Carpenter Technology Corp (CRS) 2023 Q3 法說會逐字稿

Good day, and welcome to Carpenter Technology Corporation Third Quarter 2023 Conference Call. (Operator Instructions) Please note that this event is being recorded. I'd like now to hand the conference over to John Huyette, Vice President and Head of Investor Relations. Please go ahead, sir. Thank you.

美好的一天，歡迎來到 Carpenter Technology Corporation 2023 年第三季度電話會議。 （操作員說明）請注意，正在記錄此事件。我現在想把會議交給副總裁兼投資者關係主管 John Huyette。請繼續，先生。謝謝。

Thank you, Operator. Good morning, everyone, and welcome to the Carpenter Technology Earnings Conference Call for the Fiscal 2023 Third Quarter ended March 31, 2023. This call is also being broadcast over the Internet along with presentation slides. Please note, for those of you listening by phone, you may experience a time delay in slide movement.

謝謝你，運營商。大家早上好，歡迎參加截至 2023 年 3 月 31 日的 2023 財年第三季度 Carpenter Technology 收益電話會議。該電話會議還通過互聯網播放，並附有演示幻燈片。請注意，對於那些通過電話收聽的人，您可能會遇到幻燈片移動的時間延遲。

Speakers on the call today are Tony Thene, President and Chief Executive Officer; and Tim Lain, Vice President and Chief Financial Officer.

今天的電話會議發言人是總裁兼首席執行官 Tony Thene；副總裁兼首席財務官 Tim Lain。

Statements made by management during this earnings presentation that are forward-looking statements are based on current expectations. Risks factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter Technology's most recent SEC filings, including the company's report on Form 10-K for the year ended June 30, 2022, and Forms 10-Q for the quarters ended September 30, 2022, and December 31, 2022, and the exhibits attached to those filings.

管理層在本次收益報告中所作的前瞻性陳述基於當前預期。可能導致實際結果與這些前瞻性陳述存在重大差異的風險因素可以在 Carpenter Technology 最近提交給美國證券交易委員會的文件中找到，包括該公司關於截至 2022 年 6 月 30 日止年度的 10-K 表格和 10-Q 表格的報告截至 2022 年 9 月 30 日和 2022 年 12 月 31 日的季度，以及這些文件所附的展品。

Please also note that in the following discussion, unless otherwise noted, when management discusses sales or revenue, that reference excludes surcharge. When referring to operating margin, that is based on adjusted operating income, excluding special items and sales, excluding surcharge.

另請注意，在以下討論中，除非另有說明，否則當管理層討論銷售或收入時，該參考不包括附加費。當提到營業利潤率時，這是基於調整後的營業收入，不包括特殊項目和銷售額，不包括附加費。

I will now turn the call over to Tony.

我現在將電話轉給托尼。

Thank you, John, and good morning to everyone on the call today. I'll begin on Slide 4 and a review of our safety performance. Through the third quarter of fiscal year 2023, our total case incident rate was 1.4. We saw improved performance in the third quarter, lowering the year-to-date rate. As we have discussed in recent quarters, the year-over-year rate increase is largely due to the increased employees undertaking new tasks, either as new hires or transfers into new roles.

謝謝你，約翰，早上好，今天的電話會議上的每個人。我將從幻燈片 4 開始，回顧我們的安全績效。到 2023 財年第三季度，我們的總案件事故率為 1.4。我們看到第三季度的業績有所改善，降低了年初至今的增長率。正如我們在最近幾個季度所討論的那樣，同比增長主要是由於承擔新任務的員工增加，無論是作為新員工還是調任新職位。

We continue to invest in additional training for any employee new to a job or task with frequent monitoring and follow-up. Although a 1.4 injury rate would rank us as one of the safest metal manufacturing companies, our goal continues to be a 0 injury workplace. Now let's turn to Slide 5 and a review of the third quarter.

我們繼續投資於任何新工作或任務的員工的額外培訓，並進行頻繁的監控和跟進。儘管 1.4 的傷害率將使我們成為最安全的金屬製造公司之一，但我們的目標仍然是零傷害工作場所。現在讓我們轉到幻燈片 5 和第三季度的回顧。

The third quarter performance was driven by higher productivity at our operating facilities and increasing demand in each of our end-use markets. Most notably, we see the Aerospace and defense end-use market ramp excel. With a strong demand environment, our backlog increased 10% sequentially and 70% year-over-year. This marks the ninth consecutive quarter of backlog growth. And with the strong demand environment across our end-use markets, we continue to realize price gains, which expands our operating margins.

第三季度的業績是由我們運營設施更高的生產率和我們每個終端使用市場不斷增長的需求推動的。最值得注意的是，我們看到航空航天和國防終端用途市場表現出色。在強勁的需求環境下，我們的積壓訂單環比增長 10%，同比增長 70%。這標誌著積壓訂單連續第九個季度增長。在我們的終端使用市場強勁的需求環境下，我們繼續實現價格上漲，從而擴大了我們的營業利潤率。

In fact, this week, we announced another price increase of 7% to 12% on our transactional business. We continue to improve the productivity of our labor force across our facilities by safely onboarding new employees across all of our production centers and investing in the training required to accelerate learning. We are starting to realize the benefits of these productivity efforts and the performance of our business segments.

事實上，本週，我們宣布再次將交易業務的價格上調 7% 至 12%。我們通過在所有生產中心安全地入職新員工並投資於加速學習所需的培訓，繼續提高我們工廠勞動力的生產力。我們開始意識到這些生產力努力的好處和我們業務部門的績效。

For the quarter, the SAO segment delivered operating income of $49 million, exceeding our expectations. With the improvement in productivity, we were able to ship additional material to our customers particularly in the aerospace and defense and medical end-use markets. The PEP segment turned in another strong performance with $10.2 million in operating income for the recent quarter.

