Modine Manufacturing Company (MOD) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Modine Manufacturing Company's Second Quarter Fiscal 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

各位女士、各位先生，早安，歡迎參加 Modine Manufacturing Company 2023 會計年度第二季財報電話會議。（接線員指示）提醒各位，本次電話會議將被錄音。

I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer and Investor Relations.

現在我想將會議交給本次主持人——Kathy Powers 女士，副總裁、財務長兼投資人關係負責人。

Good morning, and thank you for joining our conference call to discuss Modine's second quarter fiscal 2023 results. I'm joined on this call by Neil Brinker, our President and Chief Executive Officer; and Mick Lucareli, our Executive Vice President and Chief Financial Officer. We'll be using slides for today's presentation, which can be accessed either through the webcast link or by accessing the PDF file posted on the Investor Relations section of our website, modine.com.

早安，感謝各位參加我們的電話會議，一同討論 Modine 2023 會計年度第二季的業績。我與會的還有我們的總裁暨執行長 Neil Brinker，以及執行副總裁暨財務長 Mick Lucareli。今天的簡報將使用投影片，各位可透過網路直播連結存取，或至我們網站 modine.com 的投資人關係專區下載已張貼的 PDF 檔。

On Slide 3 is our notice regarding forward-looking statements. This call will contain forward-looking statements as outlined in our earnings release as well as in our company's filings with the Securities and Exchange Commission.

投影片第 3 頁為我們關於前瞻性陳述的聲明。本次電話會議將包含前瞻性陳述，相關內容如同我們的財報新聞稿以及公司向美國證券交易委員會提交之文件中所述。

With that, I will turn the call over to Neil.

接下來，我把電話交給 Neil。

Thank you, Kathy, and good morning, everyone. I'm pleased to announce another strong quarter from both a financial and transformational perspective with sales up over 20% from the prior year despite a negative FX impact. We have also had significant growth in our adjusted EBITDA and EBITDA margin, making further progress towards our targets. Mick will go through our financial results in more detail.

謝謝你，Kathy，各位早安。我很高興宣布，從財務面與轉型面來看，我們又交出一個強勁的季度；儘管匯率帶來負面影響，銷售額仍較去年同期成長超過 20%。我們的調整後 EBITDA 以及 EBITDA 利潤率也大幅成長，並持續朝目標邁進。Mick 將更詳細說明我們的財務結果。

But before that, I would like to provide an update on the progress that our segments are making towards the strategic objectives that we laid out during our Investor Day last June. You may recall that our transformation had 3 core work streams: focus the organization, perform and deliver and accelerate profitable growth. Our segment presidents provided specific goals for each of those activities, and I'm very proud of the progress that our organization is making against each of those.

但在此之前，我想先更新各事業部在去年 6 月投資人日所提出之策略目標的進展。各位或許記得，我們的轉型有 3 個核心工作主軸：聚焦組織、提升績效與交付，以及加速獲利成長。各事業部總裁針對每一項活動都提出了具體目標，我對組織在各項目標上的進展感到非常自豪。

Please turn to Slide 5. Our Climate Solutions segment had a great quarter. This slide shows the strategic objectives for the Climate Solutions segment, and we are making progress towards both our strategic and financial goals. First, the Climate Solutions team is deep into 80/20, and we are clearly seeing the results. In fact, we are driving 80/20 down to the business unit and plant level. For example, in our heat transfer products business, our 80/20 focus is on pricing for value and executing on new growth opportunities around the heat pump market.

請翻到投影片第 5 頁。我們的 Climate Solutions（氣候解決方案）事業部本季表現非常出色。本頁顯示該事業部的策略目標，我們正朝策略與財務目標雙雙前進。首先，Climate Solutions 團隊已深入推動 80/20，我們清楚看到成果。事實上，我們正把 80/20 推進到事業單位與工廠層級。例如，在我們的熱傳產品業務中，80/20 的重點是以價值定價，以及把握熱泵市場的新成長機會並加以落實。

There are tremendous incentives in Europe for the heat pump adoption, many of which fully offset the premium associated with this technology. We believe that shifting resources to supporting this market will drive growth for years to come. Our leadership team is firmly in place for this segment, and they are building a high-performance culture focused on profitability and growth. Our business segmentation process is complete and we are refining the data and implementing daily management tools to provide early indicators that will allow us to better manage our inventory and backlog.

歐洲對熱泵採用提供了非常可觀的激勵措施，其中許多可完全抵銷此技術所帶來的溢價成本。我們相信，將資源轉向支持此市場，將在未來多年帶動成長。該事業部的領導團隊已穩固到位，並正在建立以獲利與成長為核心的高績效文化。我們的業務分群流程已完成，目前正精煉數據並導入日常管理工具，以提供可讓我們更好管理庫存與訂單積壓（backlog）的早期指標。

As part of our transformational plan, we expect Climate Solutions to drive revenue growth over the next several years. The business had favorable market trends and delivered double-digit growth this past quarter with more to come. We are reallocating resources to these attractive businesses by creating additional capacity within our existing manufacturing footprint. For example, this past quarter, we had approximately $8 million of CapEx in Climate Solutions, which is outpacing the segment's typical spend.

作為我們轉型計畫的一部分，我們預期 Climate Solutions 將在未來數年帶動營收成長。該業務受惠於有利的市場趨勢，本季實現雙位數成長，且後續仍有更多動能。我們透過在既有製造據點內創造額外產能，將資源重新配置到這些具吸引力的業務。例如，本季我們在 Climate Solutions 的資本支出（CapEx）約為 800 萬美元，已高於該事業部的典型支出水準。

Additionally, our commercial teams are focused on building [relations], including customers, engineering consultants, distributors and sales reps. There are many factors to winning in these markets and our products have advantages that are allowing us to gain market share. First, in the data center world, having a global footprint is key to reducing carbon miles, which is very important to many customers.

此外，我們的商務團隊專注於建立[relations]，包括客戶、工程顧問、經銷商與業務代表。在這些市場中取勝有許多因素，而我們的產品具備優勢，使我們得以提升市占率。首先，在資料中心領域，擁有全球布局對於降低碳里程（carbon miles）至關重要，這對許多客戶而言非常重要。

In other areas, we are winning on lead times, such as in our heating and our indoor air quality businesses, where we are ahead of our competition and plan to stay there. In addition, our focus on product line simplification is allowing us to increase our speed to market by reducing complexity and new sale engineering time. Based on the activities and results, you can see the Climate Solutions is rapidly moving through the first 2 phases of our transformation, which are focus and perform. They have now earned the right to start focusing on the third element, which is accelerating profitable growth.

