Graco (GGG) 27 Oct 222022 Q3 Earnings call transcript

Company Profile

Participants

Kathy Schoenrock	Executive Vice President, Corporate Controller and Information Systems
Mark Sheahan	President and Chief Executive Officer
David Lowe	Chief Financial Officer and Treasurer
Deane Dray	RBC Capital Markets
Michael Halloran	Robert W. Baird
Saree Boroditsky	Jefferies
Bryan Blair	Oppenheimer
Matt Summerville	D.A. Davidson Company
Jeffrey Hammond	KeyBanc Capital Markets
Thomas Johnson	Morgan Stanley Investment Research
Andrew Buscaglia	Berenberg Capital Markets

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Third Quarter Conference Call for Graco Inc.

If you wish to access the replay for this call, you may do so by visiting the company website at www.graco.com. Graco has additional information available in a PowerPoint slide presentation, which is available as part of the webcast player. At the request of the company, we will open the conference up for questions-and-answers after the opening remarks from management.

During this call various remarks maybe made by management about their expectations, plans and prospects for the future. statements the purposes Act. Private forward-looking harbor the constitute of provisions Securities remarks for of the safe These Litigation Reform results in including report from of materially XXXX recent annual XA may quarterly as Form company's of Actual result XX-K the on a most and of those the XX-Q. various XA identified on those indicated factors, Form report in Item Item risk differ company's the available are website the SEC's website on www.sec.gov. and reports These at at company's www.graco.com

views speak update I undertakes new Systems. only Corporate current in the management's over they are company future of will of reflect The time the President, conference Controller no to statements Forward-looking and events. and turn information or light these Kathy Information as now Vice made. Schoenrock, to obligation statements Executive

Kathy Schoenrock

for results and provide XX% call I turning per Lowe. headwind increased every of foreign joining call. On everyone, from and earnings Mark translation quarter The increase in with quarter. year. a third share, from quarterly EPS basis, million quarter for last increase a diluted I'm will over the $XXX $X.XX $XXX XX% were an despite segment with in we sales Mark $X.XX significant currency. morning, additional thank million, constant sales and currency was our of growth and a the regions. currency of net headwind of here before Sheahan XX%. an effect of rates of Reported was our discussion. quarter the today Good Yesterday, for reported David record to third the an overview you Reported

the a continue unfavorable dollar XXX by increased year. current the points currency fourth our on would effect to exchange earnings with rates the rate, similar a sales be actions to we margin basis XXX the offset pricing translation for as rate the full-year gross costs basis declined a At quarter, and X% margin in decrease remainder in of points. translations rate by The basis, this the X% of expect challenge quarter experienced quarter. decreased while impact We

not rates ease foreign basis In costs, broad-based to see translation were throughout we prices they cost points. Interim and commodity were the beginning price increases. to the enough however, margin some quarter, begin to currency we rate full the addition, year. approximately implemented benefits into fourth offset during the our did decreased With XXX to by regards quarter inflationary increases gross in will see and next third quarter

was the of from foreign be quarter working earnings year. our cost trend anticipate Our the Cash and this year. earnings-based dollar and XXXX factors include million rate million the unfavorable capital. XX%. of tax will Contributing was due partially the pricing increased rate. flows likely to will taxed offset input actions translation rates a $X or related for by offset adjusted pressures were expenses million basis. from to Operating on expenses effects quarter. rate have sales continue decreased The and to in and will Reductions currency increases. rate volume X% XX%, XX% decrease $XXX expect from higher incentive at rates in This and $XX payments annual We tax than estimated operations and the U.S. a for investments continue were annual the last

the we quarter, due backlogs growth. to Through levels, the end have the of of have high repurchased million X.X for overall $XXX the business inventory receivable and reflective We accounts higher million. elevated are shares which balances,

the October of million in and We yesterday, continued year-to-date. have X.X to weeks the first as repurchased closed we $XXX repurchase million shares market shares for

with expenditures made $XX projects $XXX to dividend of million. private million debt, placement capital of our prepaid $XXX and payments facility We also $XX related million million of made expansion

the in expense corporate unallocated be for turn found deck on call the discussion. conference call Finally our for now to XX. estimates further over full-year capital Mark slide and I'll page can expenditures

