Circor International Inc (CIR) 2022 Q4 法說會逐字稿

Greetings, and welcome to the CIRCOR International's Fourth Quarter and Full Year 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I will now turn the conference over to Mr. Scott Solomon, Senior Vice President of the company's Investor Relations firm, Sharon Merrill Associates. Thank you, sir. You may begin.

您好，歡迎來到 CIRCOR International 的第四季度和 2022 年全年收益電話會議。 （操作員說明）提醒一下，正在錄製此會議。我現在將會議轉交給公司投資者關係公司 Sharon Merrill Associates 的高級副總裁 Scott Solomon 先生。謝謝你，先生。你可以開始了。

Thank you, and good morning, everyone. Before we begin, let me remind you that our earnings release and presentation are available on CIRCOR's website at investors.circor.com. If you'd like to receive copies of these materials, please e-mail cir@investorrelations.com and our IR team will provide them for you.

謝謝大家，早上好。在我們開始之前，讓我提醒您，我們的收益發布和演示文稿可在 CIRCOR 的網站 investors.circor.com 上獲取。如果您想收到這些材料的副本，請發送電子郵件至 cir@investorrelations.com，我們的 IR 團隊將為您提供。

Turning to Slide 2. Today's discussion will contain forward-looking statements as they are defined under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements represent the company's views only as of today, March 15, 2023. These expectations are subject to known and unknown risks, uncertainties and other factors, and actual results could differ materially from those anticipated or implied by today's remarks.

轉到幻燈片 2。今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款定義的前瞻性陳述。這些陳述僅代表公司截至 2023 年 3 月 15 日的觀點。這些預期受到已知和未知的風險、不確定性和其他因素的影響，實際結果可能與今天的言論預期或暗示的結果大不相同。

While CIRCOR may choose to update these forward-looking statements at a later date, the company specifically disclaims any duty to do so. You can find a full discussion of these factors in CIRCOR's Form 10-K, 10-Qs and other SEC filings also located on our website.

儘管 CIRCOR 可能會選擇在以後更新這些前瞻性陳述，但該公司明確表示不承擔任何這樣做的義務。您可以在我們網站上的 CIRCOR 表格 10-K、10-Q 和其他 SEC 文件中找到對這些因素的完整討論。

As referenced on Slide 3, on today's call, management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP financial measures to the comparable GAAP measures are available in our earnings press release. Please turn to Slide 4.

如幻燈片 3 所述，在今天的電話會議上，管理層將參考 GAAP 和非 GAAP 財務指標。我們的收益新聞稿中提供了非 GAAP 財務指標與可比的 GAAP 指標的對賬。請轉到幻燈片 4。

Joining me on today's call are Tony Najjar, CIRCOR's President and Chief Executive Officer; and AJ Sharma, Chief Financial Officer and Senior Vice President of Business Development. Tony will begin with a strategic overview and the highlights of our fourth quarter and full year performance. AJ will review the financials and discuss our guidance for the first quarter and full year 2023. Tony will provide our market outlook and then management will be happy to take your questions.

CIRCOR 總裁兼首席執行官 Tony Najjar 和我一起參加今天的電話會議；首席財務官兼業務發展高級副總裁 AJ Sharma。 Tony 將從戰略概述以及我們第四季度和全年業績的亮點開始。 AJ 將審查財務狀況並討論我們對 2023 年第一季度和全年的指導。托尼將提供我們的市場展望，然後管理層將很樂意回答您的問題。

Now please turn to Slide 5 as I hand the call over to Tony.

現在請轉到幻燈片 5，我將電話轉給托尼。

Thank you, Scott. Good morning, everyone, and thank you for joining us to discuss our fourth quarter and full year 2022 financial results. Before we review our results, I want to thank our teams across the globe for their continued focus on execution and for delivering very strong Q4 and full year 2022 results despite an overall challenging macroeconomic environment.

謝謝你，斯科特。大家早上好，感謝您加入我們討論我們的第四季度和 2022 年全年財務業績。在我們回顧我們的結果之前，我要感謝我們在全球的團隊，儘管宏觀經濟環境充滿挑戰，但他們一直專注於執行，並在第四季度和 2022 年全年取得了非常強勁的業績。

Since our Q3 earnings call, I have spent much of my time with our teams and customers, including having the opportunity to meet with our industrial valve sales team and customers, at Valve World in Dusseldorf, Germany in late November. More recently, I had the opportunity to engage with some of our key defense customers at the Middle East defense expo in Abu Dhabi. I also had the chance to spend more time with our teams at many of our locations in Europe and North America to kick off 2023 and recently visited our 2 manufacturing sites and shared services center in India.

自我們第三季度財報電話會議以來，我花了很多時間與我們的團隊和客戶在一起，包括有機會在 11 月下旬在德國杜塞爾多夫的閥門世界會見我們的工業閥門銷售團隊和客戶。最近，我有機會在阿布扎比的中東防務博覽會上與我們的一些主要防務客戶進行了交流。我也有機會花更多時間與我們在歐洲和北美許多地點的團隊一起度過 2023 年，最近還參觀了我們在印度的 2 個製造基地和共享服務中心。

I continue to be delighted by the level of commitment and focus on execution and customer satisfaction our teams display in every interaction and by the strength of the CIRCOR family of brands throughout the industries we serve.

我繼續對我們的團隊在每次互動中表現出的承諾水平和對執行力和客戶滿意度的關注以及我們所服務行業中 CIRCOR 系列品牌的實力感到高興。

After a very strong Q3, our team again performed exceptionally well in Q4, we navigated ongoing supply chain disruptions, the inflationary environment and rising energy costs to deliver 19% organic orders growth and a 550-basis point improvement in adjusted operating margin.

