A O Smith Corp (AOS) 2025 Q2 法說會逐字稿

Good day and thank you for standing by. Welcome to the second-quarter 2025 earnings conference call. (Operator Instructions)

您好，感謝您的支持。歡迎參加 2025 年第二季財報電話會議。（操作員指示）

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Helen Gurholt. Please begin.

請注意，今天的會議正在錄音。現在我想將會議交給今天的發言人海倫古爾霍爾特 (Helen Gurholt)。請開始。

Good morning, and welcome to the A. O. Smith second-quarter conference call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Today, I'm joined by Steve Shafer, Chief Executive Officer; and Chuck Lauber, Chief Financial Officer.

早上好，歡迎參加 A. O. Smith 第二季度電話會議。我是海倫古爾霍爾特 (Helen Gurholt)，投資者關係與財務規劃與分析副總裁。今天，與我一起出席的還有執行長史蒂夫·謝弗 (Steve Shafer) 和財務長查克·勞伯 (Chuck Lauber)。

Within today's presentation, we have provided non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website.

在今天的演示中，我們提供了非公認會計準則衡量指標。自由現金流定義為經營活動產生的現金減去資本支出。本簡報末尾的附錄和我們的網站上提供了 GAAP 指標與非 GAAP 指標的對帳表。

A friendly reminder that some of our comments and answers during this conference call will be forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include matters that we described in this morning's press release, among others.

友善提醒，我們在本次電話會議中的一些評論和回答將是前瞻性陳述，這些陳述存在可能導致實際結果產生重大差異的風險。這些風險包括我們在今天早上的新聞稿中描述的問題等。

Also, as a courtesy to others in the question queue, please limit yourself to one question and one follow-up per turn. If you have multiple questions, please rejoin the queue. We will be using slides as we move through today's call. You can access them on our website at investor.aosmith.com.

此外，為了尊重問題佇列中的其他人，請限制自己每次只提出一個問題和一個後續問題。如果您有多個問題，請重新加入佇列。在今天的電話會議中，我們將使用幻燈片。您可以透過我們的網站 investor.aosmith.com 存取它們。

I will now turn the call over to Steve to begin our prepared remarks.

現在我將把電話交給史蒂夫，讓他開始我們的準備好的演講。

Thank you, Helen, and good morning, everyone. We believe A.O. Smith has an outstanding foundation for profitable growth as a global water technology leader. I am both honored and excited to build on this foundation as the company's new CEO, and I'm confident in our company's future. This future will be powered by the many dedicated and capable A. O. Smith colleagues I have started to get to know over the past 1.5 years, and I look forward to the journey we have in front of us together.

謝謝你，海倫，大家早安。我們相信，作為全球水技術領導者，A.O.史密斯公司擁有實現獲利成長的良好基礎。作為公司新任首席執行官，我非常榮幸和興奮能夠在此基礎上繼續發展，我對公司的未來充滿信心。這一未來將由過去一年半以來我開始認識的許多敬業且能力出眾的 A. O. 史密斯同事們所推動，我期待著我們共同踏上未來的旅程。

Later in our prepared remarks, I will share some of my early thoughts on priorities going forward that I believe will be most impactful in delivering that bright future for us. But first, I would like to go through our second-quarter performance, our updated guidance for the year, and the announcement regarding our China business.

稍後在我們準備好的演講中，我將分享我對未來優先事項的一些早期想法，我相信這些想法將對我們實現光明的未來產生最重大的影響。但首先，我想介紹一下我們第二季的業績、今年的最新業績指引以及有關我們中國業務的公告。

Now turning to slide 4 and our financial performance in the quarter. North America water heater sales decreased 2% in the second quarter, driven by lower volumes. Shipments in the first half of 2024 benefited from prebuy-related volumes ahead of an announced price increase. This year, we believe the industry once again bought ahead of price increases and tariff risk.

現在轉到投影片 4 和本季的財務表現。由於銷量下降，第二季北美熱水器銷量下降了 2%。2024 年上半年的出貨量受惠於宣布漲價前的預購相關數量。我們認為，今年該產業再次提前購買了價格上漲和關稅風險。

We decided to take a more proactive approach by working closely with our customers to better align order rates to our strategy of smoothing production schedules in order to achieve greater operational efficiency. Like the overall industry, we still benefited in the quarter from a demand pull forward. However, our 2025 pull-forward impact was less pronounced compared to the demand pull forward we experienced in 2024, and we expect to gain operational efficiencies through the year because of these actions.

我們決定採取更積極主動的方式，與客戶密切合作，使訂單率更好地與我們平滑生產計劃的策略保持一致，從而實現更高的營運效率。與整個行業一樣，本季我們仍然受益於需求的拉動。然而，與 2024 年經歷的需求提前相比，我們對 2025 年提前的影響不那麼明顯，由於這些行動，我們預計全年的營運效率將得到提高。

Our North America boiler sales increased by 6% compared to the second quarter of 2024, led by higher volumes of our high-efficiency commercial boilers. North America water treatment sales increased slightly in the second quarter as growth in our priority channels, e-commerce, dealer, and direct-to-consumer continued to offset expected retail declines.

與 2024 年第二季相比，我們的北美鍋爐銷量成長了 6%，這主要得益於我們高效能商用鍋爐銷量的增加。由於我們的優先通路、電子商務、經銷商和直接面向消費者的成長持續抵銷預期的零售下滑，北美水處理銷售額在第二季略有成長。

In addition to the growth in these priority channels, we are pleased with the improved profitability it provided, which helped contribute to North America segment operating margin expansion in the quarter.

除了這些優先管道的成長之外，我們也對其帶來的獲利能力提升感到滿意，這有助於本季北美分部營業利潤率的擴大。

In China, second quarter sales decreased 11% in local currency as the ongoing economic challenges and limited availability of government subsidy programs outside of Tier 1 and 2 cities resulted in lower volumes. We maintained our operating margin year over year despite lower sales due to our 2024 restructuring initiatives and other cost control measures.

在中國，第二季銷售額以當地貨幣計算下降了 11%，原因是持續的經濟挑戰以及一二線城市以外政府補貼計劃的有限導致銷量下降。由於 2024 年的重組舉措和其他成本控制措施，儘管銷售額有所下降，但我們的營業利潤率仍保持同比增長。

In addition to announcing our Q2 performance in China, we are also announcing today that we are initiating a process to further assess our China business in an effort to ensure that it is best positioned to compete and succeed in the future. We intend to evaluate a broad range of options in addition to further business improvements, including strategic partnerships and other alternatives.

除了宣布我們在中國第二季的業績外，我們今天還宣布，我們正在啟動進一步評估我們中國業務的流程，以確保其在未來的競爭和成功中處於最佳位置。除了進一步的業務改進之外，我們還打算評估廣泛的選擇，包括策略合作夥伴關係和其他替代方案。

As we announced in Q4 of last year, given the market conditions, we have been working to optimize the operating structure in China and reduce costs to better position the business for the future. These initiatives are already delivering positive results. We are on track to achieve $15 million in annual benefits, which have resulted in sequential margin improvement quarter over quarter.

正如我們在去年第四季宣布的那樣，鑑於市場狀況，我們一直致力於優化中國地區的營運結構並降低成本，以便為未來業務做好更好的準備。這些措施已取得正面成果。我們預計將實現 1500 萬美元的年度收益，從而使利潤率逐季度連續提高。

Despite the current macroeconomic challenges, we believe the China market has substantial long-term potential. Our China business also has many competitive strengths, including a premium brand position, differentiated innovation capabilities, a well-established distribution network, and a talented local team. We are committed to realizing the full potential inherent in our China business for our company and our shareholders, while benefiting our employees, valuable partners and customers.

儘管當前宏觀經濟面臨挑戰，但我們相信中國市場具有巨大的長期潛力。我們的中國業務還擁有許多競爭優勢，包括優質的品牌地位、差異化的創新能力、完善的分銷網絡以及優秀的本地團隊。我們致力於為公司和股東充分發揮中國業務的潛力，同時造福我們的員工、寶貴的合作夥伴和客戶。

We believe that the assessment announced today will allow us to properly understand the potential options available to realize the full potential of the business. As the review progresses, we will continue to deliver best-in-class products and service just as we always have.

我們相信，今天宣布的評估將使我們能夠正確了解可用的潛在選擇，以充分發揮業務的潛力。隨著審查的進展，我們將一如既往地繼續提供一流的產品和服務。

Please turn to slide 5. I would now like to take a moment to discuss innovation at A. O. Smith. As a water technology leader, we continue to invest in and launch new to the world differentiated products. And I would like to highlight a few of those offerings today.

請翻到投影片 5。現在我想花點時間討論一下 A. O. 史密斯公司的創新。作為水技術的領導者，我們不斷投資並向世界推出新的差異化產品。今天我想重點介紹其中的幾項內容。

We recently introduced the second product in our ADAPT gas tankless line, the ADAPT SC, which is our standard condensing product featuring industry-first integrated scale prevention technology. This product is positioned in the high-volume segment of the tankless market and is the latest proof point in our commitment to become the North American leader in tankless technology.

我們最近推出了 ADAPT 燃氣即熱式系列的第二款產品 ADAPT SC，這是我們的標準冷凝產品，採用業界首創的整合防垢技術。該產品定位於無水箱市場的高容量領域，是我們致力於成為北美無水箱技術領導者的最新證明。

We have also just launched our HomeShield whole house water filter, which is certified to reduce PFAS to less than four parts per trillion for 500,000 gallons of water. In addition to taking whole house PFAS reduction performance to a new level, it is also easier to install and provide both economic and ecological benefits for the homeowner.

我們也剛推出了 HomeShield 全屋水過濾器，經認證可將 500,000 加侖水中的 PFAS 含量降低至每兆四分之一以下。除了將整個房屋的 PFAS 減排性能提升到一個新的水平之外，它還更易於安裝，並為房主帶來經濟和生態效益。

Next month, we will introduce the Cyclone Flex, the next generation of our industry-leading commercial water heater that is smarter, more efficient and more flexible than ever. Staying the industry leader means never standing still, and this product is a continuation of our long history of Cyclone enhancements and will help ensure we are best positioned for the 2026 regulatory change in the commercial market and remain the industry's number-one specified commercial gas water heater.

下個月，我們將推出 Cyclone Flex，這是我們業界領先的商用熱水器的下一代產品，它比以往更加聰明、高效和靈活。保持行業領先地位意味著永不停歇，這款產品是我們長期以來對 Cyclone 改進的延續，將有助於確保我們在 2026 年商業市場監管變化中佔據最佳位置，並繼續成為行業第一大指定商用燃氣熱水器。

These are just a few examples of the exciting pipeline of new products we are bringing to market that has us confident in our future.

