Franklin Electric Co Inc (FELE) 2023 Q4 法說會逐字稿

Hello, and welcome to the Franklin Electric reports fourth-quarter 2023 and full year 2023 results conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

您好，歡迎參加富蘭克林電氣 2023 年第四季報告和 2023 年全年業績電話會議。（操作員指示）請注意，今天的會議正在錄製中。

It is now my pleasure to introduce Vice President of Finance and Investor Relations, Sandy Statzer.

現在我很高興向大家介紹財務和投資者關係副總裁桑迪·斯塔澤 (Sandy Statzer)。

Thank you, Andrew, and welcome, everyone, to Franklin Electric's fourth quarter and full year 2023 earnings call. With me today is Gregg Sengstack, our Chairperson and Chief Executive Officer; and Jeff Taylor, our Chief Financial Officer. On today's call, Greg will review our fourth quarter and full year 2023 business results along with guidance for 2024. Jeff will provide additional detail on our financial performance. We will then take questions.

謝謝安德魯，歡迎大家參加富蘭克林電氣第四季和 2023 年全年財報電話會議。今天與我在一起的是我們的董事長兼執行長 Gregg Sengstack；和我們的財務長傑夫泰勒。在今天的電話會議上，Greg 將回顧我們的 2023 年第四季和全年業務表現以及 2024 年的指導。傑夫將提供有關我們財務業績的更多詳細資訊。然後我們將接受提問。

Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, many of which could cause actual results to differ materially from such forward-looking statements. A discussion of these factors may be found in the company's annual report on Form 10-K and today's earnings release. All forward-looking statements made during this call are based on information currently available and except as required by law, the company assumes no obligation to update any forward-looking statements.

在我們開始之前，請允許我提醒您，在我們進行本次電話會議時，我們將做出 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。這些陳述受到各種風險和不確定性的影響，其中許多風險和不確定性可能導致實際結果與此類前瞻性陳述有重大差異。這些因素的討論可以在公司 10-K 表格年度報告和今天的收益發布中找到。本次電話會議期間所做的所有前瞻性陳述均基於目前可用的信息，除非法律要求，否則本公司不承擔更新任何前瞻性陳述的義務。

In addition, on today's call, non-GAAP financial measures will be used to help investors understand Franklin Electric's ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in the accompanying investor presentation which is available on our website.

此外，在今天的電話會議上，將使用非公認會計準則財務指標來幫助投資者了解富蘭克林電氣目前的業務表現。今天討論的非公認會計原則財務指標與可比較公認會計原則財務指標的調節表包含在我們網站上提供的隨附投資者簡報中。

With that, I will now turn the call over to Gregg.

現在，我將把電話轉給格雷格。

Thank you, Sandy, and thank you all for joining us. We delivered a solid quarter and finish to 2023. From Q3 to Q4 sequentially, we experienced more of the same market conditions with wetter weather and customer destocking continuing in the US and, to a lesser degree, Europe. And we experienced continued commodity pricing pressure in our distribution business. Overall, reported sales were down $16 million or 3%, mainly driven by lower volume in fueling systems and a $13 million negative impact from foreign exchange, partially offset by favorable pricing.

謝謝你，桑迪，也謝謝大家加入我們。我們在本季和 2023 年完成了穩健的業績。從第三季到第四季度，我們經歷了更多相同的市場狀況，美國和歐洲的天氣更加潮濕，客戶庫存持續減少。我們的分銷業務經歷了持續的商品定價壓力。總體而言，報告銷售額下降了 1,600 萬美元，即 3%，主要是由於加油系統銷量下降以及外匯帶來的 1,300 萬美元負面影響（部分被有利的定價所抵消）。

Even with soft demand, we delivered solid operating margins in water and fueling for the quarter. Our manufacturing margins remained healthy throughout 2023, driven by continued cost controls. For the full year of 2023, we delivered sales growth of 1%, driven by pricing, partially offset by negative foreign exchange and lower volumes in fueling systems. Operating income grew 2% due to the strong performance in water systems and cost management across the company. Operating margins expanded to water and fueling with 140 and 230 basis points improvement over 2022, respectively.

即使需求疲軟，我們本季的水和燃料業務仍實現了穩定的營運利潤。在持續成本控制的推動下，我們的製造利潤率在 2023 年保持健康。2023 年全年，在定價的推動下，我們的銷售額成長了 1%，但部分被外匯負值和加油系統銷售下降所抵銷。由於整個公司在供水系統和成本管理方面的強勁表現，營業收入成長了 2%。水和燃料業務的營運利潤率較 2022 年分別提高 140 和 230 個基點。

Sales of our critical asset monitoring products within our fueling business also set a full-year record. Our distribution business was negatively impacted by commodity pricing pressure and destocking activity. Our continued focus on the management of working capital translated into strong cash flow generation in both the fourth quarter and the full year. Our operating cash flow improved by approximately $214 million as compared to 2022, resulting in free cash flow conversion of 142%. Free cash flow conversion was well above our five-year average of 106%. We used this cash to reduce our outstanding debt by over $115 million, completed several small acquisitions, and returned cash to shareholders through increased dividends and stock repurchases.

我們的加油業務中的關鍵資產監控產品的銷售也創下了全年記錄。我們的分銷業務受到商品定價壓力和去庫存活動的負面影響。我們對營運資金管理的持續關注轉化為第四季度和全年強勁的現金流產生。與 2022 年相比，我們的營運現金流量增加了約 2.14 億美元，自由現金流轉換率為 142%。自由現金流轉換率遠高於我們 106% 的五年平均值。我們利用這筆現金減少了超過 1.15 億美元的未償債務，完成了幾項小型收購，並透過增加股利和股票回購向股東返還現金。

Our net debt is near zero, and we delivered a nice step-up in our return on invested capital to 17.2%, an increase of 70 basis points. I'm incredibly proud of the Franklin team for their commitment to driving operational excellence. We are proud to be named in the Newsweek's list of America's most responsible and trustworthy companies for two consecutive years. We were also recognized by USA Today as one of America's Climate Leaders for 2023.

我們的淨負債接近零，投資資本報酬率也大幅提升至 17.2%，增加了 70 個基點。我為富蘭克林團隊致力於推動卓越營運而感到無比自豪。我們很榮幸連續兩年被《新聞週刊》評為全美最負責任、最值得信賴的公司。我們也被《今日美國》評為 2023 年美國氣候領導者之一。

Turning to our segments. For the quarter in water systems, sales declined less than 1%, overcoming a 5% foreign currency headwind. Demand in the US for large dewatering products was strong, setting a quarterly record with 13% growth and full-year record growth of 63%. In the US, demand for groundwater pumping systems was impacted by continued unfavorable weather patterns in the Western US and customer destocking. Our water treatment product lines were challenged by soft housing starts and existing home sales. Outside the US, water systems had solid demand in Latin America, while EMEA and Asia Pacific were relatively flat.

轉向我們的細分市場。本季供水系統銷售額下降了不到 1%，克服了 5% 的外匯阻力。美國對大型脫水產品的需求強勁，創下季度成長 13% 的紀錄，全年成長 63% 的紀錄。在美國，地下水抽水系統的需求受到美國西部持續不利的天氣模式和客戶去庫存的影響。我們的水處理產品線受到新屋開工和現房銷售疲軟的挑戰。在美國以外，拉丁美洲的供水系統需求強勁，而歐洲、中東和非洲和亞太地區則相對穩定。

Operating income margin for the quarter was 15.8%, essentially flat with prior year. For the full year, pricing actions and continued cost management more than offset inflationary challenges, driving an improvement in operating income margin of 16.3%, an increased of 140 basis points compared to last year.

