Mistras Group Inc (MG) 2023 Q3 法說會逐字稿

Thank you for joining MISTRAS Group's conference call for its third quarter ended September 30, 2023. My name is Michelle, and I will be your event manager today. We will be accepting questions after management's prepared remarks.

感謝您參加 MISTRAS 集團截至 2023 年 9 月 30 日的第三季電話會議。我叫米歇爾，今天我將擔任您的活動經理。我們將在管理層準備好發言後接受提問。

Participating on the call from MISTRAS will be Manny Stamatakis, the company's Chairman of the Board and Interim President and Chief Executive Officer; Ed Prajzner, Senior Executive Vice President and Chief Financial Officer.

參加 MISTRAS 電話會議的包括公司董事會主席兼臨時總裁兼執行長 Manny Stamatakis； Ed Prajzner，資深執行副總裁兼財務長。

I want to remind everyone that remarks made during this conference call will include forward-looking statements. The company's actual results could differ materially from those projected. Some of those factors can cause actual results to differ are discussed in the company's most recent annual report on Form 10-K and other reports filed with the SEC.

我想提醒大家，本次電話會議的言論將包含前瞻性陳述。公司的實際結果可能與預測有重大差異。其中一些因素可能導致實際結果有所不同，公司最新的 10-K 表格年度報告以及向 SEC 提交的其他報告中對此進行了討論。

The discussion in the conference call will also include certain financial measures that are not prepared in accordance with US GAAP. Reconciliation of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures can be found in the tables contained in yesterday's press release and the company's related current report on Form 8-K. These reports are available on the company's website in the Investors section and on the SEC's website.

電話會議的討論還將包括某些未按照美國公認會計準則制定的財務措施。這些非美國公認會計原則財務指標與最直接可比較的美國公認會計原則財務指標的調節可以在昨天的新聞稿中包含的表格和公司當前相關的表格 8-K 報告中找到。這些報告可在公司網站的投資者部分和 SEC 網站上取得。

I will now turn the conference over to Manny Stamatakis.

我現在將會議交給曼尼·斯塔馬塔基斯。

Good morning, everyone, and thank you for joining us today. In my October call, I provided a broad overview of the Board's strategic vision for MISTRAS. Today, in addition to sharing more about our financial performance, I want to talk about the future of MISTRAS as it relates to the status of Project Phoenix.

大家早安，感謝您今天加入我們。在 10 月的電話會議中，我概述了董事會對 MISTRAS 的策略願景。今天，除了分享我們的財務表現更多之外，我還想談談 MISTRAS 的未來，因為它與鳳凰計劃的狀況有關。

Our results for the third quarter were in line with our expectations for revenue and adjusted EBITDA. Revenues were up, and I am particularly pleased with another quarter of growth in our commercial aerospace and data-analytical-solutions businesses, which we believe are only beginning to blossom.

我們第三季的業績符合我們對營收和調整後 EBITDA 的預期。收入成長了，我對我們的商業航空航太和數據分析解決方案業務又一個季度的成長感到特別高興，我們相信這些業務才剛開始蓬勃發展。

Gross margin expanded while selling, general and administrative expenses contracted to help us achieve our adjusted EBITDA expectations for the quarter. The improvements in gross margin and reduction in SG&A reflect the initial impact of Project Phoenix, which we expect to continue in 2024 and beyond.

毛利率有所成長，而銷售、一般和管理費用則有所收縮，這有助於我們實現本季調整後的 EBITDA 預期。毛利率的提高和銷售、管理及行政費用的減少反映了鳳凰計畫的初步影響，我們預計該影響將在 2024 年及以後持續下去。

As also announced yesterday in a separate press release accompanying the earnings announcement, subsequent to September 30, we completed additional actions associated with Project Phoenix that will further reduce overhead and improve sales efficiency. Ed will provide more details on that later. But first, I would like to take a moment to reflect on the year-to-date results of the company, which reflect low single-digit revenue growth, a slight gross profit margin increase, and nearly 10% EBITDA growth, that the EBITDA growth was driven by savings associated with Project Phoenix.

正如昨天在收益公告附帶的另一份新聞稿中宣布的那樣，9 月 30 日之後，我們完成了與鳳凰計劃相關的其他行動，這將進一步減少管理費用並提高銷售效率。埃德稍後將提供更多詳細資訊。但首先，我想花點時間回顧一下該公司今年迄今的業績，這些業績反映了較低的個位數收入增長、毛利率略有上升以及近 10% 的 EBITDA 增長，即 EBITDA增長是由鳳凰計劃相關的節省推動的。

In 2023, the company decided to make changes to key senior management positions. These changes were instituted by the Board in conjunction with Project Phoenix to strengthen the organization and to enable us to better execute our Project Phoenix initiatives. To help accelerate profitable growth by identifying meaningful margin improvement opportunities and steps to achieve sustained cost savings.

2023年，公司決定對關鍵高階管理職進行變動。這些變革是由董事會與鳳凰計畫共同製定的，旨在加強組織並使我們能夠更好地執行鳳凰計畫。透過確定有意義的利潤改善機會和實現持續成本節約的步驟，有助於加速獲利成長。

The meaningful and timely contribution of Project-Phoenix-related actions helped to offset softness in revenue and profitability experienced in 2023, and will also contribute a material-sustained benefit to the company into 2024 and going forward. Project Phoenix's overall target is to eliminate waste and redundancy and to improve efficiency with the goal to reduce SG&A to approximately 21% of total revenues by the end of 2024, primarily through a rationalization of the overhead workforce, including a targeted 15% reduction in administrative headcount, but without as adversely impacting the company's technician base or ability to support operations and services to its customers.

鳳凰計畫相關行動的有意義和及時的貢獻有助於抵消 2023 年收入和盈利能力的疲軟，也將為公司在 2024 年及未來帶來實質的持續效益。鳳凰計畫的總體目標是消除浪費和冗餘並提高效率，目標是到2024 年底將SG&A 佔總收入的比例減少到約21%，主要是透過管理人員的合理化，包括有針對性地減少15% 的行政管理費用員工人數，但不會對公司的技術人員基礎或支援客戶營運和服務的能力產生不利影響。

Together with the other initiatives implemented, we expect total Project Phoenix savings and other benefits of approximately $30 million in fiscal 2024. These income from operations improvements initiatives should not be viewed as a reactive measure, as we are just as committed and plan to make more proactive, strategic, and robust investments into growth initiatives moving forward. While we plan to reinvest some of our Project Phoenix savings, we still expect fiscal 2024 adjusted EBITDA will be greater than our previous all-time high of $88 million. I am confident that these initiatives will accelerate profitable growth, as well as sustain cost controls and result in margin expansion going forward.

加上實施的其他舉措，我們預計2024 財年鳳凰計畫的總節省和其他收益約為3,000 萬美元。這些來自營運改善舉措的收入不應被視為一種被動措施，因為我們同樣致力於併計劃創造更多收入對未來成長計畫進行積極、策略性和穩健的投資。雖然我們計劃將鳳凰城計畫的部分儲蓄進行再投資，但我們仍然預計 2024 財年調整後的 EBITDA 將高於我們先前 8,800 萬美元的歷史新高。我相信這些措施將加速獲利成長，維持成本控制並導致未來利潤率的擴大。

Equally as important to the profitability of Project Phoenix is the behavioral discipline, accountability, and energy that this project has brought to the reshaped senior leadership team of the company. I am pleased to be leading the company at this crucial juncture, supported by a highly skilled, motivated, and invigorated senior leadership team. Speaking on behalf of the Board, I am optimistic for the future of the company and believe that the implementation of these initiatives will create real value for our shareholders.

對於鳳凰計畫的獲利能力同樣重要的是該計畫為公司重塑的高階領導團隊帶來的行為紀律、責任感和活力。我很高興能在這個關鍵時刻領導公司，並得到一支技術精湛、積極進取、充滿活力的高階領導團隊的支持。我代表董事會對公司的未來感到樂觀，並相信這些措施的實施將為我們的股東創造真正的價值。

Now, I'd like to turn the call over to Ed for his update on our recent results, and a little more detail on Project Phoenix.

現在，我想將電話轉給艾德，以了解他對我們最近結果的最新情況，以及有關鳳凰計劃的更多細節。

Thank you, Manny, and good morning, everyone. It was another quarter of meaningful progress and significant change for MISTRAS. And Project Phoenix will fundamentally change our company and significantly increase shareholder value. But before highlighting these changes, let me provide some highlights for the quarter.

