Circor International Inc (CIR) 2023 Q1 法說會逐字稿

Greetings, and welcome to the CIRCOR International First Quarter 2023 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.

大家好，歡迎參加CIRCOR International 2023年第一季財報電話會議。 （操作員指示）提醒一下，本次會議正在錄音。現在，我將把電話交給公司投資人關係公司Sharon Merrill Associates的高級副總裁Scott Solomon先生。謝謝您，先生。您可以開始了。

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，早安。在開始之前，我想提醒大家，我們的收益報告和簡報可在 CIRCOR 的網站 investors.circor.com 上取得。如果您想取得這些資料的副本，請發送電子郵件至 CIR@investorrelations.com，我們的投資者關係團隊將為您提供。

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, May 11, 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.

翻到幻燈片 2。今天的討論將包含根據美國 1995 年私人證券訴訟改革法的安全港條款定義的前瞻性聲明。這些陳述僅代表本公司截至 2023 年 5 月 11 日的觀點。這些預期受已知和未知風險、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有重大差異。

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 filings also located on our website.

雖然CIRCOR可能會選擇在稍後更新這些前瞻性聲明，但公司明確表示不承擔任何更新義務。您可以在我們網站上的CIRCOR 10-K、10-Q表格和其他文件中找到有關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 measures to the comparable GAAP measures are available in our earnings press release.

如幻燈片3所示，在今天的電話會議上，管理階層將參考GAAP和非GAAP財務指標。非GAAP指標與可比較GAAP指標的對帳表可在我們的財報新聞稿中找到。

Please turn to Slide 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 first quarter 2023 results. AJ will review the financials and discuss our guidance for the second quarter and full year 2023. Tony will provide our market outlook and then management will be happy to take your questions. Now please turn to Slide 5 as I hand the call over to Tony.

請翻到幻燈片4。今天與我一起參加電話會議的還有CIRCOR總裁兼執行長Tony Najjar，以及財務長兼業務發展資深副總裁AJ Sharma。 Tony將首先進行策略概述，並介紹我們2023年第一季業績的亮點。 AJ將回顧財務狀況，並討論我們對2023年第二季和全年的預期。 Tony將介紹我們的市場前景，然後管理層將很樂意回答大家的提問。現在，請翻到投影片5，我將把電話交給Tony。

Thank you, Scott. Good morning, everyone, and thank you for joining us to discuss our first quarter 2023 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 another solid quarter despite the ongoing macroeconomic challenges.

謝謝，斯科特。大家早安，感謝大家與我們一起討論我們2023年第一季的財務表現。在回顧業績之前，我想感謝我們全球各地的團隊，感謝他們持續專注於執行，並在持續的宏觀經濟挑戰下，再次取得了穩健的業績。

Since our year-end earnings call, I have spent most of my time with our teams and customers in Europe and North America, including having the opportunity to participate in the supplier conference with one of our top U.S. defense customers to discuss the expected ramp-up of a new key defense program that we are supporting.

自從我們召開年終收益電話會議以來，我大部分時間都與歐洲和北美的團隊和客戶在一起，包括有機會與我們美國最大的國防客戶之一一起參加供應商會議，討論我們所支持的一項新的關鍵國防計劃的預期增長。

Recently, I also had the opportunity to visit our manufacturing site in Tangier, Morocco. There, our dedicated team with more than 150 members continues to optimize lean manufacturing processes to support the growth in demand for our hydraulic and electromechanical products from our commercial aerospace customers.

最近，我還有機會參觀了我們位於摩洛哥丹吉爾的生產基地。在那裡，我們擁有150多名成員的專業團隊不斷優化精益生產流程，以滿足商用航空航太客戶對我們液壓和機電產品日益增長的需求。

Our team in Morocco, supported by our A&D team from Corona, California has also recently established advanced manufacturing capabilities for Brushless DC Motors. This added capability is geared to supporting the expected growth from new programs and applications we recently captured.

我們在摩洛哥的團隊在加州科羅納的航空航太與國防團隊的支持下，最近也建立了先進的無刷直流馬達製造能力。這項新增能力旨在支持我們近期獲得的新項目和新應用帶來的預期成長。

I continue to be delighted by the level of customer intimacy and innovation that our teams are driving and by the strength of the CIRCOR family of brands throughout the industries we serve. Our team performed exceptionally well in the first quarter, delivering excellent results supported by both segments. We delivered 13% organic orders growth, 9% revenue growth or 13% on an organic basis as well as 840 basis points of margin expansion. The margin expansion was supported by our value pricing initiative with a benefit from pricing more than offsetting the impact of inflation.

我持續為我們的團隊所推動的客戶親密度和創新水平感到欣喜，也為CIRCOR品牌系列在我們服務的各個行業所展現的實力感到欣喜。我們的團隊在第一季表現出色，在兩個部門的共同推動下，取得了優異的業績。我們實現了13%的有機訂單成長、9%的營收成長（有機成長13%），以及840個基點的利潤率成長。利潤率的成長得益於我們的價值定價計劃，定價帶來的收益足以抵銷通貨膨脹的影響。

Turning to Slide 6. Our Q1 performance underscores our team's continued focus and success in executing on our strategic priorities. These include: first, margin expansion, which includes value pricing, simplification, best-cost country sourcing and manufacturing and factory modernization; second, organic growth, renew product development and leverage of our strong aftermarket position; and third, reducing our leverage, which we accomplished in Q1 to a solid adjusted EBITDA growth. AJ will provide more details on our improved leverage and outlook in his prepared remarks.