本季度，SAO 部門實現了 4900 萬美元的營業收入，超出了我們的預期。隨著生產力的提高，我們能夠向我們的客戶運送更多材料，尤其是在航空航天、國防和醫療最終用途市場。 PEP 部門再次表現強勁，最近一個季度的營業收入為 1020 萬美元。

In particular, we saw strong demand for titanium products for the aerospace and defense and medical end-use market. Finally, our liquidity remains healthy as we finished the quarter with $212 million in total liquidity. Now let's move to Slide 6 and the end-use market update.

特別是，我們看到了航空航天、國防和醫療最終用途市場對鈦產品的強勁需求。最後，我們的流動性保持健康，因為我們以 2.12 億美元的總流動性結束了本季度。現在讓我們轉到幻燈片 6 和最終用途市場更新。

All of our end-use markets were up year-over-year and sequentially, except the medical end-use market, which was essentially flat sequentially. Our near-term and long-term outlook for each of our end-use market remains positive, and our record backlog levels support this outlook. Our aerospace and defense end-use market accounting for 49% of sales continues to ramp and was up 21% sequentially and 59% year-over-year.

我們所有的終端用途市場都同比和環比增長，但醫療終端用途市場除外，該市場環比基本持平。我們對每個最終用途市場的近期和長期前景仍然樂觀，我們創紀錄的積壓水平支持這一前景。我們的航空航天和國防終端用途市場佔銷售額的 49%，繼續增長，環比增長 21%，同比增長 59%。

Customers across our aerospace submarkets continue to urgently request material and seek higher delivery levels. Global aerospace traffic continues to grow, pushing the supply chain to ramp production for new planes to meet the growing demand. As a result of the continued increases in demand, lead times across the industry have extended and our backlog continues to rise.

我們航空航天子市場的客戶繼續迫切需要材料並尋求更高的交付水平。全球航空航天交通持續增長，推動供應鏈提高新飛機的產量以滿足不斷增長的需求。由於需求持續增長，整個行業的交貨時間延長，我們的積壓訂單繼續增加。

Notably, our Aerospace and Defense end-use market backlog is up 17% sequentially and 93% year-over-year. Our record backlog levels reflect price increases and customer urgency to secure material. The medical end-use market, accounting for 13% of sales was essentially flat sequentially and up 35% year-over-year. The higher year-over-year results were driven primarily by ongoing growth in electric surgery. And to meet growing demand for electric surgery, customers are increasing their manufacturing activity.

值得注意的是，我們的航空航天和國防終端用途市場積壓訂單環比增長 17%，同比增長 93%。我們創紀錄的積壓水平反映了價格上漲和客戶獲取材料的緊迫性。醫療終端用途市場佔銷售額的 13%，環比基本持平，同比增長 35%。較高的同比結果主要是由電動手術的持續增長推動的。為了滿足對電動手術不斷增長的需求，客戶正在增加他們的製造活動。

The overall outlook continues to be positive as medical procedures are expected to rise throughout calendar year 2023. We are seeing evidence of this replenishment in the supply chain as our medical end-use market backlog is up 9% sequentially and 80% year-over-year. The transportation end-use market accounted for 7% of sales was up 25% sequentially and up 5% compared to last year with strong demand and low inventory of both light-duty and heavy-duty vehicles. Build rates are expected to increase throughout calendar year 2023.

總體前景繼續看好，因為醫療程序預計在整個 2023 日曆年都會增加。我們看到了供應鏈補貨的證據，因為我們的醫療最終用途市場積壓訂單比上一季度增長了 9%，同比增長了 80%年。運輸終端用途市場佔銷售額的 7%，環比增長 25%，比去年增長 5%，需求強勁且輕型和重型車輛庫存較低。預計整個 2023 日曆年的建造率都會增加。

The energy end-use market accounting for 6% of sales was up 27% sequentially and up 24% compared to last year. Demand for energy continues to outpace supply driving growth in capital investment and demand for our material solutions. In many cases, the materials we are supplying into the energy end-use market are now reaching margins similar to our Aerospace and Defense business due to the unique solutions and overall demand environment.

佔銷售額 6% 的能源終端使用市場環比增長 27%，與去年相比增長 24%。對能源的需求繼續超過供應，推動資本投資和對我們的材料解決方案的需求增長。在許多情況下，由於獨特的解決方案和整體需求環境，我們向能源終端使用市場供應的材料現在的利潤率與我們的航空航天和國防業務相似。

The industrial and consumer end-use market accounted for 19% of sales was up 22% sequentially and up 17% year-over-year. We remain focused on high-margin, high-growth business like a material solutions used in semiconductor fabrication.

工業和消費者終端使用市場佔銷售額的 19%，環比增長 22%，同比增長 17%。我們仍然專注於高利潤、高增長的業務，例如用於半導體製造的材料解決方案。

Now I will turn it over to Tim for the financial summary.

現在我將把財務摘要交給蒂姆。

Thanks, Tony. Good morning, everyone. I'll start on Slide 8, the income statement summary. Net sales in the third quarter were $690.1 million, and sales, excluding surcharge, totaled $491.5 million. Sales, excluding surcharge, increased 33% from the same period a year ago on 15% higher volume. Sequentially, sales were up 17% on 13% higher volume.

謝謝，托尼。大家，早安。我將從幻燈片 8（損益表摘要）開始。第三季度淨銷售額為 6.901 億美元，不包括附加費的銷售額總計 4.915 億美元。不包括附加費的銷售額比去年同期增長 33%，銷量增長 15%。隨後，銷售額增長了 17%，銷量增長了 13%。

The higher volumes are driven by our improving productivity and throughput across our operations. I would also note that the sales growth outpaced the volume growth both sequentially and year-over-year, driven by an improving product mix and increased base prices. Gross profit was $93.5 million in the current quarter compared to $39.5 million in the same quarter of last year and $70 million in the second quarter of fiscal year 2023.

