Mayville Engineering Company Inc (MEC) 2024 Q2 法說會逐字稿

Good morning. Thank you for attending today's Mayville Engineering Company's second quarter 2024 earnings conference call. My name is Tamiya, and I will be your moderator for today's call. (Operator Instructions) I would now like to pass the conference over to your host, Stefan Neely with Vallum Advisors. You may proceed.

早安.感謝您參加今天梅維爾工程公司 2024 年第二季財報電話會議。我叫田宮，我將擔任今天電話會議的主持人。（操作員說明）我現在想將會議轉交給您的主持人，Vallum Advisors 的 Stefan Neely。您可以繼續。

Thank you, operator. On behalf of our entire team, I'd like to welcome you to the Mayville Engineering second quarter 2024 results conference call. Leading the call today is MEC's President and CEO, Jag Reddy; and Todd Butz, Chief Financial Officer.

謝謝你，接線生。我謹代表我們整個團隊歡迎您參加 Mayville Engineering 2024 年第二季業績電話會議。今天主持電話會議的是 MEC 總裁兼執行長 Jag Reddy；和財務長 Todd Butz。

Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission.

今天的討論包含有關未來業務和財務預期的前瞻性陳述。由於各種風險和不確定性，包括我們向美國證券交易委員會提交的定期報告中所述的風險，實際結果可能與今天的前瞻性聲明中預測的結果有顯著差異。

Except as required by law, we undertake no obligation to update our forward-looking statement. Further this call will include a discussion of certain non-GAAP financial measures. Reconciliations of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which is available at mecinc.com. Following our prepared remarks, we will open the line for questions.

除法律要求外，我們不承擔更新前瞻性聲明的義務。此外，本次電話會議也將討論某些非公認會計準則財務指標。這些指標與最接近的 GAAP 財務指標的對帳已包含在我們的季度收益新聞稿中，該新聞稿可在 mecinc.com 上取得。在我們準備好的發言之後，我們將開通提問熱線。

With that, I would like to turn the call over to Jag.

有了這個，我想把電話轉給賈格。

Thank you, Stefan, and good morning, everyone. Thank you for joining us today. During the second quarter, we continued to demonstrate strong strategic execution, which drove robust net sales growth, margin expansion and free cash flow conversion.

謝謝你，斯特凡，大家早安。感謝您今天加入我們。第二季度，我們持續展現強大的策略執行力，推動了強勁的淨銷售成長、利潤率擴張和自由現金流轉換。

During the quarter, our team successfully executed on new project startups in our commercial vehicle and powersports end markets. These new projects drove nearly 7% year over year organic sales growth, well above the growth trends in our end markets. Our team's continued focus on implementing our MBX lean initiatives drove $0.9 million of year over year self-help adjusted EBITDA improvements during the second quarter.

本季度，我們的團隊在商用車和動力運動終端市場成功執行了新專案啟動。這些新項目帶動有機銷售額較去年同期成長近 7%，遠高於我們終端市場的成長趨勢。我們的團隊繼續專注於實施 MBX 精益計劃，在第二季度透過自助調整後的 EBITDA 實現了 90 萬美元的同比改善。

Since the beginning of the year, our structured approach to operational excellence and lean manufacturing has resulted in approximately $2.5 million of sustainable year-over-year margin improvement. As we move into the second half of the year, our team's continued successful execution on key commercial growth and operational excellence initiatives combined with improving utilization at our Hazel Park facility will be important catalysts for outperforming our end markets.

自今年年初以來，我們採用結構化的卓越營運和精益製造方法，實現了約 250 萬美元的可持續利潤同比改善。隨著下半年的到來，我們的團隊繼續成功執行關鍵的商業成長和卓越營運計劃，再加上 Hazel Park 工廠利用率的提高，將成為我們超越終端市場的重要催化劑。

While customer demand remains steady throughout the first half of the year, our customers outlook for the second half of the year has softened in a few of our key end markets. However, with our robust strategic execution combined with our market share gains, we continue to expect that we will deliver growth for 2024.

儘管上半年客戶需求保持穩定，但我們的一些主要終端市場的客戶對下半年的前景有所疲軟。然而，憑藉我們強勁的策略執行力和市場份額的成長，我們仍然預計 2024 年將實現成長。

With that in mind, we are reiterating our 2024 financial guidance for net sales and adjusted EBITDA, which projects full year net sales growth of between 5% and 9%, and growth in adjusted EBITDA of between 9% and 15%. As it relates to free cash flow, our strong performance in the first half of the year has outpaced our expectations. As a result, we are increasing our expected full year 2024 total free cash flow guidance to between $45 million and $55 million.

考慮到這一點，我們重申 2024 年淨銷售額和調整後 EBITDA 的財務指導，預計全年淨銷售額增長在 5% 至 9% 之間，調整後 EBITDA 增長在 9% 至 15% 之間。就自由現金流而言，我們上半年的強勁表現超出了我們的預期。因此，我們將 2024 年全年自由現金流總額預期指引提高至 4,500 萬美元至 5,500 萬美元之間。

Turning now to a review of market conditions across our primary end markets. Let's begin with our commercial vehicle market, which represents approximately 37% of our trailing 12-month revenues. During the second quarter, commercial vehicle revenue increased by 10.8% on a year-over-year basis. This is primarily due to strong strategic execution on new project launches and strategic pricing initiatives, which more than offset a 0.3% decrease in North American Class 8 production during the quarter.

現在回顧一下我們主要終端市場的市場狀況。讓我們從商用車市場開始，該市場約占我們過去 12 個月收入的 37%。第二季商用車營收年增10.8%。這主要歸功於新專案啟動和策略定價措施的強有力的策略執行，抵消了本季度北美 8 級產量下降 0.3% 的影響。

Currently, ACT Research forecasts that Class 8 vehicle production to decrease 9.4% year over year in 2024 to approximately 308,000 units. ACT expects build rates to soften materially in the second half of the year, declining 17% in Q3 and 23% in the fourth quarter.

目前，ACT Research 預測 2024 年 8 級汽車產量將年減 9.4%，至約 308,000 輛。ACT 預計下半年建設率將大幅放緩，第三季下降 17%，第四季下降 23%。

For MEC, we expect our new CV project launches to continue ramping into the second half of the year, which will help us maintain comparable sales to this end market relative to 2023. It is also worth highlighting that ACT currently expects Class 8 production to recover in 2025, growing 1% compared to 2024 and having continued growth of 11% from 2025 to 2026, which supports our organic growth expectations for the next two years.

對於 MEC，我們預計新的 CV 專案的推出將在今年下半年繼續增加，這將有助於我們在 2023 年保持與該終端市場的可比銷售額。另外值得強調的是，ACT目前預計8級產量將在2025年恢復，較2024年成長1%，並在2025年至2026年持續成長11%，這支持了我們對未來兩年的有機成長預期。

Next is the construction and access market, which represented approximately 17% of our trailing 12-month revenues. Construction and access revenue increased 2.7% on a year-over year basis in the second quarter. This reflects the steady demand in non-residential and public infrastructure markets, which more than offset softness within residential markets. We expect this trend to continue through 2024, supporting our overall outlook for flat net sales to this end market due to infrastructure-related equipment demand and ongoing new customer wins.

