Moog Inc (MOG.B) 2023 Q3 法說會逐字稿

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Good morning, and welcome to the Moog Third Quarter Fiscal year 2023 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Aaron Astrachan. Please go ahead, sir.

早安，歡迎參加穆格 2023 財年第三季電話會議。今天的會議正在錄製中。這次，我想把會議交給 Aaron Astrachan。請繼續，先生。

Good morning, and thank you for joining Moog's Third Quarter 2023 Earnings Release Conference Call. I'm Aaron Astrachan, Director of Investor Relations. With me today is Pat Roche, Chief Executive Officer; and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental financial schedules, both of which are available on our website. Our earnings press release, our supplemental financial schedules and remarks made during our call today contain adjusted non-GAAP results. Reconciliations for these adjusted results to GAAP results are contained within the provided materials. Lastly, our comments today may include statements related to expected future results and other forward-looking statements. These are not guarantees as our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEC filings. Now I'm pleased to turn the call over to Pat.

早安，感謝您參加穆格 2023 年第三季財報發布電話會議。我是投資者關係總監 Aaron Astrachan。今天與我在一起的是執行長 Pat Roche；以及我們的財務長 Jennifer Walter。今天早些時候，我們發布了我們的業績和補充財務時間表，兩者都可以在我們的網站上找到。我們的收益新聞稿、補充財務計劃以及今天電話會議上的演講均包含調整後的非公認會計準則業績。這些調整後的結果與 GAAP 結果的調整包含在所提供的資料中。最後，我們今天的評論可能包括與預期未來結果相關的陳述和其他前瞻性陳述。這些不是保證，因為我們的實際結果可能與我們的前瞻性聲明中描述的結果有重大差異，並且受到我們的收益新聞稿和其他 SEC 文件中描述的各種風險和不確定性的影響。現在我很高興將電話轉給帕特。

Good morning, and welcome. Today, we will share our update on a quarter notable for record sales, strong underlying operating performance improvement masked by a space vehicle charge and cash demands above expectation. We are also increasing our full year earnings per share guidance while reflecting this stronger demand on cash.

早上好，歡迎光臨。今天，我們將分享一個季度的最新情況，該季度的銷售量創歷史新高，太空船費用掩蓋了強勁的基本營運業績改善，而且現金需求高於預期。我們也提高了全年每股收益指導，同時反映了對現金的強勁需求。

It's almost 2 months since our Investor Day conference in New York City. Our team was delighted to have the opportunity to make public our business plans. For the first time, we were explicit on our goals for the business, namely revenue CAGR of 5% to 7% to fiscal '26 from our '22 baseline, average annual adjusted operating margin expansion of 100 basis points to fiscal '26, adjusted earnings per share CAGR of 15% to 20% to 26% and free cash flow returning to the 75% to 100% conversion by '25, '26.

距離我們在紐約舉行的投資者日會議已經過去近兩個月了。我們的團隊很高興有機會公開我們的商業計劃。我們第一次明確了我們的業務目標，即從我們的22 年基線到26 財年的收入複合年增長率為5% 至7%，到26 財年調整後的平均年度調整後營業利潤率擴大100 個基點每股盈餘複合年增長率為 15% 至 20% 至 26%，自由現金流到 25 年、26 年將恢復到 75% 至 100% 的轉換水準。

We took the time in New York City to explain how we are going to deliver on these significant improvements in performance and talked in detail about our simplification and pricing activities that deliver margin enhancement. During today's call, I will give several specific examples of such activity within the quarter. Two months ago, 2 months on, I remain confident that we have a great business that is growing and becoming more profitable over the next few years.

我們在紐約市花時間解釋了我們將如何實現這些顯著的績效改進，並詳細討論了我們提高利潤率的簡化和定價活動。在今天的電話會議中，我將給出本季度此類活動的幾個具體範例。兩個月前，兩個月後，我仍然相信我們擁有一項偉大的業務，該業務將在未來幾年不斷增長並變得更加有利可圖。

Let me start right away with an update on our operational performance, covering each of my 3 themes. Starting with customer focus. We delivered record sales while managing the ongoing challenges of supply chain and labor availability. These challenges have an impact on inventory holding, product flow and overall efficiency. Our enhanced maintenance, repair and overhaul service was recognized by both Boeing and Airbus, achieving a top 2 ranking with Boeing. We continue to simplify how we're organized. We have made internal reporting structure changes within our $330 million space business that empower business leaders to better meet operational needs of our customers and to achieve financial performance.

讓我立即開始介紹我們營運績效的最新情況，涵蓋我的 3 個主題。從以客戶為中心開始。我們實現了創紀錄的銷售額，同時應對供應鏈和勞動力供應持續的挑戰。這些挑戰對庫存持有、產品流程和整體效率產生影響。我們強化的維護、修理和大修服務得到了波音和空中巴士的認可，與波音並列第二名。我們繼續簡化我們的組織方式。我們對價值 3.3 億美元的航太業務進行了內部報告結構變更，使業務領導者能夠更好地滿足客戶的營運需求並實現財務績效。

Secondly, people, community and planet, our Baguio site, which is core to our commercial aircraft operations was recognized by the employers confederation of the Philippines for our commitment to operational excellence, sustainability, employee relations and ethical behavior. We are thankful that our people are safe following this week's super typhoon.

其次，在人、社區和地球方面，我們的碧瑤基地是我們商用飛機運營的核心，因其對卓越運營、永續發展、員工關係和道德行為的承諾而獲得了菲律賓雇主聯合會的認可。我們很慶幸我們的人民在本週的超強颱風過後仍然安全。

And finally, let me return to financial strength. We are relentlessly driving simplification and pricing across our business. Let me share some examples. Within Industrial Systems, we continue to refine our portfolio with the launch of a sales process for our business in Luxembourg. For context, this is a $15 million revenue operation with 70 staff manufacturing cartridge valves and manifolds. We are refining our footprint with several moves. For example, we've changed from a direct channel to market in South Africa to a distributor model exiting our leased facility.

最後，讓我回到經濟實力。我們正在不懈地推動整個業務的簡化和定價。讓我分享一些例子。在工業系統領域，我們不斷完善我們的產品組合，為我們在盧森堡的業務推出了銷售流程。就上下文而言，這是一個收入為 1500 萬美元的業務，擁有 70 名員工製造插裝閥和歧管。我們正在採取多項措施來完善我們的足跡。例如，我們已經從南非的直接市場管道轉變為退出租賃設施的經銷商模式。

In aircraft controls, we have announced the closure of the Cincinnati-based operation of SureFly and its transfer to our Genesis Aerosystems facility in Texas. While each change yields relatively small impact today, it is the accumulation of these changes over the next couple of years that delivers footprint benefit. We are seeing 80/20 gain further traction within our business. We have the data analytics on profitability complete for over 2/3 of our revenue base across the entire organization.

在飛機控制方面，我們宣布關閉位於辛辛那提的 SureFly 業務，並將其轉移到我們位於德克薩斯州的 Genesis Aerosystems 工廠。雖然目前每項變化產生的影響相對較小，但未來幾年這些變化的累積才能帶來足跡效益。我們看到 80/20 在我們的業務中獲得了進一步的關注。我們對整個組織超過 2/3 的收入基礎進行了完整的獲利能力數據分析。

We have trained well over 100 leaders on the 80/20 approach, and we are growing capability as pilot sites mature the process and expand scope from profitability analysis to include reduction of cash conversion cycle. Ultimately, 80/20 is accelerating decisions that increase our profitability. For example, we have identified several product lines that we feel are at end of life, and we are either working with customers to close our production or finalizing agreements with other companies who will continue to support the products.

我們已經對 100 多名領導者進行了 80/20 方法的培訓，隨著試點站點流程的成熟，我們的能力也在不斷增強，並且範圍從盈利能力分析擴展到包括縮短現金轉換週期。最終，80/20 正在加速提高我們獲利能力的決策。例如，我們已經確定了幾條我們認為已達到使用壽命的產品線，我們要么與客戶合作關閉我們的生產，要么與其他將繼續支持這些產品的公司敲定協議。

Now let me turn my attention to pricing. We are driving pricing activity across all markets that we serve. We have a systematic approach, pursuing high-impact opportunities early and using 80/20 to focus further margin enhancement. Our philosophy is to ensure that pricing reflects the value that we deliver. Aircraft Control has made very significant margin improvements through pricing that are now reflected in our full year forecast. In addition, Industrial Systems has delivered substantial operating margin enhancement in this quarter with pricing being the most important contributor. Across all businesses, pricing is driving margin enhancement.

現在讓我把注意力轉向定價。我們正在推動我們服務的所有市場的定價活動。我們採用系統化方法，儘早尋找具有高影響力的機會，並利用 80/20 來進一步提高利潤率。我們的理念是確保定價反映我們提供的價值。 Aircraft Control 透過定價取得了非常顯著的利潤率改善，現在已反映在我們的全年預測中。此外，工業系統公司本季的營業利潤率大幅提高，其中定價是最重要的貢獻者。在所有企業中，定價正在推動利潤率的提高。

Now let me turn to the macro economy. The Department of Defense budget for fiscal '24 is still on its way through the House and Senate, the requested increase of 3.2% is looking to protect new platforms. Significantly, this includes maintaining the future vertical lift funding stream, moving next-generation air dominance aircraft and collaborative combat aircraft to programs of record in 2024 and increasing to $30 billion to funding for the space force.

