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However, we now anticipate that our full year margins will be at the low end or slightly below the low end of the Investor Day target range. The headwind is primarily due to ongoing manufacturing efficiencies related to supply chain constraints, ongoing inflationary pressures within manufacturing, cost and our conscious decision to continue to invest for profitable growth. That said, we expect to achieve our Investor Day ME&T free cash flow target range of $4 billion to $8 billion.
margins at low end of inv day target range , but fcf will be in line with targets
Transcript
2022 Q3
17 Nov 22
Strong price and volume offset increases in manufacturing costs in SG&A and R&D expenses. Manufacturing cost increases reflected continued higher material and freight costs and manufacturing inefficiencies caused by supply chain disruptions, resulting in our margins for the quarter being slightly lower than we had anticipated.
lower than anticipated marginds
Transcript
2022 Q3
17 Nov 22
We generated strong operating profit margin improvements in the quarter, both on a year-over-year and sequential basis. The adjusted operating profit margin was 16.5%. Adjusted profit per share increased 48% to $3.95. We generated robust ME&T free cash flow of $2.1 billion.
Our backlog continued to grow. It increased by $1.6 billion in the quarter and is now $30 billion. Compared with the third quarter of 2021, sales to users increased 7%.
backlog 30bn, margin, me & t fcf 2.1
Transcript
2022 Q3
17 Nov 22
we continue to expect to achieve our Investor Day targets for adjusted operating profit margin and ME&T free cash flow for the full year. And with that, we'll now take your questions.
inv day targets
Transcript
2022 Q2
15 Aug 22
In China, we have seen the market weaken, as I mentioned. We had a couple of very strong years in 2020 and particularly in 2021. It's too early for us to really predict what's going to happen there.
china weakening
Transcript
2022 Q2
15 Aug 22
service initiatives,
services colour
Transcript
2022 Q2
15 Aug 22
And as you know, we've been very focused on services in the last few years and one of the main elements of that is to increase the value that we provide to our customers.
services
Transcript
2022 Q2
15 Aug 22
es, we're still dealing with an inflationary environment, and we have not seen a decrease from our suppliers as a result of commodity price reductions.
As you know, it takes a while for those kind of changes to work their way through the supply chain. And of course, there's volatility there as well.
the drop in metals/energy hasn't fed into CAT supplier cost yet
Transcript
2022 Q2
15 Aug 22
the delta between price and manufacturing costs, which is really the most important part from our perspective, will actually get wider and that really is to help us actually catch back up some of the shortfalls we've seen over the previous few quarters.
So from a margin perspective, that will be a positive.
pricing power good so proce>manu cost
Transcript
2022 Q2
15 Aug 22
Having said that, we're encouraged by the conversations that we're having with our mining customers. They're making decisions based on a very long-term view
mining still conservative on spending
Transcript
2022 Q2
15 Aug 22
So our backlog increase of $2 billion was primarily driven -- was led by Energy & Transportation. And as we've mentioned previously, we have seen an increase in orders from solar turbines oil and gas customers that will start to impact us in late 2022 and into 2023.
Our backlog in Resource Industries remains healthy and would have increased if not for some Russia cancellations that we had.
So again, as we look forward, we're not making a prediction about 2023. But again, that strong backlog does help us feel good.
The other thing is Construction Industries, the infrastructure bill, we believe it will start to impact us in late 2022 and into 2023.
So again, for those -- I'll provide that as color, although obviously, we're not making a 2023 prediction at this point.
backlog commentary, E & T up on orders, RI impacted by Russia, CI -- ingrastruvture bill to hirt late 2022 /2023
Transcript
2022 Q2
15 Aug 22
Your second question, we have not seen a significant improvement in supply chain. It's still hand-to-hand combat.
Our teams are working way through those issues. Again, very proud of the team that they're able to turn in double-digit sales growth despite those supply chain challenges, but we have not seen them ease. It changes from component to component. 1 day, it's one issue, 1 day, it's another issue. But at the macro level, we have not yet seen an improvement.
no improvement in supply chain as yet
Transcript
2022 Q2
15 Aug 22
For the second half of the year, both the enterprise and segment levels, we anticipate adjusted operating profit margin improvement compared to both the first half and the comparable periods of 2021. The impact of price actions should accelerate and though we anticipate continued increases in manufacturing costs, we are starting to let the significant increases, particularly in freight and material costs, that we saw in the second half of the last year.
mgn improvement to come, pricing to offset manufacturug cists
Transcript
2022 Q2
15 Aug 22
Pricing was better than expected, while sales of equipment to end users lagged our expectations due to supply chain challenges and additional weakness in China.
eq sales lagged expectations (supply chain and china)
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2022 Q2
15 Aug 22
Energy & Transportation
e & t bonfield
Transcript
2022 Q2
15 Aug 22
Resource Industries sales increased by 16% in the second quarter to $3 billion. The improvement was primarily due to favorable price realization and higher sales volume. Volume increase on sales of aftermarket parts.
Second quarter profit for Resource Industries increased by 2% to $355 million as price and volume more than offset unfavorable manufacturing costs, which largely reflected higher material and freight cos
RI bonfield
Transcript
2022 Q2
15 Aug 22
Construction Industries.
CI bonfield
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2022 Q2
15 Aug 22
Volume decreased slightly as lower sales of equipment to end users was mostly offset by higher sales of aftermarket parts. North America had the highest growth in sales dollars, a 20% increase due to strong pricing, a favorable change in dealer inventory and continued strength in services. Sales of equipment to end users lagged the prior year slightly, driven by supply chain challenges.
services and afgtermarjet made up for machine sales decline
Transcript
2022 Q2
15 Aug 22
Price realization was better than we had anticipated due to the strong demand for machines. Manufacturing costs were also slightly higher than expected, primarily due to continued material and freight cost pressures as well as the impact of supply chain on our factory performance. Overall, price exceeded manufacturing costs for the quarter, which reverses the trend we had seen for most of the past year.
pricing good but cost up too
Transcript
2022 Q2
15 Aug 22
Machine sales to users were impacted by supply chain challenges was slightly worse than we had anticipated. Overall, we are not seeing signs of slowing demand as order levels and backlog remain healthy
no sign of sl;owing demand
Transcript
2022 Q2
15 Aug 22