Gates Industrial Corporation PLC (GTES) 2024 Q3 法說會逐字稿

Thank you for standing by. My name is Briana, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Gates Industrial Corporation Q3 2024 Earnings Call. Please note that this call is being recorded. I will now turn the conference over to Rich Kwas, VP, Investor Relations. Please go ahead, sir.

感謝您的支持。我的名字是布里安娜，今天我將擔任您的會議主持人。現在，我歡迎大家參加蓋茲工業公司 2024 年第三季財報電話會議。請注意，本次通話正在錄音。現在，我將會議交給投資人關係副總裁 Rich Kwas。先生，請繼續。

Greetings, and thank you for joining us on our third quarter 2024 earnings call. I'll briefly cover our non-GAAP and forward-looking language before passing the call over to our CEO, Ivo Jurek, who will be followed by Brooks Mallard, our CFO.

您好，感謝您參加我們的 2024 年第三季財報電話會議。我將簡要介紹我們的非公認會計準則和前瞻性語言，然後將電話轉交給我們的執行長 Ivo Jurek，隨後是我們的財務長 Brooks Mallard。

Before the market opened today, we published our third quarter 2024 results. A copy of the release is available on our website at investors.gates.com. Our call this morning is being webcast and is accompanied by a slide presentation. On this call, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance.

在今天開市前，我們公佈了2024年第三季的業績。您可在我們的網站 investor.gates.com 上查看此新聞稿的副本。我們今天上午的電話會議正在進行網路直播，並附有幻燈片演示。在本次電話會議上，我們將參考一些我們認為對評估我們的績效有用的非公認會計準則財務指標。

Reconciliations of historical non-GAAP financial measures are included in our earnings release and the slide presentation, each of which is available in the Investor Relations section of our website. Please refer now to slide 2 of the presentation, which provides a reminder that our remarks will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

歷史非公認會計準則財務指標的對帳表包含在我們的收益報告和幻燈片簡報中，您可以在我們網站的「投資者關係」部分找到。請參閱簡報的第 2 張投影片，它提醒我們，我們的評論將包括《私人證券訴訟改革法案》所定義的前瞻性陳述。

These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed in or implied by such forward-looking statements. These risks include, among others, matters that we have described in our most recent annual report on Form 10-K and in other filings we make with the SEC.

這些前瞻性陳述存在風險，可能導致實際結果與此類前瞻性陳述表達或暗示的結果有重大差異。這些風險包括我們在最近的 10-K 表年度報告和向美國證券交易委員會提交的其他文件中所描述的事項。

We disclaim any obligation to update these forward-looking statements. Later this quarter, we will be attending the Baird Global Industrial Conference the UBS Global Industrials and Transportation Conference and the Goldman Sachs Industrials and Materials Conference.

我們不承擔更新這些前瞻性聲明的任何義務。本季度晚些時候，我們將參加貝爾德全球工業會議、瑞銀全球工業和運輸會議以及高盛工業和材料會議。

We look forward to meeting with many of you. Before we start, please note all comparisons are against the prior year period unless stated otherwise.

我們期待與你們見面。在我們開始之前，請注意，除非另有說明，所有比較均與去年同期進行比較。

Now I'll turn the call over to Ivo.

現在我將電話轉給伊沃。

Thank you, Rich. Good morning, everyone. We'll begin on slide 3. In the third quarter, our team continued to execute well and delivered solid profit improvement while encountering soft demand in certain industrial end markets. We experienced about a 4% decline on a core basis primarily driven by weaker demand in the agriculture, construction and personal mobility and markets.

謝謝你，里奇。大家早安。我們將從幻燈片 3 開始。第三季度，我們的團隊繼續表現良好，在遇到某些工業終端市場需求疲軟的情況下實現了穩定的利潤成長。我們的核心業務下降了約 4%，主要原因是農業、建築、個人流動和市場的需求疲軟。

Total replacement sales increased 1% led by modest growth in automotive replacement, while sales to OEMs declined in the low double-digit range. book-to-bill and it's slightly above one. We generated a 30 basis points increase in adjusted EBITDA margins. The improvement was fuelled by a 110 basis point increase in our gross margin.

總替換品銷售額成長了 1%，主要得益於汽車替換品的小幅成長，而原始設備製造商的銷售額則下降了兩位數。訂單出貨比略高於 1。我們的調整後 EBITDA 利潤率提高了 30 個基點。這項改善得益於我們的毛利率增加了 110 個基點。

Gross margin benefited from ongoing advancement of our various enterprise initiatives, which include pricing actions and productivity. In addition, channel mix was favourable. These factors more than offset the impact of volume weakness during the quarter. Our net leverage ratio declined to 2.4 times from 2.6 times in the year ago period, supported by a lower debt balance and improved profitability.

毛利率受益於我們各項企業措施的持續推進，其中包括定價行動和生產力。此外，通路組合也較為有利。這些因素抵消了本季銷售疲軟的影響。由於債務餘額的降低和獲利能力的提高，我們的淨槓桿率從去年同期的 2.6 倍下降至 2.4 倍。

During the quarter, we returned capital to shareholders via a $125 million share repurchase. Our 2024 guidance, raising our adjusted EPS midpoint to $1.35. We have maintained our full year 2024 adjusted EBITDA midpoint of $755 million.

本季度，我們透過 1.25 億美元的股票回購向股東返還資本。我們的 2024 年指引將調整後的每股盈餘中點上調至 1.35 美元。我們將 2024 年全年調整後 EBITDA 中位數維持在 7.55 億美元。

So now please turn to slide 4. In the third quarter, we produced sales of $831 million, which was a 3.8% decrease on a core basis. Replacement sales grew slightly. We continue to see durable demand trends in our global automotive replacement business. OEM sales decreased primarily affected by lower demand in ag, construction and personal mobility. Our key Asian geographies in South America generated core sales growth and bright spot in the quarter.

現在請翻到幻燈片 4。第三季度，我們的核心銷售額為 8.31 億美元，下降 3.8%。替換品銷量略有成長。我們持續看到全球汽車替換業務的持久需求趨勢。OEM銷售額下降主要受到農業、建築和個人行動需求下降的影響。我們位於南美洲的主要亞洲地區在本季實現了核心銷售成長和亮點。

Adjusted EBITDA was approximately $183 million, which translated to a 22% margin, an increase of approximately 30 basis points. The improvement was led by a 110 basis point increase in gross margin driven by efficiencies from our enterprise initiatives as well as an increased mix of replacement sales, which carries higher margins compared to off-fleet average. G&A was higher due to increased spending associated with investments in our strategic initiatives and unfavourable effects.

調整後的 EBITDA 約為 1.83 億美元，利潤率為 22%，增加約 30 個基點。這項改善主要得益於毛利率上升了 110 個基點，這得益於我們企業計劃帶來的效率提升以及替換品銷售組合的增加，與非機隊平均水平相比，替換品銷售的利潤率更高。由於與策略性舉措投資相關的支出增加以及不利影響，一般及行政費用較高。

We believe we are making appropriate SG&A investments to improve the enterprise growth algorithm for the long term. Adjusted earnings per share was $0.33, which was 8% lower versus the year prior. Operating income was approximately $0.83 headwind, which was impacted by the lower core sales performance. We managed our operations well in the weaker environment.

我們相信，我們正在進行適當的銷售、一般及行政開支投資，以長期改善企業成長演算法。調整後每股收益為 0.33 美元，較前一年下降 8%。營業收入約為 0.83 美元逆風，受到核心銷售業績下降的影響。我們在較弱的環境中很好地管理了我們的營運。

The year-over-year decline in adjusted EBITDA compared to the year-over-year decline in sales, measured 16% and better-than-normal performance, aided by our execution on a company-wide enterprise initiatives. On slide 5, we'll review our segment performance.

與銷售額年減相比，調整後的 EBITDA 年比下降了 16%，表現優於正常水平，這得益於我們實施全公司範圍的企業計劃。在投影片 5 上，我們將回顧我們的分部表現。

In the Power Transmission segment, we generated sales of $513 million, which represented an approximate 3% decrease on a core basis. The replacement channel was up year-over-year, backed by the modest growth in automotive replacement. OEM demand stayed under pressure with both industrial and automotive experiencing declines in the low double-digit range. Broadly, we saw declines across our end markets in port transmission, diversified industrial and automotive, benefiting from good replacement activity.