現在讓我談談宏觀經濟。國防部 24 財政年度預算仍在眾議院和參議院審議中，要求增加 3.2% 是為了保護新平台。值得注意的是，這包括維持未來的垂直升力資金流，將下一代製空飛機和協作戰鬥機轉移到 2024 年的記錄計劃，並將太空軍的資金增加到 300 億美元。

Unfortunately, the war in Ukraine has now stretched beyond 500 days. politically, the obstacles to Sweden's accession to NATO has been overcome and ratification by Turkish and Hungarian Parliament is anticipated. The significant demands of arming Ukraine is driving missile replenishment orders and increased equipment MRO activity. According to Lockheed Martin, the fleet of F-35 fighters operating in Europe is expected to increase fourfold by 2030.

不幸的是，烏克蘭的戰爭已經持續了500多天。政治上，瑞典加入北約的障礙已被克服，預計將獲得土耳其和匈牙利議會的批准。武裝烏克蘭的巨大需求正在推動飛彈補給訂單和設備維護、維護、大修活動的增加。據洛克希德馬丁公司稱，到 2030 年，在歐洲運營的 F-35 戰鬥機機隊預計將增加四倍。

U.S.-China tensions continue with the trade dispute of our semiconductors now extending the cloud computing and precious minerals. It appears that important diplomatic efforts continue with Antony Blinken,Janet Yellen, Henry Kissinger and John Kerry all visiting China in recent weeks. Whilst the slowdown in Chinese economic activity is a minor concern, escalating trade embargoes would be a greater concern and potentially more disruptive. Our philosophy remains to be in China for China.

中美之間的緊張局勢仍在繼續，我們的半導體貿易爭端現在已擴展到雲端運算和貴重礦物。安東尼·布林肯、珍妮特·耶倫、亨利·基辛格和約翰·克里最近幾週都訪問了中國，看來重要的外交努力仍在繼續。雖然中國經濟活動放緩只是一個小問題，但不斷升級的貿易禁運將是一個更大的問題，而且可能更具破壞性。我們的理念仍然是立足中國、服務中國。

The recovery of commercial aircraft continues. Consequently, we are seeing real strength in aftermarket. And consistent with Investor Day, Boeing and Airbus continue to project a doubling of rates in wide-body production by fiscal '26.

商用飛機的復甦仍在持續。因此，我們看到了售後市場的真正實力。與投資者日一致，波音和空中巴士繼續預計到 26 財年寬體飛機產量將翻倍。

Industrial Automation remains a watch item. The June purchaser Managers Index for manufacturing shows contraction in the U.S. and for 12 straight months in the Eurozone. Our order intake for Industrial Automation is down about 4% in the last 6 months relative to the prior 6 months. However, we have a healthy backlog carrying us into fiscal 2024.

工業自動化仍然是一個值得關注的項目。 6 月製造業採購經理人指數顯示美國和歐元區連續 12 個月萎縮。過去 6 個月，我們的工業自動化訂單量較前 6 個月下降了約 4%。然而，我們的積壓狀況良好，足以讓我們進入 2024 財年。

Now turning to what was notable in the quarter. We returned to the Paris Air Show after 4 years absence. It was a remarkable show in which the sentiment was extremely positive. Both commercial aerospace and defense markets are anticipating continued strong growth. In fact, record-breaking gross orders for 1,000 aircraft were placed with OEMs in the month of June. There was quite a notable presence of EV tolls at the show, and we're pleased to supply hardware so far on 2 of these aircraft. In May, the C919 entered revenue service with China Eastern. This is a significant step for COMAC. We are planning a handful of shipments in calendar year '23 and a gradual increase through calendar year '24.

現在轉向本季值得注意的事情。時隔四年，我們重返巴黎航展。這是一場非凡的演出，觀眾的情緒非常正面。商業航空航太和國防市場都預計將持續強勁成長。事實上，6 月原始設備製造商共收到了創紀錄的 1,000 架飛機訂單。展會上電動車的出現相當引人注目，我們很高興迄今為止為其中兩架飛機提供硬體。 5月，C919在東航開始營運營運。這對中國商飛來說是重要的一步。我們計劃在 23 日曆年進行少量發貨，並在 24 日曆年逐步增加。

As noted at Investor Day, the engineering and manufacturing development phase of V-280 started in June. We are making good progress in ramping our engineering team. It was notable that Collins Aerospace was sold by RTX to Safran. Given no new commercial platform development over the next decade, the sale does not, in our opinion, change the competitive landscape for flight control systems.

正如投資者日所指出的，V-280 的工程和製造開發階段於 6 月開始。我們在增強工程團隊方面取得了良好進展。值得注意的是，柯林斯航空航太公司被 RTX 出售給了賽峰集團。鑑於未來十年沒有新的商業平台開發，我們認為此次出售不會改變飛行控制系統的競爭格局。

Now turning attention to our financial performance. Our second consecutive quarter of record sales was a great achievement for our entire staff. We are starting to see the benefits of simplification and pricing feeding through in our operational performance. We delivered sales of $850 million, up over 10% on prior year, with every segment posting double-digit organic growth. We are seeing the recovery of commercial aircraft, reconfigurable integrated weapons platform at full rate and high levels of activity in space components, industrial automation and simulation.

現在將注意力轉向我們的財務表現。我們連續第二季的銷售記錄對我們全體員工來說是一項偉大的成就。我們開始看到簡化和定價為我們的營運績效帶來的好處。我們的銷售額達到 8.5 億美元，比上年增長 10% 以上，每個細分市場都實現了兩位數的有機成長。我們看到商用飛機、可重構綜合武器平台的全速恢復以及太空部件、工業自動化和模擬的高水準活動。

Our bookings remained strong overall with 12-month backlog at $2.3 billion, up 2% over prior year. We do see some softening within Industrial Automation, as noted earlier. Our adjusted operating margin was down 30 basis points on prior year. Excluding space vehicle charges, our margin performance would have been up 120 basis points. This margin enhancement is due to pricing and business growth. Our cash flow was clearly pressured in this quarter with a $19 million use of cash arising from growth of physical inventory.

我們的預訂量整體保持強勁，12 個月的積壓訂單達到 23 億美元，比去年增長 2%。如前所述，我們確實看到工業自動化領域出現了一些軟化。我們調整後的營業利益率比前一年下降了 30 個基點。如果不計入太空船費用，我們的利潤率將上升 120 個基點。利潤率的提高是由於定價和業務成長。本季我們的現金流明顯受到壓力，由於實體庫存成長而使用了 1,900 萬美元的現金。

Before I hand over to Jennifer, I'd like to expand on my view of the 2 key issues impacting performance in this quarter and for the full year, namely space vehicle charges and cash flow. Firstly, we incurred a $14 million charge on our space vehicle fixed price contracts. You may ask, since we were 90% complete on our last call, how further charge could arise.

在我把工作交給珍妮佛之前，我想詳細說明我對影響本季和全年業績的兩個關鍵問題的看法，即太空船費用和現金流。首先，我們在太空船固定價格合約上支付了 1400 萬美元的費用。您可能會問，由於我們上次通話已完成 90%，如何進一步收取費用。

The charge is driven by 2 factors, namely additional software development efforts required to resolve all remaining open issues necessary to achieve flight-ready software and additional integration and test effort required to rework issues arising at integration of the last couple of flight units. These are complex systems in which the final stages of integration can flush out on anticipated challenges. Despite incurring year-to-date charges of $25 million in space vehicles, I remain very confident in that business. These charges represent additional investment in gaining a much deeper understanding of satellite bus system integration and building our capability to deliver.

費用由兩個因素驅動，即解決實現飛行就緒軟體所需的所有剩餘開放問題所需的額外軟體開發工作，以及返工最後幾個飛行單元整合時出現的問題所需的額外整合和測試工作。這些都是複雜的系統，整合的最後階段可能會面臨預期的挑戰。儘管今年迄今在太空船方面產生了 2500 萬美元的費用，但我仍然對該業務充滿信心。這些費用代表了為了更深入地了解衛星總線系統整合和建立我們的交付能力而進行的額外投資。

Our achievements to date include the development of 2 spacecraft bus platforms, namely Meteorite and Meteor, which weigh 120 kgs and 650 kgs, respectively. These buses share many common components, in particular, the avionics unit and the software base. We have now fully built and tested 6 payload ready meteorite class satellites, and we have shipped all flight hardware required under 2 contracts as of last week. We will deliver the final software release within the next 2 weeks.