翻到幻燈片6。我們第一季的業績凸顯了我們團隊在執行策略重點方面的持續專注和成功。這些重點包括：首先，利潤率提升，包括價值定價、簡化流程、最佳成本國家採購、製造和工廠現代化；其次，有機增長、新產品開發以及我們強大的售後市場地位的利用；第三，降低槓桿率，我們在第一季度實現了穩健的調整後EBITDA增長。 AJ將在其準備好的演講稿中詳細介紹我們槓桿率的提升和前景展望。

Turning to our first quarter highlights on Slide 7. Organic orders increased 13% versus prior year driven by growth in both segments. Orders in A&D were up 12% organically. The strength in A&D was driven by the continued recovery of the commercial aerospace market, strength in our naval defense programs and value pricing in both, before market and aftermarket.

回顧幻燈片7上的第一季亮點。受兩個部門成長的推動，有機訂單較上年同期成長了13%。航空航太和國防業務訂單有機成長了12%。航空航太和國防業務的強勁成長得益於商用航空航太市場的持續復甦、海軍防務專案的強勁表現以及售前和售後市場的價值定價。

Industrial orders were up 14% organically, supported by strength in our aftermarket, pricing and downstream oil and gas, primarily in the aftermarket. Pricing 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.

工業訂單有機成長14%，這得益於售後市場、定價以及下游油氣業務（主要在售後市場）的強勁表現。這兩個細分市場的定價表現強勁，彰顯了我們品牌的實力，以及我們團隊致力於最大化產品和服務價值的專注。

Backlog at the end of Q1 was up 22% from the same period last year to a record $584 million, positioning us well for the remainder of the year. On the top line, revenues increased 9% to $203 million, supported by our strong orders in backlog and easing of supply chain pressures. Our 173% increase in adjusted operating income was also supported by margin expansion across both segments with Industrial delivering another quarter of step-change performance compared to prior year. In addition to value pricing, the margin expansion was driven by the cost controls our teams continue to execute in the businesses and at corporate.

第一季末的積壓訂單較去年同期成長22%，達到創紀錄的5.84億美元，這為我們今年剩餘時間的表現奠定了良好的基礎。營收方面，得益於強勁的積壓訂單和供應鏈壓力的緩解，營收成長9%，達到2.03億美元。調整後營業利潤成長173%，也得益於兩個部門利潤率的提升，其中工業部門的業績較去年同期再次實現了顯著提升。除了價值定價之外，利潤率的成長還得益於我們團隊在各業務部門和公司層級持續實施的成本控制。

AJ will provide additional color on the margin drivers in the quarter during his prepared remarks. The demand environment for our products continues to be healthy as evidenced by sustained order strength and our growing backlog. We are positive about our business as we move through the second quarter of 2023 and look ahead for the rest of the year.

AJ 將在準備好的發言中進一步闡述本季利潤驅動因素。我們產品的需求環境持續健康，訂單持續強勁，積壓訂單不斷增加。我們對 2023 年第二季及今年剩餘時間的業務發展充滿信心。

Moving to Slide 8. Each quarter, I'd like to highlight specific growth areas that our teams are driving. Today, I'll discuss one growth area from each of our segments that showcase the focus on growth, that our teams are driving across the company. The first growth area we are highlighting is from our Industrial Control Valve business in Germany. Our team was able to capture control valve applications with 2 different OEMs for the lithium ion battery manufacturing process.

轉到第8張投影片。每個季度，我都會重點介紹我們團隊正在推動的具體成長領域。今天，我將從我們每個部門中選擇一個成長領域來探討，這些領域反映了我們團隊在全公司範圍內推動成長的重點。我們要重點介紹的第一個成長領域是我們在德國的工業控制閥業務。我們的團隊與兩家不同的原始設備製造商合作，成功獲得了用於鋰離子電池製造流程的控制閥應用。

Lithium ion battery production requires precise temperature and humidity control to avoid moisture contamination. Our control valves are used in the battery electrode manufacturing equipment to support overall process efficiency. The lithium ion battery market is expected to grow at a CAGR of over 18% between 2023 and 2032. This growth is mainly driven by renewable energy storage infrastructure, and e-mobility. We expect to continue to leverage our control valve and pump technology to support our industrial growth strategy from this fast-growing market.

鋰離子電池生產需要精確的溫度和濕度控制，以避免水分污染。我們的控制閥應用於電池電極製造設備，以提高整體製程效率。預計2023年至2032年間，鋰離子電池市場的複合年增長率將超過18%。這一成長主要由再生能源儲能基礎設施和電動車驅動。我們期望繼續利用我們的控制閥和泵浦技術，在這個快速成長的市場中支持我們的工業成長策略。

The second growth area we're highlighting is a recent product launch, our A&D team in Corona, California completed for the new Airbus A321XLR. The A321XLR is a single-aisle aircraft with a range of 4,700 nautical miles and 30% lower fuel burn per seat than previous generation aircraft. CIRCOR's Hydraulic Rate Fuse is part of the aircraft braking system and is intended to protect the hydraulic circuit in the event of fire failure. We leveraged our core technology in hydraulic valve design and high pressure control and ceiling to capture this critical application with Airbus. This new product supports our A&D growth strategy with this important family of aircraft.