謝謝你，曼尼，大家早安。對於 MISTRAS 來說，這是另一個有意義的進展和重大變化的季度。鳳凰計劃將從根本上改變我們的公司並顯著增加股東價值。但在強調這些變化之前，讓我先介紹一下本季的一些亮點。

For the third quarter of 2023, consolidated revenue was up slightly, primarily reflecting growth in oil and gas, in addition to continued strength in several of our key growth initiatives, particularly commercial aerospace and data analytical solutions. I would also note that revenue in our international segment was up 21% in the quarter, driven primarily by a strong turnaround market and increased aerospace and defense volume.

2023 年第三季度，合併收入略有成長，主要反映了石油和天然氣的成長，以及我們的幾項關鍵成長計畫（特別是商用航空航太和數據分析解決方案）的持續強勁。我還想指出的是，本季我們國際業務的收入成長了 21%，這主要是由市場強勁的周轉以及航空航太和國防業務量的增加所推動的。

Gross profit margin expanded 20 basis points as compared to the prior year quarter and was also up 210 basis points on a sequential basis, driven primarily by a favorable sales mix and lower healthcare expenses, somewhat offset by inflationary pressures, including rising energy costs and incremental subcontractor costs. Selling, general and administrative expenses were down 3% compared to the third quarter of 2022 and were also down 4.7% sequentially from the second quarter of 2023. As Manny mentioned earlier, this decrease largely reflects the impact of Project Phoenix and ongoing cost controls to achieve sustained overhead savings.

毛利率較上年同期增長20 個基點，環比增長210 個基點，這主要是由於有利的銷售組合和較低的醫療費用，但在一定程度上被通膨壓力（包括能源成本上升和增量成本）抵銷。分包商成本。銷售、一般和管理費用與2022 年第三季相比下降了3%，與2023 年第二季相比也連續下降了4.7%。正如Manny 之前提到的，這一下降很大程度上反映了鳳凰計劃和持續成本控制對實現持續的管理費用節省。

Loss from operations was $4.7 million for the third quarter, yet income from operations before special items of $11.8 million on a non-GAAP basis when excluding the goodwill impairment charge and reorganization and other related costs associated with Project Phoenix. The non-GAAP income from operations represents a 19% increase as compared to the prior year period. Net loss for the third quarter was $10.3 million, or negative $0.34 per diluted share before adjusting for the same aforementioned items, while adjusted EBITDA in the quarter was up 12.5% to $20.9 million, meeting our expectations.

第三季營運虧損為 470 萬美元，但按非公認會計準則計算，不計特殊項目的營運收入為 1,180 萬美元（不包括商譽減損費用、重組以及與鳳凰項目相關的其他相關成本）。非 GAAP 營運收入較上年同期成長 19%。第三季淨虧損為 1,030 萬美元，在對上述相同項目進行調整之前，每股攤薄虧損為負 0.34 美元，而本季調整後的 EBITDA 成長 12.5%，達到 2,090 萬美元，符合我們的預期。

The net loss in the quarter was largely attributable to a non-cash impairment charge of $13.8 million related to our international segment, related to macroeconomic factors in Europe, before consideration of the impact of any prospective Project Phoenix benefits. I will provide more detail on this item in a few minutes. Net income on a non-GAAP basis excluding the aforementioned special items, was $5.6 million or $0.18 per diluted share for the quarter.

本季的淨虧損主要歸因於與我們的國際部門相關的 1,380 萬美元非現金減損費用，該費用與歐洲的宏觀經濟因素有關，而不考慮鳳凰計畫的任何潛在效益的影響。我將在幾分鐘內提供有關此項目的更多詳細資訊。不包括上述特殊項目的非 GAAP 淨利潤為 560 萬美元，即本季稀釋後每股收益 0.18 美元。

Our net cash provided by operating activities was $10.7 million for the first nine months of 2023 compared to $10.5 million in the prior year period. Free cash flow was negative $5.6 million for the first nine months of 2023 compared to positive $0.9 million in the prior year period. This decrease in cash flow, free cash flow, was primarily attributable to an increase in capital expenditures during the current year and higher-than-normal accounts receivable balances as of September 30, due to the timing of projects in the third quarter. This $6.6 million increase in capital expenditures during the current year reflects investments in our shop laboratories and in data analytical solutions offerings to foster future revenue growth.

2023 年前 9 個月，我們的經營活動提供的淨現金為 1,070 萬美元，而去年同期為 1,050 萬美元。 2023 年前 9 個月的自由現金流為負 560 萬美元，去年同期為正 90 萬美元。現金流量（自由現金流量）的減少主要是由於本年度資本支出增加以及由於專案時間安排在第三季度而導致截至 9 月 30 日的應收帳款餘額高於正常水平。本年度資本支出增加 660 萬美元，反映了我們對車間實驗室和數據分析解決方案產品的投資，以促進未來收入成長。

Gross debt increased by $10.2 million during the quarter ended September 30, from $183.7 million as of June 30, 2023, to $193.9 million as of September 30, primarily due to the aforementioned factors impacting cash flow. Our trailing 12-month bank-defined leverage was just under 3.5 to 1 as of September 30. Accordingly, we are pushing back our timetable to achieve a leverage ratio of 3 to 1 or lower from our previous December 31, 2023, target to an expectation of that being achieved in early fiscal 2024.

截至 9 月 30 日的季度，總債務增加了 1,020 萬美元，從截至 2023 年 6 月 30 日的 1.837 億美元增加到截至 9 月 30 日的 1.939 億美元，主要是由於上述影響現金流的因素。截至9 月30 日，我們過去12 個月的銀行定義槓桿率略低於3.5 比1。因此，我們正在推遲實現3 比1 或更低槓桿率的時間表，從之前的2023 年12 月31 日目標延後到預計在 2024 財年初實現這一目標。

As I referenced earlier, we incurred a non-cash impairment charge of $13.8 million in the quarter due to decreased gross margin in the current period as a result of inflationary pressures and rising energy costs impacting our international reporting units operations. As a result, we performed an interim quantitative goodwill impairment test during the third quarter of 2023. This decreased gross margin, in addition to higher interest rates in the current period, contributed to an unfavorable decrease in this reporting unit value, which caused this impairment charge of $13.8 million, which was recorded within the international segment of our business.

正如我之前提到的，我們在本季度產生了 1,380 萬美元的非現金減損費用，因為通貨膨脹壓力和能源成本上升影響了我們的國際報告單位業務，導致本期毛利率下降。因此，我們在2023年第三季進行了中期定量商譽減損測試。毛利率下降，加上當期利率上升，導致本報告單位價值不利下降，從而導致了本次減值1,380 萬美元的費用，記錄在我們業務的國際部分。

Excluding this non-cash impairment charge, the international segment achieved positive non-GAAP operating income as well as positive EBITDA for both the three months and nine months ended September 30, 2023, and they've also experienced strong growth over the prior year comparable period. We are optimistic for continued growth in this business in '24, and beyond despite this economic headwind caused by this non-cash impairment, we will also benefit from pricing and cost improvements as part of Project Phoenix initiatives, which will be implemented during Q4 for International.

排除此非現金減損費用，截至2023 年9 月30 日的三個月和九個月，國際部門均實現了正的非公認會計原則營業收入以及正的EBITDA，並且與上年同期相比也實現了強勁成長時期。我們對該業務在24 年及以後的持續增長持樂觀態度，儘管這種非現金減值造成了經濟逆風，但作為鳳凰計劃計劃的一部分，我們還將受益於定價和成本改進，該計劃將在第四季實施國際的。

The reorganizational cost of $2.7 million recorded during the quarter relate to professional fees and certain restructuring charges associated with the changes made to our organizational structure. In the third quarter of 2023, these charges included severance costs associated with the transformation of our products and systems segment as announced back on October 2.

本季度記錄的 270 萬美元重組成本涉及專業費用和與組織結構變化相關的某些重組費用。 2023 年第三季度，這些費用包括與我們 10 月 2 日宣布的產品和系統部門轉型相關的遣散費。

Before providing additional data and details on Project Phoenix, I would like to highlight that our data analytical solutions revenue, which has experienced growth of nearly 16% for the year, is experiencing strong growth throughout all of 2023. And we believe this provides customers with a significant benefit being achieved through data analytical procedures, which in turn turns the data into actionable information, which our facility operators and our customer can use to maximize safety, enhance their productivity, and optimize their budgets.

