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On the install side, it’s mainly a couple of factors here that impacted us here in the quarter. It was – the China – the COVID lockdowns, we have incredible pipeline, but because of the disruption and ultimately the delay in getting those closed impacted us in the quarter, and that’s 1% to 2%. And then in our project-based business as we now drive our vectors of growth around sustainability and healthy building. There’s larger projects and a lot of these, it’s hard to predict that timing conversion and so that amounted to another roughly 1% to 2%
fied orders
Transcript
2023 Q1
3 Feb 23
Order timing are the largest impact within our in-store business, which grew 1% in the quarter. We were encouraged by 10% order growth in our service business driven by double digit growth in both EMEA/LA and APAC. Field backlog remains at record levels, growing 11% to $11.3 billion, $800 million increase versus the prior year while growing $250 million sequentially.
field orders
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2023 Q1
3 Feb 23
While order timing, supply chain realization and China policies have impacted our global products in field install order flow during the quarter, we are seeing incremental improvements in order momentum heading into Q2.
orders impacted/china.timing
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2023 Q1
3 Feb 23
Going into the quarter, we anticipated continued challenges related to supply chain disruptions and material availability. More specifically, inadequate supply of semiconductor chips and components, but controls products. The margin under performance relative to our expectations can largely be explained by the pace and mix of backlog conversion resulting in lower absorption on our cost base.
chip shortages, caused margin underperformance
Transcript
2022 Q2
12 Oct 22
And so then you see what happened with this repower EU directive, which is to create independence from Russian fossil fuels by – I think it’s by 2027, this is going to require new public buildings must be zero emission by 2027. The worst-performing buildings 15% of the stock have to be upgraded, and then there’s going to be an obligation to get an energy performance certificate.
russia/gas/eu
Transcript
2022 Q3
7 Aug 22
So I’m just wondering, when we go from 3Q to 4Q in those two segments, how much of it is getting that better price backlog out versus supply chain improvements. And then maybe just on this 4 points of improved margin, what is the cost assumption you’re making there? Are we using current costs? Are we assuming some inflation metric on future costs?
Q4 mgn improvdement, wqhat is backlog vs supply chain improvement
Transcript
2022 Q3
7 Aug 22
on the supply chain, just to give you a number, Joe, we still have planning for some disruption. About half of what we had in Q3, if you want to give a – to use a number, the disruption is expected to be a headwind of about $35 million in Q4 due to supply chain.
In terms of EMEALA, largely what played out in EMEALA in Q3 is what we have discussed for North America.
If you were to look at Q4, we expect EMEALA margin to be flat year-on-year, a very similar trend to what we’re expecting for North America where the margin should be directionally flat year-on-year as well
supply chain colour on q4
Transcript
2022 Q3
7 Aug 22
the electronic systems that go into our solution set, certainly, that has a big impact because there’s a multiple there as it gets installed and then serviced within our business.
And so we saw our accelerating recovery during the third quarter. We just had a very strong July with our electronic building management systems, and that drives significant revenue as well as from a mix standpoint getting back to where we were historically with that content.
higher margin electronic systens sakes too
Transcript
2022 Q3
7 Aug 22
Now you start to see this higher margin backlog in the field business to go through the P&L. That’s mainly why we expect to be – we were price/cost positive in Q3, and that will accelerate in Q4 and going forward. The best example we said, Julian, is the statistics are quoted for North America where you see a significant increase in margin sequentially, so about 4.5 points Q4 over Q3 in segment EBITDA margin. And you see it also in the delta between booked margin and also bill margin as well.
So one being higher than the other by 4 points.
higher mgn backlog wil drop through in Q4
Transcript
2022 Q3
7 Aug 22
We expect to be $30 million positive in price/cost in Q4 and positive in price/cost for the year.
We haven’t communicated that in our prepared remarks, but we’re observing today that our booked margin for orders are 4 points of our bill margin in Q3, and that is going to flow to the P&L as we realize our backlog. And as we have just said, as George indicated, the turn end of the backlog is improving by about two months, that’s starting to be the expectation.
So you have higher backlog at higher margin turning faster.
So we believe that margin going forward is going to be a tailwind for our business.
Going back quickly to our North America, which has been most impacted by those supply chain challenges, you see, again, Q3 was an inflection point.
We are anticipating an increase of margin in North America Q3 over Q4 to be about close to 4.5 points and the business margin in North America clearly turning around, Jeff.
backlog margin improving, and NA margin will improve too
Transcript
2022 Q3
7 Aug 22
nd then maybe as a follow-up, a lot of that is embedded into the margin question. I guess, the other key part of the margin question is this dynamic of what’s working through the backlog, right, and kind of price catching up given the natural lag in some of your businesses. We obviously see our margin forecast here for the quarter. In aggregate, I just wonder if you could give us a little sense of how we think about the regions, in particular North America in Q4 from a margin rate basis.
Q4 margin guidance? NA margin?
Transcript
2022 Q3
7 Aug 22
free cash flow standpoint, what we’re experiencing today is an increased level of inventory resulting from the actions we have taken to manage our supply chain disruptions and meet our customer demands. That’s largely an industry trend. Steve, if you look at the KPI for cash conversion cycle, we’re improving DSO or days better year-on-year, improving DPO seven days favorable year-on-year. And the drive we have in free cash flow at the moment is due to inventory seven days up in DIO year-on-year.
We expect, as a result, the free cash flow conversion for the year to be about 80%, we had a guide of about 90%, if you remember, Steve, and to your point, no change in the fundamentals. This inventory will go down, mainly based upon what George just said, and we are totally convinced that we will be able to go back to the 100% free cash flow target
fcf conversion gonna dip because of supply chain disruptions (increased inv cost etc)
Transcript
2022 Q3
7 Aug 22
EPS is expected to be in the range of $0.96 to $1, which assumes organic revenue growth of 9% to 10% and a segment margin improvement of 40 to 60 basis points, offsetting $0.03 FX headwind.
While near-term supply chain disruptions still empower backlog conversion rates, we continue to meet our commitments in a challenging environment.
q4 segment margin guidance
Transcript
2022 Q3
7 Aug 22
refined guidance
guidance
Transcript
2022 Q3
7 Aug 22
global products
global products
Transcript
2022 Q3
7 Aug 22
Asia Pacific
apac
Transcript
2022 Q3
7 Aug 22
EMEALA,
emeala
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2022 Q3
7 Aug 22
North America
NA
Transcript
2022 Q3
7 Aug 22
Service orders were led by high teens growth in our shorter-term transactional business. Install orders increased low double digits in the quarter, primarily driven by demand for applied HVAC and controls systems. Field backlog grew 13% to $11.1 billion, a $1.3 billion increase versus the prior year and up $174 million sequentially. In our project-based field business, we continue to below backlog with higher-margin work.
backlog up, orders up
Transcript
2022 Q3
7 Aug 22
Favorable price cost and the benefit of our ongoing SG&A and COGS programs were offset by 104 basis points margin headwind from lower volumes and supply chain-related challenges
lower vol, supply chain challemhres crimped marhgin
Transcript
2022 Q3
7 Aug 22