Enpro Inc (NPO) 2024 Q3 法說會逐字稿

Greetings, and welcome to the Enpro Q3 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Enpro 2024 年第三季財報電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, James Gentile. Thank you. You may begin.

現在我很高興向大家介紹你們的主持人詹姆斯詹蒂爾。謝謝。你可以開始了。

Thanks, Irene, and good morning, everyone. Welcome to Enpro's third-quarter 2024 earnings conference call. I will remind you that our call is being webcast at enpro.com, where you can find the presentation that accompanies this call. With me today is Eric Vaillancourt, our President and Chief Executive Officer; and Joe Bruderek, Executive Vice President and Chief Financial Officer.

謝謝艾琳，大家早安。歡迎參加 Enpro 2024 年第三季財報電話會議。我想提醒您，我們的電話會議正在 enpro.com 上進行網路直播，您可以在其中找到本次電話會議附帶的簡報。今天與我在一起的是我們的總裁兼執行長 Eric Vaillancourt；執行副總裁兼財務長 Joe Bruderek。

During today's call, we will reference a number of non-GAAP financial measures. Tables reconciling the non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. Also, a friendly reminder that we will be making statements on this call that are not historical facts and that are considered forward-looking in nature.

在今天的電話會議中，我們將參考一些非公認會計準則財務指標。簡報資料的附錄中包含將非 GAAP 衡量標準與可比較 GAAP 衡量標準進行協調的表格。另外，友好提醒我們，我們將在這次電話會議上發表的聲明不是歷史事實，而是前瞻性的。

These statements involve a number of risks and uncertainties, including those described in our filings with the SEC. Also note, during this call, we will be providing full-year 2024 guidance, which excludes unforeseen impacts from these risks and uncertainties. We do not undertake any obligation to update these forward-looking statements.

這些聲明涉及許多風險和不確定性，包括我們向 SEC 提交的文件中所述的風險和不確定性。另請注意，在本次電話會議中，我們將提供 2024 年全年指導，其中排除了這些風險和不確定性帶來的不可預見的影響。我們不承擔更新這些前瞻性聲明的任何義務。

It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric?

現在我很高興將電話轉給我們的總裁兼執行長 Eric Vaillancourt。艾瑞克？

Thanks, James, and good morning, everyone. Thank you for joining us today as we review our third-quarter results and updated outlook for the balance of 2024. Third-quarter sales were up year over year and up slightly organically, despite persistent softness in more than half of our served markets. Aftermarket or recurring revenue solutions comprise 54% of our revenue year-to-date, which provides underlying stability to our portfolio, enables us to perform well in a variety of demand environments.

謝謝詹姆斯，大家早安。感謝您今天加入我們，我們將回顧第三季業績並更新 2024 年的展望。儘管我們服務的一半以上市場持續疲軟，但第三季銷售額年增，並且略有有機成長。售後或經常性收入解決方案占我們今年迄今收入的 54%，這為我們的產品組合提供了潛在的穩定性，使我們能夠在各種需求環境中表現良好。

Our results have been quite good even in the face of demand headwinds in certain large served markets. Overall, consolidated adjusted EBITDA margin was a healthy 24.6%, demonstrating the inherent strength and balance in the Enpro portfolio.

即使在某些大型服務市場面臨需求逆風的情況下，我們的業績也相當不錯。整體而言，綜合調整後 EBITDA 利潤率為 24.6%，顯示 Enpro 投資組合的內在優勢和平衡。

Our teams are motivated and working hard, excited by our vision and our strategy for long-term growth. Our long-term vision is for revenue growth in the sealing technologies segment to be in the mid-single-digit range and AST to grow in the high single-digit range. Both segments have demonstrated the ability to generate 30% adjusted EBITDA margins, plus or minus 250 basis points, depending on the macroeconomic environment and mix.

我們的團隊積極主動、努力工作，對我們的願景和長期成長策略感到興奮。我們的長期願景是密封技術領域的收入成長在中個位數範圍內，AST 在高個位數範圍內成長。這兩個部門都已證明有能力產生 30% 的調整後 EBITDA 利潤率，上下浮動 250 個基點，具體取決於宏觀經濟環境和組合。

We plan on achieving this consistently by investing in a number of areas where we are strongest, while implementing our continuous improvement playbook that will optimize our performance over time. We would like to thank our colleagues across the company for their commitment to our core values of safety, excellence and respect while remaining motivated and agile as we provide critically important solutions to our customers.

我們計劃透過投資我們最擅長的一些領域來持續實現這一目標，同時實施我們的持續改進手冊，隨著時間的推移優化我們的績效。我們要感謝全公司的同事對我們安全、卓越和尊重的核心價值的承諾，同時在我們為客戶提供至關重要的解決方案時保持積極性和敏捷性。

Now on to our third-quarter performance. After my review, I will turn the call over to Joe for a more detailed discussion of our results and our revised outlook for the balance of the year. Operating performance in the sealing technologies segment was solid in the third quarter with 4.5% sales growth and consistent profitability despite steep declines in commercial vehicle OEM sales.

現在談談我們的第三季業績。經過審核後，我會將電話轉給喬，以便更詳細地討論我們的業績以及我們對今年剩餘時間的修訂前景。儘管商用車 OEM 銷售額急劇下降，但第三季密封技術領域的營運表現依然穩健，銷售額成長 4.5%，獲利能力維持穩定。

At AST, while we delivered a 5% sequential improvement in sales, profitability was flat, both year over year and sequentially. We continue to see areas of strength, particularly in our precision cleaning solutions tied to advanced chip production. Demand, however, continues to be choppy for the remainder of the semiconductor business, which has broad exposure to the semiconductor capital equipment spending.