在提供有關鳳凰計劃的更多數據和詳細資訊之前，我想強調一下，我們的數據分析解決方案收入今年增長了近16%，並且在2023 年全年都在強勁增長。我們相信這為客戶提供了透過數據分析程序實現了顯著的效益，數據分析程序反過來將數據轉化為可操作的信息，我們的設施運營商和客戶可以使用這些信息來最大限度地提高安全性，提高生產力並優化預算。

But now, let me provide a little more detail on Project Phoenix. A brief overview of actions taken thus far are as follows: First is strategic pricing, wherein we have developed and will further enhance a proactive structural price strategy to address inflationary costs being experienced within our business. This is the commercial function of Project Phoenix, which we mentioned earlier. Secondly, this reduction to overhead, our goal is to reduce overhead, as Manny said, to approximately 21% of total revenue by the end of 2024, primarily through a rationalization of the overhead workforce, including a targeted 15% reduction in administrative headcount without impacting the company's technician workforce base or our ability to support operations and service our customers.

但現在，讓我提供有關鳳凰計劃的更多細節。迄今為止採取的行動的簡要概述如下：首先是戰略定價，我們已經制定並將進一步加強主動的結構性價格戰略，以解決我們業務中遇到的通貨膨脹成本。這就是我們前面提到的鳳凰計畫的商業功能。其次，對於管理費用的減少，正如Manny 所說，我們的目標是到2024 年底將管理費用減少到總收入的約21%，主要是透過管理費用勞動力的合理化，包括有針對性地減少15% 的行政人員數量，而無需影響公司的技術人員隊伍或我們支援營運和服務客戶的能力。

And finally, the new leadership as a part of our transformation plan to improve shareholder value by lowering SG&A overheads, improving free cash flow, and accelerating growth, the Board made recent changes to senior leadership within the company to further strengthen the organization and enhance the execution of the various initiatives comprising Project Phoenix. We anticipate the new commercial focus, which emerged from Project Phoenix will help drive organic revenue growth in 2024, leading to a record adjusted EBITDA of greater than $88 million, primarily attributable to a significant increase in operating leverage arising from a meaningful reduction in overhead combined with profitable growth.

最後，新領導層作為我們轉型計劃的一部分，旨在透過降低銷售管理費用、改善自由現金流和加速成長來提高股東價值，董事會最近對公司內部的高階領導層進行了調整，以進一步加強組織並提高股東價值。執行包括鳳凰計畫在內的各種措施。我們預計鳳凰計畫帶來的新商業焦點將有助於推動 2024 年的有機收入成長，調整後 EBITDA 創歷史新高，超過 8,800 萬美元，這主要歸因於管理費用大幅減少，營運槓桿顯著增加與獲利成長。

More immediately, however, we are lowering our guidance ranges for fiscal 2023 with full-year revenue now expected to be between $695 million to $705 million from a previous $710 million to $720 million range. And adjusted EBITDA is now expected to be between $65 million and $68 million from a previous $68 million to $71 million range. The reduction in revenue and EBITDA are due to lower-than-previously-forecasted fourth quarter results.

然而，更直接的是，我們正在降低 2023 財年的指導範圍，目前預計全年收入將從先前的 7.1 億美元至 7.2 億美元範圍調整為 6.95 億美元至 7.05 億美元。調整後的 EBITDA 目前預計為 6,500 萬美元至 6,800 萬美元，之前的範圍為 6,800 萬美元至 7,100 萬美元。收入和 EBITDA 的減少是由於第四季度業績低於先前的預期。

Free cash flow guidance is also being lowered to between $7 million to $10 million from previously $23 million to $25 million range, which had excluded certain cash expenses being incurred to achieve the cost savings of Project Phoenix. This reduction in free cash flow guidance was due to an adverse day sales outstanding and buildup of AR and the incurrence of these cash expenses to achieve the Project Phoenix cost savings, and to a lesser extent, the increased capital expenditures to foster revenue growth.

自由現金流指引也從先前的 2,300 萬美元至 2,500 萬美元範圍下調至 700 萬美元至 1,000 萬美元，其中不包括為實現鳳凰計畫成本節約而產生的某些現金支出。自由現金流指引的減少是由於不良的每日銷售額和 AR 的積累以及為實現鳳凰項目成本節約而產生的這些現金支出，以及在較小程度上為促進收入增長而增加的資本支出。

We anticipate a modest single-digit revenue growth in 2024, yet a significant expansion in adjusted EBITDA attributable to operating leverage and the ongoing benefits of Project Phoenix. Accordingly, we expect to generate an all-time adjusted EBITDA in fiscal 2024. This outlook includes approximately $20 million of incremental benefit from Project Phoenix in 2024. And this detail was delineated in a separate press release issued yesterday, which accompanied the earnings release, as Manny alluded to.

我們預計 2024 年營收將實現小幅個位數成長，但由於營運槓桿和鳳凰計畫的持續效益，調整後 EBITDA 將大幅成長。因此，我們預計在2024 財年產生歷史最高的調整後EBITDA。這一前景包括2024 年鳳凰項目帶來的約2000 萬美元的增量收益。這一細節在昨天發布的另一份新聞稿中進行了描述，該新聞稿與收益發布一起發布，正如曼尼提到的那樣。

Project Phoenix provides a roadmap for sustained cost savings and increased profitable growth with the ultimate goal of driving bottom-line improvement and increasing shareholder value. After thorough planning, we are now implementing or have implemented many of its initiatives, which are yielding immediate benefits. We appreciate your continued support and expect to reward your patients with significantly improved results in 2024.

鳳凰計畫提供了持續節約成本和提高利潤成長的路線圖，最終目標是推動利潤改善和增加股東價值。經過周密的規劃，我們現在正在實施或已經實施了其中的許多舉措，這些舉措正在產生即時的效果。我們感謝您的持續支持，並期望在 2024 年以顯著改善的結果來獎勵您的患者。

All right, I would like to turn the call back over to Manny for his closing remarks before we move on to take your questions.

好吧，在我們繼續回答你們的問題之前，我想將電話轉回給曼尼，讓他作結語。

Thanks, Ed. The successful implementation of Project Phoenix will stabilize our core business and allow us to expand and achieve further successes in our growth areas, and I am confident that management will achieve these objectives. Specifically, I anticipate that Project Phoenix will lead to the following results: Stabilization of our legacy oil and gas business, wherein we can maintain, if not gain market share in an otherwise mature market, while yielding better economics return through a combination of strategic pricing actions, a lower-cost footprint, and a comprehensive productivity and efficiency improvement plan.

謝謝，艾德。鳳凰計畫的成功實施將穩定我們的核心業務，使我們能夠在成長領域擴大並取得進一步的成功，我相信管理層將實現這些目標。具體來說，我預計鳳凰項目將帶來以下結果： 穩定我們傳統的石油和天然氣業務，我們可以在成熟的市場中保持（如果不能獲得）市場份額，同時透過戰略定價組合產生更好的經濟回報行動、更低成本的足跡以及全面的生產力和效率改進計劃。

In addition, in 2024, the company will be making increased investments in our key growth initiatives. We will be targeting investments in our data analytical solutions and in-line pipeline inspection offerings, as well as our aerospace and defense. We already have a significant presence and are rapidly expanding in all of these markets. Through organic growth strategies, we intend to invest in each of these markets to capitalize on the growing demand for better and more efficient technology.

此外，到 2024 年，公司將增加對關鍵成長計畫的投資。我們的投資目標將是數據分析解決方案和線上管道檢測產品，以及航空航天和國防領域。我們已經在所有這些市場中佔有重要地位，並且正在迅速擴張。透過有機成長策略，我們打算投資每個市場，以利用對更好、更有效率技術不斷增長的需求。

Our data analytical proprietary software is currently analyzing over 1 million assets in over 500 plants. Our target is to increase our revenue in this sector of higher margin business by 15% to 20% CAGR over the next three years. These solutions will enable our customers to better pinpoint when and what actions should be taken to protect and preserve their assets, resulting in meaningful cost savings.

我們的數據分析專有軟體目前正在分析 500 多家工廠的超過 100 萬項資產。我們的目標是在未來三年內將此利潤率較高的業務領域的營收年複合成長率提高 15% 至 20%。這些解決方案將使我們的客戶能夠更好地確定何時以及應採取哪些行動來保護和保存其資產，從而節省有意義的成本。

I'm very pleased to be serving MISTRAS at one of the most pivotal junctures in the company's history. And I am confident in the decisions the Board has made and the actions that management will execute on. I believe this will lead to significantly improved results. We hope this, in turn, will restore investors' confidence in MISTRAS' proven ability to create shareholder value.

我很高興能夠在 MISTRAS 公司歷史上最關鍵的時刻之一為該公司提供服務。我對董事會所做的決定以及管理階層將執行的行動充滿信心。我相信這將帶來顯著改善的結果。我們希望這反過來能夠恢復投資者對 MISTRAS 創造股東價值的能力的信心。

Finally, as I indicated previously, one of my key focuses for 2024 will be to identify and engage the right individual with the right leadership and skill sets to lead our reinvigorated company forward. We plan to engage a leading executive search firm in the near future to assist us with this most important objective.