這些只是我們向市場推出的一系列令人興奮的新產品的幾個例子，這些產品讓我們對未來充滿信心。

I'll now turn the call over to Chuck, who will provide more details on our second-quarter performance.

現在我將電話轉給查克，他將提供有關我們第二季業績的更多細節。

Thank you, Steve, and good morning, everyone. We delivered sales of $1 billion in the second quarter of 2025, a decrease of 1% year over year. Earnings were $1.07 per share, a 1% increase compared to the prior period.

謝謝你，史蒂夫，大家早安。2025 年第二季我們的銷售額為 10 億美元，年減 1%。每股收益為 1.07 美元，較上一時期成長 1%。

Please turn to slide 6. Second quarter sales in the North America segment of $779 million decreased 1% compared to a difficult year-over-year comp. Higher boiler sales were more than offset by lower volumes of water heaters. North America segment earnings of $198 million were essentially flat to last year. Segment operating margin was 25.4%, an increase of 30 basis points year over year primarily due to mix benefits from our water treatment priority channel strategy as well as growth in high-efficiency water heaters.

請翻到幻燈片 6。北美地區第二季的銷售額為 7.79 億美元，與去年同期相比下降了 1%。鍋爐銷量的增加被熱水器銷量的下降所抵消。北美分部的獲利為 1.98 億美元，與去年基本持平。分部營業利益率為 25.4%，較去年成長 30 個基點，主要得益於我們的水處理優先通路策略帶來的組合效益以及高效能熱水器的成長。

Moving to slide 7. Rest of the world segment sales of $240 million decreased 2% compared to last year. and included $16 million of sales from the Pureit acquisition. Sales in our legacy India business grew 19% in local currency. China third-party sales decreased 11% on a constant currency basis.

移至幻燈片 7。全球其他地區銷售額為 2.4 億美元，較去年同期下降 2%，其中包括收購 Pureit 帶來的 1,600 萬美元銷售額。我們原有的印度業務的銷售額以當地貨幣計算增長了 19%。以固定匯率計算，中國第三方銷售額下降了 11%。

Rest of the world segment earnings of $25 million were essentially flat year over year as continued expense management offset lower sales in China. Segment operating margin was 10.5% compared to 10.6% in the prior period. The Pureit acquisition is progressing well. However, we'll be a margin headwind in the near term as we focus on the integration.

由於持續的費用管理抵消了中國市場銷售額的下降，世界其他地區的分部收益為 2,500 萬美元，與去年同期基本持平。分部營業利益率為 10.5%，而上一季為 10.6%。Pureit 收購進展順利。然而，由於我們專注於整合，短期內我們的利潤率將面臨阻力。

Please turn to slide 8. We generated operating cash flow of $178 million and free cash flow of $140 million during the first six months of 2025 and higher than the same period last year, primarily due to lower cash outlays for 2025 working capital needs that were partially offset by lower current year earnings. Our cash balance totaled $178 million at the end of June, and our net debt position was $126 million. Our leverage ratio was 14.1% as measured by total debt to total capital.

請翻到第 8 張投影片。我們在 2025 年上半年產生了 1.78 億美元的營運現金流和 1.4 億美元的自由現金流，高於去年同期，這主要是由於 2025 年營運資金需求的現金支出較低，但被當年收益較低部分抵銷。截至 6 月底，我們的現金餘額總計 1.78 億美元，淨債務總額為 1.26 億美元。以總債務與總資本之比衡量，我們的槓桿率為 14.1%。

Let's now turn to slide 9. Earlier this month, our Board approved our next quarterly dividend of $0.34 per share. We repurchased approximately 3.8 million shares of common stock in the first six months of 2025 for a total of $251 million an increase over the same period last year as we increased our planned full year repurchase intentions from $306 million in 2024 and to approximately $400 million of shares for 2025.

現在我們翻到第 9 張投影片。本月初，我們的董事會批准了下一季度每股 0.34 美元的股息。我們在 2025 年上半年回購了約 380 萬股普通股，總額為 2.51 億美元，比去年同期有所增加，因為我們將計劃的全年回購意願從 2024 年的 3.06 億美元增加到 2025 年的約 4 億美元。

We also opportunistically bought shares during the first half of the year. We are actively assessing strategic opportunities and have sufficient dry powder for suitable acquisitions. Our priority is on deals that strengthen our core business or help us build new growth platforms.

我們也在上半年抓住機會買了股票。我們正在積極評估策略機遇，並擁有足夠的資金進行合適的收購。我們的首要任務是加強我們的核心業務或幫助我們建立新的成長平台的交易。

Please turn to slide 10, in our 2025 earnings guidance and outlook. We are raising the midpoint of our 2025 EPS outlook from a range of between $3.60 and $3.90 per share to a narrowed range of between $3.70 to $3.90 per share. The midpoint of our revised EPS range is an increase of 2% compared to our 2024 adjusted EPS. We have included the following key assumptions in our outlook.

請翻到第 10 張投影片，這是我們 2025 年獲利指引和展望。我們將 2025 年每股收益預期的中點從每股 3.60 美元至 3.90 美元的範圍上調至每股 3.70 美元至 3.90 美元的窄幅範圍。與 2024 年調整後的每股盈餘相比，修訂後的每股盈餘範圍的中點增加了 2%。我們在展望中納入了以下關鍵假設。

Our guidance assumes an approximate 15% to 20% increase in the cost of steel in the back half of the year as well as the full impact of currently announced tariffs, which minimally impacted the first half of the year. Other input costs outside of steel and tariffs are slightly higher than 2024 and ratable for the year.

我們的預測是，今年下半年鋼鐵成本將上漲約 15% 至 20%，且目前宣布的關稅將對上半年產生全面影響，但影響甚微。除鋼鐵和關稅之外的其他投入成本略高於 2024 年，並可按年度分攤。

The tariff landscape remains uncertain. We have refined our estimate of the annualized tariff impact on total company cost of goods sold to be an increase of approximately 5%, which is inclusive of currently announced tariff rates as well as the mitigation efforts we have implemented.

關稅情勢仍不明朗。我們已經對年度關稅對公司總銷售成本的影響進行了估算，預計年化關稅影響將增加約 5%，其中包括目前公佈的關稅稅率以及我們實施的緩解措施。

Our mitigation strategies include footprint optimization, strategic sourcing, and other cost controls. We estimate that 2025 CapEx will be between $90 million and $100 million as we continue to invest in engineering capabilities and prepare for the upcoming regulatory changes. We expect to generate free cash flow of between $500 million and $525 million. Interest expense is projected to be between $15 million and $20 million.

我們的緩解策略包括足跡優化、策略採購和其他成本控制。我們估計，由於我們將繼續投資於工程能力並為即將到來的監管變化做好準備，2025 年的資本支出將在 9,000 萬美元至 1 億美元之間。我們預計將產生 5 億美元至 5.25 億美元的自由現金流。預計利息支出將在 1500 萬美元至 2000 萬美元之間。

Corporate and other expenses are expected to be approximately $75 million. Our effective tax rate is estimated to be between 24% to 24.5%, and we project our outstanding diluted shares will be $142 million at the end of 2025.

公司及其他費用預計約為 7,500 萬美元。我們的有效稅率估計在 24% 至 24.5% 之間，我們預計到 2025 年底我們的流通稀釋股份將達到 1.42 億美元。

I'll now turn the call back over to Steve, who will provide more color around our key markets, top-line growth outlook and segment expectations for 2025 remaining on slide 10. Steve?

現在我將電話轉回給史蒂夫，他將在第 10 張投影片上詳細介紹我們的主要市場、營收成長前景以及 2025 年的細分市場預期。史蒂夫？

Thanks, Chuck. Key assumptions in our top line outlook include the following. We project the 2025 residential and commercial industry unit volumes will be approximately flat to last year, which is unchanged.

謝謝，查克。我們對營收前景的關鍵假設包括以下內容。我們預計 2025 年住宅和商業行業單位數量將與去年基本持平，保持不變。

As we expected, we believe there will be some pressure on our market share in the first half of the year, as we managed our production levels despite the strong order rates we saw in response to tariff announcement and ahead of our main price increases. We anticipate a market share recovery in the second half of the year as we work through our backlog and our customers return to more normalized order patterns.

正如我們預期的那樣，我們認為上半年我們的市場份額將面臨一些壓力，因為儘管在關稅公告和主要價格上漲之前我們看到了強勁的訂單率，但我們仍控制了生產水平。隨著我們處理積壓訂單以及客戶恢復更正常的訂單模式，我們預計下半年市場份額將恢復。

In China, we believe the economy remains challenged, and we continue to project that our sales in China will decrease 5% to 8% in local currency. While the stimulus programs benefited sales in Tier 1 and 2 cities, where we saw relatively flat sales compared to last year, stimulus programs were inconsistently applied in other regions, particularly in smaller cities.

在中國，我們認為經濟仍面臨挑戰，我們預計以當地貨幣計算，我們在中國的銷售額將下降 5% 至 8%。雖然刺激計劃有利於一線和二線城市的銷售，但與去年相比，這些城市的銷售額相對持平，但刺激計劃在其他地區，尤其是較小的城市的應用並不一致。

Additionally, many regions have not yet resumed subsidies in the second half of the year. Our forecast assumes that the currency translation impact will be minimal in 2025. We continue to expect to realize annual savings of approximately $15 million from our 2024 restructuring actions. And as a result, China operating margin is projected to be in the 8% to 10% range for 2025, even with lower volumes.

此外，很多地區下半年還未恢復補助。我們的預測是，到 2025 年，貨幣換算的影響將微乎其微。我們仍預計透過 2024 年的重組行動每年可節省約 1500 萬美元。因此，即使銷售量較低，預計到 2025 年中國營業利潤率仍將維持在 8% 至 10% 之間。

We remain cautious about the near-term market outlook, including the impact from the appliance discount trade-in program. However, we are pleased with how our China team continues to manage the challenging environment.

我們對近期市場前景保持謹慎，包括家電折扣以舊換新計畫的影響。然而，我們很高興看到我們的中國團隊能夠繼續應對充滿挑戰的環境。

We have raised our 2025 North America boiler sales projection from an increase of between 3% and 5% to an increase of between 4% and 6% compared to 2024. We are very pleased with our growth in the first half of the year. However, we believe we may have benefited from a minimal amount of prebuy related to price increases implemented in the second quarter. We continue to monitor the commercial markets closely.

