Modine Manufacturing Co (MOD) 2023 Q4 法說會逐字稿

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

女士們先生們，早上好，歡迎來到 Modine 的 2023 財年第四季度和全年收益電話會議。 （操作員說明）作為提醒，正在錄製此電話會議。

And I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer and Investor Relations. Thank you, Ms. Powers. You may begin.

我現在想把會議轉交給你的東道主，財務主管和投資者關係副總裁 Kathy Powers 女士。謝謝你，鮑爾斯女士。你可以開始了。

Good morning, and thank you for joining our conference call to discuss Modine's fourth quarter and full year fiscal 2023 results.

早上好，感謝您參加我們的電話會議，討論 Modine 的第四季度和全年 2023 財年業績。

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.

我們的總裁兼首席執行官尼爾·布林克 (Neil Brinker) 也加入了這次電話會議；和我們的執行副總裁兼首席財務官 Mick Lucareli。

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.

我們將在今天的演示中使用幻燈片，可以通過網絡廣播鏈接或訪問我們網站 modine.com 投資者關係部分發布的 PDF 文件來訪問這些幻燈片。

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.

在幻燈片 3 上是我們關於前瞻性陳述的通知。本次電話會議將包含我們的收益發布以及我們公司向美國證券交易委員會提交的文件中概述的前瞻性陳述。

With that, it's my pleasure to turn the call over to Neil.

有了這個，我很高興把電話轉給尼爾。

Thank you, Kathy, and good morning, everyone.

謝謝你，凱西，大家早上好。

We clearly surpassed our expectations this quarter and delivered record results with sales of $618 million, up 8% and up 11% on a constant currency basis. We reported adjusted EBITDA of $66 million, up 16% from the prior year. We generated $24 million of free cash flow and $0.67 of adjusted EPS.

本季度我們顯然超出了我們的預期，實現了創紀錄的銷售額 6.18 億美元，增長 8%，按固定匯率計算增長 11%。我們報告調整後的 EBITDA 為 6600 萬美元，比上一年增長 16%。我們產生了 2400 萬美元的自由現金流和 0.67 美元的調整後每股收益。

The strong performance resulted in a record year that saw the highest sales and adjusted EBITDA in our history. What is especially remarkable is that these gains were not the result of particularly strong economic conditions, but instead were driven by the internal actions that we've taken over the past 2 years to transform the company. It is a testament to the value we've unlocked across our business, an example of how a sound, focused 80/20 approach can drive higher returns and better margins.

強勁的業績創造了創紀錄的一年，實現了我們歷史上最高的銷售額和調整後的 EBITDA。特別值得注意的是，這些收益並不是特別強勁的經濟狀況的結果，而是我們在過去兩年中為改造公司而採取的內部行動所推動的。這證明了我們在整個業務中釋放的價值，一個合理、專注的 80/20 方法如何帶來更高回報和更高利潤的例子。

Taking a step back, we accomplished a great deal in fiscal 2023. We started the year by announcing a change in our segments, streamlining reporting structures and establishing an infrastructure with focused market-based product groups. We held our first Analyst and Investor Day this past June, where we introduced our purpose statement, engineering a cleaner, healthier world. Our senior leadership team presented their strategies and shared their financial targets for both revenue growth and margin improvement, setting a clear path on how we plan to meet those targets over the next 5 years.

退後一步，我們在 2023 財年取得了巨大成就。年初，我們宣布改變我們的部門，簡化報告結構，並建立一個以市場為基礎的重點產品組的基礎設施。去年 6 月，我們舉辦了第一個分析師和投資者日，在會上介紹了我們的宗旨聲明，即打造一個更清潔、更健康的世界。我們的高級領導團隊介紹了他們的戰略並分享了他們的收入增長和利潤率提高的財務目標，為我們計劃如何在未來 5 年內實現這些目標設定了明確的路徑。

I'm happy to say that we made outstanding progress towards these goals this past year and are even running ahead of many of them. We also established an 80/20 mindset, which has created a culture shift within our organization. We started this journey with the Climate Solutions segment last year and immediately started seeing improved results. We began rolling out 80/20 in the Performance Technologies segment this past fall, where we are reducing complexity and prioritizing our best opportunities. Overall, we are proud of what we have achieved through our 80/20 journey thus far and expect incremental benefits in the next fiscal year from the actions already taken.

我很高興地說，過去一年我們在實現這些目標方面取得了顯著進展，甚至領先於其中許多目標。我們還建立了 80/20 的心態，這在我們的組織內創造了文化轉變。去年，我們從氣候解決方案部門開始了這一旅程，並立即開始看到改進的結果。去年秋天，我們開始在性能技術部門推出 80/20，我們正在降低複雜性並優先考慮我們的最佳機會。總的來說，我們為迄今為止通過 80/20 旅程取得的成就感到自豪，並期望在下一個財政年度從已經採取的行動中獲得更多收益。

For the full year, our sales were up 12% and our adjusted EBITDA was up 34% to a record-breaking $212 million. This equates to a 9.2% EBITDA margin, up 150 basis points from the prior year. We generated $57 million of free cash flow and reported adjusted EPS of $1.95. I'm so proud of the company's remarkable accomplishments and look forward to the year ahead.

全年，我們的銷售額增長了 12%，調整後的 EBITDA 增長了 34%，達到創紀錄的 2.12 億美元。這相當於 9.2% 的 EBITDA 利潤率，比上一年高出 150 個基點。我們產生了 5700 萬美元的自由現金流，調整後每股收益為 1.95 美元。我為公司取得的非凡成就感到非常自豪，並期待著來年。

Please turn to Slide 5. The Climate Solutions segment had a fantastic year, and I would like to highlight some of their accomplishments. Full year revenue increased 11% from the prior year, well above the 6% to 8% goal for fiscal 2024 presented in our Investor Day. Annual sales increased across the product groups were the largest gains in data centers, which was up 60% from the prior year. A good portion of this gain is related to North America, including sales from our new chiller plant. As I mentioned last quarter, bringing the chiller product to North America makes us a full system supplier to the data center market, allowing us to better serve our co-location customers. The chiller product has been very well received, and we are expecting further double-digit data center sale gains in fiscal 2024.

請轉到幻燈片 5。氣候解決方案部門度過了美好的一年，我想強調他們的一些成就。全年收入比上年增長 11%，遠高於投資者日提出的 2024 財年 6% 至 8% 的目標。各產品組的年銷售額增長最大的是數據中心，較上年增長 60%。這一收益的很大一部分與北美有關，包括我們新冷水機組的銷售額。正如我在上個季度提到的，將冷水機產品帶到北美使我們成為數據中心市場的完整系統供應商，使我們能夠更好地為我們的託管客戶提供服務。冷水機產品廣受好評，我們預計 2024 財年數據中心銷售額將進一步實現兩位數增長。

Another success in the Climate Solutions segment this past year was margin expansion. For the full year, the segment reported adjusted EBITDA margin of 14.6%, up 370 basis points from the prior year. This already meets our target margins for this segment of 13% to 15% by the end of fiscal 2024, 1 year earlier than previously planned. A large part of this gain resulted from the improvements in our Heat Transfer products group, who embraced 80/20 early on, helping them achieve improvements in many aspects of their operations.

去年氣候解決方案部門的另一項成功是利潤率的增長。全年，該部門報告調整後的 EBITDA 利潤率為 14.6%，比上年增長 370 個基點。到 2024 財年年底，這已經達到了我們對該細分市場 13% 至 15% 的目標利潤率，比之前的計劃提前了一年。這一收益的很大一部分來自我們傳熱產品組的改進，他們很早就接受了 80/20，幫助他們在運營的許多方面實現了改進。

Last quarter, I mentioned the growth in sales of Heat Transfer products to heat pump customers and that we are looking at increasing capacity. We recently announced that we will be expanding our manufacturing campus in Serbia to allow us to meet the demand we are seeing in this market. Over the next 3 years, we are expecting these sales to more than double. Looking ahead, this segment's strong momentum is being fueled by a healthy backlog, strong markets and from all the hard work this past year.

