Greetings and welcome to the Alamo Group, Inc. Third quarter 2022 conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Edward Rizzuti, Executive Vice President, General Counsel and Secretary. Thank you.

Thank you. By now you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-873-746. We will send you a release and make sure you're on the company's distribution. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-888-203-1112 with the pass code 1733267. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Jeff Leonard, President and Chief Executive Officer, Richard Wehrle, Executive Vice President, Chief Financial Officer, and Treasurer, and Dan Malone, Executive Vice President and Chief Sustainability Officer. Management will make some opening remarks, and then we'll open up the line for your questions. During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. Before turning the call over to Jeff, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those factors that could cause actual results to differ materially are the following: market demand, COVID-19 impacts including operational disruptions, competition, weather seasonality, currency-related issues, geopolitical issues, and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I would now like to introduce Jeff Leonard. Jeff, please go ahead.

Thank you, Ed. We want to thank all of you for joining us today. Richard will begin our call with a review of our financial results for the third quarter of 2022. I will then provide additional comments on the results. Following our formal remarks, we will look forward to taking your questions. Richard, please go ahead. Thanks.

Thanks, Jeff, and good morning, everyone. Alamo Group's third quarter 2022 closed with a solid performance with record sales and net income results for the quarter driven by strong demand for our products, despite continued supply chain challenges and labor shortages. Third quarter consolidated net sales for 2022 were $368.8 million, an increase of 9% compared to $338.3 million in the third quarter of last year. Sales were negatively impacted by over 3% due to currency translation as the U.S. dollar continued to strengthen against foreign currency. Gross margin dollars in the quarter improved compared to the third quarter of 2021 by $6.1 million. Although gross margin percentage declined by 50 basis points, both margin dollars and percentage were negatively affected by supply chain issues, labor shortages, under-absorption at our manufacturing operations, and freight surcharges on inbound inventory. Product mix was also less favorable as parts grew at a slower pace versus original expectations. Consolidated net income for the third quarter of 2022 was $25.8 million or $2.16 per diluted share, an increase of 47% versus net income of $17.5 million or $1.47 per diluted share for the third quarter of 2021. Continued solid control of cost and expenses helped support increased profitability. The vegetation management division had a solid third quarter as markets remain strong; third quarter 2022 net sales were $228.5 million, an increase of 9% compared to $209.8 million for the third quarter of 2021. The division continues to see strong demand for forestry, tree care, and agricultural and governmental mowing products across both North America and Europe. Margins during the third quarter of 2022 improved by 40 basis points as compared to the prior year quarter, despite labor shortages and supply chain disruptions. Income from operations for the third quarter of 2022 was $27.1 million, up 27% versus $21.4 million for the same period in 2021. Industrial equipment division net sales in the third quarter were $140.3 million, up just over 9% compared to $128.5 million for the third quarter of 2021. This was due to our solid performance in snow removal products and improved sales in the division's excavator, truck, and sweeper product lines. While truck chassis delivery showed no real improvement this quarter, other component part shortages continued to have a significant impact on this division's operations, which in turn drove unfavorable manufacturing deficiencies and under-absorption. Income from operations for the third quarter of 2022 was $8.7 million, unchanged compared to the third quarter of 2021. Consolidated net sales for the first nine months of 2022 totaled $1.1 