其次是建築和接入市場，約占我們過去 12 個月收入的 17%。第二季建築和接入收入年增2.7%。這反映了非住宅和公共基礎設施市場的穩定需求，足以抵消住宅市場的疲軟。我們預計這一趨勢將持續到 2024 年，由於基礎設施相關的設備需求和不斷贏得的新客戶，我們對這一終端市場的淨銷售額持平的總體前景將得到支持。

The powersports market represented approximately 18% of our trailing 12-month revenues and increased by 26.3% on a year-over-year basis in the second quarter. We continue to benefit from market share gains, which include new customer programs on high-end models and were modestly offset by softening consumer discretionary demand. As we have stated in the past we believe that our growth rate in this end market will slow relative to the prior year comparisons, but the momentum from our market share gains in this end market will continue to drive growth for the year.

動力運動市場約占我們過去 12 個月營收的 18%，第二季年增 26.3%。我們繼續受益於市場份額的成長，其中包括高端車型的新客戶計劃，但消費者非必需品需求的疲軟略微抵消了這一增長。正如我們過去所說，我們認為，與去年相比，我們在這一終端市場的成長率將放緩，但我們在這一終端市場的市佔率成長的勢頭將繼續推動今年的成長。

Our agricultural market represented approximately 9% of trailing 12-month revenues and increased 8.9% on a year-over-year basis during the second quarter. Our second quarter results for this end market reflect contributions from the MSA acquisition offset by softening demand within our legacy large ag market. The outlook for ag has been increasingly uncertain due to the impact of lower crop prices and elevated inventory levels.

我們的農產品市場約佔過去 12 個月營收的 9%，第二季年增 8.9%。我們對該終端市場的第二季業績反映了 MSA 收購的貢獻，但被我們傳統大型農業市場需求疲軟所抵消。由於農作物價格下跌和庫存水準上升的影響，農業前景越來越不確定。

Given this uncertainty, we expect our markets to be soft in the second half of the year, but still outperform the overall ag market due to market share gains with key customers. Overall, our second quarter net sales growth included nearly 11% growth associated with the Mid-States Aluminum acquisition, which closed early in the third quarter of last year.

鑑於這種不確定性，我們預計下半年市場將疲軟，但由於主要客戶的市場份額增加，其表現仍優於整體農業市場。總體而言，我們第二季的淨銷售額成長包括與去年第三季初完成的 Mid-States Aluminium 收購相關的近 11% 的成長。

The majority of MSA revenues are represented in our other end market. For 2024 as a whole, we continue to see MSA generating between $20 million to $30 million of incremental net sales. On the commercial front, we continue to build our momentum, cross-selling MSA's capabilities to our existing customers. We expect that these efforts will be significant catalysts for above market growth in 2025.

MSA 收入的大部分來自我們的其他終端市場。2024 年全年，我們將繼續看到 MSA 產生 2,000 萬至 3,000 萬美元的增量淨銷售額。在商業方面，我們持續增強勢頭，向現有客戶交叉銷售 MSA 的功能。我們預計這些努力將成為 2025 年上述市場成長的重要催化劑。

On the pricing front, our team's efforts continue to bear fruit, particularly as new project volumes ramp up. During the second quarter, our commercial pricing initiatives drove $0.6 million in incremental adjusted EBITDA year-over-year net of inflationary pressures. We continue to target between $1 million and $2 million of adjusted EBITDA growth from our pricing initiatives through the end of the year.

在定價方面，我們團隊的努力持續取得成果，特別是隨著新項目數量的增加。在第二季度，扣除通膨壓力後，我們的商業定價措施使調整後 EBITDA 年比增加了 60 萬美元。我們的目標是到年底透過定價措施實現 100 萬至 200 萬美元的調整後 EBITDA 成長。

Turning now to an overview of substantial new business wins during the second quarter. We have continued to gain additional market share with our commercial vehicle customers as they plan their vehicle updates going into the emissions regulation changes. We expect to continue to grow share over the next two years with the amount of change that is expected to occur.

現在回顧一下第二季大量新業務的進展。隨著商用車客戶計劃根據排放法規的變化進行車輛更新，我們不斷獲得更多的市場份額。隨著預計發生的變化量的增加，我們預計未來兩年份額將繼續增長。

During the second quarter, we continue to expand share with one of our new powersports customers supporting their next-generation product lines. These wins support additional growth over the next year and expect additional organic opportunities in the quarters ahead. In the quarter, we expanded share within our primary military customer, expanding share on current product, bringing us additional diversification across platforms.

在第二季度，我們繼續擴大與支持其下一代產品線的新動力運動客戶之一的份額。這些勝利將支持明年的進一步成長，並預計未來幾季將有更多有機機會。本季度，我們擴大了在主要軍事客戶中的份額，擴大了當前產品的份額，為我們帶來了跨平台的額外多元化。

During the quarter, we received multiple awards for engine tube products in the agriculture market, driven by model updates based upon regulatory emissions changes that will be occurring in the years ahead. We also grew share with one of our industrial customers supporting material handling equipment in the quarter as they look to launch new products into the market.

本季度，我們在農業市場上的引擎管產品獲得了多項獎項，這得益於基於未來幾年將發生的監管排放變化的模型更新。本季度，我們與支援物料搬運設備的一個工業客戶的份額也有所增加，因為他們希望向市場推出新產品。

As part of our ongoing strategic success, our operations team has continued to build momentum with the execution of our MBX framework and the culture of continuous improvement that has begun to permeate the company. These initiatives have been driven by our rigorous approach to MBX lean implementation, highlighted by over 200 MBX kaizen events since launching the MBX program in late 2022.

作為我們持續策略成功的一部分，我們的營運團隊透過執行 MBX 框架以及已開始滲透到公司的持續改進文化，繼續增強動力。這些措施是由我們嚴格的 MBX 精實實施方法所推動的，自 2022 年底啟動 MBX 計畫以來，已舉辦了 200 多項 MBX 改善活動。

In summary, the execution of our commercial and operational excellence initiatives has been quite successful as represented by our financial performance thus far in 2024. These results give us further confidence in our ability to drive rateable improvements to our financial profile and deliver sustainable long-term shareholder value.

總之，我們的商業和卓越營運計畫的執行非常成功，從我們 2024 年迄今的財務表現就可以看出。這些結果使我們對推動財務狀況顯著改善和實現可持續的長期股東價值的能力更加充滿信心。

As you will recall, we expect to deliver between $750 million and $850 million in revenue, expand adjusted EBITDA margin to between 14% and 16%, and generate free cash flow of between $65 million and $75 million by the end of 2026.

您可能還記得，我們​​預計到 2026 年底將實現 7.5 億至 8.5 億美元的收入，將調整後的 EBITDA 利潤率擴大至 14% 至 16%，並產生 6,500 萬至 7,500 萬美元的自由現金流。

Given our strong strategic execution, it is evident that we are making meaningful progress toward achieving these goals. In terms of capital allocation, our strong free cash flow generation has allowed us to reduce our net leverage by nearly 1 turn over the course of the last year. At the end of the quarter, our net leverage ratio stood at slightly below 1.7 times.

鑑於我們強大的策略執行力，顯然我們正在為實現這些目標取得有意義的進展。在資本配置方面，我們強勁的自由現金流產生使我們的淨槓桿比去年減少了近一倍。截至本季末，我們的淨槓桿率略低於1.7倍。

Given the strong year-to-date cash flow generation, we now expect to be at the lower end of our targeted net leverage ratio range of between 1.5 times and 2 times by the end of 2024. Additionally, during the second quarter, we repurchased $1 million worth of common equity under our $25 million share repurchase program, with $24 million remaining under the existing authorization.