在動力傳動部門，我們實現了 5.13 億美元的銷售額，核心銷售額下降了約 3%。受汽車更換量溫和成長的推動，更換通路較去年同期成長。由於工業和汽車產業都經歷了兩位數的低點下滑，OEM需求依然承受壓力。整體來看，受益於良好的替代活動，我們看到港口傳輸、多元化工業和汽車等終端市場均出現下滑。

We're the most resilient end markets as both posted low single-digit decrease in core sales. Ag and construction demand remained muted. Person mobility remained a headwind for growth, but the sales base has stabilized and inventories at the mobility manufacturers are trending lower.

我們是最具彈性的終端市場，因為核心銷售額都出現了低個位數的下降。農業和建築需求仍然低迷。人員流動仍然是成長的阻力，但銷售基礎已經穩定，流動設備製造商的庫存呈下降趨勢。

We expect inventory levels to normalize by year-end and believe the business is well positioned for growth in 2025. Power Transmission adjusted EBITDA margin expanded 30 basis points. Gross margin expansion drove the increase, led by contribution from our enterprise initiatives as well as favourable channel mix, partially offset by lower volumes.

我們預計庫存水準將在年底前恢復正常，並相信該業務在 2025 年將實現良好的成長。電力傳輸部門調整後的 EBITDA 利潤率擴大了 30 個基點。毛利率擴大推動了成長，這主要得益於我們企業計畫的貢獻以及有利的通路組合，但銷量下降部分抵消了這一影響。

In the Fluid Power segment, our sales were $317 million. On a core basis, sales decreased just under 5%. The replacement business grew modestly, led by automotive replacement, which grew mid-single digits. Industrial replacement core sales performance was relatively flat. Industrial OEM sales declined mid-teens on a core basis, driven by continued demand pressure in ag and construction.

在流體動力領域，我們的銷售額為 3.17 億美元。從核心基礎來看，銷售額下降了近 5%。替換業務溫和成長，其中汽車替換業務成長最快，增幅達到中等個位數。工業替代磁芯銷售業績相對持平。受農業和建築業持續的需求壓力推動，工業原始設備製造商銷售額核心下滑幅度達十五六成。

Despite lower volumes, Fluid Power EBITDA margins expanded 20 basis points due to the progress with our enterprise initiatives and a higher replacement sales mix. Additionally, as part of our footprint optimization initiative announced in March at our Capital Markets Day, we have commenced projects that will predominantly impact our Fluid Power business and should be a nice contributor to profitability in 2025 and beyond, all else equal.

儘管銷售量較低，但由於企業計畫的進展和替代銷售組合的提高，流體動力的 EBITDA 利潤率仍擴大了 20 個基點。此外，作為我們 3 月在資本市場日宣布的足跡優化計劃的一部分，我們已經啟動了一些將對我們的流體動力業務產生重大影響的項目，並且在其他條件相同的情況下，這些項目將對 2025 年及以後的盈利能力做出良好貢獻。

I will now pass the call over to Brooks for further comments on our results. Brooks?

現在我將把電話轉給布魯克斯，請他對我們的結果發表進一步的評論。布魯克斯？

In North America, core sales declined approximately 6%, driven by a weaker OEM sales trends. Industrial OEM channel sales declined double digits for the agriculture and construction end markets most impactful to our performance, followed by mobility. We also experienced weakness in automotive OEM with sales down mid-single digits.

在北美，受 OEM 銷售趨勢疲軟的影響，核心銷售量下降約 6%。對我們的業績影響最大的是農業和建築終端市場的工業OEM通路銷售額出現兩位數下降，其次是行動領域。我們在汽車原始設備製造商方面也經歷了疲軟，銷售額下降了中個位數。

North American replacement channel sales remained resilient, bolstered by low single digit growth in automotive replacement and with flat sales performance in industrial replacements. Intermedia, core sales fell just over 6%.

北美替換產品通路銷售仍保持彈性，得益於汽車替換產品低個位數成長和工業替換產品銷售表現持平。Intermedia 核心銷售額下降略高於 6%。

Overall macroeconomic pressure impacted the region's top line performance. Both industrial OEM and replacement core sales fell double digits, driven by declines in energy, construction and diversified industrial. Automotive volume sales were down double digits, which was mostly offset by mid-single digit growth in automotive replacement.

整體宏觀經濟壓力影響了該地區的營收表現。受能源、建築和多元化工業下滑的影響，工業原始設備製造商和替換核心銷售均出現兩位數下降。汽車銷量下降了兩位數，但大部分被汽車替換量的中等個位數成長所抵消。

Channel core sales grew modestly and benefited from strength in the industrial markets, which expanded double digits. Construction, diversified industrial and personal mobility were significant contributors. The growth was partially offset by a high single digit decline in automotive driven by our OEM demand softness. Automotive replacement declined slightly. South America and East Asia and India both posted low single-digit growth in core sales.

通路核心銷售額小幅成長，受益於工業市場的強勁成長，銷售額實現了兩位數的成長。建築業、多元化工業和個人流動是重要貢獻者。由於 OEM 需求疲軟，汽車業務出現個位數高下滑，但部分抵消了上述成長。汽車更換率略有下降。南美洲、東亞和印度的核心銷售額均實現了低個位數成長。

Automotive outperformed industrial in both regions with industrial OEM sales down modestly for plasma channels outperformed OEM channels. On slide 7, we lay out the key drivers of the year-over-year change in adjusted earnings per share. Operating performance represented a $0.03 per share headwind driven by the year-over-year core sales decline.

在兩個地區，汽車產業的表現均優於工業業，而工業 OEM 銷售額略有下降，因為等離子通路的表現優於 OEM 通路。在第 7 張投影片中，我們列出了調整後每股盈餘年增率變化的關鍵驅動因素。由於核心銷售額年減，經營業績每股下跌 0.03 美元。

Favourable interest expense and other items, including a lower share count, offset a higher adjusted effective tax rate. Slide 8 provides an overview of our cash flow performance and balance sheet metrics. For the third quarter, our free cash flow was $88 million, which was which represented 100% conversion to adjusted net income. Trade working capital, increased on higher inventories and a higher mix of automotive replacement receivables.

有利的利息支出和其他項目（包括較低的股份數量）抵消了較高的調整後有效稅率。投影片 8 概述了我們的現金流表現和資產負債表指標。第三季度，我們的自由現金流為 8,800 萬美元，佔調整後淨收入的 100%。貿易營運資本因庫存增加和汽車更換應收帳款組合增加而增加。

We build incremental inventory to support the new auto replacement business we announced last quarter. In addition, while industrial market activity currently remain subdued in our most important geographies, we believe we are nearing a trough.

我們建立增量庫存來支援我們在上個季度宣布的新的汽車更換業務。此外，雖然目前我們最重要的地區的工業市場活動仍然低迷，但我們認為我們已接近低谷。

Given our short cycle demand characteristics, we are positioning the business to capitalize on a potential recovery and support superior customer service levels. Our net leverage ratio was 2.4 times at the end of the quarter, which was 0.2 times improvement compared to last year.

鑑於我們的短週期需求特點，我們將業務定位為利用潛在的復甦並支援卓越的客戶服務水準。本季末，我們的淨槓桿率為2.4倍，比去年同期改善了0.2倍。

So combination of a lower debt balance and improved profitability contribute to the results. We are well positioned to deliver our 2026 target of one to two times net debt to adjusted EBITDA. As a reminder, as a result of our recent debt refinancing, we have no debt maturities until 2021. Our trailing 12 month return on invested capital was 22.3%, a 70 basis point increase and supported by the increase in adjusted EBITDA margin.

因此，較低的債務餘額和提高的獲利能力相結合有助於實現業績。我們已準備好實現 2026 年的目標，即淨債務與調整後 EBITDA 比率達到一至兩倍。提醒一下，由於我們最近的債務再融資，我們的債務到期日直到 2021 年。我們過去 12 個月的投資資本回報率為 22.3%，增加了 70 個基點，並受到調整後 EBITDA 利潤率增加的支持。

Shifting to our updated 2020 for guidance on slide 9, we have increased our adjusted earnings per share guidance and narrowed our adjusted EBITDA guidance range. While reiterating the midpoint, we believe our full year 2024 core growth will be in the range of minus 4% to minus 3%, which is in the lower half of our prior guidance range.