我們重點介紹的第二個成長領域是近期推出的產品，由我們位於加州科羅納的航空航太與國防（A&D）團隊為新型空中巴士A321XLR飛機完成。 A321XLR是一款單通道飛機，航程為4700海裡，每座燃油消耗比上一代飛機降低30%。 CIRCOR的液壓速率保險絲是飛機煞車系統的一部分，旨在在火災故障時保護液壓迴路。我們利用在液壓閥設計、高壓控制和升限方面的核心技術，與空中巴士合作，成功實現了這項關鍵應用。這款新產品支持我們針對這項重要飛機系列的航空航太與國防成長策略。

Before I turn the call over to AJ, I would like to provide you with a quick update on our strategic review process. As we mentioned in mid-March 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. Dialogue is underway with a number of parties that have expressed interest in acquiring all 4 parts of the company.

在將電話轉給AJ之前，我想先簡單介紹一下我們的策略評估流程。正如我們在3月中旬提到並在今天早上的財報中重申的那樣，在外部顧問和管理團隊的支持下，我們的董事會正在繼續推進策略評估工作。目前，我們正在與一些有意收購公司全部四個業務的各方進行洽談。

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

現在，讓我將電話轉給 AJ，讓他更詳細地介紹財務結果。

Thank you, Tony, and good morning, everyone. Let's turn to first quarter financial highlights on Slide 9. We posted another strong quarter of orders growth and margin expansion, further validating the margin expansion and value creation potential inherent in our portfolio. With 3 consecutive quarters of solid performance, we continue to see the financial benefits of the ongoing transformation we launched in early 2022 and believe we have a long runway for growth and margin expansion.

謝謝托尼，大家早安。讓我們來看看幻燈片9上的第一季財務亮點。我們又一個季度實現了訂單成長和利潤率提升的強勁表現，進一步驗證了我們產品組合固有的利潤率提升和價值創造潛力。憑藉連續三個季度的穩健業績，我們繼續看到2022年初啟動的持續轉型帶來的財務效益，並相信我們擁有長期的成長和利潤率提升空間。

Organic orders were up 13%, primarily driven by pricing, aftermarket, downstream and continued commercial aerospace recovery. We saw orders growth across our platforms and end markets. On the top line, our teams delivered double-digit organic revenue growth in both Industrial and Aerospace and Defense. Most of our businesses posted organic sales growth in the quarter. We continue to execute value pricing, maintain cost controls and drive growth. These efforts helped generate 173% increase in adjusted operating income and 840 basis points of adjusted operating margin expansion.

有機訂單成長13%，主要得益於定價、售後市場、下游市場以及商用航空的持續復甦。我們各平台和終端市場的訂單均有所成長。在營收方面，我們的團隊在工業、航空航太和國防領域均實現了兩位數的有機收入成長。本季度，我們大部分業務部門實現了有機銷售額成長。我們繼續執行價值定價，保持成本控制並推動成長。這些努力協助調整後營業收入成長173%，調整後營業利益率提升840個基點。

We delivered $0.53 of adjusted EPS, up 960% and grew adjusted EBITDA 103% to $31.8 million. Adjusted free cash flow was negative $16.6 million for the quarter, an improvement of $2.9 million or 15% over the prior year period. Higher AOI was offset by interest costs, special expenses and seasonality of working capital.

我們實現了0.53美元的調整後每股收益，年增960%，調整後息稅折舊攤提前利潤（EBITDA）成長103%，達到3,180萬美元。本季調整後自由現金流為負1,660萬美元，較去年同期增加290萬美元，增幅達15%。較高的AOI（目標利潤率）被利息成本、特殊費用和營運資金的季節性因素所抵銷。

As a reminder, the first quarter is a seasonally negative free cash flow quarter for us. We expect free cash flow to be positive for the full year.

需要提醒的是，第一季我們的自由現金流受季節性因素影響為負。我們預計全年自由現金流將為正值。

Turning to Slide 10 in our Aerospace and Defense segment results. We saw 12% organic orders growth led by pricing, commercial aerospace, medical and U.K. Navy, partly offset by timing of Joint Strike Fighter order in prior year. Organic revenue grew 10% with continued commercial recovery and medical growth. Aerospace and Defense delivered solid adjusted operating margin of 21.5%, expanding AOI margins by 360 basis points over prior year. AOI margin expansion was driven by pricing and broad-based volume growth.

翻到我們航空航太和國防業務表現的第10張投影片。我們看到，受定價、商用航空航天、醫療和英國海軍訂單的帶動，有機訂單增長了12%，但部分增長被去年聯合攻擊戰鬥機訂單的時機所抵消。隨著商業復甦和醫療業務的持續成長，有機收入成長了10%。航太和國防業務實現了21.5%的穩健調整後營業利潤率，AOI利潤率較去年同期成長了360個基點。 AOI利潤率的成長得益於定價和廣泛的銷售成長。

Moving to our Industrial segment results on Slide 11. Organic orders were up 14%, driven by pricing, aftermarket and downstream, partly offset by exit from Pipeline Engineering. We were especially pleased to see continued momentum in our core industrial aftermarket, which posted organic order growth of 12% year-over-year. We continue to remain laser-focused on growing this high-margin part of our business as we leverage value pricing and take share.