到目前為止，我們的成就包括開發了兩個太空船匯流排平台，即Meteorite和Meteor，重量分別為120公斤和650公斤。這些匯流排共享許多通用元件，特別是航空電子設備和軟體庫。我們現在已經完全建造並測試了 6 顆有效載荷就緒的隕石級衛星，並且截至上週我們已經運送了 2 份合約所需的所有飛行硬體。我們將在接下來的兩週內發布最終的軟體版本。

From my perspective, we have a great offering with 2 satellite bus platforms that can carry a variety of customer payloads. We are operating in a rapidly expanding market and see plenty of new opportunities ahead. Our execution risk is reduced due to our improved capability and the commonality of hardware and software across both the Meteorite and Meteor platforms.

從我的角度來看，我們提供了一個很棒的產品，包括 2 個衛星匯流排平台，可以承載各種客戶有效負載。我們正在一個快速擴張的市場中運營，並看到未來有大量新機會。由於我們的能力提高以及 Meteorite 和 Meteor 平台上硬體和軟體的通用性，我們的執行風險降低了。

Now turning my attention to our cash situation. We adjusted our free cash flow guidance from 0 to minus $60 million for FY '23. Let me describe what has changed. First, our sales have come in much stronger than anticipated. We also believe 90 days ago that there would be less growth in physical inventory during the second half of the year. We now recognize that it will take longer for our actions to slow the growth of inventory as we work to strike the right balance between slowing material inflow and meeting growing customer requirements. Our efforts have begun to reduce the underlying rate of increase of physical inventory, and we expect this improvement to continue. Given our leverage, the demand on cash is manageable with free cash flow turning strongly positive in Q4, reversing a 3 quarter use of cash.

現在將我的注意力轉向我們的現金狀況。我們將 23 財年的自由現金流指引從 0 調整為負 6,000 萬美元。讓我描述一下發生了什麼變化。首先，我們的銷售額比預期強勁得多。 90天前我們也認為下半年實體庫存成長將會放緩。我們現在認識到，我們需要更長的時間來減緩庫存成長，因為我們努力在減緩材料流入和滿足不斷增長的客戶需求之間取得適當的平衡。我們已經開始努力降低實體庫存的基本成長率，我們預計這種改善將持續下去。考慮到我們的槓桿率，現金需求是可控的，第四季自由現金流轉為強勁正值，扭轉了第三季的現金使用。

We are actively managing the situation. First, we are working to reduce material inflow while dealing with material constraints and ensuring a healthy supply chain. We are unlocking production challenges to improve throughput and material flow whilst dealing with material availability and labor constraints. We reflected during Investor Day that cash flow would take until fiscal '25, '26 before it would normalize. We are confident that this is getting the necessary attention and oversight throughout the organization. We have executed and will continue to drive many tactical changes that are slowing inventory. We are now focused on longer-term actions to drive improvement by fiscal '25, '26. On these 2 key issues, I believe we are making progress. We have significantly reduced risk on our space vehicle contracts, and we have made initial progress on physical inventory and will drive progressive improvement over the coming quarters.

我們正在積極管理局勢。首先，我們正在努力減少物料流入，同時應對物料限制，確保供應鏈健康。我們正在解決生產挑戰，以提高吞吐量和物料流程，同時應對材料可用性和勞動力限制。我們在投資者日期間反映，現金流需要到 25、26 財年才能正常化。我們相信，這將得到整個組織必要的關注和監督。我們已經並將繼續推動許多減緩庫存的戰術變革。我們現在專注於採取長期行動，以在 25、26 財年之前推動改善。在這兩個關鍵問題上，我相信我們正在取得進展。我們大幅降低了太空船合約的風險，並且在實體庫存方面取得了初步進展，並將在未來幾季推動逐步改善。

Overall, I remain very optimistic for our business. We have a strong growth, which I see as a sign that we are creating value for our customers. In addition, we've made excellent progress on our journey to improve margins through simplification and pricing. Now I'll hand over to Jennifer to review our financials in more detail.

總的來說，我對我們的業務仍然非常樂觀。我們的成長強勁，我認為這是我們正在為客戶創造價值的標誌。此外，我們在透過簡化和定價來提高利潤率方面取得了巨大進展。現在我將讓珍妮佛更詳細地審查我們的財務狀況。

Thanks, Pat. I'll begin with a review of our third quarter financial performance. I'll then provide an update on our guidance for all of fiscal year '23. It was another exceptional quarter from a sales perspective. For the second quarter in a row, we hit a record level of sales for the company. Our adjusted operating margin was 10.2%, including $14 million of charges on space vehicle programs. Our underlying operational performance was strong this quarter. We achieved $1.37 of adjusted earnings per share, which was negatively impacted by $0.33 from the space vehicle charges and was positively impacted by $0.13 from tax adjustments associated with higher R&D tax credits. This suggests performance near the high end of our guidance when carving out these 2 factors. Sales in the third quarter were $850 million. Total company sales increased 10% over the same quarter a year ago. Excluding the impact of divestitures, sales were up 11%.

謝謝，帕特。我將首先回顧我們第三季的財務表現。然後，我將提供 23 財年全年指導的最新資訊。從銷售角度來看，這又是一個特別的季度。我們連續第二季創下了公司銷售額的新紀錄。我們調整後的營業利潤率為 10.2%，其中包括 1,400 萬美元的太空船專案費用。本季我們的基本營運業績強勁。我們實現了 1.37 美元的調整後每股收益，受到太空船費用 0.33 美元的負面影響，並受到與更高研發稅收抵免相關的稅收調整 0.13 美元的正面影響。這表明在考慮這兩個因素時，業績接近我們指導的高端。第三季銷售額為8.5億美元。公司總銷售額比去年同期成長 10%。排除資產剝離的影響，銷售額成長了 11%。

The largest increase in segment sales was in aircraft controls. Sales of $355 million increased 12% over the same quarter a year ago. Commercial OE sales in the quarter were especially strong, driven by the continued market recovery in wide-body platforms as well as growth on business jets. Commercial aftermarket sales were at a record high with strong sales on the A350 program, which has been steadily ramping over the past several quarters.

部門銷售額增幅最大的是飛機控制部門。銷售額為 3.55 億美元，比去年同期成長 12%。在寬體平台市場持續復甦以及公務機成長的推動下，本季商用原配設備銷售尤其強勁。商業售後市場銷售創歷史新高，A350 專案的銷售強勁，在過去幾季一直穩定成長。

Military aircraft sales declined in the third quarter compared to the same quarter a year ago. The military sales decrease reflects lower funded development activity, including the delayed start on the flower program. In addition, military aftermarket sales were down slightly from the same quarter a year ago. Sales in Space and Defense Controls of $242 million increased 8% over the third quarter last year. Adjusting for the divestiture of a security business last year, sales increased 11%. The ramp-up in production on the reconfigurable turret program, which hit full rate production levels in the first quarter this year, drove sales this quarter. The sales growth was also driven by increased activity on avionics and components for satellites.

第三季軍用飛機銷售量與去年同期相比有所下降。軍售減少反映了開發活動資金減少，包括花卉計劃的延遲啟動。此外，軍品售後市場銷售量較去年同期略有下降。太空和國防控制領域的銷售額為 2.42 億美元，比去年第三季成長 8%。對去年安全業務的剝離進行調整後，銷售額成長了 11%。可重構砲塔專案的產量增加，在今年第一季達到了滿載生產水平，推動了本季的銷售。航空電子設備和衛星零件活動的增加也推動了銷售成長。

Industrial Systems sales increased 9% to $253 million. Excluding the divestiture of our sonar business last year, sales were up 11%. Within Industrial Systems, our Industrial Automation sales growth was driven by demand for capital equipment. This business has recovered nicely since the pandemic, but we're now seeing orders slow down in line with global capital spend. Our growing construction business is also contributing to the industrial automation sales strength. Simulation and test sales were also strong, driven by high demand on flight simulation systems. Sales and energy adjusting for the divestiture last year were up nicely compared to a year ago. These sales increases were partially offset by lower sales in medical, which was impacted by supply chain issues.

工業系統銷售額成長 9%，達到 2.53 億美元。不包括去年剝離聲納業務的情況，銷售額成長了 11%。在工業系統領域，我們的工業自動化銷售成長是由資本設備的需求所推動的。自大流行以來，這項業務恢復得很好，但我們現在看到訂單隨著全球資本支出而放緩。我們不斷成長的建築業務也為工業自動化銷售實力做出了貢獻。由於對飛行模擬系統的高需求，模擬和測試銷售也很強勁。去年剝離後的銷售額和能源調整與一年前相比有了很大的成長。這些銷售額的成長被供應鏈問題影響的醫療銷售額下降所部分抵銷。

We'll now shift to operating margins. Adjusted operating margin of 10.2% in the third quarter decreased 30 basis points from the third quarter last year. The space vehicle charges pressured our total operating margin by 150 basis points. These pressures were mostly offset by strong operational performance on our underlying business and a marginal return on the sales increase. Adjustments to operating profit this quarter and the same quarter a year ago were $2 million and $1 million, respectively. These adjustments reflect restructuring and other charges.