該季度營業利潤率為 15.8%，與去年同期基本持平。全年來看，定價行動和持續的成本管理足以抵銷通膨挑戰，推動營業利潤率提高 16.3%，比去年增加 140 個基點。

Fueling systems sales and operating income decreased 23% and 20% respectively in the fourth quarter, lapping a difficult year-over-year comparison of record fourth-quarter revenue and operating income in 2022. While end-market demand remains healthy, fueling systems was negatively impacted by a continuation of customer inventory destocking driving lower volumes. Higher interest rates, labor constraints, and permitting delays caused some new station build plans to move into 2024. Favorable price and cost containment contributed to overall fueling systems' fourth-quarter operating margin of 29.5%, an increase of 110 basis points compared to the prior year. We continue to see strong growth in our critical asset-monitoring products which closed out a record year. Overall, the fueling systems team did an excellent job delivering for our customers while managing costs to maintain our operating margins.

第四季加油系統銷售額和營業收入分別下降 23% 和 20%，與 2022 年創紀錄的第四季營收和營業收入進行年比比較很困難。雖然終端市場需求保持健康，但燃料系統受到客戶庫存持續去庫存導致銷售下降的負面影響。利率上升、勞動力限制和許可延誤導致一些新車站建設計劃推遲到 2024 年。有利的價格和成本控制使整個加油系統第四季的營業利潤達到 29.5%，比去年同期成長 110 個基點。我們繼續看到我們的關鍵資產監控產品強勁成長，並創下了創紀錄的一年。整體而言，加油系統團隊在為客戶提供服務的同時，也出色地完成了成本管理工作，以維持我們的營運利潤。

The US distribution segment was impacted by normal seasonality, destocking, and continued unfavorable weather that reduced demand. Sales decreased by approximately 1%, while operating income decreased by 66% due to continued commodity pricing pressure. The operating income margin of 0.7% decreased 120 basis points compared to the prior-year quarter. These results are a reminder that our distribution segment is more seasonal with lower volume in Q4 as more earnings volatility in our manufacturing segments.

美國分銷部門受到正常季節性、庫存減少和持續不利天氣導致需求減少的影響。由於持續的商品定價壓力，銷售額下降約 1%，營業收入下降 66%。營業利益率為 0.7%，較去年同期下降 120 個基點。這些結果提醒我們，我們的分銷部門更具季節性，第四季度的銷售量較低，因為我們的製造部門的獲利波動較大。

As mentioned last quarter, we continue to make key investments to expand on-site inventory for large contractors. Year over year, we have 33% more on-site inventory, OSI, containers deployed across the country, which is an integral part of our strategy to better serve our customers by making products available when and where they are needed. For the year, even with the demand and margin challenges, our distribution segment delivered 5.1% operating income. You may recall that when we established this business in 2017, we stated that the anticipated operating income of the segment would range between 5% and 7%. Over the last four years, it has averaged around the midpoint of 6%. As the business continues to mature, we're able to gain efficiencies with our footprint and technology and look to raise our expectations for operating income.

正如上季度所提到的，我們繼續進行重大投資，以擴大大型承包商的現場庫存。與去年同期相比，我們在全國範圍內部署的現場庫存、OSI、貨櫃數量增加了 33%，這是我們透過在需要的時間和地點提供產品來更好地服務客戶的策略的一個組成部分。今年，即使面臨需求和利潤挑戰，我們的分銷部門仍實現了 5.1% 的營業收入。您可能還記得，我們​​在2017年建立這項業務時，曾表示該部門的預期營業收入將在5%至7%之間。過去四年，平均成長率約為 6% 的中點。隨著業務的不斷成熟，我們能夠利用我們的足跡和技術來提高效率，並提高我們對營業收入的期望。

We completed two small acquisitions in the fourth quarter. In early December, we acquired the assets of Action Manufacturing and Supply Company, now part of our water treatment product line within our water systems segment. Action Manufacturing is a producer and wholesale distributor of residential water conditioning, filtration, and indoor and outdoor irrigation systems with operations in Florida and North Carolina. Including this acquisition, our water treatment product sales are approaching $200 million a year.

我們在第四季完成了兩項小型收購。12 月初，我們收購了 Action Manufacturing and Supply Company 的資產，該公司現已成為我們水系統部門水處理產品線的一部分。Action Manufacturing 是一家住宅水調節、過濾以及室內外灌溉系統的生產商和批發經銷商，業務遍及佛羅裡達州和北卡羅來納州。包括此次收購在內，我們的水處理產品銷售額每年接近 2 億美元。

With the continued growth focus in our distribution segment, we also acquired professional groundwater distributor, Water Works Pump located in Springfield, Missouri, to expand our reach in midwest markets. We welcome our new colleagues from Action and Water Works to the Franklin family. While we continue to invest and acquire businesses to further our strategy and growth, we also continue to maintain a conservative capital structure. With the net leverage ratio near zero, we are well-positioned to execute on both organic growth and strategic acquisitions.

隨著我們對分銷業務的持續成長，我們也收購了位於密蘇裡州斯普林菲爾德的專業地下水分銷商 Water Works Pump，以擴大我們在中西部市場的影響力。我們歡迎行動和水廠的新同事加入富蘭克林大家庭。在我們繼續投資和收購業務以推進我們的策略和成長的同時，我們也繼續保持保守的資本結構。由於淨槓桿率接近零，我們有能力執行有機成長和策略性收購。

Turning to our 2024 outlook. We anticipate 2024 to start much like 2023 ended and improve as we move through the year. Our outlook anticipates lower levels of destocking activities, normalizing weather conditions in the US, a reduction in large dewatering pump volume from our record 2023 performance, improved housing starts and existing home sales, and continued pricing pressure. We also anticipate continued supply chain improvements, greater confidence in lead times, lower rates of inflation, and productivity improvements.

轉向我們的 2024 年展望。我們預計 2024 年的開局與 2023 年的結束類似，並隨著這一年的進展而有所改善。我們的前景預計去庫存活動水平較低，美國天氣狀況正常化，大型排水泵數量較 2023 年創紀錄的業績有所減少，新屋開工和現有房屋銷售有所改善，以及持續的價格壓力。我們也預期供應鏈將持續改善，對交貨時間的信心增強，通貨膨脹率降低，生產力提高。

We look for demand for our groundwater pumps to continue to benefit from a large replacement business, a favorable concentration of activity across the agricultural, industrial, and mining markets, and only modest exposure to new construction in the US housing market. We foresee this demand to similarly benefit our distribution segment. We also expect our US residential specialty pumps and water treatment product lines face fewer headwinds from exposure to new home starts and existing home sales.

我們預計地下水泵的需求將繼續受益於大規模的更換業務、農業、工業和採礦市場活動的有利集中，以及美國房地產市場新建建築的適度敞口。我們預期這種需求同樣有利於我們的分銷部門。我們也預計，我們的美國住宅專用幫浦和水處理產品線因新房開工和現有房屋銷售而面臨的阻力會減少。

Outside the US, we expect to see Latin America and South America business improve, Europe to stabilize, and Asia Pacific business to experience a meaningful recovery. In our fueling business, major marketers in the US have signaled they plan to maintain their investment plans in 2024, albeit at normalized levels after several robust years. Labor constraints are expected to ease and permit activity to return to normal.

在美國以外，我們預期拉丁美洲和南美業務將有所改善，歐洲將趨於穩定，亞太地區業務將出現有意義的復甦。在我們的燃料業務中，美國的主要行銷商已表示他們計劃在 2024 年維持投資計劃，儘管在經歷了幾年的強勁增長後仍處於正常水平。預計勞動力限制將會緩解，經濟活動將恢復正常。

In our distribution segment, we look to gain momentum through the year and build on our recent acquisition. Commodity pricing pressures, especially for pipe products, should stabilize as we enter 2024. With that, we are issuing 2024 guidance with full-year sales expected to be between $2.1 billion and $2.17 billion and diluted earnings per share or EPS to be between $4.22 and $4.40 per share.