更高的產量是由我們提高整個運營的生產力和吞吐量推動的。我還要指出，在產品組合改善和底價上漲的推動下，銷售額增長超過了環比和同比銷量增長。本季度毛利為 9350 萬美元，去年同期為 3950 萬美元，2023 財年第二季度為 7000 萬美元。

Gross profit is up 137% compared to the same quarter last year and up 34% sequentially. The improvement in gross profit is primarily driven by higher sales and improving product mix and increased selling prices, partially offset by inflationary cost increases. SG&A expenses were $54.2 million in the third quarter up about $16 million from the same period a year ago and roughly $7 million higher sequentially.

毛利潤與去年同期相比增長 137%，環比增長 34%。毛利潤的改善主要是由於銷售額增加、產品組合改善以及銷售價格上漲，部分被通貨膨脹成本增加所抵消。第三季度的 SG&A 費用為 5420 萬美元，比去年同期增加約 1600 萬美元，比上一季度增加約 700 萬美元。

When adjusting for the special item in last year's third quarter, SG&A expenses were up roughly $11 million year-over-year. The increase in SG&A expenses largely reflects higher variable compensation accruals, higher travel costs and the timing of certain other expenses. The SG&A line includes corporate costs, which totaled $19.6 million in the recent third quarter.

在調整去年第三季度的特殊項目時，SG&A 費用同比增長約 1100 萬美元。 SG&A 費用的增加主要反映了較高的可變薪酬應計費用、較高的差旅費用以及某些其他費用的時間安排。 SG&A 項目包括企業成本，最近第三季度總計 1,960 萬美元。

As we look ahead to the upcoming fourth quarter of fiscal year 2023, we expect corporate cost to be about $21 million. Operating income was $39.3 million in the current quarter. When excluding the impact of special items in the prior year quarter, adjusted operating loss was $1.6 million and in our recent second quarter, operating income was $22.6 million. Again, the improvement in profitability is being driven by the increasing productivity, driving volume gains along with mix and price benefits.

展望即將到來的 2023 財年第四季度，我們預計企業成本約為 2100 萬美元。本季度營業收入為 3930 萬美元。排除去年同期特殊項目的影響，調整後的營業虧損為 160 萬美元，而在我們最近的第二季度，營業收入為 2260 萬美元。同樣，生產力的提高推動了盈利能力的提高，推動了銷量增長以及產品組合和價格優勢。

Although not shown on the slide, interest expense was $14.5 million in the current quarter compared to $13 million in our recent second quarter. The increase is due to the rising interest rates on our outstanding revolver borrowings. We currently expect interest expense to be about $15 million in our upcoming fourth quarter. Our effective tax rate for the third quarter was 22.5%. We continue to expect that the full year 2023 effective tax rate will be approximately 22% to 24%.

儘管未在幻燈片中顯示，但本季度的利息支出為 1450 萬美元，而我們最近的第二季度為 1300 萬美元。增加是由於我們未償還的循環借款的利率上升。我們目前預計即將到來的第四季度的利息支出約為 1500 萬美元。我們第三季度的有效稅率為 22.5%。我們繼續預計 2023 年全年有效稅率約為 22% 至 24%。

Earnings per share for the current quarter was $0.38 per share. The results demonstrate our continued momentum supported by improving productivity and a strong demand environment. Now turning to Slide 9 and our SAO segment results.

本季度每股收益為每股 0.38 美元。結果表明，我們在提高生產力和強勁的需求環境的支持下保持了持續的發展勢頭。現在轉向幻燈片 9 和我們的 SAO 部分結果。

Net sales for the third quarter were $603.4 million or $411.5 million excluding surcharge. Compared to the same period last year, net sales, excluding surcharge, increased 37% on 13% higher volumes. Sequentially, net sales excluding surcharge increased 19% on 14% higher volume. The year-over-year improvement in net sales was driven by higher shipment volumes due to productivity gains, the impacts of higher prices and an improving product mix across our key end-use markets, as Tony reviewed on the market slide.

第三季度淨銷售額為 6.034 億美元或 4.115 億美元，不包括附加費。與去年同期相比，不包括附加費的淨銷售額增長了 37%，銷量增長了 13%。隨後，不包括附加費的淨銷售額增長了 19%，銷量增長了 14%。正如托尼在市場幻燈片中回顧的那樣，淨銷售額的同比增長是由於生產率提高導致出貨量增加、價格上漲的影響以及我們主要最終用途市場產品組合的改善所推動的。

Sequentially, we continue to drive momentum in net sales as the operating efficiencies drove higher volumes combined with a stronger mix of products. Moving to operating results. SAO reported an operating income of $49 million in our recent third quarter, a significant improvement versus both the same quarter last year and our recent second quarter. The improving operating income results reflect continued progress towards returning to our fiscal year 2019 run rates.

因此，隨著運營效率的提高以及產品組合的增強，我們繼續推動淨銷售額的增長勢頭。轉向經營業績。 SAO 在最近的第三季度報告了 4900 萬美元的營業收入，與去年同期和最近的第二季度相比都有顯著改善。營業收入的改善反映了我們在恢復 2019 財年運行率方面的持續進展。

On a year-over-year basis, the SAO adjusted operating income improvement of $41.4 million is largely due to higher sales driven from increased production activity and throughput, which has also improved our cost performance. This was coupled with an improving product mix and price increases on both transactional and contract business.