在其他領域，我們在交期方面勝出，例如在供暖與室內空氣品質業務中，我們領先競爭對手，並計畫持續保持領先。此外，我們聚焦於產品線簡化，透過降低複雜度與縮短新銷售案的工程時間，提升上市速度。從這些活動與成果可見，Climate Solutions 正快速推進我們轉型的前兩個階段——聚焦與提升績效。他們現在已贏得權利，開始聚焦第三個要素，也就是加速獲利成長。

As part of the strategy to accelerate growth, Climate Solutions is providing full solutions to customers and is expanding geographically by bringing existing solutions to new markets. This is especially true in our data center business, where we are not only bringing chillers to the North America market, but we are now also able to provide full system solutions in both North America and Europe.

作為加速成長策略的一部分，Climate Solutions 正為客戶提供完整解決方案，並透過將既有解決方案導入新市場來擴展地理版圖。這在我們的資料中心業務尤其明顯：我們不僅將冷水機（chillers）導入北美市場，現在也能在北美與歐洲提供完整系統解決方案。

You may have seen our press release last week where we announced that we shipped our first chillers from our new production facility in Rockbridge, Virginia, as part of a sizable order from Corscale announced in July. This is a very exciting milestone for the team, which includes members from our Airedale operations in the U.K. and from our neighboring plant in Buena Vista. With chillers on board, we now have a complete data center product line, including computer room air handlers and fan walls to support both colocation and data center operations.

各位可能已看到我們上週的新聞稿：我們宣布作為 7 月公布之 Corscale 大型訂單的一部分，已從位於維吉尼亞州 Rockbridge 的新生產基地出貨首批冷水機。這對團隊而言是非常令人振奮的里程碑；團隊成員包括來自英國 Airedale 營運據點以及鄰近 Buena Vista 工廠的同仁。隨著冷水機到位，我們現在擁有完整的資料中心產品線，包括機房空調處理機（computer room air handlers）與風牆（fan walls），可同時支援機房代管（colocation）與資料中心營運。

So to wrap up on the Climate Solutions discussion, this segment is executing on its strategic objectives and has earned the right to grow. We are actively building our acquisition pipeline, identifying actionable targets in several areas. We are looking at everything from small bolt-ons to opportunities that would move the needle across multiple groups. I'm very proud of this team. Not only are they demonstrating our purpose of engineering a cleaner and healthier world, but are ahead of schedule for both revenue and earnings growth.

總結 Climate Solutions 的部分，該事業部正落實其策略目標，並已贏得成長的權利。我們正積極建立併購案源管線，在多個領域辨識可執行的標的；從小型補強型併購（bolt-ons）到能在多個事業群帶來顯著影響的機會，我們都在評估。我對這個團隊感到非常自豪。他們不僅展現了我們「以工程打造更潔淨、更健康的世界」的使命，也在營收與獲利成長方面雙雙超前進度。

Please turn to Slide 6. As I mentioned last quarter, in Performance Technologies, we are focusing on the phased rollout of 80/20, whereas Climate Solutions is far along in the journey the PT business is just getting started. To be clear, this was a planned phased approach. Implementing 80/20 requires a lot of organizational change, and each segment required our undivided attention and focus. We elected to start with Climate Solutions given the clear sizable and immediate growth opportunities while preparing performance technologies for the journey. This slide shows the strategic objectives for PT segment that were introduced in June.

請翻到投影片第 6 頁。如我上季所提，在 Performance Technologies（績效技術）事業部，我們正聚焦於分階段推動 80/20；相較於 Climate Solutions 已在旅程中走得很遠，PT 業務才剛起步。需要說明的是，這是事先規劃的分階段方法。導入 80/20 需要大量的組織變革，而每個事業部都需要我們全神貫注的關注與投入。鑑於 Climate Solutions 具備明確、規模可觀且立即可見的成長機會，我們選擇先從該事業部開始，同時為績效技術事業部的旅程做好準備。本頁顯示的是 6 月所介紹之 PT 事業部策略目標。

As I mentioned, we are early in our journey, so we are mostly working on the focus of the organization activities. As a reminder, our strategic transformation includes sizable margin improvements in Performance Technologies. We are focused on improving margins over revenue growth and are anticipating a significant change in business mix over the next several years. This means exiting unprofitable legacy businesses while rapidly growing the very attractive EV business. We have completed the market segmentation for PT and have those senior leaders in place.

如我所述，我們仍處於旅程初期，因此目前主要在進行「聚焦組織」相關工作。提醒各位，我們的策略轉型包含在 Performance Technologies 實現可觀的利潤率改善。我們更重視提升利潤率而非營收成長，並預期未來數年業務組合將出現顯著變化。這意味著我們將退出無利可圖的傳統（legacy）業務，同時快速擴張極具吸引力的電動車（EV）業務。我們已完成 PT 的市場分群，並已將資深領導團隊配置到位。

With that being behind us, we have begun training the workforce across the organization in a similar manner to what we did for the CS segment last year. This has included numerous in-person events with our leaders that are helping the local teams understand how 80/20 can help reduce complexity and reallocate resources. Meanwhile, our team continues to onboard new experienced leaders in key roles who are helping to fundamentally change the culture within the segment. This is a large complex business with considerable legacy challenges that we are actively addressing. For example, we have long-term contracts in this business that allow us to pass along material cost increases, but do not allow price increases for other rising costs such as utilities, fabrication and labor.

在上述工作完成後，我們已開始以與去年 CS 事業部相似的方式，對全組織員工進行培訓。這包括多場由領導團隊親自參與的實體活動，協助各地團隊理解 80/20 如何降低複雜度並重新配置資源。同時，我們的團隊也持續在關鍵職位延攬並到任更多具經驗的領導者，協助從根本上改變該事業部的文化。這是一個規模龐大且複雜的業務，存在相當多的歷史遺留挑戰，我們正積極加以處理。例如，我們在此業務中有長期合約可轉嫁原物料成本上升，但不允許就其他上升成本（如公用事業費用、加工製造與勞動成本）進行漲價。

Our team is taking unprecedented actions by successfully negotiating improved commercial terms outside of our standard contractual metals pass-through. This is having a positive impact on our margins, but it's not enough, as we continue to deal with rising costs. This requires a renewed focus on materials, productivity and plant performance. There is still a tremendous opportunity for improvement in the business, and our PT team is rising to the challenge. All this work is laying the foundation and driving towards our goal of simplifying and segmenting the business so that we can focus on our most important priorities.

我們的團隊正採取前所未有的行動，成功在我們標準合約的金屬成本轉嫁機制之外，協商出更優的商業條款。這對我們的利潤率帶來正面影響，但仍不足以完全抵消我們持續面臨的成本上升。這需要我們重新聚焦於材料、效率提升與工廠績效。業務仍有巨大的改善空間，我們的 PT 團隊正迎接挑戰。所有這些工作都在奠定基礎，並推動我們朝向簡化與分割業務的目標前進，使我們能專注於最重要的優先事項。

We are also beginning to start some of the activities under the perform and deliver category as well. The first of these is product simplification and exit strategies, which include deemphasizing nonprofitable or end-of-life business, in other words, deciding what we stop doing. In our air cool business, we are pursuing last-time buys on certain products in order to simplify our product portfolio and in our liquid cool business, we are improving our quotation process to improve commercial terms and reduce capital requirements.

