Regal Rexnord Corp (RRX) 2024 Q3 法說會逐字稿

Good morning, and welcome to Regal Rexnord third-quarter 2024 earnings call. (Operator Instructions) Please note, this event is being recorded.

早安，歡迎參加 Regal Rexnord 2024 年第三季財報電話會議。（操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Rob Barry, Investor Relations. Please go ahead.

我現在想將會議交給投資者關係部的 Rob Barry。請繼續。

Great. Thank you, operator. Good morning, and welcome to Regal Rexnord's Third Quarter 2024 Earnings Conference Call. Joining me today are Louis Pinkham, our Chief Executive Officer; and Rob Rehard, our Chief Financial Officer. I'd like to remind you that during today's call, you may hear forward-looking statements related to our future financial results, plans and business operations.

偉大的。謝謝你，接線生。早安，歡迎參加 Regal Rexnord 2024 年第三季財報電話會議。今天加入我的是我們的執行長 Louis Pinkham；以及我們的財務長 Rob Rehard。我想提醒您，在今天的電話會議中，您可能會聽到與我們未來財務表現、計劃和業務運營相關的前瞻性陳述。

Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in today's press release and in our reports filed with the SEC, which are available on the regalrexsnord.com website.

由於多種因素，我們的實際結果可能與預測或暗示的結果有重大差異，我們在今天的新聞稿和向SEC 提交的報告中對此進行了更詳細的描述，這些報告可在regalrexsnord.com 網站上獲取。

Also on this slide, we state that we are presenting certain non-GAAP financial measures that we believe are useful to our investors, and we've included reconciliations between the non-GAAP financial information and the GAAP equivalent in the press release and in these presentation materials. Turning to slide 3, let me briefly review the agenda for today's call. Louis will lead off with his opening comments and overview of our 3Q performance and an update on our powertrain business. Rob Rehard will then present our third quarter financial results in more detail and review our latest guidance. We'll then move on to Q&A, after which, Louis will have some closing remarks.

此外，在這張投影片上，我們還指出，我們正在提出某些我們認為對投資者有用的非GAAP 財務指標，並且我們在新聞稿和這些資訊中納入了非GAAP 財務資訊與GAAP 同等財務資訊之間的調節表。轉向投影片 3，讓我簡單回顧一下今天電話會議的議程。路易斯將首先發表他的開場評論和對我們第三季度業績的概述以及我們動力總成業務的最新情況。然後，羅布·雷哈德 (Rob Rehard) 將更詳細地介紹我們第三季的財務業績，並回顧我們的最新指導。然後我們將進行問答，之後路易斯將發表一些結束語。

And with that, I'll turn the call over to Louis.

然後，我會將電話轉給路易斯。

Great. Thanks, Rob, and good morning, everyone. Thanks for joining us to discuss our third quarter results and get an update on our business and for your continued interest in Regal Rexnord. I believe our third quarter can be characterized by significant and strong controllable execution by our team. As an enterprise, we achieved a record adjusted gross margin of 38.4% and a record adjusted EBITDA margin of 22.8%, which is up 110 basis points versus prior year on a comparable basis.

偉大的。謝謝羅布，大家早安。感謝您加入我們討論我們的第三季業績並了解我們業務的最新信息，並感謝您對 Regal Rexnord 的持續關注。我相信我們第三季的特點是我們團隊的顯著且強大的可控執行力。作為一家企業，我們實現了創紀錄的調整後毛利率 38.4% 和創紀錄的調整後 EBITDA 利潤率 22.8%，與去年同期相比增長了 110 個基點。

Our largest segment, IPS, had a very strong quarter, achieving positive organic growth in weak markets, which we believe provides clear evidence its outgrowth initiatives are gaining momentum. In addition, IPS posted another quarter of very strong record adjusted EBITDA margins aided in large part by achieving planned synergies. That said, we were disappointed in our overall third quarter sales results with sales down 2.7% on a comparable organic basis driven mainly by our AMC and PES segments facing end market headwinds and that continued to be more severe than we expected.

我們最大的部門 IPS 的季度表現非常強勁，在疲軟的市場中實現了積極的有機增長，我們認為這清楚地證明了其增長計劃正在獲得動力。此外，IPS 又公佈了一個季度非常強勁的調整後 EBITDA 利潤率，這在很大程度上得益於實現了計劃中的協同效應。儘管如此，我們對第三季的整體銷售業績感到失望，銷售額在可比有機基礎上下降了2.7%，這主要是由於我們的AMC 和PES 部門面臨終端市場逆風，而且這種逆風仍然比我們預期的更為嚴重。

In particular, we saw later headwinds in discrete automation in AMC and in general commercial and non-US commercial HVAC markets in PES. And while our residential HVAC business within PES has started to see signs of stronger demand, we have not been able to ramp our capacity fast enough to keep up with it, weighing on our service levels. We expect this to be largely resolved during fourth quarter.

特別是，我們後來看到了 AMC 的離散自動化以及 PES 的一般商業和非美國商業 HVAC 市場的逆風。儘管 PES 內的住宅 HVAC 業務已開始看到需求強勁的跡象，但我們無法足夠快地提高產能以跟上需求，從而影響了我們的服務水平。我們預計這一問題將在第四季度得到基本解決。

Despite these headwinds, we are seeing growing momentum behind our various cross-sell initiatives which helped IPS achieve positive growth in the quarter. I will highlight a notable example later in the presentation. And before digging deeper into our results, I want to thank our 30,000 Regal restaurant associates for their hard work and disciplined execution, navigating through persistently choppy end markets while also continuing to advance our many longer-term value creation drivers.

儘管存在這些不利因素，我們看到各種交叉銷售舉措背後的勢頭不斷增長，幫助 IPS 在本季度實現了正增長。我將在稍後的演示中重點介紹一個值得注意的例子。在深入研究我們的表現之前，我要感謝我們 30,000 名富豪餐廳員工的辛勤工作和嚴格的執行力，他們在持續波動的終端市場中航行，同時繼續推進我們許多長期價值創造驅動力。

We discussed these value creation opportunities in some detail at our September '17 Investor Day. For those who are not able to attend I think you would find it worthwhile to review the materials, which are available on our investor site. Expanding on third quarter results, orders in the quarter on a daily basis were up 2.5%. The growth was led by IPS, followed by AMC and while weighted to longer cycle bookings helps give us confidence that we will see better top line performance in 2025.

我們在 2017 年 9 月投資者日上詳細討論了這些價值創造機會。對於那些無法參加的人，我認為您會發現值得查看這些材料，這些材料可以在我們的投資者網站上找到。延續第三季業績，該季訂單日均成長 2.5%。這一成長由 IPS 引領，其次是 AMC，同時對較長週期的預訂進行加權，這有助於讓我們相信我們將在 2025 年看到更好的營收業績。

In October, daily orders were down less than 1%. Despite third quarter top line pressures, margins in the quarter were strong. Our adjusted gross margin came in at a record 38.4%. Adjusted EBITDA margin was 22.8%, up 110 basis points versus the prior year on lower volumes. That translates to $7 million of adjusted EBITDA growth on a roughly $44 million revenue decline.

10月份，日訂單量下降了不到1%。儘管第三季營收面臨壓力，但該季的利潤率依然強勁。我們的調整後毛利率達到創紀錄的 38.4%。調整後 EBITDA 利潤率為 22.8%，由於銷量下降，較上年增長 110 個基點。這意味著調整後的 EBITDA 成長了 700 萬美元，而營收卻下降了約 4,400 萬美元。

We think, very strong performance for a business with over 38% gross margins and reflects achieving $27 million of synergies in the quarter along with strong cost management by our teams. Regarding synergies, we remain on track to achieve $90 million this year after which we will have another $120 million of cost synergies to realize largely in '25 and '26 and worth about 2 points of margin.

我們認為，毛利率超過 38% 的業務表現非常強勁，反映出本季實現了 2,700 萬美元的協同效應以及我們團隊強有力的成本管理。關於綜效，我們今年仍將實現 9,000 萬美元的目標，之後我們將在 25 年和 26 年實現另外 1.2 億美元的成本協同效應，價值約為 2 個百分點的利潤。

Adjusted earnings per share in the quarter were $2.49, which is up 18.6% versus prior year and a clear inflection point for Regal. Lastly, we generated $126 million of adjusted free cash flow in the quarter, which contributed towards paying down debt. In summary, a good quarter of controllable execution by our team, coupled with some encouraging performance on orders.

