Solventum Corp (SOLV) 2024 Q2 法說會逐字稿

Good day. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome everyone to Solventum second quarter 2024 earnings call. As a reminder, this conference is being recorded. (Operator Instructions).

再會。我叫艾莉，今天我將擔任您的會議主持人。現在，我歡迎大家參加 Solventum 2024 年第二季財報電話會議。提醒一下，本次會議正在錄音。（操作員指令）。

I would now like to turn the program over to your host for today's conference, Kevin Moran, Senior Vice President of Investor Relations. Please proceed.

現在，我想將節目單交給今天會議的主持人、投資者關係高級副總裁凱文·莫蘭 (Kevin Moran)。請繼續。

Good afternoon, and welcome. Today we'll discuss Solventum second quarter fiscal 2024 results, along with an update to our 2024 outlook. Just after market closed today, a press release was issued with our earnings results and updated outlook. The press release and earnings presentation are available on the investors section of the Solventum website. Joining me today are Bryan Hanson, our Chief Executive Officer; and Wayde McMillan, our Chief Financial Officer.

下午好，歡迎光臨。今天，我們將討論 Solventum 2024 財年第二季的業績，以及我們 2024 年展望的更新。今天市場收盤後不久，我們就發布了一份新聞稿，其中包含我們的獲利結果和最新展望。新聞稿和收益報告可在 Solventum 網站的投資者部分查閱。今天與我一起的還有我們的執行長 Bryan Hanson；以及我們的財務長 Wayde McMillan。

During the call, we will be making forward-looking statements that are subject to risks and uncertainties. For a full description of these risks and uncertainties, please refer to our SEC filings and the forward-looking statement slide at the beginning of the presentation.

在電話會議中，我們將做出受風險和不確定性影響的前瞻性陳述。有關這些風險和不確定性的完整描述，請參閱我們的 SEC 文件和簡報開頭的前瞻性聲明投影片。

Please note that during our discussion today, all our comments will be on a non-GAAP basis unless they are specifically called out as GAAP. GAAP to non-GAAP reconciliations for all relevant periods can be found in the schedules attached to our press release. For the Q&A portion of the call, we kindly ask that you limit yourself to one question and one follow-up.

請注意，在我們今天的討論中，除非特別指出是 GAAP，否則所有評論都將以非 GAAP 為基礎。所有相關期間的 GAAP 與非 GAAP 對帳表可在我們新聞稿所附的附表中查看。對於通話的問答部分，我們懇請您將問題限制在一個問題和一個後續問題上。

And with that, I'll hand the call over to Bryan.

說完這些，我會把電話交給布萊恩。

All right. Great. Thanks, Kevin, and thanks to everyone for joining us today. I'd say it's exciting to be here for our first earnings call as a publicly traded company. And I want to start that call by saying that I'm encouraged by the progress that we have made and with the results of the quarter, which reflect our ability to come together as a new team and maintain business continuity in the midst of the separation.

好的。偉大的。謝謝凱文，也謝謝大家今天的參加。我想說，作為一家上市公司，我們第一次來這裡參加收益電話會議，這令人非常興奮。首先我想說，我們所取得的進展和本季的業績令我感到鼓舞，這反映了我們作為一支新團隊團結在一起並在分離期間保持業務連續性的能力。

And we're raising our full year outlook as we continue to progress our plans to get this business to where we expect it to be. Simply said, we are moving with urgency and we remain confident in our ability to create value. And for all those solvers that I know are listening out there. I want to say thank you for. It's your hard work that has gotten us to this point, make no mistake, this would not be happening. We would not be here without you.

隨著我們繼續推進計劃以使這項業務達到我們的預期，我們也上調了全年預期。簡而言之，我們正在緊急行動，我們對創造價值的能力充滿信心。我知道所有那些解決問題的人都在聽著。我想要對你說聲謝謝。正是你們的辛勤工作才使我們達到了今天的水平，毫無疑問，這種事情是不可能發生的。如果沒有你我們就不會在這裡。

And for the call today, I'm going to provide a brief reminder of our Investor Day presentation, specifically around our situation analysis and reasons to believe in the value-creation story as well as reminder of an update on our phased approach for the transformation and turnaround. And then I'll pass it over to Wayde for a deeper dive on the quarter and our improved outlook for 2024. And of course, we'll save time for Q&A and certainly look forward to that conversation. As some of you may be new to the story since our Investor Day in March.

在今天的電話會議上，我將簡要回顧我們的投資者日演示，特別是圍繞我們的情況分析和相信價值創造故事的理由，以及提醒我們分階段轉型和扭轉的方法的更新。然後，我將把它交給 Wayde，讓他更深入地探討本季以及我們對 2024 年的改善前景。當然，我們會留出時間進行問答，並且非常期待這場對話。你們中的一些人可能自從我們三月的投資者日以來就一直對這個故事很陌生。

Let me start by giving some background on Solventum our team and again, why we're confident in the value-creation story. And I think the right place to start is the spin itself. We've talked about this before, but we have extensive IP that we share with 3M and as a result of that. We are executing a highly entangled and therefore complex separation.

首先，讓我介紹一下 Solventum 團隊的背景，並再次說明我們為何對價值創造故事充滿信心。我認為正確的起點是旋轉本身。我們之前談過這個問題，但我們與 3M 共享大量 IP，因此也取得了成果。我們正在執行一項高度糾纏且複雜的分離任務。

But to ensure in a situation like that, we proactively mitigate the risks associated with these types of separation, we have intentionally assembled a team with significant spin and transformation experience. And given the regulatory requirements of the sector, which can significantly impact the planning and implementation of a separation. We have also ensured this team has deep regulated business experience. Simply put, we have done this before and we are going to do it again.

但為了確保在這種情況下，我們能夠主動減輕與此類分離相關的風險，我們特意組建了一支具有豐富旋轉和轉型經驗的團隊。考慮到該行業的監管要求，這可能會對分離的規劃和實施產生重大影響。我們也確保團隊擁有豐富的監管業務經驗。簡單地說，我們以前做過這件事，我們也會再做這件事。

Now relative to the business setup. Our business segments are in attractive and growing markets. We have strong sub-brand recognition in those markets, significant IP protection, solid levels of investment in R&D, and we have global reach. That said, we also have businesses that have consistently underperformed their markets. With flat volume growth over the last two years, coupled with a declining volume trend, mainly due to misaligned and unfocused and metrics, which resulted in commercial misalignment and poor R&D productivity.

現在涉及業務設定。我們的業務部門位於有吸引力且不斷成長的市場。我們在這些市場擁有強大的次品牌認知度、重要的智慧財產權保護、雄厚的研發投入，並且具有全球影響力。儘管如此，我們的一些企業也一直表現不佳。過去兩年銷售成長持平，且呈下降趨勢，主要是由於指標不一致、不集中，導致商業不一致和研發效率低。

Now with this is context, and of course, what are we going to do about it? I'd like to remind you of our phased approach to stabilize and then separate the business, reposition it for profitable growth and optimize the portfolio.

現在有了這個背景，當然，我們該怎麼做呢？我想提醒大家，我們採取分階段的方法來穩定然後分離業務，重新定位以實現盈利增長並優化投資組合。

As discussed at our investor meeting, we have outlined this in three phases, which are all currently underway and running in parallel. As you may remember, Phase 1 is focused on mission count culture and structure as well as the spin-related activities to separate from 3M. Which are critical, all of them critical catalysts to driving business growth. Phase 2 is developing and implementing our long-range plan that will reposition us for profitable growth. And Phase 3 is portfolio optimization.

正如我們在投資者會議上所討論的那樣，我們已將這項計劃分為三個階段，目前所有階段都在進行中並且同時運行。您可能還記得，第 1 階段重點關注任務計數文化和結構以及與 3M 分離的旋轉相關活動。這些都是至關重要的，它們都是推動業務成長的關鍵催化劑。第二階段正在製定和實施我們的長期計劃，這將使我們重新定位於獲利成長。第三階段是投資組合最佳化。

Okay. Starting with Phase 1 specifically related to mission talent and also culture and structure, we've already created a new mission statement and articulated our company values. And I got to say what an amazing opportunity it was to help write the mission and values for new company. I feel incredibly lucky to be a part of something so meaningful.