在我們的分銷領域，我們希望在今年取得成長勢頭，並以最近的收購為基礎。進入 2024 年，大宗商品價格壓力（尤其是管道產品）應該會趨於穩定。據此，我們發布了 2024 年指引，預計全年銷售額將在 21 億美元至 21.7 億美元之間，稀釋後每股收益或每股收益將在 4.22 美元至 4.40 美元之間。

I'm now going to hand the call over to Jeff to review our financials in more detail. Jeff?

我現在將把電話轉給傑夫，以更詳細地審查我們的財務狀況。傑夫？

Thanks, Greg, and good day, everyone. Fourth-quarter 2023 consolidated sales were $473.0 million, a year-over-year decrease of 3%. Excluding the impact of foreign currency translation, sales were basically flat last year. Our fully diluted earnings per share were $0.82 for the fourth-quarter 2023 versus $0.84 for the fourth-quarter 2022. While we don't report adjusted earnings, I do want to highlight the FX expense or foreign exchange expense below operating income related to foreign currency devaluation, primarily the Argentine peso. The $1.1 million higher expense year over year would impact earnings per share by $0.02 in the quarter.

謝謝，格雷格，大家好。2023 年第四季合併銷售額為 4.73 億美元，年減 3%。剔除外幣折算的影響，去年銷售額基本持平。2023 年第四季我們的完全攤薄每股收益為 0.82 美元，而 2022 年第四季為 0.84 美元。雖然我們沒有報告調整後的收益，但我確實想強調與外幣貶值（主要是阿根廷比索）相關的外匯費用或低於營業收入的外匯費用。費用年增 110 萬美元，將影響本季每股收益 0.02 美元。

Moving on. Water system sales in the US and Canada were down 6% compared to the fourth-quarter 2022, primarily due to lower volumes. The sales decline in the US and Canada was primarily due to lower groundwater sales. Wet weather across parts of the US and some destocking in the US pro channel led to lower sales of groundwater pumping equipment. Water systems sales in markets outside the US and Canada were up 7%. Foreign currency translation decreased sales outside the US and Canada at 12%. Excluding the impact of foreign exchange, sales were led with double-digit increases in both Latin America and EMEA and a single-digit increase in the Asia Pacific market.

繼續。與 2022 年第四季相比，美國和加拿大的供水系統銷售額下降了 6%，這主要是由於銷量下降。美國和加拿大的銷售下降主要是由於地下水銷售下降。美國部分地區的潮濕天氣以及美國專業通路的一些去庫存導致地下水抽水設備的銷售下降。美國和加拿大以外市場的供水系統銷售額成長了 7%。外幣折算使美國和加拿大以外地區的銷售額下降了 12%。排除外匯影響，拉丁美洲和歐洲、中東和非洲市場的銷售額均達到兩位數成長，亞太市場實現個位數成長。

Water systems operating income was $44.1 million in the fourth-quarter 2023, down $0.5 million or 1% versus the fourth-quarter 2022. Operating income margin was 15.8%, down 10 basis points compared to last year. The decrease in operating income was primarily due to lower sales and higher operating expenses. Distributions for further sales were $148.0 million versus fourth-quarter 2022 sales of $148.9 million, a 1% decrease. The distribution segment's operating income was $1 million for the fourth quarter, a year-over-year decrease of $1.9 million.

2023 年第四季供水系統營業收入為 4,410 萬美元，比 2022 年第四季減少 50 萬美元，即 1%。營業利益率為15.8%，比去年下降10個基點。營業收入下降的主要原因是銷售額下降和營業費用增加。進一步銷售的分配為 1.480 億美元，而 2022 年第四季的銷售額為 1.489 億美元，下降了 1%。第四季分銷部門營業收入為100萬美元，較去年同期減少190萬美元。

Operating income margin was 0.7% of sales in the fourth-quarter 2023 versus 1.9% in the prior year. The distribution segment income was negatively impacted by an adverse weather consistent with our prior comments. Income was also negatively impacted by margin compression from lower pricing on commodity-based products sold through the business.

2023 年第四季營業利益率為銷售額的 0.7%，而前一年為 1.9%。分銷部門的收入受到惡劣天氣的負面影響，這與我們先前的評論一致。透過該業務銷售的商品產品定價較低，利潤率壓縮也對收入產生了負面影響。

Fueling System sales were $65.7 million in 2023 versus fourth-quarter 2022 sales of $85.5 million, a 23% decrease. As a reminder, the current year represents a tough comparison for the company as fourth-quarter 2022, fueling systems sales represented an all-time fourth quarter record. Fueling system sales in the US and Canada decreased 18% compared to the fourth-quarter 2022, as described by Gregg in his comments. Outside the US and Canada, fueling systems sales decreased 35% due primarily to lower sales in the Asia Pacific region.

2023 年加油系統銷售額為 6,570 萬美元，而 2022 年第四季銷售額為 8,550 萬美元，下降 23%。需要提醒的是，今年對該公司來說是一個艱難的比較，因為 2022 年第四季的加油系統銷售額創下了第四季度的歷史記錄。Gregg 在評論中表示，與 2022 年第四季相比，美國和加拿大的燃油系統銷售額下降了 18%。在美國和加拿大之外，加油系統銷售額下降了 35%，主要是由於亞太地區銷售額下降。

Fueling systems' operating income was $19.4 million in the fourth-quarter 2023 compared to $24.3 million in the fourth-quarter 2022. The fourth-quarter 2023 operating income margin was 29.5% compared to 28.4% of net sales in the prior year. Operating income decreased primarily due to lower volume, while the margin percentage increased due to a favorable product mix, gross margin expansion, and outstanding cost management.

2023 年第四季加油系統的營業收入為 1,940 萬美元，而 2022 年第四季為 2,430 萬美元。2023 年第四季營業利益率為 29.5%，而上年度淨銷售額為 28.4%。營業收入下降主要是由於銷量下降，而利潤率則由於有利的產品組合、毛利率擴張和出色的成本管理而增加。

Franklin Electric's consolidated gross profit was $160.0 million for the fourth-quarter 2023, down from last year's fourth-quarter gross profit of $166.2 million. The gross profit as a percentage of net sales was 33.8% in the fourth-quarter 2023 versus 34.0% in the prior year. Selling, general, and administrative or SG&A expense was $108.8 million in the fourth-quarter of 2023 compared to $109.7 million in the fourth-quarter of 2022. The decrease in SG&A expense was largely due to lower incentive-based compensation expenses in the quarter. SG&A costs as a percent of net sales increased to 23% in the fourth quarter of 2023 from 22.4% in the fourth quarter of 2022.

富蘭克林電氣 2023 年第四季的綜合毛利為 1.60 億美元，低於去年第四季的 1.662 億美元。2023 年第四季的毛利佔淨銷售額的百分比為 33.8%，而前一年為 34.0%。2023 年第四季的銷售、一般和管理或 SG&A 費用為 1.088 億美元，而 2022 年第四季為 1.097 億美元。SG&A 費用的減少主要是由於本季基於激勵的薪酬費用減少。SG&A 成本佔淨銷售額的百分比從 2022 年第四季的 22.4% 增至 2023 年第四季的 23%。

Consolidated operating income was $50.8 million in the fourth-quarter 2023, down $5.4 million or 10% from $56.2 million in the fourth-quarter 2022, due to year-over-year declines in fueling systems and distribution as previously discussed. The fourth-quarter 2023 operating income margin was 10.7%, down from 11.5% in the fourth quarter of 2022.