上個季度，我提到熱泵客戶的傳熱產品銷售額有所增長，我們正在考慮增加產能。我們最近宣布，我們將擴大我們在塞爾維亞的製造園區，以滿足我們在這個市場上看到的需求。在接下來的 3 年裡，我們預計這些銷售額將增加一倍以上。展望未來，健康的積壓訂單、強勁的市場以及過去一年的所有辛勤工作推動了這一領域的強勁勢頭。

The leadership team is shifting focus from improving commercial processes to more operational targets to further improve gross margin. This includes enhancing cost control and productivity as we work to simplify and improve our supply chain and production processes. Our growth focus is on new product development as we use 80/20 to make decisions on where to invest when developing our technology road maps. In addition, our business development team is building its acquisition pipeline with a focus on supporting product and technology strategies. I'm very proud of this team. They reached their initial margin target a year early and are gearing up to make further improvements as they look ahead towards the next goal.

領導團隊正在將重點從改善商業流程轉移到更多運營目標上，以進一步提高毛利率。這包括在我們努力簡化和改進我們的供應鍊和生產流程時加強成本控制和生產力。我們的增長重點是新產品開發，因為我們在製定技術路線圖時使用 80/20 來決定投資方向。此外，我們的業務開發團隊正在構建其收購管道，重點是支持產品和技術戰略。我為這支球隊感到非常自豪。他們提前一年達到了最初的利潤率目標，並準備在展望下一個目標時進一步改進。

Please turn to Slide 6. The Performance Technologies segment also delivered strong performance this year, with full year revenue up 12% from the prior year. Sales increased in all product groups with the largest gains coming from sales of air cooled products to the genset market. The PT segment reported an adjusted EBITDA margin of 7.6% for the full year, an improvement of 140 basis points. The segment reported fourth quarter adjusted EBITDA margin of 9.1%, 220 basis points higher than the prior year. The momentum in this segment is clearly building.

請轉到幻燈片 6。性能技術部門今年也表現強勁，全年收入比上年增長 12%。所有產品組的銷售額均有所增長，其中最大的收益來自向發電機組市場銷售的風冷產品。 PT 部門報告全年調整後的 EBITDA 利潤率為 7.6%，提高了 140 個基點。該部門報告稱，第四季度調整後的 EBITDA 利潤率為 9.1%，比去年同期高出 220 個基點。這一領域的勢頭顯然正在增強。

Since the first quarter of this year, the PT segment has shown sequential margin improvement each quarter. Our team is on track to reach our Investor Day margin targets due in large part to strong volumes and improved product mix. Our markets in the PT segment continue to be steady with ongoing backlogs due to underproduction and supply chain challenges over the last few years. We expect continued market growth in gensets, construction equipment and commercial vehicles, although we are seeing softening in certain sectors.

自今年第一季度以來，PT 部門每個季度的利潤率都出現了連續改善。我們的團隊有望實現我們的投資者日利潤率目標，這在很大程度上要歸功於強勁的銷量和改進的產品組合。由於過去幾年生產不足和供應鏈挑戰，我們在 PT 領域的市場繼續保持穩定，積壓不斷。我們預計發電機組、建築設備和商用車的市場將繼續增長，儘管我們看到某些行業出現疲軟。

We continue to focus on the market development for zero-emission vehicles with strong government incentives and regulations driving the transition from internal combustion engine to EV. We have recently made several new product introductions, including a new BTMS, with liquid cooled condenser for heavy-duty applications and a fuel cell stack pooling package for the fuel cell market. The team has made great progress this year, adding 9 new programs, including 1 incremental program in the fourth quarter. This brings our total EV systems program wins to 21 with over $140 million of projected revenue at mature production volume. This new product is a plug-and-play system for rapid integration into fuel cell vehicle chassis, allowing our customers to accelerate the timeline from bringing these products to markets. This is just another example of how Modine is engineering a cleaner, healthier world.

我們繼續專注於零排放汽車的市場開發，政府的激勵措施和法規推動了從內燃機向電動汽車的過渡。我們最近推出了幾款新產品，包括新的 BTMS，帶有用於重型應用的液體冷卻冷凝器，以及用於燃料電池市場的燃料電池組池。該團隊今年取得了長足進步，新增項目9個，其中第四季度增量項目1個。這使我們的 EV 系統項目總數達到 21 個，成熟量產的預計收入超過 1.4 億美元。這種新產品是一種即插即用系統，可快速集成到燃料電池汽車底盤中，使我們的客戶能夠加快將這些產品推向市場的時間。這只是 Modine 如何打造一個更清潔、更健康的世界的另一個例子。

To sum up, fiscal 2023 was a milestone year, and I believe an inflection point for Modine. We set aggressive goals and either hit them or surpassed them. Over the last few years, we've radically changed our business while significantly expanding our long-term commercial opportunities. We have a clear line of sight to reach the 2027 goals we presented to you last year. We enter fiscal 2024 with excitement and a unified vision as we continue to reposition around the greatest potential. We look forward to sharing this journey with all of you.

總而言之，2023 財年是具有里程碑意義的一年，我認為這是 Modine 的轉折點。我們設定了雄心勃勃的目標，要么達到目標，要么超越目標。在過去的幾年裡，我們從根本上改變了我們的業務，同時顯著擴大了我們的長期商業機會。我們對實現去年向您提出的 2027 年目標有著清晰的認識。隨著我們繼續圍繞最大潛力重新定位，我們懷著興奮和統一的願景進入 2024 財年。我們期待與大家分享這段旅程。

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

現在我想把電話轉給米克，他將審查我們本季度的業績並提供分部財務更新。

Thanks, Neil, and good morning, everyone.

謝謝，尼爾，大家早上好。

Please turn to Slide 7 to review the segment results.

請轉到幻燈片 7 查看細分結果。

Climate Solutions had another stellar quarter with improved earnings and slightly higher sales. Revenue was up 1% from the prior year and improved 5% on a constant currency basis. Data center sales were up 55% or $20 million, including the benefit of the North American chiller expansion. As anticipated, HVAC and our sales were down 9% or $8 million, driven by lower sales of heating products versus a strong quarter last year, partially offset by higher cooler sales. The heating market decline was mostly driven by a reversion to normal pre-COVID levels, along with a relatively mild winter.

Climate Solutions 又迎來了一個出色的季度，收益有所改善，銷售額略有增加。收入比上年增長 1%，按固定匯率計算增長 5%。數據中心銷售額增長了 55% 或 2000 萬美元，其中包括北美冷水機組擴張帶來的收益。正如預期的那樣，HVAC 和我們的銷售額下降了 9% 或 800 萬美元，這是由於加熱產品的銷售額低於去年強勁的季度，部分被冷卻器銷售額的增加所抵消。供暖市場的下滑主要是由於恢復到 COVID 前的正常水平，以及相對溫和的冬季。

Sales of heat transfer products decreased 6% or $8 million from the prior year. As discussed last quarter, we anticipated some market softness around residential applications, combined with 80/20 rationalization and difficult comparisons to an exceptionally strong quarter last year. We are pleased with the very strong earnings conversion as adjusted EBITDA increased 8%, resulting in a 100 basis point margin improvement to 15.9%. The earnings and margin improvements were primarily driven by commercial pricing, positive sales mix and benefits from our 80/20 initiative. As Neil previously explained, the Climate Solutions segment is performing well and is about a year ahead of schedule in meeting their margin objectives. We expect these improvements to continue in fiscal '24.