最後，正如我之前指出的，我 2024 年的重點之一將是找到並聘請具有適當領導力和技能的合適個人，以帶領我們重振活力的公司向前發展。我們計劃在不久的將來聘請一家領先的獵人頭公司來幫助我們實現這一最重要的目標。

At this time, I would like to ask the operator to open the call up to your questions.

此時，我想請接線生開通電話，解答您的問題。

Thank you. (Operator Instructions) Chris Sakai, Singular Research.

謝謝。 （操作員說明）Chris Sakai，Singular Research。

Hi, good morning. I wanted to ask about power generation and transmission and other process industries. It looks like there was a decline there in both of those segments for the quarter one year ago. I wanted to ask what was going on there and why was there a decline there?

早安.我想詢問有關發電和輸電以及其他製程工業的問題。看起來一年前這個季度這兩個細分市場都有所下降。我想問一下那裡發生了什麼以及為什麼那裡出現下降？

Sure. I'll take that one, Chris. That's a drop off of a long-term recurring contract, new construction bills happening that's dropping off. So that was expected, we've been envisioning that. That was actually a delayed exit, but yeah, we'll be replacing that with new contract work we're going after, but that's a sun setting of a long-term project in that - in those particular sectors, actually.

當然。我要那個，克里斯。這是長期經常性合約的下降，新的建築費用正在下降。所以這是預料之中的，我們一直在設想這一點。這實際上是一個延遲的退出，但是，是的，我們將用我們正在追求的新合約工作來取代它，但實際上，在那些特定的領域，這是一個長期專案的夕陽西下。

Okay. And there was an increase in accounts receivable. What was going on there?

好的。且應收帳款增加。那裡發生了什麼事？

A little bit of that timing is, Chris, at the end of the quarter, we built up the third month of the quarter was heavier on the invoicing side. So a lot of that is timing of projects and when the invoicing took place with the customer, we maybe took our eye a little bit off the working capital. So we will tighten that up in the fourth quarter to improve that.

克里斯，在季度末，我們發現該季度第三個月的發票方面更加繁重。因此，其中很大一部分是專案的時間安排，當與客戶開立發票時，我們可能會稍微關注營運資金。因此，我們將在第四季度加強這一點以改善這一點。

No real issues there other than we need to tighten back up on the working capital and bring that back down in the fourth quarter and I anticipate that we will do that. But that was largely the timing of when the invoicing happened late in the quarter. Again, we'll tie that back down during Q4.

除了我們需要收緊營運資金並在第四季度將其回落之外，沒有真正的問題，我預計我們會這樣做。但這主要是在本季末開立發票的時間。同樣，我們將在第四季度將其固定下來。

Okay, sounds good. And then, last one for me. It looks like -- was there -- can you comment on oil and gas? What were your -- what was the major improvements for upstream?

好的聽起來不錯。然後是我的最後一個。看起來——你能評論一下石油和天然氣嗎？您對上游的主要改進是什麼？

Yeah, all three sectors actually, Chris, had a good quarter. It's just that there is a good flow of product. I mean, there is good demand. That upstream is probably the least volatile of the three for us.

是的，克里斯，實際上所有三個部門都有一個不錯的季度。只是產品的流通很好。我的意思是，需求很好。對我們來說，上游可能是三個中波動性最小的。

But just good level of business there across the board, North America and Europe. Just steady state business there, a lot of volume flowing. So the upstream is not as nearly cyclical as the other sectors, but that's a strong one.

但北美和歐洲的業務水準都很好。那裡的業務處於穩定狀態，大量流量流動。因此，上游產業不像其他產業那樣具有週期性，但這是一個很強的產業。

I mean, that's largely where our onstream business plays. They had another record quarter, so they would fall into that sector there in the quarter that the connecting capillary lines off of the drilling back to the Midstream.

我的意思是，這主要是我們的線上業務發揮作用的地方。他們又經歷了創紀錄的季度，因此他們將在該季度落入該領域，即連接毛細管線路從鑽探返回中游。

So onstream would have helped that sector, the upstream for us. But, no, it's just a nice solid piece of the business for us. All three were actually very solid, but we do like that upstream piece in particular.

因此，onstream 將有助於該行業，即我們的上游行業。但是，不，這對我們來說只是一個很好的實體業務。這三個其實都非常堅固，但我們特別喜歡上游的那塊。

Okay, great. Thanks for the answers.

好的，太好了。感謝您的回答。

Thank you.

謝謝。

Thank you, and one moment as we move on to our next question. Mitchell Pinheiro, Sturdivant & Co.

謝謝您，讓我們繼續討論下一個問題。米切爾‧皮涅羅 (Mitchell Pinheiro)，Sturdivant & Co.

Yeah. Hey, good morning.

是的。嗨，早安。

Good morning, Mitch.

早上好，米奇。

So hey, Manny, this is a question, I guess, for you. You've been on the Board now for 20 years. And I'm sort of curious, I mean, obviously, I mean, the results at MISTRAS has been a little bumpy over the last several years for a lot of obvious reasons including COVID. And I'm curious why now is Project Phoenix happening? And maybe, why wasn't it five years ago? What's happened?

所以嘿，曼尼，我想這是一個問你的問題。您在董事會任職已有 20 年了。我有點好奇，我的意思是，顯然，我的意思是，由於包括新冠病毒在內的許多明顯原因，米斯特拉斯的結果在過去幾年裡有點坎坷。我很好奇為什麼鳳凰計畫現在要發生？也許，為什麼不是五年前呢？發生了什麼事？

Is it just that there's a little more sense of urgency for -- because of the stock price? Or is there changes in the business that made Project Phoenix more relevant now than five years ago, say?

難道只是因為股價的原因，人們有了更多的緊迫感？或者說，業務上是否發生了變化，使得「鳳凰計畫」現在比五年前更具相關性？

That's a good question, Mitch. The Board felt it was time to reassess where we were. Probably should have done it five years ago, but we didn't. And as when COVID came, I think the whole world changed. We had hoped that we would come out of COVID better. We always had some concerns about our expenses.

這是個好問題，米奇。董事會認為是時候重新評估我們的處境了。也許五年前就應該這樣做，但我們沒有。當新冠疫情到來時，我認為整個世界都改變了。我們曾希望能夠更好地擺脫新冠疫情的影響。我們總是對我們的開支有些擔憂。

Our SG&A wasn't performing at the level we had hoped it would, and we just felt that we were now at a point. Look, '22 was not a good year for this company. And had it been a better year, we might have attacked things differently.

我們的SG&A 表現沒有達到我們希望的水平，我們只是覺得我們現在正處於一個關鍵點。聽著，22 年對這家公司來說並不是一個好年。如果今年是更好的一年，我們可能會採取不同的應對方式。

But I think, the combination of our coming out of COVID, the results in 2022, we decided that it was time. It was time to bring in some people to look at what we were doing, it was time to identify opportunities that we could save money in. It had not been done on an ongoing basis, and so, we decided that 2023 was going to be our rebuilding year, and that's exactly what we've done in 2023. We're examining a lot of things, we're making changes, we're very optimistic about 2024.

但我認為，結合我們擺脫新冠疫情和 2022 年的結果，我們認為是時候了。是時候讓一些人來看看我們在做什麼，是時候確定我們可以省錢的機會了。這還沒有持續進行，因此，我們決定 2023 年將是我們的重建年，這正是我們在2023 年所做的。我們正在檢查很多事情，我們正在做出改變，我們對2024 年非常樂觀。

So you are going to get a new CEO, and you talked about finding the right person with the right skill set. So A, I'm curious to know what are those skill sets? And B, it's -- so here is this person that'll be coming in and Project Phoenix is well underway. Sometimes you would think that the new CEO would have been the one embarking on Project Phoenix, but now that the new CEO is going to be the one, I guess, executing Project Phoenix.

因此，您將任命一位新首席執行官，並且您談到了尋找具有合適技能的合適人選。 A，我很想知道這些技能是什麼？ B，這是——所以這個人將會進來，鳳凰計劃正在順利進行。有時你會認為新任執行長將是開始鳳凰計畫的人，但現在我猜，新任執行長將是執行鳳凰計畫的人。

So what kind of skill sets do you want? And are the skill sets for the new CEO, does it involve different things beyond what we've seen in the Project Phoenix initiatives?