Mark Sheahan

everyone. Kathy, you, morning, good and Thank

morning will This quarter growth in organic the basis. generally gains sales product regions my an broad-based all the results experiencing comments throughout and All be constant operating These in of third on resulted order quarter this reportable in record with were most up were quarter. segments. currency earnings. Sales lines both and mid-teens tempo with in major good

of actions pricing implemented due quarter, Some the of fully the September. to the were likely which third increases taken in end were by

$XXX I million during XXXX. pressures the than the continued which business quarter, they was $XX we relief Our inflation were than with quarter, currency the consolidated a overall not that inflationary prices, in have headwinds. throughout the the cost actions QX million however of saw on end environment. a tempo offset higher to some We is at million commodity despite the end pricing enough anticipate and and year basis. broad-based offset We was last will $XXX at pleased higher profitability backlog of of the year and taken dollar-for-dollar

$XX Graco's Availability to decreased year third higher Now XX% are the Contractor quarter, contractor protective to but in-demand turning remains segment demand and have the pro North backlogs. quarter is Out-the-door ago. our primary for spray remain and coatings challenging in were still pipelines foam still by components slightly in they backlog certain up sales for healthy Painting million, on mid-teens paint commentary segments. high cause is sales America. for our and are channel a our the work. some contractors product of than outperformance and our lines strong. of driven during robust

new sales, rates. and Going forward, interest remodeling construction, on are indicators and expenditures, we an home housing eye keeping commercial as such existing starts,

year-to-date. semiconductor Demand sales quarter finishing, in months incremental sixth consecutive favorable strong improved resulting achieved quarter we liquid key environmental geographies The with remains product and in continued for adhesive equipment. these Profitability any powder time. at remained they impact ago, the a $XX margins, less XX% This XX% not seen segment again time adverse reportable process this with to Backlog three such and in and the of to year growth to million, quarter, all pressures our regions in solid continues quarter major for key are ago. of for than same segment both is grew strong categories end all up for sealant products. pumps, business results lubrication records readings were in earnings. compared in $XX the the and with incremental records The Profitability coating margin the broad-based X% components. on all and last have quarter revenue third XX%. both Industrial positive regions as operating quarter Demand than some and be XX% greater While of and the XX% and grew earnings. growth and resulting million year cost to process compared throughout growth the despite in operating revenue is equipment, with

these Moving quarter trends for all optimistic to remain regions, that will the however, and lines remainder affecting uncertain. in our the continue Demand product and many strong was segments of order our we're outlook. macroeconomic of regions incoming rates during year, the

niche manufacturing committed are channel products, profitable core pursuing new through acquisitions. We expanding in our our opportunities or to growth and strategies either capabilities, organically markets attractive launching investing global our of in

of XXXX. growth on expected That an effects double-digit basis prepared segment. to for ready record backlog plus guidance have Our raising every with constant the in we concludes to Operator, our questions. levels organic currency a We're near-record growth pricing in revenue remain our year is still we're reportable actions, our XXXX positioned low remarks.

Operator

Thank from you. question. comes Our Please Instructions] Capital [Operator question Markets. with RBC first Dray Deane your state

Deane Dray

Good morning, you. everyone. Thank

Mark Sheahan

Deane. morning, Good

Deane Dray

recent maybe be well, though can it and October on but most at all seeing Thanks. you segments, all or with doing puts us might take weeks sounds you're all? regions if Hey, so last takes, and like where slowing what four And toward geographically some focus strength? into just

Mark Sheahan

with somewhere region losing, growth. say there absolute Russian breath think Yes, with revenue for a activity bit product also we that start surprisingly really we well doing given maybe the been a is level multiple little in course headwind seen been big across there. all a $XX but million and of the expected, China really the and stop I paper. in in course strong been what's bump what despite and the little the we're to bit North we as we've haven't holding then than I with all Russia of but to think America little year, for of than going throughout had of has what reads headlines good sloppy categories far better now, all would our of in it's on the fairly on of sales, have general we're at as it's happen winter, and those terms energy least other this bit of But XX-month around revenue everyone footing. things, negative seeing, probably basis seems a where speed And resilient, be a other and with and terms Americas I got really Europe's us in all year, business anything of it's Asia remains good leading

to something experience wait to I I order there weeks environment you actions, the of last in pretty QX says like that too, our draw that, few in here pricing healthy and and comments of in to any is in activity did with weeks, did actions and while a you after overall my around respect aren't is reference before rates about really really can firm do weeks So that some characterize that, dangerous comment would terms sure pretty do dangerous, we course going got conclusions. I'm three upfront was pricing you we four that

to pretty healthy going shape, happy in we're business quarter. think still is the So that, and do I the very good with