與去年同期相比，SAO 調整後的營業收入增加了 4140 萬美元，這主要是由於生產活動和吞吐量增加導致銷售額增加，這也提高了我們的成本績效。與此同時，交易和合同業務的產品組合得到改善，價格也有所上漲。

On a sequential basis, operating income improved $18.7 million which is ahead of the expectations we set last quarter. This was driven by increased volumes as we continue to ramp our operations to meet the strong demand, partially offset by higher variable compensation accruals in the current quarter.

按順序計算，營業收入增加了 1870 萬美元，高於我們上季度設定的預期。這是由於我們繼續擴大業務以滿足強勁需求而增加的銷量，部分被本季度較高的可變薪酬應計費用所抵消。

Looking ahead, the SAO team remains focused on accelerating activity levels and production flow in a safe manner to meet the needs of our customers for the foreseeable future. Based on current expectations, we anticipate SAO will generate operating income in the range of $65 million to $70 million in the upcoming fourth quarter of fiscal year 2023. This is significant as it would have mark a return to pre-pandemic operating income levels.

展望未來，SAO 團隊將繼續專注於以安全的方式加快活動水平和生產流程，以滿足我們客戶在可預見的未來的需求。根據目前的預期，我們預計 SAO 將在即將到來的 2023 財年第四季度產生 6500 萬至 7000 萬美元的營業收入。這意義重大，因為這標誌著營業收入將恢復到大流行前的水平。

Now turning to Slide 10 and our PEP segment results. Net sales in the third quarter of fiscal year 2023 were $115.1 million or $103.8 million excluding surcharge. Net sales, excluding surcharge, increased 20% from the same quarter last year and 6% sequentially. The year-over-year growth in net sales reflects increased demand primarily in our Dynamet Titanium and additive businesses.

現在轉向幻燈片 10 和我們的 PEP 部分結果。 2023 財年第三季度的淨銷售額為 1.151 億美元或 1.038 億美元，不包括附加費。扣除附加費的淨銷售額較去年同期增長 20%，環比增長 6%。淨銷售額的同比增長主要反映了我們的 Dynamet 鈦和添加劑業務的需求增加。

In our Dynamet titanium business, net sales increased in both the Aerospace and Defense and Medical end-use markets from the same quarter a year ago. We've also seen a significant improvement in year-over-year sales in our additive business driven primarily by aerospace and defense market applications. The sequential increase in net sales primarily reflects increases in both Dynamet titanium sales and additive sales to the aerospace and defense end-use market.

在我們的 Dynamet 鈦業務中，航空航天、國防和醫療最終用途市場的淨銷售額與去年同期相比有所增長。我們還看到主要受航空航天和國防市場應用推動的增材業務銷售額同比顯著提高。淨銷售額的連續增長主要反映了 Dynamet 鈦銷售額和航空航天和國防最終用途市場添加劑銷售額的增長。

In the current quarter, PEP reported operating income of $10.2 million. This compares to adjusted operating income of $4.4 million in the same quarter a year ago, and operating income of $9.3 million in the second quarter of fiscal year 2023. The operating income improvement year-over-year is largely driven by higher sales in our Dynamet and additive businesses.

在本季度，PEP 報告營業收入為 1020 萬美元。相比之下，去年同期調整後的營業收入為 440 萬美元，2023 財年第二季度的營業收入為 930 萬美元。營業收入的同比增長主要是由於我們 Dynamet 的銷售額增加所致和添加劑業務。

We currently anticipate that the PEP segment will deliver operating income in the range of $10 million to $11 million for the upcoming fourth quarter of fiscal year 2023. Now turning to Slide 11 and a review of adjusted free cash flow.

我們目前預計，PEP 部門將在即將到來的 2023 財年第四季度實現 1000 萬至 1100 萬美元的營業收入。現在轉到幻燈片 11 並回顧調整後的自由現金流。

In the current quarter, we generated $5 million of cash from operating activities or a $91 million sequential improvement. The increase is largely attributable to the higher earnings combined with an inventory reduction of $13 million compared to an inventory build in the prior quarter. We anticipate that we will reduce inventories from the current levels in the upcoming fourth quarter. The reduction will be driven by increased shipments and a more balanced flow of materials across the operations.

在本季度，我們從經營活動中產生了 500 萬美元的現金，或 9100 萬美元的連續改進。這一增長主要歸因於更高的收益以及與上一季度庫存增加相比減少了 1300 萬美元的庫存。我們預計我們將在即將到來的第四季度減少當前水平的庫存。減少的原因是出貨量增加以及整個運營過程中物料流更加平衡。

In terms of other working capital, the current quarter's $69 million use of cash is largely due to increased accounts receivable driven by higher sales as the quarter progressed. In the third quarter of fiscal year 2023, we spent $21 million on capital expenditures. We expect fiscal year 2023 capital expenditures to be in the range of $80 million to $85 million which is down slightly from the previous guidance of $85 million to $90 million due to timing of our capital projects.

在其他營運資金方面，本季度 6900 萬美元的現金使用主要是由於本季度銷售額增加導致應收賬款增加。在 2023 財年第三季度，我們在資本支出上花費了 2100 萬美元。由於我們的資本項目的時間安排，我們預計 2023 財年的資本支出將在 8000 萬美元至 8500 萬美元之間，比之前 8500 萬美元至 9000 萬美元的指導略有下降。

Lastly, as I continue to highlight, we continue to fund a constant dividend to our shareholders which is included in our adjusted free cash flow and an important part of our overall shareholder return. With those details in mind, we reported adjusted free cash flow of negative $26 million in the third quarter of fiscal year 2023. Looking ahead to the fourth quarter, we expect to generate positive adjusted free cash flow.