根據第 9 頁上更新的 2020 年指引，我們提高了調整後每股盈餘指引，並縮小了調整後 EBITDA 指引範圍。在重申中點的同時，我們認為 2024 年全年核心成長率將在-4% 至-3% 之間，處於我們先前指導範圍的下半部。

We have narrowed our adjusted EBITDA guidance to a range of $745 million to $765 million. The $755 million midpoint is consistent with prior guidance. We have increased our adjusted earnings per share range to $1.33 per share to $1.37 per share at the recent increase at the midpoint. Our guidance for capital expenditures and free cash flow conversion remains unchanged.

我們已將調整後的 EBITDA 預期縮小至 7.45 億美元至 7.65 億美元之間。7.55 億美元的中間值與先前的指引一致。我們已將調整後的每股盈餘範圍上調至每股 1.33 美元至每股 1.37 美元，中間值為最近的上調幅度。我們對資本支出和自由現金流轉換的指導保持不變。

On slide 10, we show our updated earnings per share was for 2024. From left to right, we project about a $0.01 per share benefit from operating income, which is offset by higher interest expense. A lower tax rate and share count for the $0.03 of adjusted earnings per share benefit. Turning to slide 11, we wanted to provide a brief update on our footprint optimization plan.

在投影片 10 上，我們展示了 2024 年的最新每股收益。從左到右，我們預計每股營業收入約為 0.01 美元，但會被更高的利息支出所抵銷。較低的稅率和股票數量可帶來 0.03 美元的調整後每股盈餘。前往第 11 張投影片，我們想簡單介紹一下我們的足跡優化計畫。

Last quarter, we discussed achieving 40 million of annualized savings over a multiyear period savings beginning to accrue next year. Today, we have announced three closures are subscale facilities, which are all expected to be completed by year end. So footprint optimization plan as a global initiative and other rooftop consolidations are poised to enter. The execution stage savings are expected to build over the course of 2025 and 2026.

上個季度，我們討論了在多年期內實現 4000 萬美元的年度化節約，這些節約將於明年開始累積。今天，我們宣布關閉三座規模較小的工廠，預計這些工廠將在年底前完工。因此，足跡優化計畫作為一項全球舉措，其他屋頂整合計畫也已準備就緒。預計執行階段的節省將在 2025 年和 2026 年期間實現。

As a reminder, we anticipate achieving 40% of the full savings run rate as we exit 2025 and intend to be at the full savings level on a run-rate basis by the end of 2026. In aggregate, we believe the footprint optimization plan to contribute over 100 basis points to our adjusted EBITDA margin at maturity, which is at the high end of the range we communicated at our Capital Markets Day in March. Now I will turn it back over to Ivan for his closing remarks.

提醒一下，我們預計在 2025 年結束時將實現 40% 的全部儲蓄運行率，並計劃在 2026 年底達到全部儲蓄運行率水準。總體而言，我們相信足跡優化計劃將為我們到期的調整後 EBITDA 利潤率貢獻超過 100 個基點，這處於我們在 3 月份資本市場日傳達的範圍的高端。現在我將把發言權交還給伊万，請他作最後發言。

Thank you, Brooks. On slide 12, I'll provide some key thoughts before we take your questions. First, our global gates team is executing well, and we are delivering higher profit margins in a soft demand environment. Our team is effectively managing the operating variables that can be controlled in a challenging environment and produce a record Q3 gross margin for Geis.

謝謝你，布魯克斯。在第 12 張投影片上，我將提供一些關鍵想法，然後我們再回答您的問題。首先，我們的全球門控團隊表現良好，我們在需求疲軟的環境下實現了更高的利潤率。我們的團隊正在有效地管理在充滿挑戰的環境中可以控制的營運變量，並為 Geis 創造創紀錄的第三季毛利率。

Since we became a public company in 2024, we are on track to generate over 100 basis points of adjusted EBITDA margin improvement with our core sales on pace to decline low to mid-single digits. Second, we are positioned to drive meaningful returns for our shareholders over the next few years. Since 2016 on a core basis, our sales have grown at a 4% compound annual growth rate.

自 2024 年上市以來，我們預計將實現超過 100 個基點的調整後 EBITDA 利潤率提升，而核心銷售額則可望下降低至個位數。其次，我們致力於在未來幾年為股東帶來豐厚的回報。自 2016 年以來，我們的核心銷售額以 4% 的複合年增長率成長。

We have multiple strategic growth initiatives in place, including driving a change in a way personal mobility devices are designed and built, developing new fluid conveyance technologies that offer more efficient cooling solutions for hyperscale data centers as well as further increasing our relevant curing customers in the automotive and industrial replacement channels.

我們制定了多項策略性成長計劃，包括推動個人行動裝置設計和製造方式的變革、開發新型流體輸送技術，為超大規模資料中心提供更高效的冷卻解決方案，以及進一步增加汽車和工業替代管道的相關固化客戶。

As the industrial market stabilize, we believe we are well positioned to drive attractive core revenue growth over the midterm. In addition, we believe the ongoing execution of our enterprise initiatives should enable us to deliver above average incremental margins on the growth we anticipate to achieve. We are making incremental investments across the enterprise to position the company to deliver higher organic growth and experience more organizational efficiencies over the next decade.

隨著工業市場的穩定，我們相信我們有能力在中期內推動可觀的核心收入成長。此外，我們相信，持續執行企業計畫將使我們能夠在預期的成長上實現高於平均的增量利潤。我們正在對整個企業進行增量投資，以使公司在未來十年實現更高的有機成長並提高組織效率。

Finally, our balance sheet position continues to show steady improvement and we anticipate having more avenues available to deploy capital over the midterm. We intend to be opportunistic, yet prudent in deploying our excess free cash flows.

最後，我們的資產負債表狀況持續穩定改善，我們預計中期將有更多的管道來部署資本。我們打算抓住機會，但同時謹慎地部署我們多餘的自由現金流。

Before taking your questions, I want to extend my appreciation to all to the almost 15,000 global engaged associates for their hard work and determination to achieving our enterprise priorities and satisfying our customers' expectations.

在回答你們的問題之前，我想向全球近 15,000 名員工表示感謝，感謝他們為實現企業重點和滿足客戶期望而付出的辛勤工作和決心。

With that, I will now turn the call back over to the operator for Q&A.

說完這些，我現在將把電話轉回給接線生進行問答。

(Operator Instructions) Jeff Hammond, KeyBanc.

（操作員指示） Jeff Hammond，KeyBanc。

Great execution on the decremental. It seems like a lot of the restructuring savings come in '25, '26, maybe just talk about what you're doing in the near term to kind of mitigate the decremental headwind here in the short-term soft period.

減量方面的執行非常出色。似乎許多重整節省都發生在'25、'26 年，也許只是談談你近期將採取哪些措施來緩解短期疲軟時期的減幅逆風。

Yes. Look, I mean we have a ton on our plates associated with our enterprise initiatives. So obviously, front-to-back 80/20 execution is what we are focused on, and I think we have fast spoken on last couple of calls about our focus on material cost reductions, optimized pricing through '20 and factory productivity.

是的。你看，我的意思是我們在企業計劃方面有大量的工作要做。因此顯然，我們關注的是前後 80/20 的執行，我想我們在最近的幾次電話會議中已經快速談到了我們的重點是降低材料成本、優化 20 年的定價和提高工廠生產力。

And I think that's what's a bit unique about this cycle than maybe in a previous cycle. We feel pretty good where we sit and we continue to execute our teams execute well and we are managing to extend our gross margins in a somewhat negative demand backdrop.

我認為這正是本次週期與前一次週期相比的獨特之處。我們對自己所處的現狀感覺很好，我們繼續執行團隊的良好表現，並且我們設法在略微負面的需求背景下提高我們的毛利率。

Okay. Great. And then it seems like your peers are putting up some pretty challenging numbers in China and Asia and you guys kind of bucked the trend. And so that really stood out. I'm just wondering what you think you're doing there, is it share gain? Is it kind of where you play that's kind of driving that meaningful outgrowth?

好的。偉大的。看起來你們的同行在中國和亞洲創造了一些頗具挑戰性的數字，而你們卻逆勢而上。所以這確實很引人注目。我只是想知道你在那裡做什麼，是為了拿到股份嗎？您所從事的活動是否能夠推動這種有意義的發展？

Yes, Jeff, thank you. I'm very proud of what our China team has been able to execute. We've spoken for a while that we have had a pretty significant focus (technical difficulty) region, for region. So that our business is really more dependent on the local macro environment than as demonstrated, that's not been necessarily great. It's been challenging for some time. But we did see some green shoots in industrial end markets in Q3.