好的。從第一階段開始，具體涉及使命人才、文化和結構，我們已經創建了新的使命宣言並闡明了我們的公司價值觀。我想說，幫助撰寫新公司的使命和價值觀是一個多麼令人驚奇的機會。我感到無比幸運，能夠參與如此有意義的事。

I see the mission and the values of a company as absolutely critical to its success. Because when done right, it becomes a common purpose and connection across the team, capturing the hearts and minds of all of our team members, which again, I see as an essential enabler of sustainable business performance. And we've held mission ceremonies around the globe meeting with thousands of our employees to discuss how they bring the mission to life. It doesn't matter what region or country or business. I mean, it is clear. The team is excited and ready for the future of Solventum.

我認為公司的使命和價值觀對於公司的成功至關重要。因為如果做得好，它就會成為整個團隊的共同目標和紐帶，抓住所有團隊成員的心，而我認為這也是實現永續業務績效的重要推動因素。我們在全球各地舉行了使命儀式，與數千名員工會面，討論如何將使命變為現實。無論哪個地區、國家或企業。我的意思是，這很清楚。團隊對 Solventum 的未來充滿期待並做好了準備。

Now relative to talent, which is really one of the key areas where spinning a company creates value, we continue to move fast. We've completed the selection of our level one leadership team, finalized the structure for level two and identify key positions at levels three and four that are critical to the turnaround. And we're actively internally sourcing or acquiring experienced talent in these roles as well.

現在，相對於人才，這實際上是公司創造價值的關鍵領域之一，我們繼續快速發展。我們已經完成了一級領導團隊的選拔，確定了二級領導團隊的架構，並確定了對扭轉局面至關重要的三級和四級關鍵職位。我們也積極地從內部尋找或獲取擔任這些職位的經驗豐富的人才。

With the end of the day, we're trending ahead of my expectations and talent acquisition and benefiting from a lot of high-level industry talent that understand the value creation story and are interested in joining this team.

最終，我們的發展趨勢超出了我的預期，並獲得了大量人才，受益於許多了解價值創造故事並有興趣加入這個團隊的高級行業人才。

We're also making great progress on our culture and structure project. This is a restructuring project, we are calling the Solventum way. The goal here is to create a more nimble and less hierarchical structure that drives increased autonomy, speed, and very importantly, accountability. And will also help us ensure that we have the ability to invest for growth while enhancing margins.

我們的文化和結構項目也取得了巨大進展。這是一個重組項目，我們稱之為Solventum方式。這裡的目標是創造一個更靈活、更少等級的結構，以提高自主性、速度，以及非常重要的責任感。這也將有助於我們確保我們有能力在提高利潤率的同時進行成長投資。

Moving to the separation activities inside of Phase 1, which obviously early days with most of the work still ahead of us, but these are critical months in the separation, and I'm happy with our progress. This quarter's financial performance alone speaks to a successful start with our business continuity efforts while standing up a newly independent company.

進入第一階段的分離活動，顯然目前還處於早期階段，大部分工作仍待完成，但這是分離過程中的關鍵幾個月，我對我們的進展感到滿意。本季的財務表現足以證明，我們在建立新獨立公司的同時，業務連續性工作取得了成功開端。

Again, I want to compliment the teams for delivering on their commitments in the face of separation distractions. For areas like our supply continuity project, manufacturing and IT separation. I feel good about our disentanglement plans. This is hard work, but the teams are progressing. These initiatives with speed from a time line perspective, our supply continuity project will extend beyond 24-months. But we expect the majority of Phase 1 activities to be completed in 12 to 24 months post spin.

再次，我要讚揚各團隊在面臨分離幹擾的情況下仍履行承諾。對於我們的供應連續性專案、製造和 IT 分離等領域。我對我們的脫離糾葛計畫感到很滿意。這是艱苦的工作，但團隊正在進步。從時間表來看，這些舉措進展迅速，我們的供應連續性項目將延長至 24 個月以上。但我們預計第一階段的大部分活動將在分拆後 12 到 24 個月內完成。

I should also note that given the time frame of Phase 1, it will naturally overlap with Phases 2 and Phase 3. Phase 2 is focused on a Solventum wide long range plan to position us for profitable growth because we were able to accelerate talent acquisition at Phase 1, we've actually shorten the path to finalize our strategic plan in Phase 2.

我還要指出的是，考慮到第一階段的時間框架，它自然會與第二階段和第三階段重疊。階段 2 專注於 Solventum 的廣泛長期計劃，旨在讓我們實現盈利增長，因為我們能夠在第 1 階段加速人才獲取，我們實際上縮短了在第 2 階段完成戰略計劃的路徑。

Now we expect to share this plan during our fourth quarter earnings call, which will coincide as one would expect with our 2025 guidance. So key elements of that plan, a comprehensive. The key elements of that plan will be our primary market and sub-market selection. Again, those markets that we're going to double down in inside of those markets will be the growth driver initiatives to be able to build scale. And probably most importantly, showing that we're going to shift our commercial R&D intervention and the resources to those growth driver areas.

現在，我們希望在第四季度財報電話會議上分享該計劃，這將與我們的 2025 年指引相吻合。因此，該計劃的關鍵要素是全面的。該計劃的關鍵要素是我們的主要市場和子市場的選擇。再次，我們將加倍投入的那些市場將成為成長驅動力，以實現規模。也許最重要的是，表明我們將把商業研發幹預和資源轉移到這些成長動力領域。

And as you would expect, we're currently assessing primary markets and growth drivers, and our intent is to finalize these decisions before the end of the year. Once we've identified the primary markets and the growth drivers will begin shifting. As I said before, our resources starting with commercial infrastructure changes, things like specializing the sales organization, things like changing the incentive plans that we have with the sales organization to bias, our focus in the growth driver areas. Will also shift where we spend R&D [dollars] so that we align our new product pipeline toward innovation that matters and is material in the growth driver markets.

正如您所期望的，我們目前正在評估主要市場和成長動力，我們的目標是在今年年底之前完成這些決定。一旦我們確定了主要市場，成長動力就會開始轉變。正如我之前所說，我們的資源從商業基礎設施的變化開始，例如專業化銷售組織，改變我們與銷售組織之間的激勵計劃，將我們的重點放在成長動力領域。我們還將調整研發支出的方向，以便將我們的新產品線與對成長動力市場至關重要和實質的創新相結合。

And finally, as we expect that our focus on debt reduction over the next 24-months will allow more flexibility to expand our capital allocation priorities, including potential tuck-in M&A tied to our again growth driver areas.

最後，我們預計，未來 24 個月我們將專注於債務削減，這將使我們有更大的靈活性來擴大我們的資本配置優先事項，包括與我們再次成長的動力領域相關的潛在合併併購。

And moving on to Phase 3, we're looking at pathways for portfolio optimization through inorganic means in order to bring additional strategic clarity, organizational focus and value creation. And as a result, we are actively assessing our various markets and businesses and their value contribution to deliver on our strategic and financial priorities. And that said, given how early we are in the spin process, there are contractual considerations that will influence Phase 3.

進入第三階段，我們正在尋找透過無機手段優化投資組合的途徑，以帶來額外的策略清晰度、組織重點和價值創造。因此，我們正在積極評估我們的各個市場和業務及其價值貢獻，以實現我們的策略和財務重點。儘管如此，考慮到我們處於分拆過程的早期階段，有一些合約考量將影響第三階段。

Okay. To summarize what I just said, because I think [I threw a lot had you] number one, our foundational work on mission talent, culture and structure is ahead of schedule and progressing well and positively impacting our Phase 2 timing. From a separation perspective, it's early days, but also pivotal days in the process and things are progressing well. And I have confidence in our team.

好的。總結我剛才說的內容，因為我認為 [我已經提出了很多] 第一，我們在任務人才、文化和結構方面的基礎工作正在提前完成，並且進展順利，並對我們的第二階段時間安排產生了積極影響。從分離的角度來看，現在還處於早期階段，但也是過程中的關鍵日子，一切都很順利。我對我們的團隊充滿信心。

Number three given our early progress on our strategic plan and SKU project, we now intend to share our long range plan during our fourth quarter call, which again will coincide with our 2025 guidance. And number four, we will speak more of the quarter in a minute, but our first quarter as an independent company was a good early sign when it comes to business continuity and progress on our phased approach.

第三，鑑於我們在策略計劃和 SKU 專案上取得的早期進展，我們現在打算在第四季度電話會議上分享我們的長期計劃，這將與我們的 2025 年指導方針相吻合。第四，我們稍後將更多地談論本季度的情況，但作為一家獨立公司，我們的第一個季度在業務連續性和分階段方法的進展方面是一個很好的早期信號。

Before I turn it over to Wayde, I just want to reiterate that we have incredible opportunity to create significant value and then I believe the actions we are taking today relative to executing the separation and identifying opportunities to reposition this company for profitable growth will set us up for significant value creation in the future.