最後，正如我繼續強調的那樣，我們繼續為股東提供穩定的股息，這包括在我們調整後的自由現金流中，也是我們整體股東回報的重要組成部分。考慮到這些細節，我們報告 2023 財年第三季度調整後的自由現金流為負 2600 萬美元。展望第四季度，我們預計將產生正的調整後自由現金流。

Our liquidity remains healthy, and we ended the current quarter with total liquidity of $212 million including $22 million of cash and $190 million of available borrowings under our credit facility. Earlier this month, we executed an agreement with our banking group to amend and extend our credit facility. Under the agreement, we increased our credit facility size from $300 million to $350 million and extended the maturity to April 2028.

我們的流動性保持健康，本季度末我們的流動性總額為 2.12 億美元，包括 2200 萬美元現金和 1.9 億美元信貸額度下的可用借款。本月早些時候，我們與我們的銀行集團簽署了一項協議，以修改和擴展我們的信貸額度。根據協議，我們將信貸額度從 3 億美元增加到 3.5 億美元，並將期限延長至 2028 年 4 月。

You should note that the incremental $50 million is not reflected in this slide as the increase was effective post quarter end. With that, I will turn the call back to Tony.

您應該注意，增加的 5000 萬美元沒有反映在這張幻燈片中，因為增加是在季度末後生效的。有了這個，我會把電話轉回給托尼。

Thanks, Tim. Now to recap our third quarter of fiscal year 2023. Demand continues to increase with positive near-term and long-term outlooks in each of our end-use markets. Notably, the aerospace submarkets continue to accelerate their recovery. As a result, our backlog continues to grow, and we expect it to remain strong for the foreseeable future. To meet the demand, we are continuing to increase production rates at all of our manufacturing facilities.

謝謝，蒂姆。現在回顧一下我們 2023 財年第三季度的情況。隨著我們每個最終用途市場的近期和長期前景樂觀，需求持續增長。值得注意的是，航空航天子市場繼續加速復蘇。因此，我們的積壓訂單繼續增加，我們預計在可預見的未來它會保持強勁。為了滿足需求，我們將繼續提高所有製造工廠的生產率。

To do that, we are focused on safely onboarding and training new employees across work centers to improve productivity. By increasing volumes, improving mix, increasing prices and improving productivity, we will continue to see margin expansion. Notably, we expect margins to continue to improve in the SAO segment.

為此，我們專注於跨工作中心安全地入職和培訓新員工，以提高生產力。通過增加銷量、改善產品組合、提高價格和提高生產率，我們將繼續看到利潤率的增長。值得注意的是，我們預計 SAO 部分的利潤率將繼續提高。

We will continue to offset inflationary pressures through our raw material surcharge mechanism and our ability to increase prices on both our contractual and transactional business. As evident, we just announced our latest round of transactional price increases of 7% to 12% this week. It is important to note that inventory levels decreased during the quarter and we expect inventory to further decrease through the remainder of the fiscal year. And most importantly, looking ahead, we are positioned to achieve our goal of delivering operating income at the fiscal year 2019 run rate range in the fourth quarter of fiscal year 2023.

我們將繼續通過我們的原材料附加費機制和我們提高合同和交易業務價格的能力來抵消通脹壓力。很明顯，我們剛剛宣布本週最新一輪的交易價格上漲 7% 至 12%。值得注意的是，本季度庫存水平下降，我們預計庫存將在本財年剩餘時間內進一步下降。最重要的是，展望未來，我們有能力實現我們的目標，即在 2023 財年第四季度實現 2019 財年運行率範圍內的營業收入。

Let's turn to the next slide and take a closer look at our full fiscal year 2023 outlook. On our last earnings call, I reviewed the path to achieving the fiscal year 2019 operating income run rate by the fourth quarter of this fiscal year. As you can see in the chart on the right, we have finished the third quarter ahead of our expectations.

讓我們翻到下一張幻燈片，仔細看看我們 2023 財年的完整展望。在我們上次的財報電話會議上，我回顧了在本財年第四季度實現 2019 財年營業收入運行率的途徑。正如您在右側圖表中看到的那樣，我們已經提前完成了第三季度的預期。

Our recent third quarter performance was primarily driven by the increased productivity across our manufacturing facility, resulting in a 17% sales increase sequentially and heading the 12% to 13% we previously guided to. With that momentum, we remain on track to achieve our fourth quarter fiscal year 2023 operating income goal. Demand remains strong across all of our English markets as evidenced by growing backlog and extending lead times. We remain focused on safely training and developing the workforce to continue to drive production rates.

我們最近的第三季度業績主要受到我們整個製造工廠生產力提高的推動，導致銷售額連續增長 17%，並超過我們之前指導的 12% 至 13%。憑藉這種勢頭，我們仍有望實現 2023 財年第四季度營業收入目標。不斷增加的積壓訂單和延長的交貨時間證明了我們所有英語市場的需求依然強勁。我們仍然專注於安全培訓和發展員工隊伍，以繼續推動生產率。

Earlier, Tim communicated the SAO and PEP segment fourth quarter operating income outlook. Those combined with estimated corporate costs, results in a total company operating income range of $54 million to $60 million for the fourth quarter. And looking ahead, we expect to continue to see strong performance in the first quarter of fiscal year 2024. It is an exciting time for Corporate Technology as we are in the midst of a demand upturn in our key end-use markets. We are well-positioned to return to pre-pandemic earning levels in this fiscal year, and we have a path to significantly increase earnings over the coming years.

早些時候，蒂姆傳達了 SAO 和 PEP 部門第四季度營業收入展望。這些與估計的公司成本相結合，導致公司第四季度的總營業收入在 5400 萬美元至 6000 萬美元之間。展望未來，我們預計 2024 財年第一季度將繼續保持強勁表現。這對 Corporate Technology 來說是一個激動人心的時刻，因為我們正處於關鍵終端用途市場的需求好轉之中。我們有能力在本財年恢復到大流行前的收入水平，並且我們有辦法在未來幾年大幅增加收入。

We have scheduled an Investor Day event on May 16, and when we will go into more detail on our portfolio of material solutions, our unique assets and capabilities and our financial outlook for the next several years. We look forward to sharing our vision with you.

