杜邦 (DD) 2023 Q2 法說會逐字稿

Thank you for standing by. My name is Sydney, and I will be your conference operator today. At this time, I would like to welcome everyone to the DuPont Second Quarter 2023 Earnings Call. (Operator Instructions)

謝謝你的支持。我叫悉尼，今天我將擔任你們的會議操作員。此時此刻，我歡迎大家參加杜邦 2023 年第二季度財報電話會議。 （操作員說明）

Chris Mecray, you may now begin your conference.

克里斯·麥克雷，您現在可以開始會議了。

Good morning and thank you for joining us for DuPont's Second Quarter 2023 Financial Results Conference Call. Joining me today are Ed Breen, Chief Executive Officer; and Lori Koch, Chief Financial Officer. We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking statement disclaimer contained in the slides.

早上好，感謝您參加杜邦 2023 年第二季度財務業績電話會議。今天和我一起來的還有首席執行官埃德·布林 (Ed Breen)；和首席財務官洛里·科赫(Lori Koch)。我們準備了幻燈片來補充我們的評論，這些幻燈片已發佈在杜邦網站的“投資者關係”選項卡下並通過網絡廣播鏈接發布。請閱讀幻燈片中包含的前瞻性聲明免責聲明。

During this call, we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K, as updated by our current and periodic reports includes detailed discussion of principal risks and uncertainties, which may cause such differences. Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclude significant items.

在本次電話會議中，我們將就我們對未來的期望或預測做出前瞻性聲明。由於這些陳述基於當前的假設和涉及風險和不確定性的因素，因此我們的實際業績和結果可能與我們的前瞻性陳述存在重大差異。我們當前和定期報告更新的 10-K 表格包含對可能導致此類差異的主要風險和不確定性的詳細討論。除非另有說明，今天提出的所有歷史財務指標均以持續經營為基礎，​​不包括重要項目。

We will also refer to other non-GAAP measures. A reconciliation to the most directly comparable GAAP financial measure is included in our press release and presentation materials that have been posted to DuPont's Investor Relations website.

我們還將參考其他非公認會計原則措施。我們發佈在杜邦投資者關係網站上的新聞稿和演示材料中包含了與最直接可比的公認會計準則財務指標的調節。

I'll now turn the call over to Ed.

我現在將把電話轉給埃德。

Good morning, and thank you for joining our second quarter 2023 financial review. This morning, we announced quarterly results with revenue and operating EBITDA better than our previously communicated guidance. This performance reflects our team's ongoing strong execution while facing continued volume pressure and consumer-driven end markets, mainly electronics.

早上好，感謝您參與我們的 2023 年第二季度財務回顧。今天早上，我們公佈了季度業績，收入和經營 EBITDA 均好於我們之前公佈的指引。這一業績反映了我們團隊在面臨持續的銷量壓力和消費者驅動的終端市場（主要是電子產品）的同時，持續強勁的執行力。

In the second quarter, organic revenue declined 4% versus the year ago period despite mid-teens organic declines from the Interconnect Solutions and Semiconductor lines of business within E&I. We continue to see broad demand strength in industrial end markets, including water, automotive, aerospace as well as healthcare, along with continued carryover benefit of pricing actions taken last year to offset inflationary pressure. Notably, operating EBITDA, operating EBITDA margin and adjusted EPS were all up sequentially from first quarter. After nearly a year long downturn, we also saw a sequential sales lift and Interconnect Solutions of 7%.

儘管 E&I 內部互連解決方案和半導體業務線的有機收入出現了十幾歲左右的有機下降，但第二季度的有機收入與去年同期相比下降了 4%。我們繼續看到水、汽車、航空航天和醫療保健等工業終端市場的廣泛需求強勁，以及去年為抵消通脹壓力而採取的定價行動的持續結轉效益。值得注意的是，營業 EBITDA、營業 EBITDA 利潤率和調整後每股收益均較第一季度環比增長。經過近一年的低迷之後，我們還看到銷售額和互連解決方案的環比增長了 7%。

We also continue to be proactive in taking additional actions within our control to minimize the impact of volume declines given near-term slowdown in select end markets, while also focusing on optimizing cash generation.

我們還繼續積極主動地在我們的控制範圍內採取其他行動，以最大限度地減少由於特定終端市場近期放緩而導致的銷量下降的影響，同時還專注於優化現金生成。

Turning to Slide 4. We continue to advance a number of strategic priorities for accretive and value-added capital deployment. Yesterday, we announced completion of the Spectrum acquisition, a leader in critical specialty devices for healthcare end markets. This acquisition fully aligns with our strategic objectives of increasing top line growth through customer-driven innovation and expanding our Industrial Technologies growth pillar, while adding to our current offerings in the high-growth healthcare market.

轉向幻燈片 4。我們繼續推進多項戰略重點，以實現增值和增值資本部署。昨天，我們宣布完成對 Spectrum 的收購，Spectrum 是醫療保健終端市場關鍵專業設備的領導者。此次收購完全符合我們的戰略目標，即通過客戶驅動的創新來提高收入增長，擴大我們的工業技術增長支柱，同時增加我們在高增長醫療保健市場的現有產品。

Spectrum is being integrated into our Industrial Solutions line of business where it fits nicely with our existing Liveo franchise with average sales of about $500 million, Spectrum together with Liveo and our Tyvek Healthcare Packaging business increases our total revenue in healthcare markets to about 10% of our portfolio with expected growth rates above the company average.

Spectrum 正在整合到我們的工業解決方案業務線中，它與我們現有的平均銷售額約為5 億美元的Liveo 特許經營權非常契合，Spectrum 與Liveo 以及我們的Tyvek 醫療保健包裝業務一起將我們在醫療保健市場的總收入增加到約10%我們的投資組合的預期增長率高於公司平均水平。

Spectrum's year-to-date performance has been solid and we are pleased that operating results are in line with our deal model estimates, which include an estimated operating EBITDA margin of approximately 22%. We are excited by Spectrum's complementary fit and specifically our ability to leverage incremental growth opportunities, including synergies from cross-selling and the complementary accounts, new and faster product development and deeper design and co-development partnerships with OEMs.

Spectrum 今年迄今為止的業績一直很穩健，我們很高興經營業績符合我們的交易模型估計，其中包括約 22% 的估計經營 EBITDA 利潤率。我們對Spectrum 的互補性感到興奮，特別是我們利用增量增長機會的能力，包括交叉銷售和互補客戶的協同效應、新的和更快的產品開發以及與OEM 廠商更深層次的設計和共同開發合作夥伴關係。

Further on M&A, we continue to make progress with our delevering business divestiture and our expectation of closing this planned transaction around year-end 2023 remains unchanged. There has been good interest in the asset to date.

在併購方面，我們繼續在去槓桿化業務剝離方面取得進展，我們預計在 2023 年底左右完成這項計劃交易的預期保持不變。迄今為止，人們對該資產表現出了濃厚的興趣。

Regarding share repurchases, we expect we will complete the $3.25 billion accelerated share repurchase transaction launched last November within a month. We also intend to complete our remaining authorization through a new $2 billion ASR to be executed shortly thereafter.

關於股票回購，我們預計將在一個月內完成去年11月啟動的32.5億美元加速股票回購交易。我們還打算通過隨後不久執行的新的 20 億美元 ASR 來完成剩餘的授權。

Regarding the water district settlement that was announced in June jointly with Chemours and Corteva. This settlement comprehensively covers PFAS-related claims of public water systems starting the vast majority of the U.S. population. Our portion of the settlement is about $400 million and we expect final approval about 6 months following preliminary approval, which we expect to receive shortly.

關於 6 月份與科慕和 Corteva 聯合宣布的水區解決方案。該和解全面涵蓋了涉及絕大多數美國人口的公共供水系統與 PFAS 相關的索賠。我們承擔的和解金額約為 4 億美元，我們預計在初步批准後約 6 個月內獲得最終批准，預計很快就會收到。

Regarding broader capital allocation goals, yesterday's closing of the Spectrum deal and the new $2 billion ASR essentially completes the deployment of excess cash remaining from the M&M divestiture last November. Our current capitalization remains very sound and as a reminder, we have no significant debt maturities until November 2025. We are comfortable with a net leverage point around 2x as an equilibrium target going forward.

關於更廣泛的資本配置目標，昨天完成的 Spectrum 交易和新的 20 億美元 ASR 基本上完成了去年 11 月 M&M 剝離中剩餘的多餘現金的部署。我們目前的資本狀況仍然非常穩健，提醒您一下，我們在 2025 年 11 月之前沒有重大債務到期。我們對 2 倍左右的淨槓桿點作為未來的均衡目標感到滿意。

Before I turn it over to Lori to review our financial performance, let me add that we remain excited about the visible growth drivers enabled by our technical innovation teams and application engineers, who are squarely focused on helping customers solve their most complex challenges. To name just a few, strong growth is expected in the semiconductor industry with the ongoing global investment in new fabs. Overall growth of the semiconductor industry is anticipated to be high single digits over the coming 5-year period.

