Modine Manufacturing Company (MOD) 2024 Q2 法說會逐字稿

Good morning ladies and gentlemen and welcome to Modine's Second Quarter Fiscal 2024 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 2024 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. Please go ahead.

現在我想把會議交給本次會議主持人——Kathy Powers 女士，副總裁、財務主管暨投資人關係負責人。請開始。

Good morning and thank you for joining our conference call to discuss Modine's second quarter fiscal 2024 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.

早安，感謝各位加入我們的電話會議，一同討論 Modine 2024 會計年度第二季業績。我在本次電話會議上與我們的總裁暨執行長 Neil Brinker，以及執行副總裁暨財務長 Mick Lucareli 一同出席。

We'll be using slides with 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.

我們將使用今日簡報的投影片，您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（Investor Relations）專區下載已張貼的 PDF 檔案。

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

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，相關內容已於我們的財報新聞稿以及公司向美國證券交易委員會（SEC）提交的文件中說明。接下來，很高興把電話會議交給 Neil。

Thank you, Kathy, and good morning, everyone. I'm pleased to report another strong quarter with both solid revenue growth and earnings improvements that came in ahead of our expectations. Sales increased 7% from the prior year, driven by increases in both the Climate Solutions and Performance Technologies segment. In addition, we reported adjusted EBITDA of $81.2 million, an increase of 59% from the prior year. EBITDA margin was 13.1%, a 430-basis point improvement from the prior year. As a reminder, last year we set a goal to significantly improve our EBITDA margins, targeting a range of 10% to 12% by the end of the fiscal year, and reaching 13% to 15% range by the end of fiscal '27.

謝謝你，Kathy，各位早安。我很高興報告我們再度交出強勁的一季，不僅營收穩健成長，獲利也優於我們的預期。銷售額較去年同期成長 7%，主要由氣候解決方案（Climate Solutions）與效能技術（Performance Technologies）兩大事業部的成長所帶動。此外，我們的調整後 EBITDA 為 8,120 萬美元，較去年同期成長 59%。EBITDA 利潤率為 13.1%，較去年同期提升 430 個基點。提醒各位，去年我們設定目標要大幅提升 EBITDA 利潤率，期望在本會計年度結束前達到 10% 至 12% 的區間，並在 2027 會計年度結束前達到 13% 至 15% 的區間。

We are clearly ahead of these targets, driven by a combination of key factors, including using 80/20 principles to guide decision-making throughout the organization, allocating additional resources to targeted higher-margin businesses, and focusing on the value we bring to our customers and leveraging that to drive margin improvement and profitable growth. I'm very proud of what the organization has been able to accomplish in a short period of time. I continue to believe that we remain in the early stages of our transformation as we see medium to long-term opportunities for sustainable growth that will continue to improve our financial profile.

我們顯然已超前達成這些目標，主要由多項關鍵因素共同推動，包括：運用 80/20 原則引導全組織的決策、將更多資源配置到鎖定的高毛利業務，以及聚焦我們為客戶帶來的價值並加以運用，以推動利潤率提升與獲利性成長。我為組織在短時間內所達成的成果感到非常自豪。我仍然相信，我們的轉型仍處於早期階段；我們看到中長期具備可持續成長的機會，將持續改善我們的財務體質。

Please turn to Slide 5. The Climate Solutions segment delivered an excellent quarter with revenue of 8% from the prior year. We are benefiting from the planned diversification of our businesses, as strong growth in the data center vertical is helping offset some weaknesses in the other HVAC markets. The segment reported adjusted EBITDA of $50.4 million, a 31% increase from the prior year. This resulted in an adjusted EBITDA margin of 18.3%, up 330 basis points from the prior year. Revenues in our data center business were $79 million, more than double the prior year. Our order intake continues to grow. That said, this business can be quite lumpy due to the timing of product shipments on large data center projects. So we're not expecting growth to continue at a linear rate. We have projected a dip in the third quarter data center volume since the beginning of the year, and then expect volumes to pick up again in Q4. We have significant backlog to work through over the next 12 to 18 months, which should provide some stability in the business despite the quarter-to-quarter fluctuation in revenues.

請翻到投影片第 5 頁。氣候解決方案事業部本季表現非常出色，營收較去年同期成長 8%。我們正受惠於既定的業務多元化規劃，資料中心垂直市場的強勁成長，有助於抵消其他 HVAC 市場的部分疲弱。該事業部的調整後 EBITDA 為 5,040 萬美元，較去年同期成長 31%。因此調整後 EBITDA 利潤率達 18.3%，較去年同期提升 330 個基點。我們資料中心業務營收為 7,900 萬美元，較去年同期增加逾一倍。我們的接單量持續成長。不過，由於大型資料中心專案的產品出貨時點影響，該業務可能相當不均衡，因此我們不預期成長會以線性速度持續。自年初以來，我們已預估第三季資料中心出貨量將下滑，並預期第四季量能將再度回升。未來 12 至 18 個月我們有可觀的在手訂單（backlog）待消化，儘管營收可能季對季波動，仍可為業務提供一定程度的穩定性。

Our commercial team continues to win orders with key relationships in our pipeline and add new opportunities to the sales funnel as we evaluate and develop high-quality prospects. Our goal is not to be a high-volume products part of the data center market. Instead, we're focusing on relationships with key customers, supporting them with system solutions and ongoing services as they grow globally. This includes new and existing customers that value our engineering and service model.

我們的商務團隊持續憑藉管線中的關鍵客戶關係贏得訂單，並在評估與開發高品質潛在客戶的同時，將新機會納入銷售漏斗。我們的目標不是成為資料中心市場的高出貨量產品供應商；相反地，我們聚焦於與關鍵客戶建立關係，隨著他們全球擴張，提供系統解決方案與持續性服務支援。這也包括重視我們工程能力與服務模式的新舊客戶。

We have great products in the space and the expertise to advance the technology to address the higher heat loads that will be required in the future. For example, we are internally developing a cooling distribution unit or CDU. A CDU is integral to liquid cooling, providing critical cooling capacity and heat removal for high-density data center environments. The CDU offers controlled contaminant-free coolant for heat exchangers, direct-to-chip, and immersion cooling devices, integrating between the server and the external heat rejection.

我們在此領域擁有優秀的產品，也具備推進技術的專業能力，以因應未來所需的更高熱負載。例如，我們正在內部開發冷卻液分配單元（Cooling Distribution Unit，CDU）。CDU 是液冷系統的關鍵組件，可為高密度資料中心環境提供重要的冷卻能力與散熱。CDU 可為熱交換器、直達晶片（direct-to-chip）以及浸沒式冷卻（immersion cooling）裝置提供可控且無污染的冷卻液，並整合於伺服器與外部散熱端之間。

The CDU will further strengthen our global data center systems offering, as we'll be able to offer hybrid, liquid, and air-cooled systems. Our CDU is being developed with the full voice of the customer and is planned to be commercialized early next year. This marks our first dedicated development into liquid cooling systems. In addition, we are also working on other advanced technologies and our product roadmaps, so we can continue to provide our data center customers with efficient, connected systems, elevating their performance, while helping them meet their sustainability targets around power and water usage.

CDU 將進一步強化我們全球資料中心系統的產品組合，因為我們將能提供混合式、液冷與氣冷系統。我們的 CDU 以完整的客戶之聲（voice of the customer）為基礎進行開發，並計畫於明年初商業化。這也標誌著我們首次針對液冷系統進行專門開發。此外，我們也在推進其他先進技術與產品路線圖，以便持續為資料中心客戶提供高效率、可連結的系統，提升其效能，同時協助他們達成在電力與用水方面的永續目標。

Moving to our HVAC&R businesses, we recently announced the expansion of our electrical heating line with 2 new product launches. Our new electric infrared line provides a low-emissions heating product that can be used in a wide variety of commercial and residential applications. In addition, our new AmpDawg is the electric version of our popular Hot Dawg line of residential garage and workshop heaters. This line provides an electric alternative with the same quality and performance that Modine is known for. These are just a few examples of our product development efforts and there are more to come.

談到我們的 HVAC&R 業務，我們近期宣布擴充電熱產品線，推出兩項新產品。我們新的電動紅外線產品線提供低排放的加熱產品，可用於多種商用與住宅應用。此外，我們新的 AmpDawg 是我們廣受歡迎的 Hot Dawg 住宅車庫與工作坊暖風機產品線的電動版本。該產品線提供電力替代方案，同時維持 Modine 一貫的品質與效能。以上只是我們產品開發工作的幾個例子，後續還會有更多。

Regarding heat pumps, earlier this year we announced our plans to expand capacity at our plant in Serbia in response to the strong order intake from heat pump customers. Growth expectations for the heat pump market have been fueled by regulations driving a conversion from natural gas to electric to increase the use of renewable energy. Recently, the enforcement date of these regulations has been delayed, specifically in the German market, where the adoption date was pushed from 2027 to 2029. This has resulted in a reduction of our forecast based on the latest information from our customers. We're still planning on growth but expect lower growth in the near term while we adjust our overall production ramp.