我們已安排在 5 月 16 日舉辦投資者日活動，屆時我們將更詳細地介紹我們的材料解決方案組合、我們獨特的資產和能力以及我們未來幾年的財務前景。我們期待與您分享我們的願景。

For more information about the event, please visit our Investor Relations website. Thank you for your time. And now I will turn it over to the operator to take your questions.

有關此次活動的更多信息，請訪問我們的投資者關係網站。感謝您的時間。現在我將把它交給接線員來回答你的問題。

(Operator Instructions) First question will be from Joshua Sullivan of the Benchmark Company.

（操作員說明）第一個問題將來自基準公司的約書亞沙利文。

Just how do you think of system-wide SAO capacity relative to 2019? You've implemented the Carpenter operating model during COVID . Athens has more qualifications. How much more can you sweat the asset, given you have aerospace demand, coupled with strength across other segments now?

您如何看待相對於 2019 年的全系統 SAO 容量？您在 COVID 期間實施了 Carpenter 運營模型。雅典更有資歷。鑑於你有航空航天需求，再加上現在其他領域的實力，你還能為資產付出多少努力？

I can give you at a high level, Josh. You mentioned a couple of them. One, our productivity is higher or projected to be higher than what it was in FY '19 and FY '19, Athens effectively was at 0% utilization. So now you have them coming on. And we changed the mix of our products as well, where we've cut off the tail on some of the products and focus more on higher-margin products such as aerospace and defense. So those 3 combined, you should see a significant or meaningful, I should say, increase in our capacity versus FY '19.

我可以給你高水平的，喬希。你提到了其中的幾個。第一，我們的生產力高於或預計高於 19 財年和 19 財年的水平，雅典實際上處於 0% 的利用率。所以現在你讓他們來了。我們也改變了我們的產品組合，我們削減了一些產品的尾巴，更多地關注航空航天和國防等利潤率更高的產品。因此，這 3 個結合起來，你應該看到我們的產能與 19 財年相比有了顯著或有意義的增長。

And then just with regards to the new hire component there. Can you give us some color maybe on what does the learning curve look like recently, retention rates? Any particular skill sets that still need some focus?

然後就是關於那裡的新員工部分。你能給我們一些關於最近的學習曲線、保留率的顏色嗎？是否還有需要重點關注的特定技能？

Well, the big difference this year, and I think most companies are experiencing this is that the workforce or the new employees that we bring in have less manufacturing experience than they did maybe 4, 5, 6 years ago. So the learning curve is steeper for us. We're making great progress. You could see it in the numbers for the third quarter here. That was a big step up.

好吧，今年最大的不同是，我認為大多數公司都遇到了這種情況，即我們引進的勞動力或新員工的製造經驗可能比 4、5、6 年前少。所以學習曲線對我們來說更陡峭。我們正在取得很大進展。你可以在這裡看到第三季度的數字。這是一個很大的進步。

So you're seeing that we're being successful in that area. There's still some areas that we need to hire a couple more people reading and our Dynamet facility. We want to bring on more capacity, so there'll be more hiring there as well. but we're on a good place right now and looking forward to take it to the next level in the fourth quarter as well.

所以你看到我們在那個領域取得了成功。在某些領域，我們還需要雇用更多的閱讀人員和我們的 Dynamet 設施。我們想帶來更多的產能，所以那裡也會有更多的招聘。但我們現在處於一個很好的位置，並期待在第四季度將它提升到一個新的水平。

Got it. And then maybe just one -- last one on PEP. What does the aerospace fastener cycle look like? Are you having big build rates ahead of these build rate jumps at the OEMs or customers building inventory to avoid disruptions little more hand about.

知道了。然後可能只有一個——關於 PEP 的最後一個。航空航天緊固件週期是什麼樣的？在 OEM 或客戶構建庫存以避免中斷之前，您是否有較大的構建率？

Yes, nobody is building inventory right now, right? But Dynamet from a supply-demand standpoint is just like SAO. It is Dynamet 60-40 medical, aerospace and both of those markets are extremely tight. So think of Dynamet just like you think about SAO from a supply-demand standpoint.

是的，現在沒有人在建立庫存，對吧？但從供需的角度來看，Dynamet 就像 SAO。它是 Dynamet 60-40 醫療、航空航天，這兩個市場都非常緊張。因此，就像從供需角度考慮 SAO 一樣考慮 Dynamet。

Next question will be from Michael Leshock, KeyBanc Capital Markets.

下一個問題將來自 KeyBanc Capital Markets 的 Michael Leshock。

I wanted to start out asking how -- to 1Q, how are you expecting that to fare versus 3 months ago and maybe what platforms are driving the growth for you sequentially just given some of the seasonal downtime that you typically experience in that quarter, are you seeing stronger mix contributions? Or is that more of an ongoing volume ramp despite the seasonality.

我想開始問 - 到 1Q，與 3 個月前相比，你期望它的表現如何，以及考慮到你通常在那個季度經歷的一些季節性停機，也許哪些平台正在為你依次推動增長，是你看到更強的混合貢獻了嗎？或者，儘管存在季節性，但更多的是持續的銷量增長。

Yes. Thanks for the question. Maybe take a little bit of time on that because certainly since you asked the question, you know how impactful that would be. So as you said, I mean, given -- productivity, improvements, continued strong demand, we don't expect the same level of seasonality in our fiscal fourth quarter -- go into our fiscal first quarter that we've seen in previous years. So we don't see that same type of seasonality.