在我將其交給Lori 審查我們的財務業績之前，請允許我補充一點，我們仍然對我們的技術創新團隊和應用工程師所帶來的可見增長動力感到興奮，他們專注於幫助客戶解決最複雜的挑戰。僅舉幾例，隨著全球對新晶圓廠的持續投資，半導體行業預計將出現強勁增長。預計未來 5 年半導體行業的總體增長將達到高個位數。

We have the leading materials that enable the next generation of advanced chip manufacturing and packaging, which includes significant technology and support from the emerging generative AI revolution. Within water, we continue to drive growth in desalination and waste water markets and then helping customers achieve their sustainability goals. Finally, our auto adhesives business is well positioned to continue to capture growth with its product offerings and electric vehicles.

我們擁有領先的材料，可實現下一代先進芯片製造和封裝，其中包括來自新興生成式人工智能革命的重要技術和支持。在水領域，我們繼續推動海水淡化和廢水市場的增長，然後幫助客戶實現其可持續發展目標。最後，我們的汽車粘合劑業務處於有利地位，可以通過其產品供應和電動汽車繼續實現增長。

With that, I'll turn it over to Lori.

有了這個，我會把它交給洛里。

Thanks, Ed, and good morning. Our focus remains on operational excellence and strong execution, and we are pleased to have delivered financial results ahead of expectations despite volume pressure in some of our most profitable lines of business in electronics.

謝謝，艾德，早上好。我們的重點仍然是卓越的運營和強大的執行力，儘管我們一些最賺錢的電子業務線面臨著銷量壓力，但我們很高興能夠提前實現預期的財務業績。

Turning to our financial highlights on Slide 5. Second quarter net sales of $3.1 billion decreased 7% as reported and 4% on an organic basis versus the year ago period. Currency results in a 1% headwind from dollar strength against key currencies, most notably the Yuan and Yen, and we also saw a 2% headwind related to portfolio changes.

轉向幻燈片 5 中的財務亮點。第二季度淨銷售額為 31 億美元，與去年同期相比下降 7%，有機下降 4%。貨幣方面，美元兌主要貨幣（尤其是人民幣和日元）走強帶來了 1% 的阻力，而且我們還看到了與投資組合變化相關的 2% 的阻力。

Breaking down the 4% organic sales decline, a 6% volume decline was partially offset by a 2% pricing gain reflecting continued carryover benefit of actions taken last year to offset broad-based inflation. Volume decline primarily reflects continued demand weakness in consumer electronics coupled with inventory destocking across the channel and some softness, including destocking in North American construction-related markets. Lower volume in these consumer turbine end markets was partially mitigated by continued strength in water, automotive, aerospace and healthcare markets.

細分 4% 的有機銷售額下降來看，6% 的銷量下降被 2% 的定價上漲部分抵消，反映出去年為抵消廣泛通脹而採取的行動的持續結轉效益。銷量下降主要反映了消費電子產品的需求持續疲軟，加上整個渠道的庫存去庫存和一些疲軟，包括北美建築相關市場的去庫存。水務、汽車、航空航天和醫療保健市場的持續走強在一定程度上緩解了這些消費渦輪機終端市場銷量的下降。

Volume within electronics and construction end markets during the quarter was down 15% the year ago period, while our remaining industrial-based businesses were up about 4%.

本季度電子和建築終端市場的銷量比去年同期下降了 15%，而我們其餘的工業業務則增長了約 4%。

From a regional perspective, Europe sales in the quarter were up 4% on an organic basis while North America and Asia Pacific were down 3% and 8%, respectively, versus the year ago period. China sales were down 14% on an organic basis, driven mainly by the electronics demand weakness, but increased sequentially versus the first quarter.

從地區角度來看，本季度歐洲銷售額有機增長 4%，而北美和亞太地區較去年同期分別下降 3% 和 8%。主要由於電子產品需求疲軟，中國銷售額有機下降 14%，但與第一季度相比仍有所增長。

Second quarter operating EBITDA of $738 million decreased 11% versus the year ago period, driven by lower volumes and the impact of reduced production rates in electronics as we align inventory with demand. Operating EBITDA margin during the quarter of 23.9% was down 110 basis points versus the year ago period, driven by volume pressure, reduced production rates and mix headwinds in the high-margin steady business.

第二季度營業 EBITDA 為 7.38 億美元，較去年同期下降 11%，原因是銷量下降以及我們根據庫存與需求調整電子產品生產率降低的影響。由於銷量壓力、生產率下降以及高利潤穩定業務的混合阻力，本季度運營 EBITDA 利潤率為 23.9%，較去年同期下降 110 個基點。

On a sequential basis, operating EBITDA and operating EBITDA margins were up from the first quarter. Decremental margins for the quarter was 40%, excluding the impact of absorption headwinds related to reduced production rates within electronics. Decremental margin was below 20%, enabled by aggressive actions taken year-to-date to reduce discretionary spend. Adjusted EPS in the quarter of $0.85 per share was down 3% versus last year, which I will detail shortly.

從環比來看，營業 EBITDA 和營業 EBITDA 利潤率均較第一季度有所上升。本季度利潤率下降了 40%，不包括與電子產品生產率下降相關的吸收阻力的影響。年初至今採取的積極行動減少了可自由支配支出，導致利潤率下降幅度低於 20%。本季度調整後每股收益為 0.85 美元，比去年下降 3%，我稍後將詳細介紹這一點。

Looking at cash performance. I would first like to highlight that we have made a reporting change effective with today's second quarter results and are now providing cash flow disclosure separated between continuing and discontinued operations. This change is being made to improve visibility into cash flow generation and cash flow conversion of the ongoing businesses.

看看現金表現。我首先想強調的是，我們已經對今天的第二季度業績進行了一項報告變更，現在正在提供區分持續經營業務和終止經營業務的現金流量披露。做出這一改變是為了提高對正在進行的業務的現金流生成和現金流轉換的可見性。

On a continuing operations basis, cash flow from operations during the quarter of $400 million with CapEx of $123 million resulted in adjusted free cash flow of $277 million and associated conversion of 73%. This reflects significant improvement versus last year on a comparable basis driven by lower inventory.

在持續運營的基礎上，本季度運營現金流為 4 億美元，資本支出為 1.23 億美元，調整後自由現金流為 2.77 億美元，相關轉換率為 73%。這反映了庫存下降推動的可比基礎上與去年相比的顯著改善。

Adjusted free cash flow included a benefit of about $80 million in reduced inventory and a headwind of about $200 million related to interest payments. Optimizing cash flow continues to be a top priority for us. On adjusted free cash flow and conversion improved sequentially, we still have work to do to get to our target levels and expect further improvement in working capital metrics by year-end.

調整後的自由現金流包括庫存減少帶來的約 8000 萬美元的收益以及與利息支付相關的約 2 億美元的不利因素。優化現金流仍然是我們的首要任務。在調整後的自由現金流和轉換率連續改善方面，我們仍有工作要做，以達到我們的目標水平，並預計到年底營運資本指標將進一步改善。

Turning to Slide 6. Adjusted EPS for the quarter of $0.85 decreased 3% compared to $0.88 in the year ago period. Lower segment results more than offset below-the-line benefits, including a $0.19 benefit related to lower net interest expense and a lower share count. A higher tax rate and exchange loss during the quarter resulted in adjusted EPS headwind of $0.08 per share. Our tax rate for the quarter was 23.7%, up from 22.6% in the year ago period, driven primarily by geographic mix of (inaudible).

轉向幻燈片 6。本季度調整後每股收益為 0.85 美元，與去年同期的 0.88 美元相比下降了 3%。較低的部門業績足以抵消線下收益，包括與較低的淨利息支出和較低的股份數量相關的 0.19 美元收益。本季度較高的稅率和匯兌損失導致調整後每股收益 0.08 美元。我們本季度的稅率為 23.7%，高於去年同期的 22.6%，這主要是由（聽不清）的地理組合推動的。

Turning to segment results, beginning with E&I on Slide 7. E&I second quarter net sales of $1.3 billion decreased 14% as organic sales declined 12% due to lower volume, along with currency headwinds and an unfavorable portfolio impact of 1% each. At the line of business level, volume for Semiconductor Technologies decreased 19%, while Interconnect Solutions volume decreased 15% versus the year ago period. The decline in semi-tech resulted from a continuation of lower semiconductor fab utilization rate due to weak end market demand as well as inventory destocking across the channel. Chipset utilization rates in the second quarter averaged in the low 70s on a percentage basis.

轉向部門業績，從幻燈片7 上的E&I 開始。E&I 第二季度淨銷售額為13 億美元，下降14%，其中有機銷售額因銷量下降、貨幣逆風和各1% 的不利投資組合影響而下降12%。在業務層面，半導體技術的銷量同比下降了 19%，而互連解決方案的銷量同比下降了 15%。半導體行業的下滑是由於終端市場需求疲軟以及整個渠道的庫存去庫存導致半導體工廠利用率持續下降。按百分比計算，第二季度芯片組利用率平均在 70 左右。

A decline in Interconnect was driven by continued weak smartphones, PC and tablet demand along with channel inventory stocking. Our PCB customers in China offers in the second quarter with utilization rates slightly improved from the mid-40s during the first quarter, which was a cycle low. The PCB market has been slowdown for a year now and we are beginning to see signs of improvement within our Interconnect business, illustrated by first and second quarter sequential growth of about 7% and with further expected sequential growth in the third quarter.

