have to

related we $X additional ASCEND. and guidance the expect would costs to as additional ASCEND, Day I charges to in what implementation of at have to our be expect in to mid-November forward Investor we some our fiscal, think close a lot external start not benefits I fall. out and in to either see to more expect the support next overall some again, we think with in out were QX. go lay the as that at share, guidance York. New But in able So we but expect in Day largely QX some that we'll further as we QX from up for We was Investor ramp costs million around The minimal, or costs details we set see program, do

and confidence it seems back then of just it's Okay. supply more you get backlog worse, And what's think a and in start mean, that like the can worse get and, respects, make lot you I past got I to chain, think lot Like or progress gotten backlog on complicated, going to it's kind past of on due that better? neutral? of you due said a to back

incremental here port be the a chain backup West quarter. the strike U.S. logistics just from far chain Yes. and I will the all as itself. continue the dissimilar with on see think between freight that think and working challenges from talked hear to supply I obviously exceptional as dealing it calendar And understand. through we call businesses Russia-Ukraine our think expect see for frankly, potential and think in an that, we Look, Having operations that's created teams I port about, I don't challenges parts that this Certainly port as likely conflict job as more to and future, and the industrial the other whack-a-mole year. has the managing the supply and coast concerns. through chasing to we we said I Coast all the than Asia logistics globally some foreseeable probably ship just What of in west have things as Shanghai. backup done through

facing as we've I at diligent as that we challenges, many like ours. to of best the ahead pretty So companies are to can trying immune we're of not the think many been get issues but

QX. That was make XX down us, our be lockdowns on there. see it and will other little plant past we any we're our in ramped behind a with we more challenge We seen So us, perspective. see But effect. loop, our expect slowly largely unknowns we a to -- with China backlog current in in to where pick did we in that that's sort do up process from here back for and -- but be in behind happening the days decent tried bit to the here of barring QX, we impacts these that's take production close then I largely dent an long manning in remains to China in due to going logistics up, increase about that expect said, QX at perspective how But where a quarter. favorability in think

it. appreciate I Okay,

you. thank Okay,

Mr. back like comments. this you. Thank Sternlieb turn I closing At to for to floor would the over time,

Okay. you Investor with quarter City for Have have at a to Take look you we care day. QX day, New Day again speaking in joining next earnings and Well, York today. and a our thank and call our good in forward mid-November. good

your Ladies and you Tool in Enerpac Group. thank interest and for gentlemen, participation

log disconnect your the and may your of You time enjoy the lines or this at rest day. off webcast