我們也開始啟動「執行與交付」類別下的一些活動。其中第一項是產品簡化與退出策略，包括降低對不獲利或生命週期末端業務的投入；換言之，就是決定我們要停止做哪些事情。在我們的風冷業務中，我們正針對部分產品推動最後一次採購（last-time buys），以簡化產品組合；而在液冷業務中，我們正在改善報價流程，以優化商業條款並降低資本需求。

And finally, I want to give an update on our Advanced Solutions business, which includes our EV systems and components business. We continue to allocate resources to this business as the team focuses on new product development and commercial excellence to capture value in their key markets. We recently announced an initial order from Shyft for their Blue Arc all electric delivery vehicle. We are providing an integrated system for battery thermal management, power electronics cooling and passenger comfort. We now have 18 production orders with bus, specialty vehicle and commercial vehicle customers, representing peak revenue of over $90 million. This is only scratching the surface of our potential in the EV space, and we plan to become a much larger player here as we execute our strategy.

最後，我想更新我們的先進解決方案（Advanced Solutions）業務進展，其中包含我們的電動車（EV）系統與零組件業務。我們持續為該業務配置資源，團隊專注於新產品開發與商業卓越，以在其關鍵市場中捕捉價值。我們近期宣布獲得 Shyft 的初始訂單，供應其 Blue Arc 全電動配送車。我們提供整合式系統，涵蓋電池熱管理、功率電子冷卻與乘客舒適性。目前我們已取得 18 筆量產訂單，客戶涵蓋巴士、特種車輛與商用車，對應的峰值營收超過 9,000 萬美元。這僅是我們在 EV 領域潛力的冰山一角；隨著我們執行策略，我們計畫在此成為更具規模的參與者。

To summarize our efforts, we are moving at breakneck speed, just as you would expect from a startup. Our teams are exploring new market opportunities and working on the next generation of products all while using their thermal expertise to develop prototypes that we expect will lead to additional production orders.

總結我們的努力，我們正以極快的速度推進，就如同你對新創公司所期待的那樣。我們的團隊一方面探索新的市場機會、研發下一代產品，另一方面運用其熱管理專業開發原型，我們預期這將帶來更多量產訂單。

The limiting factor in this business isn't necessarily the rate of EV adoption, but rather the ability to produce. We have seen some delays in orders and start production mainly due to supply chain challenges. Despite this, orders remain strong, and I'm confident that EV can become a substantial high-margin business for us in the future. I'm proud of how this organization is approaching its challenges head on, and we'll continue to report on the progress.

這項業務的限制因素未必是 EV 採用速度，而是生產能力。我們看到部分訂單與投產時程有所延遲，主要原因是供應鏈挑戰。儘管如此，訂單仍然強勁，我有信心 EV 未來能成為我們一項具規模且高毛利的業務。我為這個組織正面迎戰挑戰的方式感到自豪，我們也將持續回報進展。

Now I would like to turn the call over to Mick, who will review our results for the quarter and provide segment financial updates.

現在我想把電話會議交給 Mick，他將回顧我們本季的業績，並提供各事業部的財務更新。

Thanks, Neil, and good morning, everyone. Please turn to Slide 7 to review the segment results. Climate Solutions had another exceptional quarter with solid revenue growth and excellent earnings improvement. Revenue was up 18% over the prior year and up 25% on a constant currency basis. Data center sales were up 81% or $14 million on strong demand from both hyperscale and colocation markets. HVAC&R sales were up 11% or $9 million, with seasonal sales and heating and growth in school products.

謝謝你，Neil，各位早安。請翻到投影片第 7 頁以檢視各事業部的表現。氣候解決方案（Climate Solutions）再度交出亮眼的一季，營收成長穩健，獲利改善出色。營收較去年同期成長 18%，以固定匯率計成長 25%。資料中心銷售在超大規模（hyperscale）與機房代管（colocation）市場的強勁需求帶動下，成長 81%，增加 1,400 萬美元。HVAC&R 銷售成長 11%，增加 900 萬美元，受惠於季節性銷售與供暖需求，以及學校產品的成長。

Sales of heat transfer products increased nearly $16 million or 13% from the prior year. There was broad strength across the North American markets and we benefited from European heat pump growth. We estimate that the underlying volume, excluding pricing, was up 18% from the prior year. Adjusted EBITDA increased 93% with a 15% margin, which is up 580 basis points from the prior year.

熱交換產品銷售較去年同期增加近 1,600 萬美元，成長 13%。北美市場整體表現強勁，我們也受惠於歐洲熱泵成長。我們估計在排除價格因素後的基礎出貨量較去年同期成長 18%。調整後 EBITDA 成長 93%，利潤率為 15%，較去年同期提升 580 個基點。

The earnings and margin improvements were primarily driven by higher sales volume and commercial pricing initiatives. SG&A was higher than the prior year, mainly due to wage inflation and higher sales commissions, but declined 50 basis points as a percentage of sales. As Neil discussed, Climate Solutions is progressing well on the 80/20 journey. Over the last 2 quarters, the average year-over-year margin improvement has exceeded 500 basis points.

獲利與利潤率的改善主要由更高的銷售量與商業定價措施所帶動。SG&A 較去年同期增加，主要因工資通膨與較高的銷售佣金，但占銷售額比重下降 50 個基點。如 Neil 所述，氣候解決方案在 80/20 旅程上進展良好。過去兩個季度，平均年對年利潤率改善已超過 500 個基點。

Please turn to Slide 8. Performance Technologies also had a good quarter, with sales up 22% or $59 million. Revenue was up 29% on a constant currency basis, benefiting from growth in all product groups commercial pricing and metals pass-throughs. We estimate that the underlying volume, excluding pricing was up 22%.

請翻到投影片第 8 頁。績效科技（Performance Technologies）本季表現也不錯，銷售成長 22%，增加 5,900 萬美元。以固定匯率計，營收成長 29%，受惠於所有產品群的成長、商業定價以及金屬成本轉嫁。我們估計在排除價格因素後的基礎出貨量成長 22%。

Within the segment, Advanced Solutions sales were up 21% or $6 million, with growth in our electric vehicle product sales. Liquid-cooled product sales increased 23% or $22 million due to a strong rebound in the automotive market. Lastly, air-cooled product sales increased 24% or $33 million, primarily due to strong demand in the off-highway and commercial vehicle markets. Adjusted EBITDA increased 88%, resulting in a 7.4% margin and a 260 basis point improvement from the prior year.