billion, up 13% compared to $997.1 million for the first nine months of 2021. Strong demand for our products in both our divisions, along with positive pricing initiatives, were the main drivers of this increase. Year-to-date gross margin improved to almost $18 million versus the comparison period, with a gross margin percentage down about 50 basis points as we have continued to experience inflationary pressures on material costs, purchased components, as well as higher inbound freight costs and labor shortages. Net income for the first nine months of 2022 was $72.8 million or $6.10 per diluted share versus net income of $61 million or $5.13 per diluted share for the first nine months of 2021, marking an increase of 19%. Excluding one-time charges in both 2022 and 2021, adjusted net income was $73.8 million compared to $58.5 million, an increase of 26% for the first nine months of 2022. Net sales for the vegetation management division were $704.5 million compared to $608.3 million for 2021, marking a 16% increase. The division experienced robust demand in all product categories, particularly in forestry, tree care, and agricultural and governmental mowing. Year-to-date 2022 income from operations was $78.3 million, up 29% versus $60.8 million for 2021. Net sales for the industrial equipment division for the first nine months of 2022 were $422.5 million compared to $388.7 million for the same period in 2021, an increase of almost 9%. Sales of excavators, vacuum trucks, and street sweepers led the way, with modest support from snow removal. The first nine months of 2022 income from operations was $27.6 million versus $28.3 million for the first nine months of 2021, a decrease of 2%. This division's results were negatively impacted by constrained chassis delivery, supply chain disruption, under-absorption, and higher input costs for both material and inbound freight. Order bookings increased during the third quarter of 2022 compared to the second quarter of 2022, driving our backlog up to just over $909 million. Backlog was also up 41% compared to the end of the third quarter of 2021. If we factor out the impact of currency translation on our sales volumes I mentioned earlier, our backlog would have been higher. Additionally, backlog is also up compared to the end of 2021 by over 13%. Turning to a few additional financial items for the third quarter of 2022, our balance sheet remains healthy. Capital increased to $138 million to $558 million or $440 million at the end of Q3 2021. The increase in working capital came from higher accounts receivable and inventory. Accounts receivable were almost $302 million, up 23% from a year ago on solid sales volume. Working capital was also up 27% compared to the end of 2021. We are really pleased with the receivables and have experienced no major issues with collections. Working capital remained steady. Inventory was up almost $68 million compared to the third quarter of 2021 and $42 million compared to the end of 2021. This reflects higher work-in-progress costs, inflation, as well as our efforts to support the growing demand for our products by purchasing higher levels of key components and service parts for our customers amidst constrained supplies. The increase since the end of the year is also reflected in modestly higher debt levels. Finally, the company's trailing twelve months EBITDA is $179 million, up 10% compared to the full year of 2021. For the balance of this year, cash flow should remain strong as our focus on the balance sheet will be to reduce both inventory and debt levels. We will be disciplined in controlling costs and expenses as inflation is expected to continue to pressure our partners. We will continue to adjust prices as needed based on changes in material and transportation costs in order to maintain targeted profitability. We're also very focused on improving supply chain deliveries to help reduce work-in-process inventory. The biggest opportunity will be in meeting the high demand for our products throughout the company given current supply chain constraints and labor shortages. As we did in the first and second quarters of this year, the company approved a quarterly dividend of 18 per share for the third quarter of 2022, marking a 29% increase over the third quarter of 2021. With that, I'll turn the call back over to Jeff. Thanks.