鑑於今年迄今強勁的現金流生成，我們現在預計到 2024 年底，淨槓桿率目標將處於 1.5 倍至 2 倍的目標範圍下限。此外，在第二季度，我們根據 2,500 萬美元的股票回購計畫回購了價值 100 萬美元的普通股，現有授權下剩餘 2,400 萬美元。

Going forward into the second half of the year, we intend to repay additional debt in order to further reduce our cost of capital. Additionally, we are also actively evaluating a more structured approach to our share repurchase strategy, which aligns with our existing authorization. Strategic M&A has always been a key part of our multiyear growth and business transformation strategy.

展望下半年，我們打算償還額外債務，以進一步降低資金成本。此外，我們也正在積極評估一種更結構化的股票回購策略方法，該方法與我們現有的授權相符。策略併購一直是我們多年成長和業務轉型策略的關鍵部分。

Our top priorities include lightweight materials fabrication and complementary bolt-on acquisitions of creative assets. As we have been making solid progress towards our leverage goal, we are increasing our focus on evaluating key opportunities to build on our market leading capabilities and further position the company to capitalize on multiyear secular growth trends in energy transition and OEM outsourcing.

我們的首要任務包括輕質材料製造和創意資產的補充補充收購。隨著我們在實現槓桿目標方面取得紮實進展，我們越來越注重評估關鍵機會，以增強我們的市場領先能力，並進一步使公司能夠利用能源轉型和 OEM 外包的多年長期成長趨勢。

Ultimately, we are taking a philosophical approach to capital allocation that is centered on deploying capital in a manner that creates the greatest return for the company and for our shareholders. We believe the highest opportunities for return are through debt reduction, strategic M&A and share repurchases, and will continue to allocate our capital prudently based on these opportunities.

最終，我們採用一種哲學方法來進行資本配置，其核心是以一種為公司和股東創造最大回報的方式部署資本。我們相信最大的回報機會是透過債務削減、策略併購和股票回購，並將繼續根據這些機會審慎配置我們的資本。

In summary, I am very proud of our team's ongoing commitment to excellence and strategic execution. Their hard work and commitment have positioned us to navigate the impending softening of end market demand and deliver above market growth with sustainable value creation, both in the near-term and over the coming years.

總之，我對我們團隊對卓越和策略執行的持續承諾感到非常自豪。他們的辛勤工作和承諾使我們能夠在短期和未來幾年應對終端市場需求即將疲軟的局面，並透過可持續的價值創造實現高於市場的成長。

With that, I will now turn the call over to Todd to review our financial results.

現在，我將把電話轉給托德，以審查我們的財務表現。

Thank you, Jag. I'll begin my prepared remarks with an overview of our second quarter financial performance, followed by an update on our balance sheet and liquidity. Total sales for the second quarter increased 17.7% on a year-over-year basis to $163.6 million. This increase was driven by a combination of the MSA acquisition, strong strategic execution and continued organic sales growth, partly offset by ongoing softness in our legacy agriculture end market and the expected roll-off of certain military aftermarket programs at the end of 2023.

謝謝你，賈格。我將首先概述我們第二季的財務業績，然後介紹我們的資產負債表和流動性的最新情況。第二季總銷售額年增 17.7%，達到 1.636 億美元。這一增長是由 MSA 收購、強大的戰略執行力和持續的有機銷售增長共同推動的，但部分被我們傳統農業終端市場的持續疲軟以及某些軍事售後市場項目預計在 2023 年底退出所抵消。

When excluding the MSA acquisition, organic net sales growth was 6.9% on a year-over-year basis. Our manufacturing margin was $22.3 million in the second quarter as compared to $16.1 million in the same prior year period. The increase was primarily driven by organic volume growth, execution of our MBX lean manufacturing initiatives, commercial pricing in the acquisition of MSA. Our manufacture margin rate was 13.6% for the second quarter of 2024 as compared to 11.6% for the prior year period or an increase of 200 basis points.

排除 MSA 收購後，有機淨銷售額年增 6.9%。第二季我們的製造利潤為 2,230 萬美元，去年同期為 1,610 萬美元。這一成長主要是由有機銷售成長、MBX 精益製造計劃的執行以及收購 MSA 的商業定價所推動的。2024 年第二季我們的製造利潤率為 13.6%，比去年同期的 11.6% 增加了 200 個基點。

Other selling, general and administrative expenses were $8.3 million for the second quarter of 2024 as compared to $7.4 million for the same prior year period. The increase was primarily driven by an additional $500,000 of legal expenses related to our former business customer incremental expense associated with MSA and increased costs related to compliance requirements.

2024 年第二季的其他銷售、一般和管理費用為 830 萬美元，而去年同期為 740 萬美元。這一增長主要是由於我們前業務客戶與 MSA 相關的增量費用增加了 500,000 美元的法律費用，以及與合規性要求相關的成本增加。

Interest expense was $3 million for the second quarter of 2024 as compared to $2 million in the prior year period due to higher borrowings under our credit facility. The increase in borrowings is due to the acquisition of MSA, which closed on July 1, 2023. Our focus on reducing our debt leverage, combined with strong free cash flow through the second quarter of 2024 has allowed us to achieve our net leverage goal of between 1.5 times and 2 times, which is ahead of our year-end target.

由於我們的信貸安排下的借款增加，2024 年第二季的利息支出為 300 萬美元，而去年同期為 200 萬美元。借款增加是由於收購 MSA，該收購於 2023 年 7 月 1 日完成。我們專注於降低債務槓桿，再加上 2024 年第二季強勁的自由現金流，使我們能夠實現 1.5 倍至 2 倍的淨槓桿目標，這超出了我們的年底目標。

Going into the second half of the year, we will continue to repay debt in order to reduce our interest expense, which is variable based on net leverage. Adjusted EBITDA increased to $19.6 million versus $15.3 million for the same prior year period. Adjusted EBITDA margin increased by 100 basis points to 12% in the current quarter as compared to 11% for the same prior year period.

進入下半年，我們將繼續償還債務，以減少利息支出，利息支出根據淨槓桿率而變化。調整後 EBITDA 增至 1,960 萬美元，而上年同期為 1,530 萬美元。本季調整後 EBITDA 利潤率成長 100 個基點，達到 12%，而去年同期為 11%。

Increase in our adjusted EBITDA margin was primarily due to the increased organic volume, the MSA acquisition, MBX initiative, and the benefit from our commercial planning activities. Our second quarter results demonstrate the continued progress towards our [2026] adjusted EBITDA margin goal of 14% to 16%.

我們調整後的 EBITDA 利潤率的增加主要是由於有機銷售的增加、MSA 收購、MBX 計劃以及我們商業規劃活動的收益。我們第二季的業績表明，我們在實現 [2026] 調整後 EBITDA 利潤率 14% 至 16% 的目標方面持續取得進展。

Turning now to our statement of cash flows and balance sheet. Free cash flow during the second quarter of 2024 was a positive $19.2 million or $0.94 per share as compared to a negative $3.7 million in the prior year period. The improving free cash flow year over year was due to improved working capital efficiency resulting from our MBX initiatives and a one-time $17.6 million payment of deferred compensation expense in the second quarter of last year.

現在轉向我們的現金流量表和資產負債表。2024 年第二季的自由現金流為正 1,920 萬美元，即每股 0.94 美元，而去年同期為負 370 萬美元。自由現金流較去年同期改善的原因是我們的 MBX 計畫提高了營運資金效率，以及去年第二季一次性支付 1,760 萬美元的遞延薪資費用。

Our strategic execution has been the primary driver of our improved free cash flow conversion thus far in 2024. As a result of our MBX lean initiatives, our days sales outstanding and inventory days at both declined by more than 15% as compared to a year ago.