在將麥克風交給韋德之前，我想重申，我們擁有創造重大價值的絕佳機會，而且我相信，我們今天所採取的有關執行分離以及尋找機會重新定位公司以實現盈利增長的行動，將為我們未來創造重大價值奠定基礎。

Okay, Wayde?

好嗎，韋德？

I'll start by echoing Bryan sentiment and thank everyone at Solventum for their hard work getting us to where we are today. Our three-phased approach is designed to create significant value over time. I'll keep my remarks mostly focused on updates related to Phase 1 and separation activities before getting into Q2 performance. And then wrapping up with guidance.

首先，我想表達我對布萊恩的感情，並感謝 Solventum 全體人員的辛勤工作，使我們取得了今天的成就。我們的三階段方法旨在隨著時間的推移創造巨大的價值。在談論第二季業績之前，我的演講將主要集中在第一階段和分離活動相關的更新。最後以指導結束。

To separate, we have significant efforts underway. We're moving our manufacturing lines from 67 plants to 29 Solventum plants, two of which we're building new at this time, we're also separating our distribution and supply chain by changing from 122 to 73 distribution centers. Our rebranding efforts are significant across 90 countries. We have changed our commercial distribution models in over 60 countries. The IT work streams may be the most complex as we're working to transition over 1,000 systems and stand up over 70 new platforms including our new SAP ERP system globally.

為了分開，我們正在進行重大努力。我們正在將生產線從 67 家工廠轉移到 29 家 Solventum 工廠，其中兩家目前正在新建，我們還將透過將配送中心從 122 個減少到 73 個來分離我們的配送和供應鏈。我們的品牌重塑工作已在 90 個國家進行。我們已經在60多個國家改變了商業分銷模式。IT 工作流程可能是最複雜的，因為我們正在努力轉換超過 1,000 個系統並建立超過 70 個新平台，包括我們在全球範圍內的新 SAP ERP 系統。

In parallel to the separation work, we are already making progress on the turnaround, which is centered on improving revenue growth and expanding margins. It's important to understand that historical baseline, and I'll provide some background for each metric as well.

在分離工作的同時，我們在扭轉局面方面已取得進展，重點在於提高收入成長和擴大利潤率。了解歷史基線很重要，我也將為每個指標提供一些背景資訊。

For revenue, we have historically underperformed our mid-single digit markets with flat and declining volumes over the past two years. This was clearly reflected in 2023 where price was more than all the revenue growth for the year. As we move out of a hyper inflationary period and price normalizes, we are intently focused on turning around the negative volume growth.

就收入而言，我們的表現一直不如中等個位數市場，過去兩年銷量持平或下降。這在 2023 年得到了明顯的體現，當時的價格超過了全年的收入成長。隨著我們走出惡性通貨膨脹時期並且價格恢復正常，我們全神貫注於扭轉負成長的局面。

Bryan covered the Solventum way restructuring project, which touches every segment function and region in the company. This effort is ongoing and will be an important part of our investment to reposition for growth and margin enhancement plan.

Bryan 介紹了 Solventum 方式重組項目，該項目涉及公司的每個細分職能和地區。這項工作正在進行中，並將成為我們重新定位成長和提高利潤計劃的投資的重要組成部分。

Additionally, we remain focused on a comprehensive global SKU rationalization initiative. Our goal is to streamline and simplify the company by eliminating less strategic, low-growth and or low-margin SKUs or product families.

此外，我們仍專注於全面的全球 SKU 合理化計劃。我們的目標是透過消除不太具策略性、低成長或低利潤的 SKU 或產品系列來精簡和簡化公司。

We have already identified approximately 3,500 SKUs to be eliminated as part of wave one of this initiative. They represent about 5% of total SKUs and will help simplify the supply chain and they will not have a material impact to revenue and margin in 2024. This is a promising start and real progress achieved to date. Wave two is expected to be more impactful to revenue and margin in 2025.

作為該計劃第一階段的一部分，我們已經確定將淘汰約 3,500 個 SKU。它們約佔總 SKU 的 5%，將有助於簡化供應鏈，並且不會對 2024 年的收入和利潤產生重大影響。這是一個充滿希望的開始，迄今為止也取得了真正的進展。預計第二波將對 2025 年的收入和利潤產生更大的影響。

The turnaround is also focused on improving margin. The before-mentioned Solventum way in SKU projects are designed to identify efficiencies to reinvest and improve margins. We have seen our historical operating margins step down from approximately 25% in our 2022 and 2023 carve-out financial statements in the Form 10 to our plan 21% to 23% in 2024.

扭轉局面的重點還在於提高利潤率。前面提到的 SKU 專案中的 Solventum 方法旨在確定效率，以便進行再投資並提高利潤率。我們已經看到我們的歷史營業利潤率從 2022 年和 2023 年 10 表分拆財務報表中的約 25% 下降到 2024 年計劃的 21% 至 23%。

We're not including 2021 in our baseline, given it was significantly inflated by the post-COVID rebound. This 200 to 400 basis point decline is due to the additional cost of product supplied by 3M as well as increased operating expenses to stand of a public company and the investments to reposition for growth.

我們沒有將 2021 年的數據納入我們的基準，因為該數據因新冠疫情後的反彈而被大幅誇大。這 200 至 400 個基點的下降是由於 3M 供應的產品成本增加，以及作為上市公司的營運費用增加和為實現成長而進行的投資。

Turning now to the financial update, I want to remind everyone this is the first time we'll be presenting financial results as a stand-alone company. We previously reported Q1 2024 results under a carve-out basis as the first quarter was still under 3M.

現在談談財務更新，我想提醒大家，這是我們第一次作為獨立公司發布財務業績。我們之前是根據剝離原則報告了 2024 年第一季的業績，因為第一季的營收仍低於 300 萬美金。

With that, I'll provide an overview of our Q2 results and then shift to full year guidance. Starting with sales for the second quarter of 2024, sales of $2.1 billion increased 20 basis points compared to prior year on a reported basis, while improving 1.3% on an organic basis. During the quarter, foreign exchange was a headwind of 110 basis points. Sales growth reflected the expected normalizing of price lower. We reported a slight volume increase in the quarter. That included a discrete benefit from backorder improvement without which volumes continue to decline.

首先，我將概述我們的第二季業績，然後轉向全年指引。從 2024 年第二季的銷售額開始，銷售額為 21 億美元，以報告基礎計算較上年增長 20 個基點，同時以有機基礎計算增長 1.3%。本季度，外匯逆風 110 個基點。銷售額成長反映了價格預期正常化下降。我們報告本季的銷量略有增加。其中包括訂單積壓改善帶來的單獨收益，如果沒有這項收益，訂單量將會繼續下降。

Moving to the segments, our largest segment, MedSurg delivered $1.2 billion of sales, an increase of 1.8% on an organic basis, led by the Negative Pressure Wound Therapy product category and continued adoption of our antimicrobial IV site management solutions. This segment was the primary beneficiary of reduced backorders.

談到各個部門，我們最大的部門 MedSurg 實現了 12 億美元的銷售額，有機增長 1.8%，這主要得益於負壓傷口治療產品類別以及我們抗菌 IV 部位管理解決方案的持續採用。該部門是缺貨減少的主要受益者。

Our dental segment delivered $331 million of revenue, a decrease of 2%, which reflects volume pressures associated with challenging market conditions, partially offset by pricing. HIS segment contributed $328 million of revenue, an increase of 3.6%, which is fueled by continued adoption of 360 encompass inside of revenue cycle management and steady results in performance management solutions. Similar to the prior quarter, strength in these areas was partially offset by declines in clinician productivity solutions due to changing market conditions and inconsistent investments.

我們的牙科部門實現了 3.31 億美元的收入，下降了 2%，這反映了充滿挑戰的市場條件下的銷售壓力，但部分被定價所抵消。HIS 部門貢獻了 3.28 億美元的收入，成長 3.6%，這得益於收入週期管理中 360 度覆蓋範圍的持續採用以及績效管理解決方案的穩定成果。與上一季類似，由於市場條件的變化和投資不一致導致臨床醫生生產力解決方案的下降，部分抵消了這些領域的優勢。

Finally, in purification and filtration segment delivered $238 million of sales, a decline of 0.9%, which was impacted by performance in drinking water filtration, partially offset by better than expected strength in bioprocessing filtration. Overall volume declines were partially offset by pricing.