2023 年第四季的合併營業收入為 5,080 萬美元，比 2022 年第四季的 5,620 萬美元減少 540 萬美元，即 10%，原因是如前所述，加油系統和分銷業務同比下降。2023年第四季營業利益率為10.7%，低於2022年第四季的11.5%。

The effective tax rate was 18% for both fourth quarters of 2023 and 2022. We generated approximately $316 million of operating cash flow in 2023 compared to $102 million in operating cash flow in 2022, an improvement of $214 million. In 2022, we invested in higher levels of working capital, predominantly inventory, to compensate for longer lead times and decreased supply availability. In 2023, supply chain conditions have improved, and working capital has returned to more normal levels, leading to higher levels of cash flow.

2023 年及 2022 年第四季的有效稅率均為 18%。2023 年，我們產生了約 3.16 億美元的營運現金流，與 2022 年的 1.02 億美元營運現金流相比，增加了 2.14 億美元。2022 年，我們投資了更高水準的營運資本（主要是庫存），以彌補交貨時間延長和供應量下降的影響。2023年，供應鏈狀況有所改善，營運資金恢復到更正常的水平，導致現金流水準更高。

We used the cash flow generated primarily to repay debt and return capital to shareholders via dividends and share repurchases. At the end of the year, our net debt was approximately $15 million compared to approximately $170 million at the end of 2022. The company purchased approximately 144,000 shares of its common stock in the open market for about $13 million during the fourth-quarter 2023. At the end of the fourth-quarter 2023, the remaining share repurchase authorization is approximately 900,000 shares.

我們產生的現金流主要用於償還債務，並透過股利和股票回購向股東返還資本。截至年底，我們的淨債務約為 1500 萬美元，而 2022 年底的淨債務約為 1.7 億美元。該公司在 2023 年第四季以約 1,300 萬美元的價格在公開市場購買了約 144,000 股普通股。截至2023年第四季末，剩餘股份回購授權約90萬股。

On January 22, the company announced a cash dividend increase of 11%, which marks the 32nd consecutive year that Franklin has increased our cash dividend paid to shareholders.

1月22日，公司宣布將現金股利增加11%，這標誌著富蘭克林連續第32年增加向股東支付的現金股利。

This concludes our prepared remarks. I will now turn the call over to Andrew for questions.

我們準備好的演講到此結束。我現在將把電話轉給安德魯詢問。

Thank you. (Operator Instructions) Matt Summerville, DA Davidson.

謝謝。（操作員說明）Matt Summerville，DA Davidson。

A couple of questions. Maybe can you talk across the three business segments about where you think your own inventories are, comment on how you're feeling about your own inventory levels and how much inventory still needs to come out of the channel to be fully normalized? And then I have a follow-up.

有幾個問題。也許您可以談談您認為自己的庫存在三個業務部門的情況，評論一下您對自己的庫存水平的感受，以及還需要從渠道中流出多少庫存才能完全正常化？然後我有一個後續行動。

Yeah, Matt. I'll give some high-level comments in terms of inventory. And as you know, we don't disclose inventory by segment. But overall, inventory reduction, we finished this year at about $509 million. We finished last year at $545 million. So we had a nice reduction year over year, and that translates into about 2.5 turns for the company for the full year. Our goal is to drive that closer to 3 turns, and so in terms of continued inventory reduction, that's the direction we're driving and where we want to go.

是的，馬特。我將在庫存方面給出一些高層評論。如您所知，我們不會按部門揭露庫存。但總體而言，庫存減少後，我們今年的業績約為 5.09 億美元。去年我們的營收為 5.45 億美元。因此，我們的產量逐年減少，這意味著公司全年產量約為 2.5 倍。我們的目標是推動接近 3 圈，因此就持續減少庫存而言，這就是我們正在推動的方向和我們想要去的地方。

When we look across the three segments, I think all three segments made nice progress in terms of normalizing their inventory levels as supply conditions have improved across all three businesses. And water has pulled their inventory levels down, and distribution has done a really nice job of pulling their inventories down on a year-over-year basis. They're a good indicator for us as to what would be happening in the channel. And we believe that what our team has done is reflective of others.

當我們縱觀這三個部門時，我認為這三個部門在庫存水平正常化方面都取得了良好進展，因為所有三個業務的供應狀況都得到了改善。水已經降低了他們的庫存水平，而分銷在逐年降低庫存方面做得非常好。它們對我們來說是一個很好的指標，可以讓我們了解頻道中將會發生什麼。我們相信，我們團隊所做的事情可以反映其他團隊所做的事情。

Then we think that most of the channel inventory destocking has taken place to this point, and we look forward to seeing an uptick in demand and then that pull through in 2024. And then fueling has managed their inventory levels at as good as anybody in the business certainly given how their business has slowed down in 2024. And so across the board, all three businesses made meaningful improvement in terms of how they manage it without disclosing the hard numbers.

那麼我們認為目前大部分通路庫存去庫存已經發生，我們期待看到需求上升，然後在 2024 年結束。鑑於 2024 年業務放緩，Fueling 的庫存水準管理水準與業內其他公司一樣出色。因此，整體而言，這三家企業在管理方式上都取得了有意義的改進，但沒有透露具體數字。

Got it. And then I think, Gregg, towards the end of your prepared remarks, you went through a number of factors impacting the business and the cadence as we move through the year. You referenced price pressure. I was wondering if you could put a little finer point on that.

知道了。然後我想，格雷格，在你準備好的演講即將結束時，你經歷了許多影響我們這一年業務和節奏的因素。您提到了價格壓力。我想知道你是否可以對此提出更具體的觀點。

And then maybe, Jeff, in a normal year, I kind of went back and looked and, on average, you guys do about 45% of your EPS in the first half, 55% in the back half. That's not every year, but I'm just kind of pointing to a general rule of thumb. Given all the factors Gregg talked about, how should we be thinking about that first half, second half cadence this year?

然後，傑夫，也許在正常的一年裡，我回頭看了看，平均而言，你們的每股收益的 45% 左右是在上半年，55% 在下半年。不是每年都會這樣，但我只是指出一般的經驗法則。考慮到格雷格談到的所有因素，我們該如何思考今年上半年、下半年的節奏？

Yeah. So Matt, I would say that the pricing is behaving more like it was before the pandemic. And that is where you're getting promotional activity in the market. Now we're talking principally groundwater, principally in North America or US and Canada. And so it's more kind of normal conditions with inflation on input costs slowing. Again, as Jeff pointed out, there's still some excess inventory in the channel at manufacturers and maybe the lesser grade distribution. So we're seeing more, I'll use hand-to-hand combat as a terminology for that in this case.

是的。所以馬特，我想說定價的表現更像是疫情大流行之前的情況。這就是您在市場上進行促銷活動的地方。現在我們主要談論地下水，主要是在北美或美國和加拿大。因此，投入成本通膨放緩是更正常的情況。正如傑夫所指出的，製造商通路中仍然存在一些過剩庫存，也許還有較低等級的分銷。所以我們看到了更多，在這種情況下我將使用肉搏戰作為術語。

And then on the on the spread of earnings, yeah, you’re correct. And Jeff, can give you more detail about that. With the distribution business, we're getting more of, I think, a 50-50 break because distribution manufacturing as well in Q2, distribution is better in Q3. But yeah, that's -- but we're going to have a slower start to the year. So Jeff, you want to give Matt your thoughts?

然後關於收益分佈，是的，你是對的。傑夫可以為您提供更多相關細節。我認為，在分銷業務方面，我們將獲得更多 50-50 的突破，因為分銷製造在第二季也是如此，分銷在第三季更好。但是，是的，但我們今年的開局將會較慢。那麼傑夫，你想告訴馬特你的想法嗎？

Sure. And I think that's a great lead-in, Gregg, as we expect the start of 2024 to really move sideways from where we ended. Obviously, Q1 seasonally is typically the lowest quarter for us in the company. And Matt, I went back and looked at the past three years for Q1, earnings as a percent of full year is averaging about 18% in Q1. The range is from about 16% to 19%. And so I would say certainly this year, we would expect to see a similar profile and given that we expect to build as we go through the year that first half, second half may be more heavily weighted towards the back half of the year.