在 AST，雖然我們的銷售額環比增長了 5%，但盈利能力同比和環比持平。我們繼續看到優勢領域，特別是與先進晶片生產相關的精密清潔解決方案。然而，半導體業務的其餘部分的需求繼續波動，這些業務在半導體資本設備支出方面存在廣泛的風險。

In sealing technologies, adjusted segment EBITDA margins expanded 300 basis points to 32.7%. Continuous improvement initiatives, effective supply chain management, and favorable mix contributed to another strong quarterly result.

在密封技術領域，調整後的部門 EBITDA 利潤率擴大了 300 個基點，達到 32.7%。持續的改善措施、有效的供應鏈管理和有利的組合促成了另一個強勁的季度業績。

As a reminder, our continued positive momentum and profitability in sealing technologies reflects the underlying strength of the segment. We have created a firm foundation for profitable growth by focusing on applied engineering differentiation, compelling aftermarket characteristics, incremental investment in organic growth, and a strong continuous improvement culture. Additionally, we continue to pursue strategic opportunities in adjacent markets that build upon our core competencies and safeguarding critical environments.

提醒一下，我們在密封技術方面持續的積極勢頭和盈利能力反映了該領域的潛在實力。透過專注於應用工程差異化、引人注目的售後市場特徵、有機成長的增量投資以及強大的持續改進文化，我們為獲利成長奠定了堅實的基礎。此外，我們繼續在鄰近市場尋求策略機會，這些機會建立在我們的核心競爭力和保護關鍵環境的基礎上。

Our outlook for the segment remains positive. In the advanced surface technologies segment, revenue improved 3.5% year over year and 5% sequentially. Adjusted segment EBITDA margin, however, narrowed both year over year and sequentially, driven mainly by shifting demand profiles for wafer fab equipment.

我們對該領域的前景仍然樂觀。在先進表面技術領域，營收年增 3.5%，季增 5%。然而，調整後的部門 EBITDA 利潤率同比和環比均有所收窄，這主要是由於晶圓廠設備的需求狀況改變。

Strategic growth investments, especially for precision cleaning solutions and operational improvement initiatives proceed as we continue to position AST for long-term growth. We are beginning to lap year-over-year AST sales but see a more protracted recovery than we previously expected. We continue to see strength in areas tied to advanced node chip production. Orders for equipment and certain key solutions such as coating were choppier than we expected as the third quarter progressed.

隨著我們繼續將 AST 定位於長期成長，策略性成長投資，特別是精密清潔解決方案和營運改善計畫的投資也持續進行。我們的 AST 銷售額開始年比下滑，但復甦時間比我們之前預期的要長。我們繼續看到與先進節點晶片生產相關的領域的實力。隨著第三季的進展，設備和某些關鍵解決方案（例如塗層）的訂單比我們預期的更加波動。

Overall, capacity utilization remains low across the industry, currently resulting in slow semiconductor capital equipment spending. Long term, we are focused on executing our multiyear strategy to drive AST's growth in attractive markets while building differentiated capabilities and efficiency improvements that showcase our technological and process advantages and provide our customers with essential value in the semiconductor supply chain.

整體而言，整個產業的產能利用率仍然較低，目前導致半導體資本設備支出緩慢。從長遠來看，我們專注於執行我們的多年策略，以推動AST 在有吸引力的市場中的成長，同時建立差異化的能力和效率改進，以展示我們的技術和流程優勢，並為我們的客戶在半導體供應鏈中提供重要價值。

Our balance sheet remains in excellent shape. Our free cash flow generation and strong underlying returns on investment enable us to pursue a variety of growth opportunities, both organically and through strategic acquisitions. We are adjusting our outlook to reflect the slower finish to 2024 than previously expected. Our strong execution and disciplined capital allocation will continue as we drive our value-creating strategy forward.

我們的資產負債表保持良好狀態。我們產生的自由現金流和強勁的潛在投資回報使我們能夠透過有機成長和策略收購來尋求各種成長機會。我們正在調整我們的展望，以反映 2024 年結束速度比之前預期要慢。隨著我們推動價值創造策略的發展，我們將繼續保持強大的執行力和嚴格的資本配置。

Joe?

喬？

Thank you, Eric, and good morning, everyone. Let's now go into the details of our third-quarter performance. In the third quarter, sales of $260.9 million increased 4% compared to the prior year, with organic sales up slightly. We saw strong sealing technologies performance overall and year-over-year sales growth at AST despite steep declines in commercial vehicle OEM and slow capital equipment sales in portions of our semiconductor business.

謝謝你，艾瑞克，大家早安。現在讓我們詳細了解第三季的業績。第三季銷售額為 2.609 億美元，較去年同期成長 4%，有機銷售額略有成長。儘管商用車原始設備製造商急劇下降且部分半導體業務的資本設備銷售放緩，但 AST 的密封技術總體表現強勁，銷售額同比增長。

Third-quarter adjusted EBITDA of $64.1 million increased 11% compared to the prior year period. Adjusted EBITDA margin of 24.6% expanded 160 basis points, driven by strong performance in sealing technologies. Growth initiatives on new products and investments in our differentiated capabilities continued, along with ongoing continuous improvement discipline and supply chain efficiency.

第三季調整後 EBITDA 為 6,410 萬美元，較去年同期成長 11%。受密封技術強勁表現的推動，調整後 EBITDA 利潤率為 24.6%，擴大了 160 個基點。新產品的成長計畫和對我們差異化能力的投資持續進行，同時不斷改善紀律和供應鏈效率。

Corporate expense of $10.3 million in the third quarter of 2024 increased from $9.8 million a year ago. The increase was primarily due to an increase in share price-based incentive compensation expense, partially offset by lower current year annual incentive compensation accruals and lower professional expenses. Adjusted diluted earnings per share of $1.74 increased 10%, largely driven by the factors that drove the adjusted EBITDA improvement year on year.