我們現在轉向營業利潤率。第三季調整後營業利益率為10.2%，較去年第三季下降30個基點。太空船費用使我們的總營業利潤率下降了 150 個基點。這些壓力大部分被我們基礎業務的強勁營運業績和銷售成長的邊際回報所抵銷。本季和去年同期營業利潤的調整分別為 200 萬美元和 100 萬美元。這些調整反映了重組和其他費用。

I'll now describe the key drivers of our adjusted operating margins for each of our segments. Operating margin in Aircraft Controls was 10.9% in the third quarter compared to 11.0% in the same quarter a year ago. Operating margin in Space and Defense Controls was 7.8%, down 360 basis points from 11.4% a year ago. As Pat described, we incurred significant charges on space vehicle programs again this quarter, over 500 basis points worth, masking the benefit associated with higher sales and improvements in the core business.

我現在將描述我們每個部門調整後的營業利潤率的主要驅動因素。第三季飛機管制部門的營業利益率為 10.9%，而去年同期為 11.0%。太空與國防控制部門的營業利益率為 7.8%，比一年前的 11.4% 下降了 360 個基點。正如帕特所描述的，我們本季再次在太空船專案上產生了巨額費用，價值超過 500 個基點，掩蓋了與更高的銷售額和核心業務改進相關的收益。

Operating margin in Industrial Systems was 11.5%, up nicely over the 8.7% of last year's third quarter. Benefits associated with our pricing initiatives accounted for 3 quarters of this improvement. In addition, last year's margin was pressured by supply chain disruptions and the pandemic impacting our operations in China.

工業系統部門的營業利潤率為 11.5%，遠高於去年第三季的 8.7%。與我們的定價措施相關的好處佔了這項改善的三個季度。此外，去年的利潤率也受到供應鏈中斷和影響我們在中國業務的疫情的壓力。

Interest expense is another area that's impacting our financial results. In the third quarter, interest expense was $17 million, up $8 million over the third quarter last year. The increase in interest expense relates to higher interest rates and to a lesser extent, higher levels of debt. Our adjusted effective tax rate in the third quarter was 16.0%, about the same as in the third quarter of last year. We're benefiting from higher levels of R&D tax credits and have captured these benefits in our return to provision third quarter adjustments in both years.

利息支出是影響我們財務表現的另一個領域。第三季利息支出為1700萬美元，比去年第三季增加800萬美元。利息支出的增加與較高的利率有關，在較小程度上與較高的債務水準有關。我們第三季調整後的有效稅率為16.0%，與去年第三季大致相同。我們受益於更高水準的研發稅收抵免，並在這兩年的第三季調整中獲得了這些好處。

Putting it all together, adjusted earnings per share came in at $1.37 within the range we provided a quarter ago. EPS is down 15% from the same quarter a year ago due to higher interest expense and corporate expense, partially offset by increased operating profit. Let's shift over to cash flow. In the third quarter, we had negative free cash flow of $19 million. Net earnings were solid, and capital expenditures were on plan. However, net working capital, in particular, physical inventories grew substantially.

總而言之，調整後每股收益為 1.37 美元，處於我們上季度提供的範圍內。由於利息費用和企業費用增加，每股收益較去年同期下降 15%，但部分被營業利潤增加所抵銷。讓我們轉向現金流。第三季度，我們的自由現金流為負 1,900 萬美元。淨利穩健，資本支出按計畫進行。然而，淨營運資本，特別是實體庫存大幅成長。

Growth in physical inventories, both unbilled receivables for long-term contracts and inventory as shown on the balance sheet resulted from continuing to receive in materials at a faster rate than shipping product to customers. We've maintained material flow to ensure we're positioned well for customer deliveries. However, a combination of staffing shortages, supply chain challenges and production inefficiencies have limited our ability to convert inventories to cash. In addition, this quarter, we took ownership of some inventory from a vendor to prevent a supply chain disruption.

實體庫存（包括資產負債表中顯示的長期合約的未開票應收帳款和庫存）的增長是由於材料接收速度持續快於向客戶運送產品的速度。我們維持物料流，以確保我們能夠為客戶交付做好準備。然而，人員短缺、供應鏈挑戰和生產效率低下限制了我們將庫存轉化為現金的能力。此外，本季度，我們從供應商那裡獲得了一些庫存的所有權，以防止供應鏈中斷。

Capital expenditures were $35 million. That's pretty much in line with our average spending last year and just over the average quarterly spend this year, excluding the facility we purchased last quarter. We're investing in facilities to accommodate our growth, focus our factories and enhance our capabilities through automation. Our leverage ratio, calculated on a net debt basis as of the end of the third quarter was 2.7x, within our target range of 2.25x to 2.75x.

資本支出為 3500 萬美元。這與我們去年的平均支出基本一致，略高於今年的平均季度支出，不包括我們上季度購買的設施。我們正在投資設施以適應我們的成長、集中我們的工廠並透過自動化增強我們的能力。截至第三季末，以淨負債計算，我們的槓桿率為 2.7 倍，在我們 2.2​​5 倍至 2.75 倍的目標範圍內。

Our capital deployment priorities, both long term and near term are unchanged. Our current priority continues to be investing for organic growth.

我們的長期和近期資本部署優先事項都沒有改變。我們目前的首要任務仍然是投資於有機成長。

We'll now shift over to guidance for the full year. Compared to a quarter ago, we're increasing sales, adjusted operating profit and adjusted earnings per share and modifying operating margin down slightly. Based on continuing pressures on cash, we are decreasing our free cash flow guidance for the year. Let's take a more detailed look at our guidance. We're projecting sales of $3.3 billion in fiscal year '23, which is up $60 million over our previous guidance. That's a 7% sales increase compared to FY '22 and 9% when we adjust for divestitures over the past year and the impact of foreign currency movements.

我們現在將轉向全年指導。與季度前相比，我們增加了銷售額、調整後營業利潤和調整後每股收益，並小幅下調了營業利潤率。由於現金持續面臨壓力，我們正在降低今年的自由現金流指引。讓我們更詳細地看看我們的指南。我們預計 23 財年的銷售額將達到 33 億美元，比我們先前的指導增加 6,000 萬美元。與 22 財年相比，銷售額成長了 7%，而當我們根據過去一年的資產剝離和外匯變動的影響進行調整後，銷售額成長了 9%。

We expect high single-digit organic sales growth in each of our segments. Aircraft control sales are projected to increase 8% to $1.4 billion. The increase is all on the commercial side of the business. Commercial OE will be up across the board with growth on Airbus and Boeing platforms, business jets and the Genesis business we acquired a couple of years ago. We'll also see growth in an already strong commercial aftermarket business.

我們預計每個細分市場的有機銷售額都將實現高個位數成長。飛機控制器銷售額預計將成長 8%，達到 14 億美元。成長全部來自於業務的商業方面。隨著空中巴士和波音平台、公務機以及我們幾年前收購的 Genesis 業務的成長，商用原配設備將全面成長。我們也將看到本已強勁的商業售後市場業務的成長。

To account for the strong sales this quarter, we're increasing our commercial OE forecast by $35 million and our aftermarket sales forecast by $20 million.

考慮到本季的強勁銷售，我們將商業原廠銷售預測提高了 3,500 萬美元，將售後市場銷售預測提高了 2,000 萬美元。

We expect a decline in military aircraft sales, driven by lower funded development and aftermarket sales. We're decreasing our military aircraft sales guidance by $30 million to reflect the results we're seeing, especially related to funded development activities.

我們預計，由於開發資金和售後市場銷售資金減少，軍用飛機銷售將下降。我們將軍用飛機銷售指導減少了 3000 萬美元，以反映我們所看到的結果，特別是與資助的開發活動相關的結果。

Space and Defense Controls sales are projected to increase 7% to $930 million. Adjusting for the divestiture of a security business late last fiscal year, sales will be up 9%. When looking at our numbers within the segment, you may recall that we shifted a product line from defense into space at the beginning of our first quarter. We've now adjusted last year's numbers for that shift in our supplemental materials.

太空和國防控制銷售額預計將成長 7%，達到 9.3 億美元。對上財年末安全業務剝離進行調整後，銷售額將成長 9%。當查看我們在該領域的數字時，您可能還記得我們在第一季初將產品線從國防轉向太空。我們現在已經根據補充資料中的這項變更調整了去年的數字。

Space sales will increase for satellite components and space vehicles, and defense sales will increase on production ramps for the reconfigurable turret and tactical missile programs. Our sales forecast is up $10 million over our previous forecast, reflecting the strong sales levels we're achieving in both space and defense.

衛星零件和太空船的太空銷售將增加，而可重構砲塔和戰術飛彈計畫的國防銷售將隨著生產坡道的增加而增加。我們的銷售預測比先前的預測增加了 1000 萬美元，反映出我們在太空和國防領域實現的強勁銷售水平。

Industrial Systems sales are projected to increase 6% to $965 million. Adjusting for the sale of the sonar business and foreign currency movements, the increase is 10%. Most of the growth will come from industrial automation and simulation tests, both of which were particularly strong this quarter. Our sales forecast is up $25 million from our previous forecast on record sales this quarter.