是的，傑夫，謝謝你。我對我們的中國團隊所取得的成績感到非常自豪。我們已經說過一段時間了，對於地區，我們有一個相當重要的重點（技術難度）區域。因此，我們的業務實際上比所顯示的更依賴當地的宏觀環境，這並不一定是件好事。一段時間以來這一直是個挑戰。但我們確實在第三季看到了工業終端市場的一些復甦跡象。

Our team has been focused on expanding our market share, expanding our presence across various applications in the industrial space, just as much as in the automotive replacement side of our business, and they have executed really well.

我們的團隊一直致力於擴大我們的市場份額，擴大我們在工業領域各種應用領域的影響力，就像我們的業務在汽車更換方面一樣，而且他們的表現非常出色。

And while we don't certainly see any benefits yet from the stimulus that the Chinese government is indicating that they will deploy we feel pretty good about where we sit. The growth has been returning, and we anticipate that we're going to have kind of a mid-single-digit growth rate for the full year 2024 in China. So the team has done a really good job.

儘管我們目前還未從中國政府即將實施的刺激政策中看到任何好處，但我們對目前的狀況感到十分滿意。成長正在恢復，我們預計 2024 年全年中國將實現中等個位數的成長率。所以這個團隊做得非常好。

Nigel Coe, Wolfe Research.

奈傑爾·科（Nigel Coe），沃爾夫研究公司。

So there's a lot going on this morning from my head spinning. I just wanted to just make sure that the message on page 11 is crystal clear. So are you saying that by 2026 or -- for 2026 or your kind of guidance towards 25.5%, the high end of your medium-term EBITDA margin target. Is that the message?

所以今天早上發生了很多事，讓我頭暈目眩。我只是想確保第 11 頁上的信息非常清晰。那麼您是說到 2026 年，或者——對於 2026 年，或者您預期的 25.5% 是中期 EBITDA 利潤率目標的高端。這就是資訊嗎？

Yes. So I would say at the end of '26 compared to 2024 that we will be at that $40 million run rate of savings or 100 basis points, a little bit over 100 basis points that we had committed to on the last call as we move forward. So it will hit incrementally as we move through '25 and '26 as we execute on the different projects. the different optimization plans. But if you look at it over a two-year period, by then is when you should see that 100-plus basis points of incremental EBITDA margin improvement.

是的。因此，我想說，與 2024 年相比，到 2026 年底，我們的節省運行率將達到 4000 萬美元，或者說 100 個基點，略高於我們在上次會議上承諾的 100 個基點。因此，隨著我們在'25 和'26 年執行不同的項目，它將逐步受到影響。不同的優化計劃。但如果你從兩年的時間角度來看，到那時你會看到 EBITDA 利潤率將增加 100 多個基點。

Okay. But not necessarily 25.5%. That's somewhat volume-dependent. Okay. I understand that. Okay. And then on the 4Q kind of buildup, I think that at the midpoint, you're seeing a slight pickup, I think, maybe 1% or so on revenues at the midpoint. The margin stepping down a fair amount. So we got revenue stable to slightly up. margin down, I think, maybe 100 basis points plus QoQ. So I just want to understand those dynamics a little bit better.

好的。但不一定是25.5%。這在某種程度上與音量有關。好的。我明白。好的。然後就第四季的成長而言，我認為在中間點，你會看到收入略有回升，我認為中間點的收入可能會成長 1% 左右。利潤率下降了相當幅度。因此我們的收入保持穩定甚至略有上升。我認為，利潤率可能比上一季下降 100 個基點以上。所以我只是想更了解這些動態。

Yes. Well, that's driven almost entirely by -- we talked about on the on the last earnings call that we had won this automotive replacement business, and we were doing some lift credits as we put inventory in place. Those headwinds higher than what we thought they would be because we're accelerating that activity in terms of shipping that business. And then also, that's predominantly happening in Q4 is where the majority of those credits are happening.

是的。嗯，這幾乎完全是由——我們在上次財報電話會議上談到，我們贏得了這項汽車更換業務，並且在我們把庫存放到位時，我們正在做一些提升信貸。這些阻力比我們想像的還要大，因為我們正在加快運輸業務方面的活動。而且，這主要發生在第四季度，大多數信貸都發生在這一季度。

So I would say year-over-year, that's kind of a 75 to 80 basis points headwind from an EBITDA margin perspective.

因此，我認為與去年同期相比，從 EBITDA 利潤率的角度來看，這是 75 到 80 個基點的逆風。

One other comment real quick on revenues. Just also for the full year, think about -- I know you didn't ask this, but it just helps shape up think about close to a 1% headwind for the full year on FX. So as you think about the core sales growth, what's implied for the fourth quarter. So I just want to make sure that everybody has that as a modelling piece.

關於收入還有一則評論。同樣就全年而言，想想——我知道你沒有問這個問題，但它有助於塑造對全年外匯接近 1% 逆風的思考。那麼當您考慮核心銷售成長時，這對第四季度意味著什麼。所以我只是想確保每個人都擁有它作為一個模型。

And then just a quick clarification on the share count portion of the bridge. I know you don't break out checkout, but that would embed the 3Q buyback that wouldn't have any influence from the -- whatever Blackstone does in the next couple of months or so.

然後只是對橋樑的份額計數部分進行快速澄清。我知道您不會單獨列出結帳，但這會嵌入第三季度的回購，這不會受到黑石在未來幾個月內所做的任何影響。

That's correct.

沒錯。

Damian Karas, UBS.

瑞銀的 Damian Karas。

Brook, you had made a comment that you believe you're nearing a trough and are starting to position for a recovery. Just curious -- maybe you could elaborate on what you're seeing and hearing that leads you to that viewpoint. And if that is, in fact, the case, how do you suspect that translates to growth range for the business in 2025.

布魯克，你曾說過，你相信自己已經接近低谷，並開始為復甦做好準備。只是好奇——也許你可以詳細說明一下你所看到和聽到的讓你得出這個觀點的內容。如果事實確實如此，您認為這會對 2025 年的業務成長範圍產生怎樣的影響？

Yes. So look, there's been a lot several quarters, what, eight, nine quarters of negative PMI and volume down volumes, particularly on the industrial side. And so as we've moved through the year, there's a couple of things that we're really focused on, right? One is we talked about kind of labour availability and making sure that we have the ability to run our factories optimally. .

是的。所以看起來，已經有幾個季度，有八、九個季度的 PMI 為負值，而且數量下降，尤其是在工業方面。因此，隨著這一年的過去，我們真正關注的是幾件事，對嗎？一是我們討論勞動力的可用性，並確保我們有能力以最佳的方式運作我們的工廠。。

And then also making sure that we're positioning our inventory for superior customer service and then to be ready for the inflection. And so as we move through the year, we try to make sure that at some point, we're going to come to the end of this negative PMI.

然後也要確保我們的庫存定位能夠提供優質的客戶服務，並為轉變做好準備。因此，隨著時間的流逝，我們試圖確保在某個時候，我們將結束這一負面 PMI 狀況。

You're going to see things inflect. And so we just want to make sure that we continue to keep ourselves ready for that inflection. And so when that comes, we don't know, we know there are certain parts of the business that we expect to inflect sooner rather than later.

你會看到事情發生變化。因此，我們只是想確保我們繼續為這種轉變做好準備。所以當這種情況來臨時，我們不知道，但我們知道業務的某些部分我們預計會盡快改變。

We would expect mobility to inflect a little bit sooner in 2025. Industrial, we'll see when that starts to happen. But we want to make sure we're ready and prepared for the inflection to make sure we can serve the customers and take advantage of the up cycle.

我們預計，2025 年流動性情勢將有所改善。工業，我們會看到什麼時候會發生這種情況。但我們要確保我們已經做好準備，迎接這項轉變，以確保我們能夠為客戶提供服務，並充分利用上升週期。

I see. That makes sense. And then regarding the footprint optimization, are there any further details you can share around the facilities like where they're located, any particular concentration in end market or product? And what's your confidence that you can maintain market share should we see a return to growth sooner rather than later with less facility capacity out there?

我懂了。這很有道理。然後關於足跡優化，您可以分享有關設施的更多細節嗎，例如它們位於何處，終端市場或產品的特定集中度？如果我們在設施容量減少的情況下很快恢復成長，您對維持市場佔有率有什麼信心？

Yes. So we try to play a little bit close to the vest on the location. It's primarily in the fluid power segment that we're seeing the footprint optimization activities so far. And remember, as we talked about, we're not we're not taking capacity out of our operational footprint, right?