再來看看幻燈片11上的工業部門業績。受定價、售後市場和下游業務的推動，有機訂單增長了14%，但部分被管道工程業務的退出所抵消。我們尤其欣喜地看到，核心工業售後市場持續保持成長勢頭，有機訂單較去年同期成長12%。我們將繼續專注於發展這高利潤率的業務，同時充分利用價值定價優勢，搶佔市場份額。

Organic revenue grew 15%, with broad-based strength across the platform that more than offset decline in Navy and the exit of Pipeline Engineering. Industrial posted exceptional AOI growth of 196% and AOI margin expansion of 960 basis points. The margin expansion was largely a result of the ongoing transformation of our pumps businesses fueled by value pricing, factory modernization and improving execution. The exit from Pipeline Engineering contributed 190 basis points of margin expansion.

有機收入成長15%，整個平台的強勁成長足以抵銷海軍業務的下滑和管道工程業務的退出。工業業務的AOI成長顯著，高達196%，AOI利潤率成長960個基點。利潤率的成長主要得益於我們泵浦業務的持續轉型，這得益於價值定價、工廠現代化和執行力提升。管道工程業務的退出貢獻了190個基點的利潤率成長。

At 15.2%, our first quarter Industrial AOI margin continues to validate our business differentiation and margin expansion potential. With continued success of value pricing, aftermarket growth and improving execution, we are increasingly confident of delivering AOI margins between 18% to 20% in the next 3 to 4 years.

我們第一季工業AOI利潤率為15.2%，這繼續驗證了我們業務的差異化和利潤率提升潛力。隨著價值定價的持續成功、售後市場的成長以及執行力的提升，我們更有信心在未來3到4年內實現18%至20%的AOI利潤率。

Turning to Slide 12. Net leverage and compliance leverage have continued to improve. We ended first quarter at net leverage of 3.8x, which was 0.4 turns lower than fourth quarter 2022 and 2.5 turns lower than first quarter 2022. We remain focused on delevering and it remains our top priority. With our expectation of continued expansion of EBITDA, we now expect to exit 2023 with net leverage in the low to mid-3s exclusive of any divestitures.

翻到第12張投影片。淨槓桿率和合規槓桿率持續改善。第一季末，我們的淨槓桿率為3.8倍，比2022年第四季低0.4倍，比2022年第一季低2.5倍。我們仍然專注於去槓桿，這仍然是我們的首要任務。鑑於我們預期EBITDA（息稅折舊攤提前利潤）將持續成長，我們目前預計，到2023年末，不包括任何資產剝離，淨槓桿率將維持在3%左右。

Turning to Slide 13 and our expectations for second quarter and full year 2023. Supported by strong first quarter performance, continued orders growth, improving execution and increasing backlog, we expect Q2 2023 adjusted operating income of $22.6 million to $24.6 million, an increase of 42% at the midpoint from the second quarter of last year. For full year 2023, we now expect AOI of $105 million to $118 million, an increase of 27% at the midpoint. This is an increase from our prior full year guidance of $90 million to $105 million. We expect pricing, cost optimization and growth initiatives to remain strong drivers of AOI growth and margin expansion. We continue to see signs of easing of supply chain constraints and improving execution, particularly in our pumps businesses. Interest expense is expected to be approximately $58 million for the full year, up approximately $16 million compared to prior year. The increase in interest cost is a result of higher rates.

翻到第 13 張投影片，看看我們對 2023 年第二季和全年的預期。由於第一季的強勁表現、訂單的持續成長、執行力的提升和積壓訂單的增加，我們預計 2023 年第二季的調整後營業收入為 2,260 萬美元至 2,460 萬美元，按中位數計算比去年第二季成長 42%。對於 2023 年全年，我們目前預計 AOI 為 1.05 億美元至 1.18 億美元，以中位數計算成長 27%。這高於我們先前對全年 9,000 萬美元至 1.05 億美元的預期。我們預計定價、成本優化和成長計劃將繼續成為 AOI 成長和利潤率擴大的強勁驅動力。我們繼續看到供應鏈限制有所緩解和執行力有所改善的跡象，尤其是在我們的泵浦業務中。預計全年利息支出約 5,800 萬美元，比上年增加約 1,600 萬美元。利息成本的增加是利率上升的結果。

As a result of stronger adjusted operating income, partly offset by higher interest costs, we are increasing our full year adjusted EPS to be in the range of $1.74 to $2.23. Overall, we are very encouraged by the momentum of the ongoing transformation and are very bullish about 2023 and beyond. I'll hand the call back to Tony to discuss our market outlook for orders on Slide 14.

由於調整後營業收入增加（部分抵銷了利息成本的上升），我們將全年調整後每股盈餘上調至1.74美元至2.23美元之間。整體而言，我們對持續轉型的動力感到非常鼓舞，並對2023年及以後的發展充滿信心。我將把電話轉給Tony，討論幻燈片14上的訂單市場前景。

Thank you, AJ. Based on our Q1 results and current market conditions, we now expect full year 2023 orders to be up low single digits. 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. Strength in the aftermarket and pricing will be somewhat offset by lower core market activities.