當然。我認為這是一個很好的引導，Gregg，因為我們預計 2024 年初將真正偏離我們結束的位置。顯然，第一季通常是我們公司業績最低的季度。馬特，我回顧了過去三年第一季的情況，第一季獲利佔全年的百分比平均約為 18%。範圍約為 16% 至 19%。因此，我肯定會說，今年，我們預計會看到類似的情況，考慮到我們預計今年上半年、下半年的比重可能會更大。

Okay. Got it.

好的。知道了。

Bryan Blair, Oppenheimer.

布萊恩布萊爾，奧本海默。

Action Manufacturing strikes us as strategically very important expansions at the southeast for your monitoring platform. What is the revenue base there? You mentioned approaching $200 million in total for the platform. And then off of that base, how is your team thinking about 2024 growth?

Action Manufacturing 給我們留下了深刻的印象，因為它是您的監控平台在東南部策略上非常重要的擴充。那裡的收入基礎是什麼？您提到該平台的總金額接近 2 億美元。然後在此基礎上，您的團隊如何考慮 2024 年的成長？

When you say what's the revenue? Are you asking specifically for Action Manufacturing?

當你說收入是多少？您是專門詢問 Action Manufacturing 嗎？

Yes. Just what does that contribute to the approaching $200 million?

是的。這對接近 2 億美元的資金到底有何貢獻？

Yeah, it will be in the $15 million to $20 million range overall for Action Manufacturing. In terms of operating margins, we expect to get that business in line with the rest of the water treatment business in 2024.

是的，Action Manufacturing 的整體成本將在 1,500 萬至 2,000 萬美元之間。就營業利益率而言，我們預計到 2024 年該業務將與水處理業務的其他業務保持一致。

Okay. And the water treatment revenue base all-in, how is your team thinking about '24 growth prospects?

好的。總而言之，水處理收入基礎，您的團隊如何看待「24」的成長前景？

Yeah, I think we see that -- We've always said that the water systems has got a GPP-plus 3% to 5% plus topline growth. We see water treatment can be a little stronger than the segment average there as we continue to grow that business and leverage it. And so I think top line, that's typically what we expect for growth in water systems.

是的，我想我們看到了這一點——我們總是說供水系統的 GPP 收入成長了 3% 到 5% 以上。我們認為，隨著我們繼續發展該業務並利用它，水處理可能會比該領域的平均值稍強。所以我認為最重要的是，這通常是我們對供水系統成長的期望。

Understood. And specific to water treatment staying the same, how does your deal funnel look coming into '24? And given the assets that you now have in place, how is your team thinking about or prioritizing new technologies, further geographic expansion or penetration, and perhaps more of a move into commercial applications?

明白了。具體到水處理保持不變，您的交易管道在 24 世紀看起來如何？考慮到您現在擁有的資產，您的團隊如何考慮或優先考慮新技術、進一步的地理擴張或滲透，以及可能更多地進入商業應用程式？

You covered all three points well. Yeah, certainly moving into Florida in a meaningful way. That's a key market. There are other key markets around in the southwest, which we've acquired into. We have privately held companies, we have people reaching out to us, which is always good to see it. I think the opportunity to move up the -- and complexity and size of system into light commercial industrial would be a next logical extension for us as well.

你很好地涵蓋了所有三點。是的，當然是以有意義的方式搬到佛羅裡達。這是一個關鍵市場。我們已經收購了西南地區的其他主要市場。我們有私人公司，有人向我們伸出援手，看到這一點總是很高興。我認為將系統的複雜性和規模提升到輕商業工業的機會也將是我們的下一個合乎邏輯的延伸。

Understood. And if I can sneak in one last one. I think you mentioned record revenue from critical asset monitoring. I understand that's off of a relatively small base, but if you could speak to the momentum there, what you're seeing going into '24, and how large that business may become medium term, that would be helpful.

明白了。如果我能偷偷溜進最後一張。我想你提到了關鍵資產監控創紀錄的收入。我知道這是一個相對較小的基礎，但如果你能談談那裡的勢頭，你所看到的進入 24 年的情況，以及該業務在中期可能達到多大的規模，那將會有所幫助。

Right now, the business is approaching about 10% of the fueling segment. When you look at the critical assets monitoring that relates to the grid, okay, what we call the grid business, it grew north of 20%. It has been growing at that rate now for several years and literally, again, off a small base. We're getting [stuck] by more and more utilities. We're getting bigger orders from utilities. These are for monitoring devices that go on to high-voltage circuit breaker, medium-voltage circuit breakers, pole-top transformers, also major transformers that are used bringing power to communities.

目前，該業務已接近加油領域的 10% 左右。當你看看與電網相關的關鍵資產監控時，好吧，我們所說的電網業務，它增長了 20% 以上。多年來，它一直以這樣的速度成長，而且確實是在一個很小的基數基礎上成長的。我們被越來越多的公用事業公司[困住了]。我們從公用事業公司獲得了更大的訂單。這些用於監控高壓斷路器、中壓斷路器、桿頂變壓器以及用於向社區供電的主要變壓器的監控設備。

And then we're also in the telco, into server farms, into railroad crossing, backup battery systems, and so on. So we think that just as our name gets out there as we get more brand recognition, more specification, and as the world moves more to electrification over time, over time it's going to take time, is that we're in a good place with that business. And we think it's like where we started with fueling many, many years ago is that we started with one product, and we added another product.

我們也涉足電信公司、伺服器場、鐵路道口、備用電池系統等領域。因此，我們認為，隨著我們獲得更多的品牌認知度、更多的規格，隨著時間的推移，隨著世界更多地轉向電氣化，隨著時間的推移，這將需要時間，我們的名字已經出現了，我們處於一個很好的位置那個生意。我們認為這就像我們多年前開始加油一樣，我們從一種產品開始，然後添加了另一種產品。

We listened to our customers. We listened to their pain points, and we helped solve pain points for customers. And we're beginning to see where customers across not only the US but across the globe are talking with us about their pain points, and we hope to solve more problems and challenges for them on a go-forward basis. We like the space.

我們聽取了客戶的意見。我們傾聽他們的痛點，幫助客戶解決痛點。我們開始看到，不僅美國各地的客戶，而且全球各地的客戶都在與我們談論他們的痛點，我們希望在未來的基礎上為他們解決更多問題和挑戰。我們喜歡這個空間。

That's encouraging. I appreciate the color.

這令人鼓舞。我很欣賞它的顏色。

Ryan Connors, Northcoast Research Partners.

Ryan Connors，北海岸研究合作夥伴。

So I have a few questions. Most of them are actually follow-ups of the things you've discussed here in the Q&A already. But the first was, you were talking with Mr. Blair there about the water treatment business. But in the press release, you do mention some softness actually in the quarter in that business. So can you talk specifically about about what was behind that? Any particular markets or products? Is that more volume or price? Curious what was the weakness there in the quarter itself.

所以我有幾個問題。其中大多數實際上是您在問答中已經討論過的事情的後續內容。但第一件事是，您正在那裡與布萊爾先生談論水處理業務。但在新聞稿中，您確實提到了該業務本季實際出現的一些疲軟情況。那麼您能具體談談背後的原因嗎？有什麼特定的市場或產品嗎？是數量多還是價格多？很好奇該季度本身的弱點是什麼。

You know, Ryan, a couple of factors. One is just like in other product lines in the US is that we do sell in wholesale and, again, seeing a lack of enthusiasm for taking additional inventory or people taking inventories down as a software. The other thing is that the water treatment business is more housing start-related impact as well as existing home sales because people often will make a decision to install or upgrade a water treatment system when they move. And so with having it with existing home starts being at the lowest level in 30 years ago with a rather dramatic move in interest rates, as it has been well talked about, that certainly as has put downward pressure on that business.

