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| And that's and combined with the pricing actions they've done and watching expenses, they've really been able to drive profitability at an extremely high rate there |
| It's a combination of superior execution, the ability to deliver out of the factory, some new product launches, that we've had that have really taken a nice hold in the marketplace |
| And so knowing what we know about the backlog and what's going to ship out of Powder for the rest of the year, we feel pretty confident that we're still going to be able to hit those numbers |
| And so we feel like this is a good catch-up year for us |
| The Pro business has held in there better than what I think most people would have expected |
| Strong price realization and lower product costs were more than enough to offset lower factory volumes |
| For sure, Protective & Marine, protective coatings, spray foam, anything in what we call our high-performance coatings and foam business has been good |
| Gross margin rate improvement more than offset these increased operating expenses during the quarter, resulting in operating margin rate growth of 4 percentage points |
| I think that it's a combination of pricing, great execution in the factories, some nice new product launches and reduction of backlog, that's really driven our results this year |
| Obviously, Process has been a bright spot in the portfolio, both from a top line and a margin perspective |
| Current order rates, along with backlogs, new product activity and strong pricing gives us confidence that we will attain our full year 2023 revenue guide |
| So the margins improved like kind of significantly year-over-year and quarter-over-quarter, like despite lower revenue levels on a sequential basis |
| In the face of a modest 2% revenue decline, we reported record third quarter operating earnings and operating profit margin |
| There is also a robust order activity in the third quarter of 2022 in advance of our October price increase |
| Overall, we're pleased that the company achieved third quarter operating margins of 30% or more in each of our segments |
| This was driven by a significant growth from the Process segment, coupled with strong operating performance from both Industrial and Contractor |
| Realized pricing actions remained strong and our factories have rebounded nicely after a couple of tough years of getting product out the door |
| Of course, there's a lot of things that go into whether you can actually do a deal or not, but I feel like we're in better shape today than we've been for quite some time in terms of the robustness of the pipeline, the quality of the pipeline and the quality of the discussions that we're having with companies that we're interested in |
| In 2022, Contractor sales in EMEA were up 12% in the third quarter, as we were able to ship a considerable amount of our backlog, when supply chain constraints started to alleviate |
| While macroeconomic conditions worldwide are unpredictable and business tempo has slowed from a year ago, we're pleased with the improvements that we are making in the business and that are driving record levels of profitability |
| We experienced another quarter of strong broad-based sales growth in the Process segment, which was up 9% and 13% for the quarter and year, respectively |
| We have a strong team, good factory performance |
| New product introductions and Contractor have helped drive incremental revenue in a challenging macro environment |
| Products like our new lightweight QuickShot, electric-powered architectural coatings gun package, and the reactor 2 component proportioning system for spray foam and polyurea applications, have been well received by customers globally |
| Profitability has improved in Contractor, as pricing actions are now starting to offset the significant cost increases experienced in the last 2 years |
| And so we've got a great product line, and I think we're benefiting there |
| Our environmental businesses are doing well |
| In semiconductor, we have been working down back orders throughout the year, which were actually embarrassingly high a year ago, and the team has done a really nice job of getting some throughput in the factory and making a lot of efficiency improvements there |
| And I think it's something we keep in mind because when days -- when times are dark, like they were in '09 briefly in '15 and certainly in '20, we were positioned strongly to move aggressively and take advantage of those short-term discrepancies that seem to appear every so often |
| Increases were posted in most business units and across all reportable regions, led by double-digit growth in vehicle services and semiconductor |
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| The Industrial segment was down slightly on lower project activity in our Gema Powder business, and our Contractor segment declined 8% from a combination of a difficult comparison in EMEA versus last year's record quarter and the softening of global construction markets |
| Yesterday, Graco reported third quarter sales of $540 million, a decrease of 1% from the third quarter of last year |
| Contractor segment sales were down 8% for the quarter |
| Sales decline across all regions with the steepest contraction on a percentage basis being in EMEA |
| EMEA's results for the quarter were impacted by challenging year-over-year comparisons |
| While material costs have somewhat moderated compared to what we experienced last year, lower factory volumes and increased operational spending continue to be headwinds for the quarter and year-to-date |
| Industrial segment sales declined 1% |
| And with the supply chain challenges of the last couple of years, frankly, coupled with COVID too, those are, I'd say, particularly sophisticated and complex logistical problems, especially in the markets in South America and in Asia and in Eastern Europe, where a lot of the new powder systems are installed |
| And their business has been softer than what we experienced over the last couple of years |
| You probably know that the home center has been challenging this year |
| Foot traffic is down |
| So here in this quarter, obviously, there has been some weakness in the stock |
| A decrease of $30 million from the previous quarter and $55 million lower than at the beginning of the year |
| And then in China, I was over there about a month ago, and the construction market over there has really softened quite a bit |
| And the home center has been tough |
| That business has dropped pretty significantly |
| It really isn't a significant factor, excess inventory in our businesses because our channel partners in industrial and in process really don't stop much outside of the spare parts space |
| And the supply chain constraints and people placing orders ahead of time just to get into the queue, that type of thing |
| And there is not an inventory overhang in those 2 segments, that gives us any degree of concern |
| The outlook for semiconductor this year wasn't so good, and I think our orders are kind of falling in line with that |
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