我們已將 2025 年北美鍋爐銷售預測從 3% 至 5% 的增幅上調至 4% 至 6% 的增幅（與 2024 年相比）。我們對上半年的成長感到非常滿意。不過，我們認為，我們可能從第二季實施的價格上漲相關的少量預購中受益。我們將繼續密切關注商業市場。

We have not changed our guidance that North America water treatment sales will decline approximately 5% in 2025 and as we deemphasize the less profitable retail channel. We are pleased with the momentum we are seeing in our priority channels where we are seeing double-digit growth. We continue to project an operating margin expansion of approximately 250 basis points in 2025 for the North America water treatment business.

我們沒有改變我們的預期，即北美水處理銷售額將在 2025 年下降約 5%，我們不再強調利潤較低的零售通路。我們對優先管道中看到的勢頭感到高興，這些管道實現了兩位數的成長。我們持續預測 2025 年北美水處理業務的營業利潤率將擴大約 250 個基點。

Lastly, we continue to expect the addition of Pureit will add approximately $50 million in sales in 2025 and will not have a significant bottom line contribution this year as we work through integration. Based on our confidence in our ability to manage tariffs and other cost pressures, our expected improved relative market share performance in the back half of the year.

最後，我們仍然預計 Pureit 的加入將在 2025 年增加約 5,000 萬美元的銷售額，並且由於我們正在進行整合，因此今年不會對利潤產生重大貢獻。基於我們對管理關稅和其他成本壓力的能力的信心，我們預計下半年相對市場份額表現將有所改善。

our strong boiler sales in the first half of 2025, we have raised our full year sales outlook from flat to 2% to an increase of 1% to 3% compared to last year. We continue to expect our North America segment margin will be between 24% and 24.5%, and Rest of World segment margin will be between 8% and 9%.

由於 2025 年上半年鍋爐銷售強勁，我們已將全年銷售預期從持平至 2% 上調至較去年同期成長 1% 至 3%。我們繼續預期北美分部的利潤率將在 24% 至 24.5% 之間，而世界其他地區分部的利潤率將在 8% 至 9% 之間。

Please turn to slide 11. As I reflect on my last 16 months, there were several things that led me to join the company in March 2024. And I found that those first impressions have proven to be accurate. First, the company's dedication to its foundational values and doing business the right way, the Smith way, strongly resonates with me. Second, the genuine commitment of the entire global team to a strong culture of collaboration and innovation.

請翻到第 11 張投影片。回顧過去的 16 個月，有幾件事促使我在 2024 年 3 月加入了這家公司。我發現這些第一印像已被證明是準確的。首先，公司對其基本價值的奉獻以及以正確的方式（史密斯方式）開展業務的做法引起了我的強烈共鳴。第二，整個全球團隊真正致力於建立強大的協作和創新文化。

Third, the quality of our businesses where we are a leader in the markets that we serve with a strong, trusted and enduring customer relationships. Our core North America water heater and boiler businesses provide a resilient base with stable 80% to 85% replacement rates, strong cash generation and attractive regulation-driven growth tailwind. And fourth, an amazing set of strategic opportunities that we can lean into to build our bright future.

第三，我們的業務質量，我們在所服務的市場中處於領先地位，與客戶建立了牢固、值得信賴和持久的關係。我們的核心北美熱水器和鍋爐業務提供了一個有彈性的基礎，穩定的 80% 至 85% 的替換率、強勁的現金產生能力和有吸引力的監管驅動的增長順風。第四，我們可以利用一系列令人驚嘆的策略機會來建立美好的未來。

As I now step into the CEO role, I'd like to highlight a few areas that my leadership team and I are focused on that I believe will play an important role in creating value at A. O. Smith as we go forward. First, operational excellence, we will remain focused on accelerating productivity and the elimination of waste through the expansion of our AOS operating system.

在我接任執行長一職之際，我想強調我和我的領導團隊所關注的幾個領域，我相信這些領域將在我們未來為 A. O. 史密斯創造價值方面發揮重要作用。首先，卓越運營，我們將繼續專注於透過擴展我們的 AOS 作業系統來提高生產力和消除浪費。

While A. O. Smith already has a great foundational culture of continuous improvement on the plant floor, I believe we can benefit from a renewed focus on the application of lean principles not only to our manufacturing processes, but to other processes as well. I have personal experience both in deploying and running a number of operating systems in my career. And I believe the opportunity to expand our thinking of end-to-end processes and waste elimination can even further improve the operational and working capital efficiencies of our company.

雖然 A. O. 史密斯公司已經在工廠基層建立了良好的持續改進基礎文化，但我相信，如果我們重新關注精益原則的應用，不僅將其應用於我們的製造流程，還將其應用於其他流程，我們就能從中受益。在我的職業生涯中，我有部署和運行多種作業系統的親身經歷。我相信，擴展我們對端到端流程和消除浪費的思考的機會甚至可以進一步提高我們公司的營運和營運資本效率。

An example of our focus on this operational discipline is our initiative this year to work with our customers to smooth our production schedules in our plants, which we discussed earlier. I also see technology playing a big role in helping us achieve new levels of productivity going forward. Both leveraging those technology investments we have already made more effectively and investing in new technologies to help us advance the way we work.

我們注重這項營運紀律的一個例子是，我們今年主動與客戶合作，以順利完成我們工廠的生產計劃，正如我們之前討論過的。我還看到科技在幫助我們實現未來新的生產力水平方面發揮著重要作用。我們既可以更有效地利用已經進行的技術投資，也可以投資新技術來幫助我們改善工作方式。

We are also going to build upon our great legacy of innovation at A. O. Smith. Our pipeline of innovative products is strong, and we have made a number of major investments to prepare for the future both in terms of regulatory and technology shifts. Included in this investment is the recent commissioning of our brand-new product development center in Lebanon, Tennessee.

我們也將繼承 A.O. 史密斯公司的偉大創新傳統。我們的創新產品線非常強大，我們已經進行了許多重大投資，為未來的監管和技術變革做好準備。這項投資包括最近在田納西州黎巴嫩啟用的全新產品開發中心。

Earlier, I shared some of the exciting new products we are introducing this year as examples of our powerful innovation capability. There is still much more we can do and I look forward to the opportunity to advance A.O. Smith's innovation capability to the next level. I am pleased to announce that Dr. Ming Cheng joined the company earlier this month as our next Chief Technology Officer.

之前，我分享了我們今年推出的一些令人興奮的新產品，作為我們強大創新能力的例子。我們還可以做更多，我期待有機會將 A.O. 史密斯的創新能力提升到一個新的水平。我很高興地宣布，Ming Cheng 博士本月初加入公司，擔任下一任首席技術長。

I worked with him for over 10 years at 3M and developed great respect for his leadership, business sense, technical expertise and great curiosity, all important attributes for an innovation leader. I'm confident that Ming will help us achieve this next level of innovation capability.

我在 3M 與他共事超過 10 年，對他的領導能力、商業意識、技術專長和強烈的好奇心都非常敬佩，這些都是創新領導者所具備的重要特質。我相信 Ming 將幫助我們實現更高水準的創新能力。

The third focus area I would like to mention is portfolio management. making sure that A. O. Smith is positioned well with a portfolio of businesses and products for future success. The assessment of the China business as well as the restructuring actions we took in China and North America water treatment last year, are consistent with my commitment to continually evaluate our portfolio and take the actions necessary to position them well for profitable growth.

我想提到的第三個重點領域是產品組合管理，確保 A. O. 史密斯公司擁有良好的業務和產品組合，為未來的成功做好準備。對中國業務的評估以及我們去年在中國和北美水處理領域採取的重組行動，與我的承諾一致，即持續評估我們的投資組合，並採取必要行動，為盈利增長做好準備。

M&A and strategic partnerships to build out our business platforms will likely be a critical lever to enable this portfolio of work. And we have ample dry powder and management focus to help deploy it for the right targets. I look forward to sharing more information about these priorities as we lean into them and drive them forward to create value for A.O. Smith.

透過併購和策略合作來建立我們的業務平台可能會成為實現這項工作組合的關鍵槓桿。我們擁有充足的資金和管理重點，可以幫助我們將資金部署到正確的目標。我期待分享更多有關這些優先事項的信息，因為我們將努力實現這些優先事項並推動它們為 A.O. 史密斯創造價值。

Moving to slide 12. In conclusion, as we continue to navigate the tariff landscape and pursue our long-term strategic investments, I am pleased with our team's second quarter performance. We executed well both responding to a number of uncertain factors in North America with agility and discipline and resetting the business in China to address the ongoing challenging market environment.

移至投影片 12。總之，隨著我們繼續探索關稅格局並進行長期策略投資，我對我們團隊第二季的表現感到滿意。我們表現良好，既以敏捷和紀律應對北美的許多不確定因素，也重置中國業務以應對持續充滿挑戰的市場環境。

These actions have allowed us to continue to make sequential margin improvement in both the North America and rest of world segments. We continue to see strong growth momentum in areas where we are expecting growth performance, including the North America boiler and India businesses as well as the prioritized channels in the North America water treatment business. In both our margin improvement and growth efforts, I would like to thank all my A.O. Smith colleagues for your dedication and delivery.

這些舉措使我們能夠繼續在北美和世界其他地區實現連續的利潤率提高。我們在預期業績成長的領域繼續看到強勁的成長勢頭，包括北美鍋爐和印度業務以及北美水處理業務的優先管道。在我們提高利潤率和實現成長的努力中，我要感謝所有 A.O. 史密斯同事的奉獻和付出。

We also believe the strategic actions we are taking are positioning us well for the future. Leveraging the AOS operating system, reenergizing innovation and driving our portfolio forward will be key to our success. And I am pleased to see our leadership team rallying around these priorities.

我們也相信，我們正在採取的戰略行動將為我們的未來做好充分準備。利用 AOS 作業系統、重新激發創新並推動我們的產品組合向前發展將是我們成功的關鍵。我很高興看到我們的領導團隊團結一致，共同實現這些優先事項。

Our strong market leadership, recurring revenue from our core water heater and boiler businesses and our solid balance sheet enable us to invest strategically and maximize shareholder return even in the face of uncertainty. We are confident in our future and our proven ability to achieve profitable growth.

我們強大的市場領導地位、核心熱水器和鍋爐業務的經常性收入以及穩健的資產負債表使我們能夠在面臨不確定性的情況下進行戰略投資並實現股東回報最大化。我們對我們的未來以及實現獲利成長的能力充滿信心。

With that, we conclude our prepared remarks, and we are now available for your questions.