2024 年迄今為止，我們的策略執行一直是我們改善自由現金流轉換的主要驅動力。由於我們的 MBX 精實計劃，我們的銷售週轉天數和庫存週轉天數均比一年前下降了 15% 以上。

As of the end of the second quarter of 2024 our net debt, which includes bank debt, financing agreements, finance, lease obligations and cash and cash equivalents was $125.1 million as compared to $89.7 million at the end of the second quarter of 2023. Our debt reduction resulted in a net leverage ratio of slightly below 1.7 times as of June 30 and will provide for a 30 basis point rate reduction in the third quarter.

截至 2024 年第二季末，我們的淨債務（包括銀行債務、融資協議、財務、租賃義務以及現金和現金等價物）為 1.251 億美元，而 2023 年第二季末為 8,970 萬美元。截至 6 月 30 日，我們的債務削減導致淨槓桿率略低於 1.7 倍，並將在第三季降低 30 個基點的利率。

In light of our second quarter results and our current outlook for the remainder of the year we are reiterating our financial guidance for net sales and adjusted EBITDA, while increasing our financial guidance for free cash flow. For 2024, we continue to expect the following net sales of between $620 million and $640 million and adjusted EBITDA of between $72 million and $76 million for free cash flow.

根據我們第二季的業績和目前對今年剩餘時間的展望，我們重申對淨銷售額和調整後 EBITDA 的財務指導，同時提高對自由現金流的財務指導。對於 2024 年，我們繼續預期淨銷售額將在 6.2 億美元至 6.4 億美元之間，調整後的 EBITDA 自由現金流將在 7,200 萬美元至 7,600 萬美元之間。

We now expect full year free cash flow will be in a range between $45 million to $55 million as compared to our original expectations of between $35 million and $45 million. Our outlook for the full year continues to reflect a risk-adjusted view of overall demand for the second half of the year. During the first half of the year, we have experienced strong growth and margin realization through our strategic execution.

我們現在預計全年自由現金流將在 4,500 萬美元至 5,500 萬美元之間，而我們最初的預期為 3,500 萬美元至 4,500 萬美元。我們對全年的展望繼續反映了對下半年整體需求進行風險調整的看法。今年上半年，我們透過策略執行實現了強勁的成長和利潤率。

However, as Jag had mentioned, we have seen softening demand in some of our end markets, particularly commercial vehicle, powersports and agriculture. In end market dynamics are in line with the risk adjusted view of the year, even as our growth and execution during the first two quarters outpaced our expectations.

然而，正如 Jag 所提到的，我們看到一些終端市場的需求疲軟，特別是商用車、動力運動和農業。儘管我們前兩個季度的成長和執行超出了我們的預期，但最終市場動態與今年風險調整後的觀點一致。

Overall, when combined with the evolving end market dynamics. Our guidance continues to reflect organic net sales growth as compared to 2023 of between 1.5% and 2.5% due to new product wins.

總體而言，結合不斷變化的終端市場動態。我們的指導繼續反映出，由於新產品的成功，與 2023 年相比，有機淨銷售額成長在 1.5% 至 2.5% 之間。

With that, operator, that concludes our prepared remarks. Please open the line for questions as we begin our question and answer session.

操作員，我們準備好的發言到此結束。當我們開始問答環節時，請打開提問專線。

(Operator Instructions)

（操作員說明）

Mig Dobre, Baird.

米格·多布雷，貝爾德。

Thank you, and good morning, everyone, and congratulations to the team on really good performance in a choppy environment. So that's great to see. I guess my first question is on the free cash flow guidance, and Todd, maybe you can help me better understand what prompted you to raise that guidance, even though the other elements have stayed unchanged. Is this just a function of kind of converting some of that inventory into cash? Are there any other important capital items for you to be aware of?

謝謝大家，大家早安，恭喜團隊在動盪的環境中取得了出色的表現。所以很高興看到這一點。我想我的第一個問題是關於自由現金流指導，托德，也許你可以幫助我更好地理解是什麼促使你提出該指導，即使其他要素保持不變。這只是將部分庫存轉換成現金的功能嗎？還有其他重要的資本項目需要您注意嗎？

Yes, good morning, Mig. I'm going to quickly pass on to Todd here, but I just want to reiterate that, our sustained efforts in continuing to drive MBX across our enterprise, that's in both operations and the rest of the functions, and driving better days in payables, better days in receivables, inventory reduction, better forecasting, SIOP implementation, all of these actions that we've been pursuing for the last year and a half has shown in the first half what the power of MBX is and that is really what gives us the confidence to raise our guidance for the year.

是的，早上好，米格。我很快就會轉達給托德，但我只想重申，我們持續努力在整個企業中繼續推動 MBX，無論是在運營還是其他職能方面，以及在應付賬款方面推動更好的日子，應收賬款改善、庫存減少、更好的預測、SIOP 實施，我們在過去一年半中一直在追求的所有這些行動都在上半年展示了MBX 的力量，這確實給我們帶來了好處有信心提高今年的指引。

Yeah. Good morning. To Jag's point, it really is driven by the MBX initiatives. I mean, if you look back 12 months, 18 months ago, we were at six times or terms, rather. Today, we're at just over nine as we finish second quarter. In addition to that, we've been working very hard on our terms and conditions with customers, our collection efforts. I mean, across the Board, it's been very, very positive. So, when we looked into the back half of the year, which, historically, the Q4, our fourth quarter is one of our strongest cash flow quarters, we do expect now that, again, being that range of $45 million to $55 million, and that's why we feel confident that we can achieve that, and therefore, we raise the guidance.

是的。早安.在 Jag 看來，這確實是由 MBX 計劃推動的。我的意思是，如果你回顧 12 個月、18 個月前，我們的時間是六倍或六倍。今天，第二季結束時，我們的成績剛好超過九點。除此之外，我們一直在努力製定與客戶的條款和條件以及我們的收款工作。我的意思是，從整體來看，這是非常非常積極的。因此，當我們回顧今年下半年時，從歷史上看，第四季度是我們現金流最強的季度之一，我們現在確實預計，在 4500 萬美元至 5500 萬美元的範圍內，這就是為什麼我們對實現這一目標充滿信心，因此我們提高了指導意見。

But again, you know, looking back historically here, I think in 2021, you had a big cash drag from inventory from an inventory build. I'm kind of searching through my memory here. I think that might have had something to do with challenging supply chain and all the disruptions that existed in the industry at the time.

但同樣，你知道，回顧歷史，我認為在 2021 年，庫存增加造成了巨大的現金拖累。我在這裡搜尋我的記憶。我認為這可能與具有挑戰性的供應鏈以及當時行業中存在的所有乾擾有關。

I guess my real question here is, is there room to improve to performance that you're delivering this year? Should we expect another You may note $5 million, $10 million worth of potential relief of working capital as we can go forward.

我想我真正的問題是，你們今年的表現還有進步的空間嗎？如果我們期待另一次，您可能會注意到，隨著我們的進展，營運資金可能會減少 500 萬美元、1000 萬美元。

And so when you think of 2021, it was supply chain, we're also building inventory for the expected launch of our former fitness customers. So a bit of a unique situation there as we move forward, definitely this year, we do expect to unlock continued working capital, whether it be through receivables, payables in our payments as well as inventory. But I will note that rate of progression will moderate a bit when you think of going from the six times or six turns rather to nine?