2024 年第三季的企業支出為 1,030 萬美元，高於一年前的 980 萬美元。這一增長主要是由於基於股價的激勵薪酬費用的增加，部分被本年度應計激勵薪酬的減少和專業費用的減少所抵消。調整後稀釋每股收益為 1.74 美元，成長 10%，這主要是由於推動調整後 EBITDA 同比改善的因素推動的。

Moving to a discussion of segment performance. Sealing technologies sales of $169 million increased 4.5% and organic sales were relatively flat. General industrial sales increased year over year, driven by a demand recovery in Europe and firm North American performance offsetting tepid Asian markets. In addition to our solid general industrial performance, improved food and pharma sales and firm nuclear sales offset steep declines in commercial vehicle OEM revenue. Strategic pricing actions and the acquisition of AMI completed in January this year also contributed. Aftermarket sales comprised 63% of total segment revenue.

接下來討論分部績效。密封技術銷售額為 1.69 億美元，成長 4.5%，有機銷售額相對持平。在歐洲需求復甦和北美強勁表現抵消亞洲市場不溫不火的推動下，一般工業銷售額較去年同期成長。除了我們穩健的一般工業績效外，食品和藥品銷售的改善以及核電銷售的穩定抵消了商用車原始設備製造商收入的急劇下降。策略定價行動和今年 1 月完成的 AMI 收購也做出了貢獻。售後市場銷售額佔部門總收入的 63%。

For the third quarter, adjusted segment EBITDA increased 15%. Strategic pricing, continuous improvement initiatives, the contribution from AMI and improved aftermarket mix drove the segment's profit growth during the period.

第三季度，調整後的部門 EBITDA 成長了 15%。策略定價、持續改進計劃、AMI 的貢獻和改善的售後市場組合推動了該部門在此期間的利潤成長。

Adjusted segment EBITDA margin was 32.7% in the third quarter, up 300 basis points. Sealing delivered adjusted segment EBITDA margins around 33%. As we have said since the beginning of the year, we expect to return to normal seasonal patterns in 2024, where the fourth quarter usually represents the low point of sales and adjusted EBITDA for the segment. We are excited about the number of drivers of long-term growth and value creation in sealing technologies, as we focus on expanding opportunities through growth investments and strategic acquisitions.

第三季調整後的部門 EBITDA 利潤率為 32.7%，上升 300 個基點。Sealing 調整後的部門 EBITDA 利潤率約為 33%。正如我們自今年年初以來所說，我們預計 2024 年將恢復正常的季節性模式，其中第四季度通常代表該細分市場的銷售和調整後 EBITDA 的低點。我們對密封技術長期成長和價值創造的眾多驅動因素感到興奮，因為我們專注於透過成長投資和策略性收購來擴大機會。

Turning now to the advanced surface technologies segment. Third-quarter sales of $92.5 million were up 3.5% year over year and up 5% sequentially. We saw growth in precision cleaning solutions tied to advanced node chip production, supporting applications such as artificial intelligence and high-bandwidth memory. However, demand for capital equipment, coatings and optical filters remains choppy.

現在轉向先進表面技術領域。第三季銷售額為 9,250 萬美元，年增 3.5%，季增 5%。我們看到與先進節點晶片生產相關的精密清潔解決方案的成長，支援人工智慧和高頻寬記憶體等應用。然而，對資本設備、塗料和光學濾光片的需求仍然不穩定。

Market forecasts from a variety of sources suggest that while the overall semiconductor market is in a strong secular growth position long term, the timing and magnitude of an overall recovery in capital equipment spending continues to evolve and move to the right, and we are seeing similar dynamics play out for us in the near term.

來自各種來源的市場預測表明，雖然整體半導體市場長期處於強勁的長期增長狀態，但資本設備支出整體復甦的時機和幅度繼續發展並向右移動，我們看到了類似的情況短期內我們將看到動態。

In the third quarter, adjusted segment EBITDA was flat year on year. Adjusted segment EBITDA margin was 20.8%, down 80 basis points from last year and 90 basis points sequentially. While we saw segment revenue increase, fixed cost deleveraging tied to slow wafer fab equipment demand and operating expense increases tied to growth investments crimped segment margins during the third quarter.

第三季度，調整後的分部 EBITDA 年比持平。調整後分部 EBITDA 利潤率為 20.8%，比去年下降 80 個基點，比上一季下降 90 個基點。雖然我們看到部門收入有所成長，但與晶圓廠設備需求放緩相關的固定成本去槓桿化以及與成長投資相關的營運費用增加抑制了第三季的部門利潤率。

We expect these dynamics to continue into the fourth quarter, and expenses associated with the qualification work for advanced node applications are expected to accelerate. Throughout the downturn, we have invested in targeted capacity expansions that will position AST well as the semiconductor market resumes a growth trajectory. As well as our AST platform matures, we are implementing select continuous improvement and optimization initiatives, a playbook underlying the success of the sealing technologies platform.

我們預計這些動態將持續到第四季度，與先進節點應用的資格認證工作相關的費用預計將加速。在整個經濟低迷時期，我們投資了有針對性的產能擴張，這將使 AST 在半導體市場恢復成長軌跡時處於有利地位。隨著我們的 AST 平台的成熟，我們正在實施精選的持續改進和優化舉措，這是密封技術平台成功的基礎。

Turning to the balance sheet and cash flow. At the end of the third quarter, our net leverage ratio stood at 1.8 times trailing 12-month adjusted EBITDA. Free cash flow year-to-date was approximately $83 million, down from about $134 million last year. Timing of working capital and higher cash tax payments compared to last year were the primary drivers of the year-over-year reduction. For the year, we expect free cash flow to exceed $110 million.

