Moog Inc (MOG.B) 2023 Q4 法說會逐字稿

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

早安，歡迎參加穆格 2023 財年第四季財報電話會議。今天的會議正在錄製中。現在，我想把會議交給Aaron Astrachan先生。請繼續，先生。

Good morning, and thank you for joining Moog's Fourth Quarter 2023 Earnings Release Conference Call. I'm Aaron Astrachan, Director of Investor Relations. With me today is Pat Roche, our Chief Executive Officer; and Jennifer Walter, our Chief Financial Officer.

早安，感謝您參加穆格 2023 年第四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我們的執行長 Pat Roche；以及我們的財務長 Jennifer Walter。

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.

今天早些時候，我們發布了我們的業績和補充財務計劃，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。

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.

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。

Now I'm pleased to turn the call over to Pat.

現在我很高興將電話轉給帕特。

Good morning, and welcome to the call. Today, we will share an update on a superb quarter, notable for record sales, record 12-month backlog, strong operating margins and strong cash flow. It is a tremendous performance from our teams to deliver 3 consecutive quarters of record sales and to continue to drive our margin enhancement initiatives. And for that, I wish to thank our Moog employees globally who contributed to our financial performance in the quarter and the operational improvements over the last 12 months.

早安，歡迎您的來電。今天，我們將分享一個精彩季度的最新動態，其中包括創紀錄的銷售額、創紀錄的 12 個月積壓訂單、強勁的營業利潤率和強勁的現金流。我們的團隊表現出色，連續三個季度創下銷售記錄，並繼續推動我們的利潤提升計劃。為此，我要感謝全球穆格員工，他們為我們本季的財務表現以及過去 12 個月的營運改善做出了貢獻。

Before we get into the detail on the quarter, let me first reflect on what has been an exceptional year for our company. We delivered record sales, we increased operating margin and we built an all-time high 12-month backlog. We have grown revenue over 11% organically to $3.3 billion. Each of our 3 segments contributed double-digit organic growth. The growth was led by recovery in commercial aircraft by broad-based demand for our defense and space applications and by strength in our industrial automation and flight simulators.

在我們詳細介紹本季之前，讓我先回顧一下對我們公司來說不平凡的一年。我們創造了創紀錄的銷售額，提高了營業利潤，並創造了歷史最高的 12 個月積壓訂單。我們的營收有機成長超過 11%，達到 33 億美元。我們的 3 個細分市場均貢獻了兩位數的有機成長。這一增長是由商用飛機的復甦、對國防和太空應用的廣泛需求以及我們的工業自動化和飛行模擬器的實力帶動的。

In addition, we have been successful in winning new business with exceptional -- exceptionally strong order intake on the defense side of the business, increasing our total backlog to just over $5 billion. We have expanded adjusted operating margin by 70 basis points from 10.2% to 10.9%. This is notable progress and a great start to our margin enhancement journey. The effort invested in both pricing and simplification are already delivering improved financial outcomes.

此外，我們在防禦業務方面憑藉異常強勁的訂單量成功贏得了新業務，使我們的總訂單量增加到略高於 50 億美元。我們將調整後營業利潤率從 10.2% 擴大了 70 個基點至 10.9%。這是顯著的進步，也是我們提高利潤率之旅的良好開端。在定價和簡化方面投入的努力已經帶來了財務成果的改善。

Adjusted earnings per share improved by a solid 11% to $6.15 and would have been even stronger if not for increased interest costs. We certainly have had challenges through the year with supply chain and specific labor availability issues, especially in the first 2 quarters. Those challenges have eased in the back half of the year, and we saw further improvement in Q4, finishing the year with strong cash generation.

調整後每股盈餘穩定成長 11%，達到 6.15 美元，如果不是利息成本增加，這個數字還會更高。今年我們確實在供應鏈和特定勞動力供應問題上遇到了挑戰，特別是在前兩季。這些挑戰在今年下半年有所緩解，我們在第四季度看到了進一步的改善，以強勁的現金產生結束了這一年。

Now let me turn my attention to the operational actions that we are taking to drive our performance improvement. Firstly, customer focus. We have completed the separation of aircraft into military aircraft and commercial aircraft segments. The business leaders have direct responsibility for the focused factories, the dedicated staff and the production resources for their respective businesses. They are fully accountable for operational and financial performance of the business, and each leader can now better align the business model with the distinct end market needs. Our forward guidance provides you financial visibility of these new segments.