傳熱產品的銷售額比上年下降 6% 或 800 萬美元。正如上個季度所討論的那樣，我們預計住宅應用市場將出現一些疲軟，再加上 80/20 的合理化以及與去年異常強勁的季度的艱難比較。我們對非常強勁的收益轉換感到滿意，因為調整後的 EBITDA 增長了 8%，利潤率提高了 100 個基點，達到 15.9%。收益和利潤率的提高主要是由商業定價、積極的銷售組合以及我們 80/20 計劃帶來的好處推動的。正如 Neil 之前解釋的那樣，氣候解決方案部門表現良好，比計劃提前一年實現了利潤率目標。我們預計這些改進將在 24 財年繼續進行。

Please turn to Slide 8. Performance Technologies also had a great quarter with sales up 13% or $42 million. Revenue was up 16% on a constant currency basis, benefiting from both volume and pricing improvements. Advanced Solutions sales were up 25% or $8 million with continued growth in our electric vehicle product sales in both North America and Europe. Liquid cooled application sales increased 9% or $11 million due to higher sales to commercial vehicle and automotive customers. Lastly, air cooled application sales increased 13% or $21 million, primarily due to strong demand from off-highway customers with higher sales in genset or stationary power applications.

請轉到幻燈片 8。Performance Technologies 也有一個很好的季度，銷售額增長了 13% 或 4200 萬美元。在固定匯率基礎上，收入增長了 16%，這得益於銷量和定價的改善。隨著我們在北美和歐洲的電動汽車產品銷售額持續增長，高級解決方案銷售額增長了 25% 或 800 萬美元。由於對商用車和汽車客戶的銷售額增加，液冷應用銷售額增長了 9% 或 1100 萬美元。最後，風冷應用銷售額增長了 13% 或 2100 萬美元，這主要是由於非公路客戶對發電機組或固定電源應用銷售額較高的強勁需求。

The Performance Technology team is deep into 80/20 activities and the early results are clear with strong earnings growth this quarter. Adjusted EBITDA was up 51%, resulting in a 9.1% margin and a 220 basis point improvement. As Neil discussed, the Performance Technologies segment is clearly building momentum with sequential margin improvement during the fiscal year. We are tracking towards our Investor Day margin targets and expect the improvements to continue as we see additional benefits from the ongoing rollout of 80/20 throughout the segment.

Performance Technology 團隊深入研究 80/20 活動，早期結果很明顯，本季度盈利增長強勁。調整後的 EBITDA 增長了 51%，帶來 9.1% 的利潤率和 220 個基點的改善。正如 Neil 所討論的那樣，Performance Technologies 部門顯然正在建立勢頭，本財年的連續利潤率有所提高。我們正在跟踪我們的投資者日保證金目標，並預計隨著我們看到在整個細分市場中持續推出 80/20 帶來的額外好處，改進將繼續下去。

Now let's review total company results. Please turn to Slide 9. Fourth quarter sales were up 8% or $44 million, driven by gains in both Performance Technologies and Climate Solutions. Revenue was up 11%, excluding a negative FX impact of $18 million. Growth was driven primarily by $51 million of higher volume, resulting in a 9% growth rate. Commercial and materials pricing added another $9 million.

現在讓我們回顧一下公司的總體業績。請轉到幻燈片 9。第四季度的銷售額增長了 8% 或 4400 萬美元，這主要得益於 Performance Technologies 和 Climate Solutions 的收益。收入增長 11%，不包括 1800 萬美元的負面外匯影響。增長主要是由 5100 萬美元的銷量增加推動的，增長率為 9%。商業和材料定價又增加了 900 萬美元。

Our gross margin improved 160 basis points, primarily driven by higher volume and pricing. SG&A increased $7 million from the prior year, primarily due to higher employee compensation-related expenses. I'm very pleased to report that adjusted EBITDA was higher than we anticipated in the quarter with an increase of 16% or $9 million. This represents a 70 basis point improvement and the fifth consecutive quarter of year-over-year margin improvement.

我們的毛利率提高了 160 個基點，這主要是由於銷量和定價的提高。 SG&A 比上一年增加了 700 萬美元，這主要是由於與員工薪酬相關的費用增加。我很高興地報告，本季度調整後的 EBITDA 高於我們的預期，增長了 16% 或 900 萬美元。這代表了 70 個基點的改善，並且連續第五個季度實現利潤率同比改善。

Please note that earnings per share on a GAAP basis was $1.69 and which was $1.53 higher than the prior year. This was mostly due to the reversal of a valuation allowance on certain U.S. deferred tax assets, which resulted in an income tax benefit of $57 million. This is additional good news and reflects the improved earnings outlook in the U.S. Excluding the valuation allowance impact and the impact of restructuring and environmental charges, adjusted earnings per share for the fourth quarter was $0.67, an increase of $0.10 or 18% from the prior year. These adjustments can be found in our non-GAAP reconciliations in the appendix of this presentation.

請注意，按 GAAP 計算的每股收益為 1.69 美元，比上一年高出 1.53 美元。這主要是由於某些美國遞延稅資產的估值準備金被沖銷，從而產生了 5700 萬美元的所得稅收益。這是一個額外的好消息，反映了美國盈利前景的改善。排除估值準備金影響以及重組和環境費用的影響，第四季度調整後每股收益為 0.67 美元，比上年增長 0.10 美元或 18% .這些調整可以在本演示文稿附錄的非 GAAP 調節表中找到。

Now moving to cash flow metrics. Please turn to Slide 10. We generated $24 million of free cash flow in the fourth quarter, resulting in $57 million of free cash flow for the fiscal year. The full year cash flow includes the negative impact of $18 million of cash payments, primarily for restructuring activities, including the European headcount reductions announced last year. Net debt of $286 million improved by $22 million during the quarter, resulting in a leverage ratio of 1.4x. During the quarter, we repurchased another 100,000 shares for a total of 400,000 shares for the fiscal year. As we look to the next fiscal year, we expect continued growth in free cash flow, driven by higher earnings and a continued focus on working capital. Modine's balance sheet remains quite strong, ready to support our growth and acquisition initiatives.

現在轉向現金流量指標。請轉到幻燈片 10。我們在第四季度產生了 2400 萬美元的自由現金流，導致本財年的自由現金流為 5700 萬美元。全年現金流包括 1800 萬美元現金支付的負面影響，主要用於重組活動，包括去年宣布的歐洲裁員。本季度淨債務為 2.86 億美元，減少了 2200 萬美元，槓桿率為 1.4 倍。本季度，我們又回購了 100,000 股，本財年總計 400,000 股。展望下一財年，我們預計在更高的收益和對營運資本的持續關注的推動下，自由現金流將持續增長。 Modine 的資產負債表仍然相當強勁，隨時準備支持我們的增長和收購計劃。

Now let's turn to Slide 11 for our fiscal '24 outlook. First, fiscal '24 is fully aligned with our financial targets presented at the Investor Day last June. We are expecting most end markets to remain relatively stable with strong backlogs in Climate Solutions. We're also anticipating strong revenue growth in targeted markets, data centers, indoor air quality for schools and electric vehicles.