最後，淨化和過濾部門的銷售額為 2.38 億美元，下降 0.9%，這受到飲用水過濾性能的影響，但生物加工過濾的強勁表現部分抵消了這一影響。整體銷售量的下降被定價部分抵銷。

Gross margins were 55.8% in the quarter, this represents a reduction of 200 basis points over prior year, primarily driven by increased costs in international and unfavorable mix within MedSurge that was driven by back order recovery in the lower margin OEM business. On a sequential basis, these two factors, along with a return to more normalized pricing weighed on gross margins. As expected, operating expenses increased both versus prior year results and sequentially compared to Q1.

本季毛利率為 55.8%，比上年減少 200 個基點，主要由於國際成本增加，以及 MedSurge 內部產品組合不利，而利潤率較低的 OEM 業務的積壓訂單恢復又導致該因素。從連續角度來看，這兩個因素以及回歸更正常化的定價對毛利率產生了壓力。正如預期，營業費用與去年同期相比有所增加，與第一季相比也有所增加。

The added spend includes standing up new functions and to support our growth strategy. It's also important to note that Q2 SG&A was high due to a stock-based compensation charge for legacy 3M employees. This and other smaller discrete items in Q2 represented an additional spend of approximately $30 million. In total, we delivered adjusted operating income of $430 million, which translates to operating margin of 20.7%.

增加的支出包括建立新職能和支持我們的成長策略。值得注意的是，由於 3M 原有員工的股票薪酬費用，第二季的銷售、一般及行政費用較高。此項目和第二季的其他較小獨立項目共額外支出約 3,000 萬美元。整體而言，我們實現的調整後營業收入為 4.3 億美元，相當於營業利益率為 20.7%。

Moving down the P&L, interest expense also increased sequentially, reflecting the first full quarter impact of our February 2024 debt issuance, which was partially offset by interest income. Lastly, our effective tax rate of 12.2% came in favorable due in part to the estimated geographic mix of our statutory income post spin, which includes a year to date adjustment. All in, we delivered earnings per share of $1.56 ahead of our internal expectations.

從損益表中可以看出，利息支出也較上季增加，反映了我們 2024 年 2 月發行債務對第一季的影響，但部分被利息收入所抵銷。最後，我們的有效稅率為 12.2%，部分原因是我們分拆後法定收入的估計地理分佈，其中包括年初至今的調整。總體而言，我們實現的每股收益為 1.56 美元，高於內部預期。

Turning to the balance sheet, we ended the quarter with $897 million in cash and equivalents with no outstanding borrowings on our credit facility. We generated $297 million of free cash flow in Q2, bringing our year-to-date total to $637 million. Importantly, we are committed to maintaining our investment grade rating and expect debt paydown will remain the priority over the next 24-months. We maintain a strong liquidity and financial position with continued free cash flow generation in addition to our $2 billion revolving credit facility.

談到資產負債表，本季末我們擁有 8.97 億美元的現金和等價物，並且我們的信貸安排中沒有未償還的借款。我們在第二季度產生了 2.97 億美元的自由現金流，使年初至今的總額達到 6.37 億美元。重要的是，我們致力於維持我們的投資等級評級，並預計未來 24 個月內償還債務仍將是首要任務。除了 20 億美元的循環信貸額度外，我們還持續產生自由現金流，以保持強大的流動性和財務狀況。

Now turning to guidance for 2024. We are raising our organic sales growth guidance range up to zero to up 1%. This reflects first half performance, including the benefit from backorder reduction in Q2, an updated assumption that SKU rationalization will not have a material impact on 2024 results. And importantly, building confidence in business continuity. We are not providing quarterly guidance, but I do want to be sure to highlight the second half dynamics of the year-over-year comparisons, which will play a large role in the organic sales growth in Q3 and Q4.

現在轉向2024年的指導。我們將有機銷售成長預期範圍上調至零至 1%。這反映了上半年的業績，包括第二季積壓訂單減少的好處，以及 SKU 合理化不會對 2024 年業績產生重大影響的最新假設。重要的是建立對業務連續性的信心。我們不提供季度指引，但我確實想強調下半年同比的變化動態，這將在第三季和第四季的有機銷售成長中發揮重要作用。

For background, Q3 was the highest growth rate in 2023 and therefore, as a tougher comparison and results in expected flat to down growth rate in Q3 2024. While Q4 was the second lowest growth rate of 2023. With an easing comparison for Q4 2024. For earnings per share, we are raising our guidance to $6.30 to $6.50 on our improved sales outlook and favorable estimated tax rate. We continue to expect free cash flow in the range of $700 million to $800 million.

背景是，2023 年第三季的成長率最高，因此，作為更嚴格的比較，預計 2024 年第三季的成長率將持平或下降。而第四季的成長率是2023年第二低的。與 2024 年第四季相比，情況有所放鬆。對於每股收益，基於銷售前景改善和有利的預計稅率，我們將每股收益預期上調至 6.30 美元至 6.50 美元。我們繼續預期自由現金流在 7 億至 8 億美元之間。

For reference, a few additional items we've previously shared. On gross margins, we continue to expect incremental gross margin headwinds from the 3M supply agreement mark-up will begin to flow through our P&L in Q3 2024. For operating expenses, we anticipate the continued ramp for investment to build out stand-alone functions and support our growth strategy through the second half of the year. All in, we continue to expect full year 2024 operating margin in the range of 21% to 23%.

作為參考，我們之前分享過一些其他內容。在毛利率方面，我們繼續預期 3M 供應協議加價帶來的增量毛利率阻力將在 2024 年第三季開始影響我們的損益表。對於營運費用，我們預計投資將繼續增加，以建立獨立功能並支持我們在今年下半年的成長策略。總體而言，我們繼續預計 2024 年全年營業利潤率將在 21% 至 23% 之間。

Turning to tax rate, we are updating our full year effective tax rate to 18% to 19%, an improvement of 200 basis points from our earlier assumption of 20% to 21%. It's important to recognize that this change to our tax rate is expected to be temporary for 2024 as we're benefiting from a near term favorable mix based on where we are generating our income, which is a function of realizing separation costs in certain jurisdictions.

談到稅率，我們將全年有效稅率更新為 18％ 至 19％，比我們之前假設的 20％ 至 21％ 提高了 200 個基點。重要的是要認識到，我們的稅率變化預計在 2024 年是暫時的，因為我們將受益於基於我們產生收入的地點的短期有利組合，這是在某些司法管轄區實現分離成本的函數。

In conclusion, we are off to a solid start closing our first public quarter. We're delivering on our near term financial commitments, executing on separation activities, focusing on turning around the business or raising the top and bottom line guidance for the year.

總而言之，我們在第一個公開季度的收官之時取得了良好的開端。我們正在履行近期財務承諾，執行分離活動，專注於扭轉業務或提高今年的營收和淨利潤預期。

Looking ahead, we will continue to execute on our phased approach to transform our business and make improvements across our key operational metrics, accelerating revenue growth, expanding margins, driving free cash flow and optimizing our capital allocation. We will use our expertise in health material and data science to deliver our mission. We are encouraged by the early progress and look forward to the value creation plan ahead. And I'll now hand it back to the operator for the Q&A portion of the call.

展望未來，我們將繼續分階段實施業務轉型方法，改善關鍵營運指標，加速收入成長，擴大利潤率，推動自由現金流並優化資本配置。我們將利用我們在健康材料和數據科學方面的專業知識來實現我們的使命。我們對早期的進展感到鼓舞，並期待未來的價值創造計劃。現在我將把電話交還給接線員，以便進行電話的問答部分。

(Operator Instructions).

（操作員指令）。

Travis Steed, Bank of America.

美國銀行的特拉維斯·斯蒂德 (Travis Steed)。

Hey, everybody congrats on your first earnings call. I guess, Wayde, I wanted to start with the guidance raise and really understand kind of all the moving parts there. I guess a lot of the EPS raise came from the tax. But it sounds like things are maybe even tracking ahead of plans and pushed the SKU rationalization to 2025. Is there anything are you kind of more confident in kind of the outlook here, what kind of drove the guidance raise and how to think about Q3 and second half modeling for the different line items?