現在讓我將注意力轉向我們為推動績效改善而採取的營運行動。首先，以客戶為中心。我們已經完成了飛機分為軍用飛機和商用飛機部分的分離。業務領導者對其各自業務的重點工廠、敬業的員工和生產資源直接負責。他們對業務的營運和財務績效全面負責，每個領導者現在都可以更好地將業務模式與不同的終端市場需求結合。我們的前瞻性指引為您提供這些新細分市場的財務可見度。

We have also completed delivery of our first 4 meteorite satellites to our customer. Payload integration and testing of hardware and software have been completed successfully. This is significant progress for us in our space vehicles programs. On a further positive note, we are making progress slowing the growth of physical inventory. This is a sign of improving supply chain and labor market conditions resulting in better production flow and labor utilization. This is enabling us to better meet our customer commitments.

我們也完成了向客戶交付首批 4 顆隕石衛星。有效載荷整合和軟硬體測試已成功完成。這對我們的太空船計畫來說是重大進展。從更積極的方面來看，我們在減緩實體庫存成長方面取得了進展。這是供應鏈和勞動力市場狀況改善的標誌，從而改善了生產流程和勞動力利用率。這使我們能夠更好地履行對客戶的承諾。

Next, people, community and planet. As I stated in my first earnings call, I believe that we have a moral responsibility to be good stewards of our planet for the next generation. I want to let you know that we're making good progress in characterizing and measuring emissions, and we've already published a sustainability and disclosure report last year. We've now baselined within our own facilities worldwide our CO2 emissions, water usage and hazardous waste production. We are strongly committed to drive improvement. And I can announce today that we are targeting a 40% reduction in Scope 1 and Scope 2 greenhouse gas emissions by 2030.

接下來是人、社區和地球。正如我在第一次財報電話會議中所說，我相信我們有道德責任為下一代做好地球的管家。我想讓您知道，我們在描述和測量排放方面取得了良好進展，並且去年我們已經發布了永續發展和揭露報告。現在，我們已經在全球範圍內自己的工廠內確定了二氧化碳排放量、用水量和危險廢物產生量的基線。我們堅定地致力於推動改善。我今天可以宣布，我們的目標是到 2030 年將範圍 1 和範圍 2 溫室氣體排放量減少 40%。

Finally, turning to financial strength. We are making excellent progress in driving margin enhancement through pricing and simplification. On pricing, we have had good success working with our customers across all end markets to adjust pricing so that it better reflects the value that we deliver. Those negotiations have taken place over months, and in some cases, years, the impact is now feeding through to our financial results, notably within Industrial in the second half of the year and within aircraft in the current quarter. Those agreements already concluded, deliver a substantial portion of our planned operating margin expansion out to fiscal '26.

最後，轉向資金實力。我們在透過定價和簡化來提高利潤率方面取得了巨大進展。在定價方面，我們與所有終端市場的客戶合作調整定價，使其更好地反映我們提供的價值，並取得了良好的成功。這些談判已經進行了數月，在某些情況下甚至是數年，其影響現在正在影響我們的財務業績，特別是今年下半年的工業部門和本季的飛機部門。這些協議已經達成，我們計劃的營業利潤率擴張的很大一部分將延續到 26 財年。

On simplification, we've increased the pace of simplification throughout the organization. This is evident in various initiatives. Firstly, portfolio shaping. We are well advanced in the sale of our industrial hydraulics business in Luxembourg, which we hope to complete before the end of the second quarter fiscal '24. We will also dispose of another industrial business before the end of fiscal '24 and have consequently taken a substantial charge in this quarter.

在簡化方面，我們加快了整個組織的簡化步伐。這在各種舉措中都很明顯。首先，投資組合塑造。我們在盧森堡的工業液壓業務的出售工作進展順利，我們希望在 24 財年第二季末之前完成。我們還將在 24 財年結束前處置另一項工業業務，因此在本季度承擔了大量費用。

Footprint, we have closed 6 sites in fiscal '23, a mix of sales offices and remote engineering sites. We also sold 3 factory buildings that we had previously vacated through prior footprint closures. We announced a further 2 manufacturing site closures, the first of which we'll complete in fiscal '24.

我們在 23 財年關閉了 6 個站點，其中包括銷售辦事處和遠端工程站點。我們還出售了先前因關閉工廠而騰出的 3 棟廠房。我們宣布進一步關閉 2 個生產基地，其中第一個將在 24 財年完成。

On focused factory, we continue to segregate product by end market in order to simplify our manufacturing plants. We have several changes underway, including moving aerospace products out of our industrial facility in Murphy, North Carolina, and using the growth of our space business as an opportunity to tease apart the physical operations of our space and defense businesses since each are driven by different end market requirements. We continue to build 80/20 momentum in this quarter. Our pilots are demonstrating significant progress in both pricing and simplification. We're also seeing improvement in customer satisfaction and employee engagement. We trained a further 250 leaders in the approach. In addition, we agreed to transfer several more product lines on mature end-of-life aircraft platform to specialized third-party organizations from which we expect to see a gain in efficiency.