現在讓我們轉到幻燈片 11 了解我們的 24 財年展望。首先，24 財年完全符合我們在去年 6 月投資者日提出的財務目標。我們預計大多數終端市場將保持相對穩定，氣候解決方案積壓量很大。我們還預計目標市場、數據中心、學校室內空氣質量和電動汽車的收入將實現強勁增長。

Last, we are proceeding with product rationalization through 80/20 activities and expect volume decreases in certain areas that we've chosen to deemphasize. As a result, we believe total company revenue will grow in the range of 4% to 10%. In the Climate Solutions segment, we expect data center revenue to grow 15% to 25%. As previously mentioned, we have a strong backlog going into the year, especially in North America. We anticipate HVAC and our revenues to grow in the mid-single digits as we expect some ongoing market softness, particularly in the residential heating market. However, this should be more than offset by the growth in school products, commercial refrigeration and commercial heaters. We also expect modest heat transfer product growth as strong growth to the heat pump market will be somewhat offset by ongoing weakness in residential applications and product rationalization from 80/20 actions.

最後，我們正在通過 80/20 活動進行產品合理化，並預計我們選擇不強調的某些領域的銷量會下降。因此，我們認為公司總收入將增長 4% 至 10%。在氣候解決方案領域，我們預計數據中心收入將增長 15% 至 25%。如前所述，今年我們有大量積壓工作，尤其是在北美。我們預計 HVAC 和我們的收入將以中個位數增長，因為我們預計市場會持續疲軟，尤其是在住宅供暖市場。然而，這應該被學校產品、商用製冷和商用加熱器的增長所抵消。我們還預計傳熱產品將適度增長，因為熱泵市場的強勁增長將在一定程度上被住宅應用的持續疲軟和 80/20 行動的產品合理化所抵消。

Moving to Performance Technologies. We expect continued momentum from relatively stable markets and benefits from our 80/20 rollout in this segment. We expect Advanced Solutions to have a growth rate in the 25% to 35% range, driven by program launches and continued demand for EV systems and components. We expect lower growth for liquid and air cooled products as we roll out 80/20 throughout the segment. Market growth and additional pricing benefits will be partially offset by product rationalization as we continue to deemphasize low-margin business.

轉向性能技術。我們預計相對穩定的市場將繼續保持增長勢頭，並受益於我們在這一領域推出的 80/20。我們預計高級解決方案的增長率將在 25% 至 35% 之間，這是由項目啟動和對 EV 系統和組件的持續需求推動的。隨著我們在整個細分市場推出 80/20，我們預計液體和空氣冷卻產品的增長將放緩。隨著我們繼續淡化低利潤業務，市場增長和額外的定價優勢將被產品合理化部分抵消。

From an earnings standpoint, we anticipate another strong year in terms of earnings growth and margin improvement. We expect fiscal '24 adjusted EBITDA to be in the range of $240 million to $260 million, representing an increase of 13% to 23%. As we look to the quarterly run rate, we anticipate some ongoing seasonality with Q1 being the lowest quarter, then increasing sequentially through the year. That said, we fully expect the first quarter to show strong year-over-year earnings and margin improvement.

從收益的角度來看，我們預計在收益增長和利潤率改善方面又是一個強勁的一年。我們預計 24 財年調整後的 EBITDA 將在 2.4 億美元至 2.6 億美元之間，增長 13% 至 23%。當我們查看季度運行率時，我們預計會出現一些持續的季節性，第一季度是最低的季度，然後在全年依次增加。也就是說，我們完全預計第一季度將顯示強勁的同比收益和利潤率改善。

With regards to cash flow, we anticipate further improvement in free cash flow with capital spending to be approximately $70 million. Other assumptions, including interest expense, taxes, and depreciation and amortization are included in the appendices attached to this presentation and our press release.

關於現金流，我們預計自由現金流將進一步改善，資本支出約為 7000 萬美元。其他假設，包括利息支出、稅收、折舊和攤銷，包含在本演示文稿和我們的新聞稿所附的附錄中。

To wrap up, we are very pleased with the fourth quarter and fiscal year results including record results in fiscal '23. We're on track with our transformation, and we're working towards the long-term margin and revenue targets presented in our Investor Day last June. As a result, we look forward to another year of improvement in fiscal '24.

總而言之，我們對第四季度和財政年度的業績感到非常滿意，包括 23 財年創紀錄的業績。我們正在進行轉型，我們正在努力實現去年 6 月投資者日提出的長期利潤率和收入目標。因此，我們期待 24 財年的又一年改善。

With that, Neil and I will take your questions.

有了這個，尼爾和我會回答你的問題。

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

（操作員說明）我們的第一個問題來自 Matt Summerville 和 D.A.戴維森。

Wanted to first talk about 80/20, specifically as it pertains to Performance Tech here. What -- given kind of the analytical segmentation process you've now completed, how does that inform your kind of go-forward strategy with respect to that business? And you kind of touched on the fact that we should start to expect some deliberate revenue attrition from rationalization, I think you're calling it, how much revenue attrition should we be looking at this year and next based on what you're thinking today as it pertains to both businesses? And then I have a follow-up.

想先談談 80/20，特別是因為它與 Performance Tech 有關。什麼——給定您現在已經完成的分析細分過程的種類，這如何為您關於該業務的前進戰略提供信息？你有點提到了這樣一個事實，即我們應該開始預期合理化會導致一些有意的收入流失，我想你是這麼說的，根據你今天的想法，我們今年和明年應該考慮多少收入流失因為它涉及到兩個業務？然後我有一個後續行動。

Got it, Matt. Thanks for the question. This is Neil. Yes, so 6 months into it with the Performance Technologies side of the business and as they continue to get more intelligence and information that they're learning, how they want to continue to, what I'll say, subsegment further into the business, so that we can have our organization aligned behind those very specific verticals. So we have some ideas. We have some concepts that we're working through, and I would expect to be able to line up on some firmer ranges probably within the next couple of months.

知道了，馬特。謝謝你的問題。這是尼爾。是的，在 Performance Technologies 業務方面進行了 6 個月，隨著他們繼續獲得更多他們正在學習的情報和信息，他們希望如何繼續，我會說，進一步細分業務，這樣我們就可以讓我們的組織在那些非常具體的垂直領域背後保持一致。所以我們有一些想法。我們有一些我們正在研究的概念，我希望能夠在接下來的幾個月內在一些更穩固的範圍內排隊。

Got it. Maybe I'll pivot over to data centers. Can you talk about how much of that business is in North America versus Europe, what kind of relative growth rates you're seeing in those geographies versus the guidance? And if you could also speak to both the hyperscale and co-location markets as an overlay to that?

知道了。也許我會轉向數據中心。你能談談北美與歐洲的業務有多少，你在這些地區看到的相對增長率與指導相比是什麼樣的？如果您還可以將超大規模和主機代管市場作為其疊加層來討論？

Yes, this is Neil again. Thanks for the question, Matt. Certainly, the majority of the revenue that we're seeing is from Europe, that's where the core of the business is as we continue to ramp up our facility in Virginia that supports the data center market. We're gaining share. We're winning business in the North America market. That continues to be a growth area for us. That area is growing at a much faster rate than it is in Europe, albeit they're both growing.

是的，我又是尼爾。謝謝你的問題，馬特。當然，我們看到的大部分收入來自歐洲，這是我們業務的核心所在，因為我們繼續擴大我們在弗吉尼亞州支持數據中心市場的設施。我們正在獲得份額。我們正在北美市場贏得業務。這仍然是我們的增長領域。該地區的增長速度比歐洲快得多，儘管它們都在增長。

So we have that focus. We've partnered with the right customers. We have the right technology, and we're excited about the products that we have. The products that we have are -- to help our customers meet their sustainability targets, and we're seeing that pull-through in both Europe and North America. So growth in both, but it's faster in the North America side.