嘿，大家祝賀你們第一次獲利電話會議。我想，韋德，我想從指導加薪開始，真正了解那裡的所有活動部分。我猜想每股收益的成長很大一部分來自於稅收。但聽起來事情甚至可能超出計劃，並將 SKU 合理化推遲到 2025 年。您對這裡的前景有什麼更有信心嗎？

So. Hey Travis, this is Bryan. Maybe I'll start with some of your question, particularly around just some of the confidence we have and what's kind of pushing our guide and then Wayde I'll pass to you get into more specifics there.

所以。嘿，崔維斯，我是布萊恩。也許我會從你的一些問題開始，特別是圍繞我們的一些信心以及推動我們指南的因素，然後韋德我會向你詳細介紹。

So obviously, three components that Wayde talked about that are driving our guide. And really our confidence. The first is just the business continuity is feeling pretty good right now, and we're making great progress against our plans. So that's number one.

顯然，韋德談到的三個要素推動著我們的指南。這確實讓我們充滿信心。首先，目前業務連續性感覺很好，我們正在按照計劃取得重大進展。這是第一點。

Number two, as Wayde referenced in his prepared remarks, it's just the back order recovery that we banked in Q2. And then this SKU clarity and Wayde, I'll talk more about that in a second, but we just have better clarity of the impact we're going to see in 2024 versus 2025.

第二，正如韋德在其準備好的發言中提到的，這只是我們在第二季度累積的訂單恢復。然後是這個 SKU 清晰度和 Wayde，我稍後會詳細討論這個問題，但我們對 2024 年與 2025 年將看到的影響有了更清晰的認識。

That's broad based. What we're feeling right now, and that's the reason for the guide change. I think importantly, though, to stood maybe click down and business continuity and progress against our plans. It doesn't feel like a long time. It's only been four months now, but those are pretty pivotal month in the separation. A lot can happen in those months. And for the most part, we delivered in pretty much every primary area during that time. And I think most importantly, business continuity.

這是具有廣泛基礎的。我們現在的感受，這就是改變指南的原因。不過，我認為重要的是，可能需要點擊並遵守我們的計劃以保持業務連續性和進展。感覺時間不太長。如今雖然才過去四個月，但這卻是分離過程中相當關鍵的一個月。這幾個月可能會發生很多事情。在很大程度上，我們在這段時間內幾乎在每個主要領域都實現了交付。我認為最重要的是業務連續性。

And that's where the biggest risk sits. In every day that passes Travis, we just feel better about reducing risk, retiring risk and then further executing on our turnaround strategy. I guess probably the simplest way to say it is a lot could have gone wrong and it didn't which is great. Doesn't mean it's going to be simple from here. But the momentum is positive and that drives our confidence.

而最大的風險就在於此。崔維斯，每過一天，我們都對降低風險、消除風險以及進一步執行扭虧為盈策略感到更加滿意。我想可能最簡單的說法就是很多事情可能出錯但事實並非如此，這很好。但這並不意味著從現在開始一切都會變得簡單。但勢頭是正面的，這增強了我們的信心。

But probably equally, maybe even more important than that, is we're really moving fast in talent acquisition. And I think probably anybody would recognize that you don't really want to put a strategy in if you don't have the people in place that are accountable for the strategy. So the faster you can move to put people in place, particularly in L1 and L2 positions.

但也可能同樣重要的是，我們在人才招募方面進展非常迅速。我想任何人都會體認到，如果沒有人對戰略負責，你就不想實施戰略。因此，您可以更快地將人員安排到位，特別是在 L1 和 L2 位置。

It's just critical to formulating the strategy, having ownership of the strategy and that eventually that flawless execution of the strategy. So those are the things that we feel like are moving in the right direction, increasing our optimism, and hopefully, that's reflected in our tone in the guide.

制定戰略、擁有戰略所有權以及最終完美執行戰略至關重要。因此，我們覺得這些事情正在朝著正確的方向發展，增加了我們的樂觀情緒，希望這能反映在指南的基調中。

So maybe with that, we can give a little more color on the other components.

因此，也許我們可以對其他組件提供更多的說明。

Yeah. Sounds good. Happy to pick up on how we're thinking about guidance here and the SKU project, as Bryan said, we're really pleased to be in a position where we can raise our full year guidance after just our first stand-alone quarter here as a public company.

是的。聽起來不錯。很高興了解我們對這裡的指導和 SKU 專案的看法，正如 Bryan 所說，我們非常高興能夠在作為上市公司的第一個獨立季度之後提高全年指導。

So let me talk about the new range. You really built up the back of what we called out in the quarter here in Q2, revenue was slightly ahead of our expectations because of the backorder reduction that we got, and that was from an improvement in service levels. So positive signs, as Bryan said, for business continuity.

那麼讓我來談談新系列。我們在第二季確實實現了預期目標，由於訂單減少，收入略高於我們的預期，而這得益於服務水準的提高。正如布萊恩所說，這對於業務連續性而言是積極的信號。

So that the new range then contemplates normalizing the second half for that -- for the price benefit that we've been seeing and it continues to wane into the second half, as well as a tougher comp for that back order recovery. When you normalize for those two things from the first half, the high-end assumes we see improvement in the business and then near the low end assumes a more consistent performance. So we feel real comfortable with the range here that we have for the second half.

因此，新的範圍考慮到了下半年的正常化——我們一直看到的價格優勢在下半年繼續減弱，而且對於積壓訂單的恢復來說，競爭更為激烈。當你將上半年的這兩件事正常化時，高端假設我們看到業務的改善，而低端則假設表現更加穩定。因此，我們對下半年的範圍感到非常滿意。

It's early days, but we are pleased with the business and its performance to date through the first half of the year, really with the second half to go and just keeping a focus on that, number one priority for us is our growth driver strategy. A little color down the P&L. If we think about gross margins, we mentioned in the prepared remarks, a couple of things that drove costs higher in the quarter, both the international costs and some unfavorable mix in MedSurge really around the margin on those backorder recovery products.

現在還為時過早，但我們對上半年的業務和表現感到滿意，我們確實將重點放在下半年，我們的首要任務是我們的成長動力策略。損益表稍微有點顏色。如果我們考慮毛利率，我們在準備好的評論中提到過，有幾個因素導致本季成本上升，包括國際成本以及 MedSurge 的一些不利組合，這些因素確實影響了那些缺貨恢復產品的利潤。

And so lots to consider, puts and takes it could be different next quarter. We are still expecting a step-up in cost from 3M, but that doesn't necessarily mean a step-up in gross margins because there are a lot of puts and takes. And so even with all that and the step-up in cost, we are still comfortable with our 21% to 23% operating margin expectations for the full year of '24.

因此需要考慮很多因素，下個季度的情況可能會有所不同。我們仍然預期 3M 的成本將會上升，但這並不一定意味著毛利率也會上升，因為其中存在著大量的投入和產出。因此，即使考慮到所有這些因素以及成本的上升，我們仍然對 24 年全年 21% 至 23% 的營業利潤率預期感到滿意。

And I should probably just touch quickly on OpEx because that is also an important part of how we think about modeling here. We called out in our prepared remarks that we had a good amount of discrete items, not unexpected in a separation. It's always a bit noisy with the things that are coming out of the separation related work.

我可能應該快速談談 OpEx，因為這也是我們思考建模的一個重要部分。我們在準備好的演講中指出，我們有很多獨立的物品，這在分離時並不令人意外。分開相關工作產生的事情總是有點吵鬧。

So we called out one in particular, a large expense that we took for stock-based comp and then a few other things that really were about $30 million in the quarter. So with that, we still anticipate to continue to ramp for the investment to build out our stand-alone functions and to support our growth strategy through the second half of the year. But that will be off a normalized Q2 without those discrete items. So all in feeling really good about the guide and happy to be raising both the high-end and the-low end at this time.

因此，我們特別指出了其中一項，即我們為股票薪酬和其他一些項目花費的一大筆費用，本季度這些費用實際約為 3,000 萬美元。因此，我們仍預計將在今年下半年繼續加大投資，以建立我們的獨立功能並支持我們的成長策略。但這將是脫離不含這些離散項目的正常化第二季的結果。所以，大家對這份指南感到非常滿意，很高興此時能夠提高高端和低階。

Great. Thanks for all the commentary. I guess the next question I have is thinking or kind of when can you guys start growing earnings again? I know 2025 is kind of a down year. But thinking about the plan you have is '26 a year where you potentially could grow earnings and if there's any way high level to think about some of the things you have to deal with and '25 and some of the headwinds you have in '25 of the two rationalization and kind of help us size some range of impact on that?