關於熱泵（heat pumps），今年稍早我們宣布，因應熱泵客戶強勁的接單量，計畫擴充我們在塞爾維亞工廠的產能。熱泵市場的成長預期主要受到法規推動，促使從天然氣轉向電力，以提高再生能源的使用。近期，這些法規的執行日期已延後，特別是在德國市場，採用時程由 2027 年延至 2029 年。根據客戶提供的最新資訊，這使我們下調了預測。我們仍規劃成長，但在調整整體產能爬坡（production ramp）之際，預期短期成長將較先前為低。

We still believe that this is an important market for Modine and are nearing completion of the first phase of our Serbian plant expansion. We had planned the investment in phases so that we could bring on the necessary production capacity as needed. This is providing us with the flexibility to respond to regulatory changes like these and allows us to take more measured approach to our investment. We will continue to monitor this market along with regulatory drivers that are creating this volatility.

我們仍相信這對 Modine 而言是重要市場，且塞爾維亞工廠擴建第一階段已接近完成。我們原本就以分階段方式規劃投資，以便在需要時導入必要的產能。這讓我們能更有彈性地因應此類法規變動，也使我們能以更審慎的方式推進投資。我們將持續監測該市場，以及造成此波動的法規驅動因素。

And our Climate Solutions business is having an incredible year, and I'm very proud of what we've been able to accomplish. We are investing in new products and technologies now to make sure we can continue to have profitable growth in the future.

我們的氣候解決方案業務今年表現非常亮眼，我也為我們所達成的成果感到非常自豪。我們正投入新產品與新技術，以確保未來能持續實現獲利性成長。

Please turn to Slide 6. The Performance Technologies segment also delivered excellent results this quarter, with revenue up 7% from the prior year, driven by off-highway commercial vehicle and specialty vehicle customers. Adjusted EBITDA increased 73% to $42 million, resulting in an adjusted EBITDA margin of 11.9%, an improvement of 450 basis points. Similar to last quarter, much of the increase was due to improving commercial terms in our long-term contracts, including some additional retroactive recovery.

請翻到投影片第 6 頁。效能技術事業部本季同樣交出優異成績，營收較去年同期成長 7%，主要由非公路商用車與特種車輛客戶所帶動。調整後 EBITDA 成長 73% 至 4,200 萬美元，使調整後 EBITDA 利潤率達 11.9%，提升 450 個基點。與上季類似，增幅多數來自我們長期合約商業條款的改善，其中也包含部分額外的追溯性回收（retroactive recovery）。

The PT business made a couple of important announcements this quarter that I would like to highlight as a prime example of our 80/20 work. First, we announced the divestiture of 3 businesses in Germany that produce products for internal combustion diesel and gasoline engines for the European automotive market. I'm pleased to report that this transaction closed on October 31st. We have been very clear with our intention to exit non-strategic businesses, and these divestitures are firm actions towards that goal.

PT 業務本季發布了幾項重要公告，我想特別強調，作為我們 80/20 工作的典型範例。首先，我們宣布剝離位於德國的 3 項業務，這些業務為歐洲汽車市場的內燃柴油與汽油引擎生產相關產品。我很高興報告，該交易已於 10 月 31 日完成交割。我們一直非常明確表達退出非策略性業務的意圖，而這些剝離行動正是朝該目標邁出的堅定步伐。

We will continue to pivot our resources towards strategic, high-growth businesses, and will quickly exit or wind down business that is not meeting our margin targets. Many of these actions have already been identified and are underway. As a reminder, exiting lower-margin businesses is a critical element of 80/20 as we remain focused on the earnings growth over revenue growth. We have anticipated this as part of our transformation strategy in the PT segment, understanding that it could initially result in lower revenue. However, we also have plans for growth in our EV systems and GenSet businesses that will replace the businesses we are exiting with product profiles aligned with our long-term goals. This is all part of the 80/20 process. In addition, as we exit certain businesses, we need to examine our cost structure to make sure that it's appropriate for the size of the business. There could be some additional costs as we realign our manufacturing footprint.

我們將持續把資源轉向策略性、高成長的業務，並將迅速退出或逐步結束未達成我們毛利率目標的業務。許多這類行動已經辨識完成並正在推進中。提醒一下，退出低毛利業務是 80/20 的關鍵要素，因為我們將重點放在獲利成長而非營收成長。我們已將此納入 PT 事業群的轉型策略中，並理解這在初期可能會導致營收下降。然而，我們也規劃在 EV 系統與 GenSet（發電機組）業務上推動成長，以產品組合符合我們長期目標的方式，來取代我們正在退出的業務。這一切都是 80/20 流程的一部分。此外，當我們退出某些業務時，也需要檢視成本結構，確保其與業務規模相匹配。隨著我們重新調整製造據點布局，可能會產生一些額外成本。

One of the businesses where we're investing is our EV Systems business. Last month, we announced our plans to expand production of our EVantage Thermal Management Systems to Europe. Beginning next year, we'll produce battery thermal management systems and electronic cooling packages for our European customers at our plant in Pontevico, Italy. This is in addition to our existing product lines in Lawrenceburg, Tennessee, where we are in the process of adding additional capacity to accommodate increased volumes as we launch more programs. Overall, our Performance Technologies segment is firmly on track, and I'm proud of the work being done by this team.

我們正在投資的業務之一是 EV 系統業務。上個月，我們宣布計畫將 EVantage 熱管理系統的產能擴展至歐洲。自明年起，我們將在義大利 Pontevico 工廠為歐洲客戶生產電池熱管理系統與電子冷卻套件。這是在我們田納西州 Lawrenceburg 現有產品線之外的新增布局；在 Lawrenceburg，我們也正著手增加額外產能，以因應更多專案啟動所帶來的放量需求。整體而言，我們的 Performance Technologies 事業群進展穩健，我也為這個團隊所做的工作感到自豪。

Material costs continue to be favorable, and we have had significant success negotiating contractual improvements. We're making great progress on the 80/20 journey in the segment, focusing the organization on both capitalizing on growth opportunities and optimizing non-strategic product lines.

原材料成本持續有利，我們在協商合約條款改善方面也取得顯著成果。我們在該事業群的 80/20 旅程上進展良好，聚焦組織一方面把握成長機會，另一方面優化非策略性產品線。

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

接下來我想把電話會議交給 Mick，他將回顧本季業績並提供各事業群的財務更新。

Thanks, Neil, and good morning everyone. Please turn to Slide 7 to review the segment results. Climate Solutions had another excellent quarter with a 31% increase in adjusted EBITDA. Revenue grew 8%, including a $7 million favorable FX impact. The growth was driven by data center increasing 117% or $43 million. We continue to see strong demand for our products in North America and Europe, including those supporting both hyperscale and co-location customers.

謝謝你，Neil，各位早安。請翻到投影片 7 以檢視事業群結果。Climate Solutions 本季再度表現出色，調整後 EBITDA 成長 31%。營收成長 8%，其中包含 700 萬美元的有利匯率（FX）影響。成長主要由資料中心業務帶動，增加 117% 或 4,300 萬美元。我們持續看到北美與歐洲對我們產品的強勁需求，包括支援超大規模（hyperscale）與共置（co-location）客戶的產品。

As Neil mentioned, the timing of these sales can be somewhat unpredictable, and shipments in the quarter once again exceeded our expectations. Based on the timing of our current customer schedules, we anticipate lower shipments in Q3 than ramping significantly in Q4. I want to highlight that while the timing can be hard to predict between quarters, our full-year outlook has not changed, with growth expected to exceed 60%.

如 Neil 所提到，這些銷售的時點可能有些難以預測，而本季出貨再次超出我們的預期。根據目前客戶排程的時點，我們預期第三季（Q3）出貨將低於本季，並在第四季（Q4）大幅爬升。我想強調，雖然季度之間的時點難以預測，但我們對全年展望並未改變，預期成長將超過 60%。

HVAC&R sales were down 2% or $2 million. The heating market remains soft but has improved sequentially from Q1. We expect to see further rebound as we enter the heating season, but the weather will ultimately factor into the strength of our sales for the balance of the year. Sales of heat transfer products decreased 16%, or $21 million. As discussed in previous quarters, we've experienced a decline in market demand with commercial refrigeration, along with commercial and residential HVAC&R customers.