Deane Dray

and collectively from Great, because has there discussed to the -- all annual increases, just January, to clarify plural the that's just been topic previously heard price made increase, that how individual and one know that and the you price but extent I then has implement price increase which you been to decision but across the could clarify, I to increases on it just maybe realization? price apart had of price businesses, that just your we

Mark Sheahan

why so it on and we and increase, plural year we the all geographies, then this so so did all Yes, that we earlier business year units did that's mid-year we part two this did the did across and probably the that's said question. of of one one we really

very In realization, strong. terms it's of

the increase, still to growth challenging. our tied teams actually about be costs it, doing everyone's I of this in in go you and a sure where said realized job still pain are super that revenue environment good particularly that two-thirds true. roughly of And that are think that making think to to price be can year through before it pricing, make a holds this I pushing focused on our sure get you through you want we've

David Lowe

date was recent September. the to of would notice vary. August, In increase, use periods I terms well, regionally September the touched price is This guess in just there in that around because announcement David, I end as different because amount actual Mark due that as plural communicated in of I customers fair add. a was -- notice world, sometimes in and the America, the implementation the beginning of some on, then North in requirements, the

So and now communicated been of on period in all have orders. interim we're where the really the future are just effective price adjustments

Deane Dray

Thank great That's color. you.

Operator

Thank you.

question line Please comes Halloran question. Baird. state with Robert from next Our W. Michael of the your

Michael Halloran

Hey, morning, good everyone.

Mark Sheahan

Hi Mike.

Michael Halloran

and because contractor or on first side? the it's on of on it's the on the other remarks, that? to your the organization, but a in thoughts And of perspective, at where when want your any both now normalizing side least, the confirm channel flow the or of like said challenges, inventory internal on the And couple inventory. do a cash stand segment a side think channel thin within availability Seems you the inventory I does benefit because guys from seeing questions that you you incremental little start here, some little starts side a out So but for inventory elevated, prepared and know there? inventory then you increased then

Mark Sheahan

powder $XXX think I want given them we is I be things think normal and you to mean half like I what million and that. got tie with that business backlog, than large company backlog, of probably of plus and really we higher they're can it the to the our business the dynamics Yes,

before two come inventory components. really backlog in electronic did equipment way again in waiting down think world would historically, normalize, ship So lot we've and a is it where a in levels to able where to go, that got to something I book expect and probably it's could we built and up perfect the come inventory ship you We've work-in would component or out. we you're tied can but ready for process we're an this

of home back most in our most in to we good where on are think us center the on I you feel hey, I side, they area feedback us are give channel, orders the given pro levels order, partners our think want questions, inventory still from business it, on the And side, really not was home that is pretty ask the side. that regard the of the that think about much side, with so pro the back everything we're channel CED, which they've on So the level CED center people right now, where had. getting on I got, you're

this them hey, So or we there hasn't or need that, been point. any at kind need communication of from more we mandates inventory less any

there. pretty are things think I So stable

a with. lot begin On carry the to generally side, don't industrial they

supply So so characterize deliver this I to as on be them they business Graco we to wanting for the lot really stuff, them and of side would much can and too. their on rely inventory that of thing process on same as as a

Michael Halloran

simple Great, think about And the on differences channel more -- side? mix differences of product there? pieces? side. contractor on suppose, you category the contractor of products really question helpful also stuff I then saw the out from Any that two one any either the trends any versus more when those then other And some the notable the on for designed on contractor the side of you

Mark Sheahan

would home no, business, been last of business through expect that our the up which given guess the say, long-term, center pro has our I I throughout I'd we than would say stronger huge ramp and you had but short-term, there that pandemic year. most

hard unit up us, painting that's believe a both that short-term as they're in professional now. So the margin to people with important low tradesman that respect up the we they characterize rates when super then still product find, product -- low-end, pretty of are differently they I stuff, really bit thinking start professional that it would really about contractors line, that's to the a causes busy, that would having I sort they become higher they're categories But so and they're are a more units, that I like going nice to getting longer-term, pipelines are pro are the on feel comments that I little right said say thing think on good, the to business, the dynamic and move do by grow into chain contractors.

are categories the to important So both really company.