那麼您想要什麼樣的技能呢？新任執行長的技能組合是否涉及我們在鳳凰計畫中看到的不同內容？

We are looking for someone that has leadership skills and experience. Somebody that knows how to delegate, understands accountability, knows how to build a cohesive strong management team, and to profitably grow the company. We want our next CEO to be responsive, a good listener, a strategic thinker that has the experience to navigate the public company arena. And importantly, a passion to get things done.

我們正在尋找具有領導技能和經驗的人。知道如何授權、了解責任、知道如何建立一支有凝聚力的強大管理團隊以及如何使公司獲利成長的人。我們希望我們的下一任執行長能夠積極回應、善於傾聽、具有策略思想家、擁有駕馭上市公司領域的經驗。重要的是，要有完成事情的熱情。

In simpler terms, our next CEO must have affability, availability, and ability. We are confident we are going to find that person, we're going to work hard to do that. We think that bringing the -- when we bring the right person in, it will not matter whether we started Project Phoenix before he got here, or she got here or after.

簡單來說，我們的下一任執行長必須具有和藹可親、隨和、有能力的特質。我們有信心找到那個人，我們將努力做到這一點。我們認為，當我們引入合適的人時，無論我們是在他來到這裡之前啟動鳳凰計劃，還是她來到這裡或之後啟動鳳凰計劃，都無關緊要。

So that's our thinking, that's our plan, that's what we're looking for. And we're going to invest a lot of time and effort to try to identify that individual and engage him.

這就是我們的想法，這就是我們的計劃，這就是我們正在尋找的。我們將投入大量時間和精力來嘗試識別這個人並吸引他。

Okay. And then, just a couple other things related to Project Phoenix. One, is you talk about pricing strategy. Generally, pricing is dictated by the market. And so, what is it -- I mean, are you going to be raising prices, I don't say across the board, but where you can? And I guess, are you willing to lose business that does not opt for higher pricing? I would love to hear your answer on that.

好的。然後，還有一些與鳳凰計劃相關的其他事情。一是您談論定價策略。一般來說，定價是由市場決定的。那麼，這是什麼——我的意思是，你會提高價格嗎？我不是說要全面提高價格，但你可以在哪裡提高價格？我想，您願意失去不選擇更高定價的業務嗎？我很想聽聽你對此的回答。

Yes, I am sure you would. Look, the past year to 1.5 year, the world has changed again. Inflation is up, interest rates are up, our labor shortages have not changed, and it costs us more for good talent. We need to make sure that as we develop our pricing, that we are accounting for all of that. It does us no good to have business that we are losing money on. We just -- nobody can operate in margins where you are losing money.

是的，我相信你會的。看看，過去的一年到1.5年，世界又變了。通貨膨脹上升，利率上升，我們的勞動力短缺問題沒有改變，我們的優秀人才成本更高。我們需要確保在製定定價時考慮到所有這些因素。開展虧損的業務對我們沒有任何好處。我們只是──沒有人可以在虧損的情況下進行利潤經營。

We believe our customers are fair and reasonable, and we hope that we can work with them to, at a minimum, make sure that we are covering our costs, the incurred costs that we have, and we do so in a strategic way. And we believe that because we have now undertaken an initiative to lower our SG&A, we can still be competitive.

我們相信我們的客戶是公平合理的，我們希望我們能夠與他們合作，至少確保我們能夠承擔我們的成本，我們所產生的成本，並且我們以戰略性的方式這樣做。我們相信，由於我們現在已採取措施降低銷售及管理費用，我們仍然具有競爭力。

So -- okay. And then, also related to Project Phoenix, and maybe this is for Ed. From SG&A, when I was looking at the separate press release where you're updating on Project Phoenix. You talk about $21 million of cost savings, estimated cost savings for SG&A, which would be I guess, a relative, maybe, what is that? Looks like $12 million of incremental SG&A savings. What -- did I read that correctly, number one?

所以——好吧。然後，也與鳳凰計畫有關，也許這是給艾德的。來自 SG&A，當時我正在查看您正在更新鳳凰計劃的單獨新聞稿。你談到了 2100 萬美元的成本節省，SG&A 的估計成本節省，我猜，這可能是一個親戚，那是什麼？看起來可以節省 1200 萬美元的增量 SG&A 成本。什麼──我沒讀錯嗎，第一名？

And number two, what are the investment? What are the dollars that are going to be spent on -- a free cash flow basis, what are the dollars that will offset a lot of these improvements? Do you have a cash investment figure that you can share?

第二，投資是什麼？在自由現金流的基礎上，將花費哪些美元，將抵消許多這些改進的美元是什麼？有現金投資金額可以分享嗎？

Yes, there's certainly. And you read those numbers correctly. The $21 million is the run rate in 2024, of which we have $9 million achieved in 2023. So that is incremental $12 million benefit SG&A year over year. That's before COGS, benefits, and revenue uplifts.

是的，當然有。你正確地讀出了這些數字。 2,100 萬美元是 2024 年的運行率，其中 2023 年實現了 900 萬美元。因此，SG&A 收益同比增量為 1200 萬美元。這還不包括銷貨成本、福利和收入成長。

The effort to do this is largely behind us. I mean, the actions have been taken here in 2023, the cost has been incurred. So incrementally in 2024, there is not additional investment needed to do that. This 15% back-office-overhead reduction we alluded to on the call, that's largely behind us now.

我們所做的努力基本上已經過去了。我的意思是，2023年這裡已經採取了行動，成本已經產生了。因此，到 2024 年，無需額外投資即可實現這一目標。我們在電話會議中提到的 15% 後台管理費用削減，現在基本上已經過去了。

So there is cost to achieve that taking place in 2023, but there really will not be a whole lot of incremental cost in 2024 to achieve this. We are otherwise automating things, looking for workflow and automation, we do that all the time to be more efficient. But, no, there is not any forward spend necessary to effectuate the savings of Phoenix that we're giving you here today. That effort is behind us, and there is not an incremental investment to do that.

因此，要在 2023 年實現這一目標需要成本，但到 2024 年實現這一目標實際上不會有大量增量成本。否則，我們正在自動化事物，尋找工作流程和自動化，我們一直這樣做是為了提高效率。但是，不，不需要任何遠期支出來實現我們今天在這裡為您提供的鳳凰城的節省。我們的努力已經過去，而且沒有增量投資來做到這一點。

Manny was talking about investing in the business going forward, that's an entirely different thing. And we may redeploy some overhead in our higher growth areas. That's a whole different topic, but that's reinvestment. But, no, there is not any incremental effort needed to achieve the savings that we're laying out today. That's -- We are very confident, we've spent a lot of diligence going through that and feel very confident that will be a true savings and a benefit in fiscal 2024.

曼尼談論的是對未來業務的投資，這是完全不同的事情。我們可能會在成長較高的領域重新部署一些管理費用。這是一個完全不同的話題，但那是再投資。但是，不，不需要任何增量努力來實現我們今天所計劃的節省。那就是——我們非常有信心，我們已經花費了大量的精力來完成這件事，並且非常有信心這將在 2024 財年實現真正的節省和收益。

Okay. Well, thank you for taking the questions. I'll pass it on.

好的。好的，謝謝您提出問題。我會把它傳遞下去。

Okay. Thank you, Mitch.

好的。謝謝你，米奇。

Thank you. And one moment while we move to our next question. Tim Moore, EF Hutton.

謝謝。現在我們開始討論下一個問題。蒂姆·摩爾，EF 赫頓。

Thanks. I just want to follow-up on your updated free cash flow guidance for this year. Ed, what are the exact total cash costs spent already or will be spent by the end of this year, by December for the year, to implement Project Phoenix, including the lease break costs and the severance?

謝謝。我只想跟進您今年更新的自由現金流指引。 Ed，到今年年底（即今年 12 月），實施鳳凰計劃已經或將花費的確切總現金成本是多少，包括租約終止成本和遣散費？

And then, the other part I had was, just reconciling the free cash flow guidance. That one account receivable, do you expect that maybe to convert more like in January? I know you said you are going to work on working capital towards the end of this year, but if your free cash flow guidance came down, do you think that might be more of a January collection?

然後，我要做的另一部分就是調整自由現金流指導。那一筆應收帳款，您是否預期可能會像一月那樣轉換？我知道您說過您將在今年年底前處理營運資金問題，但如果您的自由現金流指引下降，您認為這可能更像是一月份的集合嗎？

Yeah, Hi, Tim. Great question. Yeah, well, the first part of your question of the outflows relative to Project Phoenix, real costs to make that happen, that's probably about an order of magnitude, maybe $6 million this year, or probably cash out the door to effectuate that savings. So that's about the number that's baked in. That was not in our guidance earlier, but we have a pretty good line of sight now to that number. So $6 million came off the free cash flow of that -- from that region.