轉向資產負債表和現金流量。截至第三季末，我們的淨槓桿比率為過去 12 個月調整後 EBITDA 的 1.8 倍。今年迄今的自由現金流約為 8,300 萬美元，低於去年的約 1.34 億美元。與去年相比，營運資金的時機和現金稅的支付增加是年減的主要驅動因素。我們預計今年自由現金流將超過 1.1 億美元。

We are reducing our CapEx forecast for 2024 to around $40 million versus our previous expectation of $60 million. Progress continues to be made on technical innovation for a number of leading-edge applications, supporting critical in-chamber tools in addition to other exciting growth projects across the company, but spending will be more phased than previously expected. We continue to be excited about our pipeline of organic growth opportunities as we invest to drive long-term high-margin growth.

我們將 2024 年的資本支出預測下調至 4,000 萬美元左右，而先前的預期為 6,000 萬美元。許多前沿應用的技術創新繼續取得進展，除了整個公司其他令人興奮的成長項目之外，還支持關鍵的室內工具，但支出將比之前的預期更加分階段。當我們投資推動長期高利潤成長時，我們繼續對我們的有機成長機會感到興奮。

We have strong financial flexibility to execute our strategic initiatives, both organically and through acquisitions that broaden our capabilities, while continuing to return capital to shareholders. In the third quarter, we paid a $0.30 per share quarterly dividend with year-to-date payments totaling $19 million. Finally, last week, the Enpro Board of Directors renewed our two-year $50 million share repurchase authorization that recently expired.

我們擁有強大的財務靈活性，可以透過有機方式和透過收購擴大我們的能力來執行我們的策略舉措，同時繼續向股東返還資本。第三季度，我們支付了每股 0.30 美元的季度股息，年初至今支付總額為 1,900 萬美元。最後，上週，Enpro 董事會續簽了最近到期的為期兩年、價值 5,000 萬美元的股票回購授權。

(technical difficulty) Taking into consideration all the factors that we know at this time, we are reducing our full-year 2024 earnings guidance ranges, and we also now expect total Enpro sales to be down low single digits compared to 2023 versus our previous revenue guidance of approximately flat.

（技術難度）考慮到我們目前所知的所有因素，我們正在降低 2024 年全年盈利指導範圍，並且我們現在還預計 Enpro 總銷售額與 2023 年相比將比我們之前的收入下降低個位數指引大致持平。

The primary factors in adjusting our sales view are slower sales in AST, given variability in orders for wafer fab equipment and coatings lines for the fourth quarter, and continued weakness in commercial vehicle OEM sales in sealing technologies. We now expect adjusted EBITDA of between $250 million to $255 million and adjusted diluted earnings per share to range from $6.75 to $7, versus our previous view of $260 million to $270 million and $7 to $7.60, respectively. Normalized tax rate used to calculate adjusted diluted earnings per share remains at 25% and shares outstanding approximate 21 million.

調整我們銷售觀點的主要因素是 AST 銷售放緩，考慮到第四季度晶圓廠設備和塗層生產線訂單的變化，以及商用車 OEM 密封技術銷售的持續疲軟。我們目前預計調整後 EBITDA 為 2.5 億至 2.55 億美元，調整後攤薄每股收益為 6.75 美元至 7 美元，而我們先前預期的分別為 2.6 億至 2.7 億美元和 7 至 7.60 美元。用於計算調整後稀釋每股盈餘的標準化稅率仍為 25%，流通股數約為 2,100 萬股。

In AST, we expect current soft demand conditions to persist into 2025. Lower-than-expected demand for critical in-chamber tools, lower shorter-cycle orders and coatings, and accelerated growth spending related to qualification work for leading-edge applications will drive AST segment profitability down in the mid-single-digit range for the fourth quarter.

在 AST 中，我們預計當前的需求疲軟狀況將持續到 2025 年。對關鍵室內工具的需求低於預期、較短週期訂單和塗層的減少以及與前沿應用資格工作相關的加速增長支出將推動 AST 細分市場的盈利能力下降至中個位數範圍。 。

In sealing technologies, we continue to see a resilient backdrop during the seasonally low period, although commercial vehicle OEM sales will remain weaker than previously expected. Fourth-quarter sealing results will represent the lowest point of the year, while still showing strong profitability.

在密封技術方面，我們在季節性低迷時期繼續看到彈性背景，儘管商用車 OEM 銷售仍將弱於先前的預期。第四季的密封業績將代表今年的最低點，但仍顯示出強勁的獲利能力。

I will now turn the call back to Eric for closing comments.

我現在將把電話轉回埃里克以徵求結束意見。

Thanks, Joe. While near-term pressures in semiconductor and commercial vehicle OEM demand caused us to adjust our full-year view, our balanced portfolio generates attractive margins and cash flow returns. We are advancing numerous opportunities to further optimize Enpro operationally while investing in attractive opportunities to drive long-term high-margin growth.

謝謝，喬。雖然半導體和商用車 OEM 需求的近期壓力導致我們調整了全年預期，但我們平衡的投資組合產生了有吸引力的利潤和現金流回報。我們正在推進大量機會，以進一步優化 Enpro 的運營，同時投資有吸引力的機會，以推動長期高利潤成長。

Our balance sheet is in great shape, and we continue to build upon the strong foundation that we have for driving long-term value creation. Every day, we deliver critical leading-edge solutions for our customers that safeguard critical environments and applications that meaningful impact our lives.

我們的資產負債表狀況良好，我們將繼續為推動長期價值創造奠定堅實的基礎。我們每天都為客戶提供關鍵的前沿解決方案，以保護對我們的生活產生重大影響的關鍵環境和應用程式。

Thank you again for joining us today. There is no better time to be part of Enpro. I'll now welcome your questions.

再次感謝您今天加入我們。現在是加入 Enpro 的最佳時機。我現在歡迎您提出問題。

(Operator Instructions) Jeff Hammond, KeyBanc Capital Markets.

（操作員指令）Jeff Hammond，KeyBanc 資本市場。

Good morning everyone. So maybe just to start with semiconductor. We've kind of seen from peers that it's taking longer to inflect. Just wondering what you're seeing from an order funnel conversation with customers to kind of frame maybe early thinking on 2025. Is this kind of a slow bounce off the bottom? Or do we finally see more meaningful inflection?