偉大的。感謝所有的評論。我想我的下一個問題是思考或什麼時候你們的收入才能再次開始增加？我知道 2025 年是低迷的一年。但想想你的計劃是‘26 年’，你有可能增加收入，如果有任何高層次的方法可以考慮你必須處理的一些事情，以及‘25 年’和‘25 年’的一些阻力，這兩種合理化是否可以幫助我們衡量對此的影響範圍？

And thanks for the question.

感謝您的提問。

Wayde, if you want to provide a little more color on that. Some of the pressure points and '25, the obviously Wayde talked about in his prepared remarks in '25 got some unique annualization of expenses that are going to put pressure on us. And you're right, '25 is going to be a tough year for EPS, but we absolutely would expect that to begin to recover in '26. We'd be extremely disappointed if we didn't start in the right direction in '26.

韋德，如果你想對此提供更多細節。一些壓力點和'25，顯然韋德在他準備好的演講中談到了'25，得到了一些獨特的年度費用化，這將給我們帶來壓力。您說得對，25 年對 EPS 來說將是艱難的一年，但我們絕對預計 EPS 會在 26 年開始復甦。如果我們在26年沒有朝著正確的方向前進，我們將會非常失望。

So Wayde if you want provide anything more in '25. I thought you provided a lot in your prepared remarks, but...

所以 Wayde，如果你想在 '25 中提供更多的東西。我以為您在準備好的發言中提供了很多內容，但是...

Yeah. Certainly, can just still have to say we're not guiding to '25 and '26, yet, there are certainly a lot of moving pieces. As we're in our 1st year post separation. We do have a lot going on to grow revenue and expand margins, and as Bryan said, resulting EPS growth over time.

是的。當然，我們仍然不得不說我們不會引導 25 年和 26 年，但肯定有很多可移動的部分。因為我們分居後已經過了第一年。我們確實做了很多努力來增加收入和擴大利潤率，正如布萊恩所說，隨著時間的推移，每股盈餘會成長。

However, we do think it's well understood that will be pressured by the annualization of some of these costs post spin in 2025. So just to list them, we've got the 3M supply mark-up that will annualize. We'll be annualizing our standard functional expenses and then below the line will be annualizing interest expense. And all of this is because we've got three quarters this year as a public company and we'll annualize the fourth quarter next year.

然而，我們確實認為，2025年分拆後，部分成本的年化將帶來壓力，這是可以理解的。為了列出這些內容，我們得到了年度化的 3M 供應加價。我們將把標準功能支出按年計算，然後線下將利息支出按年計算。而這一切都是因為我們今年作為一家上市公司已經有三個季度了，明年我們將對第四季進行年度化。

And then I didn't mean to touch on the SKU project as well because this one is just great, great progress out of the gate real nice start. We found that there was a lot of opportunity to take out a significant number of SKUs already in our first wave here. And the good news is they don't impact revenue in a material way. There's a very small impact.

然後我並不是想談論 SKU 項目，因為這個項目非常棒，取得了很大的進展，是一個很好的開始。我們發現，在第一波衝擊中，就有很多機會可以拿走大量的 SKU。好消息是它們不會對收入產生實質影響。影響很小。

We don't expect them to impact margins or revenue in 2024. And the real benefit is it will help us simplify the supply chain, it will save a few million dollars on rebranding as well because we don't have to rebrand these SKUs that had very low value to us. So the team is continuing to work on the next wave, which we do anticipate we'll have more of an impact on 2025. But that work is still underway and we don't have an update there yet.

我們預計它們不會影響 2024 年的利潤或收入。而真正的好處是它將幫助我們簡化供應鏈，同時也將節省數百萬美元的品牌重塑費用，因為我們不必重塑這些對我們來說價值很低的 SKU。因此，團隊正在繼續致力於下一波浪潮，我們預計我們將在 2025 年產生更大的影響。但這項工作仍在進行中，我們還沒有收到最新消息。

Great. Thanks a lot.

偉大的。多謝。

Vik Chopra, Wells Fargo.

喬普拉 (Vik Chopra)，富國銀行。

Hey, good afternoon and congrats on a nice quarter of me. So [by our math] be revenue guidance raise as about $80 million to $150 million upside to 2024. Maybe just help us understand what business segments are driving this? And then I had a follow up, please.

嘿，下午好，恭喜我度過了一個愉快的季度。因此，根據我們的計算，到 2024 年，收入預期將增加約 8,000 萬美元至 1.5 億美元。也許只是幫助我們了解哪些業務部門正在推動這項進程？然後我還有一個後續問題，請回答。

Yeah, Vik happy to take that. We don't break it down by segment, but what we can say is that the message that we put into the prepared remarks was the most important one. There's a good amount of risk as we separate the business and business continuity, and we gained a lot of confidence. If we would go from a long ways from having no quarters to having one quarter. As Bryan mentioned, it was a pivotal quarter for us. That's where the confidence really grew.

是的，維克很高興接受這個。我們不會按部分進行細分，但我們可以說的是，我們在準備好的發言中表達的訊息是最重要的。當我們將業務和業務連續性分開時，存在相當大的風險，但我們獲得了許多信心。如果我們能從沒有宿舍到擁有一個宿舍，那將會是一段很長的路要走。正如布萊恩所提到的，這對我們來說是一個關鍵的季度。正是從那時起，信心才真正增強。

And so it's really across the board that we're thinking that we're going to see some strength. Obviously, the backward recovery in MedSurge was a good size as Bryan called banking. It in the second quarter here, a good-sized bump for us. So it's that the business continuity and then also the SKU reduction program. We don't think it's going to have as much of an impact on '24. That would be just across the three segments with products, not including HIS.

因此，我們確實全盤認為我們將會看到一些力量。顯然，正如布萊恩所說的那樣，MedSurge 的反向復甦規模相當大。這是第二季度，對我們來說是一個很大的成長。因此，這既是業務連續性，也是 SKU 減少計劃。我們認為它不會對‘24’產生太大影響。這只是涵蓋三個產品部門，不包括 HIS。

Yeah. And I might just add to that too, you know, if you think about really four vectors and I won't go through all these, but these four vectors that you can accelerate growth with. There's no rocket science here that pretty basic but put the things you got to do to drive it. One of the first things you can do, the fastest impact is just upgrading talent to drive better commercial rigor and just changing incentives to your commercial organization to focus on growth in those are the things we can do right now.

是的。我可能還會補充一點，如果你真正考慮四個向量，我不會一一介紹，但這四個向量可以幫助你加速成長。這裡沒有什麼很基礎的火箭科學，但你需要做一些事情來推動它。您可以做的第一件事之一，也是最快的影響就是升級人才以推動更好的商業嚴謹性，並改變商業組織的激勵措施以專注於成長，這些都是我們現在可以做的事情。

We're bringing in great people. We've accelerated and promoted people that are very capable in the organization and bring people from the outside. That will have a dividend pretty quickly because they will increase the rigor and accountability in the organization, so that we would expect to help us in the back half of '24 and certainly into '25.

我們正在引進優秀人才。我們加速並提拔組織內非常有能力的人才，並從外部引進人才。這很快就會帶來紅利，因為他們將提高組織的嚴謹性和責任感，因此我們期望這將在2024年下半年，當然還有2025年為我們提供幫助。

Got it. Very helpful. And then just my follow-up question, can you just share some high-level feedback on your conversation with the activist? And just, provide an update as to how much of a stake that actually amassed? Thank you.

知道了。非常有幫助。然後我的後續問題是，您能否分享一些您與活動人士談話的高層回饋？並且，提供一下實際累積了多少股份的最新情況？謝謝。

As you would imagine, as a public company, we don't we don't talk about any individual investor. As said as a public company and humble people, we absolutely listen to our shareholders and appreciate the feedback, but probably no more to say about that.

正如你所想像的，作為一家上市公司，我們不會談論任何個人投資者。正如我所說，作為一家上市公司和謙遜的員工，我們絕對會聽取股東的意見並感謝他們的回饋，但對此可能沒有什麼可說的了。

Next question, please, operator.

接線員，請問下一個問題。

David Roman, Goldman Sachs.