是的。謝謝你的問題。也許花點時間討論這個問題，因為既然你問了這個問題，你就知道這會有多大影響。所以正如你所說，我的意思是，考慮到 - 生產力，改善，持續強勁的需求，我們預計第四財季的季節性水平不會進入我們前幾年看到的第一財季.所以我們沒有看到相同類型的季節性。

Now as you know, over the past 8 to 10 years, that dip in the first quarter versus the fourth has probably averaged around 30% and it's been as high as 60%. So that's a significant. So for us to tell you that we're not going to see that is a real meaningful comment. I think in the last earnings call, in fact, I said we'd see another meaningful increase in the fourth quarter or another step up.

如您所知，在過去的 8 到 10 年中，第一季度與第四季度相比平均下降了 30% 左右，最高可達 60%。所以這很重要。因此，讓我們告訴您我們不會看到這是一個真正有意義的評論。我想在上次財報電話會議上，事實上，我說過我們會在第四季度看到另一個有意義的增長或另一個進步。

Now -- we'll give you some more color for the first quarter as we get to the next earnings call, but I think it's safe to say that even if the first quarter is sequentially flat to the fourth quarter, that would be major positive earnings growth inflection versus the past fiscal year first quarters.

現在——我們將在下一次財報電話會議上為您提供更多關於第一季度的信息，但我認為可以肯定地說，即使第一季度與第四季度持平，這也將是一個重大的積極因素盈利增長與上一財年第一季度相比的變化。

Now you talked about the normal seasonality we usually do our planned maintenance, preventive maintenance outage during that time. And as you know, we'd love to run the equipment 24/7 right now, and the demand is there, but we need to continue to be good operators and we needed to perform that essential preventive maintenance. And we're going through those schedules as we speak to try to understand how we can minimize that type of preventive maintenance. But even with all that factored in, you've got at least essentially flat first quarter to the fourth. And as I said earlier, that would be extremely -- that would be an extremely major positive earnings growth inflection point for us.

現在你談到了正常的季節性，我們通常會在那段時間進行計劃維護、預防性維護停機。如您所知，我們很樂意現在全天候 24/7 運行設備，需求就在那裡，但我們需要繼續成為優秀的操作員，我們需要執行必要的預防性維護。我們在講話時正在研究這些時間表，以試圖了解我們如何才能最大限度地減少這種類型的預防性維護。但即使考慮到所有因素，第一季度到第四季度至少基本持平。正如我之前所說，這將是非常重要的——這對我們來說將是一個非常重要的正收益增長拐點。

And then I wanted to ask on the price increase on the transactional business. What percent of your business does that apply to you today? And I know you wouldn't be repricing your backlog. But if you look at orders that are out maybe over a year, does it apply to that business as well?

然後我想問一下交易業務的價格上漲。今天，您的業務中有多少百分比適用於您？而且我知道你不會重新定價你的積壓。但是，如果您查看可能超過一年的訂單，它是否也適用於該業務？

Yes, it's a good question. At any point in time, we're roughly 40% to 50% of our business is under some type of longer-term contract, whether that be NLTA or 1-year pricing agreements. And presently, when we're a 52- to 60-week lead times, these price increases that we just noted would be on that business. Now remember, we've communicated several price increases over the last year that is hitting now. But this specific one would be on that transactional business then that's coming to us approximately 52 weeks from now, 1 year.

是的，這是個好問題。在任何時候，我們大約有 40% 到 50% 的業務是根據某種類型的長期合同簽訂的，無論是 NLTA 還是 1 年期定價協議。目前，當我們有 52 到 60 週的交貨時間時，我們剛剛注意到的這些價格上漲將針對該業務。現在請記住，我們已經傳達了去年的幾次價格上漲，現在正在發生。但是這個特定的交易業務將在 1 年後大約 52 週後出現。

Got it. That makes sense. And then on your aerospace business, do you have visibility into the breakout? What is MRO versus OEM business that you're supplying into?

知道了。這就說得通了。然後在您的航空航天業務中，您是否了解突破情況？您供應的 MRO 與 OEM 業務是什麼？

Yes. It's -- we're on all platforms. And I get that question a lot, just like I get, is it wide body or single aisle? or is it Boeing or Airbus? I mean at this point, right now, it doesn't matter. We're sold out. We can't make enough and I don't see that changing any time in the near future.

是的。它是 - 我們在所有平台上。我經常收到這個問題，就像我收到的一樣，是寬體還是單通道？還是波音或空客？我的意思是在這一點上，現在，沒關係。我們賣光了。我們賺的不夠多，我認為這種情況在不久的將來不會改變。

Great. And then -- and lastly for me, did you provide Jet Engine sales for the quarter, either sequentially or year-over-year?

偉大的。然後 - 最後對我來說，你是否提供了本季度的噴氣發動機銷售額，無論是連續還是同比？

I can do that for you. I didn't do that in my prepared remarks. Aerospace engine sales were up about 50% year-over-year. They were roughly flat sequentially. But really, that sequential is primarily a matter of mix of product being run as our total aerospace sales were up 59% year-over-year and 21% sequentially. And I can also note just as a point of reference, our aerospace engine backlog was up 24% sequentially and the Aero engine bookings in the quarter were at record levels. So full speed ahead on aerospace engines.

我可以為你做。我在準備好的發言中沒有這樣做。航空航天發動機銷售額同比增長約 50%。它們依次大致持平。但實際上，這個順序主要是產品組合的問題，因為我們的航空航天總銷售額同比增長 59%，環比增長 21%。我還可以注意到，作為參考，我們的航空發動機積壓訂單環比增長了 24%，本季度的航空發動機預訂量創下歷史新高。航空發動機全速前進。

Our next question will be from Gautam Khanna.