互連的下降是由於智能手機、個人電腦和平板電腦需求持續疲軟以及渠道庫存庫存造成的。我們在中國的 PCB 客戶第二季度的供貨利用率較第一季度的 40 左右略有改善，這是一個週期的低點。 PCB 市場已經放緩一年了，我們的互連業務開始看到改善的跡象，第一季度和第二季度環比增長約 7%，預計第三季度將進一步環比增長。

Sales for Industrial Solutions were flat on an organic basis as pricing and ongoing strength in broad-based industrial markets are offset by lower demand in largely consumer-driven areas, such as advanced screening applications and those tied to electronics markets, including OLED display. Operating EBITDA for E&I was $349 million was down versus the year ago period primarily due to volume declines and lower operating rates to better align inventory with demand, partially offset by reduced discretionary spend.

工業解決方案的銷售額有機基礎上持平，因為廣泛工業市場的定價和持續強勢被主要消費者驅動領域的需求下降所抵消，例如先進的屏幕應用和與電子市場相關的應用，包括 OLED 顯示器。 E&I 的營業 EBITDA 為 3.49 億美元，較上年同期下降，主要是由於銷量下降和開工率降低，以更好地使庫存與需求保持一致，但可自由支配支出的減少部分抵消了這一影響。

Turning to Slide 8. W&P's second quarter net sales of $1.5 billion were flat versus last year as organic sales growth of 1% was offset by a 1% currency segment. Organic growth of 1% reflects a 5% increase in price resulting from the carryover impact of pricing actions taken last year, mostly offset by a 4% decrease in segment volumes due to declines in Shelter solutions. At the line of business level, organic sales growth was led by Water Solutions, which was up mid-teens on continued demand growth for water filtration led by reverse osmosis and ion exchange resins, along with benefits from carryover pricing. Safety Solutions sales were up mid-single digits on an organic basis driven by carryover pricing and volume strength in Kevlar and Nomex with an aerospace and automotive market, especially for EVs, coupled with Tyvek strength in healthcare.

轉向幻燈片 8。W&P 第二季度淨銷售額為 15 億美元，與去年持平，因為 1% 的有機銷售額增長被 1% 的貨幣部分所抵消。 1% 的有機增長反映出去年定價行動的遺留影響導致價格上漲 5%，但大部分被 Shelter 解決方案下降導致的細分市場銷量下降 4% 所抵消。在業務層面，水解決方案公司引領有機銷售額增長，由於反滲透和離子交換樹脂帶動的水過濾需求持續增長，以及結轉定價帶來的好處，該公司的銷售額增長了十幾歲。在航空航天和汽車市場（尤其是電動汽車）的 Kevlar 和 Nomex 的結轉價格和銷量優勢以及 Tyvek 在醫療保健領域的實力的推動下，安全解決方案銷售額有機增長了中個位數。

Shelter Solutions were down 12% on an organic basis, driven by demand softness in construction markets as well as destocking, although we do expect a reduced impact from destocking in the second half.

由於建築市場需求疲軟以及去庫存的推動，Shelter Solutions 有機下降了 12%，儘管我們預計下半年去庫存的影響會有所減輕。

Operating EBITDA for W&P during the quarter were $368 million, up 6% or operating EBITDA margin of 24.6%, increased 140 basis points versus the year ago period. The improvement resulted primarily from net pricing gains and disciplined cost control, which more than offset volume declines.

本季度 W&P 的營業 EBITDA 為 3.68 億美元，增長 6%，營業 EBITDA 利潤率為 24.6%，比去年同期增加 140 個基點。這一改善主要歸功於淨定價收益和嚴格的成本控制，這足以抵消銷量的下降。

Turning to Slide 9. I will close with a few comments on our outlook and guidance for the third quarter and full year 2023. Regarding the demand environment, we continue to expect fairly steady demand in most of our industrial end markets within E&I and W&P although we expect sales moderation in our water business due to slower demand in China. Within Electronics, we saw stabilization and some early lift in our Interconnect Solutions business. The 7% sequential improvement in sales during the second quarter, and we expect mid-single-digit sequential growth to follow in the third quarter.

轉向幻燈片9。最後，我將就我們對2023 年第三季度和全年的展望和指導發表一些評論。關於需求環境，我們仍然預計E&I 和W&P 內的大多數工業終端市場的需求相當穩定，儘管由於中國需求放緩，我們預計水務業務的銷售將放緩。在電子領域，我們的互連解決方案業務出現了穩定和一些早期提升。第二季度銷售額環比增長 7%，我們預計第三季度將實現中個位數環比增長。

We believe study markets likely bottom during the second quarter and we assume net sales in the second half will improve slightly on a sequential basis. Given ongoing consumer electronics demand headwinds, notably in China, we have tempered the rate of second half growth to prior assumptions.

我們認為研究市場可能會在第二季度觸底，並且我們假設下半年的淨銷售額將環比略有改善。鑑於消費電子產品需求持續面臨阻力，尤其是在中國，我們已將下半年增長率調整至先前的假設。

We are adjusting our full year 2023 guidance to account for the slower cadence of recovery in electronics, including our actions to continue to reduce production to align inventory with demand. In addition, our third quarter and full year guidance now includes the estimated contribution from Spectrum beginning August 1. For the full year, we now expect net sales to be between $12.45 billion and $12.55 billion, operating EBITDA to be between $2.975 billion and $3.025 billion and adjusted EPS to be between $3.40 and $3.50 per share. For the third quarter 2023, we expect revenue of approximately $3.15 billion, operating EBITDA of approximately $755 million and adjusted EPS of approximately $0.84 per share.

我們正在調整 2023 年全年指引，以應對電子產品復甦節奏放緩的情況，包括我們繼續減少產量以使庫存與需求保持一致的行動。此外，我們的第三季度和全年指導現在包括從8 月1 日開始Spectrum 的預計貢獻。對於全年，我們現在預計淨銷售額將在124.5 億美元至125.5 億美元之間，運營EBITDA 將在29.75 億美元至30.25 億美元之間並將 EPS 調整為每股 3.40 美元至 3.50 美元。對於 2023 年第三季度，我們預計收入約為 31.5 億美元，運營 EBITDA 約為 7.55 億美元，調整後每股收益約為 0.84 美元。

With that, we are pleased to take your questions and let me turn it back to the operator to open the Q&A.

因此，我們很高興回答您的問題，並讓我將其轉回給接線員以開始問答。

(Operator Instructions) Your first question comes from the line of John McNulty from BMO Capital Markets.

（操作員說明）您的第一個問題來自 BMO 資本市場的 John McNulty。

This is Bhavesh Lodaya for John. Maybe on the Water business, the Water business tends to be a bit less cyclical compared to your other businesses. Can you add some color on what is driving the softness in China? What changed there since maybe last quarter? And what kind of recovery do you expect maybe over the next couple of quarters?

我是約翰的巴韋什·洛達亞 (Bhavesh Lodaya)。也許在水業務方面，與其他業務相比，水業務的周期性往往要小一些。您能否對推動中國經濟疲軟的因素進行一些解釋？自上個季度以來發生了什麼變化？您預計未來幾個季度會出現什麼樣的複蘇？

Yes. We think the next couple of quarters are just a little bit later will be closed in China, and it's really a slowness in the industrial economy in China right now, which obviously should rebound here at some point, but we're expecting that to be a little softer in the second half of the year that, by the way, that's growth that we've had in our business is double-digit growth. So we're just saying it's going to moderate some still growth, but just slower growth in the second half of the year. But as that business has done quarter in, quarter out, it grows at a pretty nice clip and I expect that China to improve some. That growth rate will pick up also. Remember, 70% of that business is a renewable business that's steady. So I think a couple of quarters maybe a little later in China is what we're seeing.

是的。我們認為中國的工業經濟在接下來的幾個季度會稍晚一些，目前中國的工業經濟確實很緩慢，顯然應該在某個時候反彈，但我們預計這將是今年下半年有點疲軟，順便說一句，我們的業務增長是兩位數的增長。因此，我們只是說，增長將放緩，但下半年增長將放緩。但隨著該業務每季度的表現，它的增長速度相當不錯，我預計中國會有所改善。這一增長率也會加快。請記住，該業務中有 70% 是穩定的可再生能源業務。所以我認為我們在中國看到的情況是幾個季度之後可能會晚一點。

Got it. And then in Electronics, great to see the inflection coming in the Interconnect Solutions. We have also seen some positive MSI data points. What are you hearing in semis technologies? Like, when do you expect an inflection there? And maybe any color on your order books for electronics that you're seeing this quarter so far?

知道了。然後在電子領域，很高興看到互連解決方案的變化。我們還看到了一些積極的 MSI 數據點。您在半導體技術方面聽到了什麼？比如，你預計什麼時候會出現變化？也許到目前為止您在本季度看到的電子產品訂單簿上有任何顏色？

Yes. So just probably just back to the ICS one, that started to decline and destocking started about the middle of 2022. So it's almost been kind of 10 months that in a downturn in the first quarter, it was really on bottom. And then we did see 7% sequential pickup and we're expecting mid-single-digit pickup by the forecast we had for the third quarter. So obviously, that's starting to come nicely off the bottom. The semi 1 is the one we tempered a little more in the second half. We look like we hit the bottom in the second quarter, we're not gauging much upturn in the third quarter. Instead, we're assuming we have a duller quarter kind of near the bottom are just very slightly up from that.