是的。因此，我們在選擇地點時盡量保密。到目前為止，我們主要在流體動力領域看到了足跡優化活動。請記住，正如我們所討論的，我們不會從我們的營運足跡中獲取容量，對嗎？

We are, in fact, making sure we have the same or more operational capacity and -- or in labour availability as we move through these footprint optimization plans. That's key for us. And if you remember, Elo and I both talked about labour availability being one of the biggest drivers as we move through this footprint optimization plan.

事實上，我們在實施這些足跡優化計劃時，正在確保我們擁有相同或更多的營運能力和——或勞動力的可用性。這對我們來說很關鍵。如果你還記得的話，Elo 和我都談到勞動力的可用性是我們實施這項足跡優化計畫的最大驅動因素之一。

So we actually feel better about where we stand from a capacity perspective as we move through the cycle. And we thought through all of that as we thought about how we optimize our footprint moving forward.

因此，隨著我們進入整個週期，從產能角度來看，我們實際上對自己所處的位置感覺更好了。當我們思考如何優化我們未來的足跡時，我們對所有這些都進行了思考。

Julian Mitchell, Barclays.

巴克萊銀行的朱利安·米切爾。

I suppose just want to sort of double check because you're talking about inventories being high because of expected sort of demand inflection, but you're not seeing that inflection yet. And when I look at the inventories to, say, trailing 12-month sales, I think they're at 21% in September and inventories are up low double digit year-on-year. Pre-COVID your inventory to sales was 15%.

我想只是想再檢查一下，因為你說的是庫存高企是因為預期的需求拐點，但你還沒有看到這種拐點。當我查看庫存與過去 12 個月的銷售額時，我認為 9 月的庫存為 21%，庫存量比去年同期增長了兩位數。在疫情之前，您的庫存與銷售額比為 15%。

So just want to understand, should we expect for the medium term, your inventory to sales runs at sort of 20% plus, and that's a kind of sustainable go-forward rate from here?

所以只是想了解一下，我們是否應該預期，從中期來看，您的庫存與銷售額之比將達到 20% 以上，這是一種可持續的增長速度？

Julian, I think it's a great question. Look, a couple of things. Number one, we've talked a little bit about taking incremental customers into 2025. I think Brooks talk about the ramp-up that is happening actually in Q4 of those -- of the new account and we have repositioned some inventory to be able to fill the slew of initial orders and fill the still the order set of rates that the customer is expecting.

朱利安，我認為這是一個很好的問題。看，有幾件事。首先，我們討論了一下如何在 2025 年吸引增量客戶。我認為布魯克斯談論的是第四季度新帳戶的實際增長，我們重新定位了一些庫存，以便能夠滿足大量的初始訂單，並滿足客戶期望的訂單費率。

So I'll put that on one side. On the other side, as these cycles inflect. Historically, we have been in a position where we could not fully capitalize on some of the available business that was coming our way and very quickly, we build up a substantial amount of past few backlog.

因此我將把它放在一邊。另一方面，隨著這些週期轉變。從歷史上看，我們一直處於無法充分利用一些即將到來的業務的境地，而且很快，我們就累積了大量過去的積壓訂單。

And so what we have -- when we take a look at the analytics on the business and we look at the same data that you very carefully monitor the PMIs have been negative for over 24 months. While we are not calling the reversal of the PMI cycle, we believe that we have a lot closer to that inflection and perhaps we were thinking at the beginning of the year of 2024, if you recall.

因此，當我們查看業務分析數據並仔細監控相同的數據時，我們發現 PMI 已連續 24 個月為負值。雖然我們還沒有稱之為 PMI 週期的逆轉，但我們相信我們已經非常接近那個拐點，也許我們在 2024 年初就想到了這一點，如果你還記得的話。

And so as we think about our business, we just want to make sure that we position ourselves well we will run with a slightly elevated level of inventory into the next up cycle. We believe that, that will position us well to take more market share. And we have enough initiatives to our disposals to be able to deliver on the free cash flow commitments that we have committed to the analyst community and to our shareholders. So that's kind of how we are thinking about it.

因此，當我們考慮我們的業務時，我們只是想確保我們定位良好，我們將以略高的庫存水準進入下一個上升週期。我們相信，這將使我們佔據更大的市場份額。我們在資產處置方面有足夠的舉措，以便能夠兌現我們向分析師群體和股東承諾的自由現金流承諾。這就是我們的想法。

That's really helpful. And just following up on your point on the cash flow aspect. So I think year-to-date, you're running at about 40% conversion of adjusted net. Do we -- in Q4, is the implication that there's some kind of sort of non-inventory working cap liquidation and that's what pushes you up towards the 90% for the full year.

這真的很有幫助。我只是想跟進您對現金流的觀點。所以我認為今年迄今為止，調整後的淨轉換率約為 40%。在第四季度，是否暗示存在某種非庫存工作上限清算，而這正是推動全年達到 90% 的因素。

And when we think about uses of cash going forward, should we assume it's still sort of very much buyback as the focus, at least for the next year, given where the stock's valuation is?

當我們考慮未來現金的用途時，考慮到股票的估值，我們是否應該假設回購仍然是未來的重點，至少在明年是這樣？

Yes. So if you look back at our last four-- Q4 from a cash conversion perspective, where we are right now to deliver the 90% cash conversion commitment is right at average. And so the business typically does generate a significant amount of cash because of seasonality in Q4.

是的。因此，如果從現金轉換的角度回顧我們過去的四個季度，我們現在實現 90% 現金轉換承諾的比例處於平均水平。因此，由於第四季度的季節性影響，該業務通常會產生大量現金。

And as Ivo talked about, some of this inventory is going to come out as we ship some of this automotive replacement business. We're going to see some normal seasonality cash coming in, both in terms of receivables and in terms of inventory drawdown and things like that.

正如 Ivo 所說的那樣，當我們運送部分汽車替換業務時，部分庫存就會出來。我們將會看到一些正常的季節性現金流入，包括應收帳款、庫存減少等等。

And so we feel pretty comfortable and confident where we are from a cash conversion perspective. From a capital allocation perspective, look, we still have to pay down some gross debt to get below $2 billion. We -- stock buybacks, we still have authorization on our stock buyback.

因此，從現金轉換的角度來看，我們感到非常滿意和自信。從資本配置的角度來看，我們仍然需要償還一些總債務才能達到 20 億美元以下。我們 - 股票回購，我們仍然擁有股票回購的授權。

And as our stock trades higher, and multiple looks better, the math on doing acquisitions is going to look better for us, right? And so M&A is something we're definitely going to haven't in the quiver as we look forward on capital allocation moving through 2025.

而且隨著我們的股票交易價格越來越高，而且倍數看起來越來越好，進行收購的數學計算對我們來說也會越來越好，對嗎？因此，當我們展望 2025 年的資本配置時，我們肯定不會將併購納入考量。

But we will be very thoughtful about embracing the alternatives. And as you said, Julian, stocks way to cheap based upon the financial metrics and the performance that we have delivered, and we believe that -- it's in the best of shareholders' interest to deploy capital in buying back our shares. .

但我們會非常慎重地考慮是否接受其他替代方案。正如你所說，朱利安，根據財務指標和我們的業績，股票價格太便宜了，我們相信，部署資本回購我們的股票符合股東的最佳利益。。

Deane Dray, RBC.

加拿大皇家銀行 (RBC) 的 Deane Dray。

Just wanted to clarify on Julien's question regarding the inventories. If we look at the increase, how much of it was for this new auto replacement account, the channel fill, if you will, versus positioning ahead of demand, ensuring your fill rates and service levels. So if we just -- if you could separate those two.

只是想澄清一下朱利安關於庫存的問題。如果我們看一下增長情況，其中有多少是用於這個新的汽車更換帳戶，有多少是渠道填充，如果你願意的話，與提前定位需求，以確保你的填充率和服務水平。所以如果我們只是——如果你能將這兩者分開。

Yes. I mean I would say the inventory positioning for the new business is probably in the $10 million to $15 million range. And then the balance is us working through optimizing our inventory using the 80/20 tools, thinking about when the inflection might come, what those demand signals that might look like and then how we make sure we take full advantage of the up cycle when it comes.