因此，當你想到 2021 年時，就是供應鏈，我們也在為預期推出的前健身客戶建立庫存。因此，隨著我們前進，今年的情況有些獨特，我們確實希望釋放持續的營運資金，無論是透過應收帳款、付款中的應付帳款以及庫存。但我要指出的是，當您考慮從六次或六圈而不是九圈時，進展速度會有所放緩？

Yes, there's a lot of, let's say, low hanging fruit that we get after going from 9 to 10 or 10 to 11 is a little more difficult and we still remain confident we can achieve that and it will take a little more time to do it. But in the near term, we do expect in the next six months that we'll continue to see good working capital progression and favorable free cash flow.

是的，有很多，比如說，從 9 到 10 或 10 到 11 後我們得到的很多容易實現的目標有點困難，但我們仍然有信心能夠實現這一目標，並且需要更多的時間來完成它。但在短期內，我們確實預計在未來六個月內，我們將繼續看到良好的營運資本進度和有利的自由現金流。

Okay. And two questions on market. I guess the first one is on commercial vehicle. In your prepared remarks, you talked about the setup here into the third and the fourth quarter. But as I understood it, you said that you still expect to be flat year over year from a revenue standpoint in commercial vehicle?

好的。還有兩個關於市場的問題。我猜第一個是商用車。在您準備好的演講中，您談到了第三季和第四季的設定。但據我了解，您說從商用車收入的角度來看，您仍然預期會比去年同期持平？

And I'm curious as to what gives you the confidence that you're going to be able to hit that guide that I understand that you outperformed relative to build both about double digits in Q2, but the degree of outperformance, especially as we look into Q4 relative to build would be much more significant than what you've done thus far. So is it that these customers are ramping through the year or these new contracts are ramping through the year or is there is there something else to be aware of?

我很好奇是什麼給了你信心，讓你相信你能夠達到那個指導，我知道你在第二季度的表現相對於兩位數的表現要好，但表現出色的程度，特別是當我們看到時進入第四季度相對於構建而言，比您迄今為止所做的事情要重要得多。那麼，是這些客戶在這一年中不斷增加，還是這些新合約在這一年中不斷增加，還是還有其他需要注意的事情？

Yeah. On commercial vehicles, the first half, our customer builds outperformed our expectations. And we do expect the second half to slow down, our customers to slow down their build rates and that's what we have planned from the beginning. Our confidence in hitting our forecast for second half really relies on our customers build rate projections and ACT forecasts of 308,000 vehicles for the year.

是的。在商用車方面，上半年，我們的客戶建造超出了我們的預期。我們確實預計下半年會放緩，我們的客戶會放慢他們的建造速度，這就是我們從一開始就計劃好的。我們對實現下半年預測的信心實際上取決於我們的客戶對今年 308,000 輛汽車的建造率預測和 ACT 預測。

Given that, even though we do expect some softness in the deceleration of build rates, given our new program launches and some of the share gains we've been talking about, those increased sales to our end customers gives us confidence that we can hit our forecasted targets.

有鑑於此，儘管我們確實預計建造速度會有所放緩，但考慮到我們新計劃的推出以及我們一直在談論的一些份額增長，對最終客戶的銷售增加使我們有信心能夠達到我們的目標預測目標。

But to be clear here, you expect to be flat revenue in commercial vehicles even in the fourth quarter on a 23% build decline?

但需要明確的是，您預計商用車業務的收入即使在第四季也將持平，產量下降 23%？

Let me reiterate, we expect to be flat for the full year in 2024 to 2023 results in our CV market.

讓我重申一下，我們預計 2024 年至 2023 年全年我們的商用車市場業績將持平。

Okay. Thank you for clarifying. And then finally, on agriculture, you already mentioned that large agriculture is under pressure, and I think small ag is under pressure as well in there's pretty material production costs that are coming across from older OEMs, somewhere in the high 20s, low 30s in some cases.

好的。謝謝你的澄清。最後，關於農業，您已經提到大型農業面臨壓力，我認為小型農業也面臨壓力，因為舊原始設備製造商的材料生產成本相當高，大約在 20 多歲、30 多歲之間。

So I'm sort of curious here as to how you think about this vertical specifically, especially as you differentiate between Q3 and Q4, because the pressure on build rates seems to be varying between these two quarters by OEMs. So based on your customers, I'm kind of curious as to how you think about progression here. Thank you.

因此，我很好奇您如何具體考慮這個垂直領域，特別是當您區分第三季度和第四季度時，因為原始設備製造商在這兩個季度之間對構建率的壓力似乎有所不同。因此，根據您的客戶，我很好奇您如何看待這裡的進展。謝謝。

Yes, that's a good question, Mig. We expect the overall ag market to be down mid-teens based on the programs we're on and the visibility we currently have that breaks down approximately 15% or so for large ag and approximately 10% or so for the small ag, that's what end market. For us, we're currently projecting we're going to be down for the year, approximately 5% overall, and that's because of some share gains we talked about the results of the lapping of some MSA ad revenues that came into the first half.

是的，這是個好問題，米格。根據我們正在進行的計劃和我們目前的可見度，我們預計整個農業市場將下降 15% 左右，而小型農業則下降約 10% 左右，這就是終端市場。對我們來說，我們目前預計今年整體將下降約 5%，這是因為我們談到了上半年一些 MSA 廣告收入的重疊結果帶來的一些份額收益。

So you put all of that together year-over-year, we will be down approximately 5% in the aggregate ag end market. But also let me remind you that in our overall ag is only 9%, approximately 9% to 10% max of our overall sales. It is still one of our smaller end markets, slightly larger than our military market, which is approximately 6%.

因此，將所有這些加起來，我們的農業終端市場總量將比去年同期下降約 5%。但我還要提醒您，我們的總銷售額僅佔 9%，大約占我們總銷售額的 9% 到 10%。它仍然是我們較小的終端市場之一，略大於我們的軍用市場，約佔6%。

So even though the headlines we see the headlines, we read our customers' public comments. But given where we are in the cycle, given our program wins, given our share gains, we feel like we can continue to outperform the agriculture end market.

因此，即使我們看到頭條新聞，我們也會閱讀客戶的公開評論。但考慮到我們所處的周期、考慮到我們的計劃獲勝、考慮到我們的份額增長，我們認為我們可以繼續跑贏農業終端市場。

Appreciate it. And if I can squeeze one more -- I'm sorry. On the military, just as a quick reminder here, is your exposure in military predominantly on the JLTV or are there other programs that you have in there as well? Thank you.

欣賞它。如果我還能再擠一擠的話——我很抱歉。關於軍事，這裡快速提醒一下，您在軍事方面的曝光主要是在 JLTV 上還是還有其他節目？謝謝。

And we have JLTV, FMTV are the two main programs we're on.

我們有 JLTV，FMTV 是我們的兩個主要節目。

Great. Thank you and good luck.

偉大的。謝謝你，祝你好運。

Thank you.

謝謝。

Ted Jackson, Northland Securities.

特德傑克遜，北國證券。

Thank you very much and congrats on the quarter, guys. I got a handful of questions. I'll try to run through them really quick. First of all, on the commercial vehicle, when you were giving the market data for growth across the 11% growth with regards to 2026, but I missed what you said for 2025. Can you -- do you have a head?

非常感謝你們，並祝賀本季的進展，夥計們。我有幾個問題。我會嘗試快速瀏覽它們。首先，在商用車方面，當您提供2026年成長11%的市場數據時，但我錯過了您所說的2025年增長。你能——你有頭腦嗎？

Yes, we expect that to 2025 to be slightly approximately 1% were up versus 2024.