工業系統銷售額預計將成長 6%，達到 9.65 億美元。調整聲納業務的銷售和外匯變動後，增幅為 10%。大部分成長將來自工業自動化和模擬測試，這兩個領域本季尤其強勁。我們的銷售預測比先前預測的本季創紀錄的銷售高出 2500 萬美元。

Let's shift over to operating margins. We've updated our segment operating profit and margin guidance to reflect retroactive pricing benefits we'll get in the fourth quarter on aircraft programs. The higher level of sales we're now projecting and the charges we incurred this quarter on space vehicle programs. We're now projecting an adjusted operating margin of 10.9% in fiscal year '23, which is up from 10.2% in fiscal year '22.

讓我們轉向營業利潤率。我們更新了部門營業利潤和利潤率指導，以反映我們將在第四季度獲得的飛機項目的追溯定價優勢。我們現在預計更高的銷售水準以及本季在太空船專案上產生的費用。我們目前預期 23 財年調整後營業利益率為 10.9%，高於 22 財年的 10.2%。

Industrial Systems will increase 190 basis points to 11.4%, largely due to progress on pricing initiatives. Aircraft Controls will increase 70 basis points to 10.8%, also reflecting the benefit we'll see from pricing initiatives. Factory utilization will improve as sales in the commercial OE business increased. However, this benefit will be largely offset by an unfavorable mix with the relative increase in Commercial OE.

工業系統公司將成長 190 個基點，達到 11.4%，這主要歸功於定價措施的進展。 Aircraft Controls 將增加 70 個基點，達到 10.8%，這也反映了我們將從定價措施中看到的好處。隨著商業原配設備業務銷售額的增加，工廠利用率將會提高。然而，這一優勢將在很大程度上被商業原裝備相對增加的不利組合所抵消。

Operating margin in Space and Defense Controls will decrease 40 basis points to 10.5%, reflecting $25 million of charges incurred on space vehicle programs this year, offset by incremental return on higher sales. Higher interest expense will depress adjusted earnings per share by $0.62 relative to fiscal year '22. For fiscal year '23, we're now projecting adjusted earnings per share of $5.75 plus or minus $0.10, which is up 3% over fiscal year '22. Adjusting for interest, EPS would be $6.37, an increase of 15%, reflecting strong operational performance. Next quarter, we're forecasting earnings per share to be $1.71 plus or minus $0.10.

太空和國防控制部門的營業利潤率將下降 40 個基點，至 10.5%，反映出今年太空飛行器專案產生的 2,500 萬美元費用，並被較高銷售的增量回報所抵消。與 22 財年相比，較高的利息支出將使調整後每股收益減少 0.62 美元。對於 23 財年，我們目前預計調整後每股收益為 5.75 美元上下 0.10 美元，比 22 財年增長 3%。調整利息後，每股收益將為 6.37 美元，成長 15%，反映出強勁的營運表現。我們預計下一季每股收益為 1.71 美元上下 0.10 美元。

Finally, turning to cash. We're projecting free cash flow for fiscal year '23 to be negative $60 million, down from 0 that we were projecting 90 days ago. The change largely reflects our third quarter growth in physical inventories. As we move into the fourth quarter, we expect working capital to be a source of cash, the first time in several quarters. Receivables will be the largest generator of cash within working capital. Accruals for compensation will normalize from a timing perspective in the fourth quarter, also contributing to free cash flow generation. Those sources of cash will be partially offset by continued growth in physical inventories, though we're beginning to see the growth in physical inventories trend downward. Outside of working capital, we're projecting a strong earnings quarter and we're maintaining our forecast of $165 million in capital expenditures for the year.

最後，轉向現金。我們預計 23 財年的自由現金流將為負 6,000 萬美元，低於 90 天前預測的 0。這一變化很大程度上反映了我們第三季實體庫存的成長。隨著進入第四季度，我們預計營運資金將成為現金來源，這是幾個季度以來的首次。應收帳款將成為營運資金中最大的現金來源。從時間角度來看，應計薪酬將在第四季正常化，也有助於自由現金流的產生。這些現金來源將被實體庫存的持續成長部分抵消，儘管我們開始看到實體庫存的成長呈下降趨勢。除營運資本外，我們預計季度獲利將強勁，並維持今年資本支出 1.65 億美元的預測不變。

Overall, we had a solid third quarter, and our outlook for the fourth quarter looks strong. We're positioned well from a liquidity and leverage standpoint, enabling us to invest for future growth in our business.

總體而言，我們的第三季表現穩健，第四季的前景看起來也很強勁。從流動性和槓桿的角度來看，我們處於有利地位，使我們能夠為業務的未來成長進行投資。

And now I'll turn it over to Pat.

現在我會把它交給派特。

Thank you, Jennifer. As you've heard, we closed out a solid quarter, delivering record sales. And we're on a path to deliver a fiscal year with 9% organic sales growth and 70 basis points margin improvement.

謝謝你，詹妮弗。正如您所聽說的，我們完成了一個穩定的季度，銷售額創歷史新高。我們預計在本財年實現 9% 的有機銷售成長和 70 個基點的利潤率提升。

We are now happy to take your questions.

我們現在很樂意回答您的問題。

(Operator Instructions) And our first question is going to come from Kristine Liwag from Morgan Stanley.

（操作員說明）我們的第一個問題將來自摩根士丹利的 Kristine Liwag。

Great. First, on pricing. You guys mentioned aircraft controls. You're getting the pricing increases rolling through. Can you quantify that? And are you seeing that in specific aircraft programs or all programs? And how much of a pricing increase is this?

偉大的。首先，關於定價。你們提到了飛機控制。您將看到價格上漲。你能量化一下嗎？您是否在特定飛機項目或所有項目中看到了這一點？價格上漲了多少？

Kristine, good morning. How are you?

克里斯汀，早安。你好嗎？

Great. Great. Happy Friday.

偉大的。偉大的。星期五快樂。

Thank you. So I think we've made really strong progress during the course of this year in pricing conversations with our customers. It's across all of our customers on the commercial aircraft side of the business. And in the other businesses, as I've emphasized in the Investor Day, in those conversations, we also said at Investor Day that some of them have been going on for an extended period of time. And we reached agreement with our customer that the negotiation would be retrospective to the 1st of January.

謝謝。因此，我認為今年我們在與客戶的定價對話方面取得了巨大進展。它涉及我們商用飛機業務的所有客戶。在其他業務中，正如我在投資者日強調的那樣，在這些對話中，我們也在投資者日上表示，其中一些業務已經持續了很長一段時間。我們與客戶達成一致，談判將追溯至1月1日。

And so now that we've concluded those conversations with our customer, we're able to, in the fourth quarter, reflect an increased operating margin in our Aircraft group as those prices flow through. The gain or step-up in performance of the aircraft group in Q4 is including that retrospective pricing element. And so it will be in our business going forward, but not at the same high level of operating margin as Q4 will show for Aircraft group.

因此，既然我們已經結束了與客戶的對話，我們就能夠在第四季度反映出隨著這些價格的變化，我們的飛機集團的營業利潤率增加。第四季度飛機集團業績的成長或進步包括了追溯定價因素。因此，這將是我們未來業務的一部分，但營運利潤率不會像飛機集團第四季那麼高。

So I would say, in answer to your question, Kristine, we don't want to be specific about which customer it is and it is across multiple customers within our Aircraft group business. And I don't think we want to share the increment of the increase at this point. Although in Q4, we will do a retrospective that shows how much gain has come through pricing in our business and how much has come through simplification.

所以我想說，在回答你的問題時，克里斯汀，我們不想具體說明是哪個客戶，而是我們飛機集團業務中的多個客戶。我認為我們現在不想分享增量。儘管在第四季度，我們將進行回顧，展示我們的業務定價帶來了多少收益，以及透過簡化帶來了多少收益。

Jennifer, do you have anything you'd like to add?

詹妮弗，你還有什麼要補充的嗎？

No, I think that's fair, Pat. I think we've made a lot of progress. As Pat said, we've got a retro coming up in the fourth quarter. So when we look at it for the full year, pricing is a substantial contributor to the margin enhancement for all of fiscal year '23 compared to all of fiscal year '22 across our aircraft business.

不，我認為這是公平的，帕特。我認為我們已經取得了很大進步。正如帕特所說，我們將在第四季進行回顧。因此，當我們縱觀全年時，與整個飛機業務的 22 財年相比，定價是 23 財年全年利潤率提高的重要因素。

Great. It's great to see you guys make progress there. And so when we think about this pricing reset, is this a onetime reset on all -- on the programs that you have? Or is this something that we should expect to occur on an annual basis?

偉大的。很高興看到你們在那裡取得進步。因此，當我們考慮這次定價重置時，這是否是所有項目的一次性重置？或者說這是我們每年都會發生的事嗎？

I would describe it as a progressive program, Kristine. We have still more work to do on pricing with other customers, so it's ongoing. And in addition, the pricing that we have negotiated with our customers to date has included a provision in the contracts for escalation year-over-year. And so we have a framework and a mechanism for further increases over time, depending on certain indices that we're tracking.