在該事業部內，先進解決方案銷售成長 21%，增加 600 萬美元，主要來自電動車產品銷售成長。液冷產品銷售成長 23%，增加 2,200 萬美元，因汽車市場強勁反彈。最後，風冷產品銷售成長 24%，增加 3,300 萬美元，主要由非公路（off-highway）與商用車市場的強勁需求所帶動。調整後 EBITDA 成長 88%，利潤率達 7.4%，較去年同期提升 260 個基點。

As anticipated, the impact of material cost increases on earnings was lower this quarter. We are expecting to see positive net materials in the second half of the year based on current metals projections. As Neil mentioned, the Performance Technologies segment is relatively early in the 80/20 journey. As we work further to segment the business, we expect margin improvement to accelerate towards our targets.

如預期所示，本季材料成本上升對獲利的影響較小。根據目前的金屬價格預測，我們預期下半年將出現正向的淨材料效益。如 Neil 所提，績效科技事業部在 80/20 旅程上仍相對早期。隨著我們進一步分割業務，我們預期利潤率改善將加速朝目標邁進。

Now let's review the total company results. Please turn to Slide 9. First quarter sales were up 21% or $100 million, driven by strong gains in both Climate Solutions and Performance Technologies. Revenue was up 28%, excluding a negative FX impact of $36 million. In the quarter, the main revenue driver was higher volume of approximately $100 million resulting in a volume growth rate of 21%. The balance of revenue growth was comprised of material recovery and commercial pricing, partially offset by negative foreign exchange. During the quarter, materials increased $15 million from the prior year. We were able to more than offset this increase through our various pricing mechanisms.

現在我們來檢視公司整體業績。請翻到投影片第 9 頁。第一季銷售成長 21%，增加 1 億美元，主要由氣候解決方案與績效科技的強勁成長所帶動。若排除 3,600 萬美元的匯率負面影響，營收成長 28%。本季主要的營收驅動因素是約 1 億美元的出貨量增加，對應的出貨量成長率為 21%。其餘營收成長來自材料回收與商業定價，部分被不利匯率所抵銷。本季材料成本較去年同期增加 1,500 萬美元；我們透過各種定價機制，得以超過幅度地抵消這項增加。

SG&A Increased $7 million from the prior year, yet declined 70 basis points as a percentage of sales, primarily due to higher employee compensation-related expenses and sales commissions. I'm pleased to report that adjusted EBITDA increased 73% or $22 million, this represents a 260 basis point improvement and the third consecutive quarter of year-over-year margin improvement. Adjusted earnings per share of $0.48 and was $0.33 above the prior year.

SG&A 較去年同期增加 700 萬美元，但占銷售額比重下降 70 個基點，主要因員工薪酬相關費用與銷售佣金增加。我很高興報告，調整後 EBITDA 成長 73%，增加 2,200 萬美元；這代表利潤率提升 260 個基點，並且是連續第三個季度年對年利潤率改善。調整後每股盈餘為 0.48 美元，較去年同期高出 0.33 美元。

Before moving on, I'd like to point out that we had a few very small earnings adjustments in Q2 totaling $900,000. This was comprised of $600,000 for restructuring expenses and $300,000 for environmental costs.

在進入下一部分之前，我想指出我們在第二季有幾項非常小的獲利調整，合計 90 萬美元。其中包括 60 萬美元的重整費用，以及 30 萬美元的環境成本。

Now moving to the cash flow metrics. Please turn to Slide 10. We generated $29 million of positive free cash flow in the second quarter, which was a nice improvement from our first quarter. This puts our year-to-date free cash flow at $33 million. The year-to-date cash flow includes $10 million of cash payments primarily for restructuring activities, including the European headcount reductions announced last year.

接著看現金流指標。請翻到投影片第 10 頁。我們在第二季產生 2,900 萬美元的正向自由現金流，較第一季有明顯改善，使得年初至今的自由現金流達到 3,300 萬美元。年初至今的現金流包含 1,000 萬美元的現金支付，主要用於重整活動，包括去年宣布的歐洲人力縮減。

Earnings growth and improved working capital has been the key to our cash flow generation during the first half of the year. We expect positive free cash flow in the second half of the year including approximately $9 million of anticipated cash restructuring payments, mostly tied to our European restructuring activities.

獲利成長與營運資金改善，是我們在上半年現金流量創造的關鍵。我們預期下半年將實現正的自由現金流，其中包含約 900 萬美元的預期現金重整支付，主要與我們在歐洲的重整活動相關。

I'd like to highlight that Modine's Board of Directors recently renewed our 2-year $50 million share repurchase authorization. During the quarter, we repurchased 100,000 shares and plan to repurchase a similar level per quarter over the balance of the year. As a reminder, our program is currently focused on offsetting the dilutive impact of our share-based incentive compensation program. Net debt of $301 million was $32 million lower than the prior fiscal year-end. Our cash balance was $70 million as of September 30, and we finished the quarter with a leverage ratio of 1.7 and which is within our targeted range and improved from the prior quarter.

我想特別強調，Modine 董事會近期已續期我們為期 2 年、5,000 萬美元的庫藏股回購授權。本季我們回購了 100,000 股，並計畫在今年剩餘期間每季回購相近的數量。提醒一下，我們目前的計畫重點在於抵銷以股份為基礎的激勵薪酬計畫所造成的稀釋影響。淨負債 3.01 億美元，較上一財政年度年末減少 3,200 萬美元。截至 9 月 30 日，我們的現金餘額為 7,000 萬美元，本季結束時槓桿比率為 1.7，落在我們的目標區間內，且較上一季改善。

Now let's turn to Slide 11 for our fiscal '23 outlook. We're holding our outlook for fiscal '23 revenue growth at 6% to 12% despite ongoing foreign exchange headwinds. We are currently forecasting more than a $100 million negative impact on sales due to the stronger U.S. dollar.

現在請看投影片 11，說明我們 2023 財年的展望。儘管外匯逆風仍在，我們仍維持 2023 財年營收成長 6% 至 12% 的展望不變。我們目前預估因美元走強，對銷售將造成超過 1 億美元的負面影響。

After a stronger-than-expected first half, we now anticipate that adjusted EBITDA will be in a range of $190 million to $200 million. This represents an increase of 20% to 26% versus the prior year. This is also an improvement from our previous range of $180 million to $195 million.

在上半年表現優於預期之後，我們現在預期調整後 EBITDA 將落在 1.90 億至 2.00 億美元區間。這代表較去年成長 20% 至 26%。這也較我們先前 1.80 億至 1.95 億美元的區間有所上修。

We expect Q3 EBITDA will remain strong and be in a similar range to Q2, then improving sequentially in Q4. As we just reviewed, Q2 was extremely strong. In Q3, we entered the favorable heating season, but also need to factor in the traditional holiday shutdowns. And in Q4, we anticipate a further ramp-up in volume combined with additional pricing adjustments with the new calendar year. We remain quite positive regarding our full year outlook, but we also realize there's a lot of global economic uncertainty.