是的。回到 ICS 方面，它開始下降，去庫存大約從 2022 年中期開始。在第一季度的低迷時期，差不多有 10 個月的時間，它確實已經觸底。然後我們確實看到了 7% 的環比回升，並且根據我們對第三季度的預測，我們預計將出現中個位數的回升。顯然，情況已經開始好轉。半決賽是我們在下半場稍微加強了一點的比賽。我們看起來在第二季度觸底，我們預計第三季度不會有太大好轉。相反，我們假設有一個較暗淡的季度，接近底部，僅比底部略有上升。

And then we think somewhere the inflection point is more in the fourth quarter, but it's hard to tell what month you actually see it. So we did pick it up a little bit in the forecast in the fourth quarter, but not significantly. So that's the thing we kind of tapped down when we gave you the guidance here today. But I think we've seen the bottom in semi and we're seeing the lift begin in ICS now. Remember, ICS is still negative. It has a way to come back still, but it was down over 20%, and we're starting to write it back. Those will still be negative in the third and fourth quarter on a year-over-year compare.

然後我們認為第四季度的拐點更多，但很難說你真正看到的是哪一個月。因此，我們在第四季度的預測中確實有所回升，但幅度不大。這就是我們今天在這里為您提供指導時所考慮的問題。但我認為我們已經看到了半成品的底部，並且現在我們看到 ICS 開始上漲。請記住，ICS 仍然是負面的。它還有機會恢復，但已經下降了 20% 以上，我們開始回寫它。與去年同期相比，第三季度和第四季度的數據仍將為負值。

Your next question comes from Christopher Parkinson from Mizuho Securities.

您的下一個問題來自瑞穗證券的克里斯托弗·帕金森。

Great. If we could circle back very quickly to the ICS side, there's been a bit of a difference between how China handset sales have been trending of late versus the rest of the Western world in terms of how to think about that I'd love some comments on how to think about that into the second half of the year as well as you do have a few customers with some potential new launches in the second half. So just in terms of the normalization process, it would be very helpful to get some commentary on how to think about that as it turns more into the second half, but probably more importantly, even in the 2024, based on kind of the renewed, I'd say, much lower bar than we've seen in the past, let's say, 1.5 years or so?

偉大的。如果我們能很快回到 ICS 方面，那麼最近中國手機銷售趨勢與西方世界其他地區在如何思考方面存在一些差異，我希望發表一些評論關於如何在下半年考慮這一點，以及您確實有一些客戶在下半年可能會推出一些新產品。因此，就正常化進程而言，隨著下半年的進展，獲得一些關於如何思考這一問題的評論將非常有幫助，但可能更重要的是，即使在 2024 年，基於更新的類型，我想說，比我們過去看到的要低得多，比如說1.5 年左右？

Yes. Let me comment and I'll turn it to Lori by just -- I don't want to say customer names, but we're in good shape this year on the new models being introduced by a couple of the large cell phone players. So from a market share standpoint, we know which phones we're in and we're in a better position than we were last year, not that we were in a bad position at all last year. But we feel like we're in a good position with the launch of the new models coming in. We know what we're in, in those phones. And by way, clearly, one of the things I think you all know we're in is the Capton technology for the 5G antenna is a key component for us, along with some other components, but that's a key one. Lori do you want to just talk about the timing?

是的。讓我發表評論，我將把它轉給洛里——我不想說出客戶的名字，但今年我們在幾家大型手機製造商推出的新型號方面表現良好。因此，從市場份額的角度來看，我們知道我們在哪些手機上，而且我們的地位比去年更好，而不是說我們去年的地位很差。但隨著新機型的推出，我們感覺自己處於有利位置。我們知道這些手機的處境。順便說一句，顯然，我想你們都知道我們所處的一件事是 5G 天線的 Capton 技術對我們來說是一個關鍵組件，還有其他一些組件，但這是一個關鍵組件。 Lori 你想談談時間嗎？

Yes. On the smartphone and broadly mentioned the consumer electronics recovery. That was part of the revision that we had in the second half. So our original expectations on a full year basis for smartphones would be down about 1% and PCs down about 7%. We revised expectations on each of those end markets along with the industry forecast for smartphone sound to be more in the 5% range and PC is supposed to be low double digit. So -- but that does embed year-over-year growth in the fourth quarter. So it sounds like one more quarter of year-over-year down in the third quarter and then recovery that's worth into the more normal market and most likely setting up for a strong 2024, those markets are in maybe through the destock and returning to more of a normal demand in growth.

是的。在智能手機上，廣泛提到了消費電子產品的複蘇。這是我們下半年修改的一部分。因此，我們最初預計全年智能手機將下降約 1%，個人電腦將下降約 7%。我們修改了對每個終端市場的預期，同時行業預測智能手機聲音將在 5% 範圍內，而 PC 則應為低兩位數。所以——但這確實體現了第四季度的同比增長。因此，聽起來第三季度同比又下降了四分之一，然後復蘇，這值得進入更正常的市場，並且很可能為2024 年的強勁表現做好準備，這些市場可能會通過去庫存並恢復到更多水平。增長的正常需求。

That's very helpful. And just as a very quick follow-up, just on the W&P side. You've seen some very, very solid growth out of Water Solutions, but you did have some comments as it pertains to the kind of the second half based on some fairly difficult comps to my understanding. Can you sit on kind of what's the outlook for this business? Just -- is that just -- is your commentary solely a function of just the difficult comps and you'd expect kind of a reacceleration in 2024? But if you could just hit on that kind of cadence and how we should be continuously thinking about that business in the long term? That would be very helpful.

這非常有幫助。就像 W&P 方面的一個非常快速的後續行動一樣。你已經看到了 Water Solutions 的一些非常非常穩健的增長，但你確實有一些評論，因為它與下半年的類型有關，這是基於我所理解的一些相當困難的比較。您能談談這項業務的前景嗎？只是——是這樣嗎——你的評論僅僅是困難比賽的結果嗎？你預計 2024 年會有某種重新加速嗎？但如果你能抓住這種節奏，我們應該如何長期持續思考這項業務？這將非常有幫助。

Yes. I think the way to look at that, that business is consistent, it is choppy, some quarters. We have a big installation we're doing and all that. So it's not going to be every single quarter. But generally, that business grows kind of mid-to-high single digits pretty consistently. And now this past quarter, we had even a better quarter but not on the growth rate. But again, it can be lumpy. But when you kind of smooth out the whole year, I think that's the way to look at it kind of in that 6% to 8% growth range when you smooth out the year.

是的。我認為看待這個問題的方式是，業務是一致的，但有些季度卻不穩定。我們正在做一個大型安裝等等。因此，不會是每個季度都如此。但總體而言，該業務的增長速度相當穩定，處於中高個位數。上個季度，我們的季度表現甚至更好，但增長率卻不盡如人意。但同樣，它可能是凹凸不平的。但當你對全年進行平滑處理時，我認為當你對全年進行平滑處理時，我認為這就是在 6% 至 8% 的增長范圍內看待它的方式。

And look, I expect China activity will pick up. It's hard to tell if there's a little bit of excess inventory also that is part of it, but we're again expecting a couple of just lighter quarters. But I think quarters with growth in the third quarter, but just lighter than we had in the second quarter. And I think, again, it's a consistent business and it has been since we've had it. So I don't expect it to continue to grow in that range.

看，我預計中國的活動將會回升。很難判斷庫存是否有一點過剩也是其中的一部分，但我們再次預計幾個季度的庫存會減少。但我認為第三季度會有增長，但略低於第二季度。我再次認為，這是一項始終如一的業務，自從我們擁有它以來一直如此。所以我預計它不會繼續在這個範圍內增長。

And to Ed's comment on the lumpiness, if you put a 2-year stack on the volume, we're up high single digits every quarter. So there is lumpiness of it comments around sometimes the projects work going on. But in general, it's really strong growth for us. And there's no change in our go-forward forecast, especially with the requirements that are going on around sustainability and the access to (inaudible) key growth drivers for us.

對於埃德對波動性的評論，如果你把兩年的銷量放在一起，我們每個季度都會增長高個位數。因此，有時圍繞項目正在進行的工作的評論是混亂的。但總的來說，這對我們來說確實是強勁的增長。我們的未來預測沒有變化，特別是考慮到圍繞可持續發展和我們獲得（聽不清）關鍵增長動力的要求。

And then the key here is there's a replacement business that's 70% of the business. So that adds to the consistency of it.

這裡的關鍵是替代業務佔業務的 70%。這增加了它的一致性。

Your next question comes from John Roberts from Credit Suisse.

您的下一個問題來自瑞士信貸銀行的約翰·羅伯茨。

Ed, is it fair to say that Delrin will be a private equity transaction? It would seem to be hard for a strategic to do a closing by year-end at this point?

Ed，可以說 Delrin 將是私募股權交易嗎？現在看來，戰略要在年底前完成結賬似乎很難？

Yes. We're pretty confident we'll close it by year-end. I would just say private equity has been interested along with strategic, but I don't want to get into any more than that at this point in time. But I think we're highly confident we'll have a deal. There's been nice interest in it.

是的。我們非常有信心在年底前關閉它。我只想說，私募股權公司一直對戰略感興趣，但目前我不想討論更多的話題。但我認為我們非常有信心能夠達成協議。人們對此很感興趣。

And then secondly, there's been some challenges to the 3M PFAS settlement. Are you anticipating having to go through a similar process with your settlement?