我會把它描述為一個進步的計劃，克里斯汀。我們在與其他客戶的定價方面還有更多工作要做，因此仍在進行中。此外，我們迄今為止與客戶協商的定價已在合約中包含逐年升級的條款。因此，我們有一個框架和機制，可以隨著時間的推移進一步增加，這取決於我們追蹤的某些指數。

Great. And if I could squeeze one last one on free cash flow. I mean we've seen fairly dramatic cuts in free cash flow outlook now for two consecutive quarters. I mean, what would -- is this -- what makes you confident that negative $60 million is for the year? And is that a conservative enough number if revenue maybe picks up even more than you thought?

偉大的。如果我能在自由現金流上擠出最後一筆。我的意思是，我們已經連續兩個季度看到自由現金流前景大幅下調。我的意思是，什麼——這——是什麼讓你對今年的負 6000 萬美元充滿信心？如果收入成長可能比您想像的還要多，那麼這個數字是否夠保守？

And then also, at some point, we'll see an inventory unwind. At what pace do you think that unwinds that will be for 2024, could we see all of that come back and you get your normal course of positive free cash flow plus the inventory unwind?

然後，在某個時候，我們會看到庫存減少。您認為 2024 年的放鬆速度會是多少，我們能否看到所有這些都回來，並且您能獲得正自由現金流加上庫存放鬆的正常過程？

Yes. I'll start, and then I'll hand over to Jennifer as well for some comments on this. I think the difference where we sit today is that we know it's taking longer to slow the rate of growth. We took a lot of actions in the last 90 days, which have had an impact and have slowed down the growth of inventory, but it's striking that right balance between the inflow of materials and sufficient material on hand to meet our customers' requirements.

是的。我先開始，然後我也將交給 Jennifer 徵求對此的一些評論。我認為我們今天所處的不同之處在於我們知道需要更長的時間才能減緩成長速度。在過去的 90 天內，我們採取了許多行動，這些行動產生了影響，減緩了庫存的成長，但在材料流入和現有充足材料之間實現了適當的平衡，以滿足客戶的需求。

So that's a little bit longer going and taking a little bit more time than we anticipated. It will -- to your point, it will unwind, Kristine. The inventory that we have is nonperishable, and it will get used in our programs. That unwind will begin to come through in future quarters.

因此，這比我們預期的要長一些，花費的時間也多一些。它會——就你的觀點而言，它會放鬆，克里斯汀。我們擁有的庫存是不易腐爛的，它將在我們的項目中使用。這種放鬆將在未來幾季開始顯現。

But you've got to bear in mind that our -- especially our commercial aircraft programs are ramping. We are currently running at rate 5 on our Boeing production. So that's up from the rate 4 we were previously running, and we are getting -- we are ahead because of our lead times of Boeing's own rates.

但你必須記住，我們的——尤其是我們的商用飛機計畫正在加速推進。目前，我們的波音生產速度為 5。因此，這比我們之前運行的 4 費率有所上升，而且我們正在領先，因為我們的交貨時間是波音自己的費率。

So the unwind is balanced in some way by a pickup in inventory required for those higher rates in the future. So that will play out during the course of fiscal '24. Our cash used in '24 is the demand for next year. Our free cash conversion will be -- I don't know if we gave the figure in Investor Day, it will be lower than it will be in '25, '26, but we get back to the normalized levels in '25, '26. So there are demands through the course of next year. So you see it as multiple quarters as we go through this transition now.

因此，這種放鬆在某種程度上可以透過未來更高利率所需的庫存增加來平衡。這將在 24 財年期間顯現出來。我們24年用的現金就是明年的需求。我們的自由現金轉換將是——我不知道我們是否在投資者日給出了這個數字，它將低於“25”、“26”，但我們會回到“25”的正常水平26.因此，整個明年都會有需求。因此，當我們現在經歷這一轉變時，您會看到它是多個季度。

Jennifer, do you have anything to add to that?

詹妮弗，你還有什麼要補充的嗎？

Yes. Maybe just to complement that. So for our forecast this year, for a $60 million use of cash, to your point, I would say it's balanced. To your point, if we have higher sales, we may be pressured from the receivable standpoint associated with that.

是的。也許只是為了補充這一點。因此，對於我們今年的預測，對於 6000 萬美元的現金使用，就您的觀點而言，我認為這是平衡的。就您的觀點而言，如果我們的銷售額較高，我們可能會從與之相關的應收帳款角度面臨壓力。

But I would say, overall, it's balanced. The area we give confidence to it when we're looking at how the fourth quarter is going to shape up is we do have -- we have some customer advances that were built late in Q3. And just on the normal terms associated with that, we will get the collections of that advance in Q4.

但我想說，總體來說，它是平衡的。當我們考慮第四季度的情況時，我們充滿信心的領域是我們確實擁有——我們在第三季末取得了一些客戶進展。按照與此相關的正常條款，我們將在第四季度獲得該進展的集合。

With our high level of sales in Q3, we'll also collect on those sales as well. So there's definitely some things, especially on the receivables side, that will help us as we move into the fourth quarter.

由於我們在第三季的銷售額很高，我們也將收集這些銷售額。因此，當我們進入第四季度時，肯定有一些事情，特別是應收帳款方面的事情，將對我們有所幫助。

We're also seeing a slowdown in the need for growth in physical inventory. So it's still growing. But over the past few quarters, it's been decreasing. So in the first quarter, it was about $71 million. In the second quarter, it was $67 million. Although in the third quarter, it was $65 million. That included about $10 million of a payment we made to prevent a supply chain disruption by taking some inventory from a vendor. And we're projecting that to improve to $40 million in Q4.

我們也看到實體庫存成長的需求正在放緩。所以它還在成長。但在過去幾個季度，這一數字一直在下降。所以第一季約 7100 萬美元。第二季為 6700 萬美元。儘管第三季為6500萬美元。其中包括我們透過從供應商取得部分庫存來防止供應鏈中斷而支付的約 1000 萬美元的款項。我們預計第四季這一數字將增至 4,000 萬美元。

So we are seeing a slowdown in the growth of physical inventories, but we're not yet projecting that to turn.

因此，我們看到實體庫存成長放緩，但我們尚未預期這種情況會出現逆轉。

As we look into next year, we're expecting a modest level of free cash flow generation, which is consistent with what we said a month or 2 ago as well. So definitely physical inventories is an area that will take us a while to work through.

當我們展望明年時，我們預期自由現金流的產生將處於適度水平，這也與我們一兩個月前所說的一致。因此，實體庫存肯定是我們需要一段時間才能解決的領域。

And our next question is going to come from Michael Ciarmoli from Truist Securities.

我們的下一個問題將來自 Truist Securities 的 Michael Ciarmoli。

Just Jennifer, I guess, to stay on the inventory and cash side of things. Can you kind of specify what end markets, from a material standpoint, I guess, that you're trying to reduce, is it more aerospace-related or industrial? And then any color on where you are with 787 inventories? I know you guys have been building ahead there. It sounds like Boeing is certainly pushing for five a month by year-end and kind of how that fits into kind of the equation?

我想，只有詹妮弗會留在庫存和現金方面。我想，從材料的角度來看，您能否具體說明您正在試圖減少哪些終端市場，是與航空航太相關的還是與工業相關的？那麼，您的 787 飛機庫存狀況如何？我知道你們一直在那邊建設。聽起來波音肯定會在年底前推動每月五個，這如何符合這個等式？

Yes. From a market perspective, we're seeing the supply chain pressures in many of our markets. Each of our markets is reacting a little bit different, but we're still seeing supply chain constraints in many areas for electronics. Some areas have eased up a little bit, but there's also some sourcing in other areas that continue to pop up as well on that.

是的。從市場角度來看，我們在許多市場都看到了供應鏈壓力。我們每個市場的反應都略有不同，但我們仍然看到電子產品許多領域的供應鏈受到限制。一些地區已經有所放鬆，但其他地區的一些採購也繼續出現。

I would say in our industrial businesses, it's easing up from a standpoint of our matching of incoming materials to what is being able to be processed. However, there's different things that are happening in the aerospace business. And they still seem like there's changing associate with it.

我想說，在我們的工業企業中，從我們將進料與能夠加工的材料相匹配的角度來看，它正在放鬆。然而，航空航天業正在發生不同的事情。而且他們似乎仍然有不斷變化的伙伴。

So for instance, we're still keeping our incoming receipts for the most part, fairly level from our supply chain. We want to make sure, first, that we've got everything that we need so that we can meet customer requirements, and also to make sure that we've got a healthy supply chain.

例如，我們仍然保持供應鏈中大部分的進貨收據處於相當水平。首先，我們要確保我們擁有滿足客戶要求所需的一切，同時確保我們擁有健康的供應鏈。

Obviously, we want to balance that so that we're not carrying excess amounts of safety stock. So we're being very careful, but it's a very tedious process to go through and make these decisions, and then input them into our systems, and then wait for it to actually manifest through our numbers.