我們預期第三季 EBITDA 將維持強勁，並與第二季處於相近區間，之後在第四季逐季改善。如同我們剛才回顧的，第二季表現極為強勁。第三季我們進入有利的供暖旺季，但也必須納入傳統假期停工的影響。而在第四季，我們預期在新曆年帶來的額外價格調整之下，出貨量將進一步爬升。我們對全年展望仍相當正面，但也理解全球經濟不確定性很高。

We're balancing the positive signals from strong orders and backlog against the risks associated with a potential recession in Europe or the U.S., we'll continue to evaluate and adjust each quarter.

我們在強勁訂單與在手訂單（backlog）的正面訊號，與歐洲或美國可能出現衰退所帶來的風險之間取得平衡；我們將持續逐季評估並調整。

To wrap up, we're very pleased with the second quarter results as our business leaders are executing on planned improvements. We're on track with our transformation targets presented in June. Climate Solutions is somewhat ahead of the pace. We're very encouraged by the revenue and margin outlook for this segment.

總結來說，我們對第二季的結果非常滿意，因為各事業領導團隊正落實既定的改善計畫。我們正按計畫達成 6 月所提出的轉型目標。Climate Solutions 的進度略快於原先節奏。我們對該事業部的營收與毛利率展望深受鼓舞。

In addition, Performance Technologies has begun the 80/20 journey. As demonstrated by Climate Solutions, we believe that Performance Technologies can generate similar levels of improvement as 80/20 matures. Combined, the 2 segments will continue to drive top line growth and additional margin improvements in the future.

此外，Performance Technologies 已開始推動 80/20 旅程。如同 Climate Solutions 所展現的，我們相信隨著 80/20 日益成熟，Performance Technologies 也能帶來相近幅度的改善。兩大事業部合計，未來將持續推動營收成長並帶來進一步的利潤率改善。

With that, Neil and I'll be happy to take your questions.

接下來，Neil 和我很樂意回答各位的問題。

(Operator Instructions) Our first question comes from the line of Matt Summerville with D.A. Davidson.

（接線員指示）我們的第一個問題來自 D.A. Davidson 的 Matt Summerville。

A couple of questions. Maybe let's start with the data center business on the slide it looks like you've raised your outlook, I think, from plus 40% to 50% to plus 50% to 60%. Obviously, you're up [80] here in the quarter. So a very strong start to the year. I want to speak a little bit more towards something referenced in the press release you put out the other day talking about the initial North American shipments in reference to the $100 million target it was basically communicated there for the North American data center business. To my recollection, last year, that would have been pretty minimal in terms of revenue contribution. So what kind of line of sight do you have in that business kind of multiyear outlook what's the backlog look like incoming orders? Could you put some finer points around what you're seeing in the data center side.

我有幾個問題。也許先從資料中心業務談起。從投影片上看起來，你們把展望從我記得的 +40% 到 +50%，上調到 +50% 到 +60%。顯然本季你們成長了 [80]，所以今年開局非常強勁。我想再多談一點你們前幾天發布的新聞稿中提到的內容，談到與 1 億美元目標相關的北美初期出貨，也就是當時基本上對北美資料中心業務所傳達的目標。以我的記憶，去年這部分對營收的貢獻應該相當有限。所以你們對這項業務的多年期展望有多清楚的能見度？在手訂單情況如何、接單狀況如何？能否更具體說明你們在資料中心端看到的情況。

Matt, great to hear from you. This is Neil. Sure, absolutely. We're seeing the growth through our geographic expansion. So if we think about it last year, we didn't have a product set or a product line, particularly chillers that could serve the North America market. And with our press release that came out that was specific to Rockbridge, that was the chiller expansion, where we expect to see the capacity that we put in generate revenues similar to what you just described. So this would be incremental in addition to the traditional data center revenues that Modine has produced in the past.

Matt，很高興聽到你的聲音。我是 Neil。當然，沒問題。我們看到的成長來自地理版圖的擴張。回想去年，我們並沒有一套產品組合或產品線，特別是冷水機（chillers），能夠服務北美市場。而我們發布的那則新聞稿是針對 Rockbridge 的，內容是冷水機產能擴建；我們預期新增的產能將帶來你剛才所描述的相近營收。因此，這將是在 Modine 過去既有的傳統資料中心營收之外的增量。

If you think about pivoting over to one of your other high-growth areas, EV battery thermal management systems. You mentioned cumulatively, you have 18 platform wins. Roll forward 12 months from now, what could that number look like? And out of the 18, when you aggregate the 18, what's the file value associated with that, if you will, annual revenue book associated with that?

如果把焦點轉到你們另一個高成長領域：電動車電池熱管理系統。你提到累計已拿下 18 個平台得標。往後推 12 個月，這個數字可能會變成多少？另外，這 18 個得標合計起來，對應的案值（如果可以這麼說）是多少，也就是相關的年度營收訂單簿規模是多少？

Yes. No, that's a really good question. It's Neil again. We're engaged on 101 different systems to date. If we go back to -- we'll go back, say, a year plus ago, that was almost in the single-digit range. we're on prototypes of [56], which is up [2] from June. And then we have the award wins of 18, which is 2 more than when we spoke last in June. We go back 1.5 years ago, those numbers again were single digits. With the 18 awarded wins, that's roughly $90 million that we see in terms of the run rate -- the good news here on this bit where the EV team has been focused on is when we talked about the 16 wins that we had last year -- or this year, we talk about specialty vehicles and buses. These 2 incremental wins are on the last-mile delivery vehicle OEM fleets. So we're also looking at not only EV and specialty vehicle, but we've made a pivot with some of our battery thermal management, passenger thermal management, electronic cooling packages that can serve in the last mile as well as we see that as an opportunity. At the same time, you saw a press release in regards to Shyft as we spoke about those wins.

是的，這是個非常好的問題。我還是 Neil。截至目前我們已參與 101 個不同的系統專案。如果回到——我們回到大約一年多以前，那幾乎還在個位數。我們目前有 [56] 個原型專案，較 6 月增加 [2]。然後我們有 18 個得標案，比我們上次在 6 月談到時多了 2 個。再回到 1.5 年前，這些數字同樣也都是個位數。以這 18 個得標案來看，我們所看到的年化 run rate 約為 9,000 萬美元——這部分的好消息是，EV 團隊聚焦的方向是：當我們談到去年——或今年——我們談到先前的 16 個得標時，主要是特種車輛與巴士。這新增的 2 個得標則來自最後一哩路配送車輛的 OEM 車隊。因此，我們不僅著眼於 EV 與特種車輛；同時也在電池熱管理、乘員艙熱管理、電子冷卻套件等方面做了策略轉向，讓產品能服務最後一哩路市場，我們也將其視為一個機會。同時，你也看到一則關於 Shyft 的新聞稿，我們也提到那些得標。

Sure. And then maybe one more. When you think about kind of where you're at with 80/20 in the performance side of the business, if you had to handicap it today, how much of revenue do you think we could be looking at? Or if you can frame it up in terms of product line simplification however you want to term it? How much do you think gets moved out the door, if you will, over the next year or 2? How much revenue do you need to deliberately exit? And in doing so, just that action alone, how much would that improve profitability once you complete that iteration of 80/20?