在非常強勁的第三季度之後，我們的團隊在第四季度再次表現出色，我們應對了持續的供應鏈中斷、通貨膨脹環境和不斷上漲的能源成本，實現了 19% 的有機訂單增長和調整後的營業利潤率提高 550 個基點。

Turning to Slide 6. Our results underscore continued success in executing on our strategic priorities, which include first, organic growth through new product development and leverage of our strong aftermarket position. Second, margin expansion, which includes value pricing, simplification, best-cost country sourcing in manufacturing and factory modernization. And third, reducing our leverage, which we accomplished in Q4 through strong cash generation from operations and adjusted EBITDA growth. We have made solid progress in reducing leverage over the past 4 quarters and look to continue that progress in 2023. AJ will provide more details on our improved leverage and outlook in his prepared remarks.

轉向幻燈片 6。我們的結果強調了在執行我們的戰略重點方面的持續成功，其中包括首先，通過新產品開發和利用我們強大的售後市場地位實現有機增長。第二，利潤擴張，包括價值定價、簡化、製造和工廠現代化中的最佳成本國家採購。第三，降低我們的槓桿率，這是我們在第四季度通過強勁的運營現金產生和調整後的 EBITDA 增長實現的。過去 4 個季度，我們在降低杠桿率方面取得了穩步進展，並希望在 2023 年繼續取得進展。AJ 將在他準備好的發言中提供更多關於我們提高槓桿率和前景的細節。

Turning to our fourth quarter and full year highlights on Slide 7. Organic orders increased 19% versus prior year, driven by growth in our Industrial segment. Industrial orders were up 29% organically in the quarter, supported by strength in our aftermarket, pricing and downstream. For the full year, Industrial orders were up 7% organically, driven by pricing, strength in our aftermarket and downstream, which more than offset the exit of the pipeline engineering business and timing of a large Navy order in the prior year.

轉到幻燈片 7 上的第四季度和全年亮點。在工業部門增長的推動下，有機訂單比去年同期增長了 19%。本季度工業訂單有機增長 29%，這得益於我們售後市場、定價和下游業務的強勁表現。全年，工業訂單有機增長 7%，受定價、售後市場和下游實力的推動，這大大抵消了管道工程業務的退出和上一年海軍大訂單的時機。

Orders in A&D were down slightly on an organic basis in the quarter, as strength in commercial aerospace and Navy was offset by timing of a large medical order in the prior year. For the full year, A&D orders were up 24% organically, driven by commercial aerospace recovery, aftermarket, new products for missiles and hydrogen applications, medical and pricing.

A&D 的訂單在本季度有機地略有下降，因為商業航空航天和海軍的實力被前一年的大型醫療訂單時間所抵消。全年，受商業航空航天復蘇、售後市場、導彈和氫應用新產品、醫療和定價的推動，A&D 訂單有機增長 24%。

Pricing in the year was strong in both segments, which is indicative of the power of our brands and our team's focus on maximizing value from the products and services we provide.

今年這兩個細分市場的定價都很強勁，這表明我們品牌的力量以及我們團隊專注於從我們提供的產品和服務中實現價值最大化。

Backlog at the end of Q4 was up 22% from the same period last year to $543 million, positioning us well for 2023. On the top line, we reported year-over-year revenue growth of 5% or 11% on an organic basis in Q4 with A&D up in the high teens and Industrial up mid-single digits. We accomplished this despite continued supply chain challenges in some of our businesses.

第四季度末的積壓訂單比去年同期增長 22% 至 5.43 億美元，這使我們在 2023 年處於有利地位。最重要的是，我們報告收入有機增長 5% 或 11%在第四季度，A&D 增長了十幾歲，工業增長了中個位數。儘管我們的一些業務持續面臨供應鏈挑戰，但我們還是實現了這一目標。

Our 62% increase in AOI in Q4 was supported by both segments with our Industrial segment delivering another step-change performance compared to prior year supported by our value pricing initiatives and cost controls. AJ will provide additional color on the margin drivers in the quarter during his prepared remarks.

我們在第四季度的 AOI 增長了 62%，這得到了這兩個部門的支持，我們的工業部門在我們的價值定價計劃和成本控制的支持下，與上一年相比實現了另一個階躍變化。 AJ 將在他準備好的發言中提供有關本季度保證金驅動因素的更多信息。

The solid demand environment for our products is evidenced by sustained order strength and a healthy backlog. We are positive about our business as we look ahead in 2023.

持續的訂單強度和健康的積壓證明了我們產品的穩定需求環境。展望 2023 年，我們對我們的業務持樂觀態度。

Moving to Slide 8. Each quarter, we like to highlight specific growth areas that our teams are driving. Today, I'll discuss industrial pumps and A&D innovations that showcase our product differentiation for severe service, mission-critical applications.

轉到幻燈片 8。每個季度，我們都喜歡強調我們的團隊正在推動的特定增長領域。今天，我將討論工業泵和 A&D 創新，它們展示了我們針對嚴苛服務、關鍵任務應用的產品差異化。

On the left side of the slide is a new 3-screw industrial pump capable of handling higher pressures and lower viscosity fluids. This product leverages our industry-leading technology for 3-screw pumps to penetrate applications that are typically handled by different pump technology. In head-to-head testing and severe service applications, CIRCOR's new pump has demonstrated performance far exceeding competitive products. The product is in an initial launch phase, and we are seeing early success. The pump will primarily serve the energy markets, which continues to show solid growth as well as selected general industrial applications that require the higher pressures and/or low viscosity performance.

