SPX (SPXC) 7 Nov 212021 Q3 Earnings call transcript

Good day and thank you for standing by and welcome to the Q3 2021 SPX Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your host today, Paul Clegg, VP of Investor Relations. ahead. go Please

our And today With operator. Lowe, everyone. for quarter Jamie Thanks President release The Thank our market containing on good close. the us. third Harris, and Officer, me Chief was Gene Financial call joining Officer. and press issued you, results Executive afternoon, Chief after today our are

XX. of our disclosure our of slide You results and website remarks. webcast Relations website link release press to a as and our November well available during follow can find discussion as A encourage the Investor GAAP I the spx.com. the with be release in of live at and the our this webcast you will our section the along in of earnings replay slide prepared to presentation, review call on presentation a to until

of SEC comments Safe risk As presentation recent most Harbor a our pandemic. the Please COVID-XX forward-looking to factors also provisions. our reminder, note the disclosures related filings, and our subject to portions and including in are

comments on results. adjusted focus today will financial Our largely

reconciliations historical You detailed presentation. respective appendix to of in find adjusted today's their figures GAAP can measures to the

structure category, results. African our results the in an our operations other Our of reporting which segment from includes excluded is South adjusted

[ph] Transformers showing non-service XXXX Transformers Our items. provided a non-recurring Also, gains, exclude earnings prior items, adjusted results have today's and quarterly also per expense, quarter-end. and share sale P&L excluding presentation, to appendix certain other of SPX XXXX. our pension investment acquisition-related of amortization items, business also table In for certain we the costs, discrete year-to-date the tax closed

Gene. Deutsche weeks, hosted UBS investors be by will we to that, the coming meetings and with with at conferences the And turn over conducting I'll including call Baird, Finally, over Bank. virtual

afternoon, and Paul. joining Thanks, us. for thank you everyone, Good

our Solutions, from quarter-end, full-year growth the the update provide our exceptionally At company for quarter. the investments. guidance. we highlights call and the the Transformer our next to strong today, some with with We'll an balance of third segment pursue the also our providing quarter. brief start consolidated us provide an a for sale helping of reposition with and update we'll of on to On you sheet results I'll growth completed phase

We very the and pleased see opportunities strategically received businesses. capital with redeploy attractive into are the we value aligned to more

markets. we quarter, our saw the products commercial strong have also for to During end and demand very success in continue our

Our orders record levels. and backlog reached

orders HVAC project non-repeating organic a while in XX% Excluding up year-over-year, was increased XX%. cooling, backlog

was some cash generation Year-to-date, $XX flow million free up flow cash strong. particularly free our our is including Additionally, one-time items.

NPI HVAC the Recently helping to adjusted benefit excited Total have from headwinds, model. products front, share for feedback, $X.XX us from XXX% million. trends. to On grew be I'm $XX chain approximately year-on-year, increased A win Despite backlog was customer during been and our heating positioning good orders to momentum. getting long-term strong us about while million our the EPS. very internal net saw revenue was and quarter roughly to demand strong supply our our with XX% $XX in-line of is platform heating in where this QX. example we flat of the favorable income introduced of productivity. quarter, Having QX performance challenges our supply affected estimate acceleration see late these that that, the in an We did said to impact our financial of we the chain challenges

adjusting We guidance our project supply that do chain as challenges, are overcoming well full-year our availability QX results anticipate these and but focusing supply are accordingly. on will as constrain and acutely delays mitigating

earlier achieve very capital, pipeline successfully. and confident the significant acquisition growth good initiatives, on to forward, to With momentum XXXX tight declined reflects and and look I the I As increased results offset chain conditions. goals of available controls strong ability the robust a we organic current largely the our year, opportunities that ability demand X.X%, mix Revenues year. review from positioning, laid and prior through partially to SPX of segment income current out acquisitions. current the improvement A Operating margin supply about strong I'm feel supply due and adjusted our our by driven backdrop demand impact, environment of in this manage our initiatives. cost strategic primarily by continuous