David Lowe

that the Yes, business that spray insulator and the whole on add I has it been coatings protective just throughout we'll activity the, consistently foam would strong contractor call big the the and year. to on that in

Michael Halloran

because product, mix mix is and towards that skewing little the pro the towards of And of a higher-end, a the channel as result? then higher the

Mark Sheahan

that. in least at some think of seen I here Yes, the short-term we've

Michael Halloran

the really for Thanks Great. it. questions, appreciate

Mark Sheahan

Alright.

Operator

Thank you.

state with question. your question next line from Please of Our Boroditsky Saree comes the Jefferies.

Saree Boroditsky

are levels building of level? in to Kind below question. my what seen margin the on well talk margins taking get Could at to for performance to highs, through almost is you need you contractor, thanks still all-time see Hi, XXXX. obviously back XX% sales

Mark Sheahan

pricing to all that what their the business our Yes, into I that you're third hit been you variance, rate. what and group into just actions versus it you just to of sort the margin our all that into hard thought, a on translates vast their between we have which run incremental nature, the in particular step-back have actually actions sales, think is. the components get don't costs -- products and that and they revenue you're cost really other that electronic of really The we and be sales here pretty if costs you call, outsized, compared were get difference costs factories, probably you quarter of of and offset has are lower generating, of what purchase businesses the course disproportionate we really of took our would price when a in been and designed to that majority on they the goes math pricing is margin the in of lot some increases, offsetting higher go of that on

they year do in there input cost great push they've a continue would our historically, margin pricing, to been I expansion there, that the the so, have extent expand. do come forward, think that margins and Going expect the we job what up is way we here and pressures down operation have efficient to are Rogers, lower we last if that and really that there, or than they experiencing to costs

Saree Boroditsky

cash you're like balance some deployment optimal price outlook, shares looks thinking in cost So the coming balance how are demand think So on the there's you're bought here, any the positive and how like? it I about sheet update upside the back then that you to pretty remain you margin thinking some capital look XXXX? should position? And on about what maybe sheet you

David Lowe

rightly a been consistent flow of active, and and with good we're we it, that turbulence agreeable it's because M&A to into has investments that are engaged, call in some opportunistic, model existing of aggressive than the Graco are well those, Graco now is and they we Well, be and next call that efficiency I got plant or the we've side for come wrongly investments CapEx have and on of cyclical and very pricing on launches characteristics, stating next and ground it, working where been business. we've seen -- great our of and more us markets on investments state-of-the-art past to our market, believe lot distribution to we'll And there over our in of The and in that equipment several I with leaves be M&A in diving operations, out there position. remain are in in see one balancing side, a think to as and capacity are making are share development uses to support then on And been opening and the be the the buy cyclical we make what is investment are in -- strides opportunities committee investments new that evident some as that terms could in and and couple center the will the the to to as that use to -- we leads projects successful, both, finance will the you're that street that wise that cash perhaps the and years, of understanding the equipment, of been ever and when new we product team a we've very maintenance the when Dayton think consistent markets to product internal to to long-stated the quarter do aggressive what's ‘XX in we in opportunities aggressive second want quarter improvements our years. schedules the cyclical continue technologies while still markets area. in are side we're along they on recent that see continue nature, the building months like on in cash powder ROIs broken really on being investments our over we which hopeful past. I on aggressive we The we teams are out. as continue we think as you’d us our have Graco’s we strategies complex, believe think serve that the

Saree Boroditsky

Thank believe how because slightly but more, mentioned thinking -- if about could about potentially And development elevated running could costs, squeeze so talk one you base, just last product you. you below those I any levels spending on an year's are initiatives I cost there? just you're

Mark Sheahan

as Yes, can. as much backing we we're putting

couple teams, we did restructuring leverage you the we're the of of some we're that we some talked groups out maybe make also of and those we and products investments, the put side, of changes. just and getting think not we side the year think where particularly to back that but I is there, expect shouldn't I continue know on the a better that think company to lifeblood we contractor holding together that any on are I last the about industrial due anything fact

Saree Boroditsky

Perfect. my Thanks questions. so taking for much

Mark Sheahan

Yes.

Operator

you. Thank

next question. Our with comes question from Blair Oppenheimer. Please state Bryan your

Bryan Blair

you. Thank Good morning, everyone.

Mark Sheahan

Hey, Bryan.

David Lowe

Hi.