Thank you, Richard. I'd like to again thank everyone who has taken their time to join the call today. During the third quarter, activity in most of our markets remained strong. Order intake was excellent, and backlog of $909 million once again approached a record level. Separately this year, although third quarter order bookings were down 19% compared to the exceptional third quarter of 2021, they were 16% higher than the third quarter of 2020. Excluding the more challenging timber Wolf acquisitions, the company was 29% higher than the pre-pandemic third quarter of 2019. In our vegetation management division, orders for forestry and tree care equipment were lower compared to the very strong third quarter of 2021. This was primarily due to order timing as backlog in this segment of the division's business was just under 120% higher than the prior year. Demand for the division's large industrial wood recycling equipment remained strong. Sentiment among North American farmers improved somewhat during the quarter, although concerns about rising input costs and higher interest rates were evident. The division's North American orders for mowers and other agricultural equipment were slightly lower but consistent with lower demand reported by the AGM in the sub-100 horsepower category, which is most important for Alamo. Orders were also lower as the company did not conduct a preseason program this year, given the high backlog and extended lead times. Copper metal customers continued to invest in their roadside maintenance fleets, with warrants received from governmental customers for the division's specialized mowers being exceptionally strong. The backlog for these special purpose machines set a record for the company. Orders for this division's products from Europe and South America were stable in local currencies but lower on a U.S. dollar basis due to significant movement in exchange rates year over year. Concerns about the war in Ukraine continue to weigh on markets in Europe, while in Brazil, there was caution pending the outcome of national elections. The vegetation management division's sales were 9% higher than the prior year. Street and governmental mowing produced strong results, with sales in these segments rising more than 20% compared to the third quarter of 2021. Sales of mowers, agricultural equipment, and specialty products in North and South America were up 3%, while sales of agriculture and governmental mowers in Europe increased in local currencies but declined 3% in consolidated U.S. dollars. Currency translation effects also impacted sales in the division by more than $8 million, representing almost 4% of sales. This division continued to experience supply chain constraints across a variety of industrial components. However, shortages of skilled labor were a more significant constraining factor during the third quarter. Despite these issues, the division's margin improved and operating income rose by 27% compared to the third quarter of 2021. Increased sales, healthy margins, and good control of expenses drove vegetation management's third quarter operating margin percentage up 170 basis points compared to the third quarter of 2021, representing 12% of sales. Industrial equipment division orders declined 12% versus the extraordinarily strong comparison period last year. Backlog increased 79% year over year, with all product lines showing significant increases. Vacuum truck order bookings were modestly higher, while street sweeper orders were slightly lower after a very strong second quarter. Snow removal bookings were also lower, but this was due to a timing shift of preseason orders that normally occur in the third quarter into the second quarter due to longer lead times for truck chassis. Third quarter sales in the industrial equipment division were 9% higher than the prior year. However, currency translation negatively affected division sales by nearly 2%. During the third quarter, sales of vacuum trucks and street sweepers showed modest gains, while snow removal sales were up 37% compared to the third quarter of 2021. Truck chassis allocations continued to constrain sales across all of the division's product lines during the quarter. As we reported in the second quarter, our industrial equipment division again experienced significant supply chain-driven manufacturing flow disruptions, resulting in lower absorption and lower margins during the third quarter. Currently, the division continued to ramp up its investment in product electrification during the quarter and also incurred certain one-time costs associated with ongoing plant consolidation in its snow removal segment. Although the division demonstrated good control over expenses, operating margin percentage for the quarter declined by 50 basis points compared to the third quarter of 2021. Alamo Group continued to confront significant supply chain and recruitment headwinds in an operating environment that remained challenging during the third quarter. Chassis availability did not meaningfully improve during the quarter, and allocations constrained sales in our industrial equipment division. Other industrial components also remained in short supply, including high-pressure pumps, heat exchangers, and wiring harnesses. It was gratifying that despite the headwinds we faced, the company's third quarter sales reflected a nice improvement in both sales and earnings compared to the third quarter of 2021, and once again set new company records. While sales growth was more modest than expected for the reasons described, it's worth noting that sales growth excluding currency translation effects would have been in double digits. Third quarter operating income improved significantly, up 80 basis points to 9.7% of sales from 8.9% of sales in the comparison period of 2021. The 47% improvement in fully diluted earnings per share was achieved despite higher interest charges incurred this quarter on balance. While company performance was again constrained by supply chain challenges, labor shortages, and currency effects, we were pleased with the ongoing strength displayed by our markets, especially in the governmental segment. While order bookings were lower relative to an exceptional comparison period last year, they nonetheless showed excellent growth versus the third quarters of 2019 and 2020. Our backlog increased sequentially and continues to hover close to the all-time high achieved earlier this year. Material cost inflation, while still evident in the third quarter, was less impactful than it had been earlier in the year, and both margin and backlog continued to improve. As we look forward to the fourth quarter and into early 2023, we expect the company's financial results to continue to improve as the supply chain constraints we've been experiencing for the past several quarters eventually abate. The timing of the anticipated improvement in supply chain performance remains uncertain as new delays and shortages seem to appear as quickly as the older ones are resolved. The increasingly critical shortage of skilled labor is expected to persist. We will continue to mitigate this to the greatest extent possible by strengthening our employee retention programs and accelerating investments in production process automation. Therefore, while we expect supply-side headwinds to persist in the short term, the ongoing strength of our markets combined with our near-record backlog and healthy balance sheet position us for continued profitable growth in the near future. We remain optimistic about the company's prospects for the next several quarters. This concludes our prepared remarks; we are now ready to take your questions. Operator, please go ahead.