謝謝，AJ。根據我們第一季的業績和目前的市場狀況，我們目前預計2023年全年訂單量將成長低個位數。我們也預計訂單出貨比將超過1，以支持未來的持續成長。在通用工業業務方面，我們預期訂單量將成長低個位數。售後市場和定價的強勁成長將在一定程度上被核心市場活動的減少所抵消。

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

在商業船舶方面，我們也預期會出現低個位數的有機成長，主要受售後市場的推動，並受到利用率和定價提高的支持。

In Downstream Oil and Gas, we expect orders to be down high double digits following a very strong 2022. This is primarily driven by timing of large capital projects booked in Q4 of last year. 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，我們預計訂單量將在2022年強勁增長之後出現兩位數的高點下降。這主要是由於去年第四季訂單的大型資本項目時機所致。我們的團隊正在北美、拉丁美洲和印度積極尋求幾個重大投資機會，這些機會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.

在該領域的其他領域，我們預計訂單量將成長兩位數，主要受美國和歐洲海軍項目的推動。

Turning to Aerospace & Defense, we expect high single-digit orders growth with solid contributions from the Defense and Commercial end markets. 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.

談到航空航太和國防業務，我們預計訂單將實現高個位數成長，國防和商用終端市場的貢獻將十分穩健。國防業務方面，我們預期訂單將達到低兩位數成長。這一增長主要得益於海軍項目活動的增加、導彈引信裝置和太空應用新產品的推出以及價格的上漲。

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, initial recovery of the Airbus twin-aisle platforms as well as the increased activity in the aftermarket, supported by pricing and the rebound in air travel.

在商用航空領域，我們預計訂單量將實現中等兩位數成長，主要得益於空中巴士和波音單通道平台市場的持續復甦、空中巴士雙通道平台的初步復甦以及售後市場活動的增加，以及定價和航空旅行的反彈。

Elsewhere in the segment, we expect orders to be down high single digits due to timing of a large medical order.

在該領域的其他領域，由於大量醫療訂單的時間表，我們預計訂單量將下降個位數。

Turning to Slide 15. In summary, we are extremely pleased with our strong start in Q1 and we are well positioned as we move into Q2 and look ahead for the balance of the year. We expect to continue to leverage our strong aftermarket position, our Industrial segment and deploy our value-based pricing and 80/20 principles across the organization, generating margin expansion and staying ahead of inflation.

翻到第15張投影片。總而言之，我們對第一季的強勁開局感到非常滿意，並且我們為進入第二季度以及展望今年餘下時間做好了充分準備。我們預計將繼續利用我們強大的售後市場地位和工業部門，並在整個組織範圍內部署基於價值的定價和80/20原則，從而實現利潤率增長並保持領先於通膨水平。

We continue to benefit from the 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 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 a parallel path of a potential strategic transaction.

我們持續受惠於商用航空市場的反彈，並期待國防業務獲得進一步發展勢頭，這得益於我們在關鍵平台、新產品開發以及售後市場實力的推動。我們致力於為股東創造最大價值，透過新產品開發、基於價值的定價、精簡流程和降低成本等措施，實現有機收入和利潤成長，同時，我們也在尋求潛在的策略交易。

We expect our value pricing strategy to continue to drive growth and margin expansion in 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, we remain fully focused on the areas within our control to minimize the impact from these headwinds and deliver growth and margin expansion.

我們預計，我們的價值定價策略將在2023年及以後繼續推動成長和利潤率提升。我們也持續評估業務和公司層面的進一步簡化機會。儘管我們的產業持續受到各種宏觀經濟因素的影響，但我們仍將全力專注於我們可控的領域，以最大程度地降低這些不利因素的影響，並實現成長和利潤率提升。

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

現在，AJ 和我很樂意回答大家的提問。接線員，請打開問答專線。

(Operator Instructions) Our first question comes from the line of Nathan Jones with Stifel.

（操作員指示）我們的第一個問題來自 Stifel 的 Nathan Jones。

This is Adam Farley on for Nathan Jones. I wanted to start on your value-based pricing initiatives. Could you maybe just go into a little more detail on the various value-based pricing initiatives you have in place across the businesses then how that should layer into operating margins through the year?

我是 Adam Farley，為 Nathan Jones 做訪問。我想先談談你們基於價值的定價方案。能否請您更詳細地介紹一下你們在各個業務部門實施的各種基於價值的定價方案，以及這些方案將如何影響全年的營業利潤率？

Adam, this is Tony. So it's really coming from 2 places. And on the foremarket, when long-term agreements come up for renewal, we start with a cycle that takes usually 6 months to a year, and we conclude negotiations, and that's one part of the pricing that we have been able to drive with some very specific actions that concluded last year and are supporting the pricing this year.

亞當，我是東尼。所以這實際上來自兩個方面。在前期市場，當長期協議需要續約時，我們通常以6個月到1年的週期開始談判，然後我們完成談判。這是我們能夠推動定價的一部分，我們去年採取了一些非常具體的行動，這些行動也支持了今年的定價。

The other piece of it is the aftermarket and spot orders. So as we said in past calls, that activities continue. Our leadership teams in the businesses, AJ and myself are fully focused on that. We do establish targets that the team track on a regular basis, and that's been a significant factor of the results that you saw in Q1 as well as what we delivered in Q3 and Q4 of last year.

另一部分是售後市場和現貨訂單。正如我們在過去電話會議中所說，這些活動仍在繼續。我們各業務部門的領導團隊，包括AJ和我本人，都全心全意地致力於此。我們確實設定了目標，並定期由團隊跟踪，這對我們在第一季以及去年第三季和第四季的業績至關重要。

So the value pricing initiatives that we have, the 80/20 simplification, understanding our position in the market is really the same strategy that we deployed strongly last year in the Industrial business and have been deploying in A&D for quite a few years is continuing. And that's where the value pricing is coming from.

