John Garrison: Yes. Thanks. So, the team, we have to be straightforward. We’re disappointed in our performance in the quarter. Supplier related. The team — on the good news side, the supply chain is improvement on the specific issues that we had in the third quarter created significant inefficiencies for us, but that’s continued to improve. So, the operational execution improvement needs to occur, will occur. We’re anticipating an improvement in Q4. The good thing, Steve, is that the backdrop for that business is incredibly strong. And they’re booked out through 2025 for the most part in most product categories — I’m sorry, through 2024. Let me rephrase that through 2024. And so, the market demand for that business is quite strong. We just need to improve our operational execution in deliveries, which we will as we go forward.
Julie Beck: That business has been really hampered by supply chain issues.
Operator: Our next question comes from Seth Weber from Wells Fargo. Please go ahead. Your line is open.
Seth Weber : Everybody. Good morning, and John congrats and enjoyed working with you. So [indiscernible]. Yes. I wanted to get a better understanding for the implied fourth quarter MP margin, which is down year-over-year and it’s down sequentially a bunch even though revenue looks like it’s going to be up a little bit. I’m just wondering if you could give us some more details on what’s going on there, whether it’s a mix issue or a product region issue or what? Just any more color there on MP margin.
Julie Beck: Thanks, Seth. MP had operating margins of 16.9% in the third quarter, up 230 basis points from last year. I mean they just continued to perform extremely well. They continue to invest in the business as well, and we made prudent investments to grow the business. But the margins benefited in the quarter from favorable regional and product mix and improved manufacturing efficiencies. And also, they had in the quarter, we received about $3 million of R&D credits. We get this annually, it came in Q3. And so that was a favorable amount received in Q3. Going forward, we expect strong MP full year sales over $2.2 billion. We expect Q4 sales to be up slightly from the third quarter. We did increase our outlook to 16.1% as the team continues to have their excellent performance.
And the margin of the 15% in the Q4 will be strong, but sequentially lower due to a less favorable geographic and product mix. As well as some higher sequential engineering expense because of the R&D credit that we received in Q3 will repeat itself. But overall, MP continues to deliver consistent and strong operating performance.
Seth Weber : That’s helpful. And then just maybe just the commentary around Europe. Can you just expand on the softness that you’re seeing there? Is that across both MP and AWP? And that’s the source of the cancellations that you’ve been seeing?
John Garrison: Thanks, Seth. In terms of cancellations, again, we’ve had minimal cancellations and pushouts. But we have seen and we did call out some softness in the European market. We’ve actually been pleasantly surprised how well it’s held up. But if we look at Europe in our MP business, on the aggregate side, our sales were up and backlogs are quite high there. Both customer sentiment in Europe is not nearly as strong as the customer sentiment in North America. Our Foods business was — we saw some softness in the food business, again, associated with falling scrap metal prices. Now the good news for that business. The team has worked hard over the years to diversify. We’re seeing some of the sales into our environmental business with the Fuchs machine branded Ecotec.
So again, a mix there, but clearly, Fuchs saw some softness. And I would say, in general, softness in Germany where Fuchs is headquartered and has a long — a strong market. And then we called out last quarter, our tower crane sales softness, and we saw continued softness in the tower crane business in Europe. And on the Genie side, sales and bookings were holding. But again, it’s that customer sentiment is not quite as strong. And so, we’re just — we’re highlighting that the European market especially in the U.K. and Germany, we’re seeing some softness there. Again, we believe it’s going to be offset by the strength we’re seeing in North America, but Europe is in a different place due to the geopolitical risk, the inflation than North America right now.
So those are the businesses that we’re seeing softness. We’re watching closely the bookings in those respective business segments. But again, it’s really about the customer sentiment being very different in Europe right now, especially in the U.K. and Germany, especially as compared to North America, where customer sentiment is quite strong.
Operator: Our next question comes from Steven Fisher from UBS. Please go ahead. Your line is open.
Steven Fisher : Thanks, and good morning. John, best wishes. It’s been a pleasure. Just to confirm the utilities impact, you reduced the AWP segment margin guidance by 50 basis points for the year. I think the $0.12 you called out would translate directly to that $0.50. I think so just to confirm, you haven’t assumed any impact on native utility supply chain for Q4.
Julie Beck: Well, we’re expecting it to improve in Q4 from Q3, but we’re not expecting it to return to pre-pandemic levels. We’re expecting it to return to more of our normal patterns in the first and second quarter.
Steven Fisher : Okay. Great. That’s helpful. And then at this point, I know it’s early, but I’m curious about the signals that you look at — I know you talked a lot about backlog and visibility for next year. But I guess, overall, did the signals suggest that you could have a year of growth in your two businesses? Are there any subsegments that you can say with sort of most confidence that demand should be growing in ’24?
John Garrison: Thanks, Steven. As you know, in Q3, we will provide — the team will provide a detailed outlook on our Q4 earnings call. And as you know, our customers and us right now are in the middle of our plan cycle. But with the strong backlog we have with the $2 billion booked, we do believe that, that drives momentum into 2024. We did just discuss some of the offset, if you will, with some softness in Europe. But in the U.S. market, it’s quite strong. In my opening comments, you heard me talk about the tailwinds that’s occurring because of these three legislative acts. The significant increase in nonresidential construction spending if you listen to, especially in the Genie business, if you listen to the rental customers, they’re buoyant.
They’re seeing growth in their business because of these incredible amounts of physical stimulus that’s occurring, the mega products, the size of the projects, the duration of the projects. So that provides a very nice tailwind. And we believe that’s a rising tailwind across our businesses in North America as we go into 2024. So, I would say customer feedback, especially in North America, is strong. Our bookings are at or near our kind of historical levels. So that’s a good signal. Backlog is significantly higher than historical levels. And then just leading indicators around construction and construction spending and the type of construction spending, i.e. public finance, and then these onshoring projects are going to occur irrespective of what interest rates are.