我們的準備發言到此結束，現在我們可以回答大家的提問了。

(Operator Instructions) Mike Halloran, Baird.

（操作員指示）麥克·哈洛倫，貝爾德。

Can we just start with the why now on the China side. What was it? Obviously, Steve, you're taking over the range is maybe part of the catalyst. But why is this the right opportunity to start thinking about alternatives for China? How far are you in the process and just kind of any incremental comp in the incremental context? And maybe alternatives is the wrong word, but just trying to figure out what the next steps for that region are?

現在我們可以從中國方面開始討論原因嗎？那是什麼？顯然，史蒂夫，你接管這個範圍也許是催化劑的一部分。但為什麼這是開始思考中國替代方案的正確時機呢？您在過程中進展如何？在增量環境中有任何增量補償嗎？也許「替代方案」這個詞不太恰當，但只是想弄清楚該地區下一步該怎麼做？

Yes. I think, Mike, we remain excited about the future potential of the market there. And as you know, we've been working through some changes within the business, taking some restructuring actions, making sure that we're positioning the business to compete and perform as the market goes through this challenging environment.

是的。麥克，我認為我們仍然對那裡的市場未來潛力感到興奮。如您所知，我們一直在努力對業務進行一些變革，採取一些重組措施，確保我們的業務定位能夠在市場經歷這一充滿挑戰的環境中保持競爭力和表現。

I think we're just at the point where we want to just broaden the horizon of options to explore. Our focus is completely and remains on how do we make this business most successful going forward. And so I think it was it came time where we wanted to open the aperture, look at other options and make sure that we're fully informed about what's the right path forward for the business.

我認為我們正處於想要拓寬探索選擇範圍的階段。我們的重點始終是如何讓這項業務在未來取得最大的成功。所以我認為現在是時候了，我們需要打開思路，看看其他選擇，並確保我們充分了解什麼是業務前進的正確道路。

So second, can you help with margins as we get to the back half of the year and kind of a twofold question. One, implied margins for rest of world down back at the half of the year. Normally, they seem to be up back in the half of the year? Maybe just talk through the moving pieces there? And then secondarily, just a discussion on price costs in North America and how you see that playing out for the rest of the year?

那麼第二，當我們進入下半年時，您能否幫助我們提高利潤率，這是一個雙重問題。一是世界其他地區的隱含利潤率在上半年下降。通常情況下，它們似乎會在半年內回升？也許只是談論那裡的活動部分？其次，讓我們來討論一下北美的價格成本，以及您如何看待今年剩餘時間內北美的價格成本走勢？

Yes, Mike. Rest of the world, I'll take that. So we talked a bit about our China volumes this quarter being down 11% in local currency and full year being 5% to 8% down. So as we look at the back half of the year, we expect will be some continued headwinds in China and our cost reduction actions are working well. We do expect to realize that full annual savings of $15 million.

是的，麥克。世界其他地方，我會接受。因此，我們談到了本季我們在中國的銷量以當地貨幣計算下降了 11%，全年下降了 5% 至 8%。因此，展望下半年，我們預計中國仍將面臨一些阻力，而我們的成本削減措施正在取得良好效果。我們確實希望實現每年 1500 萬美元的節省。

However, the pressures we feel that we'll see with some inconsistencies within the application of the government subsidy program. We expect to continue a bit through the back half of the year. So we're not quite as bullish on the fourth quarter as we typically are from a seasonal cadence. But we are very pleased with the restructuring results. We expect China will be in that 8% to 9% operating margin for the year.

然而，我們感受到的壓力在於，政府補助計畫的實施過程中存在一些不一致之處。我們預計今年下半年這種情況還會持續一段時間。因此，我們對第四季的樂觀程度並不像我們通常按照季節性節奏所認為的那樣。但我們對重組結果非常滿意。我們預計今年中國市場的營業利潤率將達到 8% 至 9%。

On the North America side and price cost, I mean, I think the way we think about that is really two halves of the year. As we walk into the back half of the year, we'll see steel costs going up 15% to 20%, we'll experience the full impact of tariffs. Tariffs will be about 5% for the full year.

在北美方面和價格成本方面，我的意思是，我認為我們考慮這個問題的方式實際上是一年中的兩個半年。進入下半年，鋼鐵成本將上漲 15% 至 20%，我們將感受到關稅的全面影響。全年關稅將在5%左右。

So tariffs were somewhat minimal in the second quarter as we work with kind of our key suppliers and good partners on that side. So we have direct impact and then you have indirect through suppliers and some of those were coming in a little bit slower than what we expected, but we expect the full impact in the back half of the year.

因此，由於我們與主要供應商和良好合作夥伴合作，第二季的關稅相對較低。因此，我們有直接影響，然後還有透過供應商間接產生的影響，其中一些影響比我們預期的要慢一些，但我們預計全面影響將在今年下半年顯現。

So when you take those two cost drivers together and then pricing that we've implemented effective May 4, but generally, we'll impact us in a positive way in the back half. We're able to offset those costs.

因此，當你將這兩個成本驅動因素放在一起，然後按照我們從 5 月 4 日開始實施的定價，總的來說，這將對我們下半年產生積極的影響。我們能夠抵銷這些成本。

But the net, if you look at our full year guidance, pretty strong front half North America margins, very, very pleased with where we were at in North America margin, but we'll see a little headwind on that North American margin in the back half because of those extra costs coming in.

但是，如果你看一下我們的全年指引，你會發現前半年北美的利潤率相當強勁，我們對北美的利潤率感到非常非常滿意，但是由於額外成本的進入，我們會看到後半年北美的利潤率會受到一些阻力。

We also will see volume shift a bit in the back half of the year. So typically, the water heater cadence, as you know, is about 51% in the front half and 49% in the back half on the residential side. We see the industry this year playing out very similar to last year.

我們還將看到下半年交易量略有變動。因此，通常情況下，如您所知，住宅側的熱水器節奏前半部約為 51%，後半部約為 49%。我們發現今年的產業表現與去年非常相似。

Last year, the cadence for the industry was about 53% front half and 47% back half. And what we would expect for our performance this year would be somewhere in between kind of a normal year and somewhere in between the price pull forward because we did benefit from pricing pull forward in the front half of the year.

去年，該行業的節奏約為前半部分 53%，後半部分 47%。我們預計今年的業績將介於正常年份和價格上漲之間，因為我們確實受益於上半年的價格上漲。

So if you take a look at all of those, Mike, a long answer to what we're looking at for margins in North America and price cost relationship in the back half.

因此，麥克，如果你看一下所有這些，你就會得到一個關於我們正在關注的北美利潤率和下半年價格成本關係的詳細答案。

Saree Boroditsky, Jefferies.

薩裡‧博羅迪茨基 (Saree Boroditsky)，傑弗里斯 (Jefferies)。

Could you just talk through what you saw in resi and commercial water heater shipments in June and into July? Obviously, it seems like industry shipments running ahead of what maybe you saw due to market share. So any other color on the impact of the market share that you experienced in the first half and how that plays out as you go to the second half of the year as well.

您能否談談 6 月和 7 月住宅和商用熱水器的出貨情況？顯然，由於市場份額的原因，行業出貨量似乎超出了你所看到的水平。那麼，您對上半年所經歷的市場份額的影響有何看法，以及這種影響在下半年將如何發展？

I'll just follow up, Saree on that. Kind of piggybacking off what I just mentioned kind of the cadence for the year. So we would expect that our share performance would be a bit better in the back half of the year due to the smoothing and the working with our customers, we did on order management in the front half of the year. Certainly, we benefit a bit on the price increase pull forward in the first half of the year.

我會跟進的，Saree。有點像是搭上我剛才提到的今年的節奏。因此，我們預計，由於上半年我們在訂單管理方面所做的平滑和與客戶的合作，我們的股票表現在下半年會更好一些。當然，上半年價格上漲為我們帶來了一些好處。

But we believe ours is a bit muted. So as we go into the back half of the year, as Steve mentioned, we would expect to pick up a bit of share in the back half of the year. Order rates, as you would expect in June and July are very typical and kind of right where we expect them to be after a price increase pull forward like we experienced early May.

但我們認為我們的聲音有點低沉。因此，正如史蒂夫所提到的那樣，當我們進入下半年時，我們預計下半年的市場份額會增加。正如您所預期的那樣，6 月和 7 月的訂單率非常典型，並且恰好處於我們預期的價格上漲後的水平，就像我們在 5 月初經歷的那樣。

Appreciate the color. And then I know you don't usually say much on pricing, but just the impact of price in the quarter and how much of the price increase did you realize in 2Q versus the remainder of the year?

欣賞色彩。然後我知道您通常不會談論太多關於定價的問題，但只是談論本季度價格的影響，以及與今年剩餘時間相比，第二季度的價格上漲了多少？

Yes. I'll just talk about water heating because water heating price increase with our backlog and then you have kind of the lead times and it was implemented in May a bit of pricing but very little that came into the second quarter. We had pricing in all of our businesses. So there was some pricing benefit. But price cost relationship for the quarter. From a tariff perspective, I'll just kind of stay with the tariff perspective, we roughly offset the increased cost in tariffs for the quarter.

是的。我只想談論熱水器，因為熱水器價格隨著我們的積壓訂單而上漲，然後你就有了某種交貨時間，它在五月份實施了一些定價，但進入第二季度的定價卻很少。我們的所有業務都有定價。因此存在一些定價優勢。但價格成本關係為季度關係。從關稅的角度來看，我只是堅持關稅角度，我們大致抵消了本季關稅成本的增加。

And our next question will be coming from Damian Karas of UBS.

我們的下一個問題來自瑞銀的 Damian Karas。

I wanted to ask you about the North America water heater business and the volumes you saw in the second quarter. Could you give us a sense relative to last year where the volumes came in that you shipped? And how much of a prebuy headwind are you expecting now in the third quarter as a result of a little bit of the pre-buy?

我想問一下北美熱水器業務以及第二季的銷售情況。您能否告訴我們與去年相比，您發貨的數量有多少？您預計，由於預購活動的影響，第三季的預購阻力會有多大？

I mean the industry volumes through May were relatively flat on the residential side. Commercial is up maybe 1 point. So it's tracking very similar to last year. We're not tracking quite to that level because of our smooth production and management of orders through customers. So we would expect to pick up a bit in the back half of the year relative to kind of the industry performance.