本季調整後每股收益為 2.49 美元，比去年同期成長 18.6%，這對 Regal 來說是一個明顯的轉折點。最後，我們在本季產生了 1.26 億美元的調整後自由現金流，這有助於償還債務。總而言之，我們團隊在本季的可控執行情況良好，訂單表現也令人鼓舞。

At our September Investor Day, we presented our detailed strategy for accelerating profitable growth. Each quarter going forward, I plan to highlight the product case study or initiative that shows our growth strategy in practice. This quarter, it is a powertrain win that demonstrates how we are providing differentiated value add for our customers and getting paid for through value pricing.

在九月投資者日，我們提出了加速獲利成長的詳細策略。未來的每個季度，我計劃重點介紹在實踐中展示我們成長策略的產品案例研究或計劃。本季度，這是一場動力總成的勝利，展示了我們如何為客戶提供差異化的增值服務，並透過價值定價獲得報酬。

Pictured on the left-hand side of this slide is a powertrain we designed for a mining customer. Its principal components are called out on the diagram. Nearly 100 of these powertrains will be installed to power and control motion across the mine's vast network of conveying infrastructure, which will move potash from deep inside the mine and then once on the service through a network of more processing operations.

這張投影片左邊的圖片是我們為採礦客戶設計的動力總成。其主要組成部分已在圖表上標示。將安裝近 100 個這樣的動力系統，為礦山龐大的輸送基礎設施網路提供動力和控制運動，這些基礎設施將從礦山深處輸送鉀肥，然後透過更多加工操作網路投入使用。

Various pieces of the conveying infrastructure are being direct shipped to the mine site where they will be assembled. To help minimize the degree of on-site assembly, the customer valued being able to receive the powertrain from us as a fully assembled, fully integrated solution. Our engineers were also able to address all of the mine's power and motion needs with only three sizes of the powertrain picture, down from the five originally conceived by a third-party integrator, further reducing complexity.

輸送基礎設施的各個部件直接運送到礦場進行組裝。為了最大限度地減少現場組裝程度，客戶非常重視能夠從我們這裡收到動力總成作為完全組裝、完全整合的解決方案。我們的工程師還能夠僅用三種尺寸的動力系統圖來滿足礦山的所有動力和運動需求，而第三方整合商最初設想的尺寸為五種，進一步降低了複雜性。

This is a great example of how our team's understanding of the customer's application resulted in valuable design enhancements. While not directly part of the powertrain and not pictured on this slide, our innovative RexPro conveyor chain is also being sold as part of the project. The RexPro solution arrived in a manageable length that can be easily assembled into longer strands using simple fasteners and tools, a much easier safer and faster assembly process versus competing products. Winning this RexPro business also reinforces how we are selling Regal's broader portfolio to our valued customers.

這是一個很好的例子，說明我們的團隊對客戶應用的理解如何帶來了有價值的設計改進。雖然我們的創新 RexPro 輸送鏈不是動力總成的直接組成部分，也沒有出現在這張投影片中，但它也作為該專案的一部分進行銷售。RexPro 解決方案的長度易於管理，可以使用簡單的緊固件和工具輕鬆組裝成更長的線，與競爭產品相比，組裝過程更容易、更安全、更快速。贏得 RexPro 業務也強化了我們向尊貴客戶銷售 Regal 更廣泛的產品組合的方式。

A notable feature of this powertrain win is that we are being paid a premium specifically tied to integrating the motor into the drivetrain, leveraging our motors and powertrain expertise. The motor precise alignment in the subsystem is critical to its functionality and efficiency under the harsh operating conditions at the mine.

這次動力系統勝利的一個顯著特點是，我們獲得了特別與將馬達整合到動力傳動系統中相關的溢價，利用我們的馬達和動力系統專業知識。子系統中的馬達精確對準對於其在礦井惡劣操作條件下的功能和效率至關重要。

As you can see on the lower right portion of the slide, the value of our complete solutions engineered for ease of install by a customer coordinating content from a global set of suppliers for assembly at a remote site all earned Regal Rexnord a nice price premium above the individual component costs while still helping our customers save time, money and reduce project risk.

正如您在投影片的右下部分所看到的，我們的完整解決方案的價值在於，客戶可以輕鬆安裝，協調來自全球供應商的內容，以便在遠端網站進行組裝，這一切都為Regal Rexnord 贏得了較高的溢價單一組件的成本，同時仍幫助我們的客戶節省時間、金錢並降低專案風險。

This win helps validate our powertrain strategy and our strategic focus on a subset of high-value verticals where we have deep domain expertise motors expertise and a highly engineered power transmission components that are truly valued by our customer. On top of all of this, the harsh duty nature of this application leads to a significant aftermarket opportunity for our business, which we forecasted approximately 6x the value of the initial product sale at even stronger margins.

這場勝利有助於驗證我們的動力總成策略以及我們對高價值垂直市場子集的戰略重點，在這些垂直市場中，我們擁有深厚的領域專業知識、電機專業知識和高度工程化的動力傳輸組件，這些都是我們的客戶真正重視的。最重要的是，該應用的嚴酷工作性質為我們的業務帶來了重要的售後市場機會，我們預測其價值約為初始產品銷售價值的 6 倍，利潤率甚至更高。

This is another example of what we discussed at Investor Day, creating a more durable business through stronger and stickier relationships with our customers along with significant aftermarket revenue potential. My congrats to the team for this fantastic win. And with that, I'll turn the call over to Rob.

這是我們在投資者日討論的另一個例子，透過與客戶更牢固、更有黏性的關係以及巨大的售後收入潛力來創造更持久的業務。我祝賀球隊取得這場精彩的勝利。然後，我會將電話轉給 Rob。

Thanks, Louis, and good morning, everyone. I'd also like to thank our global team for their hard work and disciplined execution in the quarter. Now let's review our operating performance by segment. Starting with Automation and Motion Controller AMC.

謝謝路易斯，大家早安。我還要感謝我們的全球團隊在本季的辛勤工作和嚴格執行。現在讓我們按部門回顧一下我們的經營業績。從自動化和運動控制器 AMC 開始。

Net sales in the third quarter were down 4.1% to the prior year on an organic basis. The results reflect weakness in discrete automation, partially offset by strength in the aerospace and defense, food and beverage, data center and medical markets. Within discrete automation, where the growth was below our expectations, the shorter cycle business continued to remain weak, with distributors retaining lean stocking levels and smaller projects slower to materialize due to heightened caution in the channel, we believe tied to factors such as persistent ISM weakness, slower to materialize benefits from interest rate reductions and US election uncertainty.

第三季淨銷售額較上年同期有機下降 4.1%。結果反映了離散自動化的疲軟，部分被航空航太和國防、食品和飲料、資料中心和醫療市場的強勁所抵消。在離散自動化領域，成長低於我們的預期，較短週期的業務繼續保持疲軟，分銷商保持精益庫存水平，而由於渠道中的謹慎態度，較小的項目實現速度較慢，我們認為這與持續的ISM 等因素有關疲軟、從降息和美國大選不確定性中獲益的速度較慢。

AMC's adjusted EBITDA margin in the quarter was 21.8%, which was below our expectations on lower volumes, weaker mix, particularly with discrete automation and larger-than-expected foreign exchange pressures. Orders in AMC in the third quarter were up 4.5% versus prior year on a daily basis, the second quarter in a row of positive orders. Book-to-bill in the third quarter for AMC was 0.9.

AMC 本季調整後的 EBITDA 利潤率為 21.8%，低於我們的預期，因為銷售量較低、產品組合較弱，特別是在離散自動化和外匯壓力大於預期的情況下。AMC第三季的訂單量較去年同期成長4.5%，是第二季連續的正訂單。AMC 第三季的訂單出貨率為 0.9。

We are encouraged by the fact that for the second quarter in a row, we saw positive orders in discrete automation, while aided by a couple of large project orders, Automation orders would have been roughly flat, even excluding these wins. Third quarter also saw an inflection to positive order growth in food and beverage, which we -- which was also encouraging to see after a long period of pressure in that end market.