HVAC&R 銷售下滑 2% 或 200 萬美元。供暖市場仍然疲弱，但相較第一季（Q1）已有逐季改善。我們預期隨著進入供暖季將進一步回升，但天氣最終仍會影響我們今年剩餘期間的銷售強度。熱交換產品銷售下降 16%，或 2,100 萬美元。如前幾季所討論，我們在商用冷凍，以及商用與住宅 HVAC&R 客戶端，均經歷市場需求下滑。

We believe many customers are continuing to work down excess inventory that was created during the previous supply chain shortage. Additionally, we've continued 80/20 product rationalization activities to drive further margin improvements.

我們認為許多客戶仍在去化先前因供應鏈短缺而形成的過剩庫存。此外，我們也持續推進 80/20 產品精簡（rationalization）活動，以帶動進一步的毛利率改善。

We're pleased with the strong earnings conversion as adjusted EBITDA increased 31% with a 330 basis point margin improvement to 18.3%. The earnings and margin improvements were driven by higher sales volume and benefits from ongoing 80/20 initiatives.

我們對強勁的獲利轉換感到滿意：調整後 EBITDA 成長 31%，毛利率提升 330 個基點至 18.3%。獲利與毛利率改善主要由較高的銷售量，以及持續推動的 80/20 計畫所帶來的效益所驅動。

Climate Solutions clearly had a very strong first half of the year. The growth in data center sales was driven by a favorable market along with the investments we made to grow this business.

Climate Solutions 上半年表現顯然非常強勁。資料中心銷售的成長，來自有利的市場環境，以及我們為擴大該業務所進行的投資。

With regards to HVAC&R and heat transfer products, we're still maintaining a cautious outlook for the second half of the year. Given our assumptions on the heating market and the lighter data center shipments in Q3, we would expect sequentially lower earnings in Q3, then close out the year with a strong Q4.

就 HVAC&R 與熱交換產品而言，我們對下半年仍維持審慎展望。基於我們對供暖市場的假設，以及第三季資料中心出貨較輕，我們預期第三季獲利將較前一季下滑，之後在第四季以強勁表現為全年收官。

To wrap up on Climate Solutions, we're remaining cautious in a few key markets, but fully anticipate further year-over-year improvements in the next 2 quarters to wrap up another great year.

總結 Climate Solutions，我們在幾個關鍵市場仍保持審慎，但完全預期未來兩季將持續出現年對年改善，為今年再創佳績畫下句點。

Please turn to Slide 8. Performance Technologies also had a great quarter with 7% sales growth, including an $8 million favorable FX impact. Revenue benefited from 80/20 initiatives as we continue to focus on higher margin businesses. While underlying sales volume declined by $5 million or 2%, the average selling price per unit was higher. As a reminder 80/20 efforts in Performance Technologies are focused on driving rapid earnings growth and not revenue growth. Therefore, we expect to see earnings growth at a more rapid rate than overall sales volume.

請翻到投影片 8。Performance Technologies 本季同樣表現亮眼，銷售成長 7%，其中包含 800 萬美元的有利匯率（FX）影響。隨著我們持續聚焦於較高毛利的業務，營收也受惠於 80/20 計畫。雖然基礎銷售量下滑 500 萬美元或 2%，但每單位平均售價更高。提醒一下，Performance Technologies 的 80/20 工作重點在於推動獲利快速成長，而非營收成長。因此，我們預期獲利成長速度將快於整體銷售量。

Advanced Solutions sales were up 30% or $10 million with continued growth of our EV Systems and component sales along with higher sales to specialty vehicle and coatings customers. Liquid cooled application sales increased 6% or $7 million due to higher demand from our commercial vehicle customers along with benefits from 80/20 initiatives. Lastly air-cooled application sales increased 2% or $4 million primarily due to higher sales to off-highway and genset customers, along with gains from 80/20 initiatives.

Advanced Solutions 銷售成長 30% 或 1,000 萬美元，主要來自 EV 系統與零組件銷售持續成長，以及對特種車輛與塗料客戶的銷售增加。液冷應用銷售成長 6% 或 700 萬美元，原因是商用車客戶需求提升，以及 80/20 計畫帶來的效益。最後，氣冷應用銷售成長 2% 或 400 萬美元，主要由非公路（off-highway）與發電機組（genset）客戶銷售增加所帶動，同時也受惠於 80/20 計畫的成果。

Performance Technologies' earnings conversion was excellent, with adjusted EBITDA of 73%, resulting in an 11.9% margin and a 450 basis point improvement. Similar to the previous quarter, earnings temporarily benefited from several million dollars of retroactive payments that may not repeat in future quarters. As Neil mentioned, we're pleased to report that the divestiture of 3 businesses in Germany was completed on October 31st. As previously disclosed, the annual revenue impact from these businesses is approximately $80 million to $90 million and will result in a revenue reduction the second half of this fiscal year. While these divestitures represent lower margin and non-strategic business, we're reviewing action plans to further align our cost structure to the lower revenue. We anticipate that these plans will be launched in Q3, with savings to begin in Q4.

Performance Technologies 的獲利轉換表現優異，調整後 EBITDA 轉換率為 73%，使毛利率達 11.9%，並提升 450 個基點。與上一季類似，獲利短期受惠於數百萬美元的追溯性付款，未來季度未必會重複發生。如 Neil 所提到，我們很高興報告，德國 3 項業務的剝離已於 10 月 31 日完成。依先前揭露，這些業務的年度營收影響約為 8,000 萬至 9,000 萬美元，並將在本會計年度下半年造成營收減少。雖然這些剝離屬於低毛利且非策略性業務，我們正在檢視行動方案，以使成本結構進一步與較低的營收水準相匹配。我們預期這些方案將於第三季啟動，並在第四季開始產生節省效益。

We did not experience any material impact from the UAW strike, but expect that some of our major OE customers may take extended holiday shutdowns this year. Based on all of these factors for the balance of the year, we anticipate ongoing 80/20 progress and further year-over-year improvements, with a sequential dip in earnings in Q3 and a step up again in Q4. And on a full-year basis, we expect Performance Technologies will report another excellent year and be within our targeted margin range.

我們未受到 UAW 罷工的任何重大影響，但預期今年部分主要 OE 客戶可能會延長假期停工。綜合今年剩餘期間的各項因素，我們預期 80/20 進展將持續推進，並帶來進一步的年對年改善；第三季獲利將出現逐季下滑，第四季則再度回升。以全年來看，我們預期 Performance Technologies 將再度交出非常出色的一年，並落在我們目標毛利率區間內。

Now let's review the total company results. Please turn to Slide 9. First quarter sales were up 7% or $42 million, including a $15 million favorable FX impact. As previously discussed, the higher revenue was driven by growth in both business segments. The gross margin improved 520 basis points, primarily driven by increases in volume, higher average selling prices, and numerous other improvements tied to our 80/20 initiatives. SG&A increased $10 million, driven primarily by higher employee compensation expenses, including incentive comp and higher product development costs. I'm happy to report that adjusted EBITDA was very strong in the quarter with an increase of 59% or $30 million. This equates to an adjusted EBITDA margin of 13.1% and a 430-basis point improvement from the prior year. This also represents the seventh consecutive quarter of year-over-year margin improvement. In addition, adjusted earnings per share was $0.89 and 85% higher than the prior year.

現在讓我們回顧公司整體業績。請翻到投影片 9。第一季銷售成長 7% 或 4,200 萬美元，其中包含 1,500 萬美元的有利匯率（FX）影響。如先前所述，營收增加主要由兩個事業群的成長所帶動。毛利率提升 520 個基點，主要由銷量增加、平均售價提高，以及與我們 80/20 計畫相關的多項改善所驅動。SG&A 增加 1,000 萬美元，主要由員工薪酬費用上升所致，包括獎酬，以及較高的產品開發成本。我很高興報告，本季調整後 EBITDA 非常強勁，成長 59% 或 3,000 萬美元。這相當於 13.1% 的調整後 EBITDA 利潤率，較去年提升 430 個基點。這也代表我們已連續第七個季度實現年對年利潤率改善。此外，調整後每股盈餘為 0.89 美元，較去年提高 85%。

Before moving to the balance sheet, I'd like to reiterate that we're pleased with the exceptional performance in the quarter, and there were a few areas that were better than expected. First, our shipments of data center products were somewhat stronger than expected with a little pull forward from Q3. Second, we had some additional benefits in the quarter for Performance Technologies, including favorable material ratios and product mix. And as I mentioned on the previous slide, we also benefited from some commercial negotiations and settlements.