我的意思是，截至五月份，住宅方面的行業交易量相對穩定。商業可能上漲了 1 個百分點。因此，其走勢與去年非常相似。由於我們透過客戶順利生產並管理訂單，因此我們還沒有達到那個水準。因此，我們預計今年下半年產業表現會略有回升。

Pull forward percentage, it's hard to tell kind of how it fell into the front half of the year versus what we'll experience in the back. But we do know we do know we had a benefit in the first half and in the second quarter for pull forward. Like I mentioned, orders are still a bit muted.

拉動百分比，很難說清它在上半年的表現如何以及我們在下半年會經歷什麼。但我們確實知道，我們在上半年和第二季取得了進步。正如我所提到的，訂單仍然有點少。

So it's a bit hard to tell exactly how much that is. I'll frame it typically, like I said before, the industry is 51-49. The industry this year, we project will be 53 47, and we're going to be somewhere in between kind of that 53, 49 in the 51, 40 -- sorry, 53, 47 and the 51-49.

因此很難確切地說出這個數字是多少。我會以典型的方式建造它，就像我之前說的，這個行業是 51-49。我們預計今年的產業成長率將達到 53% 至 47%，大概在 53% 至 49% 之間，或 51% 至 40% 之間——抱歉，應該是 53% 至 47% 和 51% 至 49% 之間。

Okay. That's helpful. And then I wanted to ask you about the China water heater business. I appreciate that you are taking a look at options on what to do with that business going forward? But just looking at, I think, where some of the industry peers have been seeing their domestic shipments.

好的。這很有幫助。然後我想問您關於中國熱水器業務的問題。我很感激您正在考慮未來如何處理該業務？但我認為，僅看一下一些業內同行的國內出貨量。

It feels like you've been underperforming and maybe experiencing greater headwinds than the broader industry. Could you just help us to understand a little bit why that might be? Does it come down to your regional concentration maybe being more in the Tier 1 or Tier 2? Are you still seeing peers maybe price more aggressively, anything that could just help us understand why you're maybe trailing a little bit in that market in the exchange program.

感覺你的表現一直不佳，而且可能比整個產業遭遇更大的阻力。您能否幫助我們稍微理解為什麼會發生這種情況？這是否意味著您的區域集中度可能更集中在第 1 層或第 2 層？您是否仍然認為同行的定價可能更具侵略性，任何可以幫助我們理解為什麼您在交換計劃中可能在該市場落後一點的事情。

Yes. So I mean, obviously, we have many decades of really strong performance in China. We're viewed as a market leader, great brand or known for our innovation in China. And I would say all of that is still the case on the ground. We're an aspirational premium product, and that's backed up by our ability to continue to put great products in the marketplace, drive innovation and and support it with the service that people come to expect from A.O.

是的。所以我的意思是，顯然，我們在中國已經有幾十年的強勁表現。我們被視為中國市場的領導者、偉大的品牌或以創新而聞名。我想說的是，目前實際情況依然如此。我們是一款令人嚮往的高端產品，而這得益於我們不斷向市場推出優質產品、推動創新以及透過人們期望從 A.O. 獲得的服務來支持它的能力。

Smith in China. And I think that's still healthy in a very challenging market, and we see that through in the premium positions where we continue to be able to hold our own and maintain share. Obviously, what's changed recently that market dynamics are more challenging. Consumer confidence is -- remains very low in China, and that is also highly connected to retail -- or sorry, property values in China. And so we're all working through that together.

史密斯在中國。我認為，在一個充滿挑戰的市場中，這仍然是健康的，我們在高端地位中看到了這一點，我們繼續能夠保持自己的地位並維持份額。顯然，最近發生的變化是市場動態變得更具挑戰性。中國的消費者信心仍然很低，而且這也與中國的零售業——或者說房地產價值——密切相關。因此，我們正在共同努力解決這個問題。

The other thing that's changed is local competitors have gotten much better. So the gap in performance, the gap in innovation isn't what it used to be. So that's making it a more mature and challenging marketplace. And I think that's starting to play out in parts of share, either down market. There's also shifts happening in terms of how people buy in the channels where we have a very strong distribution network, more of that's moving to online.

另一個變化是本地競爭對手已經變得更好。因此，效能上的差距、創新上的差距不再像以前那麼大了。因此，這使得它成為一個更成熟和更具挑戰性的市場。我認為這已經開始在部分股票市場或低端市場發揮作用。人們的購買方式也在發生變化，我們擁有非常強大的分銷網絡，更多的購買行為正在轉向線上。

That also serves as a headwind, especially as we try to get our more premium innovative message out there. So on the ground, we're pivoting on those things. We're responding them. We're getting more active in digital. We're getting more active as the market also gets into more connected and intelligent devices, and we've made investments to be able to ride that wave as well.

這也是一種阻力，特別是當我們試圖傳播更優質的創新訊息時。因此，在實際操作中，我們正圍繞這些事情進行調整。我們正在回應他們。我們在數位領域變得越來越活躍。隨著市場進入更互聯和智慧化的時代，我們也變得更加活躍，我們也進行了投資，以便能夠順應這一潮流。

So we're going through a transition and some of those transitions relative to competition, some of those transitions relative to go-to-market models are things we have to work through, and that's a lot of the work we've been doing that's been a challenge for the business the last few years, but one that we're continuing to navigate through.

因此，我們正在經歷一個轉型期，其中一些轉型與競爭有關，一些轉型與市場進入模式有關，這些都是我們必須努力解決的問題，我們所做的許多工作在過去幾年裡對業務來說是一個挑戰，但我們會繼續努力克服。

And our next question will be coming from Susan Maklari of Goldman Sachs.

我們的下一個問題來自高盛的蘇珊·馬克拉里 (Susan Maklari)。

My first question is on the efforts that you mentioned to help better manage the pull forward of volumes in the first half. Can you just give a bit more detail on how you approach that? What was different relative to the past and how you're thinking about efforts to continue to perhaps maintain that going forward?

我的第一個問題是關於您提到的幫助更好地管理上半年交易量提前的舉措。您能否更詳細地說明一下您如何處理這個問題？與過去相比有什麼不同？您考慮如何努力繼續保持這種狀態？

So the industry, when they see upcoming changes, and in this particular case this year, it was a combination of both tariff risk as well as announced price changes, look to buy ahead and get in front of that. And we saw that last year with the price changes. We saw that this year again with price changes and tariff announcements. And the impact that has on our operations is when you get a lot of orders that come in and you look to serve all those orders right away as you're investing in your operations to crew up , add shifts, run overtime to meet that demand.

因此，當業界看到即將發生的變化時，就今年的這個特殊情況而言，這是關稅風險和已宣布的價格變化的結合，他們希望提前購買並搶佔先機。我們在去年的價格變化中就看到了這一點。今年我們再次看到了價格變動和關稅公告。這對我們的營運產生的影響是，當你收到大量訂單時，你會希望立即滿足所有這些訂單，因為你正在投資運營，增加人員、增加班次、加班來滿足需求。

And then once the inventory is out there in the channel, it takes time to work off through. And obviously, then the consequence of that on our manufacturing operations is we have plants that become underutilized. So it's a pretty lumpy and inefficient way to run our manufacturing operations. We experienced that last year. And this year, we wanted to kind of get ahead of that.

一旦庫存進入渠道，就需要時間處理。顯然，這對我們的製造業務造成的後果是我們的工廠利用率不足。因此，這是一種運行我們製造業務的相當不平衡且低效的方式。我們去年就經歷過這樣的事。今年，我們想要領先一步。

We work really closely with our customers. It's not an exact science. It's a little bit of art site to work with our customers around making sure they're getting the product they need and expect, but at the same time, doing it a way that doesn't drive unnecessary inefficiencies through the entire supply chain.

我們與客戶密切合作。這不是一門精確的科學。這是一個有點藝術氣息的網站，我們與客戶合作，確保他們獲得他們需要和期望的產品，但同時，這樣做的方式不會在整個供應鏈中造成不必要的低效率。

And so -- as we work with our customers through that, yes, we do still have some pull ahead that we've expected that we've seen in Q2. But also, we think we've got a better way of actually manning our operations, and we work with our customers to make sure that their they're still getting the product they need and when they need it, but also that the way we're able to smooth out how our plants run so that we're not investing in over time upfront and then underutilization on the back half.

因此，當我們與客戶合作時，是的，我們仍然比我們預期在第二季度看到的有一定領先優勢。但同時，我們認為我們已經找到了更好的方法來實際管理我們的運營，我們與客戶合作，以確保他們仍然能夠在需要時獲得他們需要的產品，而且我們能夠平穩地運行我們的工廠，這樣我們就不會在前期投入過多的時間，而在後半段卻利用率不足。

Okay. That's great color. And then as you think about the business, Stephen, you come into this new role, can you talk a bit about other areas that maybe also noncore or things that you'd like to deemphasize? And any areas or adjacencies that you're interested in building into and your thoughts on perhaps M&A or organic initiatives in those areas.

好的。顏色真棒。然後，當您考慮業務時，史蒂芬，您擔任這個新角色，您能否談談其他可能非核心的領域或您想要淡化的事情？以及您有興趣進入的任何領域或鄰接領域，以及您對這些領域的併購或有機舉措的想法。

Yes. A high priority for me, as I mentioned, is portfolio management. I think that's always continuing to review the portfolio we have today and making sure we're the right owner, the best owner for the business. And we'll continue to always evaluate that and keep that top of mind just as we always have. I think it's also very important as we think about our capital deployment priorities.

是的。正如我所提到的，投資組合管理對我來說是重中之重。我認為這始終是持續審查我們目前的投資組合，並確保我們是合適的所有者，是該業務的最佳所有者。我們將一如既往地繼續評估這一點，並將其放在首位。我認為，當我們考慮資本部署優先事項時，這也非常重要。

We're going to continue to invest in our core businesses to make sure we maintain leadership positions, which we generally have today, but also to actually build out new business platforms. I think that's important for us to get into growthier spaces. I think M&A is a core component for how we're going to do that. And we've got a real focused effort on thinking about where we go, having our strategies right on that, having conviction about where we go next and then executing and following through the pipeline.

我們將繼續投資於我們的核心業務，以確保我們保持目前的領導地位，同時也要實際建立新的業務平台。我認為這對我們進入更具成長潛力的領域非常重要。我認為併購是我們實現這一目標的核心要素。我們真正集中精力思考我們的目標，制定正確的策略，堅信我們下一步的目標，然後執行並遵循整個流程。

And our next question will be coming from Matt Summerville of D.A. Davidson.