大家早安。所以也許只是從半導體開始。我們從同行那裡看到，它需要更長的時間才能改變。只是想知道您從與客戶的訂單漏斗對話中看到了什麼，以形成 2025 年的早期思考框架。這是底部的緩慢反彈嗎？或者我們最終會看到更有意義的改變嗎？

Well, Jeff, the way I would describe it is still being choppy. As you said, maybe a slow rebound from the bottom. But at this point, it's just -- people are just pulling in their horns a little conservative. We've looked at the announcements with some of the leading IDM or one of the leading IDMs in the third quarter to create a little bit of uncertainty, and our customers are just being cautious. So right now, our demand profile just keeps bouncing around a little bit.

好吧，傑夫，我描述它的方式仍然是不穩定的。正如你所說，也許是從底部緩慢反彈。但在這一點上，人們只是有點保守。我們查看了一些領先的 IDM 或領先的 IDM 之一在第三季度發布的公告，發現了一些不確定性，而我們的客戶只是保持謹慎。所以現在，我們的需求狀況一直在小幅波動。

Jeff, I was just going to add, yes, I mean, the build plans that we see from our key customers are just moving around. As Eric mentioned, a couple of the dynamics have caused our customers to kind of retrench on inventory a little bit and kind of wait out that uncertainty. So as things move into 2025, we kind of expect these conditions to remain through the beginning of the year. After that, we just don't have good visibility right now into what the rest of the market will do.

傑夫，我只是想補充一點，是的，我的意思是，我們從主要客戶那裡看到的構建計劃只是在變化。正如艾瑞克所提到的，一些動態導致我們的客戶稍微削減庫存，並等待這種不確定性過去。因此，隨著事情進入 2025 年，我們預計這些情況將持續到今年年初。在那之後，我們現在還不清楚市場的其他部分會做什麼。

I think, Jeff, just to add to it, we had a customer meeting. And at one point, they were happy with the inventory they had. And then as the quarter went on, I think they're doing a little bit more destocking based on some recent customer news. And so there's a little bit more destocking than [there was previously].

我想，傑夫，補充一下，我們舉行了一次客戶會議。一度，他們對自己擁有的庫存感到滿意。然後隨著本季的繼續，我認為他們根據最近的一些客戶新聞進行了更多的去庫存工作。所以去庫存比【之前有過】。

Okay. That's really good color. Shifting gears to sealing. Maybe just level set us on your nuclear business, how big it is today. And just there's been kind of a lot of news flow around resurgence in nuclear and some announcements around data centers and just wanted to understand better how you think you might participate in that resurgence.

好的。這顏色確實不錯啊轉向密封。也許只是讓我們了解一下你們的核能業務，它今天有多大。只是有很多關於核能復甦的新聞和一些關於資料中心的公告，我只是想更了解你認為你可能如何參與這種復甦。

Nuclear business for us is about 7% of sales. That's where it is today. It's obviously good for us. At the same time, it's not going to change our trajectory fundamentally. When you look at the average reactor in terms of the content we have, it's significant to us, but at the same time, it's not going to be significant to the portfolio to our nuclear business. It's good, but it's not going to create double-digit growth for Enpro or anything like that.

核能業務對我們來說約佔銷售額的7%。這就是今天的情況。這顯然對我們有好處。同時，它不會從根本上改變我們的軌跡。當你從我們擁有的內容來看平均反應爐時，它對我們很重要，但同時，它對我們的核子業務組合並不重要。這很好，但不會為 Enpro 或類似公司帶來兩位數的成長。

So we have the seals for the [reactor pretzel vessels] and while that's substantial, there's only two of them, and they buy two or three at a time, and they replace them every couple of years. So it's not going to be what you would consider a home run. So it's substantial and it's a good profitable business, and it's a great long-term solution. And as we get in the small modular reactors, there will be more and more of them.

所以我們有[反應器椒鹽捲餅容器]的密封件，雖然數量很大，但只有兩個，他們一次購買兩到三個，每隔幾年更換一次。所以這不會是你認為的全壘打。因此，它是一項規模龐大、利潤豐厚的業務，也是一個很好的長期解決方案。隨著我們進入小型模組化反應堆，它們的數量將會越來越多。

At the same time, I don't want people building in a huge increase for nuclear that's likely not going to be that for us. It will be consistent long-term steady growth that's very profitable.

同時，我不希望人們大幅增加核電建設，這對我們來說可能不會。持續的長期穩定成長將是非常有利可圖的。

When we think about the structure of the sealing technologies segment, I mean, nuclear and sustainable power generation are just one of many growth nodes that when we talk about the dynamism of the segment, we put together five or six kind of [bonds] singles and doubles that can kind of build that organic growth dynamic into that mid-single-digit range long term, and our teams are working really hard to make sure that we deliver that level of performance, complemented by incremental strategic acquisitions that expand our capabilities to customers.

當我們考慮密封技術領域的結構時，我的意思是，核能和可持續發電只是眾多增長節點之一，當我們談論該領域的活力時，我們將五六種[債券]單項放在一起從長遠來看，這可以將有機成長動力建立在中個位數範圍內，我們的團隊正在非常努力地工作，以確保我們提供這種水平的績效，並輔以增量策略收購，從而擴展我們的能力顧客。

Steve Ferazani, Sidoti & Company.

史蒂夫·費拉扎尼 (Steve Ferazani)，Sidoti & Company。

Good morning, everyone. I appreciate all the detail on the call this morning. I wanted to ask about part of the margin softening on ASTs related to increased spending for growth initiatives. And then I know, Joe, you mentioned expecting accelerated spending on the certification process in 4Q. Can you walk us through those two elements?