我們感到鼓舞的是，連續第二個季度，我們在離散自動化方面看到了積極的訂單，而在幾個大型項目訂單的幫助下，即使不包括這些訂單，自動化訂單也將大致持平。第三季食品和飲料訂單也出現了積極的增長，在終端市場長期面臨壓力之後，我們看到這一點也令人鼓舞。

Finally, we continue to see strength in aero, data center and medical. October orders for AMC were down 11.5% on a daily organic basis and largely reflects lumpy longer-cycle project activity on discrete automation. Given these characteristics, we believe October's orders performance is best considered in the context of AMC's recent order trend.

最後，我們繼續看到航空、資料中心和醫療領域的實力。AMC 10 月訂單以日有機率下降 11.5%，很大程度上反映了離散自動化的長週期項目活動不穩定。鑑於這些特徵，我們認為最好在 AMC 近期訂單趨勢的背景下考慮 10 月的訂單表現。

The weighted average of second quarter, third quarter and October orders which were all weighted to longer cycle is about 5% and actually helps boost our confidence that AMC will be able to deliver stronger top line performance in 2025.

第二季、第三季和10 月訂單（均加權至較長週期）的加權平均值約為5%，實際上有助於增強我們對AMC 將能夠在2025 年實現更強勁營收業績的信心。

Turning to Industrial Powertrain Solutions or IPS. Net sales in the third quarter were up almost 1% versus the prior year on an organic basis. The results reflect strength in energy, aerospace, and metals and mining, net of weakness in the alternative energy and machinery off-highway markets. Cross-marketing synergies continued to contribute a couple of points of growth in the quarter. We believe this segment's third quarter results reflect outperformance versus our IPS end markets.

轉向工業動力總成解決方案或 IPS。第三季的淨銷售額與上年同期相比有機成長近 1%。結果反映了能源、航空航太、金屬和採礦業的強勢，扣除了替代能源和非公路機械市場的疲軟。跨行銷協同效應持續為本季帶來幾個成長點。我們相信該部門第三季的業績反映了優於我們的 IPS 終端市場的表現。

Even so, it was slightly below our expectations due to incremental weakness in certain short-cycle general industrial end markets that tend to correlate with the ISM. Adjusted EBITDA margin in the quarter was 26.8% and above our expectations and up nicely from prior year. This strong performance reflects higher volumes, stronger mix and cost synergies.

即便如此，由於某些往往與 ISM 相關的短週期一般工業終端市場逐漸疲軟，因此價格仍略低於我們的預期。本季調整後 EBITDA 利潤率為 26.8%，高於我們的預期，且較上年大幅成長。這種強勁的業績反映了更高的銷售、更強的產品組合和成本協同效應。

Orders in IPS on a daily basis were up nearly 6% in the third quarter which suggests we are building some sequential momentum. This solid performance reflects growth in the distributor and OEM channels. Book-to-bill in the third quarter for IPS was roughly 1.0. In October, orders on a daily organic basis were up 6.6%. We believe continuing the positive momentum and market out growth we saw in the quarter.

第三季 IPS 的日訂單量成長了近 6%，這表明我們正在建立一些環比勢頭。這種穩健的業績反映了分銷商和 OEM 通路的成長。IPS 第三季的訂單出貨比約為 1.0。 10 月份，日均訂單量成長 6.6%。我們相信本季的積極勢頭和市場成長將繼續下去。

Turning to Power Efficiency Solutions, or PES. Net sales in the third quarter were down 6.2% versus the prior year on an organic basis, which was below our expectations. The decline versus prior year primarily reflects weakness in the general commercial market and in commercial HVAC outside the US The shortfall versus our prior forecast relates to incremental weakness in both these markets and to a slower-than-expected capacity ramp in residential HVAC.

轉向電源效率解決方案（PES）。第三季淨銷售額有機比上年下降 6.2%，低於我們的預期。與前一年相比的下降主要反映了美國以外的一般商業市場和商業暖通空調市場的疲軟。增長慢於預期有關。

Let me provide a little more color on what we are seeing in residential strategy. This market has been under pressure for almost two years due to weak underlying end market demand and significant destocking. We believe destocking is over, but end-user demand remains weak and forecast from our OEM customers suggest it will remain so into next year. However, in the last three months, we started to see strengthening in demand, mostly from a subset of our customers that appear to be prebuilding resi HVAC units in advance of the end of year regulatory change.

讓我對我們在住宅策略中看到的情況提供更多的說明。由於終端市場需求疲軟和庫存大幅減少，該市場近兩年來一直承受壓力。我們相信去庫存已經結束，但最終用戶需求仍然疲軟，我們的 OEM 客戶的預測表明這種情況將持續到明年。然而，在過去的三個月裡，我們開始看到需求的加強，主要來自我們的一小部分客戶，他們似乎在年底監管變化之前預建了 Resi HVAC 裝置。

Our team has been ramping our production in response but has been challenged to keep pace with demand for a couple of reasons. One, we did not anticipate the significant level of pre-buy activity by our OEM customers, in part because we have had low visibility and shifting messages from them about their demand plans ahead of the refrigerant transition. And two, some of our suppliers have struggled to increase their own capacity coming off two years of demand declines.

作為回應，我們的團隊一直在提高產量，但由於多種原因而面臨著跟上需求步伐的挑戰。第一，我們沒有預料到我們的 OEM 客戶會進行大量的預購買活動，部分原因是我們的知名度較低，並且他們在冷媒轉型之前就需求計劃轉移了資訊。第二，我們的一些供應商在經歷兩年的需求下降後一直在努力提高自己的產能。

We are currently working to ramp our capacity as fast as possible and saw our third quarter resi HVAC sales up over 10% sequentially, well above the typically flattish seasonal demand pattern. We continue to make further progress. And as Louis mentioned, should be able to catch up in fourth quarter on our now healthy resi HVAC backlog, helping enable positive growth for PES this quarter.

我們目前正在努力盡快提高產能，第三季 Resi HVAC 銷售額較上季成長超過 10%，遠高於通常持平的季節性需求模式。我們繼續取得進一步進展。正如路易斯所提到的，應該能夠在第四季度趕上我們目前健康的 Resi HVAC 積壓訂單，幫助實現本季度 PES 的正成長。

Also, an important perspective is that the surge in market demand that appears driven by prebuy activity is weighted to smaller HVAC systems, where we are less focused and actually larger systems where we are more focused with how premium efficiency solutions were down year-over-year in the quarter. These dynamics are apparent in the AHRI data.

此外，一個重要的觀點是，由預購活動推動的市場需求激增，主要集中在較小的暖通空調系統（我們不太關注這些系統）和實際上較大的系統（我們更關注高效解決方案同比下降的情況）。這些動態在 AHRI 數據中顯而易見。

Turning to segment margins. The adjusted EBITDA margin in the quarter for PES was 17.8%, consistent with our expectation, but down from the prior year on lower volumes and weaker mix. We were pleased with the team's effort to hit our third quarter margin commitment for PES, a testament to strong cost management.

轉向細分市場利潤。本季 PES 調整後 EBITDA 利潤率為 17.8%，與我們的預期一致，但由於銷量下降和產品組合較弱，較上年有所下降。我們對團隊努力實現第三季 PES 利潤率承諾感到高興，這證明了強大的成本管理。

Shifting to orders. Orders in PES for the second quarter were down 3% on an organic daily basis, however, did improve sequentially. The orders decline reflects the end market headwinds I mentioned earlier for this segment as well as our slower capacity ramp in residential. Book-to-bill in the quarter for PES was 1.01, which is encouraging and consistent with our expectation for positive growth in this segment for the fourth quarter.

轉向訂單。第二季 PES 訂單以每日有機率計算下降 3%，但較上季有所改善。訂單下降反映了我之前提到的該細分市場的終端市場阻力以及住宅產能成長放緩。本季的預訂出貨比 PES 為 1.01，令人鼓舞，並符合我們對該細分市場第四季正成長的預期。

Daily orders for PES in October were down 1.5%, also reflecting the dynamics I outlined impacting third quarter performance. However, we saw improved ready HVAC orders sequentially in October, and we expect to see further improvements as fourth quarter unfolds. On the following slide, we highlight some additional financial updates for your reference. Notably, on the right side of this page, you will see we ended the quarter with total debt of approximately $5.7 billion and net debt of $5.2 billion.