我們的下一個問題來自 D.A. Davidson 的 Matt Summerville。

Two questions. First, on the more recent point you made about building new business platforms. Can you provide a deeper assessment or maybe initial assessment on the actionability and quality of A.O. Smith's current M&A pipeline? And then I have a follow-up.

兩個問題。首先，關於您最近提到的建立新業務平台的問題。您能否對 A.O. 史密斯目前的併購管道的可操作性和品質進行更深入的評估或初步評估？然後我有一個後續問題。

Yes. I mean it's 1 that's active and moving. And I think we have a few spaces we're pretty excited about, and there are spaces where we think we can step in and be good owners of businesses and run them in the A.O. Smith way. So we're excited about a few areas.

是的。我的意思是它是活躍的和移動的。我認為我們對一些領域感到非常興奮，還有一些領域我們認為我們可以介入並成為優秀的企業所有者，並以 A.O. 史密斯的方式經營它們。我們對一些領域感到興奮。

Actionability of those targets can vary. It's never a certain thing. But I think we've -- we're excited that a few assets that we think could be a really good fit may be actionable in the coming year, but we can't commit to anything, and we don't know. And as always, we'll be disciplined about how we step into those opportunities.

這些目標的可操作性可能有所不同。它從來都不是一個確定的事情。但我認為，我們很高興看到一些我們認為非常合適的資產可能在來年投入使用，但我們不能承諾任何事情，我們也不知道。和往常一樣，我們會嚴格把握這些機會。

And just as a follow-up, are you willing to consider something more transformational, maybe add another leg to the stool, so to speak? And then just a quick one on the boiler business. guide 4% to 6%. I think in Q1, you were up 10%, Q2, you were up 6%. So help me understand what that's implied about the back half of the year, specifically to boilers.

另外，作為後續問題，您是否願意考慮一些更具變革性的事情，比如說給凳子加一條腿？然後簡單談談鍋爐業務。指導價為 4% 至 6%。我認為第一季成長了 10%，第二季成長了 6%。因此，請幫助我理解這對下半年意味著什麼，特別是對鍋爐而言。

So on the first question on transformational M&A. I mean I think we wouldn't rule it out. We are trying to build new businesses. Obviously, there's a whole bunch of additional kind of risks and challenges that come with something that's bigger and more transformational. But I think our view of where we want to go next is we want to build out new business platforms and ones that are great fits for our company and what we do well.

第一個問題是關於轉型併購。我的意思是我認為我們不會排除這種可能性。我們正在努力開拓新業務。顯然，更大、更具變革性的事物會帶來一系列額外的風險和挑戰。但我認為，我們對下一步發展方向的看法是，我們希望建立新的業務平台，這些平台非常適合我們的公司和我們擅長的領域。

So not rolled out, but obviously, those things oftentimes take time to build towards. As it relates to the boiler business, I think we're just -- we're being cautious about the back half of the year. Certainly, we like the growth performance that we saw in the first half of 2025. We've got a good healthy backlog. So I think we're entering the second half of the year in a strong position.

所以沒有推出，但顯然，這些事情往往需要時間來建構。就鍋爐業務而言，我認為我們只是——我們對下半年持謹慎態度。當然，我們喜歡 2025 年上半年看到的成長表現。我們有大量積壓訂單。因此我認為我們將以強勁的勢頭進入下半年。

And that's why we're really watching the commercial market closely. Difficult to know for sure how much pull ahead we potentially had in the first half as part of that. That's part of the reason for the cautiousness and then also just what happens with projects and how those play out. by the coming to the end of the year.

這就是我們密切關注商業市場的原因。很難確切知道我們在上半場可能領先多少。這是謹慎的原因之一，也是專案在年底前會發生什麼以及進展如何的原因。

And our next question will be coming from Bryan Blair of Oppenheimer.

我們的下一個問題來自奧本海默公司的布萊恩布萊爾。

Quick question on the assessment of A.O. Smith China. As you're thinking about the varying opportunities at hand for potential opportunities. Is this specific to or exclusive to Smith China? Or could your faster-growing India business be included as you're looking more so on the side of strategic opportunities, or partnerships, other alternatives?

關於 A.O. 史密斯中國的評估，我想問一下。當您正在思考潛在的機會時，眼前的各種機會。這是 Smith 中國特有的還是獨有的？或者，由於您更專注於策略機會、合作夥伴關係或其他替代方案，因此是否可以將您成長較快的印度業務納入其中？

Yes. The announcement today is specific to China and just looking at options for our China business.

是的。今天的公告專門針對中國，只是探討我們中國業務的選擇。

And sorry if I missed this detail. With North American water treatment, are you still tracking towards the 250 basis point margin expansion you had outlined before? And then I guess -- and more importantly, with mix progressing towards your targeted more favorable mix. How should we think about incremental margins as you lap the retail declines and get back to growth?

如果我錯過了這個細節，我很抱歉。對於北美水處理，您是否仍在朝著先前概述的 250 個基點的利潤率擴張目標前進？然後我想——更重要的是，隨著混合朝著你所針對的更有利的組合發展。當零售業克服衰退並恢復成長時，我們應該如何看待增量利潤率？

Yes. We are tracking to our target of 250 to 300 basis points improvement that the business has performed well through the front half of the year. And on the shelf retail transition, it was a pretty clean transition. So we saw a nice increase in the first quarter which carried through to the second quarter just based on the channel strategy to de-emphasize on the shelf retail. So we're comfortable with that 250 to 300 basis points increase and would expect that to pretty much be carrying forward for the rest of the year.

是的。我們正在朝著 250 至 300 個基點的改善目標邁進，今年上半年業務表現良好。就貨架零售轉型而言，這是一個相當乾淨的轉型。因此，我們看到第一季出現了良好的成長，並且這種成長一直延續到第二季度，這只是基於通路策略不再強調貨架零售。因此，我們對 250 至 300 個基點的增幅感到滿意，並預計這一增幅將在今年剩餘時間內持續下去。

I would add, too, just kind of going forward in addition to some of those go-to-market prioritization decisions we've made, we're also taking actions to take advantage of the integration work of the different acquisitions we've brought together to build that business. And we have opportunities there to also both drive growth and continued margin performance through those levers, which goes above and beyond just the prioritization work we've done.

我還要補充一點，除了我們已經做出的一些市場優先決策之外，我們還將採取行動，利用我們為打造該業務而進行的不同收購的整合工作。我們也有機會透過這些槓桿來推動成長和持續的利潤表現，這超出了我們所做的優先排序。

Our next question will be coming from Jeff Hammond of KeyBanc Capital Markets.

我們的下一個問題來自 KeyBanc Capital Markets 的 Jeff Hammond。

Just wanted to clarify the market share comment, weaker first half, better second half. Is that just simply that your competitors didn't limit prebuy and maybe they saw more prebuy so that levels out? And then just more broadly on competitive landscape. Maybe just speak to kind of the new player in the market, and the JV partnership. And then it seems like some distributors are opening up to multiple sourcing for water heaters.

只是想澄清市場佔有率的評論，上半年較弱，下半年較好。這是否只是因為您的競爭對手沒有限制預購，而他們可能看到了更多的預購，所以情況趨於平穩？然後更廣泛地討論競爭格局。也許只是談論市場上的新參與者和合資夥伴關係。然後似乎一些經銷商正在開放熱水器的多種採購管道。

So you just talk about competitive landscape more broadly?

那麼您只是更廣泛地談論競爭格局嗎？

Sure. Just maybe as a first point around how do we think our actions relative to the industry. We do think the industry maybe took a more aggressive posture of fulfilling order demand than what we did. That that's really what's behind our commentary around market share, both first half of the year compared to second half and why we do believe we will have an uptick in market share in the back half as we manage some of those orders back through kind of what will play out in the second half. So that's the driver.

當然。也許首先我們要思考的是，我們如何看待自己的行為相對於產業而言。我們確實認為，該行業可能採取了比我們更積極的態度來滿足訂單需求。這就是我們對市場份額的評論背後的真正原因，包括上半年與下半年的比較，以及為什麼我們相信下半年我們的市場份額會上升，因為我們會管理好一些訂單，然後再考慮下半年的情況。這就是驅動因素。

There's a lot to still play out for the second half of the year to validate it, but that's our assumption. The second question, sorry.

今年下半年仍有許多事情需要發生來驗證這一點，但這是我們的假設。第二個問題，抱歉。

With respect to the recent JV.

關於最近的合資企業。

Oh, yes, and competitive. Yes. I think there's obviously -- over the last few years, there's been a number of announcements and new entrants looking to get into the space. And those always get our attention, right? We're the market leader and we're mindful of when there's new people looking to participate in the North America water heater space.

哦，是的，而且有競爭力。是的。我認為顯然——在過去的幾年裡，已經有許多公告和新進入者希望進入該領域。這些總是會引起我們的注意，對吧？我們是市場領導者，我們會留意是否有新人想要參與北美熱水器領域。

But I would say, to really be successful in this market, you have to have real conviction. And I think that conviction requires you to have the full breadth of portfolio. You've got to have that portfolio available at a moment's notice, especially when you got 80%, 85% that's replacement. People don't really like to take a cold shower twice. So you have that portfolio available through the channel partners that can reach the contractors on a moment's notice.

但我想說，要想在這個市場上真正成功，你必須有真正的信念。我認為，要有這種信念，你必須擁有全面的投資組合。你必須隨時準備好該投資組合，特別是當你有 80%、85% 的替代品時。人們不太喜歡洗兩次冷水澡。因此，您可以透過通路合作夥伴取得該產品組合，並可以隨時聯繫承包商。

And that's the types of investments we make, and that's the kind of conviction level we have for this market.

這就是我們進行的投資類型，這就是我們對這個市場的信心程度。

And I think it's also why it's proven to be pretty challenging relative to new entrants coming into the space. And then on top of that, it's actually a pretty complicated landscape as you go forward, especially on the regulatory front where there's a lot of uncertainty. You got to have the right technologies available in the right states at the right time with those changes. And that's the advantage we have as the market leader, right? We help lead the industry through those types of changes.

我認為這也是為什麼對於進入該領域的新人來說，它被證明是相當具有挑戰性的。除此之外，隨著情勢的發展，情況實際上會變得相當複雜，特別是在監管方面存在著許多不確定性。隨著這些變化，你必須在正確的時間在正確的州提供正確的技術。這就是我們身為市場領導者的優勢，對嗎？我們幫助引領業界經歷這些類型的變革。

So I think it's challenging for a new entrant to come in. We don't take it lightly. We take it seriously. We're always thinking about making sure that we continue to serve the market well so that there's no need for alternatives. And I think as we've said before, too, as it relates to channel and share shifts in channel and even how that plays out across the big that's something we always have had to deal with.