滑道的左側是一個新的 3 螺桿工業泵，能夠處理更高壓力和更低粘度的流體。該產品利用我們行業領先的 3 螺桿泵技術來滲透通常由不同泵技術處理的應用。在面對面的測試和嚴苛的服務應用中，CIRCOR 的新型泵表現出遠超競爭產品的性能。該產品正處於初始發布階段，我們看到了早期的成功。該泵將主要服務於持續穩步增長的能源市場，以及需要更高壓力和/或低粘度性能的特定一般工業應用。

On the right side of the slide, our A&D team in France were selected to provide mission-critical helium valves for the new air ship being developed by French aeronautical company Flying Whales. Their ship will be lifted by helium cells and propelled by hybrid electric system powered by sustainable aviation fuel. Capable of transporting up to 60 tons of cargo, the innovative airship is designed to carry items such as blades for wind turbines, logs collected from steep mountain sites, construction materials being delivered to remote isolated location or food and aid after natural disasters where railways or roads may be unaccessible.

在幻燈片的右側，我們在法國的 A&D 團隊被選中為法國航空公司 Flying Whales 正在開發的新型飛艇提供任務關鍵型氦氣閥。他們的船將由氦電池舉起，並由以可持續航空燃料為動力的混合動力系統推進。這艘創新的飛艇能夠運輸多達 60 噸的貨物，旨在運載風力渦輪機葉片、從陡峭山區收集的原木、運送到偏遠偏遠地區的建築材料或鐵路或自然災害後的食品和援助等物品。道路可能無法通行。

Our team worked side-by-side with Flying Whales for nearly 18 months to develop the requirements for this critical application. We leverage our core technology and valve design and electromechanical actuation to develop an innovative solution. We are working with Flying Whales on another major package for the airship and are well positioned to capture additional content on this exciting program.

我們的團隊與 Flying Whales 並肩工作了將近 18 個月，以製定這一關鍵應用程序的要求。我們利用我們的核心技術和閥門設計以及機電驅動來開發創新解決方案。我們正在與 Flying Whales 合作開發飛艇的另一個主要包，並準備好在這個激動人心的計劃中捕捉更多內容。

Before I turn the call over to AJ, I would like to provide you a quick update on our strategic review process. As we announced in late February, and reiterated in this morning's earnings release, our Board, supported by our external advisers and the management team continues to progress with the review. Our Board for its external advisers is in dialogue with a number of parties that have expressed interest in acquiring all or parts of the company.

在我將電話轉給 AJ 之前，我想向您簡要介紹一下我們的戰略審查流程。正如我們在 2 月下旬宣布並在今天上午的收益發布中重申的那樣，我們的董事會在外部顧問和管理團隊的支持下繼續推進審查。我們的外部顧問董事會正在與許多表示有興趣收購公司全部或部分股份的各方進行對話。

Now let me turn the call over to AJ to cover the financial results in more detail.

現在讓我把電話轉給 AJ，以更詳細地介紹財務結果。

Thank you, Tony, and good morning, everyone. Let's turn to fourth quarter financial highlights on Slide 9.

謝謝你，托尼，大家早上好。讓我們轉向幻燈片 9 上的第四季度財務亮點。

Excluding previously divested businesses, we posted the highest backlog and the strongest industrial AOI margin, A&D AOI margin and consolidated AOI margin in at least the past 4 years. With the strong fourth quarter results, we built upon the step-change performance delivered in the prior quarter. We continue to see the financial benefits of the transformation we launched in early 2022. We believe we have a long runway for growth and margin expansion.

排除之前剝離的業務，我們公佈了至少過去 4 年中最高的積壓訂單和最強的工業 AOI 利潤率、A&D AOI 利潤率和綜合 AOI 利潤率。憑藉強勁的第四季度業績，我們在上一季度實現的階躍式業績的基礎上再接再厲。我們繼續看到我們在 2022 年初啟動的轉型帶來的財務收益。我們相信我們在增長和利潤率擴張方面還有很長的路要走。

Organic orders were up 19%, primarily driven by Navy, pumps aftermarket and downstream. We saw orders growth across our platforms in most of the regions and end markets. The order strength remains robust, which speaks to the power of our brands and the strength of our technologies.

有機訂單增長了 19%，主要受海軍、泵售後市場和下游的推動。我們在大部分地區和終端市場的平台上看到了訂單增長。訂單強度保持強勁，這說明了我們品牌的力量和我們技術的實力。

On the top line, our teams delivered double-digit organic revenue growth, with most of our businesses posting organic sales growth in the quarter. We continued to execute value pricing, maintain cost controls and drive growth. These efforts helped generate a 62% increase in adjusted operating income and 550 basis points of adjusted operating margin expansion.

最重要的是，我們的團隊實現了兩位數的有機收入增長，我們的大部分業務在本季度都實現了有機銷售增長。我們繼續執行價值定價，保持成本控制並推動增長。這些努力幫助調整後的營業收入增長了 62%，調整後的營業利潤率增加了 550 個基點。

We delivered $0.77 of adjusted EPS, up 67% and grew adjusted EBITDA 50% to $37 million. We posted strong improvement in adjusted free cash flow for the quarter, both sequentially and over prior year. Strong cash flow from operations more than offset special expenses and continued investments in CapEx.