是的，我們預計到 2025 年，這一數字將比 2024 年略增約 1%。

Okay. And then when I think about that, I mean, that's market data, you would expect at a minimum to grow in line with market. So I'm not saying that that's your guidance. I'm just saying like, if the market data and the projections hold true, that it would stand to reason that you would expect to see some modest growth in commercial vehicle in 2025.

好的。然後當我想到這一點時，我的意思是，這是市場數據，您至少會期望與市場保持一致的成長。所以我並不是說這是你的指導。我只是說，如果市場數據和預測屬實，那麼您預計 2025 年商用車將出現一定程度的適度增長。

Yes, you know, obviously, we're not providing any guidance for 2025. With that caveat, we expect to outperform the commercial vehicle market in 2025.

是的，您知道，顯然我們不會為 2025 年提供任何指導。考慮到這一點，我們預計 2025 年的表現將超過商用車市場。

Okay. My second question goes over into the powersports market. I mean, you've just nailed it there. I mean, it's the markets, as weak as anything you could imagine, and the project wins for you, it really allows you to pull through on that. When we finish off this year and get into 2025, I mean, what is there more stuff that would allow you to continue to, let's just call it, outperform market.

好的。我的第二個問題涉及動力運動市場。我的意思是，你剛剛把它釘在那裡。我的意思是，這是市場，就像你能想像到的那樣疲軟，而這個計畫為你贏得了勝利，它確實讓你能夠渡過難關。當我們今年結束並進入 2025 年時，我的意思是，還有什麼東西可以讓你繼續（我們就這麼稱呼它）跑贏市場。

I'm not going to ask for you to talk about market share kind of market growth and stuff. But would you view 2025 of being an arena where you would grow more in line with the market or is there still some tail from all the new activity that you brought through your business in 2024 that were carried forward into 2025 and allow you to continue to say grow faster than that market in aggregate?

我不會要求你談論市場佔有率、市場成長之類的問題。但是，您是否認為 2025 年是一個您將更加符合市場發展的舞台，或者您在 2024 年通過業務帶來的所有新活動是否仍然存在一些尾部，這些活動已結轉至 2025 年，並​​允許您繼續說成長速度快於該市場的整體成長速度？

Let me first step back --

讓我先退後一步--

I'm asking because you said ramping or even you're ramping a lot of stuff.

我問這個問題是因為你說要增加，甚至你要增加很多東西。

Yeah.

是的。

Through this year and kind of like how does it tail into '25 is where I'm going with this?

今年，我的目標是如何進入 25 年？

Yeah. So the discretionary nature of a significant spend in the market and interest rates have had is it, in fact, on customer purchases. At the same time, our customers have built up significant inventory in the channels as well. It's been a really great first half for us in powersports market as we ramp up new customers. We do expect the second half to moderate a bit our growth rates in the market we will still grow and outperform the market.

是的。因此，市場上大量支出和利率的可自由支配性質實際上是針對客戶購買的。同時，我們的客戶也在通路中建立了大量的庫存。隨著我們增加新客戶，我們在動力運動市場上半年的表現非常出色。我們確實預計下半年我們的市場成長率會有所放緩，但我們仍將成長並贏得市場。

It will be interesting to see what happens with interest rates and that channel inventories with our customers as we go into 2025. There is a good possibility that we will outperform the market even in powersports next year. But sitting here, it's a little challenging to predict right now how that is all going to play out, given the interest rate environment we're currently in.

進入 2025 年，看看利率會發生什麼變化，以及與我們的客戶溝通庫存的情況將會很有趣。即使在明年的動力運動領域，我們也很有可能跑贏大盤。但考慮到我們目前所處的利率環境，現在預測這一切將如何發展有點困難。

Yeah. I mean, I listened to all those calls and there's I mean, the new product stuff they talk about is nice, but the market itself is just horrible. A question that I think will come close to your heart, Jag, and maybe somewhat fun. I want to maybe to have you unpack a little bit about where you are in your journey for value based pricing.

是的。我的意思是，我聽了所有這些電話，我的意思是，他們談論的新產品很好，但市場本身很糟糕。賈格，我認為這個問題會引起你的注意，而且可能還有點有趣。我想讓您了解一下您在基於價值的定價之旅中所處的位置。

I mean, you highlighted a lot. You've talked about how it's improving your margin structure. So if we think about MEC and the revenue base that it has, maybe like, how much of your revenue have you converted over to this new pricing model and how far can you take it, I guess, kind of what do you see it in terms of the trajectory as we roll through 2025 and beyond?

我的意思是，你強調了很多。您已經談到了它如何改善您的利潤結構。因此，如果我們考慮 MEC 及其所擁有的收入基礎，也許您將多少收入轉換為這種新的定價模式，以及您能走多遠，我想，您在其中看到了什麼2025 年及以後的發展軌跡如何？

As we indicated last time, Ted, probably 15%, maybe less than 20% of our total sales are probably under the code new pricing regime, i.e., value based pricing. And so that gives us is a good in our three to four to five year runway to continue to convert existing core business to the new pricing model. So it's going to have some legs at the same time, right is going to take some time as well. And it's positive as well, given that we can continue to leverage our pricing for the foreseeable future.

正如我們上次指出的，Ted，我們總銷售額的 15%，甚至不到 20% 可能是在新定價制度下，也就是基於價值的定價。因此，這為我們提供了一個良好的條件，即在三到四到五年的時間內繼續將現有核心業務轉換為新的定價模式。所以它會同時有一些腿，右邊也需要一些時間。鑑於我們可以在可預見的未來繼續利用我們的定價，這也是積極的。

Okay. My last question for you all is just maybe an update on the sports equipment litigation. Kind of where are you with regards to that process and maybe any change in terms of how you see it in terms of its resolution? Just kind of an update on that front. Thanks.

好的。我向大家提出的最後一個問題可能只是運動器材訴訟的最新情況。您對流程的看法如何？只是這方面的更新。謝謝。

Sure. The discovery process continues with the litigation, and we expect the discovery phase to conclude in Q3 and anticipate a potentially a trial to begin either later this year or early 2025. We remain confident in a positive outcome for MEC. Beyond that, we will not comment on the pending litigation.

當然。訴訟將繼續進行證據開示過程，我們預計證據開示階段將在第三季結束，並預計可能在今年稍後或 2025 年初開始審判。我們對 MEC 取得正面成果仍然充滿信心。除此之外，我們不會對未決訴訟發表評論。

Okay, great, it was worth asking. Congrats again on the quarter. I'll talk to you guys soon.

好吧，太好了，值得一問。再次恭喜本季。我很快就會和你們談談。

Thank you, Ted.

謝謝你，泰德。

Ross Sparenblek, William Blair.

羅斯·斯帕倫布萊克、威廉·布萊爾。

(Operator Instructions)

（操作員說明）

[Natalia Bak], Citigroup

[Natalia Bak]，花旗集團

Hi, good morning. Congrats on the quarter and this is Natalia Bak on behalf of Andy Kaplowitz from Citigroup.

嗨，早安。恭喜本季，我是 Natalia Bak 代表花旗集團的 Andy Kaplowitz。

Good morning.

早安.

So, my first question that I want to ask is, with leverage now at 1.7 turns and you raising your fee cash flow guidance for the year, how are you thinking about the potential for incremental M&A activity? And what impact does recent market volatility and current macroeconomic uncertainty have on how you and the board think about M&A in the current environment?