value Turning framework. creation to our

fronts. last months, on progress continued several Over have few to make the we

actions our introduced customers the to cooling engineers. report and a our believe which execute us optimization of give basis including initiatives, our We our our cooling equipment On selection publication improvement latest of ease The several continued initiatives of in improvements and and will on we contains with new business in this to We been digital our in forward made. continuous leap have new process. advantage the CoolSpec, product specification design and that tool has digital an HVAC achieving very details called well-received. extended rollout sustainability of ESG, disclosures

favorable SpiDER XD we In Scanner our gas our gain government strategic getting AtoN responses Europe. cooler launched new and is offerings, winning Manhole which In evaporative year-on-year very large new with our continue we CUES in [ph] several also traction fluid Ecotech customer We to our share. orders. Detection Measurement, high-efficiency boiler booked platform, heating, experienced and And growth. & in strong condenser HVAC

following the of company the August. of platform, CommTech in began acquisition our the into integration also the ECS We

review to turn continue results. opportunities cross-selling call products. to Jamie our the I'll now, attractive see our We to financial for And

Gene. Thanks,

year. adjusted $X.XX, the was EPS For quarter, prior down the from third

agreement meet and This impact to more backlog constraints rate. addition with I balances new Both year. shortly, review cost are our prior alleviating a moderately In we with very trends the prior encouraging tax higher in although carries demand. the customer compared demand items, tax was included near-term favorable in rate run year. periods interest rate interest the in from on swap rate With lower the strong benefited the discrete and a QX debt will on lower which focusing drivers, businesses, to began production lower by partially larger offset effective to we which segment and due

approximately both Measurement was Margins $X primary the results. decreased Detection results QX, Year-to-date, our Detection we million use drivers with Adjusted our segment duration the EPS on to objectives. growth challenges, are chain SPX XX%. modest results While HVAC high-level revenue within of well were income our control in regards of the executing for partially primarily positioned & adjusted revenue Reviewing predict X.X%, accurately by driven to within In segments. year-over-year ongoing across were the offset acquisitions & was our acquisitions. segment by continue leverage XXXX down QX, With we lower growth. cannot being Measurement. we supply segment up up to believe

price project HVAC due non-repeating a revenues offsetting volume decline modest For segment, currency of to sales approximately supply an X.X% effect. the our organic with associated prior-year with flat, chain center unit approximately declined Cooling with EMEA a X.X% were favorable in challenges. region X% data in sales down lower increases and our were Heating period.

margin our supply impacted efficiencies, despite demand availability Adjusted largely points cost. the XXX well The Americas for income some million sales HVAC products. very chain and parts shipments, constraints. of Overall, labor $X.X decreased cooling basis and issues, due as as which levels remain productivity Our high up component was and segment to including certain were respectively. decline

lower backlog, for project from $XXX organic recent up XX%, up orders respectively. were and income ECS in The heating year-over-year, effects results. XX.X% currency was a backlog increase XX% Based in positioned points the our prior bookings modest platform, exceed Sealite, heating were on and XX.X% and large increases Adjusted of HVAC's margins both most for booked including that due and cooling modestly. of impact repeat, one In Software, particularly & Sensors prior-year backlog in favorable backlog ending revenues from Total ULC, impact. organic cooling an HVAC to materially & the significant with basis year-over-year associated XXX of not Measurement, X.X%, were margin Segment were the acquisitions. decreased Excluding a order million. income and segment year increased acquisitions boilers. our did our Detection and to

on projects continue orders our and going products We growth next a near-term specialized our has we significant impact our of on businesses. well. core Overall, our of are We pleased CommTech, our and AtoN the and ULC for compared and about XX%, excited related and well XX% be see to lower-than-anticipated opportunities backlog to initiatives from are highly prior The acquisitions. $XXX ULC significant seeing with for Despite quasi-government which the of year and experiencing continue for very case us delayed. track million, or business said, backlog in the backlog for a this margin. customers. That increases Measurement & said, Robotics positions customer's approximately are very the revenue to our Detection beyond. numerous due some income upside government well our for we rate year. were acquisitions and is company. effect acquisitions and growth budget, to of timing businesses of large all ahead. these orders up and a are Ending including very year-over-year the are challenges, Organically, orders integrations revenue benefit detrimental into and was transportation That most Many other believe are to respectively, perform and profit our were these or