在轉到資產負債表之前，我想再次強調，我們對本季的卓越表現感到滿意，而且有幾個面向優於預期。第一，我們的資料中心產品出貨量略強於預期，且有部分需求從第三季提前拉貨。第二，本季我們在績效科技（Performance Technologies）方面也獲得一些額外利多，包括有利的材料比率與產品組合。並且如我在上一張投影片提到的，我們也受惠於一些商業談判與和解。

While maintaining a cautious view for the second half, we're again raising our earnings outlook based on some of the first-half progress. In a few minutes, I'll further review how all this will impact our sequential results in the full year guidance.

在對下半年維持審慎看法的同時，我們基於上半年的一些進展，再次上調獲利展望。幾分鐘後，我將進一步說明這些因素將如何影響我們在全年指引中的逐季表現。

Now moving to cash flow metrics, please turn to Slide 10. We generated $58 million of free cash flow in the second quarter, which is a nice improvement from our first quarter. This puts year-to-date free cash flow at $85 million, which compares very favorably to $33 million generated in the prior fiscal year end and $43 million lower than the last quarter. Net debt coupled with strong earnings resulted in a leverage ratio of 0.8.

現在轉到現金流量指標，請看第10頁投影片。我們在第二季產生了5,800萬美元的自由現金流，較第一季有不錯的改善。這使得年初至今的自由現金流達到8,500萬美元，與上一財年年末所產生的3,300萬美元相比非常亮眼，且較上一季低4,300萬美元。淨負債搭配強勁獲利，使槓桿比率為0.8。

During the quarter, we restarted our share repurchase program and purchased 200,000 shares. As a reminder, our program is currently focused on offsetting the dilutive impact of our share-based incentive compensation program. This fiscal year, we expect continued growth in free cash flow, driven by higher earnings and a continued focus on working capital. We continue to anticipate full-year free cash flow will fall in our targeted range of 3% to 5% of sales. Modine's balance sheet remains quite strong, which we plan to maintain in the current economic climate and stand ready to support both organic growth and acquisition initiatives.

本季我們重啟庫藏股回購計畫並回購了20萬股。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。本財年，我們預期自由現金流將持續成長，主要由更高的獲利以及持續聚焦營運資金所帶動。我們仍預期全年自由現金流將落在我們目標區間，即銷售額的3%至5%。Modine 的資產負債表依然相當強健，我們計畫在目前的經濟環境下維持這樣的狀態，並隨時準備支持內生成長與併購計畫。

Now let's turn to Slide 11 for our fiscal '24 outlook. As announced in the press release, we're raising our full year earnings outlook for fiscal '24. The second quarter exceeded our expectations, leading to another increase in our profitability outlook for the fiscal year. In the Climate Solutions segment, we continue to expect data center revenue growth of 60% to 70%.

現在請看第11頁投影片，說明我們2024財年的展望。如新聞稿所宣布，我們上調了2024財年全年獲利展望。第二季表現超出我們預期，促使我們再次提高本財年的獲利能力展望。在氣候解決方案（Climate Solutions）部門，我們仍預期資料中心營收成長60%至70%。

Moving to HVAC&R, we expect modest revenue growth in the low single digits, maintaining the range from last quarter as we remain cautious and approach the prime heating season. With regards to heat transfer products, we now anticipate a sales decline in the mid-single digits, which is a reduction from our previous guidance. This is primarily due to concerns over a general economic slowdown, especially in residential and commercial refrigeration applications, and a slower ramp schedule for the heat pump market.

轉到 HVAC&R，我們預期營收將有溫和成長，約為低個位數百分比；在我們保持審慎並接近主要供暖季之際，維持與上季相同的區間。至於熱交換產品，我們目前預期銷售將下滑中個位數百分比，較先前指引有所下修。這主要是因為擔憂整體經濟放緩，特別是在住宅與商用冷凍應用，以及熱泵市場的爬坡時程較慢。

Moving to Performance Technologies. We expect continued benefits from our 80/20 rollout, and now that we've completed the German divestitures, we're adjusting the second half revenue outlook accordingly. We expect advances, including the impact of the divestitures.

接著談績效科技（Performance Technologies）。我們預期將持續受惠於 80/20 推行計畫；且既然我們已完成德國資產處分，我們也會相應調整下半年的營收展望。我們預期將有所進展，包括處分的影響。

From an SG&A perspective, we're anticipating that we'll finish the full year between $260 million and $270 million, including higher incentive and compensation expenses.

從 SG&A（銷售、一般及行政費用）角度來看，我們預期全年將落在2.6億至2.7億美元之間，其中包含較高的獎金與薪酬費用。

Let's move to adjusted EBITDA. Based on the recent results and market trends, we're raising our adjusted EBITDA outlook for the year while maintaining a somewhat cautious position with half of the fiscal year left in front of us. We now expect our adjusted fiscal '24 EBITDA to be in the range of $285 million to $300 million, up from $280 million to $295 million, and representing an increase of 34% to 41% versus the prior year.

接著看調整後 EBITDA。基於近期結果與市場趨勢，我們上調今年的調整後 EBITDA 展望；同時在財年仍有一半尚未走完的情況下，我們仍維持一定程度的審慎立場。我們目前預期2024財年調整後 EBITDA 將落在2.85億至3.00億美元區間，高於先前的2.80億至2.95億美元，並代表較去年增加34%至41%。

Consistent with our previous update, we anticipate that the second half will average approximately $70 million of a quarterly adjusted EBITDA. We expect that Q3 will be sequentially lower based on my previous comments on the business segments with a step up in Q4.

與我們先前更新一致，我們預期下半年每季平均約7,000萬美元的調整後 EBITDA。根據我先前對各業務部門的評論，我們預期第三季將較前一季下滑，而第四季將回升。

The sequential lift in Q4 will be driven by typical seasonal patterns and a strong order book and data centers, advanced thermal solutions, and other key growth businesses.

第四季的逐季提升將由典型的季節性型態，以及資料中心、先進熱管理解決方案與其他關鍵成長業務的強勁訂單能見度所帶動。

Shifting back to the full year, I want to reaffirm that our full year outlook is well aligned with our transformational earnings and margin targets, and we expect to deliver another year of record results at Modine. In addition, we anticipate that free cash flow will further improve with the higher earnings outlook with capital expenditures expected to be around $70 million. Other assumptions including interest expense, taxes, depreciation, amortization are included in appendices attached to this presentation and our press release.

回到全年，我想再次確認，我們的全年展望與我們的轉型獲利與毛利率目標高度一致，我們預期 Modine 將再度交出創紀錄的一年。此外，隨著獲利展望上調，我們預期自由現金流將進一步改善，而資本支出預計約為7,000萬美元。其他假設（包括利息費用、稅負、折舊與攤銷）已列於本簡報所附的附錄以及我們的新聞稿中。

To wrap up, we're extremely pleased with the results from the second quarter and our ability to maintain momentum towards our interim and long-term financial targets. As Neil said, we're in the early stages of our transformation, but the progress has been tremendous. And we have a lot of hard work and opportunity in front of us.

總結來說，我們對第二季的結果以及我們維持朝向中期與長期財務目標前進的動能感到非常滿意。正如 Neil 所說，我們仍處於轉型的早期階段，但進展非常顯著。而我們前方仍有許多艱鉅的工作與機會。

With that, Neil and I will take your questions.

接下來，Neil 和我將回答各位的提問。

(Operator Instructions) Our first question comes from 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。

I wanted to maybe start with a question on the data center business. The growth cycle you're in, in fiscal '24, what does that suggest about fiscal '25 in the context of the backlog and order comments you made and what were in the slides here? And then I'm curious if you have any update on customer diversification initiatives within the hyperscale market and any early feedback on the CDU? And then I have a follow-up.

我想先從資料中心業務的問題開始。你們在2024財年的成長週期，結合你們對積壓訂單與訂單狀況的評論，以及投影片上的內容，對2025財年意味著什麼？另外，我也想了解你們在超大規模（hyperscale）市場內的客戶多元化計畫是否有任何更新，以及 CDU 是否有任何初步回饋？我還有一個追問。

Do you want to go first on CDU?

你要先回答 CDU 的部分嗎？

Yes, Matt, thank you for the question. Yes, so as you know, we continue to experience growth and we continue to grow the backlog in data centers. A lot of that was driven by the fact that we've expanded our ability to manufacture globally. The CapEx investment that we made in our labs and our factories in the United States as well as in Europe to support this growth, to allow us to build the capacity to keep up with this demand that we're seeing. We've been able to expand our product portfolio on the air cooling side as well. An integral piece of this growth was being able to develop and manufacture a chiller in the United States and North American market.