因此，我想問的第一個問題是，槓桿率現在為 1.7 倍，並且您提高了今年的費用現金流指引，您如何看待增量併購活動的潛力？最近的市場波動和當前宏觀經濟的不確定性對您和董事會如何看待當前環境下的併購有何影響？

Yeah. It's a really good place to be, Natalie. We are ahead of our schedule on our debt repayments, and as interest rates are working in our favor, as we indicated, 30 basis points of interest rate reduction in Q3 for us, given our leverage ratio, and potentially future interest rate cuts by Fed gives us confidence that we can continue to pursue our capital allocation strategy.

是的。這真是個好地方，娜塔莉。我們提前償還了債務，正如我們所指出的，由於利率對我們有利，考慮到我們的槓桿率以及美聯儲未來可能降息，我們在第三季度將利率降低 30 個基點讓我們有信心繼續推行我們的資本配置策略。

As indicated in our prepared remarks, we will put together a structured buyback program as well, as we continue to reengage with potential M&A targets. Our pipeline remains strong and we continue to stay close to the market. Given that the multiples have remained consistent, we expect to pursue some attractive targets in our adjacent markets to beef up our offerings to our end customers, either in lightweight materials, energy transition and other attractive end markets that will also help us with the diversification in our end markets.

正如我們在準備好的演講中所指出的，隨著我們繼續重新接觸潛在的併購目標，我們也將制定結構化的回購計畫。我們的產品線依然強勁，並且持續貼近市場。鑑於倍數保持一致，我們預計在鄰近市場尋求一些有吸引力的目標，以加強我們為最終客戶提供的產品，無論是在輕質材料、能源轉型和其他有吸引力的終端市場，這也將有助於我們實現多元化我們的終端市場。

Okay, helpful. And then just toning, on your construction and access end market, can you remind us of your mix of exposure to resi versus commercial construction equipment, and how are you thinking about trends in resi versus commercial impacting your outlook for the constructional portion of your business going forward?

好的，有幫助。然後，就您的建築和接入終端市場而言，您能否提醒我們您對Resi與商業建築設備的投資組合，以及您如何看待Resi與商業的趨勢影響您對業務建築部分的前景繼續前進嗎？

Yes, I don't think I can break down on the call resi versus infrastructure. We have not given that breakout in the past. Having said that, our access versus construction is approach is approximately $45 million to $55 million . That's the breakdown in construction, though we are seeing some modest signs of growth in our resume some export markets and infrastructure, particularly the government and public infrastructure could be a tailwind in the second half of 2024.

是的，我認為我無法詳細分析呼叫資源與基礎設施的關係。我們過去沒有出現過這樣的突破。話雖如此，我們的接入與建造成本約為 4500 萬至 5500 萬美元。這就是建築業的崩潰，儘管我們在一些出口市場和基礎設施的恢復中看到了一些溫和的成長跡象，特別是政府和公共基礎設施可能會成為 2024 年下半年的推動力。

But we need to watch our OEM inventories in the channel and then see how that continues to translate into sales and production for our end customers access market, though continues to be strong. Our access customer has strong backlog at which we expect to support our 2024 forecast.

但我們需要觀察我們在通路中的 OEM 庫存，然後看看它如何繼續轉化為我們的最終客戶進入市場的銷售和生產，儘管仍然強勁。我們的接入客戶有大量積壓訂單，我們預計這將支援我們 2024 年的預測。

Very helpful. And then just focusing on PowerStore, can you just talk about what you're seeing hearing from more of your consumer-facing customers in that end market?

非常有幫助。然後只關注 PowerStore，您能談談您從該終端市場中更多面向消費者的客戶那裡聽到的情況嗎？

All of our end market customers have both consumer-facing products and also what we call utility products. The utility demand has been stable and strong. We have gotten on new platforms and programs with multiple customers. As we discussed last time, we brought on some new customers to MEC this year. All of that is helping us stabilize and grow in this end market with a pretty sizable contraction in actual end market sales. We see that discretionary spend, i.e., the recreational side of the market, continues to be soft and our customers continue to have excess inventory in the channel.

我們所有的終端市場客戶既有面向消費者的產品，也有我們所謂的實用產品。公用事業需求穩定且強勁。我們已經與多個客戶建立了新的平台和計劃。正如我們上次討論的那樣，今年我們為 MEC 帶來了一些新客戶。所有這些都有助於我們在終端市場上穩定和成長，但實際終端市場銷售額卻大幅收縮。我們看到可自由支配的支出，即市場的娛樂方面，繼續疲軟，我們的客戶在渠道中繼續擁有過剩的庫存。

We all can see the marketing programs that are running to clear the inventory channel, sorry, channel inventories. So we'll have to see how it plays out. And our expectation is that if there is any movement in interest rates in the coming quarters, that will only be a tailwind for us, either in 2024 or going into 2025.

我們都可以看到正在運行的行銷計劃，以清理渠道庫存，對不起，渠道庫存。所以我們必須看看結果如何。我們的預期是，如果未來幾季利率出現任何變動，無論是在 2024 年還是 2025 年，這只會對我們有利。

Okay. That's helpful color. And then one last question for me. You mentioned how the continued ramp-up of new project work should help offset some of the expected softness in the few end markets in the second half. Maybe can you talk about how these new projects should help flow through the P&L over the coming quarters and how we should think about that potentially impacting topline and reported profitability over the next few quarters?

好的。這是有用的顏色。然後是我的最後一個問題。您提到新專案工作的持續增加將如何幫助抵消下半年少數終端市場的一些預期疲軟。也許您能談談這些新項目應如何幫助影響未來幾季的損益表，以及我們應該如何考慮這些新項目對未來幾季營收和報告獲利能力的潛在影響？

So, when you think about the markets, right? We've said on the last call, we've made significant gains in powersports. We've made significant gains in PV, which will, again, offset or mitigate some of the declines that we're seeing on the end market demand.

那麼，當你考慮市場時，對嗎？我們在上次電話會議中說過，我們在動力運動方面取得了重大進展。我們在光伏領域取得了顯著進展，這將再次抵消或緩解我們看到的終端市場需求下降的情況。

On the topline, given that CV is 38% of our overall sales, we do expect sequentially, going from second quarter to third quarter, we will see about a 6% to 8% decline in topline revenue versus a 20%-plus decline in that CV market alone and then when you look at Q4, more of a modest decline, maybe 1% to 3%.

就營收而言，鑑於CV 占我們總銷售額的38%，我們確實預計，從第二季到第三季度，我們將看到營收下降約6% 至8%，而營收則下降20 % 以上。

From a P&L perspective, the fundamental building blocks that we've put in place already as it relates to MBX, other lean initiatives and commercial pricing are there. And you can see the results in Q1 and Q2 to have a very positive impact on our bottomline financial performance. But as you enter the second half, given that CV does have a pretty sizable downturn, that will impact some of our larger facilities.

從損益角度來看，我們已經建立了與 MBX、其他精實計畫和商業定價相關的基本建置模組。您可以看到第一季和第二季的結果對我們的財務業績底線產生了非常正面的影響。但進入下半年後，考慮到 CV 確實出現了相當大的下滑，這將影響我們的一些大型設施。

So we will have a little bit of a tempered margin progression in the second half as these facilities will be slightly underutilized due to overhead absorption. But generally speaking, when we think about margin progression in our 14% to 16% goal, we feel we have the pieces in place to build upon to continue margin progression even in a down market, albeit it will be very tempered, I would say, in Q3 and Q4.