你知道，瑞安，有幾個因素。一個就像美國的其他產品線一樣，我們確實進行批發銷售，並且再次看到人們缺乏增加庫存或將庫存作為軟體減少的熱情。另一件事是，水處理業務更多地受到房屋開工以及現有房屋銷售的影響，因為人們在搬家時通常會決定安裝或升級水處理系統。因此，隨著現有房屋的利率開始處於 30 年前的最低水平，正如人們廣泛談論的那樣，利率發生了相當大的變化，這無疑給該業務帶來了下行壓力。

We don't think that -- we're kind of lapping that. You're seeing interest rates coming down a bit. We're seeing home starts beginning to come up a little bit. So that's why we're we're optimistic about '24, but I think it's going to, again -- the comparables will be easier in the back half of '24 like many companies in the [CRN] in the front half.

我們不這麼認為——我們有點贊同這一點。您會看到利率略有下降。我們看到家庭開始出現一點點。這就是為什麼我們對 24 年持樂觀態度，但我認為，在 24 年後半段，可比性將會更容易，就像 [CRN] 前半段的許多公司一樣。

Okay, good. And then over to the fueling side and on this discussion of channel inventory destocking, we're trying to get comfortable with reconciling that with the comments you made regarding -- Gregg, regarding the underlying demand growth still being intact. So you can just discuss for us, why would we be seeing destocking persist this long there if the demand in fact is still robust underneath it?

好的。然後，在燃料方面，在關於渠道庫存去庫存的討論中，我們正在努力將這一點與您關於格雷格關於潛在需求增長仍然完好無損的評論進行協調。所以你可以為我們討論一下，如果實際上需求仍然強勁，為什麼我們會看到去庫存持續這麼長時間？

Obviously, lead times have come down, but at some point, we expect that to run its course. Can you talk about the timing where in fueling specifically what your base case is for when that dynamic levels out and that growth will start to shine through?

顯然，交貨時間已經縮短，但在某個時候，我們預計這種情況會自然發生。您能否具體談談當這種動態趨於平穩並且成長將開始顯現時，具體推動您的基本情況的時機？

You're right. I'd say we were a little surprised at the lack of appetite in Q4. Like many others, we've been talking about destocking and figure like, okay, now it's over, now it's over. It seems that kind of extent. So we talked again with major marketers, a couple of them are public. And so again with the public major marketers putting out their bid schedules, their build schedules, and they have a say-do commitment to the Street like we do, and so you get that visibility.

你說得對。我想說我們對第四季的缺乏興趣感到有點驚訝。和其他許多人一樣，我們一直在談論去庫存，並認為，好吧，現在結束了，現在結束了。好像就是這種程度。因此，我們再次與主要行銷人員進行了交談，其中一些是公開的。因此，隨著公共主要行銷人員再次推出他們的投標時間表、他們的構建時間表，他們像我們一樣向華爾街做出說做的承諾，因此你可以獲得這種可見性。

With some private firms, things kind of moves to the right. And so with that and with the really, again, improved lead times, if you think about it, you're in distribution in the fueling space. you've got to have that product available when that station starts to build because of relatively tight schedule and build schedule. So you're going to buy ahead.

對於一些私人公司來說，事情有點向右發展。因此，隨著交貨時間的真正改善，如果你仔細想想，你就處於加油領域的分配之中。由於工期和建設進度相對緊張，當該站開始建設時，您必須擁有該產品。所以你要提前買。

And now with the lead times improving, they really -- distributors had little appetite. We didn't see the normal year-end activity that we would see many people to hit rebate levels. There is very little incentive or variable interest in hitting rebate levels at the end of the year. So I think that they kind of -- our customers kind of looked at the year and said, look, we're going to let it go by, and we're going to restart in '24 to refresh.

現在，隨著交貨時間的縮短，分銷商確實沒有什麼興趣。我們沒有看到正常的年終活動，我們會看到很多人達到回扣水準。在年底達到回扣水準幾乎沒有激勵或可變利益。所以我認為他們——我們的客戶回顧了這一年並說，看，我們將讓它過去，我們將在 24 年重新開始以刷新。

We just really have a good station builds even through COVID with all the challenges, but I think that what we're looking at as station builds maybe being kind of more like, again, 2019, 2020 levels which are down a little bit from last couple of years. But again, the major marketers -- because, again, two-thirds of the stations out there in United States, for example, there are 150,000 stations, call it 100,000 are people to operate 10 stores or less. And those number of operators are declining. They're being bought off or replaced by the major marketers.

即使在新冠疫情期間，我們確實擁有一個良好的車站建設，但我認為我們所看到的車站建設可能更像是 2019 年、2020 年的水平，比去年略有下降許多年。但同樣，主要的行銷人員 - 因為，同樣，美國有三分之二的電台，例如，有 150,000 個電台，稱之為 100,000 人經營 10 家或更少的商店。而且營運商的數量正在下降。他們正在被主要行銷商收購或取代。

Those are the companies that we're focused on with spec. And that's why we're encouraged to say that with major marketers consolidating, with us gaining spec with them, that's why we feel that we're going to have a reasonable '24. But like you said, I think we were a little surprised at the kind of lack appetite in the fourth quarter. But the markers are telling us that they're going to have a good schedule build in 2024 with the investment that we see.

這些是我們重點關注的公司。這就是為什麼我們被鼓勵說，隨著主要行銷人員的整合，隨著我們獲得他們的規格，這就是為什麼我們認為我們將有一個合理的「24」。但就像你說的，我認為我們對第四季度的缺乏胃口感到有點驚訝。但標記告訴我們，憑藉我們看到的投資，他們將在 2024 年制定一個良好的時間表。

Got it. That's very thorough. I appreciate the detail, and I did have one last one, if I might.

知道了。這非常徹底。我很欣賞這個細節，如果可以的話，我確實有最後一個。

Sure.

當然。

This issue of price and destocking in these commodity-oriented products, as you call them, in the distribution business, can you just unpack that for us a little bit, some additional color on what proportion of the total line card for Headwaters are we talking about here? Just kind of scale it for us. And then you also mentioned that you expect that to abate as the year progresses, so any kind of additional sequencing color there would be helpful as well.

這些以商品為導向的產品（正如您所說的那樣，在分銷業務中）的價格和去庫存問題，您能否為我們稍微解釋一下，一些額外的顏色，說明我們正在討論的Headwaters 總產品線卡片的比例是多少？關於這裡？只是為我們縮放一下。然後您還提到，您預計隨著時間的推移，這種情況會減弱，因此任何額外的排序顏色也會有所幫助。

Sure, Ryan. So call it commodity-type product in the groundwater channel, call it around a half, 40% to maybe half of the products that are handled. And so what we were seeing in '23 in particular with pipe, which is a large portion of that, both plastic and steel but certainly in plastic, is that capacity came online and the manufacturers really want to ship in big ways. So it began a bit of a price war, and so anything you had on hand became worth less and where we got squeezed.

當然，瑞安。因此，我們稱之為地下水渠道中的商品型產品，稱其為所處理產品的一半、40% 到一半左右。因此，我們在 23 年看到的情況是，尤其是管道（佔管道的很大一部分，包括塑膠和鋼，但肯定是塑膠），產能已上線，製造商確實希望大規模發貨。所以這就開始了一場價格戰，所以你手頭上的任何東西都變得不值錢了，我們受到了擠壓。

The fourth quarter is disappointing as the results were on an absolute basis or a relative basis down about 120 basis points, I think, Jeff, from the fourth quarter last year and compared to a 300-basis-point decline overall during the year. So it seems to be slowing and margin sort of pressure seems to be -- or pressure on margins seems to be abating a bit. So I think that, again, Q1 always tough in the groundwater business. We were expecting normal weather.