我們交付了 0.77 美元的調整後每股收益，增長 67%，調整後的 EBITDA 增長 50% 至 3700 萬美元。我們公佈了本季度調整後自由現金流的強勁改善，無論是環比還是比去年同期。來自運營的強勁現金流足以抵消特殊費用和資本支出的持續投資。

Turning to Slide 10 and our Aerospace & Defense segment results. We saw 11.6% orders growth in Defense led by very strong growth in U.S. Navy, partly offset by timing of JSF order in prior period. Overall, Aerospace & Defense organic orders declined by 1% due to timing of a large medical order of approximately $16 million in prior period.

轉向幻燈片 10 和我們的航空航天與國防部門的結果。由於美國海軍的強勁增長，我們看到國防訂單增長 11.6%，部分被前期 JSF 訂單的時間抵消。總體而言，由於前期約 1600 萬美元的大型醫療訂單的時間安排，航空航天和國防有機訂單下降了 1%。

Organic revenue grew 18% with all of the Aerospace & Defense businesses posting revenue growth in the quarter. Aerospace & Defense delivered highest ever adjusted operating margin of 27.3%, fueled by pricing, volume and mix.

有機收入增長 18%，所有航空航天和國防業務在本季度均實現收入增長。在定價、銷量和組合的推動下，航空航天和國防實現了有史以來最高的調整後營業利潤率 27.3%。

Moving to our Industrial segment results on Slide 11. Organic orders were up 29%, driven by both core industrial and downstream. We were especially pleased to see continued momentum in our core industrial aftermarket which posted organic order growth of 23%. We remain laser-focused on growing this high-margin part of our business and see tremendous opportunity to leverage value pricing and take share.

轉向我們在幻燈片 11 上的工業部門結果。有機訂單增長了 29%，受核心工業和下游的推動。我們特別高興地看到我們核心工業售後市場的持續增長勢頭，有機訂單增長了 23%。我們仍然專注於發展我們業務的這一高利潤部分，並看到利用價值定價和分享的巨大機會。

Organic revenue grew 7% with broad-based strength across the platform that more than offset the exit of pipeline engineering. The exit of pipeline engineering impacted growth by 2 points. Industrial posted exceptional AOI growth of 109% and AOI margin expansion of 710 basis points. The margin expansion was largely a result of value pricing, cost optimization and exit of pipeline engineering.

有機收入增長 7%，整個平台的廣泛實力足以抵消管道工程的退出。管道工程的退出對增長產生了 2 個百分點的影響。工業領域 AOI 增長 109%，AOI 利潤率增長 710 個基點。利潤率的增長主要是價值定價、成本優化和管道工程退出的結果。

At 13.5% AOI margin, fourth quarter performance further validates the business differentiation and margin expansion potential implicit in our industrial platform. As we continue to find success with value pricing, OpEx optimization and aftermarket growth, and further supported by improvements in factory performance, we expect to deliver Industrial AOI margins of 18% to 20% within the next 3 to 5 years.

第四季度的 AOI 利潤率為 13.5%，進一步驗證了我們工業平台中隱含的業務差異化和利潤擴張潛力。隨著我們在價值定價、運營支出優化和售後市場增長方面繼續取得成功，並進一步得到工廠績效改善的支持，我們預計在未來 3 到 5 年內實現 18% 到 20% 的工業 AOI 利潤率。

Turning to Slide 12. Net leverage and compliance leverage have continued to improve throughout the year. We ended 4Q at net leverage of 4.2x which was 0.8x lower than 3Q and 2.1x lower than 1Q 2022. We remain focused on delevering and it remains our top priority. With our expectation of continued expansion of EBITDA, we anticipate exiting 2023 with net leverage in the mid- to high 3s, exclusive of any divestitures.

轉到幻燈片 12。淨槓桿率和合規槓桿率全年持續改善。我們以 4.2 倍的淨槓桿率結束了第四季度，比第三季度低 0.8 倍，比 2022 年第一季度低 2.1 倍。我們仍然專注於去槓桿化，這仍然是我們的首要任務。鑑於我們對 EBITDA 持續擴張的預期，我們預計到 2023 年淨槓桿率處於中高 3 位，不包括任何資產剝離。

Turning to Slide 13 and our expectations for first quarter and full year 2023. With record backlog of $543 million exiting the fourth quarter, we expect full year organic revenue growth of 3% at the midpoint of our range. Our strong backlog and current order trend helps derisk a demand-slowdown scenario. We expect pricing to remain a strong driver of AOI growth and margin expansion, particularly in our Industrial segment.

轉到幻燈片 13 以及我們對 2023 年第一季度和全年的預期。由於第四季度積壓量達到創紀錄的 5.43 億美元，我們預計全年有機收入增長 3%，處於我們範圍的中點。我們強大的積壓訂單和當前訂單趨勢有助於降低需求放緩情景的風險。我們預計定價仍將是 AOI 增長和利潤率擴張的強大驅動力，尤其是在我們的工業領域。

We continue to see signs of easing of supply chain constraints and moderating inflationary pressures. As in 2022, this year, we expect to make investments to enable growth in attractive segments. These investments include engineering resources to help develop new products, channel expansion and product localization to help grow in newer regions and factory modernizations to lower operating costs and enhance customer experience.

我們繼續看到供應鏈限制放鬆和通脹壓力緩和的跡象。與 2022 年一樣，今年我們預計將進行投資以實現有吸引力的細分市場的增長。這些投資包括工程資源以幫助開發新產品、渠道擴張和產品本地化以幫助在較新的地區發展和工廠現代化以降低運營成本和增強客戶體驗。

Supported by pricing, cost optimization and growth initiatives, we expect Q1 2023 adjusted operating income of $17.5 million to $19 million, an increase of 75% at the midpoint. For the full year, we expect AOI of $90 million to $105 million, up 11% at the midpoint. Interest expense is expected to be approximately $60 million for the full year, up approximately $16 million compared to prior year. The increase in interest cost is a result of higher rates. We have assumed additional 50 basis points Fed [would] increase in March followed with 25 basis points in May and another 25 basis points in June.