所以我們有那個重點。我們與合適的客戶合作。我們擁有合適的技術，我們對我們擁有的產品感到興奮。我們擁有的產品是——幫助我們的客戶實現他們的可持續發展目標，我們在歐洲和北美都看到了這一點。所以兩者都有增長，但在北美方面增長更快。

Relative to the co-location market still is strong, especially with the customers that we've aligned behind, where we're providing the unique solutions that they're looking for. Our focus and through 80/20 in terms of making sure that we have our best opportunities in front of us with our customers to help them essentially grow in the market space that they're in is actually starting to pay dividends. So that focus and that energy are the critical fuel is why we're seeing the growth in Europe and North America as well.

相對於託管市場仍然很強勁，尤其是對於我們支持的客戶，我們正在提供他們正在尋找的獨特解決方案。我們的重點和通過 80/20 確保我們有最好的機會擺在我們的客戶面前，幫助他們在他們所在的市場空間中實現實質性增長，這實際上開始帶來回報。因此，這種專注和能量是關鍵燃料，這就是我們在歐洲和北美也看到增長的原因。

On the hyperscaler side, we're not seeing any slowdown there as well. We're still connected with a large hyperscaler customer. We're working with new product development with the next-generation data centers, and we're pretty far along in that process.

在超大規模方面，我們也沒有看到任何放緩。我們仍然與一個大型超大規模客戶保持聯繫。我們正在與下一代數據中心一起開發新產品，我們在這個過程中已經取得了相當大的進展。

And then maybe if I can just sneak one more in. If you look at the plus 4% to 10% sales guidance, can you maybe talk about where the 2 businesses, where you expect them to fall relative to that range? And then if you can maybe talk about incremental cost savings you expect in '24 over '23 from the European restructuring?

然後也許如果我能再偷偷溜進去一個。如果你看看 4% 到 10% 的銷售指導，你能不能談談這 2 家企業的位置，你預計它們相對於該範圍的下降？然後，您是否可以談談您期望歐洲重組在 24 年到 23 年期間節省的增量成本？

Yes. Hi, Matt, it's Mick. I'll take the first part of that.

是的。嗨，馬特，我是米克。我先講第一部分。

I think within the range itself, we've got that the lower end and the higher range, so just first, broader speaking to your first question. I think planned product rationalization, as you know, in the past in early phases of 80/20, it's hard to predict, which customers or business will drop off. And sometimes it stays much longer than we expect. And with the higher profit margin on it, we're quite comfortable with that. So first, I would say, I think the big difference between our low end and high end is really just trying to have a crystal ball about exactly which business will wind off or not.

我認為在範圍內，我們有低端和高端範圍，所以首先，更廣泛地回答你的第一個問題。我認為計劃的產品合理化，如你所知，在過去的 80/20 早期階段，很難預測哪些客戶或業務會流失。有時它停留的時間比我們預期的要長得多。並且由於它的利潤率更高，我們對此感到非常滿意。所以首先，我想說，我認為我們的低端和高端之間的最大區別實際上只是試圖掌握一個水晶球來確定哪些業務會結束或不會結束。

And then within your question for climate and for Performance Technologies, both are really going to be kind of within that range, not really too far off. I guess I probably expect slightly higher revenue growth across climate than Performance Technologies. But that said, we've got a lot of good program launches in Performance Technologies around power generation and gensets and significant commercial pricing initiatives kicking in this year, which will both help the topline for Performance Technologies.

然後在你關於氣候和性能技術的問題中，兩者確實都在那個範圍內，而不是太遠。我想我可能預計整個氣候的收入增長略高於 Performance Technologies。但話雖如此，我們在 Performance Technologies 推出了許多圍繞發電和發電機組的良好計劃，以及今年啟動的重要商業定價計劃，這都將有助於 Performance Technologies 的收入。

And then at the end, you had a question, if you could just repeat, I think it had to do with restructuring?

最後，你有一個問題，如果你能重複一遍，我認為這與重組有關？

Yes, how much incremental cost savings should hit the P&L in '24 versus '23 from that European restructuring that you've completed?

是的，從您完成的歐洲重組中，24 年與 23 年的損益相比，增加的成本節省應該達到多少？

Yes. We've got rolled through most of it. I think net-net, I would expect about a $5 million net just in that German, European headquarters region as far as net savings in the new year.

是的。我們已經完成了大部分。我認為 net-net，就新的一年的淨儲蓄而言，我預計僅在德國歐洲總部地區就有大約 500 萬美元的淨儲蓄。

And the next question comes from the line of Brian Sponheimer with Gabelli Funds.

下一個問題來自 Gabelli Funds 的 Brian Sponheimer。

Congratulations. Couple of questions, one, on just the balance sheet, we saw good cash flow performance, but also on a year-over-year basis, you've got an extra $30 million or so of receivables and $40 million of inventory. Can you just talk about the working capital needs of the business as you kind of transition in 80/20 and whether there's any sort of collection that you're thinking about as you work through the year?

恭喜。有幾個問題，一個，僅在資產負債表上，我們看到了良好的現金流表現，而且與去年同期相比，您還有額外的 3000 萬美元左右的應收賬款和 4000 萬美元的庫存。您能否談談在 80/20 過渡時企業的營運資金需求，以及您在全年工作時是否正在考慮任何類型的收款？

Yes. Brian, it's Mick.

是的。布賴恩，是米克。

You're right. Really kind of beginning with the post-COVID supply chain we've seen inventory rise in the last 12 to 18 months, and the plan is to continue to work that down as really availability of parts is much improved. So there's some improvement we have there. Accounts receivable too a little bit higher than we normally have and expect. I think part of that has been a lot of the 80/20 initiatives too, as you can imagine, as we are talking to customers and negotiating, renegotiating prices. At times that can get caught up in AR. But short answer is, generally speaking, we see kind of a flat level of working capital. So we're going to hold working capital while continuing to grow revenue and then that should convert nicely from a free cash flow standpoint.

你說得對。從後 COVID 供應鏈開始，我們已經看到過去 12 到 18 個月的庫存增加，並且計劃繼續降低庫存，因為零件的可用性確實得到了很大改善。所以我們在那裡有一些改進。應收賬款比我們通常擁有的和預期的要高一點。我認為其中一部分也是很多 80/20 舉措，正如你可以想像的那樣，因為我們正在與客戶交談並談判，重新談判價格。有時這可能會陷入 AR 中。但簡短的回答是，一般來說，我們看到營運資金水平持平。因此，我們將在繼續增加收入的同時持有營運資金，然後從自由現金流的角度來看應該會很好地轉換。

Okay. Appreciate the color there. And then you had mentioned that you're about a year ahead of where you wanted to be into margin targets for Performance Tech -- I'm sorry, for Climate Solutions rather. Does this mean that you are just simply ahead of plan? Or is this potentially that you see greater possibilities as to where the profitability of this business can go?

好的。欣賞那裡的顏色。然後你提到你比你想要進入 Performance Tech 的利潤率目標提前了大約一年 - 對不起，而是氣候解決方案。這是否意味著您只是超前於計劃？或者這是否有可能使您看到有關該業務盈利能力的更大可能性？

Yes. I'll go first, Brian, it's Mick again. And Neil can jump on.

是的。我先走了，布萊恩，又是米克。尼爾可以繼續前進。

Yes, good question. We should be clear that we are really happy about how fast that team -- I think it was about 370 basis points this year. The first year out drove the margin improvement. From there, when we were in our Analyst Day, we had goals from years 2 to 5 to push that margin higher. So yes, short answer is we expect to drive further margin improvement. We don't see it peaking out here, but really, that almost 400 basis points was faster than we thought in year 1. We won't do that every year, but we expect to drive it higher each year. You have anything to add?

