And I think if you look back over the last 18 months, that’s why the order downturn has been less shallow, that’s why we’ve been able to post organic growth as a positive, even in industrial in light of some negative orders. So I think it’s part of our shaping of the portfolio.
Jennifer Parmentier: Yes. I mean it’s — the portfolio is more resilient. And the teams across all of these businesses are doing a great job using the tools to expand margins. It’s the reason why with 1.5% organic growth, we can expand margins 170 basis points. So it’s — I guess said before, we’re really proud of the whole team.
Julian Mitchell: That’s great. Thank you.
Jennifer Parmentier: Thanks, Julian.
Operator: Next questions are from the line of Mig Dobre with Baird. Please proceed with your question.
Mig Dobre: Thank you for taking the question. Good morning. I also sort of want to talk a little bit about industrial and orders there. I’m curious when you kind of destocking business and you look at the last four or five quarters, how you think about the OE versus distributor demand. It seems to me that in this down cycle, we had lower distributor demand occur maybe earlier than what’s been going on with OEMs. The destocking process started earlier for distributors and we’re just maybe now really starting to see the OEM production cuts. I’m wondering if that’s sort of your experience as well. And if that somehow implies that while the down cycle is shallower, it could actually be longer than the traditional six quarters that you’ve seen in the past where things were more synchronized.
Jennifer Parmentier: I would say that I do think we saw destocking start earlier for distribution. But as we’ve seen with many of our large OEs, they talked about higher dealer inventory, right? And so that’s kind of a sense of their own destocking when the dealer inventories are high, they’re not placing as big orders as they had in the past. But I would tell you, though, there’s nobody canceling orders or pushing them, pushing them out to any great extent. So I don’t feel like this is going to last longer. We’re not seeing any signs that are telling us that right now. Just the early Q4 signs here that it looks different than it has.
Todd Leombruno: Mig, that mix really still remains the same, that 50-50 mix that we talk about in the Industrial segment. So we think there’s a nice balance there.
Mig Dobre: Okay. And on capital deployment and maybe you’ll comment on this at your upcoming Investor Day, but I’m sort of curious as you’re evaluating M&A if there is — there is something to be said about expanding portfolio — the portfolio outside of the core areas that you’ve been targeting over the past couple of years. So more expansive strategy or if sort of the lanes that you’ve been active in are still the areas that you’re looking to build. Thanks.
Jennifer Parmentier: Right now, I would tell you that we’re not looking to expand outside of the technologies we have. As I’ve commented a couple of times externally, we really like this set of technologies. They have a connectivity to them, and we think they’re the right ones for our portfolio.
Mig Dobre: Appreciate it.
Jennifer Parmentier: Thanks, Mig
Operator: Our next questions is from the line of Jeffrey Sprague with Vertical Research Partners. Please proceed with your question.
Jeffrey Sprague: Hi. Thank you. Good morning, everyone. I guess you can tell we’re all like hyper focused on orders, right, Jenny?
Jennifer Parmentier: [indiscernible]
Jeffrey Sprague: Yes. And I may be even a little more hyper focused given the way I’m going to phrase my question, it rhythms a little bit with what a couple of other people brought up. But it is interesting when you look at North America, right? Sales growth has outpaced order growth, I think, for seven quarters until this quarter, and it looks like we’ve kind of recoupled. You mentioned some backlog, but should we be thinking really that sales and orders are going to be much more tightly correlated here as we try to glean where the upturn might be.
Jennifer Parmentier: No, I don’t think so, Jeff. I don’t think we should be thinking that way. I think that, again, if I go back to the strength of the backlog and the change in the portfolio. It’s different than it was in the past. It’s a different company than it was 10 years ago, five years ago, right? And we really believe that once this turns, we’re going to grow differently because of that.
Jeffrey Sprague: Okay.
Todd Leombruno: Yes. Jeff, I would add, obviously, every one of these things we go through is a little bit different. We did come off two years of double-digit organic growth, right? So there was a significant amount of demand that we had to deliver through those industrial businesses. I think if you’ve seen that inventory levels moderate throughout the year, we’ve kind of reduced that thing. But as Jenny said, the backlog really pretty strong. It’s at near all-time levels. We continue to pressure test that to make sure that it’s real and legitimate. I think it’s just part of having a longer cycle mix within that portfolio.