好的，Matt，謝謝你的問題。是的，如你所知，我們持續經歷成長，並且持續增加資料中心的積壓訂單。其中很大一部分是因為我們擴大全球製造能力所帶動。我們在美國以及歐洲的實驗室與工廠所做的資本支出投資，是為了支持這項成長，讓我們能建立產能以跟上我們所看到的需求。我們也在氣冷產品方面擴充了產品組合。這項成長的一個關鍵環節，是能夠在美國與北美市場開發並製造冷水機（chiller）。

So we will continue to expand our product portfolio and data centers, and the next evolution of that is with the CDUs. So these CDUs are going to get us into a different area of the data center to allow us to provide liquid cooling, and that's the VOC that we've collected from both our hyperscaler and colos. They pivot into more of a liquid cooling approach for areas where they have high heat density and heat loads. They're leaning on us in order to help them provide that solution.

因此，我們將持續擴充資料中心的產品組合，而下一階段的演進就是 CDU。這些 CDU 將讓我們進入資料中心的另一個領域，使我們能提供液冷解決方案；這也是我們從超大規模客戶與共置機房（colos）蒐集到的客戶之聲（VOC）。他們正轉向在高熱密度與高熱負載的區域採用更多液冷方式。他們也仰賴我們協助提供該解決方案。

And you know, this isn't new to us, Matt. We've recognized this and we've realized this. We actually produced the CDU back in 2016. And, you know, this was before there was a market. And now that we see that there's favorable trends where we can complement our current product portfolio of cooling products and data centers, adding the CDU piece just makes a lot of sense.

而且你知道，Matt，這對我們來說並不新。我們早已認知並理解這個趨勢。其實我們在2016年就生產過 CDU，只是當時市場尚未形成。如今我們看到有利趨勢，能夠補強我們目前在資料中心的冷卻產品組合，因此加入 CDU 這一塊非常合理。

Yes, and Matt, on your question about next year, we're in the middle of our planning process, so a little bit early to give a definitive number for you. But I think the way we thought about it for quite a while is the ability, obviously, to grow 60%, 70% a year is not going to be sustainable over the long term as the business gets much bigger. But we've talked about longer-term growth rates in the 20%, 30% level, maybe even a little bit higher. So still really high. We'd expect very high revenue growth next year, but it won't continue at a 60%, 70% pace.

是的，Matt，關於你對明年的問題，我們正處於規劃流程中，所以現在要給你一個明確數字還稍早。不過我們長期以來的看法是，隨著業務規模變得更大，顯然每年成長60%、70%不可能長期持續。我們談過較長期的成長率大約在20%到30%的水準，甚至可能略高一些，仍然非常高。我們預期明年營收仍會有非常高的成長，但不會再以60%、70%的速度持續。

And then I asked about any progress on hyperscale customer diversification.

接著我詢問了超大規模客戶多元化方面是否有任何進展。

Yes, we continue to have conversations and advance our conversations there. It takes time. You know, we started the process about 18 months ago, and we're much further along in line with where we would expect to be. Again, adding our capacity across the globe, having the global manufacturing footprint, increasing our product portfolio with liquid cooling technologies, all is in favor of us being able to continue to advance those conversations with the hypers.

是的，我們持續在那方面進行對話，並推進相關討論。這需要時間。你知道，我們大約在 18 個月前啟動這個流程，而目前的進展已經遠超前，符合我們原本預期的節奏。同樣地，我們在全球擴充產能、建立全球製造佈局、透過液冷技術擴充產品組合，這些都有利於我們能夠持續推進與超大規模客戶的對話。

Got it. And then, just as a follow-up, as I kind of think about the guidance framework you gave coming out of Q1, thinking about Q2, pretty much everything you just delivered bucked all of that guidance in a good way. And I'm just curious about the go-forward guidance. Have you really seen a step function change in the demand environment? Or are you looking at this saying, you know, macro is a little choppy. There's a few myths here and there in the business. Geopolitical environment is unfortunate as it is what it is, so to speak. So, maybe some conservatism here is understandable. I'm just trying to sort of more dig at kind of your guidance philosophy as we think about the second half in the setup, given how you performed in 1H?

了解。接著作為追問，當我回想你們在 Q1 後給出的指引框架、再看 Q2，幾乎你們剛剛交付的所有結果都以正面的方式超越了那些指引。我想了解一下後續的指引：你們是否真的看到需求環境出現了階躍式變化？還是你們的看法是，宏觀環境仍有些顛簸，業務中這裡那裡有一些雜音；地緣政治環境不幸但也就是如此。那麼在這裡保持一些保守是可以理解的。我只是想更深入了解你們的指引哲學，尤其是在你們上半年表現如此之後，對下半年展望的設定是怎麼思考的？

Yes. Hey, Matt, it's Mick. I think really fair question. And I think it's much more of the latter. We're not seeing a step function change in the business or any level of profitability levels. The latter, which you went through that list of the uncertainties kind of across the market, geopolitical environment, a number of things in a few markets like the eating season coming up. So I know we had thought Q2 would be a little bit of a step down from Q1, and we had another strong quarter.

是的。嗨，Matt，我是 Mick。我覺得這個問題非常合理。我認為更偏向你後面那種情況。我們沒有看到業務出現階躍式變化，也沒有看到獲利水準出現任何那種變化。你剛才列舉的那些不確定性——市場整體、地緣政治環境，以及在少數市場中的一些因素，例如即將到來的旺季等——更接近我們的觀察。所以我們原本以為 Q2 會比 Q1 略有回落，但我們又交出了一個強勁的季度。

In there is the other thing I guess I'd add, and Neil could add any color, but as we continue to go through this transformation, the amount of complexity that we have in the organization, we're asking the leaders to manage through businesses that we are divesting product lines we're exiting, pricing adjustments we're pushing through growth volumes and timing. It's turned out for us in a positive way, the momentum is great, but our ability to predict in 1 quarter to the next, with that level of accuracy, there's a large amount of complexity in the company right now. That's just making it, we're trying to be cautious of how we project for the next 6 months. Neil, do you want to add any other color on it?

另外我想補充的是，Neil 也可以補充一些看法：隨著我們持續推進這項轉型，我們組織內的複雜度很高。我們要求領導團隊在多條戰線同時管理：我們正在剝離的業務、正在退出的產品線、正在推動的價格調整、成長量與時點等。結果對我們而言是正面的，動能很強，但在目前這種複雜度下，要以很高的準確度去預測一個季度到下一個季度，確實更困難。公司現在的複雜度很高，這使得我們在對未來 6 個月做預測時，會更謹慎一些。Neil，你要不要再補充一些？

Yes, I mean, when you think about how difficult it is to predict change in a stable environment when we destabilize it, you know, through a lot of our 80/20 activities intentionally for the right thing to do, we're transforming the company. When you're in a destabilized mode, we're changing many, many things all at once. It does become a little bit more difficult to predict. So we're continuing to manage it the way we do and we want to make sure that we keep consistent with our approach in terms of how we guide.

是的。我的意思是，當你想到在一個穩定環境中要預測變化都已經很難，而當我們透過許多 80/20 活動有意識地把環境「去穩定化」——因為那是正確的事——我們正在轉型公司。當你處於去穩定化的狀態時，我們同時在改變非常多事情，確實會讓預測變得更困難一些。因此我們會持續以我們一貫的方式來管理，同時也要確保在指引方式上保持與我們的方法一致。

Our next question is from Chris Moore with CJS Securities.

我們的下一個問題來自 CJS Securities 的 Chris Moore。

Maybe I'll just start with a quick follow-up on the data center side. The current backlog, is that all air cooling technology?

我先就資料中心這邊做個快速追問。目前的在手訂單（backlog）全部都是氣冷技術嗎？

Correct.

正確。

Got you. And the time frame on the CDU development, is that a couple of years? What does that look like?

了解。那 CDU 的開發時程，是要兩年左右嗎？大概會是什麼樣子？

Great question. We expect to have the ability to commercialize that in the beginning of next year. And it'll grow at the rate that we see, or we potentially could predict the market adoption of this. So it's a nice compliment in terms of what we're doing on the air cooling side. We've got multiple technologies here with the CDU. We can do liquid to liquid, we can do air to liquid. There's just different ways to solve for the challenges that our customers see. So we're going to be able to move and deploy product at the rate that they, companies that have this technology and they position themselves well with joint ventures and other things, but it's similar space. We're familiar with it. We've been waiting for the time to make this investment when we actually start to see this market start to stabilize and has the potential to grow.