大家早安。我很欣賞今天早上電話中的所有細節。我想問與成長計畫支出增加相關的 AST 利潤率疲軟的部分情況。然後我知道，喬，您提到預計第四季度認證流程的支出會加速。能為我們介紹一下這兩個要素嗎？

Yes. So our progress in Arizona has gone quite well operationally, right? We've executed the build-out of that facility quite well and we're actually a little bit ahead of schedule there. So working with our key customers, we've accelerated the qualification for leading-edge node cleaning and so we can demonstrate copy exact into that Arizona facility and we're kind of pulling that work into 2024 a little bit more than previously expected. So that's going to put a little bit of cost ahead of demand in 2025 into the fourth quarter. And that's why I said some of that is accelerating.

是的。所以我們在亞利桑那州的進展在操作上進展順利，對嗎？我們已經很好地完成了該設施的建設，而且實際上比計劃提前了一點。因此，我們與主要客戶合作，加快了前沿節點清潔的資格認證，因此我們可以在亞利桑那州的工廠中演示精確複製，我們將這項工作推遲到 2024 年，比之前的預期要多一些。因此，這將在 2025 年第四季的需求之前增加一些成本。這就是為什麼我說其中一些正在加速。

Remember, this is just Phase 1 of the work we're doing in Arizona, and we're very excited by that, but we've accelerated some of the qualification work and early returns are quite positive there. So we're just pulling some of that into 2024.

請記住，這只是我們在亞利桑那州所做工作的第一階段，我們對此感到非常興奮，但我們已經加快了一些資格認證工作，並且早期回報非常積極。所以我們只是將其中的一部分推遲到 2024 年。

I said the other factors are we're implementing our operational excellence playbook in the AST group. So what you're seeing is investment ahead of the value that will come later on. You're seeing it in terms of things like improving our inspection process, our cost of performance is lower. We've had some -- recently some very significant innovation in both our optical business and also our semiconductor business, where some automation has reduced inspection time from hours to minutes in some cases.

我說過其他因素是我們正在 AST 團隊中實施我們的卓越營運手冊。所以你看到的是投資先於隨後出現的價值。您可以從改進我們的檢查流程等方面看到，我們的效能成本更低。最近，我們的光學業務和半導體業務都進行了一些非常重大的創新，在某些情況下，一些自動化將檢查時間從幾小時縮短到幾分鐘。

And so things like that along with some little facility consolidation, moving some equipment around to get more of a positive flow throughout the factories. You saw the success of those initiatives in our sealing technologies businesses, and we're just getting started really on the AST platform. So all that takes extra investment ahead of the benefit that comes from it.

諸如此類的事情，以及一些小型設施整合，移動一些設備，以在整個工廠中獲得更多的積極流動。您在我們的密封技術業務中看到了這些舉措的成功，而我們在 AST 平台上才剛剛真正開始。因此，所有這些都需要額外的投資才能帶來收益。

At the same time, it's a slower time in the industry. And so you've got a lot of people who are trying to keep busy. We have been working on very meaningful projects. We don't get time to do when things are busy. And so we have the cost of those initiatives without the benefit at this point. But those benefits will flow in over time. And as we said earlier, that business will rebound to be 30% EBITDA plus or minus a couple of 150 basis points, depending on the mix and volume at the time. So we're still really excited about that business.

同時，現在是產業發展放緩的時期。所以有很多人都在努力保持忙碌。我們一直致力於非常有意義的專案。當事情很忙時，我們沒有時間做事。因此，目前我們已經付出了這些措施的成本，但沒有帶來任何好處。但隨著時間的推移，這些好處將會逐漸顯現。正如我們之前所說，該業務將反彈至 30% EBITDA 加減 150 個基點，具體取決於當時的組合和數量。所以我們仍然對這項業務感到非常興奮。

Great. And if I could just ask about the expected ramp on Arizona, the certification process, when you would expect to see meaningful revenue generation out of that operation.

偉大的。如果我可以問一下亞利桑那州的預期成長、認證過程，您預計何時會從該業務中看到有意義的收入。

Yes, I guess the best answer we could give you right now is you may have saw the press report yesterday that talked about one of our key customers mentioning they're starting up a ramp on four-nanometer sometime in the middle of 2025. And that would drive some of our volume at that time. But I don't expect full ramp personally until '26.

是的，我想我們現在可以給您的最佳答案是您可能已經看到了昨天的新聞報道，其中談到我們的一位主要客戶提到他們將在2025 年中期的某個時候啟動四奈米工藝的升級。這將推動我們當時的部分銷售。但我個人預計要到 26 年才會全面啟動。

Yes. Okay. That's helpful. When you bought Alluxa, you talked a lot about that being really customers came to Alluxa because of their strong reputation for doing a very specific custom build which they didn't have to market themselves. Have you flipped that at all? Are you trying to more aggressively market the capabilities of Alluxa now given the recent weak demand over the last multiple months?

是的。好的。這很有幫助。當你購買 Alluxa 時，你談到了很多真正的客戶之所以來到 Alluxa，是因為他們在進行非常具體的客製化建置方面享有盛譽，而他們不必推銷自己。你完全翻轉了嗎？鑑於過去幾個月需求疲軟，您是否正在嘗試更積極地推銷 Alluxa 的功能？

We wouldn't have flipped it. We're still investing in the same places they were, and those opportunities are coming back now. As I said before in previous calls, they had a blip really because of COVID, people stopped traveling and stopped doing new projects. Everybody is working from home. That just caused -- it's like a snake swallowing a large animal.

我們不會翻轉它。我們仍然在原來的地方進行投資，這些機會現在又回來了。正如我之前在之前的電話中所說，他們確實因為新冠疫情而出現了短暫的波動，人們停止了旅行並停止了新專案。每個人都在家工作。這就導致了──就像一條蛇吞掉了一隻大型動物。

And so they had this bulge that went through or this bulge that went through without something behind it. The pipeline is now very active and we've had some very significant customer wins in the last few months. And so that business is starting to improve dramatically.