因此我認為對於新進入者來說這是一個挑戰。我們對此並不掉以輕心。我們非常重視此事。我們始終在思考如何確保繼續為市場提供良好的服務，這樣就不需要其他選擇。而且我認為，正如我們之前所說的那樣，因為它與渠道和渠道份額的變化有關，甚至與它如何在整個過程中發揮作用有關，這是我們一直必須處理的事情。

We navigate it through.

我們引導它通過。

I think we've always been able to find a way to make that work out well for us, working closely with our channel partners, and we'll continue to do that going forward.

我認為，我們總是能找到一種方式讓我們的工作順利進行，與我們的通路合作夥伴密切合作，並且我們將繼續這樣做。

And our next question will be coming from Scott Graham of Seaport Research Partners.

我們的下一個問題來自 Seaport Research Partners 的 Scott Graham。

I wanted to follow-up on Mike's question of why now. I don't think anyone would debate the strength of your China business. It's been around forever, you're a market leader, the whole thing. But obviously, sales are off-peak margin is well off peak. So is this more of an announcement maybe that it's and look at the business to see which portions of it need to be paired a major restructuring?

我想進一步回答麥克關於「為什麼是現在」的問題。我認為沒有人會質疑你們在中國的業務實力。它一直存在，你是市場領導者，一切都是如此。但顯然，銷售額處於非高峰期，利潤率也遠低於高峰期。那麼這是否更像是一個公告，也許它會審視業務，看看哪些部分需要進行重大重組？

Because it just seems like a divestment today would not be prudent. Could you talk to what some of the maybe more looked upon favorably assessments within the options that you're talking about here? Could it just be a major restructuring of the business?

因為現在看來撤資並不明智。您能否談談您在此處談論的選項中一些可能更受青睞的評估？這可能只是重大的業務重組嗎？

Yes. I mean our announcement today is not announcement of any decision made business. We're still very early, and we're just sort of at this point announcing that we're initiating this assessment. And actions we could take within the business, those are ones we consider and think about and evaluate ongoing, and we'll continue to do that for sure. I think the why now is, I think we want to explore what our full set of alternatives are, right?

是的。我的意思是，我們今天的公告並不是任何已做出決定的業務公告。我們還處於早期階段，我們只是在此時宣布我們正在啟動這項評估。我們可以在業務範圍內採取的行動，都是我們正在考慮、思考和評估的，我們肯定會繼續這樣做。我認為現在的原因是，我想我們想要探索我們全部的替代方案是什麼，對嗎？

And we're not sitting here today committing to a divestiture of the business. What we're talking about is we would like to understand and be well informed around what the full potential options are for the business going forward to make sure we actually do what we can to position the business in this great asset that we have in China for success and to be able to compete and win in the future.

我們今天坐在這裡並不是要承諾剝離這項業務。我們正在談論的是，我們希望了解並充分了解未來業務的所有潛在選擇，以確保我們確實盡我們所能，將業務定位在我們在中國擁有的這一巨大資產上，以獲得成功，並能夠在未來競爭和獲勝。

And we think what we're doing is broadening the aperture of that, of what potential options could look like. And any strategic partnerships or anything else we would explore, our primary goal would be how to make the business better. how does it make the business have a better chance of success going forward, and that's the ones we're going to take to it.

我們認為，我們正在做的是擴大這個範圍，了解潛在的選擇。對於任何策略合作夥伴關係或我們所探索的其他任何事情，我們的主要目標是如何使業務變得更好。如何使業務在未來有更好的成功機會，這就是我們要做的。

Understood. I just -- my follow-up is around pricing. So you went out with an announcement, I believe it was in April on the price increases that were going to be part -- a big part of your offsetting tariffs and you're saying essentially that there wasn't really much of a tariff impact in the second quarter. So I guess I'm wondering, are you now rolling back pricing in some way because effective May 1, I'd have to believe that some people might be looking for some type of rollback given that the tariffs were rolled back.

明白了。我只是——我的後續問題是關於定價。所以你發布了一項聲明，我相信是在四月份，關於價格上漲的聲明將成為抵消關稅的一部分 - 很大一部分，而你基本上是說第二季度關稅的影響並不大。所以我想知道，您現在是否會以某種方式降低價格，因為從 5 月 1 日起，鑑於關稅已經降低，我不得不相信有些人可能會尋求某種形式的降價。

No, we're not, Scott. What we're trying to indicate is for the second quarter, it was not a meaningful impact because of some of the timing of when the tariffs came in. We did see some offsetting in pricing. But in the back half, we will have the full impact of tariffs. We'll have the full impact of 15% to 20% steel costs going up.

不，我們不是，斯科特。我們想要表明的是，對於第二季而言，由於關稅實施的時機問題，並未產生重大影響。我們確實看到了定價方面的一些抵消。但在下半年，我們將受到關稅的全面影響。我們將全面感受到鋼鐵成本上漲 15% 至 20% 的影響。

So we're -- the announcement was effective in May. And as you know, we don't really realize the benefits of any pricing until you work through the backlog and lead times, which takes us to the very end of June. So that portion of it really doesn't roll in until almost as we start into the third quarter.

因此我們 — — 該公告於五月生效。而且如您所知，在您解決積壓和交貨時間問題之前，我們無法真正意識到任何定價的好處，而這將持續到六月底。因此，這一部分實際上直到我們進入第三季時才真正開始發揮作用。

Understood. And nice execution around the operations in 2Q.

明白了。第二季的營運執行情況良好。

And our next question will be coming from Nathan Jones of Stifel.

我們的下一個問題來自 Stifel 的 Nathan Jones。

Good morning, everyone. I guess I'll follow up on that last question around tariffs and pricing. I think you guys said on the last call, you announced pricing to the market that was going to be 6% to 9% across the majority of the North American business. And I think you talked about 5% impact to COGS on this call. maybe that was across COGS for the whole business and not COGS just in North America, but it would seem that maybe there's some margin upside there from price versus what you're seeing from tariffs or maybe that 5% is spread across all of COGS rather than just North America?

大家早安。我想我會繼續回答有關關稅和定價的最後一個問題。我想你們在上次電話會議上說過，你們宣布的市場定價將針對北美大部分業務達到 6% 至 9%。我認為您在這次電話會議上談到了對 COGS 的 5% 的影響。也許這是針對整個業務的 COGS，而不僅僅是北美的 COGS，但看起來，與關稅相比，價格可能存在一些利潤上漲，或者也許 5% 分佈在所有 COGS 上，而不僅僅是北美？

Any comments you can make there?

您有什麼評論嗎？

Yes. Thank you for the clarification on that, Nathan. It is 5% across all of the business and our tariff impact is largely North America business that we have the cost impact. So 5% across the business, but it's predominantly focused within North America.

是的。謝謝你對此的澄清，Nathan。整個業務的關稅影響為 5%，而我們的成本影響主要來自北美業務。因此整個業務的成長率為 5%，但主要集中在北美。

Okay. So the COGS number in North America is a bit higher and maybe in that 6% to 9% range. So it's a bit more offsetting.

好的。因此，北美的 COGS 數字略高一些，可能在 6% 到 9% 的範圍內。因此，這有點抵消。

That's correct.

沒錯。

I guess the other question I wanted to ask is around the operational excellence kind of priority stave that you set. Maybe just any comments around that. It sounded a little bit to me like lean outside the 4 walls is somewhere that you see an opportunity -- just maybe any color around that and any specific places that you see opportunities to improve the operational performance of the business.

我想問的另一個問題是關於您設定的卓越營運優先事項。也許只是圍繞這一點的任何評論。在我看來，這聽起來有點像在四面牆之外的地方精益求精是一個你看到機會的地方——也許只是周圍的任何顏色和任何特定的地方，你都可以看到改善業務運營績效的機會。

Yes. I wouldn't characterize it as lean outside the 4 walls as much as referencing lean in our end-to-end processes. And I think where the AOS operating system today is done a really nice job of focusing on the plant floor with model lines and engaging our workforce around continuous improvement, and we did some good results from that. Expanding it to really think about end-to-end process. And obviously, many of our processes run through our plans, which is why I wouldn't characterize it as outside the manufacturing walls.

是的。我不會將其描述為外部精益，而是參考端到端流程中的精益。我認為，如今的 AOS 作業系統確實做得非常好，它專注於工廠車間的模型生產線，並讓我們的員工參與到持續改進中，我們也取得了一些良好的成果。將其擴展以真正思考端到端流程。顯然，我們的許多流程都是按照計劃進行的，這就是為什麼我不會將其描述為製造牆之外。

But leveraging our ERP system to get more discipline around our processes and as we do that, realizing more efficiencies.

但是利用我們的 ERP 系統可以使我們的流程更加規範，這樣我們就可以實現更高的效率。

And our next question will be coming from David McGregor of Longbow Research.

我們的下一個問題來自 Longbow Research 的 David McGregor。

This is Joe Nolan on for David. You mentioned steel costs up 15% to 20%. I was just hoping you could talk about what you're seeing with some of the other input costs and how those are moving directionally into the second half of the year.

喬諾蘭 (Joe Nolan) 代替大衛上場。您提到鋼鐵成本上漲了15%至20%。我只是希望您能談談您所看到的其他一些投入成本的情況，以及這些成本在下半年將如何變化。

Yes. Year-over-year, other input costs outside of steel and tariffs, of course, they're up slightly year-over-year, but pretty ratable for the year. We don't necessarily see those moving up in a great deal in the back half. Again, that's not cost not associated with the tariff impact.

是的。與去年同期相比，除鋼鐵和關稅之外的其他投入成本當然同比略有上漲，但與全年相比還是相當可觀的。我們不一定會認為這些在下半年會有很大的上漲。再說一遍，這不是與關稅影響無關的成本。

Got it. Okay. And then the water treatment business had a good quarter overall. It sounds like retail business might still be a little weak there. Can you just talk a bit more about your outlook into the second half for that business?

知道了。好的。整體而言，本季水處理業務表現良好。聽起來那裡的零售業務可能仍然有點疲軟。您能否再談談對該業務下半年的展望？

Yes. I think we're making really good progress on that business. I think the focus on our priority channels has brought focus to places where we think we have the best chance to compete win, the integration work we're doing with in our acquisitions to help the businesses get healthier and stronger. And it's a growth platform for us. And we had a bit of a reset to go through kind of last year and into this year relative to positioning the business to be more competitive.