好問題。我們預期在明年年初就具備將其商業化的能力。之後會依照我們看到、或我們可能預測到的市場採用速度來成長。因此就我們在氣冷端所做的事情而言，這是一個很好的補充。CDU 方面我們有多種技術：可以做液對液，也可以做氣對液。解決客戶所面臨挑戰的方法有很多種。所以我們將能夠依照他們的節奏來推進並部署產品；具備這項技術並透過合資等方式把自己定位好的公司，也都在相近的領域。我們對這個領域很熟悉。我們一直在等待合適的時點來做這項投資，也就是當我們開始看到這個市場趨於穩定並且具備成長潛力的時候。

Like I said earlier, we've developed CDUs in the past. We did this 6 years ago. There just wasn't a market for it. So we believe the time is right.

如我先前所說，我們過去也開發過 CDU。我們在 6 年前就做過，但當時並沒有市場。因此我們相信現在時機成熟了。

Let me switch gears here. So Ford is postponing a $12 billion EV factory. The reasons given were unwillingness of customers to pay extra for its electric vehicles. Just wondering kind of how you look at that? Any impact potentially on the ICE auto business or EV business in general. Just, you know, kind of your thoughts there.

我換個話題。Ford 正在延後一座 120 億美元的電動車工廠。給出的原因是客戶不願意為其電動車支付更高的價格。想請教你們怎麼看這件事？是否可能對燃油車（ICE）汽車業務或整體 EV 業務造成任何影響？想聽聽你們的看法。

Yes, it's an interesting question, right? We don't focus on EV automotive. Our EV areas that we focus in terms of the electrification is on specialty vehicles. You know, we really look at larger EV applications that require our systems and solutions. And we've moved away from any EV related to automotive that's component related. So, where we see growth and where we see the demand, you know, we're partnered with, we're on 119 different engagements with customers in the areas that we target for EV. We see 27 orders or platform wins that we're very pleased to have won. We're expanding our EV product group. We're expanding capacity in our plants in Tennessee. We just recently put out a press release that we're expanding into Europe. We're going to be producing in Italy. So we see growth in the areas that we've defined -- that is target for us in the EV. Again, that's in systems and in vehicles like specialty vehicles, municipal buses, school buses, last mile delivery vehicles, that's the space that we're focused on.

是的，這是個有意思的問題，對吧？我們不聚焦於乘用車 EV。就電動化而言，我們聚焦的 EV 領域是特種車輛。你知道，我們主要看的是需要我們系統與解決方案的較大型 EV 應用。我們也已經遠離任何與乘用車相關、偏零組件層級的 EV 業務。因此，在我們看到成長、看到需求的領域，我們與客戶合作——在我們鎖定的 EV 目標領域，我們目前有 119 個不同的客戶專案在進行。我們也看到 27 筆訂單或平台中標（platform wins），我們對此非常滿意。我們正在擴編 EV 產品團隊，也在田納西州的工廠擴充產能。我們最近也發布新聞稿，宣布擴展到歐洲，將在義大利生產。因此，我們在所定義的 EV 目標領域看到成長——也就是系統層級，以及特種車輛、市政巴士、校車、最後一哩配送車等車種；這就是我們聚焦的領域。

Then into Q2 in the data center segment, maybe you can, if I caught that right, maybe you can just help us understand the dynamics there.

那在資料中心部門的 Q2，或許你可以——如果我沒聽錯的話——幫我們理解一下那裡的動態。

Yes. It's Mick. So definitely, we, from a forecast standpoint, probably the last, you know, 3 or 4 months or so, based on schedules from our customers. We knew the lowest quarter of the year would likely be our Q3. Those data center, what we've talked about in the past, is they can be lumpy. These are, we had a photo in the presentation, really large construction projects. And so we're required to have product ready to be shipped. But when they're pulled, it depends on the customer and the completion. They only want it on time, ready to go.

是的，我是 Mick。確實，從預測角度來看，可能在過去大概 3 到 4 個月左右，根據客戶給的排程，我們就知道全年最低的季度很可能會是 Q3。資料中心業務——我們過去談過——可能會有波動性（lumpy）。這些是非常大型的建設專案，我們在簡報中也放了照片。因此我們必須把產品準備好以便出貨。但實際拉貨時間取決於客戶與工程完工進度。他們只希望我們準時交付、隨時可用。

So in Q2, we had a little bit higher revenue than we thought that was really going to be, we thought would be coming in Q3. And then in Q3, we expect to have a lower amount of revenue in Q3 and a big ramp in Q4. Again, just based on -- consistent with our order book, but it's based on the timing of where we see the customers pulling and asking for those shipments.

所以在 Q2，我們的營收比原先預期略高；原本我們以為那部分會落在 Q3。接著在 Q3，我們預期 Q3 的營收會比較低，而 Q4 會大幅拉升。同樣地，這與我們的訂單簿一致，但主要取決於我們看到客戶拉貨、要求出貨的時點。

And then I just wanted to follow up on the CDU. I guess latest thoughts on how you're approaching high performance approaching high performance in AI data centers? And then does the CDU address that, given that it's liquid cooling or not for that market?

另外我想再追問 CDU。我想了解你們目前對於 AI 資料中心的高效能需求是如何切入的？以及 CDU 是否能滿足那個需求——考量它是液冷——或是對那個市場而言並非如此？

No, that's a good question. Yes, it does address that. So anywhere where you need to augment your cooling capacity in a data center where you have the traditional air cooling mechanisms. And if you -- as a data center or co-location want to expand into higher performance, higher computing speeds because of AI or AV or ML, machine learning, you would need a more efficient cooling technique and liquid cooling is a more efficient cooling technique. So this is liquid cooling that supports direct to chip, for example, cooling to allow for removal of heat on those heat loads on those silver racks. So yes, it is part of that -- those market drivers. This helps support and solve for that problem.

不，這是個好問題。是的，確實有涵蓋到。也就是說，在任何需要在資料中心、且仍採用傳統空氣冷卻機制的地方，去補強你的冷卻能力時都適用。而如果你——作為資料中心或機房代管（co-location）業者——想因為 AI 或 AV 或 ML（機器學習）而擴展到更高效能、更高運算速度，你就需要更高效率的冷卻技術，而液冷就是更高效率的冷卻技術。所以這是支援例如「直達晶片（direct-to-chip）」的液冷，用於冷卻以便移除那些銀色機櫃（silver racks）上熱負載所產生的熱量。所以是的，這是——那些市場驅動因素——的一部分。這有助於支援並解決那個問題。

Okay. And I think you said that that's actually going to be available in the first part of calendar '24 or did you mean? I wasn't clear on that.

好的。我想你剛才說那實際上會在 2024 年曆年的前半段就能供應，還是你的意思是？我不太確定。

Yes, we're looking at the first. We're looking at the first part of next year, correct.

是的，我們看的是明年上半年，沒錯。

Okay. Great. And then just one quick one if I could squeeze it then. Any update or any updated thoughts, I guess, on what you're seeing in terms of M&A potential targets, pipeline? Any more color to add there?

好的。很好。那我再快速問一個，如果我可以再塞一題的話。關於你們看到的併購（M&A）潛在標的、案源管線（pipeline），有沒有任何更新或新的想法？還有沒有更多細節可以補充？

Yes. It's been flowed a little bit, but we talked maybe a quarter or 2 ago with rate hikes and nervousness around the economy. We saw some deal flow and opportunities kind of slow down. People were hesitant to come to the market. I would say the last few months it's been picking up a little bit for us. In addition, as Neil and I have talked about, we're continuing to have more people on the Modine side being aggressive with dialogues, discussions, knocking on doors. So, we'll continue to report back. It's a 100% effort going forward and I think we're feeling good about the pipeline with opportunity we're building.

有的。它有些起伏，但我們大概在一季或兩季前談過，因為升息以及對經濟的緊張情緒，我們看到一些交易流量與機會有點放緩。大家對進入市場比較猶豫。我會說，過去幾個月對我們而言又稍微回升了一些。另外，正如 Neil 和我談到的，我們也持續讓 Modine 這邊更多人更積極地進行對話、討論、主動拜訪。我們會持續回報進展。未來會是 100% 的投入，我想我們對正在建立的機會管線感覺不錯。

(Operator Instructions) Our next question is from Tim Moore with EF Hutton.

（接線員指示）我們下一個問題來自 EF Hutton 的 Tim Moore。

Congratulations on the gross margin expansion and the data centers growth. For overall Modine, I mean, it seems like you've harnessed the quickest and easier way to grow sales is through your current customers, you know, that helps the margin profile quicker, and maybe a new customer that has new engineering design cost drag. As you look out over the next 12 months, do you expect to take on some more new customers outside of the EV platforms that you've been signing up? Do you think that might weigh a little bit on gross margin expansion, or do you think the 80/20 would offset that if you're adding new customers?