Good morning, guys. Thanks for taking a couple of questions.

Hi, Chris. Good morning.

I'm wondering if there is any way that you can quantify or approximate the amount of incremental revenue you could have generated in Q3 with significantly lower supply chain challenges. And is any of that lost moving forward?

It's not lost moving forward, Chris. It's very difficult to quantify. We have close to $30 million in our web backlog, and there’s a good chance that with supply chain support we could have shipped a lot of that.

Okay. Got it, that's helpful. Maybe talk a little bit about the drivers of dealer inventories in the AG side. You had mentioned, you know, in Q2, but steel prices coming down may have given some pause in purchasing my dealers made sure that lower price steel was fully priced in equipment.

What are you seeing on that front and what are you seeing in terms of overall demand there?

The dealer orders for AG equipment stabilized during the quarter very nicely, Chris, and we haven't seen any further dealers attempting to reprice backlog. We did see some of that in Q2, but we really didn't experience any of that in Q3. What you're seeing right now in the AG side is just caution because backlogs are out so far, and I think dealers just don't have the award now because they can't get the equipment. So I think it's just what I like to refer to as backlog fatigue, which I think is an accurate description of what is going on. To add to that too, we may have seen steel prices come down in raw materials, but we haven't seen our component parts that we purchase having those same prices abate.

One of the things we normally have is a preseason program on the AG side. Our backlogs are so high.

Okay. That would normally drive orders at this time of year. Got it, that's helpful. Just last one for me. I think you talked about a 12% operating margin as a medium-term goal. Now that Q3 is done and you're a month into Q4, any updated thoughts in terms of, you know, 12% visibility timing? Is that a target at this point in time?

Hi, Chris, this is Jeff. I think we could begin running at that rate late next year; at least that's my hope and expectation. Again, this is contingent upon the supply chain situation improving at a meaningful pace. There is so much pent-up backlog in our industrial division at really good pricing that I think we'll get there. Our industrial division should be doing a lot better than it is. As I referenced, we actually had some chassis we were expecting to receive in the third quarter, but they have now been deferred into 2023. So if those come in, that’ll provide a nice upside in 2023, provided they do come out of the plant sooner or later from our suppliers.

And are you getting any push from the chassis producers? Have they talked at all about 2023 at this point in time in terms of expectations?

Yeah, at least our big chassis suppliers have. I mean, it's a tale of two cities. We have two primary chassis suppliers that we deal with. One is our bigger supplier with high reliability; in other words, we're getting what they tell us we're going to get. They're just not able to ramp up production enough to meet our needs. Our secondary supplier has been less reliable in meeting what he has promised to give us. That's the situation we face right now. Additionally, a new problem arose in the quarter for the market of small trucks that produce a lot of the smaller chassis we use on our sweepers, which have started producing chassis into next year. So we're working our way through that. We have alternatives for those small sweepers, but it just caused a bit more complexity this quarter than anticipated.

Got it, all very helpful. I'll jump back in line. Thanks, guys.

Thanks, Chris. Our next question comes from Mike with D.A. Davidson. Please proceed with your question. Okay. Sorry, Mike, are you on mute?

Okay. It looks like we've lost Mike; hopefully he'll come back in the queue.

Our next question comes from Greg Burns with Sidoti and Company. Please proceed with your question.

Good morning. Thanks for all the color on the orders by product line. I was just wondering if you could provide a little more detail. Is it mainly a function of difficult comparisons from last year, or are you seeing a little slowdown in demand maybe in specific areas?

Yeah, well the order trends and the declines. If you look at our snow removal business, we had an extraordinary second quarter in bookings, with timing shifts due to chassis lead times. We had an exceptional level of snow removal orders right now, and that business is in great shape with a record backlog. However, if you look back into the third quarter of 2021, we had a huge influx of orders in our forestry tree care business, along with some timing of orders booked into our JD Edwards system as we converted the acquired Rayfield company into JD Edwards. So we truly have some unique one-off factors impacting our bookings in the third quarter of last year. Overall, all the businesses are in good shape in the industrial division, and they are all trending up nicely on bookings. This pace has continued up until now. Looking at vegetation management, forestry remains strong and has a nice pace. Agricultural orders ticked down a bit, but as Dan said, this was a function of not having a preseason this year. Overall, we are in a very strong position in terms of bookings and inquiry levels remain good.

Okay, great. Thank you.

Now I'll hand it off. Thanks, Frank.

Our next question comes from Mike Buskey from D.A. Davidson. Please proceed with your question.