因此，下半年我們的利潤成長將略有緩和，因為這些設施由於管理費用的吸收而未充分利用。但總的來說，當我們考慮14% 至16% 的目標中的利潤率進展時，我們認為即使在市場低迷的情況下，我們也有足夠的基礎來繼續利潤率的增長，儘管我想說，這會非常溫和。

Okay, got it. Very helpful and congrats on the quarter and thank you for taking all my questions.

好的，明白了。非常有幫助，恭喜本季度，感謝您回答我的所有問題。

Thank you.

謝謝。

Thank you.

謝謝。

Ross Sparenblek, William Blair.

羅斯·斯帕倫布萊克、威廉·布萊爾。

Good morning, guys.

早安，夥計們。

Good morning, Ross.

早安，羅斯。

All right. You can hear me. Apologies for technical difficulties there. Maybe sticking on the margins, as we think about kind of the second half, maybe a little bit softer on the end market, but you have done excellent work with MBX. What would expectations be for maybe decrementals, given the work that has been done, if it's maybe a little bit worse than expected in the second half of the year?

好的。你聽得到我說話。對那裡的技術困難表示歉意。也許會堅持邊緣化，正如我們所認為的下半年那樣，終端市場可能會稍微疲軟一些，但你們在 MBX 方面做得非常出色。考慮到已經完成的工作，如果下半年的情況可能比預期差一點，那麼對減量的期望是什麼？

No, I wouldn't characterize I think the decremental will be a little bit our historical decremental around 17.5%. And I would say that we're at or maybe slightly below that as we stand today. On I would expect and we do expect to continue to see the positive impact of MBX and commercial pricing and other initiatives in the second half, like I just mentioned, that will buffer or be mitigated by, unfortunately, the pressure of 100 utilization at a few of our larger facilities. But generally speaking, I would expect margin progression to continue in Q3 and Q4, but at a much lower pace than what we saw from Q2 to Q3.

不，我不會描述我認為減量將是我們歷史上大約 17.5% 的減量。我想說的是，我們目前的情況已經達到或可能略低於這個水平。我預計並且我們確實預計下半年將繼續看到 MBX 和商業定價以及其他舉措的積極影響，正如我剛才提到的，不幸的是，這將緩衝或減輕 100 個利用率的壓力我們的大型設施很少。但總的來說，我預計第三季和第四季的利潤率將繼續成長，但速度比我們從第二季到第三季看到的要慢得多。

Just to add to that draws, we are actively looking at all the levers we have at our disposal as we expect the volumes to come down, particularly in some large facilities and significant operations. We're looking at every lever, including cutting back on overtime, and we're really following strict checkbook processes to make sure that our variable spend is down. We're looking at resizing our workforce in couple of our facilities that are either seeing or expect to see some significant volume reductions. So we're taking all the actions necessary for the second half for us to continue to drive the revenue and margin progression as we laid out.

為了增加這一吸引力，我們正在積極研究我們可以使用的所有槓桿，因為我們預計產量會下降，特別是在一些大型設施和重要業務中。我們正在考慮每一個槓桿，包括減少加班，並且我們確實遵循嚴格的支票簿流程，以確保我們的可變支出下降。我們正在考慮調整我們幾家工廠的員工規模，這些工廠的數量要么會大幅減少，要么預計會大幅減少。因此，我們將在下半年採取一切必要的行動，以便繼續按照我們的計劃推動收入和利潤率的成長。

Okay. And maybe just on capacity, when we think about access, I think maybe there's $10 million left to go get at Hazel Park. But just company as a whole, where do you guys stand today and how should we frame all the wins in the second quarter, as you know, contributing in the next four quarters to revenue, trying to support that?

好的。也許僅就容量而言，當我們考慮訪問權限時，我認為 Hazel Park 可能還剩下 1000 萬美元。但就公司整體而言，你們今天的立場如何？ 我們應該如何制定第二季度的所有勝利，如你們所知，在接下來的四個季度為收入做出貢獻，並試圖支持這一點？

Yeah. So, the first point I would add is, we're continuing to make good progress with the ramp up of Hazel Park. That gap that you highlighted, we continue to work that gap down. The pipeline that our sales team has developed is really strong and we are continuing to focus on closing those opportunities to be able to add to that gap that you mentioned. So, sitting here, we feel pretty good about our exit rate out of Hazel Park in 2024.

是的。因此，我要補充的第一點是，我們在 Hazel Park 的建設上繼續取得良好進展。您強調的這一差距，我們將繼續努力縮小這一差距。我們的銷售團隊開發的管道非常強大，我們將繼續專注於縮小這些機會，以彌補您提到的差距。因此，坐在這裡，我們對 2024 年離開 Hazel Park 的退出率感到非常滿意。

Perfect. And just one more, if I can, on Hazel Park. Is there anything that we should call out in the modeling as we think about the cadence of these four end markets ramping? Powersports is obviously, having a good year this year. Is ag maybe at '25, '26, or is there anything, with that cadence that we should be aware of?

完美的。如果可以的話，就在榛果公園再多一處吧。當我們考慮這四個終端市場的成長節奏時，我們應該在模型中指出什麼嗎？Powersports 顯然今年表現不錯。ag 可能在 '25、'26，或有什麼我們應該注意的節奏嗎？

I wish I could. I wish I could predict the ag market downturn or the duration of the downturn, right? So we'll just have to watch it really closely. And then as we exit the year, right, we'll have a better idea where interest rates stand and where yields and crop prices stand at the end of the year. But also I want to remind everyone that it is only 9% of our overall business right? Now, yes, the headlines are very negative. But at the same time, it is still a small portion, a portion of our overall business.

我希望我能。我希望我能夠預測農業市場的低迷或低迷的持續時間，對吧？所以我們只需要非常仔細地觀察它。然後，當我們結束這一年時，對吧，我們將更好地了解年底的利率、產量和農作物價格。但我也想提醒大家，這只是我們整體業務的9%，對嗎？現在，是的，頭條新聞非常負面。但同時，它仍然是一小部分，是我們整體業務的一部分。

Okay. So the ramping of these programs isn't fully insulated from the overall market takeaway, whereas powersports clearly is.

好的。因此，這些項目的發展並不能完全不受整體市場影響，而動力運動顯然可以。

Yeah, agreed.

是的，同意。

Perfect. Awesome, guys. Well, yeah, congrats on the quarter. Thanks for the questions.

完美的。太棒了，夥計們。嗯，是的，恭喜這個季度。感謝您的提問。

Thanks, Ross.

謝謝，羅斯。

Thank you. There are currently no other questions at this time, I will pass it back over to the management team for closing remarks.

謝謝。目前沒有其他問題，我會將其轉交給管理團隊進行總結發言。

Once again, thank you for joining our call. We appreciate your continued support of MEC and we look forward to updating you on our progress next quarter. Should you have any questions, please contact Noel Ryan or Stefan Neely at Vallum, our Investor Relations Counsel. This concludes our call today. You may now disconnect.

再次感謝您加入我們的通話。我們感謝您對 MEC 的持續支持，並期待在下個季度向您通報我們的最新進展。如果您有任何疑問，請聯絡我們的投資者關係顧問 Vallum 的 Noel Ryan 或 Stefan Neely。我們今天的電話會議到此結束。您現在可以斷開連線。

Yes, this concludes the conference call. Thank you for your participation. You may now disconnect your line.

是的，電話會議到此結束。感謝您的參與。現在您可以斷開線路。