恭喜毛利率擴張以及資料中心的成長。就整體 Modine 而言，我的意思是，看起來你們已經掌握到最快、也最容易的銷售成長方式，就是透過你們現有客戶——你知道，這能更快改善毛利結構；而新客戶可能會帶來新的工程設計成本拖累。展望未來 12 個月，除了你們一直在簽下的 EV 平台之外，你們是否預期會再新增一些新客戶？你覺得這可能會對毛利率擴張造成一些壓力嗎？還是你認為如果新增新客戶，80/20 會抵消那個影響？

Yes. Well, it's a good question, Tim. Certainly, we're looking at new customers and new geographies where we've identified market-facing verticals that are growth. So if you think about the GenSet market, you think about what we're doing in EV, data centers, indoor air quality, absolutely. And through 80/20, as we identify those customers, we have filters, just to be direct. We've got filters in place to make sure that we don't have erosion in terms of all the hard work that we're doing.

是的。Tim，這是個好問題。當然，我們正在尋找新客戶以及新地理區域，因為我們已經辨識出面向市場的垂直領域具有成長性。所以如果你想到發電機組（GenSet）市場、想到我們在 EV、資料中心、室內空氣品質所做的事情，絕對是的。而透過 80/20，當我們辨識這些客戶時，我們有篩選機制——我就直說——我們有篩選機制來確保不會侵蝕我們所做的所有辛苦成果。

I definitely enjoyed visiting your data center manufacturing facility in Virginia 3 months ago and got a really good appreciation of the uniqueness of the offering there. That was a great Investor Day. But what I really want to get to, I know the opening remarks you mentioned, 12 to 18-month backlog range for that. I'm just trying to get a sense if there's a shadow backlog behind that, you know, as you talk to your customers and they plan finding more power sources, electricity to run their co-location and hyperscale's and you kind of think about maybe what CDU can do, you know, the end of the calendar 2025. Do you think that, you know, your backlog is a lot bigger than maybe the 12 to 18 months based on kind of the plans of your customers for their growth?

我三個月前很享受參觀你們在維吉尼亞州的資料中心製造工廠，也非常體會到那裡產品/方案的獨特性。那是一場很棒的投資人日。但我真正想問的是，我知道你們在開場談話中提到，那邊的訂單積壓（backlog）大約是 12 到 18 個月。我只是想了解，是否在那之後還有一個「影子」訂單積壓——也就是說，當你們和客戶交流、他們規劃尋找更多電力來源、電力供應來運行他們的機房代管與超大規模（hyperscale）時，你們也會思考像 CDU 能做到什麼——例如到 2025 年曆年年底。你是否認為，基於客戶成長計畫，你們的訂單積壓其實比 12 到 18 個月還要大得多？

Yes, it's a good question. Certainly, you know, if we think about it in terms of our percent confidence, when we get to the point of backlog, we run it all the way through a funnel, right? So when you're looking at backlog, this is a high degree, high visibility, high likelihood that the order is going to be placed or the order has already been placed. And even before that, you know, we look at our commercial funnel and we say that it's 50% visibility and it's larger than the current backlog. And then there's a precursor to that, which is 25%. Assuming that you have 25% visibility of it, that order is larger and bigger. As you get out in the out years, 3, 4, 5 years, it's much more difficult to predict. But certainly we're having conversations with our customers because as you go along that cycle, whether it's at 25%, 50% or 75%, you have to start triggering supply chain, manufacturing, operations, and there's an entire process. So yes, we have those conversations. Yes, we see and we do have visibility of it. But we don't declare victory until we have the order in hand.

是的，這是個好問題。當然，如果我們用「信心百分比」來看，當我們把它歸類為 backlog 的時候，我們會把它完整跑過一個漏斗（funnel），對吧？所以當你看 backlog 時，這代表高度確定、高度可視性、高度可能性——訂單會被下達，或訂單已經下達。甚至在那之前，我們會看商務漏斗（commercial funnel），我們說那是 50% 的可視性，而且它比目前的 backlog 還大。再之前還有一個前置階段，是 25%。假設你對它有 25% 的可視性，那個訂單規模會更大、更多。當你往更遠的年度看，3、4、5 年後，就更難預測。但我們確實在和客戶對話，因為當你沿著那個週期前進，不論是在 25%、50% 或 75%，你都必須開始啟動供應鏈、製造、營運，這是一整套流程。所以是的，我們有那些對話。是的，我們看得到，也確實有可視性。但在我們拿到手上的訂單之前，我們不會宣告勝利。

I just have 2 more questions. Your gross margin is beat several quarters in a row versus maybe from the commentary or what the consensus number was. Any sense, you know, if Mick wants to take a stab at this, any chance to maybe parse out how much of the gross margin expansion maybe this quarter or recently roughly is from kind of the cost-saving/efficiencies bucket versus catch-up pricing taken. I cover a lot of industrial stocks, and a lot of them have had terrific price increases the last 12 to 16 months, but they're starting to see it slow in October and November. So, I'm just trying to get a sense, is the 80/20 still a pretty big driver as it gets rolled out more to Performance Technologies? And are you kind of tapping out on maybe the pricing catch-up?

我還有兩個問題。你們的毛利率已經連續好幾季都優於可能從評論或市場共識數字所預期的水準。你們有沒有什麼看法——如果 Mick 想試著回答也可以——能否大致拆分一下，本季或近期毛利率擴張大概有多少來自節省成本/效率提升那一桶（bucket），以及有多少來自補漲式的定價（catch-up pricing）？我覆蓋很多工業股，很多公司在過去 12 到 16 個月都有很好的漲價，但他們在 10 月和 11 月開始看到放緩。所以我想了解的是：80/20 在更進一步推行到 Performance Technologies 時，是否仍是相當大的驅動因素？以及你們是否在補漲式定價上差不多已經到頂了？

Yes, yes, that's a fair question. I would answer it 2 different ways or 2 ways. If we break it down by climate and by Performance Technologies, Climate Solutions and very intentionally as part of the transformation, the strategy has shifted towards a heavy lean on growth. And so, most of the margin improvement we've been seeing in Climate Solutions over the last 2 quarters, I would say, is driven by growth. And yes, there's mix in there, but we're growing. The businesses that we want to grow have high, you know, margins and margins where we want them to be. And data centers is a good example.

是的，是的，這是個合理的問題。我會用兩種方式、或兩個面向來回答。如果我們按 Climate（氣候）與 Performance Technologies 來拆分，Climate Solutions 並且非常刻意地作為轉型的一部分，策略已轉向更偏重成長。因此，我會說，過去兩季我們在 Climate Solutions 看到的大部分毛利改善，是由成長所驅動。是的，當中也有產品組合（mix）的因素，但我們在成長。我們想要成長的那些業務具有高毛利——而且毛利水準也在我們希望的位置。資料中心就是一個很好的例子。

Performance Technologies, again, and Neil's talked about this for a couple quarters, we specifically paced that. They are deep into the early phases of 80/20. So, for Performance Technologies over the last couple quarters, they've had a much bigger margin drive based on, I would combine it, it's not just pricing, but product line simplification. And with that, it's cost reduction and throughput and productivity. So, yes, we continue to think Performance Technologies for a bit is going to be cleaning, simplifying their business, focused on margin improvement with a heavy dose of growth in EV. And then we would expect probably a year out, Performance Technologies will continue to then identify those pockets where they see above-market growth rates. So hope that answers the question for you.

至於 Performance Technologies，同樣地，Neil 過去幾季也談過，我們是有節奏地推進。他們正深入 80/20 的早期階段。所以，Performance Technologies 在過去幾季的毛利推升更大，我會把它合併來看：不只是定價，還包括產品線簡化。而隨之而來的是降本、產能吞吐（throughput）以及生產力提升。所以是的，我們仍然認為 Performance Technologies 在一段時間內會持續清理、簡化其業務，聚焦於毛利改善，同時在 EV 上有很大比重的成長。然後我們預期大概一年之後，Performance Technologies 會繼續辨識那些他們看到高於市場成長率的利基領域。希望這能回答你的問題。

Mick, that definitely did. That was really good granularity and gives me more optimism about the runway for margin expansion from this technology and even climate. Unlike some other industrial companies you're seeing your pricing power have this quarter. But my last question is around your SG&A expense. You know, I know it ran a bit high, 11% this quarter, and it seemed like the implied guidance you gave for this year is about 2.4% or -- 10.4% or so of sales. I know you guys have been focused obviously on the operation side and for a good point and the gross margin expansion has been phenomenal. But do you think maybe next year there's some opportunity to maybe get some more SG&A leverage out and get that down to 10% instead of maybe 10.4%?