其次，3M PFAS 和解協議面臨一些挑戰。您是否預計在和解時必須經歷類似的流程？

Yes. John, what happened here was very typical of these bigger type of settlements that have to these class actions. If you go back and look at any of the other big ones, you always get that, I think, what you're referring to is the challenge from state AGs and all that. I don't think by what we're hearing that there's going to be a problem here we're thinking in the very near future, we get preliminary approval from the judge, and as we said in our prepared remarks, it will be about 6 months after that preliminary approval from the judge where we would then be finished with that and make the payment.

是的。約翰，這裡發生的事情是這些集體訴訟的大型和解類型中非常典型的。如果你回頭看看其他任何一個大問題，你總會明白，我認為，你指的是來自州總檢察長等的挑戰。我認為根據我們所聽到的情況，我們認為在不久的將來這裡不會出現問題，我們得到了法官的初步批准，正如我們在準備好的發言中所說，這將是關於法官初步批准後6個月，我們將完成該工作並付款。

Your next question comes from Steve Tusa from JPMorgan.

您的下一個問題來自摩根大通的史蒂夫·圖薩。

Can you just give us a bit of an update on the -- I know these businesses aren't the most raw material centric anymore, but maybe just a bit of an update on the raw material outlook for this year. I'm not sure if you called it out in the beginning of the call, the $100 million you were talking about before?

您能否給我們提供一些最新情況——我知道這些企業不再以原材料為中心，但也許只是介紹一下今年原材料前景的一些最新情況。我不確定你在通話開始時是否提到過，之前所說的1億美元？

Yes. So that was a net headwind between price and raws. So we did increase that to about $140 million from our view of $100 million. So we have seen a step up and we expect to benefit from deflation. To remind you, it was around $800 million last year of a headwind that we saw and we've got obviously a fair bit of room to go to get all of that money back, but we're making really nice progress.

是的。因此，這是價格和原材料之間的淨逆風。因此，我們確實將這一數字從我們預期的 1 億美元增加到了 1.4 億美元左右。因此，我們已經看到了增長，我們預計將從通貨緊縮中受益。提醒您一下，去年我們遇到的逆風損失約為 8 億美元，顯然我們還有相當大的空間可以收回所有這些資金，但我們正在取得非常好的進展。

Initially, a lot of the deflation is coming from the energy and logistics side. You can see what the natural gas prices have gone from the peaks that we bought in the third quarter of last year and the stabilization in the supply chain, we're seeing nice improvement in logistics. So the one piece that we're working through is just the timing of when that falls through the P&L. So we actually in the first quarter, predominantly, a little bit in the second quarter, we actually saw some headwinds from the carryover from the escalation 2022 from a P&L perspective. And as we head into the back half of the year, we'll start to see those benefits that we've been getting from a procurement perspective drop into the P&L.

最初，大部分通貨緊縮來自能源和物流方面。你可以看到天然氣價格已經從我們去年第三季度購買的峰值以及供應鏈的穩定中看出，我們看到物流有了很大的改善。因此，我們正在解決的一個問題就是確定何時納入損益表。因此，實際上在第一季度，主要是在第二季度，從損益角度來看，我們實際上看到了 2022 年升級帶來的一些阻力。當我們進入今年下半年時，我們將開始看到我們從採購角度獲得的那些好處落入損益表中。

Yes, Steve, it kind of takes 4 to 5 months on the raws to work its way through in our system and we build a customer. So some of this, we're obviously going to see now in 2024 but the procurement team has been working very aggressively and Lori and I meet with them on a very consistent basis because it's a big part of seeing up on 2024 for us. And by the way, Steve, just as a side note, the margins on the E&I, remember, not much of the walls were in E&I, we only raised prices 2% there. The predominant part of it is going to become in W&P. And the thing that affected the margins in E&I is really the absorption charge that we've taken.

是的，史蒂夫，在我們的系統中，原始數據需要 4 到 5 個月的時間才能完成，然後我們就建立了一個客戶。因此，我們顯然會在 2024 年看到其中的一些情況，但採購團隊一直在非常積極地工作，洛里和我以非常一致的方式與他們會面，因為這是我們展望 2024 年的重要組成部分。順便說一句，史蒂夫，順便說一句，E&I 的利潤率，請記住，E&I 的利潤率並不高，我們只在那裡提高了 2% 的價格。其中主要部分將成為 W&P。影響 E&I 利潤率的實際上是我們收取的吸收費用。

We're going to take it again in the third quarter, we're probably going to take it in the fourth quarter, just to make sure everything is teed up for 2024 and that's affected our -- or like in the third -- in the second quarter that affected our margins in E&I by about 400 basis points. So without the absorption, we know we're running that business north of 30%, even in a reduced volume environment. So I feel very confident you all watched us run that in a 32%, 33% EBITDA range. I'm very comfortable when I look at our math that we're in good shape there as we rebound.

我們將在第三季度再次進行，我們可能會在第四季度進行，只是為了確保一切都為 2024 年做好準備，這影響了我們的——或者像第三季度那樣——第二季度，我們的E&I 利潤率受到了約400 個基點的影響。因此，如果沒有吸收，我們知道即使在銷量減少的環境中，我們的業務也將超過 30%。所以我非常有信心你們都看到我們在 32%、33% 的 EBITDA 範圍內運行。當我查看我們的數學數據時，我感到非常滿意，因為我們在反彈時處於良好的狀態。

And is there any risk around anything you're seeing in pricing in W&P that when you look out to the second half or into next year, any aggression on pricing in those businesses?

當您展望下半年或明年時，您在 W&P 的定價中看到的任何風險是否存在，這些業務的定價是否存在任何侵略性？

So very small. The one area we're going to give up some price that we forecasted in the second half of the year is in the construction-related markets. We also had to raise very significantly in those markets because of what the raws did last year. So we've made an assumption in this forecast that we'll give up some of the pricing there. Otherwise, we're feeling pretty solid across the rest of the portfolio.

所以非常小。我們將在今年下半年放棄一些價格預測的領域是建築相關市場。由於去年原材料的表現，我們還必須在這些市場上大幅籌集資金。因此，我們在此預測中做出了一個假設，即我們將放棄部分定價。除此之外，我們對投資組合的其餘部分感覺相當穩健。

Next question comes from David Begleiter from Deutsche Bank.

下一個問題來自德意志銀行的 David Begleiter。

Ed and Lori, how much did Spectrum add to Q3 in '23 guidance?

Ed 和 Lori，Spectrum 在 23 年指導中的第三季度增加了多少？

Yes. So in total, it will give you about a little north of $200 million in sales at a 22% margin. It's pretty consistent across the months, so you'll take 2 months of it in the third quarter and then the full 3 months in the fourth quarter. From an EPS perspective, it's really only about $0.01 on a full year basis once you factor in the loss of the interest income from the cash that we paid for the deal. There's more of an EBITDA function versus an EPS.

是的。因此，總的來說，它的銷售額將超過 2 億美元，利潤率為 22%。各個月份的數據相當一致，因此您將在第三季度使用 2 個月，然後在第四季度使用完整的 3 個月。從每股收益的角度來看，如果考慮到我們為交易支付的現金利息收入的損失，全年收益實際上僅為 0.01 美元左右。與 EPS 相比，EBITDA 功能更多。

Got it. And then just on destocking in Shelter, where do you think we are? I know you said you were closely end here or it's moderating? How much further do you think we have to go Shelter Solutions destocking?

知道了。然後就庇護所的去庫存而言，您認為我們現在處於什麼位置？我知道你說過你已經接近尾聲了還是正在緩和？您認為我們在 Shelter Solutions 去庫存方面還需要走多遠？

I think it's mostly done destocking by the end of this third quarter. And that's talking to a couple of our key distributors and customers. One of the big box guys, by the way, was doing a rebalancing of all their inventory by moving it around to different stores and regions. That's how we were doing it and they're pretty much through that process. So I think the end of third quarter, we're kind of there.

我認為到第三季度末，庫存基本上已完成。這是與我們的幾個主要經銷商和客戶的交談。順便說一句，其中一個大賣場的人正在通過將其轉移到不同的商店和地區來重新平衡所有庫存。我們就是這麼做的，他們也基本上完成了這個過程。所以我認為第三季度末我們就到了。

Your next question comes from Mike Leithead from Barclays.

您的下一個問題來自巴克萊銀行的邁克·萊特黑德。

First question, your corporate and retained business came in a bit better than historically has. Can you just help us unpack what happened this quarter there and just how that should trend going forward?

第一個問題，您的公司和保留業務的情況比歷史情況要好一些。您能否幫助我們了解本季度發生的情況以及未來的趨勢？

Yes. So we had a really strong growth within corporate M&M. It was driven by the (inaudible), which is the largest segment of it. And it's really strong the EV growth in the overall auto build growth. So auto build were up about 16% in the second quarter, we would have posted a similar number. And we see really nice performance in the EV piece. So that's what drove the improvement year-over-year primarily.

是的。因此，我們在企業 M&M 領域取得了非常強勁的增長。它是由（聽不清）驅動的，這是其中最大的部分。電動汽車的增長在整個汽車製造增長中確實非常強勁。因此，第二季度汽車製造量增長了約 16%，我們本來會發布類似的數字。我們在電動汽車中看到了非常好的性能。這就是推動同比改善的主要因素。

Great. And then second, just on E&I, you talked about reducing production rates to help manage inventory. Do you expect that to still be some degree of drag in the second half to earnings? And then just relatedly, how should we expect working capital to finish out this year?