是的，好問題。我們應該清楚，我們對這支球隊的速度有多快感到非常高興——我認為今年大約是 370 個基點。第一年推動了利潤率的提高。從那時起，當我們在分析師日時，我們制定了第 2 年到第 5 年的目標，以提高利潤率。所以是的，簡短的回答是我們希望進一步提高利潤率。我們看不到它在這里達到頂峰，但實際上，幾乎 400 個基點比我們在第一年想像的要快。我們不會每年都這樣做，但我們希望每年都能提高它。你有什麼要補充的嗎？

No, that's a great summary.

不，這是一個很好的總結。

Congratulations. We look forward to seeing what you all do next.

恭喜。我們期待看到你們接下來會做什麼。

And the next question comes from the line of Tim Moore with EF Hutton.

下一個問題來自 Tim Moore 和 EF Hutton。

Congratulations on the strong EBITDA growth against a year ago, high-growth comparable. Just maybe shifting gears for your internal combustion engines auto business, not the EVs that you're ramping up on, but it seems like the ICE business is still maybe a little bit misconceived or biased by some investors. Isn't that just only maybe a $300 million sales business or 13% of your sales and you possibly might have stopped taking new orders on that, and those margins are probably going up because of the pricing hikes you've done?

祝賀 EBITDA 與一年前相比強勁增長，高增長可比。也許只是為你的內燃機汽車業務換檔，而不是你正在增加的電動汽車，但看起來 ICE 業務可能仍然有點被一些投資者誤解或偏見。這難道不是只有 3 億美元的銷售業務或銷售額的 13%，而且您可能已經停止接受新訂單，而且由於您的定價上漲，這些利潤率可能會上升嗎？

Yes. It's a relatively small portion of the business overall. In PT, we've -- the revenue has declined year-over-year, certainly. We're still actively working with our customers there. We're serving some products. We are -- we have certain thresholds and filters that we put in place through our 80/20 analytics. And if we can provide a solution that meets those margin targets and those thresholds because we have the technology, and there's value there, that's what we're looking for. And we're going to continue to shift our focus more on the systems side as well.

是的。它只佔整個業務的一小部分。在 PT，我們已經 - 當然，收入同比下降。我們仍在積極與那裡的客戶合作。我們正在提供一些產品。我們 - 我們通過 80/20 分析設置了某些閾值和過濾器。如果我們能夠提供滿足這些利潤率目標和閾值的解決方案，因為我們擁有技術，並且那裡有價值，那就是我們正在尋找的。我們還將繼續將重點更多地轉移到系統方面。

Great. That's helpful color because I can imagine the margin is going up there compared to a couple of years ago. Maybe just switching gears to your European production capacity expansion for the heat transfer pumps at your Serbia plant. Did I hear correctly earlier on the call that you mentioned you expect those sales to double. And I'm just kind of curious over what time frame you expect it given kind of the credit subsidy for houses in Europe?

偉大的。這是有用的顏色，因為我可以想像與幾年前相比，利潤率正在上升。也許只是將齒輪切換到您在塞爾維亞工廠的傳熱泵的歐洲生產能力擴展。我早些時候在電話中聽到的是不是你提到你希望這些銷售額翻一番？我只是很好奇，考慮到歐洲對房屋的信貸補貼，您期望什麼時間框架？

Yes. So I'll let Mick give you the timeline on that, but we're excited about that space in that market. So we have expanded our facilities there on our campus in Serbia. We're in the process of buying capital equipment, getting that equipment into the plant, so we can start up the first of several lines that we need to put in place because the order book is so healthy. It's a highly regulated market, and we certainly see that market as multiple years in terms of growth. So the team is in place. The team is putting in the capital and the infrastructure and we've got a pretty healthy order book.

是的。所以我會讓米克給你時間表，但我們對那個市場的空間感到興奮。所以我們在塞爾維亞的校園裡擴建了我們的設施。我們正在購買資本設備，將這些設備放入工廠，因此我們可以啟動我們需要部署的幾條生產線中的第一條，因為訂單簿非常健康。這是一個受到高度監管的市場，我們當然認為該市場在增長方面會持續多年。所以團隊就位了。該團隊正在投入資金和基礎設施，我們有一個非常健康的訂單簿。

Yes. Neil, just we've talked about that doubling within 3 years on the heat pump side, currently a little bit more than $50 million, but growing really rapidly over the next few years.

是的。尼爾，剛才我們談到了熱泵方面在 3 年內翻了一番，目前略高於 5000 萬美元，但在未來幾年內增長非常迅速。

Great. That's terrific to hear and it seems like a terrific use of capital allocation. You gave some color around the first quarter of this fiscal year. I think lower sales figure and then sequentially growing. I'm just trying to think about the gross margin expansion magnitude cadence. Should that also improve sequentially each quarter? And I'm just wondering, will the -- will the June quarter possibly be a lower gross margin in this quarter you just reported in March? Just kind of curious about that.

偉大的。這聽起來太棒了，這似乎是對資本配置的極好運用。你在本財年第一季度左右給出了一些顏色。我認為較低的銷售數字然後連續增長。我只是想考慮毛利率擴張幅度的節奏。這是否也應該每個季度依次改善？我只是想知道，您在 3 月份剛剛報告的本季度，6 月季度的毛利率是否會較低？只是有點好奇。

Yes, a really good question. I'm glad you followed up on it. We do have -- we still have a little bit of seasonality at Modine where Q4 tends to be really strong. Q1 can be -- typically, the last few years has been the weakest quarter of the year, and that has to do with some of the business on the climate side ramping up in HVAC and schools. It's also the slowest part of the heating year. But -- so coming off of a really strong Q4, that's the one to be sure. We don't -- we see Q1 being lower than Q4, both in probably margin a little bit and in earnings. But if you look at it year-over-year, Q1, we fully expect to be up significantly in revenue, up in gross margin and up in earnings. So can't really roll forward Q4 to Q1, but Q1 on a year-over-year basis, we expect to be fully in line with our guidance. Hopefully, that helps.

是的，一個非常好的問題。我很高興你跟進了它。我們確實有 - 我們在 Modine 仍然有一點季節性，第四季度往往非常強勁。第一季度可以——通常情況下，過去幾年是一年中最疲軟的季度，這與氣候方面的一些業務在暖通空調和學校的增長有關。這也是供暖年中最慢的部分。但是——從一個非常強勁的第四季度開始，這是可以肯定的。我們沒有——我們看到第一季度低於第四季度，無論是在利潤率還是在收益方面。但如果你與去年同期相比，第一季度，我們完全預計收入、毛利率和收益將大幅增長。所以不能真正將第四季度提前到第一季度，但與去年同期相比，第一季度，我們預計將完全符合我們的指導。希望這會有所幫助。

That's exactly what I was looking for and kind of what I thought might happen. So that's really good investors know that for seasonality.

這正是我一直在尋找的，也是我認為可能會發生的事情。所以這真的很好，投資者知道季節性。

My last question is around the data center chilling business in the U.S. and North America. It obviously appears you have a strong line of sight on revenue there, the co-location and hyperscale businesses and orders, feel free to correct me if I'm wrong, but did I -- do I recall correctly, you expect maybe $100 million in sales from North America this fiscal year? And I'm just wondering maybe as you think out the next few years, how does your growth trajectory look for maybe next fiscal year? I mean, maybe you could do $100 million this year, is it something like $150 million next year and eventually $300 million a few years down the road?