所以他們有這個穿過的凸起，或是這個穿過的凸起後面沒有任何東西。該管道現在非常活躍，在過去幾個月中我們贏得了一些非常重要的客戶。因此，業務開始顯著改善。

There are several end markets that Alluxa could be successful in, and they have a very diversified customer base. But some of the areas of strength are in free space communications, certain new space applications, semiconductor areas as well. So the outlook remains steady for Alluxa for us, and they continue to be a top of the pyramid business in the industry.

Alluxa 可以在多個終端市場取得成功，並且擁有非常多元化的客戶群。但一些優勢領域是自由空間通訊、某些新的空間應用以及半導體領域。因此，我們對 Alluxa 的前景保持穩定，他們仍然是產業金字塔頂端的企業。

Their life sciences surgical applications have also taken up recently again.

他們的生命科學外科應用最近也再次興起。

Great. Last one for me. One, you lowered CapEx. Just what do you -- what spending is not taking place? And then two, seeing some debt reduction, does that ramp up debt reduction, if you're lowering CapEx?

偉大的。最後一張給我。第一，你降低了資本支出。你到底在做什麼──哪些支出沒有發生？第二，看到債務減少，如果你降低資本支出，這是否會增加債務減少？

Yes, Steve. So yes, as you said, we lowered our CapEx guide to $40 million. Frankly, we probably overestimated our ability to execute a little bit on CapEx going into this year. Our capacity is probably more in the $40 million to $50 million range.

是的，史蒂夫。所以，是的，正如您所說，我們將資本支出指南降低至 4000 萬美元。坦白說，我們可能高估了我們今年執行資本支出的能力。我們的產能可能在 4,000 萬至 5,000 萬美元之間。

At the same time, there's some really advanced work we're doing on gas dispersion equipment. And so our engineering teams have been working on that in multiple locations. And based on the innovation that's coming through that and some of the learnings, it's probably better to phase some of that over time, and it will ultimately result in a more advanced solution, a more optimized solution at the end.

同時，我們正在氣體分散設備方面進行一些非常先進的工作。因此，我們的工程團隊一直在多個地點進行這方面的工作。基於由此產生的創新和一些經驗教訓，隨著時間的推移，分階段進行一些創新可能會更好，最終產生更先進的解決方案，最終得到更優化的解決方案。

So even though some of that was a little bit ahead of ourselves, it will result in a better ultimate solution because we're going to phase some of that spending over multiple periods there. I think going forward, we're always going to prioritize organic investments and prioritize investments in M&A from a capital allocation standpoint, and those are going to be our two primary areas that we're investing in.

因此，儘管其中一些有點超出了我們的預期，但這將帶來更好的最終解決方案，因為我們將在多個時期內分階段進行部分支出。我認為，展望未來，從資本配置的角度來看，我們始終會優先考慮有機投資和併購投資，而這些將是我們投資的兩個主要領域。

We're not, at the current moment, looking to act on other legs of capital allocation, and the majority of our focus will be on organic and inorganic growth.

目前，我們不打算在資本配置的其他方面採取行動，我們的主要重點將放在有機和無機成長上。

Yes. I mean, we're going to generate well over $110 million of free cash flow in 2024 partially driven by the fact that we have a lower CapEx budget. And as we look forward, from a percentage of revenue perspective, we'd like to put about 3.5% to 4% of revenue to work in capital spending, two-thirds of which will be focused on high-margin growth projects.

是的。我的意思是，我們將在 2024 年產生超過 1.1 億美元的自由現金流，部分原因是我們的資本支出預算較低。展望未來，從收入百分比的角度來看，我們希望將約 3.5% 至 4% 的收入用於資本支出，其中三分之二將專注於高利潤成長項目。

(Operator Instructions) Ian Zaffino, Oppenheimer & Co.

（操作員說明）Ian Zaffino，Oppenheimer & Co.

I just wanted to drill down on AST a little bit more. Where exactly are you seeing that weakness? Is it very leading edge or less so? And maybe what has kind of moved against you in that kind of spectrum?

我只是想更深入地了解 AST。您到底在哪裡看到了這個弱點？它是非常領先還是不太領先？也許在這種範圍內什麼對你不利？

I think you said was it leading edge. I didn't hear the first part of your question.

我想你說的是它的前沿。我沒有聽到你問題的第一部分。

Yes, exactly. Where are you kind of seeing the difference? Where are things weaker than you had expected? Is it kind of on the leading edge, non-leading edge? Exactly where is it?

是的，完全正確。您在哪裡看到差異？哪些地方比你預想的還要弱？它是處於前沿還是非前沿？到底在哪裡？

The leading-edge cleaning and applications are very, very strong. And so everything leading edge, we're doing very well within our cleaning and refurbishment business and new product testing as well. On the legacy pieces and the capital equipment spending, which some of that does go to leading edge as well. So it's hard to break it out and say this much is leading edge and this much is trailing edge. That's where it's a little bit slower. They're still not -- the factories still aren't fully utilized. And so when utilization rates go up, they'll buy more equipment. But that's the slowest piece of it.

前沿的清潔和應用非常非常強大。因此，一切都處於領先地位，我們在清潔和翻新業務以及新產品測試方面做得非常好。在遺留部件和資本設備支出上，其中一些也確實達到了領先水準。因此，很難區分出這麼多是前沿，這麼多是後緣。這就是速度慢一點的地方。但他們仍然沒有——工廠仍然沒有充分利用。因此，當利用率上升時，他們會購買更多設備。但這是最慢的部分。

We also saw a little incremental weakness in coatings compared to certain -- just the order flow is a little choppier than we had initially felt in that Q2 throughout this quarter as well. And those tend to be shorter cycle product and solution lines that just kind of move around a little bit.