偉大的。其次，就 E&I 而言，您談到了降低生產率以幫助管理庫存。您預計這仍會對下半年的盈利產生一定程度的拖累嗎？與此相關的是，我們預計今年的營運​​資金將如何結束？

Yes. No, we're definitely going to take the absorption this quarter. We're in the third quarter, about $40 million and the same in the fourth quarter as our plan. So we're really getting inventory aligned up very well with demand. So we just feel it's the prudent thing to do right now. So that's what's baked into the plan that we've given here today.

是的。不，我們肯定會在本季度進行吸收。我們第三季度的收入約為 4000 萬美元，第四季度的收入與我們的計劃相同。因此，我們確實使庫存與需求非常契合。所以我們認為現在採取謹慎的做法。這就是我們今天在這裡給出的計劃中的內容。

Yes, we saw a nice improvement in inventory in the second quarter. About $80 million of a reduction. We'll look to continue to drive that down as we get into the end of the year. We had an improvement sequentially in both cash generation and cash conversion. We'll look to continue to improve that as we get into the back half of the year. Our third quarter is typically our strongest quarter for cash generation because we don't have an interest payment, which we have in the second and the fourth quarter, which we pay our annual bonus in the first quarter. So the third quarter is the clean end from that perspective.

是的，我們看到第二季度庫存有了很大改善。減少約8000萬美元。當我們進入年底時，我們將尋求繼續降低這一點。我們在現金生成和現金轉換方面都取得了連續改善。當我們進入今年下半年時，我們將繼續改進這一點。我們的第三季度通常是現金產生能力最強的季度，因為我們沒有利息支付，而我們在第二季度和第四季度有利息支付，我們在第一季度支付年度獎金。所以從這個角度來看，第三季度是乾淨的結局。

And just the notes that I had mentioned on the script just to make sure that you caught it, we will move to a continuing ops basis presentation in cash flow. So we'll take out all the noise from the discontinued ops components, which are primarily in this year, the funding of the escrow account, which will take place at some point in the second half and then the funding of the other end-of-use items. So we will pull that out and just kind of focus on continuing operations and can make those cash generation.

我在腳本中提到的註釋只是為了確保您明白它，我們將轉向以現金流為基礎的持續運營演示。因此，我們將消除來自已停止運營組件的所有噪音，這些噪音主要是在今年，託管賬戶的資金將在下半年的某個時候發生，然後是另一端的資金。 - 使用物品。因此，我們將把它拿出來，只專注於持續運營，並能夠產生現金。

Your next question comes from Josh Spector from UBS.

您的下一個問題來自瑞銀集團 (UBS) 的喬什·斯佩克特 (Josh Spector)。

I guess, first, I wanted to ask on the 3Q guidance. So if we look at organic sales and EBITDA, you're kind of guiding flat sequentially but you're talking about ICS as up mid-single digits. It sounds like raw materials could be a little bit better with health. Typically with ICS up, you get a mix benefit there. So what drives that flat EBITDA? What are some of the offsetting items that would keep EBITDA flat versus having it up sequentially on an organic basis?

我想，首先，我想問一下第三季度的指導。因此，如果我們看一下有機銷售額和 EBITDA，您會發現，您的指導順序是持平的，但您談論的是 ICS，其增長率為中個位數。聽起來原材料在健康方面可能會好一點。通常，隨著 ICS 的啟動，您將獲得混合優勢。那麼是什麼因素導致 EBITDA 持平呢？有哪些抵消項目可以使 EBITDA 保持持平，而不是有機地連續增長？

Yes. So the 3 biggest items that we had mentioned, first being the water deceleration. So we see some moderation in water as we get into the back half of the year, coming off a really strong quarter in the second quarter. We had also mentioned that we expect to have to get back some price primarily in the Shelter business within water. And then the third, probably smallest piece but something we're raising was we do see some small destocking within biopharma. So it's been pretty well telegraphed across some of the other players and we are starting to see that a little bit within our video business in the Industrial Solution business in Shanghai.

是的。所以我們提到的三個最大的項目，首先是水減速。因此，隨著進入今年下半年，我們看到水量有所放緩，而第二季度的季度表現非常強勁。我們還提到，我們預計必須收回一些價格，主要是在水上庇護所業務中。第三個部分，可能是最小的部分，但我們正在籌集的資金是，我們確實看到生物製藥領域出現了一些小規模的去庫存。因此，其他一些參與者已經很好地傳達了這一點，我們開始在上海工業解決方案業務的視頻業務中看到這一點。

Okay. That's helpful. And I guess when I think about ICS, a look into 2024, so I haven't done the full math, but maybe organic, you're down something like 10% this year. I guess when we look at smartphone growth, PC growth, there's not a massive inflection next year. There's better growth forecasted, maybe low single digits. I guess, how do you think about that ICS business performing relative to that? Do we overbuild some inventory so we don't get the full bounce back? Or do you expect it stronger? If you could frame that, that would be helpful.

好的。這很有幫助。我想，當我考慮 ICS 時，展望 2024 年，所以我還沒有進行完整的數學計算，但也許是有機的，今年你會下降 10% 左右。我想當我們觀察智能手機的增長、個人電腦的增長時，明年不會出現巨大的變化。預計增長會更好，可能是低個位數。我想，您如何看待 ICS 業務的相關表現？我們是否過度積累了一些庫存，以致無法全面反彈？或者你期望它更強？如果你能把它框起來，那會很有幫助。

Yes. I mean it's kind of hard to say at this point how the restocking potentially could happen in those 2 spaces. We would expect it to perform nicely alongside the market. The one tailwind that will happen for us in a year-over-year perspective on EBITDA, we won't have those absorption headwinds that we had in 2022. So the predominance of those absorption happens for reasons within both ICS and semis that both create tailwinds for us as we head into 2023.

是的。我的意思是，目前很難說這兩個空間如何進行補貨。我們預計它會與市場一起表現良好。從EBITDA 的逐年角度來看，我們將面臨的一個有利因素是，我們不會再遇到2022 年那樣的吸收逆風。因此，這些吸收的主導地位是由於ICS 和半成品中的原因而發生的，這兩者都創造了當我們邁入 2023 年時，這對我們來說是順風車。

Your next question comes from Vincent Andrews from Morgan Stanley.

您的下一個問題來自摩根士丹利的文森特·安德魯斯。

Wondering if you can speak just a little bit about the cost work you've been doing kind of past president, future? Just looking at the income statement. I've got SG&A down about $76 million year-to-date, R&D down $32 million. And then sundry expense down $40 million. And maybe you can kind of contextualize those decreases and how they play out over the balance of the year and which segments, presumably we're seeing the most and the ones that are having the most macro concerns? And maybe just also remind us what sundry expense actually is?

想知道您是否可以談談您過去、未來的總統所做的成本工作？只看損益表。今年迄今為止，SG&A 減少了約 7600 萬美元，研發費用減少了 3200 萬美元。然後雜項費用減少了 4000 萬美元。也許你可以將這些下降聯繫起來，以及它們在今年餘下的時間裡如何發揮作用，以及哪些細分市場，大概我們看到的最多，哪些細分市場最受宏觀擔憂？也許還提醒我們雜項費用實際上是什麼？

Yes. So the predominance of sundry is really not even in operating EBITDA it's where our interest in improvement is also where some gains on asset sales that don't get reported in operating EBITDA or adjusted EPS come in. So it's not really primarily related to our operating business. There's detail in the queue when that comes out tomorrow about what all of the other specifics are but that's not really a reflection at all of any of our efforts to control discretionary spend. From that perspective, though, we have been very aggressive on control and the discretionary spend to minimize the decrementals that we've been posting and I think we've done a nice job doing that.

是的。因此，雜項的主導地位實際上甚至不在經營EBITDA 中，我們對改進的興趣也在於資產銷售的一些收益，這些收益沒有在經營EBITDA 或調整後的每股收益中報告。因此，這實際上並不主要與我們的經營有關商業。明天發布的隊列中會有關於所有其他細節的詳細信息，但這並不能真正反映我們控制可自由支配支出的任何努力。不過，從這個角度來看，我們在控制和可自由支配支出方面一直非常積極，以最大限度地減少我們一直在發布的減量，我認為我們在這方面做得很好。

So in the first half, our decrementals as reported were 40% but if you take out the headwinds from the absorption that we've been driving to reduce inventory were more down in the mid-20s. And so that's really a reflection of the aggressive actions we've taken from both. We did a small restructuring to be able to reduce some headcount primarily in the G&A space. So we're really trying to keep R&D and marketing and sales pretty clean. And then we have been taking some reductions to our annual discretionary consultations or bonus. And so that's what you're seeing more so coming in through the R&D line, that would be a use of that. And then on the SG&A line would be the small license that we took to reduce headcount as well as the discretionary spend.