10 月 PES 的日訂單量下降了 1.5%，也反映了我概述的影響第三季業績的動態。然而，我們在 10 月看到了現成的 HVAC 訂單連續改善，並且我們預計隨著第四季度的展開，將會看到進一步的改善。在下一張投影片中，我們重點介紹了一些其他財務更新供您參考。值得注意的是，在本頁右側，您將看到本季末我們的總債務約為 57 億美元，淨債務為 52 億美元。

We repaid approximately $114 million of gross debt in the quarter or $730 million on a year-to-date basis and remain on track to pay down $700 million of our debt this year. Adjusted free cash flow in the quarter was $125.5 million. We have continued to deploy the majority of our free cash flow to debt reduction and that is our plan going forward.

本季我們償還了約 1.14 億美元的總債務，年初至今償還了 7.3 億美元，今年仍有望償還 7 億美元的債務。本季調整後自由現金流為 1.255 億美元。我們繼續將大部分自由現金流用於減少債務，這就是我們未來的計劃。

Moving to the outlook. As we stated at our Investor Day on September 17, we were tracking lower in our guidance range. Today, we are updating our guidance to factor some incremental headwinds, reducing our sales outlook to factor weaker performance in third quarter and our latest expectations for fourth quarter. The primary drivers of the lower sales outlook are top line performance in PES and in AMC.

轉向展望。正如我們在 9 月 17 日的投資者日上所說，我們正在追蹤指導範圍的下限。今天，我們正在更新我們的指導，以考慮一些增量阻力，降低我們的銷售前景，以考慮第三季較弱的業績以及我們對第四季度的最新預期。銷售前景下降的主要驅動因素是 PES 和 AMC 的營收業績。

There are two main drivers of our revision in PES: one, sustained weakness in the non-US commercial HVAC and US general commercial markets; and two, the slower-than-expected ramp in our residential HVAC capacity, which I discussed earlier. Our lower sales outlook for AMC is largely related to a more protracted recovery and discrete automation versus our prior expectations as well as incremental caution among our customers across the segment related to factors including persistent ISM pressure and a lower-than-expected demand acceleration benefit tied to interest rate changes.

我們修正本益比的主要驅動因素有二：一是非美國商業暖通空調和美國一般商業市場持續疲軟；第二，我之前討論過的住宅暖通空調容量的成長速度慢於預期。我們對AMC 的銷售前景較低，很大程度上與我們先前的預期相比，復甦和離散自動化的時間更長，以及整個細分市場的客戶對持續的ISM 壓力和低於預期的需求加速效益等因素越來越謹慎。

Our outlook for adjusted EBITDA margin is now 22% due to the lower sales volumes and slightly weaker mix. We are also making minor adjustments to our below-the-line estimates as detailed in the table. Notably, our effective tax rate is coming down by 2.5 points driven primarily by a onetime tax benefit in non-US operations. The net impact of these changes reduced the midpoint of our adjusted diluted EPS guidance range by $0.30 to $9.30.

由於銷售下降和產品組合略有減弱，我們對調整後 EBITDA 利潤率的預期目前為 22%。我們也對下​​表中詳細說明的線下估算進行了細微調整。值得注意的是，我們的有效稅率下降了 2.5 個百分點，這主要是由於非美國業務的一次性稅收優惠。這些變化的淨影響將我們調整後的稀釋每股收益指引範圍的中點降低了 0.30 美元至 9.30 美元。

Our new adjusted diluted EPS guidance range for full year 2024 is now $9.15 to $9.45. Finally, we now expect adjusted free cash flow to be approximately $600 million this year, down from our prior expectation. The primary drivers of the revised cash flow expectation are our lower EBITDA outlook, higher inventory investment largely tied to the ready HVAC ramp and sell-through in our PES segment and timing of receivable collections associated with the expected timing of shipments in the quarter.

我們調整後的 2024 年全年稀釋每股收益指引範圍目前為 9.15 美元至 9.45 美元。最後，我們現在預計今年調整後的自由現金流約為 6 億美元，低於我們先前的預期。修訂後的現金流量預期的主要驅動因素是我們較低的EBITDA 前景、較高的庫存投資主要與我們PES 部門的HVAC 產能和銷售情況以及與本季度預期發貨時間相關的應收帳款回收時間相關。

For reference, our updated free cash flow guide still represents a 10% free cash flow margin, and we believe we continue to have a clear path to a low to mid-teens cash flow margin over the next two to three years as we continue to realize synergies, repay debt reduced cash restructuring costs and drive stronger top line growth.

作為參考，我們更新的自由現金流指南仍代表 10% 的自由現金流利潤率，我們相信，隨著我們繼續實現協同效應、償還債務、降低現金重組成本並推動更強勁的營收成長。

On this slide, we provide more specific expectations for our performance by segment on revenue and adjusted EBITDA margin for fourth quarter and for the full year. Note that the 2024 guided growth rates for AMC and IPS are all calculated versus 2023 pro forma sales results. While we are disappointed to be trimming our outlook, we are pleased with the continued strength of IPS while continuing to see market headwinds at AMC and PES.

在這張投影片中，我們按部門對第四季和全年的收入和調整後 EBITDA 利潤率的表現提供了更具體的預期。請注意，AMC 和 IPS 的 2024 年指導成長率都是根據 2023 年預計銷售結果計算的。雖然我們對下調前景感到失望，但我們對 IPS 的持續強勁感到滿意，同時繼續看到 AMC 和 PES 的市場阻力。

With that said, we are staying focused on what is under our control, working the many outgrowth initiatives we outlined at Investor Day, continuing to deliver synergies and execute our 80/20 and lean initiatives to expand margins and generating healthy free cash flow and paying down our debt.

話雖如此，我們仍將重點放在我們控制範圍內的事情上，實施我們在投資者日概述的許多增長計劃，繼續提供協同效應並執行我們的80/20 和精益計劃，以擴大利潤率並產生健康的自由現金流和支付減少我們的債務。

So despite some temporary near-term frictions, confidence in our Regal Rexnord value creation opportunity remains high. Now before taking questions, many of you may be interested in our thoughts for 2025. And while we are not planning to provide 2025 guidance today, I'm happy to share a few guideposts to help with modeling next year. We will provide a fuller update as we typically do when we report fourth quarter results.

因此，儘管近期存在一些暫時的摩擦，但我們對 Regal Rexnord 價值創造機會的信心仍然很高。現在，在回答問題之前，你們中的許多人可能對我們對 2025 年的想法感興趣。雖然我們今天不打算提供 2025 年指導，但我很高興分享一些指導方針，以幫助明年的建模。我們將像通常在報告第四季度業績時那樣提供更全面的更新。

From a sales perspective, we are currently planning for limited growth in 2025 because a number of our end markets are experiencing headwinds that, for now at least, we assume persist into next year. Markets that fall into this category include discrete automation, non-US commercial HVAC, general commercial, general industrial and machinery off-highway.

從銷售角度來看，我們目前計劃在 2025 年實現有限成長，因為我們的許多終端市場正在經歷逆風，至少目前我們認為這種逆風將持續到明年。屬於此類別的市場包括離散自動化、非美國商業暖通空調、一般商業、一般工業和非公路機械。

Regarding residential HVAC, demand appears to be roughly flat this year at the end user level. And for now, we are assuming that remains the case or potentially modestly better in 2025. That said, we believe the refrigerant transition is creating some uncertainty in the demand outlook, which may vary at different points of the value stream. We plan to provide additional thoughts on this topic when we guide 2025.

關於住宅暖通空調，今年終端用戶的需求似乎大致持平。目前，我們假設情況仍然如此，或者到 2025 年可能會稍微好一點。也就是說，我們認為冷媒轉型正在為需求前景帶來一些不確定性，這種不確定性在價值流的不同點可能會有所不同。我們計劃在製定 2025 年指南時提供有關此主題的更多想法。

From a margin perspective, a key driver will be incremental cost synergies that we expect to realize next year. We would also expect any organic growth to lever at an enterprise average in the low 30s. Below the line, the primary drivers in the bridge will be a roughly $50 million decline in interest expense and a reversion to our longer to our long-term expected effective tax rate of 24%. Again, we will provide more details with our fourth quarter report. And with that, operator, we are now ready to take questions.