Jeffrey Sprague: Great. And if you have the numbers handy, can you just tick through the kind of the four aero buckets we got here, commercial aftermarket up 25, but just OE and then military aftermarket and OE, what those numbers were in the quarter?
Jennifer Parmentier: For Q3, Jeff, you’re asking?
Jeffrey Sprague: Yes, for Q3.
Jennifer Parmentier: Yes. Commercial OEM was up 18%, and that was mainly based on strong narrow wide-body growth. MRO up 26%. And same thing. Their traffic recovery, things we’ve talked about, military OEM 7% and MRO 14%.
Jeffrey Sprague: Thanks a lot. I’ll leave it there.
Todd Leombruno: Jeff, I would just remind everyone, that’s all organic at this point, too.
Jennifer Parmentier: Yes. Thank you, Todd, all organic.
Operator: Thank you. Our next question is from the line of Joe O’Dea with Wells Fargo. Please proceed with your question.
Joe O’Dea: Hi. Good morning. Sorry to bore you, but I’ll stick with the common theme. And just wanted to get a little color around, I mean, certainly encouraging commentary on kind of North America through cycle and demand. I guess as it relates to what’s implied for fourth quarter, I mean, it looks like a larger kind of sequential revenue decline from 3Q to 4Q, than what we’ve seen over the last number of years outside of COVID. And so just kind of sequentially, what you’re anticipating there? The orders seemed like they were stable from 3Q to 4Q. I think you said — from 2Q to 3Q, I think you said dollars up. And so just what’s kind of driving maybe a little bit softer sequential trend there because it sounds like otherwise, things are holding and even improving.
Jennifer Parmentier: Yes. So as I mentioned earlier, the guide is based off of Q3 order rates, and they — you are right, they did stay at negative four, but if you look at the sales dollars, Q4 dollars are in line with Q3. So that’s why we’re signaling that minus 4 versus the approximately minus 1 that we had previously.
Joe O’Dea: Got it. Okay. That’s helpful and then just a question in terms of kind of pricing sensitivity and just to, kind of understand customer experience. I mean when a customer walks into a distributor. Are they typically walking in knowing exactly what they want to buy and the Parker product? Or are they kind of looking at prices and shopping between Parker and competitors? Just trying to understand how much price shopping goes on versus how much is — is kind of predetermined and brand loyal.
Jennifer Parmentier: Yes. First of all, I think the Parker brand is very strong and people are looking for Parker products when they walk into a Parker distributor. And they need a part and they need it now, right? So it’s not what I would characterize as price shopping, it’s availability. And then having that person standing behind the counter who knows how to apply that part, how to help them get the right part if they don’t know exactly what they need or they don’t know exactly what replacement is an order. So they’re walking in to get help and they’re walking in to get a product. And that really is what is so special about the partnership that we have with our distributors. They’re just an extension of our engineering team, and they provide a great value and service to many customers.
Joe O’Dea: That’s helpful. Thank you.
Operator: Thank you. Our next question is from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Joe Giordano: Hey guys. Thanks for taking my questions.
Todd Leombruno: Hey Joe.
Jennifer Parmentier: Hi Joe.
Joe Giordano: Hey. On the aerospace side, so given all that’s happening, I know you’re in your aerospace portfolio is very broad. But if we just kind of narrow into like OEM commercial, like given what’s going on with Boeing. And the reduction in rates there, like it doesn’t sound like they’ve told any of their suppliers anywhere to slow down what they’re shipping to them given supply chains. But like is there — at what point do you see risk to that dynamic where build rates are down, but everyone is still shipping the same and inventories must be building over there?
Jennifer Parmentier: No. We stay in close contact with all the airframe manufacturers and our aerospace team talks to the Boeing team on a regular basis. So — what we’re seeing is consistent with what they’ve talked about most recently, production in the 30s. They have signaled that the rate increase isn’t going to happen right now. But we are committed to make sure that we are at pace with them and that we continue to supply product them to help them reach their goals. So we’re not seeing any signs of that’s slowing down right now.