因此，上半年，我們報告的減量為 40%，但如果排除我們一直在推動減少庫存的吸收所帶來的阻力，那麼在 20 多歲左右，減量會更多。因此，這確實反映了我們對雙方採取的積極行動。我們進行了一次小型重組，以便能夠主要減少一般行政管理領域的一些員工人數。因此，我們確實在努力保持研發、營銷和銷售的干淨整潔。然後我們對年度酌情諮詢或獎金進行了一些削減。這就是你通過研發線看到的更多內容，這將是它的用途。然後，SG&A 線將是我們為減少員工數量以及可自由支配支出而獲得的小額許可證。

Yes. By the way, we're are -- we've been tensioning real good is our travel and entertainment budgets. We're trying to keep them. The salespeople are traveling the application engineers, but we're really being sure of holding people, holding management meetings all over the world and all that. So we're just being -- we've really put the word out to our team, hey, while we're in a tougher environment here will come out of it nice, but just watch anything on the discretionary side.

是的。順便說一句，我們一直在緊張，真正好的方面是我們的旅行和娛樂預算。我們正在努力留住他們。銷售人員與應用工程師一起出差，但我們確實有信心在世界各地舉行人員會議和管理會議等等。所以我們只是——我們確實向我們的團隊傳達了這一信息，嘿，雖然我們處於一個更艱難的環境中，但這裡會很好地擺脫困境，但請注意酌情處理方面的任何事情。

Okay. And then just as a follow-up, Ed, nothing happening presumably on the bolt-on M&A side of the table for the rest of the year? Or any thoughts there?

好的。然後，作為後續行動，Ed，今年剩下的時間裡，補充性併購方面大概沒有發生任何事情吧？或者有什麼想法嗎？

No. No, I don't think you'll see anything obviously, the rest of this year and at least well into next year. I think I said on the last call, a good year pause. We love where we've got the balance sheet at, as I think Lori mentioned on the call I did -- we're going to have leverage just near somewhere around 2x. That's where we want to be. And we're in a great spot. And I don't feel like we need to do anything. So we are -- we got to where we need to be.

不，不，我認為在今年剩下的時間裡，至少到明年，你不會看到任何明顯的東西。我想我在上次電話會議上說過，這是美好的一年。我們喜歡我們的資產負債表，正如我認為洛里在電話會議中提到的那樣——我們的槓桿率將接近 2 倍左右。這就是我們想要達到的目標。我們處於一個很好的位置。我覺得我們不需要做任何事情。所以我們——我們已經到達了我們需要到達的地方。

Your next question comes from Frank Mitsch from Fermium Research.

您的下一個問題來自 Fermium Research 的 Frank Mitsch。

Ed, I heard the RiverHouse Benedict debt on Sunday. It was very nice. So congrats on that.

艾德，我周日聽說了本尼迪克特河屋的債務。這個真好。所以恭喜你。

Thank you. I haven't heard it yet.

謝謝。我還沒聽說過。

You haven't heard it yet, I highly recommend it. Following up on the M&A question, Auto Adhesives is still in your corporate line item. When might we expect that to be folded back into the -- into one of the businesses? And/or is that a candidate for divestiture?

你還沒聽過，我強烈推薦。跟進併購問題，汽車粘合劑仍然在您的公司行項目中。我們什麼時候可以期望將其重新納入其中一項業務？和/或這是剝離的候選者嗎？

No, it's not a candidate for divestiture. It's very core to us. We like the position we have, especially with the EV opportunity we have and we're obviously seeing a lot of wins there, and the growth rate has been phenomenal. So we like that business. And by the way, we -- I don't think we're going to make any new short term on pulling it out of there of where we're reporting it at this point in time. We just -- we've got everything run in the way we want. So you won't see anything in the next couple of quarters.

不，它不是剝離的候選者。這對我們來說非常核心。我們喜歡我們所擁有的地位，特別是我們擁有的電動汽車機會，我們顯然在那裡看到了很多勝利，而且增長率是驚人的。所以我們喜歡這個行業。順便說一句，我認為我們不會制定任何新的短期條款來將其從我們目前報告的情況中拉出來。我們只是——我們讓一切都按照我們想要的方式運行。所以在接下來的幾個季度裡你不會看到任何東西。

Okay. And then if I look geographically, I mean Europe has been up year-over-year based on price. What are your thoughts in terms of volume growth in that region?

好的。然後，如果我從地理角度來看，我的意思是歐洲的價格逐年上漲。您對該地區銷量增長有何看法？

Yes. So volume growth in general in Europe is about flat. I would expect a similar performance as we get into the back half of the year. And it's really different and it's been the toughest for us has been Asia Pacific, which we've been highlighting this obvious dominance of it is China. The price piece though it will start to wane as we get into the back half of the year. So we saw it kind of cut in half as we went from Q1 to Q2, and then as we get into Q3 and Q4 we really -- it would be flat to slightly negative, given some of the price that we would have to give back primarily in the Shelter space that we have mentioned.

是的。因此，歐洲的銷量增長總體上持平。我預計下半年會有類似的表現。這真的很不同，對我們來說最艱難的是亞太地區，我們一直強調中國占據明顯的主導地位。不過，隨著進入今年下半年，價格將會開始下降。因此，當我們從第一季度到第二季度時，我們看到它減少了一半，然後當我們進入第三季度和第四季度時，考慮到我們必須回饋的一些價格，它實際上會持平甚至略有負值主要是在我們提到的庇護所空間中。

Your next question comes from Steve Byrne from Bank of America.

您的下一個問題來自美國銀行的史蒂夫·伯恩。

The EPA has estimated several thousand water districts that would need to comply with the proposed MCLs. My question for you is Ed, you mentioned you think you could get final approval on the settlement in 6 months or so. Do you need a certain fraction of those water districts to opt-in? And can you comment on how that is going? And do you have a view on how they will comply. Do you expect they will mostly use carbon? Or do you think some of them might employ RO or an exchange your technologies?

EPA 估計有數千個水區需要遵守擬議的 MCL。我的問題是 Ed，您提到您認為您可以在 6 個月左右的時間內獲得和解的最終批准。您是否需要這些水域中的一定比例才能選擇加入？您能否評論一下進展如何？您對他們將如何遵守有何看法？您預計他們將主要使用碳嗎？或者你認為他們中的一些人可能會僱傭RO或者交換你的技術？

Yes. So look, we -- there's a percent that have, I'll call it, opt in or we can walk away from the settlement -- so by the way, that's a very high percentage and we think just a big teeing up that, that will not be a problem. Remember, a lot of these water districts have been being talked to by the plaintiff side of this. This hasn't been done in a vacuum. So it's -- they've been talked to along the way here to get to this, what I'll call it preliminary settlement. So I think shortly, as I said, we will get it approved by the judge on a preliminary basis and then you work all the opt-ins to make sure you get that done and then you have final approval once you hit that threshold. So it's really up to each of the difficulty for water districts, how they're going to handle that to clean up any PFAS that's in there. So I don't want to comment on that.

是的。所以看，我們——我稱之為，有一定比例的人選擇加入，否則我們可以放棄和解——所以順便說一句，這是一個非常高的比例，我們認為這只是一個很大的準備，那不會是一個問題。請記住，原告方已經與許多這些水域進行了談判。這並不是憑空完成的。所以，他們一直在這裡與他們進行交談，以達成這一點，我稱之為初步解決方案。因此，我認為，正如我所說，我們很快就會得到法官的初步批准，然後你會進行所有選擇以確保完成這項工作，然後一旦達到該閾值，你就會獲得最終批准。因此，這實際上取決於水區的每個困難，以及他們將如何處理該問題以清理其中的 PFAS。所以我不想對此發表評論。

And then you mentioned that 70% of your water business is renewables. I was just curious, what fraction of that are you selling directly to the customer versus going through an intermediary service provider? And do you have an interest in changing that fraction by getting more aggressive in your own sales force?

然後您提到您的水務業務 70% 是可再生能源。我只是很好奇，與通過中間服務提供商直接向客戶銷售相比，你們佔了多少比例？您是否有興趣通過在自己的銷售隊伍中變得更加積極進取來改變這一比例？

I don't see any change in our go-to-market strategy for the prominence of its direct as we go to the customers and put the projects in place and we're just replacing the filter, which is where the recurring revenue rate comes from. So this is a -- as we had mentioned earlier on the call, kind of mid-to-high single-digit grower for us. A lot of opportunities as we go forward around the sustainability and the access to clean water.

我認為我們的進入市場策略沒有任何變化，因為我們直接接觸客戶並將項目落實到位，我們只是更換過濾器，這就是經常性收入的來源從。因此，正如我們之前在電話會議中提到的那樣，對我們來說，這是一個中高個位數的種植者。當我們圍繞可持續發展和獲得清潔水的方向前進時，有很多機會。

Your next question comes from Arun Viswanathan from RBC Capital Markets.

您的下一個問題來自 RBC 資本市場的 Arun Viswanathan。

I just wanted to ask about the electronics market here. Could you just elaborate on the destocking, the volume trajectory, I guess, from here. I think previously, you had expected this year to be the main volume negative hit. You'll be facing easier comps next year. Do you think you should grow in kind of, say, the mid-single-digit level for next year? Or where do you expect electronics volumes to be next year?