從利潤角度來看，一個關鍵驅動因素將是我們預計明年將實現的增量成本綜效。我們也預期任何有機成長的槓桿率都將達到企業平均 30 左右。在此線以下，橋樑的主要驅動因素將是利息支出減少約 5000 萬美元，以及恢復到 24% 的長期預期有效稅率。我們將再次在第四季度報告中提供更多詳細資訊。接線員，我們現在準備好回答問題了。

(Operator Instructions) Mike Halloran, Baird.

（操作員說明）Mike Halloran，Baird。

So just a clarification on the thoughts for next year. First, the limited growth comment, is that an organic comment or an all-in comment? And then on an organic basis, is the thought here just relatively normal sequentials on a lot of equal and then kind of adjusting for some of the moving pieces you're seeing in the PES side?

所以只是澄清一下明年的想法。首先，有限成長評論是有機評論還是全面評論？然後在有機的基礎上，這裡的想法是否只是相對正常的順序，在許多相同的情況下，然後對你在 PES 方面看到的一些移動部分進行調整？

Yes. So Mike, it is an organic comment. And we think it's best right now to go into next year very measured given uncertainties in the markets, given the election results, just a lot going on. We're going to move into next year. likely a little bit more incrementally measured than we have historically and again, because of the level of uncertainty.

是的。麥克，這是一個有機的評論。我們認為，考慮到市場的不確定性、考慮到選舉結果以及發生的許多事情，現在最好謹慎地進入明年。我們將進入明年。由於不確定性的程度，可能會比我們歷史上一次又一次地進行更多的增量測量。

Got it. And then if you look back typically short-cycle business, the spread between orders and kind of revenue growth is bigger today than it would have been historically. At what point in time do you think that starts matching up? And maybe talk to how the business has morphed a little bit and gotten a little longer cycle. And I'm sure there's some other things behind it.

知道了。然後，如果你回顧典型的短週期業務，今天的訂單和收入成長之間的差距比歷史上更大。您認為什麼時間點開始配對？也許還可以談談業務如何發生了一些變化並獲得了更長的周期。我確信這背後還有其他一些事情。

But when do you think that kind of syncs up?

但你認為什麼時候會同步呢？

Yes. It has morphed a bit from the historic, especially in AMC. And so AMC much longer cycle our backlog roughly six months. Some of our business is data center aerospace. We have more than a year of backlog.

是的。它已經與歷史發生了一些變化，尤其是在 AMC 中。因此，AMC 的積壓週期要長得多，大約是六個月。我們的部分業務是資料中心航空航天。我們有一年多的積壓。

So that takes a bit more time IPS, we feel pretty good, though, about the fact that our orders have been strong and we beat by about 1% this quarter and feel good about the momentum there. And PES continues to be a short-cycle business. And so it's -- when orders ramp, we will ramp. The one piece I'd say, even within the quarter as much of our business is booked and ship the next day. Now the backlog there in about 1.5 months, but it's certainly our shorter-cycle business, PES.

因此，這需要更多的時間 IPS，不過，我們感覺很好，因為我們的訂單一直很強勁，本季度我們的業績增長了約 1%，並且對那裡的勢頭感到滿意。PES 仍然是一項短週期業務。所以，當訂單增加時，我們也會增加。我想說的是，即使在本季度內，我們的大部分業務也已預訂並在第二天發貨。現在積壓的時間大約是 1.5 個月，但這肯定是我們週期較短的業務，PES。

And then one more, if I may. Just thoughts on free cash flow in the next year. I know a little disappointing to end this year because of the moving pieces. How does next year track? And maybe just put that in the context of previous guidance you've given?

如果可以的話，再來一張。只是對明年自由現金流的思考。我知道今年結束時有些令人失望，因為有一些令人感動的事情。明年走勢如何？也許只是將其放在您之前給出的指導的背景下？

Sure. Thanks, Mike. So we absolutely still have a good path on next year despite the fact that we've got some timing differences this year. We do believe we could end next year at an exit rate at about $1 billion which is what we've previously communicated. Again, the primary drivers will be cash interest coming down and cash taxes of course, we're going to reduce our cash restructuring as well and expect to get a little working capital benefit, especially given the fact that we've got some timing differences this year.

當然。謝謝，麥克。因此，儘管今年我們在時間安排上存在一些差異，但明年我們絕對仍然有一條良好的道路。我們確實相信明年的退出率可能達到 10 億美元左右，這也是我們之前溝通過的。同樣，主要驅動因素將是現金利息下降和現金稅，當然，我們也將減少現金重組，並期望獲得一點營運資本收益，特別是考慮到我們存在一些時間差異今年。

So all of those contribute to continuing to deliver next year's commitment.

因此，所有這些都有助於繼續履行明年的承諾。

Jeff Hammond, KeyBanc Capital Markets.

Jeff Hammond，KeyBanc 資本市場。

Still struggling a little bit with HVAC. I mean, one, just trying to understand why you guys weren't more prepared for an uptick. It seemed pretty well telegraphed that there was going to be a prebuy here and your order rates kind of indicate continued softness relative to not being able to ramp. And I'm seeing like 20% to 30% order growth from the OEMs. So maybe it's the other stuff, but I'm just trying to get my arms around it.

在暖通空調方面仍然有點掙扎。我的意思是，第一，只是想了解為什麼你們沒有為上漲做更多準備。這似乎很好地傳達了這裡將有一個預購，而你的訂單率有點表明相對於無法增加的持續疲軟。我看到 OEM 的訂單增加了 20% 到 30%。所以也許是其他原因，但我只是想解決這個問題。

I really want to break this up into two, if I could, Jeff. First of all, we have seen a rebound in resi HVAC and sales have increased about 10%. But after two years of weak demand and fall starts on recovery, the recent surge in demand was not something we could have or would have wanted to get a head up. So our capacity ramp is lagging this demand surge. And however, we expect to be caught up through the end of fourth quarter.

如果可以的話，我真的想把它分成兩個部分，傑夫。首先，我們看到Resi HVAC 反彈，銷售額成長了約10%。但在經歷了兩年的需求疲軟和復甦開始下滑之後，近期需求的激增並不是我們能夠或不希望提前看到的。因此，我們的產能成長落後於需求激增。然而，我們預計到第四季末就會趕上。

also reference that many of our OEMs kept their strategy around 2L transition pretty under wrap. And so we didn't have a lot of visibility to this. And it takes time to ramp up volumes and the supply chain. The last point I'll make to your comments about the -- also a disconnect between maybe some of the growth at an OEM versus us. First of all, remember, our OEMs get priced in the market.

也提到我們的許多 OEM 廠商都對 2L 轉型的策略保密。所以我們對此沒有太多了解。增加產量和供應鏈需要時間。我要針對您關於 OEM 與我們的某些增長之間的脫節的評論提出最後一點。首先，請記住，我們的 OEM 是根據市場定價的。

We do not. And so there's always a disconnect there. And then secondly, as Rob said in his prepared remarks. It's notable, as outlined in AHRI, prebuy activity appears weighted to smaller HVAC systems, where we have relatively lower exposure given our focus on premium and actually larger systems year-to-date and in the quarter have been down. So I think it's really those two items that I think that's to answer your question.

我們沒有。所以那裡總是存在著脫節。其次，正如羅佈在他準備好的演講中所說的那樣。值得注意的是，正如AHRI 所概述的那樣，預購活動似乎偏重於小型HVAC 系統，考慮到我們對優質系統的關注度相對較低，而今年迄今為止和本季度實際規模較大的系統有所下降。所以我認為這兩項確實可以回答你的問題。

Okay. And then discrete automation, I heard good things and bad things on the order front. I'm just wondering, as you check with your customers and the channel, what you're seeing there in terms of signs of an inflection or maybe just continued choppiness.

好的。然後是離散自動化，我在訂單方面聽到了好消息和壞消息。我只是想知道，當您與客戶和管道核實時，您會看到什麼變化的跡象，或者可能只是持續的波動。

Yes. Yes. longer cycle orders and we're winning and seeing some growth. And actually, our win rates, our funnels are up. So this gives us confidence into '25.