our with net end ended of which loan, a term of to quarter we off, $XXX not intend now We million. of at Turning position position cash currently the our to cash financial in Net are of we the pay $XXX million. quarter. do the

the organic favorable quarter, to associated about $XX million near proceeds reduce strong refund. flow term, Solutions continue to resolution good borrowings. our Transformer sale was very In Africa process benefit primarily flows South in tax for balance year. cash from our including reflects a Our we with have strong initiatives several strong revolver of cash sale the one-time items. a in momentum. balance and sheet quarter of Cash consisting Transformer and Overall, we to pay the feel free was used dispute million of the proceeds $XX collections active prospects. certain of we see off to position other through also We Adjusted cash the the from with strong a sheet forms a the and are the have at and flow inorganic opportunities, from and very pipeline robust including well-positioned grow and debt the

Overall, seeing results. our forward. and we share our $X.XX range earnings $X.XXX the prior declines range growth updated to adjusted $X.XX. $X.XX estimate of of At the mentioned excited outlook the of the delays we're QX per in supply EPS project we about adjusted remain moving our of update guidance, to a are $X.XX in earlier. XXXX and business compared over around the reflects impact The and guidance primary we Regarding with guidance XX% chain drivers challenges the midpoint, optimistic

We addressing and are aggressively and are marketplace and shop in with floor winning believe chain constraints our the we improvement the the monitoring with our supply customers, and programs. on continuous

find guidance mix and lower back items. will primary more assumptions our a end The our to rate to will markets. you on relate turn appendix for and expense slides. always, of our jurisdictional the discussion in today's income on the As call based tax to changes now lower statement details to discrete I Gene interest

demand Thanks, heating. to favorable for most & with In we products Americas, level very run rate strong Jamie. Overall, very see in demand the differences of In our regions. particularly geographically, seeing we strength continue end HVAC, notable across are markets a seeing in are Detection Measurement, trends.

and despite bookings performance underlying very levels constraints. our in more well backlog chain businesses QX of In seeing significant our demand building As attractive project-oriented noted, supply as reflects are activity delays. strong as are summary, customer

team us While the to the current Transformer flexible of remain on our and our environment positions our work well to and including opportunities. continues optimize is value performance. to initiatives, creation challenging, inorganic executing continue The sale closing hard growth

experienced earlier exceptionally Paul. multiple demand a to the continue balance have over levers to now, control I'll targets back laid we turn under out the capable SPX With the and our call this strong strong year. sheet XXXX backdrop driving we toward highly and team, And

Thanks, ready to Gene. questions. are to Operator, go we

comes [Operator our question Blair first Oppenheimer. Instructions]. Bryan from from And

rate us run a frame could impact little you bit supply hoping chain more. for was I

the in we call-outs of You impacts that discrete heating. your revision. bottom And further should line segment? How think the by or then the that Any platform then, platform looking guidance have headwinds should and by we about? called out think implied we to fourth by quarter,

believe absent on our probably results, just able sort of from of we We labor was majority on would slight two balance and share per was roughly a about to our capacity think production our out have being heating was product reported somewhat came a get of the heating, QX, couple upside called side. cooling. We impact. constraints, a The there chain issue. to business, third Cooling out For businesses. more door. of cold we ship supply $X.XX it constraints that the the significant from But segments, our impacts. had impact a Across the a some impacting came

that had get couldn't out. Our radio some shipments business

AtoN it fighting couldn't late a Our else year. we We the in supply or really form that get minute more business our late to cancellation everybody It showed been had up out. the suppliers, allocation quarter to also the all issue. saw supply. some up some We component shipment availability of we've impact began like and show of saw chain of in acutely availability, businesses. Primarily

showed it it be out up. more the you on get saw to little those backlog And door grow. our components, together, to just bit door. primarily to really cost-efficiency, it could out having of able A is production put things where And the get finish so, not process,