了解。最後可能再問一個。當你們思考在業務的 performance 端推動 80/20 的進度，如果今天要你估算一下，你認為我們可能會看到多少營收受到影響？或者你也可以用產品線簡化等你想用的方式來描述：未來 1 到 2 年，你認為大概會有多少（營收）會被移出門外、也就是被剔除？你們需要刻意退出多少營收？而在這麼做之後，單就這個動作本身，一旦完成這一輪 80/20，獲利能力會提升多少？

No, great question, Matt. We're thinking about it the same way. As you -- as we mentioned, we've -- we're really in the early stages of 80/20 in Climate Solutions, and we've just structured the team in a way to stand up market verticals around our air, liquid and EV business in order to get to those answers. They're working through the quads in terms of how they look at the products and customers. They're looking at profitability. And we've just set this up with a new general manager that we just hired as well to come up with these types of conclusions.

不，Matt，問得很好。我們的思考方式跟你一樣。正如你——正如我們提到的，我們——我們在氣候解決方案（Climate Solutions）的 80/20 還真的處於非常早期的階段；我們也剛把團隊架構調整好，圍繞我們的空氣、液體以及 EV 業務建立市場垂直領域，以便得到這些答案。他們正從四個象限（quads）的角度來梳理產品與客戶的看法。他們也在看獲利能力。而且我們也剛設立了這個架構，並新聘了一位總經理，來形成這類結論。

So right now, there's a hypothesis -- we have some assumptions. We need to vet those assumptions in the hypothesis to determine exactly what those numbers look like. It's -- you're thinking about it the same way we're thinking about it. And just like we did in Climate Solutions, we'll work through the meticulous calculations so that we can come up with the right and proper range.

所以目前有一個假設——我們有一些前提假設。我們需要在這個假設中驗證那些前提假設，才能精確判定這些數字會長什麼樣子。你——你的思考方式跟我們一樣。就像我們在氣候解決方案所做的一樣，我們會進行細緻的計算，這樣才能得出正確且恰當的區間。

(Operator Instructions) Your next question is from Steve Ferazani with Sidoti.

（接線生指示）您的下一個問題來自 Sidoti 的 Steve Ferazani。

Everyone. Appreciate all the color on the call. impressive margin improvement in PT despite the early stages of 80/20. Can you give a sense of how much more of a contribution that can be this year? I know you're in the early stages and just how sustainable those margins are in PT, knowing that you're seeing slowdowns from the European economies, higher energy costs and also likely that light vehicle production, at least in Europe probably doesn't grow quite so substantially given some of these headwinds?

各位，感謝在電話會議上提供這麼多細節。即便 80/20 還在早期階段，PT 的毛利率改善仍令人印象深刻。你們能否說明今年還能帶來多少額外貢獻？我知道你們仍在早期階段；另外，考量到歐洲經濟放緩、更高的能源成本，以及輕型車產量（至少在歐洲）在這些逆風下可能不會大幅成長，PT 的這些毛利率有多可持續？

Steve, great question. This is Neil. I'll start with some of the high-level details of what we're working on in Performance Technologies, and then I'll let Mick respond. It's a really good question because you're right, there are some headwinds, where we see some of that. But at the same time, we see opportunities within the business.

Steve，問得很好。我是 Neil。我先從我們在績效科技（Performance Technologies）正在推動的一些高層次重點開始說明，接著讓 Mick 回應。這確實是個很好的問題，因為你說得對，確實存在一些逆風，我們也看得到其中一部分；但同時，我們也在業務內看到機會。

First and foremost is around complexity reduction as the team looks at its product line simplification and how we can do and be more efficient with the products and then the plants that we work in. We also see an opportunity within plant productivity and materials. That's going to be a major focus for the Performance Technologies' team. The team is really excited about 80/20. The team has a lot of energy around this because they saw the impact in Climate Solutions, and they're ready to adopt it and embrace it.

首先也是最重要的是降低複雜度：團隊正在檢視產品線簡化，以及我們如何在產品與所運作的工廠上做得更有效率。我們也看到工廠生產力與材料方面的機會。這將會是績效科技團隊的主要聚焦。團隊對 80/20 非常興奮；大家對此充滿動能，因為他們看到了在氣候解決方案中的影響力，並且已準備好採用並擁抱它。

And then there's a lot of great commercial excellence programs that are working on in Performance Technologies that I suspect we'll start to see some impact in the coming quarters. Commercial excellence around pricing, surcharge, minimum order quantities, nonrecurring engineering. They're really smart this team in terms of how they're thinking about commercializing existing products and future products. Mick?

另外，績效科技也在推動許多很棒的商業卓越（commercial excellence）計畫，我猜我們會在接下來幾個季度開始看到一些成效。商業卓越涵蓋定價、附加費（surcharge）、最低訂購量、一次性工程費（nonrecurring engineering）。這個團隊非常聰明，對於如何將既有產品與未來產品商業化，他們的思考方式很到位。Mick？

Yes, Steve, I'd just add, we laid out at our Analyst Day at the objective here by the end of fiscal '24 over that 2-year period was to get this business to cross the double-digit margin standpoint. And so we've seen good improvement from Q1 to Q2. And then we would expect, based on all the activities Neil laid out. And the next thing about that is a lot of 80/20 is our control versus the economic environment out there.

是的，Steve，我再補充一下：我們在分析師日（Analyst Day）已經說明了目標——在 2 年期間、也就是到 2024 財年末，要讓這個業務的利潤率跨過兩位數的門檻。因此我們看到從 Q1 到 Q2 有不錯的改善。接下來，基於 Neil 所列出的所有活動，我們也會預期持續改善。另外一點是，80/20 很大一部分是在我們可控範圍內，而不是取決於外部的經濟環境。

So to your question, I think we continue to anticipate further margin improvements in Q3 and then a further lift in Q4 on our track to getting this business to get into a double-digit range.

所以回到你的問題，我認為我們仍預期 Q3 會有進一步的利潤率改善，然後在 Q4 再有一波提升，沿著我們的路徑把這個業務帶進兩位數區間。

That's helpful. Beyond data centers a couple of the areas you highlighted, and I want to see if you can quantify them a bit and also ask about the tailwinds. Obviously, you've benefited from the older school retrofits. Trying to get a sense of how much longer that tailwind could be? And then if you can quantify in dollar terms what you're seeing from the European heat pump market.

這很有幫助。除了資料中心之外，你提到的幾個領域，我想看看你能否稍微量化一下，並且也想問一下順風因素。顯然你們受惠於較舊校舍的翻新改造。我想了解這個順風大概還能持續多久？另外，你能否用金額來量化你們在歐洲熱泵市場看到的情況？

Yes, good question. So relative to the CARES Act or the SR Act in North America and the funding that's in place for schools. We know that there's at a minimum 3 years' worth of funding that will be deployed across the 125,000 K-12 that are in the United States. It's a matter of the ability to install and at the rate that they can install during the off season, which is the summer seasons when the schools are not in operation.