我的最後一個問題是關於美國和北美的數據中心冷卻業務。很明顯，您對那裡的收入、託管和超大規模業務和訂單有很強的看法，如果我錯了，請隨時糾正我，但我——我沒記錯嗎，你預計可能是 1 億美元本財年北美的銷售額？我只是想知道，也許在您考慮未來幾年時，您的增長軌跡可能如何看待下一個財政年度？我的意思是，也許你今年可以做 1 億美元，明年是 1.5 億美元，幾年後最終是 3 億美元嗎？

Yes, that's a great question. Because it's such a focus for us, you're right. When you think about those growth rates, we're building the capacity in today. I think we've been really clever in terms of how we're utilizing our manufacturing footprint and where we're making investments for manufacturing space as well as labs to support this growth. But we have visibility in the market. We see where we fill a gap with our technology, and we're building our capacity expansion model to fit those type of growth rates.

是的，這是一個很好的問題。因為它是我們的重點，所以你是對的。當您考慮這些增長率時，我們正在建設今天的能力。我認為我們在如何利用我們的製造足跡以及我們在哪裡投資製造空間和實驗室以支持這種增長方面非常聰明。但是我們在市場上有知名度。我們看到我們用我們的技術填補了空白，我們正在建立我們的產能擴張模型來適應這些類型的增長率。

Yes. I was just going to add coming off of this year, we'll have wrapped up a little bit north of $150 million of data center sales and globally. And we should expect to grow over the next 3 years. Similar rate, probably in the 15% to 20% range over a 3- to 5-year window. Obviously, this year, we've got the next fiscal year, much higher growth rate, a lot more visibility in our guidance there, 15% to 25%. But if you want to roll it forward, I think that 15% to 20% over a long term is a good current target for us.

是的。我只是想補充說，從今年開始，我們將在全球範圍內完成超過 1.5 億美元的數據中心銷售額。我們應該期望在未來 3 年內實現增長。類似的比率，可能在 3 到 5 年的窗口內在 15% 到 20% 的範圍內。顯然，今年，我們有下一個財政年度，增長率更高，我們在那裡的指導可見度更高，15% 到 25%。但如果你想向前推進，我認為長期 15% 到 20% 對我們來說是一個很好的當前目標。

(Operator Instructions) And our next question comes from the line of Steve Ferazani with Sidoti & Company.

（操作員說明）我們的下一個問題來自 Steve Ferazani 與 Sidoti & Company 的合作。

Neil, Mick, appreciate all the color this morning. I wanted to follow up on the heat pump market in Europe, which we know has been very, very strong, supported by government incentives. You're talking about the potential to double it, but we saw -- I mean some of the trade association data and some of the reporting from some smaller Scandinavian heat pump providers this quarter were up substantially. So I'm a little bit surprised your heat transfer products was down. Are you capacity constrained there right now? Or is that just a much smaller part of the overall HTP?

尼爾，米克，今天早上欣賞所有的顏色。我想跟進歐洲的熱泵市場，我們知道該市場在政府激勵措施的支持下非常非常強勁。你在談論將其翻倍的可能性，但我們看到 - 我的意思是本季度一些貿易協會數據和一些較小的斯堪的納維亞熱泵供應商的報告大幅上升。所以我有點驚訝你們的傳熱產品下降了。您現在那裡的容量受限嗎？或者這只是整個 HTP 的一小部分？

Yes. It is -- you're right, Steve. For the moment, it's smaller, but the trends and where we're headed with it is -- it will be substantial. But yes, that's exactly right. That's why we've invested in that additional plant. We've invested in the lines that are necessary for that. So we're starting to ramp that up. We're running 24/7 with the capacity that we have as we start to expand that capacity in Serbia.

是的。它是——你是對的，史蒂夫。目前，它較小，但趨勢和我們的發展方向是——它將是巨大的。但是，是的，這是完全正確的。這就是為什麼我們投資了那個額外的工廠。我們已經投資了為此所必需的生產線。所以我們開始加大力度。當我們開始擴大在塞爾維亞的產能時，我們將以 24/7 全天候運行。

Excellent. Okay. And I may have missed that, we covered so much ground this morning. I know. Did you provide a fiscal '24 CapEx range?

出色的。好的。我可能錯過了這一點，今天早上我們討論了很多內容。我知道。您是否提供了 24 財年的資本支出範圍？

Yes. We expect that to be around $70 million or below.

是的。我們預計這將在 7000 萬美元左右或以下。

$70 million?

7000萬美元？

Yes, $70 million. And then we also provided in the appendix. It's important to point out with the valuation allowance coming off U.S. we'll go back to being a taxpayer in the U.S., which is a good situation. But we're guiding to about a 26% effective tax rate in the new year. And then with rates up a little bit, we had guided to interest expense being in the $23 million to $25 million range, Steve.

是的，7000 萬美元。然後我們也在附錄中提供了。重要的是要指出，隨著美國取消估值津貼，我們將重新成為美國的納稅人，這是一個很好的情況。但我們指導新的一年的有效稅率約為 26%。然後隨著利率上升一點，我們已經指導利息支出在 2300 萬到 2500 萬美元之間，史蒂夫。

Okay. That's helpful. I wanted to touch on school retrofits with all the discussions in Washington right now in terms of pulling back some unused funds. Any risks right now to how that market is playing out and you still expect -- and I don't want you -- obviously, you can't predict government decision makers. But how are you thinking about that market playing out over the next 2 or 3 years as it currently stands?

好的。這很有幫助。我想談談學校改造，現在在華盛頓就撤回一些未使用的資金進行所有討論。現在該市場如何發揮作用的任何風險，你仍然期望 - 我不希望你 - 顯然，你無法預測政府決策者。但您如何看待該市場在未來 2 或 3 年內的發展情況？

Yes, it's a good question. I literally just got off the phone with the general manager of the business yesterday, asking that very question. And we're comfortable with where we're at in terms of the orders. We're comfortable with the production rates that we're running to. We have visibility beyond a year in terms of what the order intake looks like. So in the short term, even over the next, say, 18 months, we're comfortable with what our position has been.

是的，這是個好問題。我昨天剛和公司總經理通了電話，就問了這個問題。我們對我們在訂單方面所處的位置感到滿意。我們對我們正在運行的生產率感到滿意。就訂單攝入情況而言，我們有超過一年的可見性。所以在短期內，甚至在接下來的 18 個月裡，我們對我們的立場感到滿意。

And just on capital allocation, starting to develop any kind of plan for M&A now that you're starting to become a more significant cash flow generator and the balance sheet is in great shape.

就資本配置而言，既然你開始成為一個更重要的現金流產生者並且資產負債表狀況良好，就開始製定任何類型的併購計劃。

Yes, Steve, it's Mick.

是的，史蒂夫，是米克。

Yes, Neil and I talked for a few quarters. I think we went back a year ago, our message was head down implementing 80/20, starting to generate cash. The last few quarters was we've really rebuilt and added some really strong skills on the business development side trying to refill the funnel. As we look today, I think, Neil and I are a lot more encouraged and optimistic that we're now starting to see some potential targets in the funnel that can be actionable in the next year or so. So really good progress from the whole business development team.

是的，尼爾和我談了幾個季度。我想我們回到了一年前，我們的信息是低頭實施 80/20，開始產生現金。在過去的幾個季度中，我們真正重建並在業務開發方面添加了一些非常強大的技能，試圖重新填充漏斗。正如我們今天所看到的，我認為，尼爾和我更加鼓舞和樂觀，因為我們現在開始看到漏斗中的一些潛在目標，這些目標可以在明年左右採取行動。整個業務開發團隊取得了非常好的進展。

Yes. I would just add one thing to that, Steve, is that because of the success that we're having organically with the changes that we're making organically, with the businesses that we're growing organically, we're ahead of where we plan to be a year ago in New York with Climate Solutions, and we're kicking it off in PT. Organically, we have this -- we have pretty good control around it. So when we're thinking about M&A, we're thinking about technology where do we fill technology gaps. It's not as if we need to do large acquisitions to catch up with the goals that we put in place. But really, where do we want to grow? Where do we want to make sure that we have leading-edge technologies so that we can continue to support our growth verticals, particularly those in Climate Solutions.