As see distribution our the think similar business. we across fourth look quarter, a I towards you'll type

especially As our the quite you will know, largest a be our heating the shipping probably, a impact, inventory boiler our in on that during spectrum, building fourth lot that so large year, side. the lot very across quarter. quarter We're fourth a of business business, is

that little back be bit will to has up, inventory begun So, as building tougher a us. for supply chain

than a out expected would side, had some marketplace. cost talked pricing the little cost the price in had in On headwind to we We've that anticipated. We August, on was about, a we higher have say relationship. slight we

today. next think what said structure was We on QX marketplace. has quarter price in ability place. cost to of latter the into based again still the we going our and third feel for hit impact. about But a maintain part going quarter. it second the to is good the into taken will, I I the on we in cover We it get things call, our to have That the last predominantly quarter. across and It know to our if and the year think disruption, where tailwind seeing a out predominantly we'll fourth plan innovative will similar net half we're distribution. think the the But of is availability, you the component of be the year, supply segment, and shipped still

you outlook you a some perspective by that. still strong for given and XXXX market framework. underlying I out backlog cetera, understanding that guess you're your on year platform, don't shifting to position, can items trends, perhaps some topic next to We'll growth et offer positive where directional or there we a are have seeing – more where guidance most watch wait have confident and insight But think there. maybe in

at take cut I'll a that.

the we're our that in products. across and as As about, been elevated so really can talked you very look of obviously, backlogs. see very that profile we've at our strong feel very and demand about you good has virtually all and elevated feel our really then, good the markets. markets, winning it We bookings in We

to believe with go we're stronger our strong than much going into very backlog a of businesses. XXXX we a number in position, So, normal actually

areas are look you for government, the if would positive what end Dodge the commercial, wide at demand If get side, at we very which starts, underlying look say you XXXX, positive. indicators. schools, all would of cooling centers, I if we're lean across, seeing report say seeing, what And actually you data look of would is, new you predictions the the track, of that to their on really I from applications, serves variety a we

A cooling to would the chunk on the So, side also that of side. signals on seeing we're heating the side. pertain demand some positive

program. hydronic we strategies replacement, or of our our products but In most feel are with more where good reminder, business share really is boiler contactor with a particular, our there. we As and market our

So, I side, we to look feel good XXXX. we would say the on as forward HVAC

I some continue. into as good. continued other we that really look going and just to components across would moderate is from would we to see in at and there As and I We've there, in. our seeing expect as which some feel back look look expect detection, largest to also And next I there platforms. those had would business, growth. inspection, and the location I we go we say, would growth momentum nice I'd within our really I year. in we transportation, D&M, And say, CommTech see you nice radio AtoN we're do growth then, nice probably more expect bounce expect on growth

So, good situation winning market products ironically, in and feel, at doing we're ourselves very new in find well. profile we demand about the are the level, a our is high that and general we we the feel

more I is guess, focused as like chain on demand of is demand. amount a supply time side a would have just some the and supply The We tremendous our of that well lot labor. outstanding. companies, And include as

So, out into a a of bit of go XXXX. we should slipping little as little benefit bit give that us

and How dry you're balance as the M&A the great now. thinking is team we powder of approach your actionability position your sheet about Year? in a Obviously, New pipeline

team's You've have. spoken the the if much for points you and XXXX? the give in than and just confidence have some your ever while and finish more about finer your on across outlook more M&A they'll line any confidently us very then can strategy funnel in curious for a I'm capacity you bringing then prospects your deals

more market; more quarter and think this how I exactly said good a and we feel have about there I we log one, think grow. where we We of, want front of activity the is two, clarity very is last function the to in

we're our very really further. attractive feel think good opportunities about can we us and actually look build platforms So, at of I the activity very that help as some I seeing it, amount

very which from would a even I last the is optimistic, little call, incrementally I'm feeling optimistic. bit more say I'm So,

As a you there the strong by just know, math, very sheet. looking is at balance

of sheet. to up could You go $X balance billion

generating and good business of net-net, the sale we're of going strengthens for going going I GE pay cash Transformers, that allows dividends while is a And strategy. to think that's forward. us and pursue Our are And tons this good our real growing. business, a businesses to that, some to is do think I really us be Prolec,

So, I for about investing XXXX. feel as good we're how we go thinking really into about growth

UBS. Damian next from question Karas Our comes from

on little as you sales? the a to comments What to of whether on market was is going your I in boiler that suppressed components exactly hear has relates the challenges. it labor? market growth surprised heating particular, or and, flat the specifically, HVAC, that elaborate side Could on the boiler in it's