是的，問得好。就北美的《CARES 法案》或《SR 法案》以及針對學校的既有資金而言，我們知道至少有 3 年的資金會在美國 12.5 萬所 K-12 學校中逐步投入。關鍵在於安裝能力，以及他們能在淡季（也就是暑假、學校未運作的夏季）以多快的速度完成安裝。

I suspect, Steve, that that's going to go beyond 3 years because the installations will not be able to keep up with the pace of demand especially as schools and school boards and teachers unions and PTOs really think hard about infrastructure spend and how to improve the indoor quality within the schools and classrooms. So I think that's a tailwind that's in place for several years. In terms of the heat pump market in Europe, we just recently broke ground on an expansion in Serbia. We're preparing and we're ramping for that. We're deploying some more CapEx and more machinery and equipment so that we can keep up with that demand, and we expect to see that demand over the next plus -- 2 to 3 years.

Steve，我猜這會超過 3 年，因為安裝速度無法跟上需求的步伐，尤其當學校、學區董事會、教師工會以及家長教師會（PTOs）更認真思考基礎設施支出，以及如何改善學校與教室的室內空氣品質時。我認為這個順風會持續好幾年。至於歐洲的熱泵市場，我們最近才在塞爾維亞為擴建案動土。我們正在為此做準備並加速爬坡。我們會投入更多資本支出（CapEx）、更多機械與設備，以便跟上需求；而且我們預期未來 2 到 3 年仍會看到這樣的需求。

Great. So I guess that leads right into my next question, which is CapEx priorities given that Virginia is now open. It sounds like now Serbia is something on the heat pump. How are you thinking about CapEx priorities moving forward? And if I can group that in with your leverage ratio now looks like you're going to be below what your old targets were and how you're prioritizing capital allocation, is leverage clearly at a very strong rate level and getting better?

很好。那我想這就直接帶到我的下一個問題：在維吉尼亞現在已經啟用的情況下，聽起來塞爾維亞也會投入熱泵相關。你們接下來如何思考 CapEx 的優先順序？另外把這點跟你們的槓桿比率一起問：你們現在看起來會低於過去的目標區間；在資本配置的優先順序上，你們的槓桿是否已經明顯處於非常強健的水準，而且還在改善？

Yes. Thanks, Steve. The -- we're really happy with the leverage ratio, as you pointed out for others we've talked for several years about trying to keep the company through a cycle between 1.5 to 2.5x, depending on acquisition pipeline, the economic environment and getting to 1.7% this quarter is really happy with that. I think going forward, we continue to expect that to decline. And part of that is -- it's good to go into any kind of economic uncertainty with that strong balance sheet. But equally so, we talked about really ramping up our acquisition pipeline. So we're trying to ensure we have the balance sheet ready for any kind of economic events and certainly more important, I think it's strategically to support the acquisition funnel in our growth verticals.

是的，謝謝你，Steve。正如你所指出的，我們對槓桿比率非常滿意。過去幾年我們一直談到，希望公司在景氣循環中維持在 1.5 到 2.5 倍之間，取決於併購管線、經濟環境等因素；而本季達到 1.7%（原文如此）讓我們非常高興。我想往前看，我們仍預期它會繼續下降。其中一部分原因是——在任何經濟不確定性下，擁有這樣強健的資產負債表是好事。但同樣地，我們也談到要大幅提升併購管線。因此我們希望確保資產負債表已準備好面對任何經濟事件；更重要的是，我認為在策略上是為了支持我們成長垂直領域的併購漏斗。

And then you're right then just on the short run, even in the quarter, out of $12 million of CapEx, we spent at least $8 million in the quarter on our Climate Solutions side. So as Neil laid out priorities to continue to expand data center production to ensure we have adequate capacity for the rapid order book intake. And then the other probably CapEx or PP&E 1 at Serbia, as Neil mentioned, to support the growth in -- of the European heat pump market.

另外你說得對，就短期來看，甚至在本季度，在 1,200 萬美元的 CapEx 中，我們至少有 800 萬美元是花在氣候解決方案這一側。因此如 Neil 所說，優先事項是持續擴充資料中心的產能，以確保我們有足夠的產能來承接快速增加的訂單簿。然後另一個可能的 CapEx 或 PP&E（不動產、廠房及設備）項目是在塞爾維亞，如 Neil 提到的，用以支援歐洲熱泵市場的成長。

Your next question is from the line of Matt Summerville with D.A. Davidson.

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

Just a couple of follow-ups. Mick, can you talk about how we should be thinking about the cost savings realization associated with the European restructuring. I know you're targeting about $20 million. How should we think about that fiscal '23 versus what lands in fiscal '24? And can you remind what the cash cost of that program is?

我有幾個追問。Mick，您能談談我們應該如何看待與歐洲重組相關的成本節省實現嗎？我知道你們目標大約是 2,000 萬美元。我們應該如何看待 2023 財年相較於 2024 財年會落地多少？另外，能否提醒一下這個計畫的現金成本是多少？

Yes. So we estimated and that we'd get approximately half of the savings this year, Matt, and were a little bit more heavily weighted in the second half than the front. And then the other, say, half or $10 million next year, so we'll get the full amount. We had originally estimated that the cost would be about $20 million to $25 million and we're still finalizing the program, but I'm happy to say we're running clearly at the low end of that and an opportunity that we might be able to do slightly better than what we had thought.

好的。我們的估算是，今年大約能取得一半的節省，Matt，而且權重會稍微偏向下半年多於上半年。接著明年再取得另外一半，也就是約 1,000 萬美元，如此就能達到全額。我們原先估計成本約為 2,000 萬到 2,500 萬美元，目前仍在敲定計畫，但我很高興地說，我們明顯是在該區間的低端運行，而且有機會做得比我們原先想的還要稍微更好一些。

And then how should we be thinking about total CapEx for this year? And if you have a preliminary view on next? And then similarly, how we should be thinking about free cash conversion this year and next, bearing in mind the CapEx aspect of things as well as the cash cost of this program?

那麼，今年的總資本支出（CapEx）我們應該怎麼看？如果你們對明年有初步看法也請分享。另外，同樣地，考量資本支出以及這個計畫的現金成本，今年與明年的自由現金轉換率我們應該如何看待？

Yes. From a CapEx standpoint, we're still looking in the $60 million to $70 million range for the year that we haven't spent in the first half at that rate, but we have some heavier spending in the areas we just talked about in the second half. It's about $60 million to $70 million this year, Matt.

好的。就資本支出而言，我們今年仍然預期在 6,000 萬到 7,000 萬美元的區間。上半年我們的支出速度沒有達到那個水準，但下半年在我們剛剛談到的領域會有較多支出。今年大約是 6,000 萬到 7,000 萬美元，Matt。

From a conversion the way -- probably the easiest way we think about it or especially externally is this year, looking at free cash flow to a sales margin or a conversion, about 2.5% to 3%. And then improving further next year. When we laid out our transformation strategy, we want to be within the 24-month window, 3% to 5% of sales. And then from 3 years on, obviously, push above that range. So I hope that addresses your question.