第四季令人失望，傑夫，我認為，從絕對基礎或相對基礎來看，結果比去年第四季下降了約 120 個基點，而今年整體下降了 300 個基點。因此，它似乎正在放緩，利潤率壓力似乎正在減弱，或者利潤率壓力似乎正在減弱。因此，我再次認為，第一季地下水業務始終艱難。我們預計天氣正常。

But as you know, it has been well documented in January got one of the wettest months again. And in the West, flooding in California; East Coast, you've got the big snowstorms. These things will impact the start of the year. But I think as we go through the year, again, as inventories normalize, as supplies match demand, we should see a more normal pricing environment.

但如您所知，有充分記錄表明一月份再次成為最潮濕的月份之一。在西部，加州發生洪水；東海岸，有大暴風雪。這些事情將影響今年年初。但我認為，隨著今年的到來，隨著庫存恢復正常，隨著供應與需求相匹配，我們應該會看到一個更正常的定價環境。

What I did mention to Matt earlier was that in the sale of pumps and pumping systems in the groundwater channel, we tend to see more kind of, as I said, one-offs, specials, promos, and responding to competitive threat there, somebody's responding to our competitive threats. So you see kind of more -- that's more normal or indicative of behavior before the pandemic.

我之前向馬特提到的是，在地下水道中水泵和抽水系統的銷售中，我們往往會看到更多的，正如我所說的，一次性的、特價的、促銷的，以及應對競爭威脅的，某人的應對我們的競爭威脅。所以你會看到更多——這是大流行之前更正常或更代表性的行為。

Got it. I appreciate the time this morning.

知道了。我很珍惜今天早上的時間。

Sure, Ryan.

當然，瑞安。

Walter Liptak, Seaport Research.

沃爾特·利普塔克，海港研究中心。

Just wanted to ask about pricing and if it is a more normal year for pricing and inflation? What's the timing for any actions and maybe what kind of magnitude are you looking at?

只是想問定價問題，今年是否是定價和通貨膨脹更正常的一年？採取行動的時機是什麼？您認為行動的規模有多大？

Yeah, we certainly see pricing becoming more like it has been several years ago in terms of the industry, certainly in the water business but fueling to some extent as well. They had more annual price increases. And I think we see that returning to more normal versus really the the environment in late '21 and '22, where we were doing monthly or quarterly price increases just to stay on top of the inflation that was happening out there. So the frequency of it will, we think, return more to normal. Obviously, we'll manage that often. If inflation kicks up again, we'll manage our business and work through that.

是的，我們當然看到就行業而言，定價變得更像幾年前，當然是在水務行業，但也在一定程度上推動了定價。他們的年度價格上漲幅度更大。我認為，與 21 世紀末和 22 世紀的環境相比，我們看到回歸更加正常，當時我們每月或每季提價，只是為了控制正在發生的通貨膨脹。因此，我們認為，它的頻率將更多地恢復正常。顯然，我們會經常這樣做。如果通貨膨脹再次加劇，我們將管理我們的業務並解決這個問題。

Typically price, we're going to get in that 2% to 3% to 4% price, assuming that inflation is in check and at a more normalized level. We certainly want to recover our costs and maintain our margins. But it depends on where we are in the world, and we have a global business. And so outside of the US, the environment is much different than what we see inside the US.

通常情況下，假設通膨受到控制並處於更正常化的水平，我們將採用 2% 至 3% 至 4% 的價格。我們當然希望收回成本並維持利潤。但這取決於我們在世界的哪個地方，而且我們擁有全球業務。因此，美國以外的環境與我們在美國國內看到的環境有很大不同。

We tend to talk about the inflation numbers inside the US much more frequently. But there are parts of our business outside of North America where inflation and currency devaluation are double digits and in some cases, high double digits. And we're managing through those environments as well. And our teams do a really nice job of going out and recovering that lost sales or currency devaluation impact in terms of pricing. So hopefully that answers your question.

我們傾向於更頻繁地談論美國國內的通膨數據。但我們在北美以外的部分業務的通貨膨脹和貨幣貶值達到了兩位數，在某些情況下甚至達到了高兩位數。我們也在這些環境中進行管理。我們的團隊在走出去並恢復定價方面的銷售損失或貨幣貶值影響方面做得非常好。希望這能回答你的問題。

Okay. Yeah, that's great. And then maybe on the -- the cash flow looks great. Balance sheet is in great shape. I wonder if you could just talk about the capital structure and anything that you're looking at to utilize your balance sheet. Are you going to try and increase the number of M&A deals? Is there something else that you can do?

好的。是的，那太好了。然後也許現金流看起來很棒。資產負債表狀況良好。我想知道您是否可以談談資本結構以及您正在考慮利用資產負債表的任何內容。您打算嘗試增加併購交易的數量嗎？你還有什麼可以做的嗎？

Yeah. So first of all, capital structure. I really like our capital structure. We effectively have no leverage on the balance sheet. The net leverage is 0.1 times. And so that that gives us a lot of flexibility in the company, and so we're pretty pleased with that.

是的。首先是資本結構。我真的很喜歡我們的資本結構。我們實際上在資產負債表上沒有任何槓桿作用。淨槓桿為0.1倍。這給我們公司帶來了很大的靈活性，我們對此非常滿意。

We're very happy with the strong cash flow generation that we saw in the year and certainly really excited that that free cash flow conversion at 142% certainly was well north of what we say we target every year north of 100% free cash flow conversion. And I didn't mention it, but full-year EBITDA was over $300 million of EBITDA. I think it's $306 million to be exact. So great performance from from the balance sheet perspective and from a cash flow perspective for the company.

我們對今年看到的強勁現金流產生感到非常高興，當然也非常興奮，142% 的自由現金流轉換率肯定遠高於我們所說的每年 100% 自由現金流轉換率的目標。我沒有提到，但全年 EBITDA 超過 3 億美元。我認為準確地說是 3.06 億美元。從公司的資產負債表和現金流量角度來看，業績非常出色。

Gregg can comment here as well, but obviously, we generated strong cash flow throughout our history. We expect to continue to do that. And that gives us a great -- we're well positioned to take advantage of opportunities as they present themselves. I think we would be excited to see more deals and be more active on the M&A front. And certainly, we've got our attention and focus on those opportunities.

格雷格也可以在這裡發表評論，但顯然，我們在整個歷史中產生了強勁的現金流。我們希望繼續這樣做。這給了我們很大的幫助——我們處於有利位置，可以充分利用出現的機會。我認為我們會很高興看到更多交易並在併購方面更加積極。當然，我們已經引起了我們的注意並專注於這些機會。

But we're going to maintain our discipline in terms of how we evaluate those and make sure that they make sense for us, and it's a good deal for our shareholders overall. To the extent that we have excess cash flow, then we've got a long history of paying a reasonable dividend. We've increased that dividend for 32 years. The Board and the management team, I think, have a lot of commitments to continue paying the dividend and hopefully increasing as we move forward. Obviously, the Board makes that decision.

但我們將在如何評估這些方面保持我們的紀律，並確保它們對我們有意義，而且這對我們的股東整體來說是一筆好交易。如果我們擁有過剩的現金流，那麼我們就有支付合理股利的悠久歷史。32 年來我們一直在增加股利。我認為，董事會和管理團隊有很多承諾繼續支付股息，並希望隨著我們的前進而增加。顯然，董事會做出了這個決定。

And to the extent that we can repurchase shares, and it's accretive and makes sense for our shareholders as we continue to grow the business, then that's also an area where we can deploy some of that excess cash. But we certainly want to continue to invest in growing the business through acquisition as well as organic growth opportunities that we have.