是的。我的意思是，新業務的庫存定位可能在 1000 萬美元到 1500 萬美元的範圍內。然後，我們需要利用 80/20 工具來優化庫存，思考拐點何時可能到來，那些需求訊號可能會是什麼樣子，以及如何確保在上升週期到來時充分利用它。

Okay. That's good. And then can you talk about contributions from new products and any update? I know it's still small, but any update on the data center initiatives.

好的。那挺好的。那麼您能談談新產品的貢獻和任何更新嗎？我知道它仍然很小，但有關資料中心計劃的任何更新資訊。

Yes, sure. So we continue to track towards the 20% of new product vitality index Dean. So we're very much on track to reach the level that we have committed kind of in that 2018, 2019 time frame. So that's making really good progress.

是的，當然。因此，我們繼續追蹤20%的新產品活力指數Dean。因此，我們非常有望在 2018 年、2019 年期間實現我們承諾的水平。所以這確實是一個很大的進展。

And as we anticipate the inflection in personal mobility, we will continue to see a nice contribution from those sales into the NPI vitality in addition to our fluid conveyance side of our business. I would say that maybe on the data centers, in September, we've announced the launch of a new data master data center cooling house that we anticipate will start shipping this quarter in Q4.

而且，隨著我們預期個人移動性將發生轉變，我們將繼續看到這些銷售對我們業務的流暢傳輸方面以及新產品導入活力做出良好貢獻。我想說，也許在資料中心，我們在九月宣布推出一個新的資料主資料中心冷卻室，我們預計將於本季第四季開始出貨。

It's a product line that is very specifically designed towards data center application. It does have better maybe increased compactness for the application, allowing a much more efficient assembly and routing in very tight footprint in those data centers.

這是專門針對資料中心應用設計的產品線。它確實可能更好地增加了應用程式的緊湊性，從而允許在資料中心非常狹窄的空間內進行更高效的組裝和佈線。

And there's also features very specialty compounded type materials that ensure cleanliness throughout the system, limiting any contamination opportunities and downtime to engineering and deploying our material science into this product line.

而且還具有非常特殊的複合材料，可確保整個系統的清潔度，限制任何污染機會和停機時間，並將我們的材料科學工程部署到該產品線中。

So it will be more on the new product side of the data centers. And then we are working very closely with our partner, Cool IT on a number of applications on our water pumps. We are also expanding the portfolio of these wire pumps from about 100 watts up to 4 kilowatts, and we have a number of new accounts that we are working on design ins with globally and frankly, predominantly between North America and Asia. So that's proceeding quite well. Again, it's very early on.

因此它將更多地關注資料中心的新產品方面。然後，我們與合作夥伴 Cool IT 密切合作，在我們的水泵上開發了許多應用。我們還將把這些線泵的產品組合從大約 100 瓦擴大到 4 千瓦，並且我們在全球範圍內擁有許多新客戶，我們正在與他們合作進行設計，坦率地說，主要是在北美和亞洲。一切進展順利。再說一遍，現在還為時過早。

And while there's lots of lots of interest and lots of discussion about companies that are booking kind of new business lots of the new businesses coming on the chip side. And then on the infrastructure side, there are some customers that have a longer cycle infrastructure-type build. And our products are more consumable that go into these type of applications and we anticipated our stacking is going to be more on the latter part of that project cycle. So we're very excited about what we are doing.

雖然人們對預訂新業務的公司有很多興趣，也有很多討論，但許多新業務都來自晶片方面。在基礎設施方面，有些客戶的基礎設施建置週期較長。我們的產品更具消耗性，可以用於此類應用，我們預計我們的堆疊將更多地出現在專案週期的後期。我們對於自己所做的事情感到非常興奮。

The opportunities are quite nice out there, and we have substantially scaled up the reach of the type of customers that we are dealing with, both from kind of the hardware side all the way through the infrastructure side.

外面的機會相當不錯，而且我們已經大大擴大了我們所服務的客戶類型的範圍，包括從硬體方面到基礎設施方面。

Mike Halloran, Baird.

麥克·哈洛倫，貝爾德。

I have two here. One, just as you think about the stress end markets that you're seeing today, are you at the point where you're starting to see sequential stability in those markets? Or is there still a deterioration? And I suppose more broadly when you think about the cumulative portfolio at this point? Is this just more stable at softer levels? Or is it more variable than that by end market if I'm just thinking about it on a sequential basis?

我這裡有兩個。首先，正如您思考今天所看到的壓力終端市場一樣，您是否開始看到這些市場出現連續的穩定？或者說情況還有惡化嗎？我想，當您考慮此時的累積投資組合時，範圍會更廣泛一些？這在較軟的層面上是否更穩定？或者，如果我只是按順序考慮，那麼終端市場的變化是否比這更大？

Yes. Look, the algorithm of the thesis about Gates has been that with our large presence in replacement market, the replacement market should give you a better stability as you move through these cycles. And so I think that you're kind of seeing that playing itself out replacement markets have been performing significantly better. We replacement markets have been slightly up. on a much larger base of revenue.

是的。你看，關於蓋茲的論文的演算法是，由於我們在替代市場中佔有重要地位，因此當你經歷這些週期時，替代市場應該會為你帶來更好的穩定性。因此，我認為你會看到替代市場的表現明顯更好。我們的替代市場略有上漲。在更大的收入基礎上。

And the first-fit side of our business, which is much smaller, has been rather substantially impacted predominantly by the negative end market environment with off-highway. So I think add commercial construction. This is the nuance on personal mobility, but it's just an overhang from a super cycle that was occurring during COVID.

而我們業務的首次組裝部分規模要小得多，主要受到非公路用車終端市場負面環境的嚴重影響。所以我認為增加商業建築。這是個人出行的細微差別，但這只是 COVID 期間超級週期的一個延伸。

And on that end market, we do start to see stability. We are starting to see that inventories in the channels in the personal mobility channel has stabilized rather nicely, and we certainly anticipate that as we exit into '25, the personal mobility will start to nicely accelerate and start getting more on a trajectory of growth rates that we have seen historically. And that we feel good about that not only because we are we are the leading brand in those applications.

在終端市場，我們確實開始看到穩定。我們開始看到個人流動管道中的庫存已經相當穩定，我們當然預計，當我們進入25年時，個人流動將開始加速並開始沿著我們歷史上看到的成長率軌跡發展。我們對此感到高興，不僅因為我們是這些應用領域的領導品牌。

But also, we have a ton of new design-ins that we have prosecuted over the last couple of years. And then when I take a look at more traditional markets, look, I mean, our industrial replacement market has behaved much more constructively in Q3 while it hasn't accelerated into a growth position, it has stabilized.

而且，過去幾年我們也審理了大量的新設計。然後，當我觀察更傳統的市場時，我們發現，我們的工業替代市場在第三季表現得更積極，雖然它還沒有加速進入成長狀態，但已經趨於穩定。

It's kind of flatlined, which is good to see from where I sit, replacement markets in the automotive side of our business are performing quite well, and that's after two years of really nice sustained growth. And again, we spoke -- Brook spoke a little bit earlier about the ramp-up of the new account that we have in AR in North America that will be very nicely accretive in '25.

它有點持平，從我的角度來看這是件好事，我們汽車業務的替代市場表現相當不錯，這是在經過兩年的持續良好增長之後實現的。再次，我們談到了——布魯克早些時候談到了我們在北美 AR 領域新帳戶的成長，這些帳戶將在 25 年實現非常好的成長。

And so the replacement market is doing exactly what we thought it's going to do when we brought the company public. It's providing more stability. And I think that bodes well for the future. Again, I'll put a plug in there, right?

因此，替代市場正在經歷我們在公司上市時所預料到的情況。它提供了更高的穩定性。我認為這對未來來說是個好兆頭。再說了，我會把插頭插在那裡，對吧？

I mean we have had a couple of years of negative core growth and we have grown our gross margins and EBITDA margins nicely over the last 24 months. So we feel quite good about what this business capacity is when we start actually getting some operational leverage on incremental revenues.

我的意思是，我們已經經歷了幾年的核心負成長，但在過去 24 個月裡，我們的毛利率和 EBITDA 利潤率卻實現了良好的成長。因此，當我們開始真正獲得增量收入的一些營運槓桿時，我們對這種業務能力感到非常滿意。

Yes, makes sense. And a follow-up, just I certainly understand the answer to Julian's question earlier about buyback prioritization. As you think about the shift to M&A over the next few years here, how aggressively are you working on the cultivation today? Do you feel like you have the right team in place? And then what kind of opportunities are you seeing out there when you look at things that you're coming your way or that you're working on?