是的。是的。更長週期的訂單，我們正在贏得勝利並看到一些增長。事實上，我們的勝率和漏斗都在上升。所以這讓我們對 25 年充滿信心。

I would say short-cycle book ship type orders are not and we're not forecasting them to. Now we had expected that with the interest rate cuts that we would see some more release of capital projects than we have. And I just think as we finished this year uncertainty with the election. ISM still being below 50. I think it's the longest stretch for over 33 years, it's just waiting on people's desire to go back in with projects.

我想說的是，短週期預訂船型訂單不是，我們也沒有預測它們會這樣。現在我們預計，隨著降息，我們會看到比現在更多的資本項目釋放。我只是認為，隨著今年選舉的不確定性的結束。ISM 仍低於 50。我認為這是 33 年來最長的一段時間，它只是在等待人們重返計畫的願望。

And so that's putting a weight on the more short-cycle book ship discrete automation. Hopefully, that helps.

因此，這給週期更短的書船離散自動化帶來了壓力。希望這會有所幫助。

Kyle Menges, Citigroup.

凱爾門格斯，花旗集團。

This is Randy on for Kyle. So I have a quick question about the cross-selling synergies in particularly in IPS. I was just hoping you could talk through what kind of incremental benefits that you've been seeing from these synergies and how that has trended versus your expectations this year and if you expect that to continue stepping up going forward?

這是蘭迪替凱爾發言。因此，我有一個關於交叉銷售協同效應的快速問題，特別是在 IPS 領域。我只是希望您能談談您從這些協同效應中看到了哪些增量效益，以及今年與您的預期相比的趨勢如何，以及您是否預計未來會繼續加強？

So we think our outperformance in IPS is greatly driven by our cross-sell and our industrial powertrain initiatives. We believe that, that is worth about 1 to 2 points of our growth in this quarter. I'll remind you that only about 15% of our customers buy two or more of our products. And if they were only buying one more, the opportunity is significant. And so we think this will continue to accelerate.

因此，我們認為我們在 IPS 方面的出色表現很大程度上是由我們的交叉銷售和工業動力系統所推動的。我們相信，這相當於我們本季成長約 1 到 2 個百分點。我要提醒您的是，只有大約 15% 的客戶購買我們的兩種或兩種以上產品。如果他們只再買一件，那麼機會就很大。因此我們認為這將繼續加速。

In addition, our focus on -- and this is why I emphasized in my prepared remarks, the project win in the industrial power train because it gives another example of the strength of the scale and scope of our portfolio. Hopefully, that helps.

此外，我們的重點是——這就是為什麼我在準備好的發言中強調工業動力傳動系統項目的勝利，因為它提供了我們投資組合的規模和範圍的實力的另一個例子。希望這會有所幫助。

Great. That's helpful. And then another quick one on shifting gears to AMC a little bit. I see you guys are expecting some sequential margin improvement in the fourth quarter. So with that, is it fair to say that the third quarter was kind of a bottom for discrete automation?

偉大的。這很有幫助。然後是另一篇關於稍微轉向 AMC 的快速文章。我看到你們預計第四季的利潤率會有所改善。那麼，可以公平地說第三季是離散自動化的底部嗎？

Or is it some of the other end markets that will drive the improvement sequentially?

還是其他一些終端市場將依序推動改善？

Yes. Ready really is across the board. It does reflect what we see in our backlog today, along with the cost synergies we expect in the quarter. We also see that we're going to get better sales in fourth quarter versus third quarter, and so leverage on that will be stronger. And then the business did implement some cost actions in response to the slower near-term demand environment, would expect to more fully realized.

是的。準備工作確實是全面的。它確實反映了我們今天在積壓訂單中看到的情況，以及我們預期在本季的成本協同效應。我們也看到，第四季的銷售量將比第三季更好，因此對此的槓桿作用將會更強。然後，該企業確實實施了一些成本行動，以應對近期需求放緩的環境，預計將得到更充分的實現。

And finally, the third quarter did have the impact that I commented on during the call of some FX exposure at the EBITDA line that was not in our expectation initially. So which -- and I would maybe characterize that as maybe a third of the difference that we saw relative to our expectations. So all of that combined, we feel good about the ramp that we've got going on. And to your question specifically, do we see that third quarter as a bottom. I'd say, yes, pretty close to a bottom there moving forward.

最後，第三季確實產生了我在 EBITDA 線的一些外匯敞口電話會議中評論過的影響，這並不在我們最初的預期之內。因此，我可能會將其描述為我們所看到的相對於我們的期望的差異的三分之一。因此，所有這些結合起來，我們對我們正在進行的坡道感覺良好。具體到你的問題，我們是否認為第三季已經觸底。我想說，是的，向前發展已經非常接近底部了。

We would not expect that performance going.

我們預計這種表現不會持續下去。

Julian Mitchell, Barclays.

朱利安米切爾，巴克萊銀行。

Maybe just my first question on the EBITDA margin outlook as I don't know if that's been touched on yet. So it looks like you're ending or ending this year in the fourth quarter with a sort of 100, 150 bps of margin increase year-on-year. So maybe a sort of 23% margin in Q4. Next year, you're saying exiting at sort of 25%. So you've got a sort of a 200-point increase in the margin next year, at least year-end to year-end.

也許這只是我關於 EBITDA 利潤率前景的第一個問題，因為我不知道這是否已被觸及。因此，看起來今年第四季的利潤率將年增 100、150 個基點。因此，第四季的利潤率可能達到 23%。明年，你說的是 25% 左右的退出率。因此，明年的利潤率將增加 200 點，至少年末是如此。

I just wanted to sort of understand if that's roughly the right ballpark of kind of margin expansion next year and the composition of that would be sort of 100 bps from the synergies and then 50 bps plus coming from volume leverage or price cost. Is that the right way to think about kind of margin expansion? And should it be fairly linear through the year?

我只是想了解這是否是明年利潤率擴張的大致正確範圍，其組成將是來自協同效應的 100 個基點，然後是來自數量槓桿或價格成本的 50 個基點以上。這是考慮利潤擴張的正確方法嗎？全年的變化應該是相當線性的嗎？

Yes. So first of all, on the fourth quarter, which I think where you were going first, it is a little lower, but we're a little bit -- we're going to be a little bit measured as we kind of go through the fourth quarter here based on what we've seen. But we -- it is still within our normal decremental margin. So it does reflect the mix of sales coming out, which is weighted to higher-margin AMC. So moving into next year.

是的。首先，在第四季度，我認為你首先要去的地方，它有點低，但我們會稍微謹慎一點，因為我們經歷了一些事情根據我們所看到的情況，這是第四季度的情況。但我們——它仍然在我們正常的遞減範圍內。因此，它確實反映了銷售組合的情況，並加權到利潤率較高的 AMC。所以進入明年。

Yes, you characterized it correctly, and we do believe that we have a good path based on both the synergy expectation, the volume that we expect to realize as we go through the year from an EBITDA perspective. And then from an earnings perspective, the interest coming out, the interest expense coming out next year, which should drive a nice benefit as well. So yes, we do expect to come out next year at a couple of hundred basis points relative to where we finish this year of improvement as an exit rate and still feel very strongly about that.

是的，您的描述是正確的，我們確實相信，基於協同效應預期，我們有一條良好的道路，從 EBITDA 的角度來看，我們預計在這一年中實現的數量。然後從收益的角度來看，利息、明年的利息支出都會產生，這也應該會帶來不錯的收益。所以，是的，我們確實預計明年的退出率將比今年的退出率提高幾百個基點，並且對此仍然有非常強烈的感覺。

That's great. And then just my quick follow-up, circling back, unfortunately, to the PES division and the sort of resi HVAC back and forth. But I think Louis, you mentioned maybe that 10% revenue increase in resi HVAC sales. So I just wanted to clarify, was that a sort of a Q3 year-on-year comment. And then anything you could flesh out for us on the resi HVAC sales growth year-on-year assumption for the fourth quarter and anything maybe for '24 as a whole.