顯然，我們希望平衡這一點，這樣我們就不會持有太多的安全庫存。所以我們非常小心，但這是一個非常乏味的過程，要經歷並做出這些決定，然後將它們輸入我們的系統，然後等待它透過我們的數字實際體現出來。

But in some of the A&D side of the business, and it's in different parts of it, some places we've got, we're short on staff a little bit. So when we've got the materials in, it still takes a while for us to push those products through based on our staffing.

但在業務的某些 A&D 方面，在不同的部分，我們的一些地方，我們的員工有點短缺。所以當我們拿到材料後，根據我們的人員配置，我們還需要一段時間來推動這些產品。

Some of the supply chain challenges are happening as well, and this throughput through our factories of making that all happen. So if we get a huge slug of inventories in, even from our supply chain, the time that it still takes to process it through doesn't necessarily mean that we'll catch up right away. So there's second level challenges that we're facing even though that we are getting materials in the door.

一些供應鏈挑戰也在發生，而我們工廠的吞吐量使這一切成為現實。因此，如果我們有大量庫存，即使是來自我們的供應鏈，處理它仍然需要的時間並不一定意味著我們會立即趕上。因此，儘管我們正在獲取材料，但我們仍面臨第二級挑戰。

As it relates to 787 inventories, currently, it's not having a significant amount of impact on our free cash flow. However, we are carrying inventory that we had built up in previous periods, especially in fiscal year '22. That's going to help us as we start going into this ramp, and we're at that five a month rate right now on that. So right now, it's stable, not causing any further pressure, but -- and we do have stock in hand so that we can manage as we move forward.

由於它與 787 庫存相關，目前它對我們的自由現金流沒有重大影響。然而，我們持有先前期間累積的庫存，尤其是在 22 財年。當我們開始進入這個階段時，這將對我們有所幫助，我們現在的速度是每月五個。所以現在它很穩定，不會造成任何進一步的壓力，但是——我們手頭上確實有庫存，這樣我們就可以在前進的過程中進行管理。

Got it. And then what about -- you called out the, I think, earlier the unbilled receivables. What sort of the line of sight in terms of driving that down? Do you -- is it more milestone-based? Are they presumably more on the space and defense side? And should we expect that to be more of a tailwind out in '25 or '26? Or do you think you can start unwinding some of that in the shorter term?

知道了。然後呢——我想，你早些時候提到了未開票的應收帳款。什麼樣的視線才能推動其下降？你認為它更具有里程碑意義嗎？他們可能更關注太空和國防方面嗎？我們是否應該期望這會在 25 年或 26 年成為更多的順風車？或者你認為你可以在短期內開始放鬆其中一些？

Yes. So the unbilled receivables, there's a number of things that are happening, first of all, with our level of activity. We've got continuing growth with our sales growth. A lot of our business on the A&D side is on long-term contracting. So it does happen to go through the unbilled receivables as we have progress on that.

是的。因此，對於未開票的應收帳款，有很多事情正在發生，首先是我們的活動水平。隨著銷售額的成長，我們的業務也持續成長。我們在 A&D 方面的許多業務都是長期合約。因此，隨著我們在這方面取得進展，它確實會處理未開立的應收帳款。

Certain things have gotten delayed in the unbilled and converting that over into cash. For instance, the space vehicle charges that we described, the delays associated with that, the higher expenses has delayed our activity on that, such that the cash that we would have expected to get in this year, we're now projecting getting into next year instead. So there's different things on different programs.

某些事情在未開票並將其轉換為現金方面被延遲了。例如，我們描述的太空船費用，與之相關的延誤，較高的費用推遲了我們在這方面的活動，因此我們預計今年獲得的現金，我們現在預計進入明年年代替。所以不同的程式有不同的東西。

Okay. And then, Pat, can I just try the pricing in aircraft one more time. I mean can you maybe even -- I know you don't want to maybe give a lot of specifics, but are you having more success immediately in the aftermarket? Or are you getting some on the OE side?

好的。然後，帕特，我可以再試一次飛機上的定價嗎？我的意思是，您甚至可以 - 我知道您可能不想提供很多細節，但是您是否立即在售後市場取得了更大的成功？或者你在 OE 方面有一些嗎？

I figured that the conversations with Boeing and Airbus might be a bit more challenging there. And then are you getting some across the military as well? And then I, guess, with that price, you talked about some of the escalators, but are you trying to manage, I guess, future price step-downs with volumes? Are those components in the conversations as well?

我認為與波音和空中巴士的對話可能更具挑戰性。那麼你在軍隊中也得到了一些嗎？然後我猜，在這個價格下，你談到了一些自動扶梯，但我猜你是否試圖透過數量來管理未來的價格下降？對話中也包含這些內容嗎？

Well, thanks, Michael. The pricing activity is across all of the OEMs and all of the aftermarket. So it's not limited to OEM activity. And as you know, in some of our OEM contracts, aftermarket is an element of the contract, and that's part of the contract discussions.

嗯，謝謝，麥可。定價活動涉及所有原始設備製造商和所有售後市場。因此，它不僅限於 OEM 活動。如您所知，在我們的一些 OEM 合約中，售後市場是合約的一個要素，也是合約討論的一部分。

So all those factors are rolling into the conversations that we're having. But my position is that we've made great progress with those conversations with the customers. There's a recognition on both sides to have a sustainable business. There had to be an adjustment, and that has come through now.

因此，所有這些因素都在我們正在進行的對話中。但我的立場是，我們在與客戶的對話中取得了巨大進展。雙方都認識到擁有可持續的業務。必須進行調整，現在已經完成了。

So I'm really pleased, Michael, where we got to with those conversations. And the impact then, as we say, will show through in Q4 and throughout next year.

所以我真的很高興，邁克爾，我們能夠進行這些對話。正如我們所說，其影響將在第四季和整個明年顯現出來。

And our new question is going to come from Cai von Rumohr from TD Cowen.

我們的新問題將來自 TD Cowen 的 Cai von Rumohr。

Yes. So maybe switching back for a second to space, another large charge. How close are we to the end of this? I mean what should we be looking for as a milestone to say, from here on out, we shouldn't expect more space vehicle charges?

是的。因此，也許會切換回太空，再次進行一次大的充電。我們距離結束還有多遠？我的意思是，我們應該尋找什麼作為里程碑，從現在開始，我們不應該期望更多的太空船收費？

Cai, welcome, and thank you for the question. I think we have really done a good job over the last 2 months in burning down the risk associated with that space vehicle program. There are two programs on which we have shipped units. The first six of our Meteorite class units.

蔡，歡迎，謝謝你的提問。我認為過去兩個月我們在降低與太空船計劃相關的風險方面確實做得很好。我們已向兩個項目發貨。我們的隕石級單位的前六個。

Those shipments completed 2 weeks ago -- or last week was the last shipment out of our facility to our customers' facility.

這些發貨是在兩週前完成的，或者說上周是最後一次從我們的工廠發送到客戶工廠的發貨。

So in terms of the integration and test activities, all of those have been completed for all six units. So that's one element that reduces the risk down. We know that the hardware is functional, and it is with our customers at this point.

因此，就整合和測試活動而言，所有六個單元都已完成。所以這是降低風險的一個因素。我們知道硬體功能正常，目前已與我們的客戶一起使用。

The software, we have a revision of software to be delivered to the customer on August 11. So that's within the next 2 weeks. So we're in the final stages of working through that update to code. And so again, because we're so close to the finish line now with the software, we have really high confidence that we have the issues addressed in terms of delivery there. And we don't expect to see a change in the cost of development of the software as a consequence of being so close to the finish line at this point.

對於軟體，我們將在 8 月 11 日向客戶交付軟體修訂版。所以這是在接下來的兩週內。因此，我們正處於程式碼更新的最後階段。再說一次，因為我們現在已經非常接近該軟體的終點線，所以我們非常有信心我們已經解決了交付方面的問題。我們預計軟體開發成本不會因為目前如此接近終點線而改變。

We also sent in an expert team about 2 months ago to do an assessment on work left to be completed, and that was part of revising the estimate to complete. So 90 days ago, I would have said we were 90% complete. If I look at the estimates to complete, as of last week, we were 97% to 98% complete. So we are, most of the way, almost entirely through those two programs, Cai.

大約兩個月前，我們還派了一個專家小組對未完成的工作進行評估，這是修改預計完成情況的一​​部分。所以 90 天前，我會說我們已經完成 90%了。如果我看看要完成的估計，截至上週，我們已經完成了 97% 到 98%。所以我們在大多數情況下幾乎完全通過這兩個程序，蔡。

So is that both Meteor and Meteorite the both the two vehicles, basically you've had shipments on? Are those six all Meteorites?

那麼，Meteor 和 Meteorite 這兩種車輛基本上都是你們出貨的嗎？那六顆都是隕石嗎？

So it is on the Meteorite class that we have shipped six satellites.