Bryan Blair

Mark, case share quarter Process, there's taking there? six out which Very the I lumpiness? I ask you in terms of is And assuming I in anything of given your end that isn't XX%. or impressive if above the in I'm have assets, consistency of any wondering would growth markets the the team and figured also I was believe applications order again Process timing clearly called you growth I ask? think dynamic to or call-out consecutive don't with but

Mark Sheahan

Yes, some it's hard of for we're exactly know us are taking companies aren't. the or share whether not, public, to some

we've So our is say I really but that will pretty data bad, there. what categories product pleased with multiple really been is

If you think a which other revenue that business, gain otherwise group we're wouldn't some up with has are new diaphragm that they I had. that incremental helped launched have maybe some technology pump with we've really of substantial into market, there and that couple our competitors two start

sell are than where Our a our a bit forward gained competitors have them, they where sticky, there, and new lubrication we're think excited that in from maybe particular little better that's so lubrication one and big tool accounts perspective. injectors you of pretty and machine area once serve some the customers I going industrial and about our we and think is availability in product things very our industry the I businesses to we are good businesses, and availability have

there. the business rates investment there, our helping been so there's as business, into growth good, of And the that's with some well. extremely a growth semiconductor seeing has lot environmental going Our dollars business landfill even we're

going the So all results. happy and with hitting is cylinders the are we're really things and on team well well

Bryan Blair

color. smallest to the see and fruition tailwinds if product pavement over hear, is at comes pressured have we of I suspect the an of and the the offset I And to business be? is pavement a contractors appreciate for near-term. much HPCS then paint there, least there [indiscernible] nice but categories like pretty Good while? you'll just How realize I

Mark Sheahan

we they are Yes, with in although tied all construction. it's contractor that a line in really have fairly broad product

We things have on lot are better or and have have texture, be protective a line have and projects, do outside which it of year used striping, there, to really to remodeling and spray we some is materials coatings, so then build, ago architectural we too. which people infrastructure oil for coatings higher residential might that there's remodeling with bridges the they the elements and put a commercial can installation sit helps on there with stuff it also be foam there is in that which than that homes, we are get being exposed investment upgrade and was pipelines the their like

on pretty given more good North is think that in still that under we rates, that probably expect a that's because the construction to would residential is is again, a area America. way just where eye we interest slowdown before said our in long-term market, keeping one here but are the we I spike like built of So worth an things single-family

maybe is for there long-term units, of are markets million softness, something so but think which some really, demographics, periods three where us. really years good you like based demand on like just still $X.X can go is I these through it's

Bryan Blair

again. Thanks sense. makes All

Mark Sheahan

Thanks.

Operator

you. Thank

Davidson comes next the question. line Matt with from your question Please state of Company. D.A. Summerville Our

Matt Summerville

call interim contractor, them. that whatever of the of you or of may little Thanks. that rationale think seem doesn't sort driven to the timing to of least buy order price as you ahead in come bit increase Mark, at little of have the I've outside businesses, bit ahead, that indicated about want it, all a other

I saw have that? related you expand could on been that of relegated a more that any probably activity, should just assume you would So if the little Contractor, it

Mark Sheahan

it in has than you around, it's know to if nature, right, laying think to probably later. I come some going human rather and increase deploy price got you Yes, you try capital sooner

to year not you also it very side, that surprised quite doing we pricing on on a well that that tell haven't normal comments it side. ordering the of bunch we do that all our any may all a so on push expect that's have, are we this back buy everyone happen. we been distributor understands occasion, my about of side we of that so the have tie can of were or is the in try we is So a manage see upfront had when that and it were from of ahead. doesn't that of the by as partners little actions big I partners it we on we nobody raising push industrial even sudden news that situation there more them but aware good The bit, to prevalent has industrial an the the happen course And if like can on products know that back them, a teams have really I we of channel bit and took really little what of do larger it the a we prices or project a ask taken process may we're of but would some

Matt Summerville

price on the raw And materials, based about thinking it's should be we And would what cost for at early, transportation, like about obviously in implementing but increase be this that ’XX? we of on fact view here early a increase you price magnitude couple looking does did interim looks your we How thinking -- for cetera, of inbound then the type cetera. of et be et how action should profile another your months? change

Mark Sheahan

over crystal today. that next the things we we a ball or pressures go math, it's down, good sit today, we here run have when Yes, cost job offsetting we're really of question, where based the great think we are to XX-months, experiencing input don't we've on just we a that done have whether a really but today as good the they're on are up going costs

year. We still raise prices next planning early to are

I to our more think that flexible some not the specific any not of smart where think may the in to the have time that's environment pricing think look any us flexible that it'll this this it's really basis ability able this I go, the case-by-case taking. regions commit I a we've for to some specific But stay go, is one and not on percentages environment more be dates some so go. and things here may go, to we're in businesses on some or we may of at approach a and be learned as company may that

Matt Summerville

Got it. Thanks, Mark.