與某些塗料相比，我們還看到塗料方面出現了一些逐漸疲軟的情況——只是訂單流比我們在本季度第二季度最初感受到的更加不穩定。這些往往是周期較短的產品和解決方案線，只是稍微移動一下。

Okay. And then as we look at like a return to growth in that space or the division, comps definitely get a lot easier, I guess, in the first half of next year. Is that enough to kind of move back into, let's say, positive growth? Or semi cap equipment rebound or just cleaning solution's enough to kind of get you back to positive growth? Thanks.

好的。然後，當我們看到該領域或部門恢復成長時，我想，明年上半年，競爭肯定會變得容易得多。這是否足以讓經濟重新回到正成長狀態？或者半帽設備反彈或只是清潔解決方案足以讓您恢復正成長？謝謝。

I mean, so we were up in AST sequentially 5%. We were up 3.5% year over year. This is the first material quarter of like those lower comps starting to lap. We are still seeing for Q4 just kind of a flattish from Q3 results from a top-line perspective with a little bit of headwinds on the margin like we discussed in the guidance section. I think we're going to see a slow first half, but we're probably kind of still past the lowest point because there are dynamics that should drive a little bit of growth.

我的意思是，我們的 AST 連續上升了 5%。我們年增了 3.5%。這是像那些較低的比較開始圈的第一個物質季度。從營收角度來看，我們仍然看到第四季度的業績與第三季的業績持平，但正如我們在指導部分中討論的那樣，邊緣存在一些阻力。我認為上半年我們會看到緩慢的成長，但我們可能仍然已經過了最低點，因為有一些動力應該會推動一些成長。

But in terms of that industry forecasted hockey stick type of acceleration, that likely will not come to fruition, which actually kind of benefits us when we think about balancing our costs with the intermediate demand outlook while still investing in those opportunities for long-term growth.

但就產業預測的曲棍球棒式加速而言，這可能不會實現，當我們考慮平衡成本與中間需求前景，同時仍投資於這些長期成長機會時，這實際上對我們有利。

Yes. I mean the first quarter, we've talked about it this year, represented the bottom for what we expected. And so we've seen slight sequential improvement of demand quarter over quarter. It's just not as much as we originally expected. And so as we go into the fourth quarter and in the first and second quarter of last year, our expectation is that we'll see year-over-year growth. We're just not seeing the sequential substantial improvement that was originally predicted to come in the back half of this year.

是的。我的意思是，我們今年已經討論過第一季度，它代表了我們預期的底部。因此，我們看到需求逐季略有改善。只是沒有我們最初預期的那麼多。因此，當我們進入第四季度以及去年第一季和第二季時，我們的預期是我們將看到同比增長。我們只是沒有看到最初預計在今年下半年出現的連續實質改善。

Yes. Like over the next few quarters, it's just going to be choppy until some of these things kind of come to fruition. That's just the realistic situation at hand for us and many others.

是的。就像接下來的幾個季度一樣，在其中一些事情實現之前，情況將會變得不穩定。這就是我們和許多其他人面臨的現實情況。

Jeff Hammond, KeyBanc Capital Markets.

Jeff Hammond，KeyBanc 資本市場。

Maybe just an update on then AMI integration and just actionability in your M&A pipeline?

也許只是 AMI 整合的更新以及併購管道中的可操作性？

AMI acquisition is a home run by every standard. We're very thrilled with that. That team, Kevin and the team are doing an outstanding job culturally. Every aspect of that business has been just a home run, and we're very excited about it.

AMI 的收購無論從哪個方面來看都是一次本壘打。我們對此感到非常興奮。凱文和整個團隊在文化方面做得非常出色。這項業務的各個方面都堪稱本壘打，我們對此感到非常興奮。

In terms of actionability, we have a robust pipeline we look at all the time. We literally look at opportunities every week. I don't think a week goes by we don't look at something. But we'll remain disciplined, and we're going to find another business similar to AMI at some point here.

就可操作性而言，我們一直在關注強大的管道。我們每週都會尋找機會。我認為我們每個星期都會看一些東西。但我們將保持紀律，並且我們將在某個時候找到另一家與 AMI 類似的業務。

And it seems like things coming to market have kind of picked up. The activity has picked up through the second half quite a bit. So we're seeing more opportunities of things that we've been looking at closely over a softer period now coming to market. So the pipeline is really active, Jeff. And we've got a couple of things that we're really interested in. Nothing that's actionable yet, but we continue to look at key focus areas in sealing technologies for extension opportunities in food and pharma, in test and measurement, and other spaces that we're really interested.

上市的東西似乎有所回升。下半年活動回升。因此，我們看到在疲軟時期一直密切關注的產品有更多機會進入市場。所以，傑夫，管道確實很活躍。我們有一些我們真正感興趣的事情。目前尚無任何可行的方案，但我們將繼續專注於密封技術的關鍵重點領域，以尋找食品和製藥、測試和測量以及我們真正感興趣的其他領域的擴展機會。

AMI is a really good model for the type of business that meets all of our Enpro criteria, both strategic and from a culture and leadership perspective. So we've got a number of opportunities like that in our pipeline that we're hopefully going to execute on here soon.

AMI 對於滿足我們所有 Enpro 標準的業務類型來說是一個非常好的模型，無論是從策略角度還是從文化和領導力角度來看。因此，我們的管道中有很多類似的機會，我們希望很快就能在這裡執行。

Yes. It's just more about timing rather than opportunity set in terms of availability of some of these assets.

是的。就其中一些資產的可用性而言，更多的是時機而不是機會集。

At this time, there are no further questions. And I would like to turn the floor back over to James Gentile for any closing remarks.

目前，沒有其他問題了。我想請詹姆斯詹蒂爾發表結束語。

Thank you for your interest today. Have a terrific day, and see you next quarter.

感謝您今天的關注。祝你有美好的一天，下季見。

That concludes today's conference. Thank you for joining us. You may now disconnect your lines.

今天的會議到此結束。感謝您加入我們。現在您可以斷開線路。