在定價、成本優化和增長計劃的支持下，我們預計 2023 年第一季度調整後的營業收入為 1750 萬美元至 1900 萬美元，中點增長 75%。對於全年，我們預計 AOI 為 9000 萬至 1.05 億美元，中點增長 11%。全年利息支出預計約為 6000 萬美元，比上年增加約 1600 萬美元。利息成本的增加是利率上升的結果。我們假設美聯儲 [would] 在 3 月份額外加息 50 個基點，然後在 5 月份加息 25 個基點，在 6 月份再加息 25 個基點。

As a result of higher interest cost, we expect full year adjusted EPS to be in the range of $1.19 to $1.74. Overall, we are bullish about 2023 and continue to build a strong foundation for delivering an improving performance. I'll hand the call back to Tony to discuss our market outlook for orders on Slide 14.

由於利息成本較高，我們預計全年調整後每股收益將在 1.19 美元至 1.74 美元之間。總體而言，我們對 2023 年持樂觀態度，並繼續為實現更好的業績奠定堅實的基礎。我會將電話轉回給托尼，討論我們對幻燈片 14 訂單的市場前景。

Thank you, AJ. Looking ahead, we expect full year 2023 orders to be up low-single digits following the very strong Q4 and full year 2022. We also expect a book-to-bill ratio over 1, supporting continued future growth. In our general industrial business, we expect orders to be up low-single digits following a strong 2022. Strength in the aftermarket and pricing will be somewhat offset by lower core market activities.

謝謝你，阿傑。展望未來，我們預計 2023 年全年訂單將在非常強勁的第四季度和 2022 年全年之後增長至低個位數。我們還預計訂單出貨比將超過 1，以支持未來的持續增長。在我們的一般工業業務中，我們預計訂單將在強勁的 2022 年之後增長至低個位數。售後市場和定價的強勁勢頭將在一定程度上被較低的核心市場活動所抵消。

In commercial marine, we also expect low single-digit organic growth, driven mostly by the aftermarket, supported by increased utilization and pricing.

在商業海運方面，我們還預計低個位數的有機增長，主要由售後市場推動，並受到利用率和定價增加的支持。

In downstream oil and gas, we expect orders to be down in high-double digits following a very strong 2022. This is primarily driven by timing of large capital projects booked in Q4. Our team is actively pursuing several major opportunities in North America, Latin America and India, which could significantly improve the outlook.

在下游石油和天然氣領域，我們預計訂單將在 2022 年非常強勁之後下降兩位數。這主要是由於第四季度預訂的大型資本項目的時間安排所致。我們的團隊正在北美、拉丁美洲和印度積極尋求幾個重大機會，這可能會顯著改善前景。

Elsewhere in the segment, we expect orders to be up high double digits, primarily driven by naval programs in the U.S. and Europe.

在該領域的其他地方，我們預計訂單將增長兩位數，這主要是由美國和歐洲的海軍計劃推動的。

Turning to Aerospace & Defense, we expect high single-digit orders growth in this segment. In our defense business, we expect low double-digit orders growth. This growth is driven by increased activities in naval programs, new products for missile fusing devices and space applications and pricing.

談到航空航天和國防，我們預計該領域的訂單將實現高個位數增長。在我們的國防業務中，我們預計訂單將實現兩位數的低增長。這種增長是由海軍計劃活動的增加、導彈融合裝置的新產品以及空間應用和定價推動的。

In commercial aerospace, we expect mid-double-digit orders growth, primarily driven by the continued market recovery for the single-aisle platforms at Airbus and Boeing, as well as the increased activity in aftermarket supported by pricing and the rebound in air travel.

在商用航空航天領域，我們預計訂單將實現中等兩位數增長，這主要是由於空中客車和波音單通道平台的市場持續復甦，以及定價和航空旅行反彈支持的售後市場活動增加。

Elsewhere in this segment, we expect orders to be down high-single digits due to timing of large medical orders.

在該細分市場的其他地方，我們預計由於大型醫療訂單的時間安排，訂單將下降高個位數。

Turning to Slide 15. In summary, we are extremely pleased with our strong finish in 2022, and we are well positioned as we move into 2023 with strong momentum. We expect to continue to leverage our strong aftermarket position in our Industrial segment and deploy our value-based pricing and 80/20 principles across the organization, generating margin expansion and staying ahead of inflation despite the current macroeconomic climate.

轉到幻燈片 15。總而言之，我們對我們在 2022 年的強勁表現感到非常滿意，並且在我們以強勁的勢頭進入 2023 年時我們處於有利地位。我們希望繼續利用我們在工業部門強大的售後市場地位，並在整個組織中部署我們基於價值的定價和 80/20 原則，儘管當前的宏觀經濟環境不佳，但仍會擴大利潤並保持領先於通貨膨脹。

We continue to benefit from the ongoing rebound of the commercial aerospace market and look for further momentum in our defense business, driven by our positions on key platforms, new product development and the strength in the aftermarket. We strive to maximize value creation for our shareholders, pursuing organic revenue and margin growth through new product development, value-based pricing, simplification and cost-out actions while at the same time, pursuing the parallel path of a potential strategic transaction.