高盛的大衛‧羅曼（David Roman）。

Thank you. Good afternoon, everybody. I want to get one in here on the financial side and then one follow up on the strategic planning side. Maybe just starting on with respect to the outlook for the balance of the year, I'm trying to put together some of the moving parts as it relates to first half versus second half and maybe Wayde, you could help us bridge a little bit commentary around the reiteration of the 21% to 23% operating margin. That's roughly what you did here in the first half with some of the commentary around the 3M supply agreement as well as the incremental investments at and what that implies for sort of an exit rate for the year. And then as we look at free cash flow year-to-date and the updated guidance, it implies a significant step up in cash utilization here in the second half can you maybe help us understand some of the moving parts there as well?

謝謝。大家下午好。我想先了解財務方面的狀況，然後再跟進一下策略規劃方面的狀況。也許只是從今年餘額的前景開始，我試圖整理一些與上半年和下半年相關的變動部分，也許 Wayde，你可以幫助我們就重申 21％ 至 23％ 的營業利潤率做出一些評論。這大致就是您在上半年所做的工作，包括對 3M 供應協議和增量投資的一些評論，以及這對今年的退出率意味著什麼。然後，當我們查看年初至今的自由現金流和更新後的指引時，這意味著下半年現金利用率將顯著提高，您能否幫助我們了解其中的一些變動因素？

Sure. So just to cover a little bit more David to your question on first half second half outlook. I think I touched on revenue, a good amount there, just highlighting that we had a couple of items in the first half that won't repeat in the second half pricing winning and then back order recovery, which is opportunistic, and we don't anticipate seeing that in the second half at this point. And so that's what gets us our revenue growth rate and it's a zero to 1% for the year. And so you can do the math on that for the second half. I do just want to highlight from our prepared remarks that there is a comp -- significant comp issue between Q3 and Q4. So that's important for revenue.

當然。所以，大衛，我只是想稍微回答一下你關於上半年下半年前景的問題。我想我提到了收入，那裡有相當多的收入，只是強調我們上半年有幾個項目不會在下半年重複定價獲勝和訂單恢復，這是機會主義的，我們預計目前不會在下半年看到這種情況。這就是我們的營收成長率，今年的營收成長率是 0 到 1%。所以你可以對下半部進行計算。我只是想從我們的準備好的發言中強調一下，第三季和第四季之間存在著重大的競爭問題。這對於收入來說很重要。

You mentioned bridging the and the exit rate around operating margins. The way we're thinking about this is Q2 had some headwinds in gross margins and operating margins for us. Those are offset with the favorability in revenue. And so that's what gives us confidence to hold that 21% to 23% for the year.

您提到了彌合營業利潤率和退出率之間的差距。我們對此的看法是，第二季我們的毛利率和營業利潤率遇到了一些阻力。這些都被收入的有利因素所抵消。因此，我們有信心今年的成長率將保持在 21% 至 23% 之間。

We're not going to comment on an exit rate at this point. We're not giving the quarterly guidance. Obviously, we've just got one quarter under our belt, and we've got a long ways to go, we're just not going to get to that level of detail.

我們目前不會對退出率發表評論。我們不提供季度指引。顯然，我們才剛度過一個季度，還有很長的路要走，我們無法達到那種細節。

But what we can tell you is, we really gained a lot of confidence in the quarter and we learned a lot about the business post separation. So it's building confidence and that's what allowed us to raise both the top and the bottom line here before we go -- just after our first quarter.

但我們可以告訴您的是，我們在本季度確實獲得了很多信心，並且我們對分離後的業務有了更多的了解。因此，這正在建立信心，這也是我們在第一季結束後能夠提高營收和淨利潤的原因。

You mentioned cash as well. I would say probably the biggest things that we're managing here post separation is just all of the timing of the inter-company work that we're doing, as well as standing up our capital expenditure processes. And so we do think we will be using more cash in the second half of the year to settle out some of those as well as ramping up our capital expenditure use in the second half.

您也提到了現金。我想說，分開後我們要管理的最大的事情可能是我們正在進行的所有公司間工作的時間表，以及建立我們的資本支出流程。因此，我們確實認為，我們將在下半年使用更多現金來解決其中的一些問題，並在下半年增加資本支出。

Got it. And then Bryan, I appreciate your comments on kind of being ready to share more with us, on the fourth quarter call. But I think you've made comments in other forums about kind of the turnaround, the top line being roughly a five year period of time. Can you maybe update us on any thoughts with respect to that outlook and how that falls into the context of the phasing of the different parts of the Solventum turnaround that you referenced earlier?

知道了。然後布萊恩，我很感謝你在第四季度電話會議上準備與我們分享更多內容的評論。但我認為您已經在其他論壇上對這種轉變發表了評論，頂線大致是五年時間段。您能否向我們介紹一下您對這一前景的看法，以及這與您之前提到的 Solventum 轉型不同部分分階段的背景如何？

Good to hear from. So Solventum, I'll repeat a little bit of what I said and then maybe add some additional color. I see this as -- an opportunity for us in our strategic plan to very clearly articulate what markets in sub-markets we're going to care about. We're going to double down in. And those will be our faster-growth markets, as you can imagine. And we're working through that now and expect to pick those by the end of 2024.

很高興收到你的來信。因此，Solventum，我會重複我所說的內容，然後可能會添加一些額外的顏色。我認為這對我們來說是一個機會，讓我們可以在策略規劃中非常清楚地表達出我們將關注的子市場中的哪些市場。我們會加倍努力。正如您所想像的，這些將是我們成長更快的市場。我們現在正在努力解決這個問題，預計在 2024 年底前完成。

Once we do that, that begins the shift of resources commercially R&D, M&A, when we get to that point and that begins to drive traction and focus in those areas that just takes time. But maybe I can double click on that revenue growth accelerators that I referenced that there were really four of those. And it just it -- again, there's no secret sauce here. If you've ever run a business and you've turned one around drove revenue acceleration. These are the things you have to do. It just a question of doing them and how much time they take.

一旦我們做到了這一點，就會開始將資源轉移到商業研發和併購上，當我們到達這一點時，就會開始推動和關注這些領域，只是需要時間。但也許我可以雙擊我提到的收入成長加速器，實際上有四個。就是這樣——再說一遍，這裡沒有什麼秘密。如果您曾經經營過一家企業，並且成功扭轉了企業虧損的局面，那麼您就可以加速營收成長。這些都是你必須要做的事。這只是一個做這些事情以及需要花多少時間的問題。

I just kind of start with the first is, as I referenced, getting great people in place now to drive rigor in our commercial organization is paramount, and it's the fastest way to drive revenue growth. Second, fastest way is commercial structure changes, either specialization or just increasing reach in those important spaces that we're going to concentrate on. Third, as you would expect, would be increasing the productivity of R&D. We have to do less of these iterative approaches in R&D and more impactful, more meaningful launches inside of the high-growth areas.

我首先要說的是，正如我所提到的，現在找到優秀人才來推動我們商業組織的嚴謹性是至關重要的，這是推動收入成長的最快方法。第二，最快的方式是改變商業結構，無論是專業化或只是增加我們將要集中精力的那些重要領域的影響力。第三，正如你所期望的，這將提高研發的生產力。我們必須在研發中減少這些迭代方法，並在高成長領域進行更有影響力、更有意義的發布。

And then probably in parallel with that, would be portfolio optimization. I look at that in two ways. The first would be tuck-in acquisitions to give more scale in those fast-growth markets and the other would be potentially exiting categories that are slow-growth, right, that those are the ways that you would get there.

然後可能同時進行的就是投資組合優化。我從兩個方面看待這個問題。第一種是進行間接收購，以便在快速成長的市場中擴大規模，另一種是可能退出成長緩慢的類別，對，這些都是實現目標的方法。

If I just think about the timing of those things kind of going to your question again on the talent side that's right now, maybe in the back half of '24 into '25, we should expect to see that benefit commercial structure changes just take a little longer because you got to know where you're going to do them and then you got to actually hire people and change the structure. That's more probably latter part of '25.

如果我只是考慮這些事情發生的時間，那麼回到你現在的人才方面的問題，也許在2024年下半年到2025年，我們應該會看到福利商業結構的變化需要更長的時間，因為你必須知道你要在哪裡做這些事情，然後你必須真正僱用人員並改變結構。這更有可能是 25 年後期。

If I think about R&D productivity, once you start a project, by best case when you start one is 2026, but likely beyond that, just depending on the product complexity the regulatory requirements. And then portfolio optimization, really at least on the acquisition side, depends on just deleveraging timing.