那太棒了。然後是我的快速跟進，不幸的是，又回到了 PES 部門和類似的 Resi HVAC 部門。但我認為 Louis，您提到 Resi HVAC 銷售收入可能增加 10%。所以我只是想澄清一下，這是否是第三季同比評論。然後，您可以為我們充實有關第四季度 Resi HVAC 銷售同比增長假設的任何信息，以及整個 24 年的任何信息。

Just so we can understand kind of going into next year, how to think about pre-buy normalizing versus sell-through demand accelerating perhaps that type of thing?

這樣我們就可以了解明年的情況，如何考慮預購正常化與售後需求加速的情況？

Yes. Sure, Julian. We'll try to help here. So first of all, the comment on 10% was a sequential comment. So stating that we are ramping and we're getting better.

是的。當然，朱利安。我們會盡力提供協助。所以首先，對10%的評論是一個順序評論。所以說我們正在進步並且我們正在變得更好。

And so we expect a sequential into fourth quarter as well. Year-on-year, it's an important part of our business. drilling, but it's 10% of our business, and I don't have that level of detail in front of me. So we're going to have to follow up with you separately to give you that information.

因此，我們預期第四季也會出現連續的情況。與去年同期相比，這是我們業務的重要組成部分。鑽探，但這只占我們業務的 10%，而我面前沒有那麼詳細的資訊。因此，我們將不得不單獨與您聯繫以向您提供該資訊。

Okay. No worries. But your point would be, Louis, that the sort of inventory balances at the OEMs and distributors, let's say, in that market, maybe a little bit higher, but only at the kind of smaller systems end of the spectrum as you exit this year?

好的。不用擔心。但路易斯，你的觀點是，原始設備製造商和分銷商的庫存平衡，比如說，在該市場中，可能會高一點，但僅限於今年退出時的小型系統末端？

Yes. I mean, that's what we're seeing right now. That's what we're seeing in our demand. And I'm sorry, I didn't elaborate on one other part of your question, which is what do we think about next year. We do think some of that will occur meaning the build in HL through the end of this year, which will make next year a little bit softer, and we also believe end market demand is likely not improving in next year.

是的。我的意思是，這就是我們現在所看到的。這就是我們在需求中看到的。很抱歉，我沒有詳細說明你問題的另一部分，也就是我們明年的想法。我們確實認為其中一些情況將會發生，這意味著 HL 的建設將持續到今年年底，這將使明年的情況變得更加疲軟，我們也認為明年終端市場需求可能不會改善。

And so we think it's going to be at least right now, an improvement for us, partially because of the inventories that will have to be reset but it won't be significant growth for '25. But we'll provide more on this when we get together in January.

因此，我們認為至少現在對我們來說是一個進步，部分原因是庫存必須重置，但 25 年不會有顯著增長。但當我們一月份聚會時，我們將提供更多相關資訊。

Nigel Coe, Wolfe Research.

奈傑爾·科，沃爾夫研究中心。

Rob, maybe talk about -- I think you mentioned $1 billion of free cash flow as an exit rate for $25 million. Just curious what that means because obviously there's a on free cash flow. So just wondering what you meant by that. But I just want to kick off with a question on the we've got pressures in commercial, broadly speaking, and then Europe and China. Maybe just kind of double-click into that a little bit more, so we understand exactly what's going on there.

Rob，也許談談——我想你提到了 10 億美元的自由現金流作為 2500 萬美元的退出率。只是好奇這意味著什麼，因為顯然有自由現金流。所以只是想知道你這是什麼意思。但我只想先提出一個問題，從廣義上講，我們在商業方面面臨壓力，然後是歐洲和中國。也許只需再雙擊一下，這樣我們就可以準確地了解那裡發生了什麼。

And then what's the visibility in '25 to those end markets getting better within TS?

那麼 25 年 TS 中那些終端市場變得更好的能見度如何？

So let me take the first part and just start there and then, Louis, if you want to maybe contribute more on the second half of the question. So when it comes to the explanation around the free cash flow exit rate 25 that about $1 billion. We do see a path to incrementally improve our free cash flow through the year next year based on a lot of factors that I described previously. EBITDA certainly is going to contribute there along with cash interest, cash taxes and lower cash restructuring as well as working capital. What I say I'm looking to exit the year '25 at $1 billion, I'm saying, likely in the fourth quarter annualized, you would see a number that would represent something closer to $1 billion.

因此，讓我從第一部分開始，然後，路易斯，如果你想對問題的後半部分做出更多貢獻。因此，當談到圍繞自由現金流退出率 25 的解釋時，大約為 10 億美元。基於我之前描述的許多因素，我們確實看到了明年逐步改善我們的自由現金流的途徑。EBITDA 肯定會與現金利息、現金稅、較低的現金重組以及營運資本一起做出貢獻。我所說的是，我希望在 25 年以 10 億美元的價格退出，我的意思是，很可能在第四季度按年化計算，你會看到一個接近 10 億美元的數字。

Okay, that's clear. And then on the PES, Louis?

好的，很清楚了。然後在實況足球上，路易斯？

Yes. So the comments, Nigel, on CHC outside the US, we serve a broad set of customers in Europe and in China, including local players. And we are seeing continued pressure in the European market and the China market. ISM is below 50 and both. And China market is still heavily weighted because of some of the residential overbuild.

是的。因此，Nigel 對於美國以外的 CHC 的評論是，我們為歐洲和中國的廣泛客戶提供服務，包括當地企業。我們看到歐洲市場和中國市場持續面臨壓力。ISM 低於 50，兩者兼具。由於一些住宅過度建設，中國市場仍受到重重影響。

We don't see a lot of line of sight to great improvement in Europe or China next year. And this is a little bit of why when we talked about '25, we're saying we're going to be measured in our thought process, and we don't see a lot of opportunity for growth in those markets in '25. Not at this time.

我們認為明年歐洲或中國不會有太大改善。這就是為什麼當我們談論「25」時，我們說我們將在我們的思考過程中進行衡量，並且我們在「25」中看不到這些市場有很多成長機會。目前還不行。

Okay. That's helpful. And a quick follow-on. With IPS, I mean, obviously, IPS performance has been very different to two segments, and I understand share gains have been part of that. But the long-cycle markets, metals and mining, aerospace, et cetera, are driving that to some degree.

好的。這很有幫助。並快速跟進。對於 IPS，我的意思是，很明顯，兩個細分市場的 IPS 表現有很大不同，我知道份額成長是其中的一部分。但金屬和採礦、航空航太等長週期市場在某種程度上推動了這個趨勢。

Your comment on long-cycle orders suggest that those end markets remain strong into '25. Is that the right interpretation?

您對長週期訂單的評論表明，這些終端市場在 25 世紀仍然保持強勁。這是正確的解釋嗎？

Except that our comments on longer cycle orders were more AMC centric. And so cycle factory automation. So discrete automation, excuse me, that we sell into aero, defense, our medical, our data center business, that's where much of that commentary was about, which gives us some confidence into though, to your point, I mean probably the biggest macro driver that we look at for ITS as I that's been below 50 for many, many months, yet IPS continues to execute and outperform. And we believe that, that just reinforces the thesis of the rationale for the record and the Ultra acquisition, and it's all about our scale and scope of go-to-market and the portfolio of products that we have. And so we'll continue to drive that activity and think that's a long-term benefit for IBS and Regal.

只是我們對較長週期訂單的評論更以 AMC 為中心。如此循環工廠自動化。所以離散自動化，對不起，我們賣給航空、國防、我們的醫療、我們的資料中心業務，這就是大部分評論的內容，這給了我們一些信心，但就你的觀點而言，我的意思是可能是最大的宏觀我們為 ITS 尋找的驅動程序，因為我已經好幾個月低於 50，但 IPS 繼續執行並跑贏大盤。我們相信，這只是強化了記錄和 Ultra 收購的基本原理，而這一切都與我們進入市場的規模和範圍以及我們擁有的產品組合有關。因此，我們將繼續推動這項活動，並認為這對 IBS 和 Regal 來說是長期利益。

Joe Ritchie, Goldman Sachs.

喬·里奇，高盛。

Just sorry to harp on the free cash flow. But just I want to make sure I understand it. So the exit rate for next year is going to be $1 billion exiting 4Q, so call it roughly a $250 million-plus number in the fourth quarter of next year, if you annualize it. But the reality is like you're hitting that number this year. And so it doesn't provide a lot of color on the full year free cash flow number for 2025.