我只是想問一下這裡的電子市場。我想，您能否從這裡詳細說明一下去庫存和成交量軌跡。我認為之前，您曾預計今年將是主要的成交量負打擊。明年你將面臨更容易的比賽。您認為明年的增長是否應該達到中個位數水平？或者您預計明年的電子產品銷量會是多少？

Yes. So as we had mentioned, we believe within ICS that we'll continue to see sequential improvement as we head into Q3. And then I mean a little bit of tentative improvement as we head into Q4. In the semi, we don't see a material bump in sequential sales until we get into the fourth quarter. But definitely, the year-over-year volume headwind, we'll start to ease and we see full year overall E&I organic growth of about 10%. And that's primarily a volume reflecting within that segment.

是的。正如我們所提到的，我們相信在 ICS 內部，進入第三季度時我們將繼續看到連續的改進。然後我的意思是，當我們進入第四季度時，會有一些嘗試性的改進。在半年中，直到進入第四季度，我們才看到連續銷售出現實質性增長。但毫無疑問，同比銷量逆風將開始緩解，我們預計全年整體 E&I 有機增長約為 10%。這主要是反映該細分市場的數量。

So -- it's probably a little early to call what 2024 looks like. I think there's a pretty good sense that it would be positive just given that you won't have the destock going on, but even if the demand is flat, which would be hard to see, you don't have that headwind from the destock year-over-year. So we're really encouraged as we head into 2024 from the tailwind that we will see from that only market recovery in electronics, but also the lapping of the absorption headwinds that we've taken this year to control the inventory. And then the further benefit from deflation as it fully run through P&L or kind of the key components that were (inaudible).

所以，現在判斷 2024 年會是什麼樣子可能還為時過早。我認為有一種很好的感覺，即考慮到不會進行去庫存，這將是積極的，但即使需求持平（這很難看到），你也不會遇到去庫存帶來的阻力一年又一年。因此，當我們乘著順風進入 2024 年時，我們感到非常鼓舞，我們不僅會看到電子產品市場的複蘇，而且還會看到我們今年為控制庫存而採取的吸收逆風的情況。然後，通貨緊縮會帶來進一步的好處，因為它完全貫穿損益表或某種關鍵組成部分（聽不清）。

Great. And just real quickly on the share buyback plans. So you'll be completing the $3.25 billion very soon. Could you just describe how we should think about the other $2 billion that you commenced shortly thereafter. Would that be done ratably? Or how should we think about that? How it flows in?

偉大的。並迅速實施股票回購計劃。因此，您很快就會完成 32.5 億美元的建設。您能簡單描述一下我們應該如何考慮您此後不久啟動的另外 20 億美元資金嗎？能順利完成嗎？或者說我們應該如何思考這個問題？怎麼流入的？

Yes. So it will be a similar structure to the first $3.25 billion. Yes, we'll complete that within a month and then shortly thereafter, we'll execute a $2 billion ASR. So you'll get 80% of the shares upfront and then you'll get the 20% cleanup in the back, and it probably will take us about 6 months to complete that full program. It's usually about a quarter for every $1 billion of shares that you're taking out.

是的。因此，這將是與前 32.5 億美元類似的結構。是的，我們將在一個月內完成，然後不久之後，我們將執行 20 億美元的 ASR。因此，您將預先獲得 80% 的份額，然後您將在後面獲得 20% 的清理費用，我們可能需要大約 6 個月的時間才能完成整個計劃。通常每賣出 10 億美元的股票，大約有四分之一。

Your next question comes from Mike Sison from Wells Fargo.

您的下一個問題來自富國銀行的邁克·西森。

In terms of semi technologies and Interconnect Solutions, I think historically after a destocking event, you do see some restocking. But given it's taking so long for the destocking to end, how do you think that plays out this time around? Or is there any differences between the regions on that?

就半導體技術和互連解決方案而言，我認為從歷史上看，在去庫存事件之後，您確實會看到一些補貨。但鑑於去庫存需要很長時間才能結束，您認為這一次的效果如何？或者說各地區之間在這方面有什麼差異嗎？

Yes. I mean it's hard to say what everyone is going to do with respect to the restock after coming through such a significant destocking. So we might change their normal pattern (inaudible) . So it's probably a little too early to say what's going to happen from a destocking. I think you are probably (inaudible) next year and everyone destocking (inaudible) all with the stabilization that's happening in the supply chain generally everybody in that.

是的。我的意思是，在經歷瞭如此大規模的去庫存之後，很難說每個人都會對補貨做什麼。所以我們可能會改變他們的正常模式（聽不清）。因此，現在判斷去庫存會發生什麼可能還為時過早。我認為明年可能（聽不清）每個人都會去庫存（聽不清），因為供應鏈中的每個人都在穩定供應鏈。

Got it. And then just a quick follow-up. E&I has historically been above 30% for EBITDA margins and sort of get back there? Is it just simply getting all the volume back?

知道了。然後進行快速跟進。 E&I 的 EBITDA 利潤率歷來都在 30% 以上，現在會回到這個水平嗎？只是簡單地恢復所有音量嗎？

Yes. It's really 2 things to get the volume back, but remember a point I think I made earlier when Steve Tusa was on, the EBITDA margins has the absorption in the second quarter were already over 30%. So the absorption is what pulling down the charge we took there to expanded to 26.6-ish number. So we know we can -- even in a softer volume environment, we're running it a little north of 30%. And as you said and I said earlier, we run this business 32%, 33% EBITDA margins. And we'll get price throughput, as the volumes continue to come back.

是的。恢復銷量確實需要兩件事，但請記住我早些時候在 Steve Tusa 上任時提出的一點，即 EBITDA 利潤率在第二季度的吸收率已經超過 30%。因此，吸收將我們在那裡的電荷拉低至 26.6 左右的數字。所以我們知道我們可以——即使在成交量較弱的環境中，我們的運行速度也略高於 30%。正如你和我之前所說，我們經營這項業務的 EBITDA 利潤率為 32%、33%。隨著銷量繼續回升，我們將獲得價格吞吐量。

Your final question comes from Patrick Cunningham from Citibank.

最後一個問題來自花旗銀行的帕特里克·坎寧安。

Is there any update to your expectations for $20 million in synergy capture from spectrum? And what should we expect for the cadence there?

您對從頻譜中獲取 2000 萬美元協同效應的預期有任何更新嗎？我們應該對那裡的節奏有何期待？

Yes, no update to that. We still expect $20 million. It probably will take the better part of 12 to 18 months to get $20 million out. I mean, obviously, for us, it is more of a revenue synergy opportunity as we bring the 2 portfolios together in verge our expertise biopharma with their expertise in medical device comes from a revenue synergy perspective.

是的，沒有更新。我們仍然預計 2000 萬美元。可能需要 12 到 18 個月的時間才能收回 2000 萬美元。我的意思是，顯然，對我們來說，這更多的是一個收入協同機會，因為我們從收入協同的角度將我們的生物製藥專業知識與他們在醫療設備方面的專業知識結合在一起，將這兩個投資組合結合在一起。

Got it. That's helpful. And how do you expect the healthcare business to trend throughout the year, both on the legacy and the spectrum side? There's been some commentary pointing to pockets of destocking as companies deplete safety stocks. Have you seen any of that from any of your businesses?

知道了。這很有幫助。您預計醫療保健業務全年的趨勢如何，無論是在傳統方面還是在頻譜方面？有一些評論指出，隨著公司耗盡安全庫存，公司將進行部分去庫存。您在您的企業中看到過這樣的情況嗎？

Yes. So our Liveo business were -- I think Lori mentioned this a little while ago in the biopharma side. We're seeing some destocking there. And I think I heard, I think, 6 other companies I heard in the last week would make the results that they were seeing some destocking in biopharma. In my gut is that last a couple of quarters, just to correct that a little bit. And it was another one of those markets just like semi. I remember I was getting calls from CEOs in the healthcare business, but we need more, we need more and I think just like (inaudible) everyone overshot there's a little bit of a correction going on there, but I'd say that's probably the third and fourth quarter a little correction there.

是的。所以我們的 Liveo 業務是——我想 Lori 不久前在生物製藥方面提到過這一點。我們看到那裡的庫存有所減少。我想我聽說，我想，上週我聽說的另外 6 家公司將做出他們在生物製藥領域進行一些去庫存的結果。我的直覺是，過去幾個季度，只是為了糾正一點。就像半成品市場一樣，這是另一個市場。我記得我接到了醫療保健行業首席執行官的電話，但我們需要更多，我們需要更多，我認為就像（聽不清）每個人都過分了，那裡正在進行一些修正，但我想說這可能是第三和第四季度出現了一些調整。

As Lori mentioned earlier, the spectrum numbers are kind of right on where we thought they would be. So they look like they're keyed up for the year, we thought they were going to happen in the second half of the year here. And I would expect, again, that the growth in our healthcare businesses will be above company average and certainly above GDP.

正如洛里之前提到的，頻譜數字與我們的預期相符。所以他們看起來對今年很興奮，我們認為他們會在今年下半年發生。我再次預計，我們的醫療保健業務的增長將高於公司平均水平，當然也高於 GDP。

I now turn the call over to Chris Mecray for concluding remarks.

我現在將電話轉給克里斯·麥克雷 (Chris Mecray) 進行總結髮言。

Okay. Thanks, everybody, for joining our call. Just for your reference, a copy of the transcript will be posted on our website once available. This concludes our call. Thank you.

好的。謝謝大家加入我們的電話會議。僅供您參考，成績單副本一旦可用將發佈在我們的網站上。我們的通話到此結束。謝謝。