我們繼續受益於商業航空市場的持續反彈，並在我們在關鍵平台上的地位、新產品開發和售後市場實力的推動下，尋求國防業務的進一步發展。我們努力為股東創造最大價值，通過新產品開發、基於價值的定價、簡化和成本節約行動追求有機收入和利潤增長，同時追求潛在戰略交易的平行路徑。

We expect our value pricing strategy to continue to drive growth and margin expansion as we look ahead to 2023 and beyond. We are also continuing to evaluate further simplification opportunities in the businesses and at corporate. While our industry continues to be affected by various macroeconomic factors and disruptions, we remain focused on the areas within our control to minimize the impact from these headwinds and deliver growth and margin expansion.

展望 2023 年及以後，我們預計我們的價值定價策略將繼續推動增長和利潤率擴張。我們還在繼續評估業務和公司的進一步簡化機會。雖然我們的行業繼續受到各種宏觀經濟因素和乾擾的影響，但我們仍然專注於我們控制範圍內的領域，以盡量減少這些不利因素的影響，並實現增長和利潤率擴張。

Now AJ and I would be happy to take your questions. Operator, please open the line for Q&A.

現在 AJ 和我很樂意回答您的問題。接線員，請打開Q&A線路。

(Operator Instructions) Our first question comes from the line of Andy Kaplowitz with Citi.

（操作員說明）我們的第一個問題來自花旗銀行的 Andy Kaplowitz。

This is Piyush on behalf of Andy. So obviously a strong quarter here, and you touched on simplification and value pricing helping you, but help us understand a little more, are the benefits from these initiatives coming faster than your expectation? Like 15.5% of margin is new for CIRCOR. So how much of this do you think is sustainable going forward?

我是 Piyush 代表 Andy。所以很明顯這裡是一個強勁的季度，你談到了簡化和價值定價幫助你，但幫助我們了解更多，這些舉措帶來的好處是否比你的預期更快？ 15.5% 的保證金對 CIRCOR 來說是新的。那麼，您認為其中有多少是可持續發展的？

Yes. Most of the benefit is coming from pricing, about $10 million net in Q4. And obviously, there were simplification actions in total for the year. We have taken out about $14 million on a run rate basis with some of it carrying over into 2023. We took actions very early in the year to drive the pricing. And you can say in some cases, it did come faster than we expected, but we did take very specific actions that have driven these price increases in both segments with Industrial driving a significant portion of the pricing in the year. And then obviously, it showed up in Q3 and more in Q4.

是的。大部分收益來自定價，第四季度淨收益約為 1000 萬美元。顯然，這一年總共有簡化行動。我們已按運行率計提了約 1400 萬美元，其中一些結轉至 2023 年。我們在年初採取了行動來推動定價。你可以說在某些情況下，它確實來得比我們預期的要快，但我們確實採取了非常具體的行動，推動了這兩個領域的價格上漲，其中工業推動了今年定價的很大一部分。然後很明顯，它出現在第三季度，第四季度更多。

As we look ahead to 2023, we expect similar pricing to what we achieved in 2022. We also expect more of it to drop to the bottom line because of some of the easing and energy costs and other things that were headwinds in 2022.

展望 2023 年，我們預計定價將與 2022 年類似。我們還預計，由於一些寬鬆政策和能源成本以及 2022 年的其他不利因素，更多的定價將降至底線。

Got it. And just following up on that, like for your 2023 guidance, you have obviously given a little bit of wide range here. So can you maybe elaborate on what's baked into the lower end of your guidance range? And what needs to go right to get you to that higher end of that range.

知道了。就此而言，就像你的 2023 年指導一樣，你顯然在這裡給出了一些廣泛的範圍。那麼，您能否詳細說明您的指導範圍的低端是什麼？以及需要做些什麼才能使您達到該範圍的高端。

Yes. Piyush, I can take that. So if you look at our internal plans, our bottoms-up plan, we are targeting the high end of the range. The low end of the range takes into account for unforeseen external shocks that may impact our businesses in 2023. So if you ask us, we feel, based on what we know today, fairly comfortable hitting the high end of the range. The low end is a risk assessment on external factors unknown to us that may impact us in the remainder of the year.

是的。 Piyush，我可以接受。所以如果你看看我們的內部計劃，我們自下而上的計劃，我們的目標是范圍的高端。該範圍的低端考慮了可能在 2023 年影響我們業務的不可預見的外部衝擊。因此，如果您問我們，根據我們今天所知道的情況，我們覺得達到該範圍的高端相當舒服。低端是對我們未知的可能在今年剩餘時間影響我們的外部因素的風險評估。

And I'll add to that, based on what we know today, we haven't seen any significant slowdown. So at least the way Q1 has started, we haven't seen any slowdown yet in the markets. But as AJ mentioned, we did factor some slowdown in our guidance, which is I think a very conservative based on what we see today.

我還要補充一點，根據我們今天所知道的，我們沒有看到任何明顯的放緩。因此，至少從第一季度開始的方式來看，我們還沒有看到市場出現任何放緩。但正如 AJ 所提到的，我們確實在我們的指導中考慮了一些放緩，我認為這是基於我們今天所看到的非常保守的。

Got it. Very helpful. And AJ, on free cash flow, it kind of recovered in 4Q. Maybe elaborate a little bit here. Is it the operating environment easing or are there any actions that you have been taking that kind of helps you get to a positive conversion in 2023 and eventually to that 90% to 95% long-term target that the company has?