I think also a been of don't and activities. has start Why Jamie involved I these in heavily lot

demand, If about, with is our the you as believe the winning And new demand start we are the do products we've market. in exceptional. talked

have I has the that of As call, on backlog the said we grown. that amount

had it's we volumes those. If are going up that months, of is up upside what just what is you – happening But interesting this you look two were some a were out coming some in would say, we pretty I as for and the with I of reliable say, so to quarter. pushed very issue, really years the very suppliers worked year-over-year, towards and some the we first mitigate we into end And we years I very, component to our thought have say the until, would fundamental order quarter, ended would actually is, amazing. look And Damian, supply. strong,

answer chain think I challenge. a supply been the So, is very it and has simple

supply business we supply We XXXX, involved look we're worth lot work Council. our cross a chain, when noting something In Chain with I Supply think formed is you very it's with do together. chain a of at our that businesses.

about opportunities, of pricing that, coordinate together, We For example, buy was COVID, together so but opportunities. And to work this also million we steel. supply prices. we something $XX important. pretty get scale is We this in share

focused say on surprise to is was are the on acceleration at the a So, what very but I supply the I chain, would lot we time chain. supply would the us. end we spent of a of And quarter say

we're have we through working feel We about and will we good through work successfully it and many and it initiatives actions, and are. where

Jamie, about The lot lot I other us question. ultimately Damian's is, there's other – thing some of will benefit comments as interesting think a of making you a dividends. pay these any do you that do activities to have this think is

And supply There Yes, a we sales – definitely challenge demand. out, great get to demand agree. to therefore, a than was the get get to more was product out. it had chain it

Some having or where to we're of parts, expanding as doing tier can third, fifth adding the we're we possible. new our We're component types we're getting fourth, address going we of them. get if that, some are sourcing through parts suppliers things breadth different reengineering so trouble

We have possible. safety stock wherever

you stops, the part to acutely again, pulling a were into this are quarter and of fourth for we – the process we last that. So, last moving quarter. all focused if and But, in in out build heating, will, quarter, address third the

we disruption the produce And so, ship. ability of see a inhibits our to component that when and part, to really

we think much as demand-driven to I good. as out an feel a It's ability it is the get it issue. door so, issue And not all

is boilers, is you component any can kind hodgepodge. On point Or or it to? particular a of components there

that minus, of really don't honestly, that we have on a could supply plus or I us, material have. us, in cripple that will. if one a is one in reliance we think, most small times, chain big for medium-sized have quite businesses dozen, strengths you our We and

we have scale supply broad That diversity. level, challenges. good a macroeconomic said, chain have at We

have somewhere lot We different the of chain steps in prey supply upstream to that three component disruption fall two, a process. parts one,

component parts a to that at of If heating, you couple examples. relate look specifically

Wire harness, insulation.

of Some sheets. steel the

was the or other material it exchange Ironically, very that affected shape. QX. bill the our more items predominantly extraneous of core actually we're heat good in And where blowers

of being And challenges being other up aluminum industries. It you some issues ended ended that in the hear had. up some aluminum-based we components

does we company [indiscernible], deal tough have I to But full be happen our in diversity have But chain scale think supply it those So, that asset able the experienced. have that's that to big of environment. the net-net, with more and with some in parts we're we we to component to give together. ones us a that a

about those I take? can on back your some more you get just alluded Jamie. Maybe any to, that and levers how color normal? back you're long those see is pull track? of that confidence when to How going guess thinking that it those anymore, can you margins you kind of just What's going pulling levers about you getting to on

all would Yes, it's question. normal. great a probably see if would be to thrilled going could we say to I the we gets predict exactly back we're when chain supply

regardless a that's that that So, has the are I questions set everybody you think of in. industry

better I the important. important. think Jamie was management, of things us supplier improvement Jamie on regarding said assembly, floor. the This production very to A make chain. continuous number point projects plant scheduling company inventory around have our been geared will And made is management, a other supply