是的，嗨，提姆。很好的問題。是的，嗯，你的問題的第一部分是與鳳凰計劃相關的資金外流，實現這一目標的實際成本，可能是一個數量級，今年可能是 600 萬美元，或者可能會兌現以實現節省。這就是已經確定的數字。這不在我們之前的指導中，但我們現在對這個數字有了很好的了解。因此，600 萬美元來自該地區的自由現金流。

The AR, yeah. The WIP build that we've seen and some of the delay in AR, we're working hard to pull that down here in 2023. I hope to be able to achieve, if not slightly exceed, that new revised free cash flow. Worst case, it might trickle into January, but we are working very hard to bring that back down here in the fourth quarter.

AR，是的。我們已經看到的 WIP 建置以及 AR 的一些延遲，我們正在努力在 2023 年將其拉低。我希望能夠實現（如果不是稍微超過）新修訂的自由現金流。最壞的情況可能會持續到一月份，但我們正在非常努力地在第四季度將其恢復到這一水平。

I will mention there's a third piece there. There is some incremental CapEx year over year, that's a little bit higher now. Where we are investing in some of the new higher growth areas, that's also bringing down that free cash flow a little bit. Again, that's good investment in the future, that will lead to some growth there.

我會提到那裡還有第三塊。資本支出逐年增加，現在有點高了。當我們投資一些新的高成長領域時，這也會稍微減少自由現金流。再說一次，這是對未來的良好投資，這將帶來一些成長。

But it's primarily the WIP build and the AR that is adversely hurting me now, that made us bring down the free cash flow, and we're going to work that back down as hard as we can by 12/31. But yeah, to your point, some of that may slip into Q1.

但現在主要是 WIP 建置和 AR 對我造成了不利影響，導致我們降低了自由現金流，我們將在 12 月 31 日之前盡最大努力減少這種情況。但是，是的，就你的觀點而言，其中一些可能會滑入第一季。

Great. That was really helpful, giving that bridge of the components. I think that really helps investors. Definitely all adds up to the free cash flow guidance difference, that it clearly makes sense. What about that one defense project? I know it was pushed out, stop and go from the first half of the year. I don't know it could be maybe $7 million or $8 million in sales. Did that start up again, or is it about to start up?

偉大的。這確實很有幫助，提供了組件之間的橋樑。我認為這確實對投資者有幫助。毫無疑問，所有這些加起來就構成了自由現金流指導差異，這顯然是有道理的。那一項國防項目呢？我知道從上半年就被推了出來，走走停停。我不知道銷售額可能是 700 萬美元或 800 萬美元。是又開始了，還是即將開始？

Unfortunately, no, Chris -- Tim sorry -- that's still delaying a little bit, so that's not appreciably picking up here in the back half, second half of 2023. We had hoped that, and that's maybe a reason why our revenue guidance came off a little bit.

不幸的是，沒有，克里斯 - 蒂姆抱歉 - 這仍然有點延遲，所以在 2023 年下半年，這並沒有明顯好轉。我們曾希望如此，這也許就是我們發布收入指引的原因關閉一點點。

We do see that getting back online next year. Again, the job didn't go away, it just got pushed out and delayed. But, no, we did not have that appreciably help through the third quarter. It is slowly coming back up, and the staffing is occurring, and it will get back online. But you can think of that more of a '24 event at this point. That's not going to appreciably get back online in 2023.

我們確實看到明年會重新上線。再說一次，工作並沒有消失，只是被推遲和推遲了。但是，不，我們在第三季並沒有得到明顯的幫助。它正在慢慢恢復，人員配備也正在進行中，它將恢復線上狀態。但此時您可以將其更多地視為 24 年的活動。到 2023 年，這種情況不會明顯恢復。

Yeah, that's helpful, Ed. And my last question is around data analytical solutions. Manny had mentioned, I think, on the prepared remarks, maybe a 15% to 20% CAGR. If you look at the first half of this year, stripping out the September quarter, it was growing, I think at 22%. And it decelerated, I don't know if my math is right, maybe, 5% in the September quarter.

是的，這很有幫助，艾德。我的最後一個問題是關於數據分析解決方案的。我認為，曼尼在準備好的評論中提到，複合年增長率可能為 15% 到 20%。如果你看看今年上半年，剔除 9 月的季度，你會發現它正在成長，我認為成長了 22%。而且它減速了，我不知道我的數學是否正確，也許，九月季度減速了 5%。

Was there any lumpiness in that data solutions? Was it just because it was lapping a really good growth period the year before? Was there anything with on stream? Or something that went on in the September quarter that might have caused the sales growth rate to be below the target goal?

該數據解決方案是否存在任何混亂？只是因為它前一年經歷了非常好的成長期嗎？現場有什麼節目嗎？或者九月季度發生的事情可能導致銷售成長率低於目標？

I will let Manny expand on that one. It's 16% through the nine months, so it will end and flow any given quarter. The very nature of data and software, there is a big piece of implementation that happens there. It's not just pure software licenses, there is work to implement along the way so that number may not climb in a linear manner.

我會讓曼尼進一步闡述這一點。九個月內的成長率為 16%，因此它將在任何給定季度結束並流動。就數據和軟體的本質而言，那裡發生了很大的實現。這不僅是純粹的軟體許可證，還需要實施一些工作，以便數量不會以線性方式攀升。

But that CAGR growth that Manny alluded to is real, we are right in that range now at 16%. But no, it's a high growth area for us and we want to do more of it as Manny said. I'll defer to Manny, any other color he wants to add on data analytics.

但曼尼提到的複合年增長率是真實的，我們現在正處於這個範圍內，為 16%。但不，這對我們來說是一個高成長領域，我們希望像曼尼所說的那樣做得更多。我會聽從曼尼（Manny）的意見，他想在數據分析中添加任何其他顏色。

Yeah, what I would like to just add is this. This is a very -- it's a profitable and important sector in our business, and we are now going to be focusing on scaling that to a greater level. We want to be able to put -- to get into more plants quicker.

是的，我想補充的是這個。這是我們業務中一個非常有利可圖且重要的部門，我們現在將專注於將其擴展到更高的水平。我們希望能夠更快投入更多工廠。

And we think that the proprietary software that exists there will be very helpful to our customers. It has been helpful to the customers we're in now, but there is a huge market for this type of service. And we need to be able to get into all those markets, including our own markets which were - a lot of these plants that we have are plants that we identified and brought in outside of our customer base. And so, part of our plan is to scale -- to bring those solutions to our own customers.

我們認為那裡存在的專有軟體將對我們的客戶非常有幫助。這對我們現在的客戶很有幫助，但這種服務有一個巨大的市場。我們需要能夠進入所有這些市場，包括我們自己的市場，我們擁有的許多工廠都是我們在客戶群之外確定並引進的。因此，我們計劃的一部分是擴大規模——將這些解決方案帶給我們自己的客戶。

We think there is a lot of opportunity there. We think there is a lot of room for growth, but we don't want to do it unless we're prepared. So our '24, we're going to be focusing on getting ready to scale, so that we can do multiple installations at the same time. And so, that we can get into more and more plants with this solution.

我們認為那裡有很多機會。我們認為有很大的成長空間，但除非我們做好準備，否則我們不想這樣做。因此，我們的 24 年將專注於做好擴展準備，以便我們可以同時進行多個安裝。因此，我們可以使用該解決方案進入越來越多的工廠。

Great.

偉大的。

I don't know if that answers your question.

我不知道這是否回答了你的問題。

It did. It did. I am a big believer in the data solutions driver for your top line. So thanks, Manny and Ed. And I'll turn it back over to the operator.

它做了。它做了。我非常相信數據解決方案能夠推動您的收入。謝謝曼尼和艾德。我會把它轉回給接線生。

Thank you, Tim.

謝謝你，提姆。

Thank you. And one moment as we move on to our next question. Brian Russo, Sidoti.

謝謝。我們繼續討論下一個問題。布萊恩·羅素，西多蒂。

Yeah. Hi, good morning.

是的。早安.

Good morning, Brian.

早安，布萊恩。

Just a few follow ups, I guess, from previous questions. The first on the price increase -- or just Project Phoenix in general. Clearly, the SG&A appears to be completely within your control, so visibility there is pretty good.

我想，只是之前問題的一些後續行動。第一個是關於價格上漲——或者只是一個總體上的鳳凰計劃。顯然，SG&A 似乎完全在您的控制範圍內，因此可見度非常好。

But just on the price increases, to follow up on a previous question. I think in 2023, the majority of that was focused in your North American operations and specifically in oil and gas, which is a very competitive market. Feel free to disagree.