是的，有道理。另外，我當然明白朱利安之前關於回購優先順序的問題的答案。當您考慮未來幾年向併購轉變時，您目前在培育方面有多積極？您是否覺得您已經組建了合適的團隊？那麼，當您審視自己正在遇到的事情或正在從事的事情時，您看到了什麼樣的機會？

Look, we have a good team, a small team, but a good team. Our first priority was to repair our balance sheet or get our balance sheet to a point where we can start thinking about deploying excess free cash flow into incremental M&A. While that was happening, we were not inactive. We are active out there. We are cultivating relationships.

看，我們有一支優秀的團隊，雖然團隊很小，但卻是優秀的團隊。我們的首要任務是修復我們的資產負債表，或讓我們的資產負債表達到我們可以開始考慮將多餘的自由現金流投入增量併購的程度。當這一切發生時，我們並沒有停止活動。我們在那裡很活躍。我們正在培養關係。

We have pipelines of opportunities where we've participated in a number of discussions, but at this point in time, again, our stock is cheap, and I probably get more rewarded by and generating rewards for our shareholders by buying back stock and deploying and trying to buy companies at much higher multiple that (technical difficulty). But I think that as we rerate and as things starts to normalized, we continue to execute.

我們有很多機會，我們已經參與了許多討論，但目前我們的股票價格很便宜，我可能會透過回購股票、部署和嘗試以更高的市盈率收購公司，從而獲得更多的回報，並為我們的股東創造回報。（技術難度）。但我認為，隨著我們重新評級並且事情開始正常化，我們會繼續執行。

We have some at some (technical difficulty) are deploying SG&A towards those opportunities, we have done a good job in balancing our capital deployment across our factories. So we are well positioned to deliver on nice organic growth rate as the market start to stabilize. And I don't think that, that's a year out. That's probably a lot closer than that.

我們在部署銷售、一般及行政開支以抓住這些機會時遇到了一些技術困難，我們在平衡各工廠的資本配置方面做得很好。因此，隨著市場開始穩定，我們有能力實現良好的有機成長率。我不認為那會是一年後的事。那可能比那更近。

Jerry Revich, Goldman Sachs.

高盛的傑瑞·雷維奇（Jerry Revich）。

This is Clay on for Jay. Just one question for me. How has price costs trended throughout the year as material costs have slowed? And then how does this inform how we think about pricing for next year?

這是 Clay 代替 Jay 上場。我只想問一個問題。隨著材料成本放緩，全年價格成本趨勢如何？那麼這對我們思考明年的定價有何影響呢？

So look, there's really two components to our pricing. We have always maintained and always I think we'll maintain. We have pretty strong pricing power, and we'll always offset material freight inflation price. And I think the second component is the 80-20 pricing as part of our 80/20 enterprise initiative.

所以看，我們的定價其實是由兩個部分組成。我們一直堅持這一點，我認為我們也會一直堅持這一點。我們擁有相當強的定價能力，我們始終會抵銷材料運費通膨價格。我認為第二個組成部分是 80-20 定價，這是我們 80/20 企業計劃的一部分。

And that's been nicely accretive not hugely accretive but nicely accretive as we move through 2024. And we haven't fully deployed 80/20 across all of our regions and all of our product line yet. And so we're continuing to roll that out. and we think there's still some runway relative to the 80/20 pricing and some accretion there. But we're confident whichever way inflation goes, we'll be able to price for inflation, and we'll be able to make sure we maintain our margins, irrespective of how inflationary the environment is. .

而且隨著我們進入 2024 年，這已經是很好的增值了，雖然不是大幅增值，但已經是很好的增值了。而且我們尚未在所有地區和所有產品線上全面部署 80/20。因此我們將繼續推行這項措施。我們認為相對於 80/20 定價，仍有一些跑道和一些增值空間。但我們相信，無論通膨如何變化，我們都能夠根據通膨情況進行定價，無論通膨環境如何，我們都能夠確保維持我們的利潤率。。

Nigel Coe, Wolfe Research.

奈傑爾·科（Nigel Coe），沃爾夫研究公司。

Yes, I've got another question. So I just wanted to come back to the data center opportunity. I mean, I know it's very small right now, but when you compared to Parker Hannifin has sized the TAM at potentially $2 billion by 2028, I'm just wondering if that's kind of the scope of the market you see as well. Just there any thoughts there would be helpful.

是的，我還有一個問題。所以我只是想回到資料中心的機會。我的意思是，我知道它現在非常小，但是當你與派克漢尼汾相比時，到 2028 年其 TAM 規模可能達到 20 億美元，我只是想知道這是否也是你所看到的市場範圍。只要有想法就會有幫助。

Yes. Nigel, I think during our capital market day, I've talked about kind of $1 billion, $1.5 billion. So we're in a very similar vicinity as what Parker has outlined. They may have some other products there. But for us between our houses, couplings and in water pumps, we believe that, that's plus or minus a similar number.

是的。奈傑爾，我想在我們的資本市場日期間，我談到了 10 億美元、15 億美元左右。因此，我們所處的情況與帕克所概述的非常相似。他們可能在那裡有一些其他產品。但對於我們的房屋、聯軸器和水泵而言，我們相信，這是正負一個相似的數字。

Okay. And then just a quick one on the return to growth because it seems that you are seeing a bot in the market and I think any sort of reasonable view on seasonality as we go from 4Q to 1Q, has you growing in 1Q '21? Just want to make sure that's not out of whack with your thoughts.

好的。然後我快速問一下恢復成長的問題，因為您似乎看到市場上出現了一個機器人，我認為，隨著我們從第四季度到第一季度，對季節性的任何合理看法，您是否在 21 年第一季度實現了成長？只是想確保這不會與您的想法相矛盾。

Well, we're not prepared to talk about 2025 quite yet. But if you were to look at normal seasonality through over the course of the last few years, one would expect you move from growth as you move from Q4 to Q1. But in our next call, we'll roll out our 2025 guidance and what we're thinking about volumes and margins and everything. So -- but assuming normal seasonality, one would think you would return to growth.

嗯，我們還沒準備好談論 2025 年。但如果您觀察過去幾年的正常季節性，您會發現從第四季度到第一季度，經濟將從成長轉向下降。但在下一次電話會議上，我們將推出 2025 年的指導方針，以及我們對銷售、利潤率等各方面的考量。所以——但假設季節性正常，人們會認為你會恢復成長。

David Raso, Evercore ISI.

大衛·拉索（David Raso），Evercore ISI。

Sorry, I've been a lot of calls, so if this was answered, I apologize. The ag construction and personal mobility softness, is there any sign of a bottoming in those particular markets sort of dovetailing on the prior question about trying to think of resumption of organic growth are those businesses a big part of that? Or is that something that we don't yet really know when the bottom is on those markets?

抱歉，我接了很多電話，如果這個問題已經得到答复，我深表歉意。農業建築和個人流動性疲軟，這些特定市場是否有觸底的跡象，這與先前關於試圖恢復有機成長的問題相吻合，這些業務是否是其中的重要組成部分？還是我們還未真正知道這些市場何時會觸底？

Yes, Dave. Thank you for your question. I would -- I think I stated it a couple of minutes ago. We definitely believe that personal mobility is stabilizing. So while it may still be somewhat negative in Q4, the inventory channel inventory and inventory at our customers is bottoming out and normalizing. So we anticipate that personal mobility will resume growth in 2025.

是的，戴夫。感謝您的提問。我會——我想我幾分鐘前就說過了。我們確實相信個人流動性正在趨於穩定。因此，儘管第四季可能仍存在一定負面因素，但庫存通路庫存和客戶庫存正在觸底並趨於正常。因此，我們預計個人出行將在 2025 年恢復成長。

I would say that ag and commercial construction is still reasonably negative. And you probably know it better than I do, but my sense is that there's probably somewhat more pain, maybe that's going to be layered in over the next couple of quarters in a particularly before we start seeing some stability in those two end markets.

我想說農業和商業建築仍然相當負面。您可能比我更了解這一點，但我的感覺是，可能會有更多的痛苦，也許這種痛苦將在接下來的幾個季度中逐漸顯現，特別是在我們開始看到這兩個終端市場出現一些穩定之前。

And anything on construction in particular?

還有什麼關於建築的具體資訊嗎？

No, I would say that construction is kind of similar to ag. It's reasonably negative globally. I think that you're probably not going to see any stability into maybe latter part of next year.