因此，我們所採取的價值定價措施、80/20簡化策略以及對我們市場定位的理解，實際上與我們去年在工業業務領域大力部署的策略相同，並且多年來一直在航空航天和國防領域持續部署。這就是價值定價的由來。

We expect full year to be similar to what we did last year. Q1 started stronger than what we expected, stronger than last year, and that's been a significant factor in the margin expansion in Q1, in addition to the cost controls that we've been implementing.

我們預計全年業績將與去年持平。第一季的開局強於我們的預期，也強於去年，這也是第一季利潤率成長的重要因素，此外，我們一直在實施的成本控制措施也功不可沒。

Okay. That's helpful. And then just shifting over to the orders growth, really strong organic orders. Maybe specifically for Industrial, how do Industrial orders trend through the quarter? Are orders continuing at a similar pace through April and the early part of May? And maybe some color on long versus short cycle markets and some of the trends you're seeing there?

好的。這很有幫助。然後我們來談談訂單成長，尤其是強勁的有機訂單。具體來說，工業訂單在本季的趨勢如何？ 4月份和5月初的訂單成長速度是否保持相似？能否談談長週期市場和短週期市場的對比，以及您觀察到的一些趨勢？

So the aftermarket and Industrial, as we said in the prepared remarks, continues to be strong. It's both market recapturing some of our share from the installed base as well as the pricing impact. So that's a significant portion. In North America, the foremarket continues to be quite strong and power generation midstream type activities with our 3 screw pumps as well as chemical processing. So in general, the Industrial markets to be -- continues to be quite strong in North America. We're seeing good activities with the battery manufacturing processes. We mentioned one example with the control valves. So overall, foremarket in North America is solid, foremarket in Europe is a little bit slower, but the aftermarket continues to be solid across the board.

正如我們在準備好的演講中所說，售後市場和工業市場持續強勁。這既包括市場從已安裝基數中奪回部分份額，也包括定價影響。所以，這部分份額相當可觀。在北美，前裝市場持續強勁，我們的三螺桿泵浦和化學加工等發電中游業務也表現強勁。整體而言，北美的工業市場持續強勁。我們看到電池製造流程表現良好。我們之前提到過控制閥的例子。整體而言，北美前裝市場表現穩健，歐洲前裝市場略顯疲軟，但售後市場整體表現仍穩健。

Okay. I think you mentioned you're pursuing some large opportunities within downstream oil and gas that could potentially improve the outlook. Is there any additional color you could provide there?

好的。我記得您提到過，您正在尋求下游石油和天然氣領域的一些重大投資機會，這些機會可能會改善前景。您能提供一些更多資訊嗎？

Yes, there is activities in the U.S. markets with the large refiners. There's activities in Mexico. There's a lot of quoting activities in Brazil. And then even in the Middle East, some activities in Abu Dhabi in that region as well with refiners. So there's significant quote activities across the board. Q1 was quite strong for downstream, stronger than what we had expected.

是的，美國市場大型煉油廠的活動很活躍。墨西哥也有活動。巴西有很多報價活動。甚至在中東，阿布達比地區的煉油廠也有一些活動。所以，各行各業都有重要的報價活動。第一季下游業務表現相當強勁，超出了我們的預期。

But for the full year, we are still expecting to be down compared to prior year, simply because of the very large orders that we booked in Q4 that will not quite repeat, but we are seeing improvements, at least based on Q1 and then Q2 started relatively well both in downstream. And I guess I didn't answer the other part of your question, as well as in the rest of the industrial businesses.

但就全年而言，我們預計銷售額仍將較上年下降，原因在於我們第四季接到的大量訂單，這種情況不會完全重演。但我們看到情況有所改善，至少在第一季的基礎上是如此，第二季下游業務的開局也相對較好。我想我還沒有回答你問題的另一部分，以及其他工業業務的情況。

Our next question comes from the line of Andy Kaplowitz with Citi.

我們的下一個問題來自花旗銀行的 Andy Kaplowitz。

Tony, maybe you could give us some more color regarding your Industrial margin progression. Obviously, strong progress in the mid-teens, you talked about it. You talked about sort of the value-based pricing model. I assume that's a lot of this. But how much more runway do you have there on value-based pricing? And how much of this sort of cost really starting to come down. You mentioned easing of supply chain. And I know you're saying 18% to 20% over the next 3 to 4 years. What still needs to be done to get there? And how do you think about normalized incremental margin for that business?

東尼，或許您可以更詳細地介紹一下工業利潤率的成長。您提到了工業利潤率在15%左右的強勁成長。您也提到了基於價值的定價模式。我想這已經夠多了。但是，在基於價值的定價方面，您還有多少發展空間？這類成本有多少真正開始下降？您提到了供應鏈的簡化。我知道您說的是未來3到4年內達到18%到20%的利潤率。為了達到這個目標，還需要做些什麼？您如何看待該業務的正常化增量利潤率？

Yes. So Andy, pricing, certainly in the last half of last year, Q1 this year, has been a critical factor. In addition to pricing, inflation is starting to ease. So inflation was pre-muted in Q1, energy cost, which was a significant headwind last year, starting to ease especially in our factory in Germany. The other factor is, we've spoken about factory modernization. Some of that equipment is in place and starting to support productivity. The improvement in supply chain is also supporting productivity. So there's various pieces. But looking at the Q1 results, pricing continues to be the largest piece.