至於轉換率——我們認為最容易理解的方式，尤其是對外部而言，是今年以自由現金流對銷售額的比率（或轉換率）來看，大約是 2.5% 到 3%。明年會進一步改善。當我們提出轉型策略時，我們希望在 24 個月的窗口內達到銷售額的 3% 到 5%。而在 3 年之後，顯然要推升到高於該區間。所以希望這回答了你的問題。

Yes. And then M&A, I guess you guys must feel good. about the Climate business to start talking about M&A. I would have been under the impression maybe coming out of last quarter that we were maybe still at least 6 if not 12 months off before we start to have or before you start to have the discussion with us like you're having today. So maybe talk about Neil, what gets you comfortable to start thinking about M&A now as it pertains to that business. You mentioned you're looking at opportunities in a couple of areas, maybe a couple of technology areas, maybe speak to that in a little more detail. And then I'd be curious as to how you're feeling about the maturity of the funnel and what kind of the high end of deal size you might be willing to look at for that business?

好的。那關於併購（M&A），我想你們一定對 Climate 業務感覺不錯，才開始談併購。我的印象是，可能在上一季結束時，我們距離開始討論這件事也許還有至少 6 個月、甚至 12 個月，才會開始跟我們進行像今天這樣的討論。所以也許請 Neil 談談，是什麼讓你現在就對開始思考與該業務相關的併購感到更有把握。你提到你們在幾個領域尋找機會，可能是一些技術領域，能否更詳細說明？另外我也想了解，你對案源漏斗的成熟度感覺如何，以及就該業務而言，你們願意評估的交易規模上限大概會到多大？

Yes. All good questions, Matt. And you're right. We are thinking about it. in terms of Climate Solutions. We have each one of the market verticals inside of Climate Solutions that are segmented internally a little bit differently in terms of hyper growth, their growth or we want to maintain existing size and EBITDA dollars.

好的，都是很好的問題，Matt。你說得對，我們確實正在思考 Climate Solutions 方面的併購。Climate Solutions 內部的每一個市場垂直領域，在內部的分段方式略有不同，取決於它們是超高速成長、一般成長，或是我們希望維持既有規模與 EBITDA 金額。

So there's specific markets inside of Climate Solutions that we're more aggressive with in terms of how we're thinking about filling the funnel with M&A activity. And when we focus on those areas are the ones we often talk about, we look at not only how to gain share in that space, but also adjacencies and technologies or channel that would complement what we do today, 1 or 2 degrees, adjacent space is how we think about that orbit.

因此，在 Climate Solutions 內部有一些特定市場，我們在思考如何透過併購活動來充實漏斗時會更積極。當我們聚焦在那些領域時——也就是我們經常談到的那些——我們不僅看如何在該領域提升市占，也會看相鄰領域，以及能補強我們現有業務的技術或通路；我們把它視為距離我們現有業務 1 到 2 個「角度」的相鄰空間，這就是我們對這個軌道的思考方式。

We have worked pretty hard to build out a business development team. So we've put some new individual -- actually a press release came out this past quarter in terms of Paul Plourde, who we just brought in to drive business development and generate and create this funnel with the support of our GMs.

我們也非常努力地建立業務開發團隊。因此我們引進了一些新的人才——其實本季有一則新聞稿提到 Paul Plourde，我們剛把他延攬進來，負責推動業務開發，並在各事業部總經理（GM）的支持下，產生並建立這個案源漏斗。

So I feel much more comfortable than I'd say, a year ago, where we have GMs that are in the spaces that have been identified for inorganic growth and that they're building out targets and they're cultivating relationships based on their status in terms of where we want them to spend time on M&A activity. And then we also are now creating at the corporate office, a business development engine to where we can execute on the process once you get through cultivation and you get into, say, the stages of diligence.

所以我比起一年前更有信心。現在我們的 GM 已經在那些被認定為需要透過非有機成長的領域就位，他們正在建立目標清單，並依據我們希望他們在併購活動上投入時間的優先順序，去培養關係。同時，我們也正在總部建立一個業務開發引擎，讓我們在完成關係培養、進入例如盡職調查等階段後，能夠執行整個流程。

So we're a lot further along than we were because our GMs are now in place for over a year and they can set the strategies, they know their markets. We're building out the support and infrastructure at the corporate level. And we've accelerated the earnings improvement in Climate Solutions that allows us to really focus on this and spend more time talking about it. As you know, you can never time these things, Matt, but to have the funnel and the net as wide as it is versus what we had last year, I feel much more comfortable where we're at today.

因此我們比以前前進了很多，因為我們的 GM 現在已就位超過一年，他們能制定策略、也了解各自市場。我們正在公司層面建立支援與基礎設施。我們也加速了 Climate Solutions 的獲利改善，讓我們能真正把重心放在這上面，並花更多時間討論。如你所知，Matt，這些事情永遠無法精準掌握時點，但相較於去年，我們現在的漏斗與覆蓋範圍更廣，讓我對我們目前的位置更有信心。

Yes. Matt, I'd just add that besides question, just add on what Neil said, super hard to answer based on all those factors that I view it as our role and my role to sort of position the company. So the opportunities may come in smaller pieces, which we can't necessarily control. On the other hand, we saw this years ago with Luvata. We have the new bank facilities. We've got plenty of flexibility in our covenants. So I think the governor on size is our current bank agreements and covenant ratios there, but it gives us a lot of flexibility to do larger transactions. But ultimately, it all comes down to all the details based on the specific opportunity.

是的，Matt，我再補充一下：除了你的問題之外，也延伸 Neil 的說法，這真的很難回答，因為牽涉到很多因素。我認為我們的角色、以及我的角色，是把公司定位好。因此機會可能會以較小的片段出現，而這不一定是我們能控制的。另一方面，我們多年前在 Luvata 的案例也看過。我們有新的銀行融資安排，契約條款（covenants）也有很大的彈性。所以我認為規模的限制主要取決於我們目前的銀行協議與相關的契約比率，但它確實給了我們進行較大型交易的高度彈性。不過最終仍取決於特定機會的所有細節。

I'm showing no further questions at this time. I would now like to turn the conference back to Kathy Powers.

我這邊顯示目前沒有其他問題。現在我想把電話會議交回給 Kathy Powers。

Thank you, and thanks to everyone on the call for joining us this morning. A replay will be available through our website in about 2 hours. We hope you all have a great day. Thanks.

謝謝，也感謝今天早上參與電話會議的各位。約 2 小時後可透過我們的網站收聽重播。祝大家有美好的一天。謝謝。

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.

各位女士、先生，感謝您的參與。本次電話會議到此結束。您現在可以掛線。