Mark Sheahan

Yes.

Operator

Thank you.

comes from state Markets. question. the Capital Jeffrey of Please question next Hammond your line with Our KeyBanc

Jeffrey Hammond

to just wanted go Yes, M&A. back to

you slides X% years. -- well guys been to I that front have running a in the highlight few growth for certainly think below have you been of X% the

speak you get Just maybe that X% code? to you more changes to what to think on X% maybe zip

Mark Sheahan

us than we've they're maybe to environment at last little working Yes, but when about to it it's compared years. corporate journey companies still had more see starting on job, be past. they're a I couple reasonable, team the the some that seen their and time to we built-up over fantastic up more current the become pricing would get company to to pipeline talk a the and little business a create is competency of the active comes the and what doing what really our a been business really of acquisitions, of trying take to here a more M&A units, to of going we now we've say, in targeting, bit bit that's a our elevated are units all with We're

only with talk a have world-class a understand the enviable well, trying very lot things a them we we've business, those manufacturing, got and Our to the as we have acquire global we're offer, we story when to companies footprint really we conversation. are that in leverage requirements customer to that an

putting been to better long-term we a in year on where talking are when as through more and some M&A targets really resources we're So a that about percentages ourselves by a a trying about the we're those contribution here we're have we and getting historically last it talk basis that those than I think the achieve position company. cycle, in on

David Lowe

candidates just in I focused really over that's having Blue work expose in Book it all, the years. a if help of team in a thrived. turnover several know perhaps the effort, rocks market, first-hand course to I some first with that was of that, process, when ordinarily M&A, businesses we potential the cultivation the do working tremendous a we good units, they lacking can the on the on that's on I was out that market more reactive but and the this, extent different sellers. business been point missionary some this last and building we work And do on could it would I has get a process, of did add lot couple say we that a were of is something us And proactive we the wouldn't which auction and relying process as can of the that to for avoid may that like

Jeffrey Hammond

that's about why some lot it it like resilient. And other people proving industrial on more other then of slowness the there in these where you're different concern there? seems maybe saw anything slowing a you Europe, Okay, Is or just ones, quite seeing more industrial ones there, great. back are seem versus resilient

Mark Sheahan

course a around move at so the particular numbers of in can lot. quarter, Nothing

some too had to of with activity that. Just in this European industrial you that, be project can and number includes powder particular we lumpy remind our and, powder quarter,

businesses strong Graco the quarter. and legacy were very the So solid through pretty

Jeffrey Hammond

Okay. end-market there? mix be know bucket, but if last just of sense non-res Thanks. might what -- big I updated us construction And that you res, gave better don't overtime a is then have a within mix, you the one,

Mark Sheahan

tough. tell, don't a it’s they to lot sprayer thing customers paint of are would we Sherwin-Williams having because but of you and pretty hard different go, Yes, to a and is terms end-markets job when residential the details in is when I really could that we're good that broad going -- be granular commercial store next to buy a you a say don't it day, where know really mix, getting it's exposure on the at a

David Lowe

like ‘XX positive categories of that see on here for office some pretty the for some would in for I that North forecasts look notwithstanding construction, kinds ‘XX. relying of external commercial the areas we're and the in large Yes, America different challenges especially say, forecast the we of

Jeffrey Hammond

Okay. I appreciate it.

Operator

Morgan state Instructions] question. question with Johnson Our Please Research. you. Thank from [Operator your Thomas next comes Stanley Investment

Thomas Johnson

was out we can through Hi, last thanks. some conditions some that year-end. and of this mentioned the there EMEA in If to just, Europe persistent to surprisingly where quarter, kind go here, economic of, quarter scenario weakening mind back keep obviously regional dynamics was called you've

surprises evolved Just standpoint outlook maybe could the how given the there? has here, that on you strong where a biggest us in seen you've update quarter region and your from customer