Good morning, sorry about that, guys. I guess my phone just cut out entirely. Can you hear me?

That's alright, Mike. Good morning.

A couple of questions, and if I missed the last week, or at least feel free to go through the transcript later. I guess I wanted to ask firstly about seasonality in the fourth quarter. Since you bought more a couple of years back, I remember the fourth quarter was a really weird situation on EBITDA because you had just made the purchase. And pretty much since then, we've had a pandemic issue. So we haven't really seen a real fourth quarter yet. That makes a lot of sense for what the long-term outlook is. Just give us a sense of what the seasonality looks like in contrast to Q3 going forward, and might we see that happening in the clearing standpoint this particular fourth quarter.

I think the seasonality is getting shaken out of the business to a large extent, Mike, by the backlog. Normally, the fourth quarter would be a little softer in forestry, but I'm not expecting that right now at all. It's looking like it’s shaping up to be a pretty solid quarter in that business, but you're right. In a typical year without all the noise in the supply chain and backlog, the fourth quarter would be just a little bit softer than the third.

Got it. As far as could you comment on was that? I was talking about a company-wide discussion of how earnings might be affected.

We're finding that specifically the forestry division is holding up well. It's just a little soft, but that’s due to pre-season driving orders from my perspective. So I think we should have a pretty solid fourth quarter by historic standards.

Perfect, great. This would be a good. Great, I appreciate that color. I guess on the one hand, it's good news because you have a great backlog already. There's no reason to add to it. That’s an order that could be or hasn't been ordered, but I guess I'm curious, you know, if a farmer needs something quickly can you get it out? Or are you just booked up that you'll be hamstrung from new shipments in the first part of 2023?

No, I don't think we're going to be hamstrung. The issue we're dealing with in that side of the business right now is more about getting enough people on board to get the work out the door. I made reference in the call. The vegetation management division as a whole felt a bigger impact from labor than from materials related to supply chain in the third quarter.

A couple of other things about the preseason program. Obviously, it starts in July and goes through November, which usually moves at a higher discount for them. That doesn't mean they also... The AG division also has an NC program that they usually start in the spring time, and there is probably a good chance that they will go ahead and do that as well. Those aren't as large of a discount as our biggest programs. It's all going to depend on how they look at it. Any orders that they have consistently, if it stays up then they'll probably just decide one way or the other how they're going to handle the program. I also wanted to talk to one of Chris's questions earlier about pricing and what's in the backlog here, I guess with steel prices coming down and other prices like aluminum coming down a bit over the last few months. Do you have to adjust any pricing in your backlogs down because there were previously announced surcharges? Do those come off for next year? Is that a margin headwind for next year?

I think it's a little too soon to tell, Mike. As I said, we didn't have any of that in the third quarter. We didn't see dealers trying to reprice expectations based on lower steel prices. So no, I don't think that's occurred yet. Could it happen in the future? I think if we head into a hard recession and dealers are looking to keep their balance sheets nice and lean, yes, that could potentially happen, but no signs of it yet.

Okay, and I can just squeeze one more in there, and that's about M&A. Jeff, I know you're always talking with various targets out there. I've been surprised at the number of M&A deals happening in this sector over the last few months given the broader market, but there is some activity out there. I'd be curious if you could tell us the state of some of your larger deals right now or just the overall state of how targets are talking with you these days.

There aren't many larger deals in the space we're working at the moment, Mike. As I've said, we're going to be disciplined about not straying too far from our core with M&A. We're looking at some nice opportunities in Europe that we're working on. The timing of those is still a little up in the air, but they are long-term. We always chase prospects for a very long period, as you know, like we've been talking about acquiring specific companies for a decade. So the market overall for M&A is probably good in some segments, but our interests lie elsewhere. Alright, well that's great color. Thank you so much. I'll pass it along.

Our next question comes from Tim Moore. Please proceed with your question.

Thanks, Matt. Questions for Jeff and Richard. Do you have a rough estimate of the margin drag from under-absorption in the September quarter or is it something like a 100 to 150 basis points drag on gross margin? And the other part of that question is, as of today, I'm just wondering if you've achieved positive net price realization to cover your cost inflation, including freight surcharges enacted.