很抱歉一直在談論自由現金流。但我只是想確保我理解它。因此，明年第四季的退出率將是 10 億美元，所以如果按年化計算，明年第四季的退出率大約為 2.5 億美元以上。但現實情況是你今年就達到這個數字了。因此，它並沒有提供 2025 年全年自由現金流數據的太多資訊。

And so what I'm trying to understand is whether $750 million to $800 million is kind of like a reasonable starting point and seeing a lot of progress versus the $600 million that you're expecting for this year?

所以我想了解的是，7.5 億至 8 億美元是否是一個合理的起點，與您今年預期的 6 億美元相比是否取得了很大進展？

Yes, I think the way to think about it, Joe, is think about about an $800 million number for next year. So a couple of hundred million dollars of benefit, maybe even a little bit better than that, depending on the working capital contribution as we go through the year is one of the determining factors there. And like I said, we're going to get a little bit of that trickle over from this year from a timing perspective. But again, that's really kind of the one area where it could flex a little bit, but I still think $800 million is about the right number.

是的，喬，我認為考慮這個問題的方法是考慮明年的 8 億美元數字。因此，幾億美元的收益，甚至可能比這更好一點，取決於我們一年中的營運資本貢獻，這是那裡的決定因素之一。就像我說的，從時機的角度來看，我們將從今年開始獲得一點點滴滴。但同樣，這確實是一個可以稍微靈活一點的領域，但我仍然認為 8 億美元是合適的數字。

Okay. Very clear. And then I guess maybe just a near-term question on the fourth quarter because not to pin you down to a number necessarily by segment. But so PES last year had that that one of your customers had cut production for a few weeks, and so there should be a pretty good nice little benefit there. And so I don't know, in my model, I was forecasting PS to be up double digits in the fourth quarter.

好的。非常清楚。然後我想這可能只是第四季度的一個近期問題，因為不是為了讓你按部門確定一個數字。但去年 PES 的情況是，您的一位客戶削減了幾週的產量，因此應該會帶來相當不錯的小好處。所以我不知道，在我的模型中，我預測 PS 在第四季將成長兩位數。

When you think about the buildup by segment, how does kind of like the forecast of the fourth quarter shake out by segment ballpark?

當您考慮按細分市場的成長時，第四季度的預測按細分市場大致如何？

Yes. Well, I don't think that it would be double digits in the fourth quarter for PES. I think it's going to be in the range that we provided in the guide there that we put out by segment, which would be kind of lower in the fourth quarter, lower single digit.

是的。嗯，我不認為 PES 第四季會達到兩位數。我認為這將在我們按細分市場發布的指南中提供的範圍內，第四季度將較低，較低的個位數。

Yes, it's about mid-single digit is the midpoint of our fourth quarter. I'll remind you, though, that fourth quarter historically is a lower quarter. And I agree with you last year, we did have one OEM shut down the facility for three weeks. But we are forecasting fourth quarter to be up about million year-over-year. And so that, I would say, addresses that along with our ramp in resi HVAC.

是的，大約是我們第四季的中位數。不過，我要提醒您，從歷史上看，第四季是一個較低的季度。我同意你去年的觀點，我們確實讓一家 OEM 關閉了工廠三週。但我們預計第四季將年增約 100 萬美元。因此，我想說，這與我們在 Resi HVAC 中的坡道一起解決了這個問題。

And clearly, too, if you look at the AHRI data, year-to-date, the market is down. at least certainly in the larger units, the market is down. So I I don't think there's a lot of catalysts here that would say that fourth quarter should be up double digit.

而且很明顯，如果你看看 AHRI 的數據，今年迄今為止，市場正在下跌。至少可以肯定的是，在較大的單位中，市場正在下跌。因此，我認為沒有很多催化劑可以表明第四季度應該實現兩位數成長。

Christopher Glynn, Oppenheimer.

克里斯托弗·格林，奧本海默。

Just wanted to dive into the commercial aspects of PES a little bit with the resi HVAC in North America commercial doing a little better. the magnitude on the international commercial and general commercial seems a little striking. So curious if you could talk about various factors like channel inventory end markets or maybe business selectivity and share decisions type trade-offs?

只是想深入了解 PES 的商業方面，北美的 Resi HVAC 商業做得更好一些。國際商業和一般商業的規模似乎有點驚人。很好奇您是否可以談論各種因素，例如通路庫存終端市場或業務選擇性和共享決策類型的權衡？

And just to be clear, though, Chris, I think it's important to note just how that segment breaks down. 31% of that segment is general commercial, and we would say links very well to ISM 23% of that segment is commercial HVAC, and we've been seeing North America commercial HVAC strong, but outside of North America, EMEA and Asia down and down high single digits, low double digits. And then pool is about 9% of that segment, and it's relatively flat, slightly down. And sort of readied that base at 37%. And so this is what -- when we have the pressure in general commercial and CHC outside of North America, that's really 50% of the business, and that has been under pressure.

不過，要明確的是，克里斯，我認為重要的是要注意該細分市場是如何分解的。該細分市場的31% 是一般商業，我們可以說與ISM 的聯繫非常好。 (EMEA) 和亞洲則下降，高位個位數下降，低點兩位數下降。然後池佔該細分市場的 9% 左右，而且相對持平，略有下降。37% 的基礎已經準備好了。所以這就是——當我們在北美以外的一般商業和 CHC 領域面臨壓力時，這實際上佔業務的 50%，而且一直處於壓力之下。

No question. And now we're starting to see resi HVAC improve, and we think that will continue, and that should uplift the segment, certainly in Q4 and going into '25.

毫無疑問。現在我們開始看到 Resi HVAC 的改善，我們認為這種情況將持續下去，這應該會提升該領域，當然在第四季度並進入 25 年。

Okay. Great. And on the residential HVAC, not sure if there's any share sensitivities there, but any possibility OEMs who you kind of lag delivery to that they hit back at some point in the future?

好的。偉大的。在住宅暖通空調方面，不確定那裡是否存在任何份額敏感性，但是否有可能是原始設備製造商（OEM）的交付滯後，他們會在未來某個時候反擊？

We're close with all our OEMs. We are working through the challenges of the ramp-up. We don't see a material impact whatsoever. If anything, we continue to to work -- to grow with our OEMs and air moving solutions. As we talked about at our Investor Day, we're gaining some nice momentum there.

我們與所有 OEM 廠商關係密切。我們正在努力應對升級過程中的挑戰。我們沒有看到任何實質影響。如果有什麼不同的話，那就是我們將繼續努力，與我們的 OEM 和空氣輸送解決方案一起成長。正如我們在投資者日談到的那樣，我們在那裡獲得了一些良好的勢頭。

We feel good the long-term relationship with our Red HVAC OEMs is positive.

我們與 Red HVAC OEM 廠商的長期關係是正面的，對此我們感到非常滿意。

This concludes our question-and-answer session. I would like to turn the conference back over to Louis Pinkham for closing remarks.

我們的問答環節到此結束。我想將會議轉迴路易斯·平卡姆 (Louis Pinkham) 致閉幕詞。

Thank you, operator, and thanks to our investors and analysts for joining us today. Our teams remain highly engaged executing the many growth and margin enhancement initiatives outlined at our September Investor Day, in particular, leveraging our powerful enterprise to accelerate profitable growth, both organic and in time inorganic. We are seeing clear signs of our progress in IPS and expect improving momentum in our other segments as well as we look ahead to 2025 and beyond. Thank you again for joining us today, and thank you for your interest in Regal Rexnord. Have a good day.

謝謝運營商，也感謝我們的投資者和分析師今天加入我們。我們的團隊仍然高度參與執行九月投資者日概述的許多增長和利潤提高計劃，特別是利用我們強大的企業來加速有機和及時無機的盈利增長。我們在 IPS 領域看到了明顯的進展跡象，預計其他領域的勢頭將有所改善，並展望 2025 年及以後。再次感謝您今天加入我們，並感謝您對 Regal Rexnord 的興趣。祝你有美好的一天。

The conference has now concluded. Thank you for attending. You may now disconnect.

會議現已結束。感謝您的出席。您現在可以斷開連線。