是的。我只想補充一件事，史蒂夫，因為我們有機地取得了成功，我們正在有機地進行變革，我們正在有機地發展業務，我們領先於我們計劃一年前在紐約與 Climate Solutions 一起，我們將在 PT 開始。有機地，我們有這個——我們對它有很好的控制。因此，當我們考慮併購時，我們在考慮技術，我們在哪些方面填補技術空白。我們似乎不需要進行大規模收購來實現我們設定的目標。但實際上，我們想在哪裡發展？我們要在哪裡確保我們擁有領先的技術，以便我們能夠繼續支持我們的垂直增長，尤其是氣候解決方案領域的垂直增長。

And when we think about those as not -- you wouldn't be focused on it as being accretive or not accretive, you would be thinking about trying to fill a hole and maybe provides better longer-term growth?

當我們認為這些不是——你不會把注意力集中在它是增值還是不增值時，你會考慮試圖填補一個空缺，並可能提供更好的長期增長？

Correct.

正確的。

Yes. And anything bigger on the radar screen? Or would you be focused more on the bolt-on type size?

是的。雷達屏幕上有什麼更大的東西嗎？還是您會更關注螺栓固定式尺寸？

Yes. We continue to focus on the bolt-ons. And then within our pipeline, we've been pretty consistent that there are always going to be a few targets that we keep our eye on that are larger, but -- and you can't control when things come to market. But if we had our way, we'll continue to focus on some of those midsized ones that we can tuck in under the technology and product road map.

是的。我們繼續關注螺栓固定裝置。然後在我們的管道中，我們一直非常一致，總是會有一些我們關注的目標更大，但是 - 當事情進入市場時你無法控制。但如果我們按照自己的方式行事，我們將繼續專注於我們可以根據技術和產品路線圖納入的一些中型企業。

And the next question comes from the line of Florence (inaudible) with DC Capital Advisors.

下一個問題來自佛羅倫薩（聽不清）與 DC Capital Advisors 的對話。

I have a question on the -- how does the acceleration in AI rollout and development impact your business? I'm guessing it's more on the data center side. What sort of opportunities does that present? And how are you thinking about investing in that area going forward?

我有一個問題 - 人工智能推出和開發的加速如何影響您的業務？我猜更多是在數據中心方面。這會帶來什麼樣的機會？您如何考慮未來對該領域的投資？

Good to hear from you. This is Neil. Great question. That's a very relevant question. As we start to see these technologies shift, it's really important that we, as a supplier, critical supplier in this space and data centers provide current technologies to support that. So we're working with our customers as they start to evolve in the data center space, moving away from the traditional computing to high-performance computing, which supports AI. It supports a lot of the market drivers, it supports AI, it supports AV, it supports IoT, it's supports 5G, all these things that require higher-performance computing.

很高興聽到你的消息。這是尼爾。很好的問題。這是一個非常相關的問題。當我們開始看到這些技術發生轉變時，我們作為供應商，這個領域和數據中心的關鍵供應商提供當前技術來支持這一點非常重要。因此，我們正在與客戶合作，因為他們開始在數據中心領域發展，從傳統計算轉向支持人工智能的高性能計算。它支持很多市場驅動因素，它支持 AI，它支持 AV，它支持 IoT，它支持 5G，所有這些都需要更高性能的計算。

And when you have high-performance computing, you have a power density issue. And when you have a power density issue, you get heat. And from that heat, you have to have more creative ways to remove it. And at some point in time, we'll hit a threshold with the mechanical heating solutions that are currently in the market today and things will start to shift. So we are working closely with our teams and our customers to make sure that we're being very innovative in that space. And it's also an area that we are very curious, and we have a pretty big backcast to make sure that we can -- there's other ways to potentially acquire that technology. So there's the inorganic and organic path. So we're looking at both. And because of the -- it's the tip of the spear for us with data centers and that's where we want to grow, we welcome this change. We welcome this new technology, and we welcome the engineering challenge.

當您擁有高性能計算時，就會遇到功率密度問題。當你遇到功率密度問題時，你就會發熱。從那種熱量中，你必須有更多創造性的方法來去除它。在某個時間點，我們將達到當今市場上現有的機械加熱解決方案的門檻，事情將開始發生變化。因此，我們正在與我們的團隊和客戶密切合作，以確保我們在該領域非常具有創新性。這也是我們非常好奇的一個領域，我們有一個相當大的回溯來確保我們可以——還有其他方法可以潛在地獲得該技術。所以有無機和有機路徑。所以我們正在考慮兩者。因為 - 這是我們數據中心的矛尖，也是我們想要發展的地方，我們歡迎這一變化。我們歡迎這項新技術，我們歡迎工程挑戰。

And on a different topic, what are you seeing on the human capital side. It wasn't that long ago, a number of companies were talking about higher turnover, difficulty hiring. What are you seeing on that front?

在另一個話題上，您在人力資本方面看到了什麼。就在不久前，許多公司還在談論人員流動率上升、招聘困難的問題。你在前面看到了什麼？

Yes. It's different regionally. But for the most part, what we're seeing is much more stability than where we were at a year ago. And that's based on the fact that we've had some pretty good talent inside of our plants today that are making sure that we have the right workforce in place. And then we've got our policies here on the salary side that we can recruit and retain very talented individuals across multiple industries. That's how we've been able to absolutely move in this rate that we're moving and transform the company at the rate we have.

是的。地區不同。但在大多數情況下，我們所看到的比一年前要穩定得多。這是基於這樣一個事實，即我們今天在工廠內部擁有一些非常優秀的人才，他們確保我們擁有合適的員工隊伍。然後我們在薪資方面製定了我們的政策，我們可以在多個行業招聘和留住非常有才華的人。這就是我們如何能夠以我們正在移動的速度絕對移動並以我們現有的速度改造公司。

Is there any way for you to quantify the benefit to you all just cost-wise from that?

您有什麼方法可以從成本上量化對所有人的好處嗎？

I didn't catch the full question, Florence. Is there any way to quantify...

佛羅倫薩，我沒有聽清完整的問題。有什麼方法可以量化...

I guess, in terms of reduced costs from lower turnover or less need to use recruiters for hiring?

我想，就降低人員流動率或減少招聘人員的需求來降低成本而言？

Yes. Yes. So where -- Mick and I watch that closely, it's in the margin and making sure that we're efficient. You go back a year ago and when you have a workforce that is transient, there's a lot of time training. There's a lot of overtime that's used. You're not efficient, you're not as productive. So once you get some stability in place, you start to see the margins improve relative to over time, relative to labor hours and relative to things like expedited freight because we don't have people in the right place at the right time.

是的。是的。那麼在哪裡 - 米克和我密切關注，它處於邊緣並確保我們高效。回到一年前，當你的勞動力是短暫的時，有很多時間接受培訓。有很多加班時間。你沒有效率，你沒有那麼多產。因此，一旦你獲得了一定的穩定性，你就會開始看到利潤率相對於時間、勞動時間和加急貨運等因素有所改善，因為我們沒有在正確的時間在正確的地點安排人員。

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

我現在沒有進一步的問題。我現在想把會議轉回 Kathy Powers。

Thank you, and thanks to everybody for joining us this morning. You'll be able to access the replay of this call through our website in about 2 hours. We hope everybody has a great day.

謝謝大家，也感謝大家今天早上加入我們。大約 2 小時後，您就可以通過我們的網站收聽此次通話的重播。我們希望每個人都有美好的一天。

That concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。