是的。我認為我們在該業務上取得了非常好的進展。我認為，對優先管道的關注使我們的注意力集中在我們認為最有可能贏得競爭的地方，我們在收購中所做的整合工作可以幫助企業變得更健康、更強大。這對我們來說是一個成長平台。去年和今年，我們進行了一些調整，以使業務更具競爭力。

And I think where we are now is we like the positioning of where we're at and now it's time to get back to growth.

我認為我們現在的定位是符合我們的期望的，現在是時候恢復成長了。

In your comments around kind of the weakness in the retail channel, it's really a proactive strategy that we took to deemphasize on the shelf retail. So it's intentional that we've moved that channel, and it's helped our margin profile as we step into the year.

在您關於零售通路弱點的評論中，我們採取的實際上是一個積極的策略，即淡化貨架零售的重要性。因此，我們有意轉移該管道，這有助於我們在進入新的一年時提高利潤率。

And our next question will be coming from Sam Snyder of Northcoast Research, lines.

我們的下一個問題來自 Northcoast Research 的 Sam Snyder。

I have a couple of questions. Thanks for getting in at the end of the call. But I wanted to know what has changed from a quarter ago with the China business? I know -- I mean maybe I'll ask it a different way, but what's on the table now that wasn't on the table before in terms of strategic actions. Maybe help us imagine what -- not a sale outright, but something else, like a partnership like what could that look like?

我有幾個問題。感謝您在通話結束時的參與。但我想知道與一個季度前相比，中國業務發生了哪些變化？我知道——我的意思是，也許我會換個方式問這個問題，但就戰略行動而言，現在討論的是什麼，以前沒有討論過。也許可以幫助我們想像一下——不是直接銷售，而是其他東西，例如合作關係，那會是什麼樣子？

And I have a follow-up on innovation maybe more long term, if we can get to it.

如果我們能夠做到的話，我會對創新進行更長期的追蹤。

Yes. I mean we've obviously been working on closely with our China team around how to improve the competitiveness and the success of our China business. I think what changed is we want to just think about a full range of options of what's the best way to do that, right? And I think it's an evolution of our thinking as we think about how do we set up our China business. We've got a great asset with many competitive strengths.

是的。我的意思是，我們顯然一直在與我們的中國團隊密切合作，共同研究如何提高我們中國業務的競爭力和成功率。我認為改變的是，我們只想考慮各種選擇，看看什麼是實現這一目標的最佳方式，對嗎？我認為這是我們在思考如何開展中國業務時思維的演變。我們擁有龐大的資產和許多競爭優勢。

And as I mentioned, it's a market we think there's got a lot of potential in and so what we want to do is say, what's the best way to do that. And we think it could involve working with strategic partners and thinking about options beyond just some of the things we've been doing to the state. And we want -- we were starting this process, right? So what we want to do is we want to be fully informed and ultimately, at the end of the day, make sure that we set this business up for the best path forward to be most successful.

正如我所提到的，我們認為這個市場有很大的潛力，所以我們想說的是，最好的方法是什麼。我們認為這可能涉及與戰略夥伴的合作，並思考除了我們對國家所做的一些事情之外的其他選擇。我們希望——我們正在開始這個過程，對嗎？因此，我們想要做的是，我們希望充分了解情況，並最終確保我們為這項業務設定最佳前進道路，以取得最大成功。

Okay. And then just real quick if I get it in on innovation. Like what do you see -- when you think about innovation, whether it's U.S. market or rest of world, maybe illustrate some of the things you're talking about.

好的。然後，如果我能夠快速地實現創新，那就真的很快了。就像您看到的那樣——當您想到創新時，無論是美國市場還是世界其他地區，也許可以說明您正在談論的一些事情。

Yes. I mean I'm a big believer that innovation for industrial companies is core to how you drive organic growth and how you maintain outsized profitability, you have to be able to bring things to the world. that are differentiated and that solve real problems. So for me, it's fundamental to a really successful industrial business. I got to see that up and close at 3M.

是的。我的意思是，我堅信工業公司的創新是推動有機成長和維持超額獲利的核心，你必須能為世界帶來差異化的產品，解決實際問題。所以對我來說，這是真正成功的工業企業的基礎。我在 3M 近距離觀察了它。

It's 1 of the more successful innovation industrial companies out there. And I think it's an important part of our future. And also, what's really nice is it's been a huge part of our past, right? We have innovated and really to totally changed markets as we stepped into them over our 150-year history. And I think it's a big part of our 150-year future.

它是目前較為成功的創新工業公司之一。我認為這是我們未來的重要組成部分。而且，真正美好的是，它已經成為我們過去的重要組成部分，對吧？在我們 150 年的發展歷程中，我們不斷創新，並徹底改變了市場。我認為這是我們未來 150 年的重要組成部分。

And it includes innovation processes that allow you to launch products successfully and efficiently and on time, meeting customer needs.

它包括創新流程，使您能夠成功、有效率、按時推出產品，滿足客戶需求。

It's a culture and making sure that we continue to embrace and energize a culture of innovation, which includes being able to experiment, be curious, take risks as you step into doing new things to the world. And it's really understanding and defining the technologies that are going to be relevant to the future and making sure you invest in those technologies. So those are the types of things that we're focusing on. And as I mentioned, our new CTO, I think, is going to be a great boost to helping us get to the next level.

這是一種文化，確保我們繼續擁抱和激發創新文化，包括敢於嘗試、保持好奇心、敢於冒險，敢於為世界創造新事物。這實際上是理解和定義與未來相關的技術，並確保對這些技術進行投資。這些都是我們關注的重點。正如我所提到的，我認為我們的新任技術長將會大大幫助我們邁向新的高度。

And one moment for our last question, which will be coming from Andrew Kaplowitz of Citigroup.

現在讓我們來看最後一個問題，這個問題來自花旗集團的 Andrew Kaplowitz。

Good morning, everyone. Thanks for fitting me in Steve, I know you said you'll consider all alternatives when you're using your balance sheet moving forward. But ALS has been sitting with what, I think, some would call an underlevered balance sheet for some time. As you assess just overall capital allocation. Do you think the company could get a bit more aggressive in general using its balance sheet?

大家早安。感謝史蒂夫為我提供幫助，我知道你說過，在使用資產負債表時，你會考慮所有的替代方案。但我認為，ALS 一段時間以來一直處於一些人稱之為低槓桿的資產負債表狀態。正如您所評估的整體資本配置一樣。您是否認為該公司在使用資產負債表時總體上可以更積極一些？

Or how do you think about that?

或者您對此有何看法？

Yes. I mean I think it's important for our future, and we're going to look to continue to find attractive growth platforms for us. So it's a high focus for us. I think we obviously need to protect and run and drive performance in our core businesses because that's what helps fund cash and maintain a strong balance sheet. So we're going to do that.

是的。我的意思是，我認為這對我們的未來很重要，我們將繼續尋找對我們有吸引力的成長平台。因此我們高度關注這一點。我認為我們顯然需要保護、營運和推動我們的核心業務的業績，因為這有助於籌集現金並維持強勁的資產負債表。所以我們要這麼做。

But I do think it's going to be a big focus for me. going forward is figuring out how do we transform our portfolio over time. How we put that balance sheet to work will obviously be determined by some of the strategies we pursue and then some of the actionability of some of the M&A targets that will be out there. But look, I think we're in a great position because we do have a strong balance sheet. And I think we do have some core capabilities that I think we can stretch into new areas that we'll be able to create a lot of value.

但我確實認為這將是我關注的重點。未來我們要弄清楚如何隨著時間的推移改變我們的投資組合。我們如何讓資產負債表發揮作用顯然將取決於我們所採取的一些策略，以及一些併購目標的可行性。但我認為我們處於有利地位，因為我們確實擁有強大的資產負債表。我認為我們確實擁有一些核心能力，我們可以將其擴展到新的領域，從而創造許多價值。

And so it's going to be a big focus for us.

因此這將成為我們關注的重點。

Helpful. And then you obviously raised your boiler forecast. I know you answered a previous question that you want to be conservative in the second half. But is your improved guidance just continued traction on your high-efficiency boilers? Or is there any change in the market?

很有幫助。然後你顯然提高了鍋爐的預測。我知道您在回答先前的問題時說過，您希望在後半部採取保守態度。但是，您改進的指導是否只是對高效能鍋爐的持續牽引？或是市場有什麼變化嗎？

How would you rate the health of your commercial customers right now?

您如何評估目前商業客戶的健康狀況？

I think the business performs well. I think -- like I said, we have great interactions with our customers who are still looking for high-efficiency products. So that's where our business and our lock in bar business in particular, really plays well and is meeting the market needs. So we see the business performing well in the marketplace as well as what it's delivering in terms of growth financially for the company.

我認為業務表現良好。我認為—就像我說的，我們與仍在尋找高效產品的客戶保持著良好的互動。這就是我們的業務，特別是我們的酒吧鎖店業務，真正發揮了良好的作用並滿足了市場需求。因此，我們看到該業務在市場上表現良好，並為公司帶來了財務成長。

Yes, this is Chuck. We are -- when you look at our guide 4% to 6%, and Steve said it earlier, kind of protecting ourselves on the prebuy because we did experience some inventory in the channel and boilers a couple of years ago, which unwound a bit. And we would expect there's a little bit of pull forward, but we're very, very pleased with kind of how we're performing in the market.

是的，這是查克。當您查看我們的 4% 到 6% 的指導時，我們就是這樣的，史蒂夫之前也說過，這有點像在預購時保護自己，因為幾年前我們確實在渠道和鍋爐中經歷了一些庫存，後來有所緩解。我們預計會有一點提前，但我們對我們在市場上的表現非常非常滿意。

And I'm showing no further questions. I would now like to turn the conference back to Helen Gurholt for closing remarks.

我沒有其他問題。現在想請 Helen Gurholt 致閉幕詞。

Thank you for joining us today. Let me conclude by reminding you that we are pleased with our EPS growth in the quarter. We look forward to updating you on our progress in the quarters to come. In addition, please mark your calendars to join our presentations at 3 conferences in the quarter. Seaport on August 18, Jefferies on September 3 and D.A.

感謝您今天加入我們。最後，我想提醒大家，我們對本季的每股盈餘成長感到滿意。我們期待在未來幾季向您通報我們的進展。此外，請在日曆上標記參加我們本季在 3 次會議上的演講。海港於 8 月 18 日，傑富瑞於 9 月 3 日，D.A.

Davidson September 18. Thank you, and have a great day.

戴維森 9 月 18 日。謝謝您，祝您有愉快的一天。

And this concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。