Both our divisions are pretty aggressive about managing that. We're doing everything we can to pass the increased costs back onto customers, and they understand that. The key is consistency with our customers; they see it, and we tell them about it, and they are accepting it. However, if some additional costs are coming down, we have to do what we can to help protect that backlog and avoid repricing anything we have there. If we get savings from lower freight costs and so on, we would be willing to accommodate the customer.

To give a little different color on that, the actual gross margin one we track is material and labor standard, which continues to go higher as expected. The decline in operating margin is all a function of inefficiencies on the shop floor due to under-absorption, which in this division was several million dollars during the quarter.

Got it, that's helpful color. That's very helpful color, and yeah, I think investors understand that's more an industrial segment issue than any labor issues on the vegetation side. Another question I had was, can you provide your plan and timing to possibly assemble more products in Europe to incur expensive transportation costs to ship them from the U.S.? Could something like that be leasing a plant or ramping up a bit more on European production starting late next year?

Yes, we just started finalizing a policy for us to increase market production there right now. We’re planning to kick that off into next year because it’s expensive to move products from one location to another across the states and Europe, and at this point, we’re not going to achieve much margin from that. So yes, I think the market is critical for us. We hope to increase our production capacity in existing facilities in late next year to position us better for European demand. Additionally, we just completed an expansion at our facility in Santa Isabel in Brazil to increase our local production of forestry products; this segment has become very active and is growing, and it is very difficult to import from North America into Brazil. A strong local presence will enhance our competitive edge.

Okay, that's helpful. Thanks for providing details on that. That should help improve margins as production ramps up. The question about free cash flow—here, it's a little low in the quarter. I know that you might have a seasonal working capital reduction from receivables collections in very late summer that helps free cash flow. I grasped that inventory's up because you have to go back to the final assembly stages, but did you know if there was a receivables reduction that may have trickled into October? Do you expect pretty strong free cash flow in the fourth quarter?

We'll have it, Tim. Definitely through October, because a lot of pre-season gets paid off basically almost through that timeframe. It'll drag a little into November. Overall, I think our DSOs are in great shape in both divisions. We are extremely pleased with the collection process. Our collections have remained strong, especially in the industrial segments.

As I mentioned, about a third of the increase in inventory that we've seen since the start of the year is directly tied to supporting the growth of our governmental mowing business, and a large chunk of that is scheduled to ship in the fourth quarter. As long as things proceed as planned, we should see a nice uptick in production and inventory in the fourth quarter that will help with cash flow.

That's terrific, that's really great to hear. I'm modeling a pretty strong free cash flow for the fourth quarter. Can you give any update on electrification and hybrid innovation, and is there anything compelling coming out of the pipeline next year that might launch by summer?

There are some very interesting developments in electrification. I made reference during the call that we could have done a little bit better in our industrial division this quarter, but we’ve been ramping up investment in electrification, even though that has elevated our expenses a bit. We're intending to launch several new products that are electrified versions of our current product lines at the Con Expo in March of next year. We're well advanced with that and are on schedule for that. We just launched a hybrid wood chipper in the U.K. under our Timber Wolf brand, which is an exciting product that has been very well received by the market. So yes, we have a lot happening in electrification, and I think Con Expo should be exciting. I hope you can attend.

One last question. I was looking at geographic sales in the 10-Q and I realize snow removal was strong in the quarter. Was there anything driving the very large growth of maybe 50% to 60% in Canada or Australia? I know Australia is up as well year-over-year from a small base, but anything else going on there with penetration or launches or new customer wins?

It's mainly our Canadian snow removal business, which recorded significant growth. We opened several new upfitting centers across Canada last year that are now loaded. Historically, we aimed to produce 100 trucks a year at each of those centers. Additionally, we changed our strategy to supply complete products and deal directly with the end-user, which is often either a governmental agency or a contractor working for a governmental agency. This business has shown explosive growth, and we're starting to see exciting activity in the fourth quarter as well.

That's helpful. Very impressive in the quarter. That's it for my questions, Jeff and Richard; thanks for taking them.

Thank you. There are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Okay. Thank you very much, and we thank you again for joining us today. We look forward to speaking with you again on our fourth quarter and year-end 2022 call in February of next year. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.