如果我們可以回購股票，隨著我們業務的不斷發展，它會增值並且對我們的股東有意義，那麼這也是我們可以部署一些多餘現金的領域。但我們當然希望繼續投資透過收購以及我們擁有的有機成長機會來發展業務。

Okay, great.

好的，太好了。

Michael Halloran, Baird.

麥可·哈洛倫，貝爾德。

Hi, good morning, everyone. You have Pez on for Mike. So I wanted to take a look at fueling again. Can you perhaps size how much of a headwind the declines in destocking versus the push-outs were in the quarter? And then, is there any green shoots you're seeing that there's light at the end of the tunnel on destocking within fueling specifically?

嗨，大家早安。你讓佩茲代替麥克。所以我想再看看加油。您能否估算一下本季去庫存下降與淘汰的阻力有多大？然後，您是否看到了任何新芽，即隧道盡頭有曙光，特別是在加油方面去庫存？

Yeah, I think the short answer is probably, no, but let me take an attempt at here, Pez. In terms of fueling, if we look at the business in the pullback that we've seen in volume there, we certainly believe that destocking is the largest factor that's that's driving that decrease in volume. And that's based on discussions that our team is having with our customers and who we sell to in terms of the distributors that sell through in this market as well as the major marketers that are out there.

是的，我認為簡短的答案可能是，不，但讓我在這裡嘗試一下，佩茲。就燃料而言，如果我們觀察銷量下滑的業務，我們當然相信去庫存是推動銷量下降的最大因素。這是基於我們的團隊與客戶進行的討論以及我們的銷售對象（即在該市場進行銷售的分銷商以及那裡的主要營銷商）的討論。

But we also know that there have been delays, there have been push outs, higher interest rates. Gregg talked earlier about the major marketers. And as they continue to grow in size, they get more sophisticated, and so they understand that higher financing cost impacts their ability to carry high levels of inventory, and they've all pulled back on that. And certainly, as supply availability and lead times have improved, that certainly played a played a big factor in it as well.

但我們也知道，出現了延誤，出現了延遲，出現了更高的利率。格雷格早些時候談到了主要的營銷人員。隨著它們規模的不斷擴大，它們變得更加複雜，因此它們明白，更高的融資成本會影響它們持有高庫存水準的能力，而它們都在這一點上有所退縮。當然，隨著供應可用性和交貨時間的改善，這當然也發揮了重要作用。

So I think those are the big factors. We talked about demand in 2024 in fueling is normalizing. And let me unpack that just for a quick second because if you replay the last several years, right? 2021, coming out of the pandemic, there was certainly some recovery there because, if you recall, fueling was most impacted during the pandemic and capital got shutdown at the major marketers. And so when that came back, there was some level of recovery that came through in 2021.

所以我認為這些都是重要因素。我們談到 2024 年燃料需求將趨於正常化。讓我快速解開這個問題，因為如果你重溫過去幾年的情況，對吧？2021 年，疫情結束後，肯定會出現一些復甦，因為如果你還記得的話，加油在疫情期間受到的影響最大，主要行銷商的資金也被關閉。因此，當這種情況回來時，2021 年出現了一定程度的復甦。

And obviously, hindsight's always 20/20. But in 2022, we know that the demand was solid and strong in the fueling business for renewed industry installations but also for replacement demand for upgrades of existing stations. But there was this factor in 2022 that was this buildup of stocking inventory in the channel. And I think we see that more clearly today than maybe we did when it was happening, but there was this big build-up of inventory. And then the big reset happened in 2023.

顯然，事後諸葛亮總是20/20。但到 2022 年，我們知道加油業務對更新工業裝置以及現有加油站升級的替換需求的需求強勁且強勁。但 2022 年有一個因素，那就是通路庫存的增加。我認為我們今天比事情發生時更清楚地看到了這一點，但庫存大量增加。然後 2023 年發生了重大重置。

And so as we move into 2024, based on our discussions with our customers and the major marketers, we see that demand is normalizing, but it's not going to normalize back to where it was in 2022, right? It's not going to have that build-up of inventory that that drove sales, strong record sales, that we saw in 2022. But the business is still solid, the end market is healthy, the major marketers are continuing to invest. They're going to continue to grow, and we really think that we do a great job in terms of supplying them, bringing them great safety in the industry, the lowest total cost of ownership, and deliver a great product to them that we support after the sale. So that's high level where we see 2024 for fueling.

因此，當我們進入 2024 年時，根據我們與客戶和主要行銷人員的討論，我們看到需求正在正常化，但它不會正常化回 2022 年的水平，對嗎？它不會出現我們在 2022 年看到的那種推動銷售的庫存積累，即創紀錄的強勁銷售。但業務仍然穩健，終端市場健康，主要行銷人員正在繼續投資。他們將繼續成長，我們確實認為我們在供應方面做得很好，為他們帶來了行業內的極大安全性、最低的總擁有成本，並為他們提供了我們支持的優質產品售後。因此，我們認為 2024 年的燃料供應處於較高水準。

No, that's super helpful color and very robust answer. I appreciate it. Maybe on the margin side of fueling, obviously an impressive margin despite the volume levels. Maybe thinking about margins in 2024, is there any puts and takes that we should consider kind of as that demand normalizes? Is there any mixed considerations we need to be mindful of, or do we feel like we can maybe increment at relatively normal levels from here?

不，這是非常有用的顏色和非常可靠的答案。我很感激。也許在燃料的利潤方面，儘管銷量水準明顯，但利潤卻令人印象深刻。也許考慮到 2024 年的利潤率，隨著需求正常化，我們是否應該考慮任何看跌期權和看跌期權？我們是否需要注意任何複雜的考慮因素，或者我們是否覺得我們可以從這裡以相對正常的水平增加？

Yeah. I mean, we've historically said this business is 25% and 27% operating income margin. We've been way past that for several quarters now. And so certainly, as our grid solutions and our critical asset monitoring products, as they increase in the mix, that certainly helps our business from a margin perspective. I would say as some of the core fueling products come back and that mix starts to shift down, it's going to keep us in the margin range. That is going to be at the high end of that range. If not higher, I expect that. I'm not predicting we're going to go back to 32% operating margins, but we'll be in the high 20s and possibly touch over 30, depending on how things playout.

是的。我的意思是，我們歷來說過這項業務的營業利潤率為 25% 和 27%。幾個季度以來，我們已經遠遠超過了這一點。因此，隨著我們的電網解決方案和關鍵資產監控產品的組合不斷增加，從利潤角度來看，這肯定有助於我們的業務。我想說，隨著一些核心燃料產品的回歸，並且這種組合開始下降，這將使我們保持在利潤範圍內。這將是該範圍的高端。如果不是更高，我希望如此。我並沒有預測我們的營業利潤率會回到 32%，但我們的營業利潤率將達到 20% 以上，甚至可能超過 30%，具體取決於事態發展。

Super helpful. I'll pass it on.

超有幫助。我會把它傳遞下去。

Thank you. I will now hand the call back over to Chairperson and CEO, Gregg Sengstack for any closing remarks.

謝謝。我現在將把電話轉回給董事長兼執行長 Gregg Sengstack)，讓其發表結束語。

I want to thank you all for joining us this morning for this call. Please have a safe week, and we'll look forward to speaking to you with our first-quarter results.

我要感謝大家今天早上參加我們的這次電話會議。請度過安全的一周，我們期待與您分享我們的第一季業績。

Thank you, and thank you for participating. This does conclude today's program, and you may now disconnect.

謝謝您，也謝謝您的參與。今天的節目到此結束，您現在可以斷開連線了。