但只是關於價格上漲，以跟進先前的問題。我認為到 2023 年，大部分業務都集中在北美業務，特別是石油和天然氣，這是一個競爭非常激烈的市場。隨意不同意。

But in terms of aerospace and defense, it seems that that's where you might have higher barriers to entry, a lot of certifications needed where price increases might be more palatable for customers given the unique expertise that MISTRAS brings to the table. Just trying to get a better sense for the price increases, which I assume falls in your gross profit and/or revenue benefit category for Project Phoenix in 2024?

但在航空航太和國防領域，似乎進入門檻可能更高，需要大量認證，考慮到 MISTRAS 帶來的獨特專業知識，價格上漲可能更能讓客戶接受。只是想更了解價格上漲情況，我認為價格上漲屬於你們 2024 年鳳凰計畫的毛利和/或收入收益類別？

Yeah. (multiple speakers) okay, yeah. So you're right, Brian, there is not one-size-fits-all here necessarily for all of our customers and all of our sectors. But what we are really going after here is a more of a proactive approach versus reactive. I mean, we obviously have great partnerships with our customers, and we do have price increases any given year. That's not new for us.

是的。 （多個發言者）好的，是的。所以你是對的，布萊恩，這裡並不存在適合我們所有客戶和所有部門的一刀切的方法。但我們真正追求的是一種主動而非被動的方法。我的意思是，我們顯然與客戶建立了良好的合作關係，而且我們每年都會漲價。這對我們來說並不新鮮。

But it's more about a policy, a structure, a routine matter of business here where we are getting fair value from the customer. A lot of this ties into our commercial efforts to get more KPIs, get more connectivity, to really understand the value to the customer, to demonstrate that, to illustrate that. Data solutions is all about that, bringing that true value to the customer and making sure there is a KPI that fully recognizes that.

但這更多的是關於政策、結構、日常業務問題，我們從客戶身上獲得公平的價值。這在很大程度上與我們的商業努力有關，以獲得更多的 KPI、獲得更多的連接、真正了解對客戶的價值、證明這一點、說明這一點。數據解決方案的目的是為客戶帶來真正的價值，並確保有一個能夠充分認識到這一點的 KPI。

Obviously, many of our price increases go right to the technicians as they should, but it can't just be a push here. We are investing in many capabilities for customers, whether it's robotic crawlers, software, and many other capabilities. So -- and we are doing that to be more efficient, to help the customer more effectively, safely, efficiently use their asset base. So all that's about getting a fair return and making sure that it's all connected there.

顯然，我們的許多漲價都直接惠及了技術人員，這是他們應該做的，但這不僅僅是推動。我們正在為客戶投資許多功能，無論是機器人爬行器、軟體或許多其他功能。因此，我們這樣做是為了提高效率，幫助客戶更有效、安全、有效率地使用他們的資產基礎。因此，這一切都是為了獲得公平的回報並確保一切都在那裡連接。

So that's really what we're going after. It's a more holistic discussion, and dialogue and partnership with the customer wherein it's - where we're both winning. They're getting more effectiveness, more efficiency, more productivity from the offering we give them, that requires investment and a fair return.

這就是我們真正追求的目標。這是與客戶進行更全面的討論、對話和合作，這是我們雙贏的地方。他們從我們提供的產品中獲得了更高的效力、更高的效率和生產力，這需要投資和公平的回報。

So that's really what we're going after there, where it's proactive in a dialogue and a discussion, not a reactive thing as it has been routinely for us in more recent times. Make it more of a process, a policy with transparency and dialogue. That's what we're going after, that's where - again, where it's meaningful, and we want to make it part of a routine things that we do each year.

因此，這確實是我們所追求的目標，在對話和討論中積極主動，而不是像最近我們所習慣的那樣被動。使其更像是一個過程、一項具有透明度和對話的政策。這就是我們所追求的，這就是它有意義的地方，我們希望使其成為我們每年所做的例行事情的一部分。

And I think that's fair, and I think that's the conversations we're having and discussions we're having with customers. And I think that's important because it is -- there is growth here, there is investment needed, and there's a huge payback to what we do. So that's why we're really focusing in on this particular aspect of pricing in its more holistic sense.

我認為這是公平的，我認為這就是我們正在與客戶進行的對話和討論。我認為這很重要，因為這裡有成長，需要投資，而且我們所做的事情會帶來巨大的回報。這就是為什麼我們真正關注定價的這一特定方面的更全面的意義。

Okay.

好的。

And just to add to that, just to add to that, strategically, we want to make sure that we are taking full advantage of the price increases that we've already agreed -- that have already been agreed to. So many of our arrangements allow us to pass through certain costs as they increase. We want to make sure that we have a standardized, comprehensive approach to making sure we are taking full advantage of all of the increases that we've already --// that have already been agreed to.

除此之外，從戰略上來說，我們希望確保我們充分利用我們已經同意的價格上漲。我們的許多安排允許我們在某些​​成本增加時轉嫁成本。我們希望確保我們有一個標準化、全面的方法來確保我們充分利用我們已經同意的所有增加。

And then, secondly, we want to make sure we have clear understanding of what our costs are as we sit down and talk to our customers and renew the business. It is a competitive business, there is no question about it. But we do provide value, and all we want to do is be paid fairly. So a lot of it is making sure we're taking advantage of what's already been agreed to, and I don't think that's going to be as problematic.

其次，我們希望確保在我們坐下來與客戶交談並更新業務時清楚地了解我們的成本。這是一項競爭激烈的業務，這是毫無疑問的。但我們確實提供了價值，我們想要做的就是獲得公平的報酬。因此，很大程度上是為了確保我們利用已經達成的協議，我認為這不會成為問題。

So it's not -- I don't want to give anybody impression, we're just going to raise our prices across the board. That isn't the intention here. The key word here is strategic. And our first and initial focus is to make sure we are taking advantage of all the price increases we've already been -- that have already been agreed to and then, take it beyond that.

所以，我不想給任何人留下印象，我們只是要全面提高價格。這不是這裡的意圖。這裡的關鍵字是戰略。我們的第一個也是最初的重點是確保我們正在利用我們已經同意的所有價格上漲，然後再超越這一點。

Got it. Okay. And then, maybe for Ed. Given the reduced free cash flow outlook for 2023, are you unable to reach that three-times-leverage target that the market has been focused on this year?

知道了。好的。然後，也許對艾德來說。鑑於2023年自由現金流前景下降，是否無法達成今年市場關注的三倍槓桿目標？

Yes. That was, as we said, in the prepared remarks, yes. We're right -- we're below a three-five now. We had hoped to get below a three by 12/31, that's going to slip out maybe just one quarter due to that little relatively weaker free cash flow. But it got pushed out, we'll achieve that in the early part of 2024. We will still get below a three, yes.

是的。正如我們在準備好的發言中所說，是的。我們是對的——我們現在低於三比五。我們原本希望在 12/31 時能夠低於 3，但由於自由現金流相對較弱，這一數字可能只會下降四分之一。但它被推遲了，我們將在 2024 年初實現這一目標。我們仍然會低於 3，是的。

Okay, great. And historically, your cash conversion has been nearly 50%. Is that kind of a reasonable assumption in 2024?

好的，太好了。從歷史上看，您的現金轉換率接近 50%。 2024 年這樣的假設合理嗎？

Yes. So I believe that it is. I mean, our CapEx for good reasons has been growing a little higher this year than a couple of past years. But, no, I think that 50%, not in every given quarter, but over the longer term, yes, we do believe a 50% conversion of EBITDA is still a fair number to use going forward, yes.

是的。所以我相信確實如此。我的意思是，我們的資本支出今年比過去幾年增長了一些，這是有充分理由的。但是，不，我認為 50%，不是每個季度都如此，但從長遠來看，是的，我們確實相信 50% 的 EBITDA 轉換仍然是一個合理的數字，是的。

Okay, great. And then, I apologize if I missed this earlier, but what is the new CapEx run rate?

好的，太好了。然後，如果我之前錯過了這一點，我深表歉意，但新的資本支出運行率是多少？

Well, I mean, this year we're going to end up at probably $21 million, $22 million, which has been a little which has been a little higher than the mid to high teens we've operated at the last couple of years. It's to be determined, it's really a function of how much more investment in our shop labs do we want to do going forward.