知道了。很有幫助。而 AJ，在自由現金流方面，它在第四季度有所恢復。也許在這裡詳細說明一下。是經營環境正在緩和，還是您一直在採取任何行動，以幫助您在 2023 年實現積極的轉化，並最終實現公司設定的 90% 至 95% 的長期目標？

Yes. So I would say Piyush, 2023 will still be a transitional year for us when it comes to free cash flow. We would have certain special payments tied to the strategic review that's undergoing. The CapEx will be in excess of depreciation like it was in 2022. But beyond 2023, I think things will normalize for CIRCOR from a free cash flow standpoint. So as we look into 2023 compared to 2022, the other big element impacting free cash flow in 2022 was consumption of cash and working capital. And if you remember, working capital was built in 2 places, supporting our U.S. Navy programs and building up inventory, particularly in our pumps businesses to safeguard customers against supply disruptions.

是的。所以我想說 Piyush，在自由現金流方面，2023 年對我們來說仍然是過渡年。我們會有一些與正在進行的戰略審查相關的特殊付款。資本支出將像 2022 年那樣超過折舊。但在 2023 年之後，我認為從自由現金流的角度來看，CIRCOR 的情況將會正常化。因此，當我們將 2023 年與 2022 年進行比較時，影響 2022 年自由現金流的另一個重要因素是現金和營運資金的消耗。如果您還記得的話，營運資金建立在兩個地方，支持我們的美國海軍計劃和建立庫存，特別是在我們的泵業務中，以保護客戶免受供應中斷的影響。

So we don't expect working capital to build up in 2023 in any meaningful way. The unlocking of working capital from our U.S. Navy programs, which is probably close to $20 million of cash opportunity for us, that comes in between the second half of 2023 and into 2024. And the way we have forecasted leverage, you've taken a more conservative view on free cash flow, and we're saying that unlocking of working capital from U.S. Navy happens in 2024.

因此，我們預計營運資金不會在 2023 年以任何有意義的方式增加。在 2023 年下半年到 2024 年之間，從我們的美國海軍計劃中釋放營運資金，這對我們來說可能是接近 2000 萬美元的現金機會。我們預測槓桿的方式，你已經採取了對自由現金流持更保守的看法，我們說美國海軍的營運資金將於 2024 年釋放。

Our next question comes from the line of Nathan Jones with Stifel.

我們的下一個問題來自 Nathan Jones 與 Stifel 的對話。

I'm going to start with a couple of questions on the strategic review. I think it was a year and a day ago that it was announced. Can you just give us a few comments on why this is taking so long? I mean, it wouldn't typically take this long. I mean I imagine that it probably causes some internal disruptions with talent retention and acquisition given the uncertainty? And any comments you can make on whether or not you think it's impacting your ability to win business with this uncertainty around the company.

我將從關於戰略審查的幾個問題開始。我認為它是在一年零一天前宣布的。您能否就為什麼需要這麼長時間給我們一些評論？我的意思是，通常不會花這麼長時間。我的意思是，我認為鑑於不確定性，這可能會導致人才保留和招聘方面的一些內部中斷？對於您是否認為這會影響您在公司周圍的這種不確定性下贏得業務的能力，您可以發表任何評論。

So Andy, the last year -- Nathan, last year was basically spent focusing on completing the restatement, as you know, which we finished in September. And then after that, we started to more actively work the process. The process is underway as we have communicated a couple of times now recently. So that's really what we can say about that at this point. But again, last year was a big focus here to complete the restatement, which came up early in the year.

所以安迪，去年 - 內森，去年基本上專注於完成重述，如你所知，我們在 9 月完成了重述。在那之後，我們開始更積極地處理這個過程。這個過程正在進行中，因為我們最近已經溝通了幾次。所以這就是我們現在可以說的。但同樣，去年是完成今年年初提出的重述的一大重點。

From a talent perspective, we have basically maintained our key talent and the businesses. The businesses are focused on execution as it shows up in our results. So we haven't had any issues attracting talent. From a customer's perspective, the question doesn't really come up very much. And when it does, we explain where we are. But it really hasn't had any impact from the customers and order perspective. And again, the results, I think, speak to that. So that's where we are. We'll continue to communicate as we make progress with the review. But at this point, all we can say is the process is underway.

從人才的角度來看，我們基本保持了我們的核心人才和業務。這些業務專注於執行，因為它顯示在我們的結果中。所以我們在吸引人才方面沒有任何問題。從客戶的角度來看，這個問題並沒有真正出現。當它出現時，我們會解釋我們的位置。但從客戶和訂單的角度來看，它確實沒有任何影響。我認為，結果再次說明了這一點。這就是我們的處境。隨著審核取得進展，我們將繼續溝通。但在這一點上，我們只能說這個過程正在進行中。

Okay. I'll go on to Aerospace & Defense. With very high margins in the quarter, and I think all-time record for the company, can you talk about the drivers of that margin performance in the fourth quarter and whether there was anything more discrete that might have driven it up or it's more of a sustainable level you think you can hold?

好的。我將繼續學習航空航天與國防。本季度的利潤率非常高，而且我認為是公司的歷史記錄，你能談談第四季度利潤率表現的驅動因素嗎？您認為可以保持的可持續水平？

In Q4, typically, we do see higher margins in A&D, and it's basically a lot of the spot orders that we received during the year, which kind of start to shift in Q3 and Q4 and that's where most of our pricing is coming in. So it's pricing and then it's volume. It's usually our highest volume quarter in the year as well. So these are the 2 key elements, basically.

通常，在第四季度，我們確實看到 A&D 的利潤率更高，這基本上是我們在這一年收到的大量現貨訂單，這種情況在第三季度和第四季度開始發生變化，這就是我們大部分定價的來源。所以它是定價，然後是數量。這通常也是我們一年中銷量最高的季度。所以這些基本上是 2 個關鍵要素。

So this is not really a new kind of baseline level for A&D margins. It's more typical seasonality and a good performance during the quarter?