Mark Sheahan

happy I out we're year. all-in that for things see team accomplish is a read the to think better Europe struggling also Yes, and them. The proud lines given had of doing over quarter, product what to all really able doom did them headwinds then various levels that there. they've the you to pretty bit fair has gloom a so a when and our of in over bit the the our amount been been factories revenue has ability think I'm losing team out. them things what helped demand slowed nature, down of get with about with our flow and a to fairly all, and But little what's challenging that of with that Russia We I

David Lowe

the gloom with product cetera, that Graco for environment does tell, think lay but energy increased and Yes, lines a an doom, even is costs, will there on, touched groundwork and costs, of as I lot and labor better because time Mark ROI. et of costs,

Europe economically will So demand lot of operations I in help that more hate events to a of notwithstanding a with and inflation, fact interest, politically the that make can we world which continue follow products efficient. for

Thomas Johnson

looking the such there standpoint business? maybe as the your anything domestic demand? Have the strength component have you United last some strong two transitory by releasing surprised from near-term Is been been availability there. thanks. in States, just Great, revenue very of a quarters as increased pent-up then at And that's impacting

Mark Sheahan

Yes, product categories surprising several has wouldn't on multiple quarters there continuation, demand and across been say too good. for had so window a we've been of been nothing we're the happening from world. multiple end-markets, I It's now our where surprised. this It's sort

Thomas Johnson

pass Great, back. I'll thanks.

Operator

Thank you.

the from line of Andrew Please Berenberg your comes Markets. question state next Capital with Buscaglia Our question.

Andrew Buscaglia

Hey, good morning, guys.

Mark Sheahan

Good morning.

David Lowe

Good morning.

Andrew Buscaglia

Is amongst I'm factory some going So out in that? right and up really influenced are really while there now to this industrial there, than indicators now And wondering have what's a driver now? about your technology just the willing much that segment, interesting how talk by industrial going often -- like with driver process right you is gloom to real of is is the big of on and perking are customer we're confidence doom they're of maybe upgrades upgrade. is I'm strong? seeing? there is base lot and that wondering things broader So what sustained it those energy markets upgrade factories your demand we're and

Mark Sheahan

because say, ways in the on the reduce are out the wide up and a that equation, through material tight and I deep in they for material looking Yes, sell to looking costs factory in with or the the lot where quick go open it I products and product a say mile things we it's a of of line is ways demonstrate you rough, a to in us some people can relatively have labor gone doors taking payback customers. a and as of putting really consumption, sure believe for by an because upgrading new does some majority you can of our when and product industrial for with labor going there. hard that stuff to and for inch winds process do twosy got here that like onesy, But and you've mean that's vast

I good facilities terms is I So companies in lot machine three the mean, it's over the lot in question, and demand tools and the us, in at a because good. are our are years last investing. look a I think of up [indiscernible], invested our we've a factories that paybacks

as sets as dynamic for So continued it place, us strength. in up long that is

David Lowe

investments they the industrial EV they're automotive side on now, right families Yes, product a three to take and make speaking ones in demand equipment and are ones decisions on to I those business, new industry, more and unless broadly of decisions is to certain -- of the activity have plant need There's for extreme product their bad, next of but the because now Difficulty] world product recessionary they times and least add for an drives product years. helping plans a in their new equipment. in And they'll market, situation obviously course, platforms, of where to would on going not key the at big what in automotive. lot [Technical just sort what that for their good around commitment are platforms, their five means make over the our need we and the

Andrew Buscaglia

sensors M&A And going more that talked I'm strategy your and a you're implementing be products your strategy? we things okay. sense. is R&D to similar wondering question, Makes those maybe while coming much with Yes, haven't like in or picture about from and at bigger along lines technology where into new

Mark Sheahan

extent feedback capability focus for or the major of having wants most And think has a products data them. to customers and our are products that have I to the been providing smart us. customer the

along way that So very well I there. think the we're

Andrew Buscaglia

thank Okay, you.

Mark Sheahan

Yes.

Operator

Thank you.

As Mark no are questions, to further there will Sheahan. now the I turn conference over

Mark Sheahan

call. you I for participating unanticipated and have environment many hurdles. for a operations excellent across employees closing, like around endured been efforts year, Okay, in world acknowledge the would but our it's disciplines, this today's multiple where manufacturing teams our thank especially their In to purchasing in challenging

call. come and this company Thank what That great concludes it's together. people goodbye. the you, makes the rewarding teams been Our and watch to are

Operator

our a concludes and day. All participating, for conference Thank for you parties have now This all may today. nice disconnect.

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.