我們的下一個問題將來自 Gautam Khanna。

Tony, I was wondering if you could talk a little bit about the December quarter just based on your backlog visibility. Is that -- are you guys going to maybe work through holidays or what have you, so that we actually do better than normal seasonality in that quarter as well?

托尼，我想知道你是否可以根據你的積壓可見性談談 12 月季度的情況。那是 - 你們可能會在假期工作還是有什麼，所以我們實際上也比那個季度的正常季節性做得更好？

Yes. So you're talking about our second quarter fiscal, right?

是的。所以你在談論我們的第二季度財政，對嗎？

Yes, correct.

是，對的。

Yes. Well, yes. I think we're in a period now -- not think, I know we're in a period now, but we're trying to minimize our downtime we're getting -- trying to get smarter in the way we do preventive maintenance. And because throughout FY '24, the next year, we're going to be able to sell everything we make. And that's going to be extended through the next 3 or 4 years.

是的。嗯，是。我認為我們現在正處於一個時期——不認為，我知道我們現在正處於一個時期，但我們正在努力盡量減少我們的停機時間——試圖在我們進行預防性維護的方式上變得更聰明.而且因為在整個 24 財年，即明年，我們將能夠出售我們製造的所有產品。這將在接下來的 3 或 4 年內延長。

So Yes, Gautam as I said, you look at the first quarter, at least flat, and you'll continue to see improvement over the next quarters of FY '24. It's a little early for me to tell you exactly what those would be, but I don't anticipate any significant sequential pullback as we work through FY '24.

所以是的，正如我所說，高塔姆，你看第一季度，至少持平，你將繼續看到 24 財年接下來幾個季度的改善。現在告訴你確切的內容還為時過早，但我預計在我們完成 24 財年期間不會出現任何重大的連續回調。

Okay. And you commented on -- some of the non-spot business having better pricing. When do we start to see that flow through your results? Is it already flowing through? Or is it going to pick up as we move through the second half of this calendar year on your long term agreements.

好的。你評論了——一些非現貨業務有更好的定價。我們什麼時候開始在您的結果中看到這種流動？是不是已經流過了？或者隨著我們根據您的長期協議在本日曆年的下半年移動，它會回升嗎？

Long-term agreements. Yes. So we've seen that today. That price is coming through. We still have a couple -- there's still a couple of major contracts that will expire this calendar year. So there'll be more negotiation there. I wish 100% of that price would hit the bottom line. But as you know, there has been some input cost inflation as well. Now our pricing is offsetting that, but we don't get 100% of the pricing to hit the bottom line. So I guess, a high level to your question, we've seen that over the last several quarters, and we'll continue to see some price improvement over the next year.

長期協議。是的。所以我們今天已經看到了。這個價格正在通過。我們還有幾個——還有幾個主要合同將在本日曆年到期。所以那裡會有更多的談判。我希望該價格的 100% 能觸及底線。但如您所知，也出現了一些投入成本通脹。現在我們的定價正在抵消這一點，但我們並沒有讓 100% 的定價達到底線。所以我想，對於你的問題來說，這是一個高層次的問題，我們在過去幾個季度已經看到了這一點，我們將在明年繼續看到一些價格上漲。

And just one last one. On the backlog -- when we look back historically, Carpenter's backlog represents, I don't know, 30% to 40% of 1-year forward sales. Today, it's a very elevated level. And I'm just curious, is it -- do the customers want the backlog as quickly as you can ship it? Is there -- like what is the constraint on maybe applying that similar ratio, call it 40% of forward sales in backlog today. Is it just production constraints? Is it -- or is it the customers want it later on? I'm just curious like what prevents you guys from doing even better?

最後一個。關於積壓——當我們回顧歷史時，我不知道 Carpenter 的積壓佔 1 年遠期銷售額的 30% 到 40%。今天，這是一個非常高的水平。我只是很好奇，是嗎——客戶是否希望盡快發貨積壓？有沒有 - 比如可能應用類似比率的限制是什麼，稱其為今天積壓的遠期銷售額的 40%。僅僅是生產限制嗎？是——還是客戶以後需要它？我很好奇是什麼阻止你們做得更好？

Yes. For right now, it's just ramping up the operations. We're not at 100% yet, and that's primarily driven by onboarding new employees, just like as you will know, other companies in this industry have stated the same thing we have. So that's the main gating factor right now. I could I could sell significantly more material right now if my production rates were higher. Obviously, they were higher in the third quarter. They're going to have to take another step up in the fourth quarter and into FY '24, and that's the plans. But there's really nobody placing orders now that if I went to them and said, "I can increase deliveries to you by 25%, 30% that they would say no, they would take it.

是的。目前，它只是在加強運營。我們還沒有達到 100%，這主要是由新員工入職驅動的，就像你知道的那樣，這個行業的其他公司也說過同樣的話。所以這是現在的主要門控因素。如果我的生產率更高，我現在可以賣出更多的材料。顯然，他們在第三季度更高。他們將不得不在第四季度和 24 財年再邁出一步，這就是計劃。但現在真的沒有人下訂單了，如果我去找他們說，“我可以增加 25% 的交貨量，30% 他們會拒絕，他們會接受。

And that wouldn't be to build inventory, right? That would be -- they would take that material right now.

那不會是建立庫存，對吧？那就是——他們現在就拿走那些材料。

This concludes our question-and-answer session. I'll now turn the call back over to Mr. John Huyette for closing remarks.

我們的問答環節到此結束。我現在將電話轉回給 John Huyette 先生作結束語。

Thank you, operator and thank you, everyone, for joining us today for our Fiscal 2023 Third Quarter Conference Call. Have a great rest of your day.

感謝運營商，感謝大家今天加入我們的 2023 財年第三季度電話會議。祝您度過愉快的一天。

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

謝謝。會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。