因此，這並不是一種新的 A&D 利潤率基線水平。這是更典型的季節性和本季度的良好表現？

Yes, I think that's the appropriate way of factorizing it, Nathan. And as we look into 2023, we do expect on a full year basis, A&D margins to expand slightly but we're not -- at least at this time, we're not baking in an equally strong margin quarter for Aerospace & Defense in 2023.

是的，我認為這是分解它的合適方法，Nathan。當我們展望 2023 年時，我們確實預計在全年基礎上，A&D 利潤率會略有增長，但我們不會——至少在這個時候，我們不會在航空航天和國防的同樣強勁的利潤率季度烘烤2023.

Okay. A couple on cash and investments. The -- you guys have talked about growth investments, CapEx for various reasons. Can you provide a little more color on kind of the magnitude of the incremental investments that you're making in 2023, both that run through the P&L and that are going to run through CapEx?

好的。一對現金和投資。出於各種原因，你們談到了增長投資和資本支出。您能否更詳細地說明您在 2023 年進行的增量投資的規模，包括貫穿損益表和將貫穿資本支出的增量投資？

Yes. I'll have Tony give you some color on the types of investments you're making and why we're making these investments. But quantifying it for you, I would say the amount of CapEx that's exceeding depreciation, that's the amount of CapEx that's truly tied to the factory modernization that is well underway in our 2 largest factories in [Kornwestheim] and Monroe. So as we're looking at 2023, we expect to spend about $10 million of CapEx in excess of depreciation. We have the option to throttle it down if we feel that would be appropriate. But that's to give you a sense of the magnitude. And once we get past 2023, the pace of CapEx investments will moderate in a very meaningful way.

是的。我會讓托尼給你一些顏色，說明你正在進行的投資類型以及我們進行這些投資的原因。但是為你量化它，我會說超過折舊的資本支出金額，這是真正與工廠現代化相關的資本支出金額，我們在 [Kornwestheim] 和 Monroe 的 2 家最大工廠正在進行中。因此，當我們展望 2023 年時，我們預計將花費約 1000 萬美元的資本支出超過折舊。如果我們認為合適，我們可以選擇降低它。但那是為了讓您了解規模。一旦我們過了 2023 年，資本支出投資的步伐將以一種非常有意義的方式放緩。

So I expect 2024 onwards, CapEx equating depreciation again for the company.

因此，我預計從 2024 年開始，公司的資本支出將再次等同於折舊。

Yes. The additional investments, Nathan, beyond CapEx is really a new product development. We see opportunities in very specific areas in Industrial and A&D and then we are making investments. Some of it is customer funded, but not all of it. So there is investments that we are continuing to make where we see good business cases for new products.

是的。 Nathan，超出資本支出的額外投資實際上是一種新產品開發。我們在工業和 A&D 的非常具體的領域看到了機會，然後我們進行了投資。其中一些是客戶資助的，但不是全部。因此，在我們看到新產品的良好商業案例時，我們將繼續進行投資。

Is there a number you can give us on what that investment is incremental that's being paid for by CIRCOR?

關於 CIRCOR 支付的增量投資，您是否可以提供一個數字？

It's about $4 million or so.

大約400萬美元左右。

(Operator Instructions) Our next question comes from the line of Brett Kearney with Gabelli.

（操作員說明）我們的下一個問題來自 Brett Kearney 和 Gabelli。

Had the nice order from the downstream valves business in the quarter. And it sounds like although you're not baking much into the expectation this year, there is a number of opportunities out there across a few different geographic regions. I guess on the downstream valves portion of the Industrial business, can you just talk about overall kind of the project funnel, the tone of activity you're hearing from customers? And then what -- obviously, we've seen the very strong margin performance in Industrial as a whole, what margin expectations you have both on the order you booked in the quarter and kind of maybe on what some of those projects out on the horizon are shaping up as.

本季度來自下游閥門業務的訂單不錯。聽起來雖然您對今年的期望不高，但在幾個不同的地理區域中存在許多機會。我想在工業業務的下游閥門部分，你能談談項目漏斗的整體類型，你從客戶那裡聽到的活動基調嗎？然後 - 顯然，我們已經看到整個工業領域的利潤率表現非常強勁，您對本季度預訂的訂單以及其中一些項目的利潤率預期有多大正在形成。

So in downstream, in total, we're tracking about $100 million of various opportunities, both capital and then turnarounds, which is basically refits that we could book in the next 12 months or so. So we haven't factored all of that into our forecast, obviously, because there's always timing risk that we could see but that's kind of the funnel. It's heavy North America, and then there's good activities in Latin America and India, where we have seen some good recent successes.

因此，在下游，我們總共跟踪了大約 1 億美元的各種機會，包括資本和周轉，這基本上是我們可以在未來 12 個月左右預訂的改裝。所以我們沒有將所有這些都考慮到我們的預測中，顯然，因為我們總是可以看到時間風險，但這就是漏斗。這是沉重的北美，然後在拉丁美洲和印度有很好的活動，我們最近在這些地方看到了一些不錯的成功。

As far as the margin, industrial margins, the big lift, as we mentioned, came from pricing, being a significant factor. There was also some leverage of the volume and then overall cost simplifications or cost out actions.

至於利潤率，工業利潤率，正如我們提到的那樣，巨大的提升來自定價，這是一個重要因素。還有一些數量的槓桿作用，然後是總體成本簡化或成本削減行動。

Thank you. There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

謝謝。目前沒有其他問題。今天的會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。