因此，我們在隕石級上運送了六顆衛星。

And the Meteor?

還有流星呢？

On the Meteor, we will ship the first of those in the latter part of this calendar year. What's my point around Meteor and Meteorite is that they have a common platform of avionics, which is the electronics that control the system and a common base of software.

在 Meteor 上，我們將在今年下半年出貨第一批。我對 Meteor 和 Meteorite 的看法是，它們有一個通用的航空電子平台，即控制系統的電子設備和通用的軟體基礎。

And so a lot of the complexity and the integration risk is actually associated with those parts of the system. Many of the hardware components are also similar. What might vary from one to the next is the propulsion system and the size of the solar ray panels, but there's a high level of commonality. So I would look at them as a modular platforms, Cai, which is another reason why we have confidence.

因此，許多複雜性和整合風險實際上與系統的這些部分相關。許多硬體組件也相似。不同型號的推進系統和太陽能板的尺寸可能有所不同，但具有很高的通用性。所以我會把它們視為一個模組化平台，蔡，這是我們有信心的另一個原因。

Very good answer. So getting back to the cash flow. So what about -- as we think about next year or so, I guess, we can expect the inventory to continue to go up. But even with some improvement, it looks like your DSOs have really been going up a fair amount.

非常好的答案。那麼回到現金流。那麼，當我們考慮明年左右時，我想我們可以預期庫存將繼續上升。但即使有了一些改進，看起來您的 DSO 確實已經上升了相當多的量。

Where do you see those going next year? Where do you see kind of your payables relative to sales? And also with the inventory uptick, it looks like you're close to 23% of sales, whereas if we go back to '22, you've gotten down to below 20%. So it looks like there's really quite a lot of excess inventory relative to your sales level. When do you see that sort of starting to cross?

您認為明年這些人會去哪裡？您如何看待相對於銷售額的應付帳款？而且隨著庫存的增加，看起來您接近銷售額的 23%，而如果我們回到 22 年，您已經降至 20% 以下。因此，相對於您的銷售水平，看起來確實有相當多的過剩庫存。你什麼時候看到這種交叉？

So I'll take that, Cai. We'll give further detailed guidance on fiscal year '24 when we do this in 90 days. But just on a general type of basis, what we can expect to see is, on physical inventories, as you mentioned, we're going to continue to see growth. We expect that to moderate at least in this fourth quarter, and we'll comment more on next year in next quarter's call.

所以我就接受這個，蔡。我們將在 90 天內提供有關 24 財年的進一步詳細指導。但就一般情況而言，我們可以預期看到的是，正如您所提到的，在實體庫存方面，我們將繼續看到成長。我們預計這種情況至少會在第四季度有所緩解，我們將在下個季度的電話會議中對明年進行更多評論。

We will have a little bit of lumpiness associated with our customer advances. Our customer advances level right now is strong. but it comes in lumps. And we do expect to see some, next year, probably in the later part of next year, and it's just due to program timing that we've got.

我們的客戶預付款會出現一些混亂。目前我們的客戶進步水準很高。但它是塊狀的。我們確實預計明年會看到一些，可能是在明年下半年，這只是由於我們已經掌握的計劃時間表。

We are still expecting to generate modest levels of free cash flow generation, which is what we shared in the Investor Day for fiscal year '24. So some of the inventories that we're talking about now, the physical inventories, we would not see a significant turn in that until we're getting out in some out years when we'll return to more normal levels of free cash flow.

我們仍然期望產生適度的自由現金流，這就是我們在 24 財年投資者日分享的內容。因此，我們現在談論的一些庫存，即實體庫存，我們不會看到重大轉變，直到我們在幾年後恢復到更正常的自由現金流水準。

Right. But so what about the receivables? I mean the DSOs look like they also are higher. I mean do you expect your collection rate to improve?

正確的。但應收帳款又如何呢？我的意思是 DSO 看起來也更高。我的意思是，您預期收款率會提高嗎？

There's a couple of forces. There's -- they're offsetting forces. So let me describe that. Right now, our sales are high. There's a couple of -- our receivables are high. So they're high to the level of sales that we have.

有幾個力量。他們正在抵消力量。讓我描述一下。現在，我們的銷售額很高。有幾個－我們的應收帳款很高。所以他們的銷售水準很高。

If you look at our balance sheet right now, there is a gross up between some receivables and advances for advances that we have build, but not collected until the fourth quarter. So that comes through, but that just shows up as a bad guy in our receivables in the third quarter, but that converts fully to cash in the fourth quarter.

如果你現在看一下我們的資產負債表，你會發現一些應收帳款和我們已經建立但直到第四季才收回的預付款之間的總額有所增加。這樣就實現了，但這只是在第三季度我們的應收帳款中表現為壞人，但在第四季度完全轉換為現金。

As our sales continue to grow, there is pressure on our receivables That continues to happen, especially on the ramp-up associated with our aircraft business where terms are less favorable than the average of the company. And that's the area of the business that we're growing. So there are pressures associated with that. But again, we do have the strong collections that we're expecting from the Q3 sales that we had as well as the advances that we are collecting, and that's the timing from Q3 to Q4.

隨著我們的銷售持續成長，我們的應收帳款面臨壓力，這種情況持續發生，尤其是與我們的飛機業務相關的成長，其條款不如公司的平均水平。這就是我們正在發展的業務領域。因此存在與此相關的壓力。但同樣，我們確實擁有我們所期望的第三季銷售以及我們正在收集的預付款中所期望的強勁產品系列，這就是從第三季到第四季的時間表。

Got it. So Pat, you described lots of improvements, which all sound really very good and better pricing going forward on aircraft on a normalized basis. And space defense like we're out of, hopefully, we have less problems from the satellite vehicles.

知道了。帕特，您描述了很多改進，這些改進聽起來都非常好，並且在標準化的基礎上飛機的定價會更好。希望我們的太空防禦能減少衛星飛行器所帶來的問題。

And industrial, you've got some price hikes. You're looking for, I think, 100 basis points on average for the next couple of years. I mean it would look like you would get sort of a proportional percent of that next year. I mean you could be close to up 100 basis points on the op margin. Am I reading that incorrectly?

工業方面，價格有漲。我認為，你正在尋找未來幾年的平均 100 個基點。我的意思是，明年你會得到一定比例的收益。我的意思是，操作利潤率可能會上漲接近 100 個基點。我讀錯了嗎？

We are feeling really confident, Cai, that we are going to deliver on the 100 basis points a year on average, as we said in the Investor Day. Everything that we're doing is on track towards that at this point.

蔡，我們非常有信心，正如我們在投資者日所說，我們將實現平均每年 100 個基點的目標。目前我們所做的一切都朝著這個目標邁進。

(Operator Instructions) Michael Ciarmoli from Trust Securities.

（操作員指示）信託證券公司的 Michael Ciarmoli。

Pat, just can you give us maybe a little bit more insight into maybe within Space and Defense, do you have a lot of other development contracts or new start contracts? I mean we are seeing this mix shift across the defense sector of legacy programs winding down, new programs ramping up.

帕特，您能否給我們更多的了解，也許在太空和國防領域，您是否還有很多其他開發合約或新的啟動合約？我的意思是，我們正在看到整個國防部門的這種混合變化：遺留項目逐漸減少，新項目不斷增加。

And I mean just to try and get an assessment of maybe how much risk you see with some of the other contracts in there. For example, I don't know if you have any firm fixed development contracts, but just trying to maybe get a framework on what else could crop up in that sector?

我的意思是嘗試評估您看到的其他一些合約的風險有多大。例如，我不知道你們是否有任何固定的開發合同，但只是想獲得一個框架，了解該領域還會出現什麼？

Thanks, Michael. I think we have, in general, reducing our exposure to -- from fixed contracts in our military side of the business. We have some, for sure. We have some legacy programs that are still to close out. And there are a couple of pieces of business in space and defense that are still under fixed price contracts.

謝謝，麥可。我認為，總的來說，我們已經減少了軍事業務中固定合約的風險。我們肯定有一些。我們有一些遺留項目尚未結束。太空和國防領域的一些業務仍處於固定價格合約之下。

So I think that we feel comfortable with the profile that we have there, Michael. I wouldn't say it's degrading in answer to your question.

所以我認為我們對我們在那裡的形象感到滿意，邁克爾。我不會說回答你的問題是有辱人格的。

And I have no further questions in the queue at this time, and I'll turn the call back over to Aaron Astrachan. Please go ahead.

目前隊列中沒有其他問題，我會將電話轉回 Aaron Astrachan。請繼續。

So it's back to Pat, and I appreciate you taking the time to join the call, and I look forward to meeting you all again in 90 days' time. Thank you very much.

現在回到帕特，我感謝您抽出時間參加電話會議，我期待在 90 天後再次與大家見面。非常感謝。

And this concludes today's call. We appreciate your participation. You may now disconnect.

今天的電話會議到此結束。我們感謝您的參與。您現在可以斷開連接。