get is got think going things build and different time been safety doing of sure they We've a with that in us working to route there your we've in you're that suppliers, year done after. I look from year sourcing than mitigate a are our so product to supply less late challenges and to are management. of think some have your we relationship last saw they'd It's is CI the When safety that you're hearing putting different inventory. in helped customers care get to probably the But to and much go this This capital I expensive that to lot quarter. and have important, where hard of we've challenges working stock place in year the have route some plant. our I'm we less hit working is the supply of and us us most companies saying, we portfolio work confident in to disruption we and can take this in in covering, probably on a making have than going the stock. the ahead, of far it a there to relative a the of

means know see some because been about of I big in believe are those of you have the that's year. to goods. So some normally that I plants, What can't we to the efficiently. challenges improvements process. made of the improvement, things think if It about. what were And you of the would get overemphasize, more through our But of the walk you components of our more flow the this been continuous scheduling a floor our helps is supply mitigator We need. do some

And our Ferazani from Sidoti. next comes from Steve question

a I to going I'm chain guess the of asked. following up probably have been questions up end on supply that lot

Just trying sense. a get to

saw think, at lot other guidance, based to that guidance sense of EPS a quarter. move didn't current why at later that crop don't of worse. problems get dramatically, least been seen the up in we've You just what Q end trying you typically companies. this on given the doesn't a a one is quarter get has problems much the worse you get that in typically, next the lot quarter. it I'm the And And And than a of

mind hit to I the us there. think couple of things saw come late quarter. in really We this

that see, our we the the would it for data of where was we to really be. It in quarter is September second week that last all week had you've in visibility outlook thought XX If days.

As clearly possible, first mitigate forward the we we look into to steps taken some all. quarter, of fourth where

did and components based let's P&L. it, with also the in seeing that about certain on also I some we think provided we're the most call environment, today's have it's volatility most, place risk are there guidance that to in on our potential moving put what based we

tried now. think so, our it is game since a we've And wildcard – I think every last the Do quarter, right company, is chain you again, kind of step more. up supply just even to

shipping And important. But that businesses, are it right based the to based on demand having literally so, we're the the our track? but plans, they on obvious. two is contact volatile communication components demand, still still – strong. very there be our we'll is very on now in place, our of seeing got suppliers. track? able that state daily is component numbers Is again, what out what that on door get chain believe in in with One Is to certainly, the now supply reflect and we've We right inventory sales

term term middle what the types on labor we're longer So, as because day-to-day, of are challenged least handle to at this think long wage guess, the if this you – applies are that I now how you through persists well, And you of are how looking these year, labor issues? things but inflation, planning doing long quite for if know I to challenges it's the at next we whether front. term

So, it's labor term chain a question. longer of supply sort picture, bigger and

earlier, think I will I more look much goods. in talking cases, manufacture more components were process, an if you a across think buy of type spectrum, of typically our assembly We the we and businesses items, flow don't not lot at most we all.

so, And are I is chain you think impact supply because chain be companies ultimately from supply of other a seeing the lot is [indiscernible]. reason the of think issue our ultimately, than later labor part I, a

of to is, from a that's whatever two, it part three supply back the it's labor kind becomes the a unload steps chain type think root of whether ultimately, into import, chain the supply a issue. situation If process, an I ships, think labor go you significant cargo labor one, I issue,

I it later. a think little bit So, hit us

our our I say are some think all think better have to while in real ability improvement where we because through the labor challenges of labor, plants certain I seeing modest for we labor, the that some had that challenges. our still same direct challenging, we'd we've manage reason,

able that went I some get and stimulus to think in of as we saw some for recruited and were away, people roles. be the dollars to we reaction

we perspective, think I from manageable. feel And like that it's so,

probably about really we out alternative As steps or have on on lead to again, of base finding working top a able to where with staying product the a and the the thought use we're be an of than supplier on set to to scale component dates alternative are would broader taking. component it years two our much and we is means whether suppliers, be and broadening relates parts, reengineer times it ago delivery the – ever