不，我認為建築有點類似農業。從全球來看，這項數據相當負面。我認為直到明年下半年可能都不會看到任何穩定。

And lastly, the plant closures, the facility closure. Any reason -- I mean it's easier for me to ask then you to execute. I appreciate that, especially trying to serve customers. But any reason we can't pull forward some of the closures me unless you think the market.

最後，工廠關閉，設施關閉。任何原因——我的意思是我提出要求比你執行更容易。我很感激這一點，尤其是盡力為顧客服務。但無論出於什麼原因，我們都不能提前關閉一些工廠，除非你認為市場狀況良好。

We did. We've just announced -- sorry, we did, David. We've just announced three that we're going to -- we announced them in the second half of and we just stated that we will complete those closures by end of this year. And we did say that our policy is that we will tell you when we are executing when we are well on execution side, and we have more that we anticipate to execute into 2025.

我們做到了。我們剛剛宣布了——抱歉，我們確實宣布了，大衛。我們剛剛宣布了將在下半年關閉三家門市，我們剛剛表示將在今年年底前完成這些門市的關閉。我們確實說過，我們的政策是，當我們在執行方面做得很好時，我們會告訴你我們何時執行，而且我們預計到 2025 年還會執行更多。

And when we are ready to go and delineate exactly the impact, we will come up and we will provide an update we have provided incremental update in our deck on page 11, and we are on track to execute those.

當我們準備好並準確描述影響時，我們將提出更新，並提供第 11 頁中提供的增量更新，並且我們正在按計劃執行這些更新。

And of what's been announced, how much are those already accounting for part of the $40 million in full savings? Just so I can get a scope of how many maybe more need to be executed to get to $40 million.

那麼，在已經宣布的措施中，有多少已經佔到 4,000 萬美元全部節省額的一部分？這樣我就能知道需要執行多少才能達到 4,000 萬美元的目標。

Yes. Look, I mean, I think as we -- we want to be really careful in terms of how much we roll out, how much detail we give based on the timing of when things roll out. We're going to stick with -- look, by the end of '26, we're going to be at $40 million of incremental EBITDA margin over 100 basis points of incremental EBITDA margin.

是的。看，我的意思是，我認為我們要非常小心我們推出多少產品，根據產品推出的時間來提供多少細節。我們將堅持下去——到 26 年底，我們的增量 EBITDA 利潤率將達到 4000 萬美元，超過增量 EBITDA 利潤率 100 個基點。

And the spread is kind of 40%, 25% and 60%. And as we move through things and we start to realize savings, we'll be a little bit more, I think, discrete in terms of counting out what we've achieved versus what we have to go. But right now, we're going to stick with that overview. I will give you an update on that overviews investment for growth through the different phases of the footprint optimization.

其利差大概為 40%、25% 和 60%。隨著我們不斷進步並開始實現節約，我認為，在計算我們已經取得的成就和我們需要實現的成就時，我們會更加謹慎。但現在，我們將堅持這項概述。我將向您介紹在足跡優化的不同階段中對成長的投資概況。

And David, that's at run rate for '25 and '26. So the 40% gets you to a number, but we're -- that's run rate, not realized savings in '25.

戴維，這是 25 年和 26 年的運行率。因此 40% 會讓您得到一個數字，但我們 — — 這是運行率，而不是 25 年實現的節省。

No, I appreciate it's not 16 for the full year, it's a run rate in '16 by the time you exit.

不，我知道這不是全年的 16 倍，而是您退出時 16 年的運行率。

By the end of the '25. Correct.

到25年底。正確的。

Andrew Kaplowitz, Citi.

花旗銀行的 Andrew Kaplowitz。

I think you started Diversified Industrial is one of your most resilient end markets in power transmission, which I think is kind of the opposite of what you were seeing earlier in the year. So maybe you can give us more color on what's going on there overall.

我認為，您創辦的多元化工業是您在電力傳輸領域最具彈性的終端市場之一，我認為這與您今年早些時候看到的情況正好相反。所以也許您可以向我們更詳細地介紹那裡發生的整體情況。

Yes. Look, we are starting to see some more stability, particularly in the replacement channels. So I think that people still need to repair their apparatus. They may have deferring some maintenance. You can defer maintenance, however. I think that the inventories have been depleted rather significantly.

是的。看，我們開始看到更多的穩定性，特別是在替代管道。所以我認為人們仍然需要修理他們的設備。他們可能推遲了一些維護。但是您可以推遲維護。我認為庫存已經消耗得相當多了。

And while we don't -- we are not forecasting any significant rebound in inventories over the near term, we believe that we have reached kind of the flat of the demand disruption that we have seen over the last couple of years. So the diversified industrial end market was basically flat year-on-year, which is the best performance we have seen in several quarters.

雖然我們預測短期內庫存不會大幅反彈，但我們認為，我們已經達到了過去幾年所見的需求中斷的平穩階段。因此，多元化工業終端市場與去年同期相比基本持平，這是我們幾個季度以來看到的最佳表現。

And though, like auto OEMs become a small part of your business and it continues to be somewhat volatile. But like a lot of replacement seems quite stable and even arguably healthy, is it befitting from auto OEM volatility? And do you have good visibility going into '25 in the auto -- global auto replacement business?

然而，汽車原始設備製造商 (OEM) 只是您業務的一小部分，並且仍然會有一定的波動。但就像許多替代品看起來相當穩定，甚至可以說是健康的，它是否適合汽車原始設備製造商的波動？您對 25 年全球汽車更換業務的前景是否看好？

Look, we are very constructive on the global auto replacement business from a couple of different venues. One is that we are taking market share which is always nicely accretive to our business. And two, if you take a look at the underlying market dynamics, the car fleets continue to age.

你看，我們從幾個不同的角度對全球汽車更換業務非常有建設性的看法。一是我們正在佔領市場份額，這對我們的業務來說總是有益的。其次，如果你看一下潛在的市場動態，你會發現汽車車隊正在不斷老化。

People are driving. The unemployment is very healthy, both in the developed world as well as reasonably healthy in the developing world. We manufacture products that are not discretionary. If something breaks that we manufacture, it's not nice to have. You will have to replace it. And so that gives us more optimistic view that market continues to be reasonably accretive to what we do in '25.

人們正在開車。無論在已開發國家或發展中國家，失業率都處於非常健康的水平。我們生產的產品不是可自由支配的。如果我們製造的東西故障，那就不好了。您必須將其更換。因此，這讓我們更加樂觀地認為，市場將繼續合理地增值，以適應我們在 25 年所做的事情。

And you probably already talked about that, but just sort of my own edification I got on late is that I know you spoke about some start-up costs last quarter as you ramped up some .

你可能已經談到了這一點，但我最近得到的啟發是，我知道你談到了上個季度的一些啟動成本，因為你增加了一些。

They're lower in Q3. I would say that we've accelerated some of those lifts and shipments relative to the new business that we've won. And so we're expecting probably more headwinds on than originally anticipated. I would say most of those headwinds are coming in Q4, which -- there was an earlier question about year-over-year margin impact.

第三季的漲幅更低。我想說的是，相對於我們贏得的新業務，我們已經加快了部分運輸和出貨量。因此，我們預期可能面臨的阻力會比最初預期的更大。我想說，大部分不利因素都將在第四季度出現，而之前有一個問題是關於同比利潤率的影響。

And so there was like a 70 to 80 basis points margin impact year-over-year of that accelerated activity with the new replacement customer. So no, I mean, I think all in all, it's good. We're moving faster. We're performing better. We're getting the product on the shelf where it belongs, and we're going to have I think, a good footprint as we move into next year.

因此，隨著新替代客戶的加速活動，利潤率比去年同期產生了 70 到 80 個基點的影響。所以不，我的意思是，我認為總的來說，這是好的。我們行動得更快了。我們的表現越來越好。我們會把產品放到它應該在的貨架上，我想，進入明年，我們將會留下良好的足跡。

Thanks, Andy. We have no further questions at this time. I will now turn it back to Rich Kwas for any closing remarks. .

謝謝，安迪。目前我們沒有其他問題。現在我將把發言時間交還給 Rich Kwas，請他作最後發言。。

Thanks, everyone, for participating. If you have any follow-up questions, please feel free to reach out, and have a great rest of the week. Take care.

感謝大家的參與。如果您有任何後續問題，請隨時聯繫我們，並祝您本週剩餘時間過得愉快。小心。

This concludes today's conference. You may now disconnect.

今天的會議到此結束。您現在可以斷開連線。