是的。 Andy，價格，尤其是去年下半年，也就是今年第一季，一直是關鍵因素。除了價格之外，通貨膨脹也開始緩解。通貨膨脹在第一季已經有所緩和，能源成本，也就是去年的一個重大阻力，也開始緩解，尤其是在我們德國的工廠。另一個因素是我們談到了工廠現代化。其中一些設備已經到位，並開始支援生產力。供應鏈的改善也正在提高生產力。所以，有很多因素。但從第一季的業績來看，價格仍然是最重要的因素。

The other side of it is cost control with OpEx. So we are -- a significant focus by our leadership team and controlling costs as we grow, so we'll get the leverage from the growth as well. So there's various factors, but pricing at this point is the largest element as we look ahead. And that's why we reiterated our confidence in achieving that 18% to 20% in the next 3 to 4 years because of all the other factors that will come into play, plus the continued focus on the pricing which again, in Q1 started significantly stronger than what we had expected.

另一方面是營運成本控制。因此，我們的領導團隊非常重視在業務成長過程中控製成本，以便我們也能在成長中獲得槓桿。影響因素很多，但目前定價是我們展望未來最重要的因素。正因如此，我們重申有信心在未來3到4年內實現18%到20%的增幅，因為所有其他因素都會發揮作用，再加上我們對定價的持續關注，定價在第一季的開局就明顯強於我們的預期。

Tony, maybe I could follow up there and just ask, like you mentioned you're evaluating sort of new simplification and cost-out projects, I think. And again, you delivered the margin growth in Q1. We know you've been working on this stuff for a while. So maybe to use an American term, what inning are you in of your transformation?

東尼，也許我可以跟進一下，就像你提到的那樣，你正在評估一些新的簡化和成本削減項目。而且，你在第一季實現了利潤成長。我們知道你在這方面已經努力了一段時間。所以，用美國的說法，你的轉型目前處於哪個階段？

So last year, we spoke about taking out about $14 million of cost on a run rate basis, about $6 million to $7 million basically will happen this year. Portion happened last year, portion will happen this year. We still have higher OpEx in businesses than we believe we need. So 2 things that we're doing as attrition happens in the businesses, we're replacing some of those roles where it makes sense in our shared service center in India. And then as we grow, we -- the plan and what we have been doing is to do more with the same resources that we have, and that's the leverage that we expect to get.

去年，我們談到以運行率計算削減約1400萬美元的成本，今年基本上會削減600萬到700萬美元。一部分是去年削減的，一部分是今年削減的。我們業務部門的營運支出仍高於我們所認為的需要。因此，隨著業務部門人員流失，我們正在做的兩件事是，在印度共享服務中心替換一些合理的職位。隨著業務的成長，我們的計劃和做法是用現有資源做更多的事情，這就是我們期望獲得的優勢。

If we look at our OpEx in total for 2023, we expect it to be about 100 basis points lower for the whole company as a percentage of sales compared to last year. So these are the various elements that we continue to drive. Again, a lot of actions have been implemented and more is ahead.

如果我們看一下2023年的總營運支出，我們預計全公司營運支出佔銷售額的百分比將比去年下降約100個基點。以上就是我們將繼續推動的各項措施。再次強調，我們已經實施了許多措施，未來還會有更多措施。

And then I'm not sure if you can answer this, but I'll ask it anyway, like the strategic review has obviously been going on for a while now. Any additional thoughts on timeline, let's say realistic timeline for all of us to think about for you the Board to make the decision that it needs to make.

我不確定您是否能回答這個問題，但我還是想問一下，畢竟戰略評估顯然已經進行了一段時間了。關於時間表，您還有什麼其他想法嗎？最好能有一個切合實際的時間表，方便我們大家思考，以便董事會做出必要的決定。

Andy, it's very difficult for us to comment on timing. Obviously, as we said and reiterated, the process is underway. If you recall, we spoke initially about strategic review back in March of last year but all of last year was focused on catching up with our filing, the restatement process that we had to go through. Early this year, we said the process has been formally launched and it is not a cycle now going through it. It's really difficult to provide timing. Even if we were to guess timing, we will likely be wrong. So we're not getting into timing discussions, but the process is underway, and the Board is committed to completing that review.

安迪，我們很難評論時間安排。顯然，正如我們反覆強調的那樣，這個過程正在進行中。如果你還記得的話，我們最初在去年3月就談到了策略審查，但去年全年我們都專注於完成申報，也就是我們必須經歷的重述流程。今年年初，我們表示該流程已經正式啟動，現在還不是週期性的流程。很難確定時間安排。即使我們猜測時間，也很可能出錯。所以我們不會討論時間安排，但這個過程正在進行中，董事會致力於完成審查。

One more question for me. Like, AJ, on cash generation, you mentioned it will be positive for '23. You start out seasonally weak, maybe commentary on sort of improvement in sort of working capital? Like how do you feel about this year versus where you entered sort of last year at this time.