Mick，確實如此。那個拆解得非常細，讓我對這項技術、甚至氣候帶來的毛利率擴張跑道更有信心。不同於你看到的其他一些工業公司，你們本季的定價能力正在展現。不過我最後一個問題是關於你們的 SG&A 費用。你知道，我知道本季看起來偏高一些，達到 11%，而你們今年給出的隱含指引似乎約為 2.4% 或——約為銷售額的 10.4% 左右。我知道你們顯然一直把重心放在營運端，而且這點很有道理，毛利率擴張也非常亮眼。但你們是否認為明年可能有機會再多釋放一些 SG&A 槓桿，把它降到 10% 而不是大約 10.4%？

Yes, the way I think about it, I'll give you, you know, my view and if Neil wants to add any color. There was, if we go back again to when we announced the transformation and Neil coming in, you know, 5 or 10 years of really leaning out Modine and focused on SG&A. Over the last year, we have reinvested in some key areas to support growth and people. It's everything from procurement to product development. And I think everybody sees the amount of earnings growth coming from those. But we will plateau. I call it kind of maybe reloading where we had some gaps in SG&A. So I would expect we'll have SG&A dollars growing to the range I provided. And then at that point, I think from a percentage of sales, that's a fair question. I think we'll start to -- we'll peak out or even start to leverage a little bit at the percentage of sales, the SG&A.

是的，我的看法是這樣——我先分享我的觀點，如果 Neil 想補充也可以。回到我們宣布轉型、以及 Neil 加入的時候，你知道，過去 5 到 10 年我們一直在精實 Modine，並且聚焦於 SG&A。過去一年，我們在一些關鍵領域重新投資，以支援成長與人才，從採購到產品開發都有。我想大家也都看到，這些投入帶來了相當多的獲利成長。但我們會進入平台期。我把它稱為某種「重新裝填」，因為我們在 SG&A 上有一些缺口需要補上。所以我預期 SG&A 的金額會成長到我提供的那個區間。到了那個時點，從銷售額百分比來看，這是個合理的問題；我認為我們會開始——達到高點，甚至在 SG&A 佔銷售額的比例上開始出現一些槓桿效益。

Our next question is from Matt Summerville with D.A. Davidson.

我們下一個問題來自 D.A. Davidson 的 Matt Summerville。

A couple of questions. First, talk through data center expectations a bit. You talked through the heat pump side of things. There's 3 other high growth verticals that you guys have talked about in the past. Could you maybe more directly address kind of what you're seeing there, what expectations may look like for revenue this year, where are the pluses and minuses in those remaining 3, and then I have a couple quick follow-up.

我有幾個問題。首先，請多談談資料中心的展望。你們談到了熱泵那一塊。過去你們也談過另外 3 個高成長的垂直領域。你們能否更直接地說明你們在那裡看到的情況、今年營收的預期可能長什麼樣子、那剩下 3 個領域各自的利多與利空在哪裡？然後我還有幾個快速追問。

Do you want to talk GenSet?

你想談談 GenSet 嗎？

Yes, so we continue to develop in the GenSet market some advanced products that we believe we're going to be able to move into expanding our customer base. So certainly, we still believe in the numbers behind GenSet, we still believe in the market, we see the tailwinds behind it, and it's favorable to the work that we're doing. So GenSet markets on path, I'll let Mick give the numbers when I finish on the other 2. EV, we continue to develop new product. We mentioned the expansion that we're moving into in Europe because of the potential demand in the out years. We're winning on platforms and programs, and we've launched additional new product. In indoor air quality, we're starting to continue to see the impact and effect of the CARES Act and the ESSER funds. We're seeing tailwinds out to 2026 with our school unit ventilators. So again, we're standing behind our indoor air quality growth relative to the numbers.

好的。我們持續在 GenSet 市場開發一些先進產品，我們相信這將使我們能夠擴大客戶基礎。因此，我們仍然相信 GenSet 背後的數字，仍然相信這個市場；我們看到其背後的順風，而且這對我們正在做的工作是有利的。所以 GenSet 市場仍在軌道上；我在談完另外兩個之後，讓 Mick 來給數字。EV 方面，我們持續開發新產品。我們提到，因為未來幾年的潛在需求，我們正在歐洲推進擴張。我們在平台與專案上持續得標，也推出了更多新產品。在室內空氣品質方面，我們開始持續看到《CARES 法案》以及 ESSER 資金的影響與效果。我們看到順風延續到 2026 年，主要來自我們的學校用單元通風機。因此，我們仍然支持室內空氣品質的成長，並與我們的數字一致。

Yes, for the most part, those long-term growth rates, especially in the growth businesses Neil just went through, Matt, we still feel good about those. I think with the strong data center year, we'll probably be adjusting data center long-term growth rates up to reflect this really strong year we're in. And then we still expect similar growth rates, you know, high double-digit growth rates across all of those. And then on a heat pump side, that growth rate we think, based on what Neil said, we'll take it down a little bit. Still be double-digit growth rate, but we see that being a slower ramp and taking a little bit longer to get to peak volume.

是的，整體而言，那些長期成長率——尤其是 Neil 剛剛提到的成長型業務——Matt，我們仍然對此感到樂觀。我認為在資料中心今年表現強勁的情況下，我們可能會上調資料中心的長期成長率，以反映我們正處於這個非常強勁的年度。然後我們仍預期其他領域會有類似的成長率，也就是在所有這些領域都能達到高雙位數的成長率。至於熱泵端，我們認為基於 Neil 所說的，我們會把那個成長率稍微下修一些。仍會是雙位數成長，但我們看到爬坡會更慢一些，達到峰值量需要更長時間。

Got it. And just to be clear from a modeling standpoint, embedded in the reiterated top-line guide is how much headwind from either divestitures, product line exit, or otherwise, I'll call it deliberate revenue attrition.

了解。為了模型更清楚一點，在你們重申的營收（top-line）指引中，因出售事業、退出產品線或其他因素所造成的逆風——我稱之為刻意的營收流失（deliberate revenue attrition）——大概包含多少？

Yes, I would estimate that $40 million to $50 million, Matt, of product, you know, for sure the divestitures, those 3 German businesses were $80 million to $90 million annualized. And then we do track all of our 80/20 product line simplification efforts. And just in context for you, we just updated that. And since we started, we're over $300 million. Now, that includes the divestitures, but over $300 million of business that we've specifically targeted from a product line simplification.

是的，Matt，我估計大約是 4,000 萬到 5,000 萬美元的產品（營收）影響。當然，出售事業方面，那 3 個德國業務年化約 8,000 萬到 9,000 萬美元。另外，我們也會追蹤所有 80/20 產品線精簡的努力。給你一個背景，我們剛更新過：自從開始以來，我們已經超過 3 億美元。這其中包含出售事業，但也包括超過 3 億美元的業務，是我們透過產品線精簡所明確鎖定的。

Okay. And then, just lastly, early read on the heating season here in North America, I know that's an important business for you, obviously. You know, we had a really mild winter last year, but what does early sell-in look like into the channel, and what's your assessment of inventory levels as they sit here today?

好的。最後一個問題：北美這邊供暖季的早期觀察。我知道這對你們來說顯然是很重要的業務。去年冬天非常溫和，但目前通路端的早期鋪貨（sell-in）看起來如何？以及你對目前庫存水位的評估是什麼？

Yes, you know, the last couple quarters we were looking at anticipating that we hit a bottom there relative to the amount of inventory that was in the channel and starting to see a recovery. This month, October, will be a very important month for us as we track the order rates as well as November. And you know, we're going to track those on a day-to-day basis to see exactly when we start to see the recovery and rebound. So I think we're near where we thought we would be and, you know, we're going to know a lot more in the next 4 weeks how strong the recovery will be, Matt.

是的，你知道，過去幾個季度我們一直在觀察並預期：就通路庫存量而言，我們已經觸底，並開始看到復甦。這個月，也就是 10 月，對我們會非常重要，因為我們會追蹤訂單率，11 月也是一樣。而且你知道，我們會以每日為基礎追蹤，來精確判斷我們何時開始看到復甦與反彈。所以我認為我們接近我們原先預期的位置；而且你知道，接下來 4 週我們會更清楚復甦會有多強，Matt。

As there are no further questions at this time, I would now turn the conference over to Kathy Powers. Please go ahead.

由於目前沒有其他問題，我現在把電話會議交回給 Kathy Powers。請繼續。

Thank you and thanks to everybody for joining us on the call this morning. The replay will be available through our website in about 2 hours. We hope everyone has a great day.

謝謝，也感謝各位今天早上參與我們的電話會議。重播將在約 2 小時後於我們的網站提供。祝大家有美好的一天。

Thank you. The conference of Modine Manufacturing has now concluded. Thank you for your participation. You may now disconnect your lines.

謝謝。Modine Manufacturing 的電話會議到此結束。感謝各位的參與。您現在可以掛斷電話線。