really, the in the very do for really number at initiatives do of has on position. sole we're I work we and alluded also supply stronger items that you sole has I bill think been there the in is to – are control, some labor, that that other or tremendous engineering retention, five a look our that cetera, component, when dividends. of our engagement, amount take sourced been started longer a we recruiting, in much few our And a radio material you're before getting structurally exogenous we thing, function built of chains has of out, on. stock has And sourced reduced think going I go into your detection. the have we of for have, safety has when Jamie procuring quarter. even that what's just Take, for different now And of And that closely particular has other incrementally which is sources better. I – pay time. challenging, we think would items example, have portions terms to And add are been a et things at factors both with a

core Our control we bought have up XXXX. to boards, already

and so initiatives our is think actions and structurally risk out of system. actions And number been lot I a a taken there feel like have progress made. of so, I of these – there's

overs engineering Some taken have months, change some three have six months. of taken these

our chain, how Jamie And rest we've in of you risk reduces about make profile. and these laid So, things this said, not lot believe do feel just I are But year. and the that snap out us of we're do is I can the but managing fundamentally, think, as a I good supply does choppiness fingers. your there stronger

is with is are in demand last affecting one response the seeing times, longer Just lead you on, to times that any those longer lead slowdown in orders?

purpose. the so are very I seen. it say, that a as bulk a or products specified items, have for particular what of But would I our Not customer meaning reminder, engineered is

tower cetera, is build unique. We cetera, customer. to horsepower, et we tonnage that et for cooling anything don't the fan, the every The is ship particular the inventory. cetera, et example, type For of size,

there is is a And solutions. I hydronics, more is the need it stock. the real boilers. there business of an that. you is variety have behind give keep good for probably And to example, as engineered get business building towards once in biggest really only the very making our product order, where do feel we on the So, start businesses, our eyes we What you're – portions that think would standard demand of where an product those do But in I you you our where are that really is product. a nice

I make up. there about the if high, to so, is to grow a that think our destocking And and that keep demand way stock pull-through have you would eyes of the there's we'd is not then buildup coming do a and very sure that

something that right is would feel question, that specific of aware and we demand quite So, extended actually, demand of. I a – we're with that your don't I you What think it's across We times there good to it's the say is I now think higher do prices. any is destruction aware demand I'm do destruction see do also lead Jamie, obvious. see can demand business. our of –

come nicely. to very Continuing in

[Operator Instructions]. Research. Seaport And Walt comes next from Liptak from our question

partners more the through ask boiler you from end the and Are to Want users? one coming think, do orders sell-through, on are business. to is or building strong channel inventory they their this

partners. I would predominantly it's say channel

there So, there. is some usage

down. And break so, let's it

$XXX About million $XXX to closer million Heating, electric million million. probably heat. speaking, $XXX where $XXX starting now. really in million, now The and get the and on stock QX the consumption that with up hydronic. of $XXX let's $XXX the is field to actually the is broadly side that and of pull-through That's PK So, to say, is the QX. of is resi million. demand in occurs bulk About you going purchases on are really

they to to for So, their now, QX. year, stock-outs to the service to be field getting but the say build want which are They out customers I right? the channel is get in make from don't able you would sure QX really consumption the is really

And trying demand. so, to able aggressively service to they're that very be

ship So, you should be able to these.

channel in in your residencies. February, go will partners shipping to to you're them still you're the demand fourth get of the And getting if quarter. the then, January, Some

QX, intention. think season, of the How of our so very look I We at at the balances. and things a that at heat have? And one we have distributors. we much be the a distributors the lot end of would at look good inventory would end always of do visibility our

visibility that overall, of at we have and be that always have the something good Some pretty less. about balance would at a end so heat inventory, some, season. at we would of feel the But we some look the

back Are XXXX backlog nice so the The you now backlog XXXX? above to up D&M, you levels? in to it's see Are that much.

look but would is across, higher, if you the that of driven. I are some say, acquisition numbers

there. the are look levels at we ones backlogs. has higher some which demand the talk pretty is our our think very CommTech seeing don't about let's XXXX to TCI, kind improvement AtoN yet, is project You businesses, really Genfare, it's are attractive backlog the say, I but business, But about, that we nice transportation, of up ZWE significantly. talking and definitely typically

Clegg would And Paul remarks. further for And to closing thank no you. I'm the turn now call questions. back to like I showing

call the over look you all speaking Thank you forward to quarter. for Okay. next to today and the we joining

conference today's concludes for call. you Thank This participating.

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