還有一個問題。 AJ，關於現金流，您提到2023年會是正面的。今年的業績受季節性因素影響，可能與營運資本有所改善有關？您對今年的感受與去年同期相比如何？

Yes. I would say, Andy, we are growing the top line this year. So there still would be in dollar terms, growth in working capital through the year. Consistent with what we said in the last earnings call, we expect to have mid-single-digit sort of -- in dollar terms, mid-single-digit free cash flow performance for the full year. The first half would be negative, the second half turns positive. And this is while maintaining the elevated levels of CapEx as we continue to modernize our large and critical factories.

是的。我想說，安迪，我們今年的營收正在成長。所以，以美元計算，全年營運資本仍將成長。與我們在上次財報電話會議上所說的一致，我們預計全年自由現金流將達到中位數個位數成長。上半年為負，下半年將轉為正。而且，我們將繼續保持較高的資本支出水平，同時繼續對大型關鍵工廠進行現代化改造。

Our next question comes from the line of Brett Kearney with Gabelli.

我們的下一個問題來自 Gabelli 的 Brett Kearney。

Congrats on the continued momentum. You guys touched on this a bit already. But Tony, as you get out more, you visit the factories, meet with teams, it feels like coming through in the results, there's a [re-energization] process that's taking place. You've spoken about a number of the performance drivers. I was wondering if you can expand a bit on the factory modernization initiative, what opportunities you've seen there and whether those investments have been made or continuing to be made at some of your core sites today.

恭喜你們持續保持良好勢頭。你們之前已經稍微談到這一點了。東尼，隨著你更多參與，參觀工廠，與團隊會面，感覺成果正在顯現，一個[重新煥發活力]的過程正在發生。你談到了一些績效驅動因素。我想知道你能否稍微詳細談談工廠現代化計劃，你在那裡看到了哪些機遇，以及這些投資是否已經在你們的一些核心工廠進行，或者是否仍在繼續進行。

Yes. So we have several new machining centers, including robotic type machining centers for -- with the key focus being on our screw pump type product line. So there are already significant investments that have been put in use, starting late last year, continuing this year. And there's more that's on order that we expect to receive into this year as well can continue to put into production. It's still in the early stages of the benefits from that, but we are starting to see signs, and we've been able to leverage this equipment and our solid backlog to drive this revenue growth, and we expect that to continue in the year as well.

是的。我們有幾個新的加工中心，包括機器人加工中心——重點是我們的螺桿泵型產品線。所以，從去年年底開始，我們已經投入了大量投資，並將繼續投入使用。此外，我們預計今年還會收到更多訂單，並將繼續投入生產。目前這些訂單的收益仍處於初期階段，但我們已經開始看到一些跡象，我們已經能夠利用這些設備和我們大量的訂單來推動收入成長，我們預計今年的收入成長也將持續下去。

So we're probably 30%, 40% down net modernization path and expect to maybe get about 60% of it by the end of this year. And most of the equipment that we are planning to invest in will be on order throughout this year and will continue to come into next year as well.

因此，我們的淨現代化進度大概在30%到40%之間，預計今年底大概能完成60%。我們計劃投資的設備大部分今年都會有訂單，明年也會繼續到貨。

Excellent. And then just lastly, on new product development, you highlight another key win with the control valve product line. I guess more broadly, can you talk about what you touched on in terms of the deeper market mapping and segmentation work that the teams are doing to really identify some of these growth verticals and go after them in a more impactful way?

非常好。最後，關於新產品開發，您強調了控制閥產品線的另一個關鍵勝利。我想更廣泛地說，您能否談談團隊正在進行的更深入的市場規劃和細分工作，這些工作旨在真正識別一些成長垂直領域，並以更有效的方式去追逐它們？

Yes. So that's going on in both segments, but specifically in the Industrial segment. So we spoke about the control valves. I think I touched a little bit on the pumps. The control valves is just one element of growth that we see in this area. There's opportunities in carbon capture and various other renewable type markets or clean energy. But specifically with the batteries, that's obviously a high-growth area, high-growth market. Beyond the control valves, we have metering pumps that have applications, and we're already applying those in various applications. And we also have our progressive cavity pumps with applications and moving lithium slurry. In addition to the pumps, some of our pumps that are used on the mining side, some of our large propeller pumps.

是的。這兩個領域都在發生這種情況，尤其是在工業領域。我們談到了控制閥。我想我稍微提到了泵。控制閥只是我們在這個領域看到的成長點之一。碳捕獲和其他各種再生能源市場或清潔能源領域都存在機會。但具體到電池領域，這顯然是一個高成長領域，一個高成長市場。除了控制閥，我們還有各種應用的計量泵，我們已經將它們應用於各種應用。我們還有用於輸送鋰漿的螺桿泵。除了泵浦之外，我們的一些泵浦還用於採礦，還有一些大型螺旋槳泵。

So we have various elements in our portfolio and we're looking at the whole supply chain for that side of the market to continue to drive growth. It's still in early stages. It's hard to put a number on it, but we see significant potential from that market as we look ahead.

因此，我們的產品組合涵蓋多種元素，我們正在著眼於該市場的整個供應鏈，以繼續推動成長。目前仍處於早期階段。很難給出一個確切的數字，但展望未來，我們看到該市場擁有巨大的潛力。

Thank you. We have no more questions at this time. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

謝謝。現在沒有其他問題了。女士們，先生們，今天的電話會議到此結束。您可以掛斷電話了。感謝您的參與，祝您有美好的一天。