嗯，我的意思是，今年我們的收入可能會達到 2,100 萬美元、2,200 萬美元，這比我們過去幾年營運的中高收入要高一些。這還有待確定，這實際上取決於我們未來想要對我們的車間實驗室進行多少投資。

We'll have a little -- if it's value add, and there is good ROI with quick paybacks, meeting our hurdles, we'll expand up a little bit. So the 2%, 2.25% of revenue might drift up to 2.5% to 2% and 3.25% of revenue. So we're leaving a little flexibility to spring that up next year. We have not yet locked in our CapEx plans for next year, but we'll have a little more tolerance to invest in the business for the high-growth prospects.

我們會有一點——如果它能增加價值，並且有良好的投資回報率和快速的回​​報，滿足我們的障礙，我們就會擴大一點。因此，收入的 2%、2.25% 可能會上升至收入的 2.5% 至 2% 和 3.25%。因此，我們會留一點彈性，以便明年推出。我們尚未鎖定明年的資本支出計劃，但我們將更寬容地投資於高成長前景的業務。

Again, this year was a little higher than last year. It may level right out at the same number next year, but we've yet to lock down our capital plans. But it may be modestly higher next year for good reasons for this expansion capital to grow some of our shop labs in particular, and to invest a little bit in data solutions, we might be going to go just a little bit higher here in 2024.

同樣，今年比去年略高。明年可能會達到同樣的數字，但我們尚未鎖定我們的資本計劃。但明年可能會小幅上漲，因為這筆擴張資本有充分的理由來發展我們的一些車間實驗室，特別是在數據解決方案上投資一點，我們可能會在 2024 年稍微高一點。

Okay, great. And you mentioned the delays in the defense contract as a driver of the reduced revenue guidance for 2023. I also noticed the power and industrials were weak, and I know you had that large nuclear contract that rolled off. Are you still looking to backfill that? And is that also contributing to the reduced top line?

好的，太好了。您提到國防合約的延遲是導致 2023 年收入指導減少的一個因素。我還注意到電力和工業疲軟，而且我知道您的大型核合約已經到期。您還在尋找回填嗎？這是否也導致了收入的減少？

Yes. That was expected on the power gen side. That was a known project roll-off, as you said, so that was expected. That was not affecting our guidance, that was anticipated to be rolling off. And we are looking at this area, that project work. Although it's not the biggest piece of our business, it's mostly run and maintain and call out work and whatnot.

是的。這是發電方面的預期。正如您所說，這是一個已知的項目滾動，所以這是預期的。這並沒有影響我們的指導，預計會下降。我們正在研究這個領域、那個專案工作。雖然這不是我們最大的業務，但它主要是運作、維護、調配工作等等。

The new projects, new CapEx, brand-new projects is a nice 5.5% to 10% of our business any given year. We're not excluding that. We're not ignoring that. That's a piece we are looking at. There is a lot of new construction going on throughout the US and beyond. Battery plants, EV plants, chip manufacturing, you name it, where we can do work.

任何一年，新項目、新資本支出、全新項目都占我們業務的 5.5% 到 10%。我們並不排除這一點。我們並沒有忽視這一點。這就是我們正在看的一塊。美國各地及其他地區正在興建大量新建築。電池工廠、電動車工廠、晶片製造，只要你能想到的，我們都可以在那裡工作。

And we are taking a hard look at that because that's nice, long -- just like defense work, that's a nice, long five- to seven-year projects that are a nice core to add to your base. So we are taking a hard look at that to replace some of that longer-term work that sticks around and repeats year after year on a long cycle there.

我們正在認真研究這個問題，因為這是很好的、長期的——就像國防工作一樣，這是一個很好的、長期的五到七年的項目，是一個很好的核心，可以添加到你的基礎上。因此，我們正在認真研究這個問題，以取代一些長期存在的工作，這些工作在很長的周期中年復一年地重複著。

So yeah, we are looking at that. There are some good opportunities there. So we do plan to replace that longer-term contract work, that's dropping off. Yes, we are looking to replace that in our mix of business.

是的，我們正在考慮這一點。那裡有一些很好的機會。因此，我們確實計劃更換正在減少的長期合約工作。是的，我們正在尋求在我們的業務組合中取代它。

Okay. And then, just take that one step forward to 2024. What exactly does modest single-digit revenue growth mean? Does that mean less than 5%?

好的。然後，向 2024 年邁出一步。個位數的收入適度成長到底意味著什麼？這是否意味著低於5%？

That's how you should probably interpret that, yeah. We were thinking maybe that's 3% to 5%, it's somewhere in that range, yeah. We're looking hard at that now. We're well in way with the budget, thinking hard about next year. But that's the takeaway we would want you to have there. That's kind of what we're thinking at this point for next year.

這就是你應該如何解釋的，是的。我們認為可能是 3% 到 5%，是的，就在這個範圍內。我們現在正在認真研究這個問題。我們的預算進展順利，正在認真考慮明年的情況。但這就是我們希望您能學到的要點。這就是我們現在對明年的想法。

Okay. And then, lastly, and maybe for Manny, and this might even be a question for the permanent CEO. But where do you envision MISTRAS in maybe two to three years? I mean, is it increasing scale? Or is it diversifying the mix of business? Maybe adding some other subsectors that you can leverage data solutions and even your Sensoria technology? And is there an inorganic growth component?

好的。最後，也許對曼尼來說，這甚至可能是永久執行長的問題。但您對 MISTRAS 兩到三年後的前景有何展望？我的意思是，它的規模正在擴大嗎？還是業務組合多元化？也許添加一些您可以利用數據解決方案甚至 Sensoria 技術的其他子部門？是否存在無機生長成分？

I think right now, our focus is organic growth. We think we have a lot of opportunity within that area to grow the company. And if there are inorganic growth opportunities that make sense, we'll look at those. But our focus is going to be organic growth. We talked about strategic pricing initiative, but we are also looking very closely at how our entire sales process is working. We think we should be doing more organic growth.

我認為現在我們的重點是有機成長。我們認為我們在該領域有很多機會來發展公司。如果存在有意義的無機成長機會，我們會關注這些機會。但我們的重點將是有機成長。我們討論了策略定價計劃，但我們也密切關注整個銷售流程的運作方式。我們認為我們應該進行更多的有機成長。

And so, but a big component of our future is going to be data analytics solutions. We think that's the future. We have millions and millions of assets that we have tested. And we think, the analytic component of that framework is going to be key to our future. It's still going to be in oil and gas, as well as chemical, as well as other areas.

因此，我們未來的一個重要組成部分將是數據分析解決方案。我們認為這就是未來。我們已經測試了數以百萬計的資產。我們認為，該框架的分析部分將成為我們未來的關鍵。它仍然會出現在石油和天然氣、化學以及其他領域。

Look, we can analyze data in a lot of different industries. But we have a wealth of data in oil and gas, and we should take advantage of that to the extent that we can.

看，我們可以分析很多不同產業的數據。但我們擁有豐富的石油和天然氣數據，我們應該盡可能地利用這些數據。

So I think our focus is right now, going to be organic rather than inorganic. We are not going to walk away from anything that makes a lot of sense. Every single initiative we undertake moving forward will go through a vigorous return on investment analogy. When it makes sense, we're going to invest, and we're going to just continue to work that way and improve our efficiency, improve our sales strategy, improve the pipeline of business that we would want to bring in. That's all organic.

所以我認為我們現在的重點是有機的而不是無機的。我們不會放棄任何有意義的事。我們向前邁進的每一項舉措都將經歷一個強而有力的投資回報類比。當有意義的時候，我們就會進行投資，並且我們將繼續以這種方式工作，提高我們的效率，改進我們的銷售策略，改善我們想要引入的業務管道。這都是有機的。

I don't know if that answers your question, but I hope it does.

我不知道這是否能回答你的問題，但我希望能。

Yes, it does very much. I appreciate it. Thank you.

是的，它的作用非常大。我很感激。謝謝。

Operator

操作員

Thank you. And I would like to turn the conference back over to Manny Stamatakis for any further remarks.

謝謝。我想將會議轉回給曼尼·斯塔馬塔基斯，讓其發表進一步的評論。

Well, first of all, thank you, operator. I do want to thank everyone for joining this call today. I want to thank you for your continued interest in MISTRAS. There is more to come, and I look forward to providing you with an update on our business and progress achieved towards our initiatives on the next call.

嗯，首先謝謝你，接線生。我確實要感謝大家參加今天的電話會議。我要感謝您對 MISTRAS 的持續關注。未來還會有更多內容，我期待在下次電話會議上向您提供我們業務的最新資訊以及我們的舉措所取得的進展。

So, everyone, please have a safe and prosperous day. Thank you very much.

所以，請大家度過一個安全、繁榮的一天。非常感謝。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。