如果我考慮研發生產力，一旦你啟動一個項目，最好的情況是2026年，但可能超過這個時間，這取決於產品的複雜性和監管要求。然後，投資組合優化，至少在收購方面，實際上取決於去槓桿的時機。

And so when I think about the LRP, why these are important is because we're figuring out now the mix of these elements that we're going to need to accelerate growth where the major gaps are as we work through those that mix that will inform not just our LRP, but the time to accelerate the revenue growth. So hopefully that gives a little more color versus what I said in the past. But those are the elements to get us there.

因此，當我考慮 LRP 時，它們之所以重要是因為我們現在正在弄清楚我們需要加速成長的這些要素的組合，而主要的差距在於，當我們研究這些要素的組合時，這不僅會告知我們的 LRP，還會告知加速收入成長的時間。因此，希望這能比我過去所說的更生動。但這些都是幫助我們達成目標的要素。

That's great. Appreciate all the detail. Thank you.

那太棒了。感謝所有的細節。謝謝。

Vik Chopra, Wells Fargo.

喬普拉 (Vik Chopra)，富國銀行。

Hey, just hopping back to you for a couple of quick follow up. That $22 million of corporate and -- allocated expense of revenues, do you expect those to continue going forward or should we be building those into our revenue projections?

嘿，只是想快速跟進一下你的情況。2200 萬美元的企業和分配的收入費用，您是否預計這些金額會繼續增加，或者我們應該將其納入我們的收入預測中？

Then why the [asset Vik] that's an approximate number to the [$22 million ] for the rest of the area. So in other words, a that's a good estimate for the next couple of quarters this year.

那麼為什麼 [Vik 的資產] 與該地區其他部分的 [2200 萬美元] 相比是一個近似值。換句話說，這是對今年接下來幾季的一個很好的估計。

Okay. To build that $22 million roughly for the Q3 and Q4. Got it.

好的。為第三季和第四季籌集約 2200 萬美元。知道了。

And then I don't think I heard an updated FX assumption for the year. Can you help us out with that? Thank you.

我認為我沒有聽到今年更新的外匯假設。你能幫我們解決這個問題嗎？謝謝。

So FX, yeah. So we're not -- we just use the current FX rates at this point for the following. So Bryan actually have that?

是的，是 FX。因此，我們不會－我們只是使用目前的外匯匯率來進行以下操作。那麼布萊恩確實有這個嗎？

Yeah. So right now on the lapse assumption we provided from a revenue perspective is 50 basis points of impact, we did not update that. So safe to assume that's still our best guess.

是的。因此，目前我們從收入角度提供的失效假設是 50 個基點的影響，我們尚未更新這一點。因此可以放心地認為這仍然是我們最好的猜測。

And the way we do that Vik, we just take the current rates approximately right now and apply them. So we're expecting 50 basis points for the full year.

Vik，我們這樣做的方法是，我們只是採用目前的大致利率並應用它們。因此我們預計全年漲幅為 50 個基點。

Got it. Thank you very much.

知道了。非常感謝。

David Roman, Goldman Sachs.

高盛的大衛‧羅曼（David Roman）。

Thank you. Appreciate your taking the additional questions. Just maybe a few clarification items, maybe Wayde, starting with the tax rate. I know you talked about some catch-up items here that occurred in the quarter. But I think as you look at year-to-date tax rate and the updated guidance kind of puts the tax rate in that 20% to 21% range and the back half of the year, I guess, is that a fair characterization of where that that should land? And then secondly, you did make a passing reference to restructuring. Are you already at a point where you are ready to start rationalizing down costs? And is that and how is that impacting your outlook?

謝謝。感謝您回答這些附加問題。也許只需要澄清幾個事項，也許韋德，從稅率開始。我知道您談到了本季發生的一些追趕事件。但我認為，當您查看年初至今的稅率時，更新後的指引將稅率置於 20％ 至 21％ 的範圍內，而對於今年下半年的稅率，我想，這是對其應落入位置的合理描述嗎？其次，您確實順便提到了重組。您是否已準備好開始合理化降低成本？那會怎樣？

Sure. I'll pick up on tax rate. And then, Bryan, you want to talk about some of our strategies here. That's probably the right way to say it.

當然。我將了解稅率。然後，布萊恩，你想談談我們這裡的一些策略。這或許才是正確的說法。

So for tax rate, you've got it. Basically we've had better than expected tax rate for the first half of the year that we had a pretty sizable a year-to-date catch-up here in our first quarter post separation. And the second half is similar to what we expected for the full year when we gave our full year expectations. And this is one of the areas that has to settle out a little bit as we separate and our tax team is hard at work at it. So that's what we're comfortable with for a guide at this point and then from a restructuring standpoint, Bryan?

對於稅率，你已經知道了。基本上，我們上半年的稅率好於預期，在分離後的第一個季度，我們的年初至今的稅率已經大幅追趕上來。下半年的表現與我們給出的全年預期相似。這是我們分離時需要解決的領域之一，我們的稅務團隊正在努力解決這個問題。那麼，這就是我們目前感到滿意的指導方針，然後從重整的角度來看，布萊恩？

Yeah, a great question, David [digesting]. So what I would say is our work is that we do feel like we're in the right position to start this project in. I think it might be -- it might surprise you actually the primary reason for it.

是的，這個問題問得很好，大衛[消化]。因此我想說的是，我們確實覺得我們處於啟動這個專案的正確位置。我認為這可能是——實際上其主要原因可能會讓你感到驚訝。

So there's really two in my mind, but the one that comes to me is the most important is the restructuring is focused work Solventum way is focused on streamlining our structure so that we can complement a culture shift that we're putting into place. We are going to change the culture of this company. We're going to look for speed. We're going to move faster. We're going to be autonomous, and we're going to drive accountability in the organization.

所以在我看來實際上有兩個，但我認為最重要的是重組的重點工作，Solventum 的方式專注於精簡我們的結構，以便我們可以補充我們正在實施的文化轉變。我們將改變這家公司的文化。我們要追求速度。我們會行動得更快。我們將實現自治，並在組織內推動問責。

You have to have the right structure to drive that culture shift. And I promise you when we do it and we are doing it today. It will turn into growth that drives growth in an organization. And as we know, growth drives leverage in an organization in a really sustainable way.

你必須擁有正確的結構來推動這種文化轉變。我向你們保證，當我們這樣做時，我們今天就會這樣做。它將轉化為推動組織成長的成長。我們知道，成長能以真正永續的方式推動組織的槓桿作用。

The second part of a program like that is what you would normally do in the business in Wayde that might have done in the past. It's to allow us the headroom to not only invest for growth, which we have to do. That's a primary area of focus, but also drive margin expansion. So we absolutely feel like that's the right thing to do now for those reasons.

此類計劃的第二部分是您過去在 Wayde 開展業務時通常會做的事情。這為我們提供了不僅為了成長而投資的空間，這是我們必須做的。這是主要關注的領域，同時也推動利潤率的擴大。因此，出於這些原因，我們絕對認為這是現在應該做的正確的事情。

Bryan, I think you covered that really well, I'll just add. I think part of the question was around timing and just maybe to reflect back on the Investor Day in March. Where we laid out our four key actions for value creation. And we talked about driving efficiencies to fuel the investment that Bryan just covered. And so, no change in strategy, just sharing more about our efforts as we go here, that revenue growth remains the top metric for sure. But as Bryan said, driving efficiencies will help us first to fund additional growth initiatives as well as we look to expand gross margins over time.

布萊恩，我認為你已經很好地解釋了這一點，我只是想補充一下。我認為問題的一部分與時機有關，也許只是為了回顧三月的投資者日。我們列出了創造價值的四個關鍵行動。我們討論瞭如何提高效率來推動 Bryan 剛才談到的投資。因此，策略沒有改變，只是分享更多我們的努力成果，收入成長肯定仍然是最重要的指標。但正如布萊恩所說，提高效率將首先幫助我們資助額外的成長計劃，同時我們也希望隨著時間的推移提高毛利率。

Got it. Thanks clarification.

知道了。謝謝澄清。

Okay. It looks like there are no further questions. So I will close it by just saying, thank you so much for joining us on our first public call, and we look forward to engaging with many of you over the coming months.

好的。看起來好像沒有其他問題了。最後，我想說，非常感謝大家參加我們的第一次公開電話會議，我們期待在接下來的幾個月與大家交流。

Thanks and have a great day.

謝謝，祝您有愉快的一天。

Thanks so much.

非常感謝。

Thank you everyone, for attending today's conference call. You may now disconnect. Have a wonderful day.

感謝大家參加今天的電話會議。您現在可以斷開連線。祝您有美好的一天。