在重點工廠方面，我們繼續按終端市場劃分產品，以簡化我們的製造工廠。我們正在進行一些變革，包括將航空航天產品從我們位於北卡羅來納州墨菲的工業設施中移出，並利用我們的航天業務的增長作為機會來梳理我們的航天和國防業務的物理運營，因為每個業務都是由不同的驅動因素終端市場需求。我們在本季繼續建立 80/20 的勢頭。我們的試點在定價和簡化方面都取得了重大進展。我們也看到客戶滿意度和員工敬業度有所提高。我們又對 250 位領導者進行了此方法的訓練。此外，我們同意將成熟的報廢飛機平台上的更多產品線轉移給專業的第三方組織，我們希望從中看到效率的提高。

Finally, we added 2 more sites to full implementation under 80/20, bringing the total to 10.

最後，我們在 80/20 下又增加了 2 個站點來全面實施，使總數達到 10 個。

Now before I turn attention to macroeconomic environment, I'd like to share 2 further updates. First, we report a positive impact in Q4 from the settlement of litigation. We are not able to provide specifics since the terms of the settlement are confidential. We are pleased to have this concluded. Secondly, I'm also happy to report that we are making good progress on revalidating our security clearance with the Defense Counterintelligence and Security Agency. And in the meantime, we continue to work without interruption on awarded defense contracts.

現在，在我轉向宏觀經濟環境之前，我想分享兩個進一步的更新。首先，我們報告第四季訴訟和解的正面影響。由於和解條款是保密的，我們無法提供具體細節。我們很高興得出這個結論。其次，我也很高興地報告，我們在與國防反情報和安全局重新驗證我們的安全許可方面取得了良好進展。同時，我們繼續不間斷地完成已授予的國防合約。

We have submitted a mitigation plan that we believe meets the DCSA requirements as we noted previously, we expect the plan to involve standing of a subsidiary with an organizational structure and procedures to ensure the protection of classified information. We're hopeful to have the situation resolved during the next 2 quarters and we'll provide an update when we have additional information to share. As a reminder, this matter relates solely to classified U.S. military programs.

我們已經提交了一份緩解計劃，我們認為該計劃符合 DCSA 的要求，正如我們之前指出的，我們預計該計劃將涉及子公司的地位，其組織結構和程序可確保機密資訊的保護。我們希望在接下來的兩個季度內解決這個問題，當我們有更多資訊可以分享時，我們將提供更新。提醒一下，此事僅與美國機密軍事項目有關。

Now turning to macroeconomic and end market conditions. It is shocking that we now have war in Ukraine and the Middle East. Simmering geopolitical tensions are leading most nations to reassess their national security and to increase commitment to defense spending. Defense constitutes half of our book of business. The commercial aircraft market continues to strengthen. We have a clearly defined wide-body production ramp over the next few years towards 10 and 9 shipsets per month in fiscal '26 for 787 and A350, respectively. We see no change in those plans.

現在轉向宏觀經濟和終端市場狀況。令人震驚的是，烏克蘭和中東現在爆發了戰爭。一觸即發的地緣政治緊張局勢正導致大多數國家重新評估其國家安全並增加對國防開支的承諾。國防業務占我們業務的一半。商用飛機市場持續走強。我們在未來幾年內制定了明確的寬體飛機產量計劃，即 787 和 A350 在 26 財年每月分別生產 10 架和 9 架飛機。我們認為這些計劃沒有改變。

Industrial markets continue to soften, there has been a gradual reduction in book-to-bill ratio over the last 6 months. Market data such as the Manufacturing Purchasing Managers' Index and the survey data from the German Engineering Federation, our VDMA all indicate contraction. We expect this to continue and we are managing our business accordingly.

工業市場持續疲軟，過去 6 個月訂單出貨比逐漸下降。製造業採購經理指數等市場數據以及德國工程聯合會、德國機械製造業協會的調查數據均顯示收縮。我們預計這種情況將持續下去，並且我們正在相應地管理我們的業務。

Now looking forward to guidance for fiscal '24. We continue to execute on our Investor Day initiatives of growth and margin enhancement. Our fiscal '23 performance was in line with our expectations, and we are building momentum going into fiscal '24. For that reason, I'm confident in laying out our guidance for '24, which includes solid revenue growth, 4% year-over-year yielding a 7% CAGR growth from fiscal '22 to fiscal '24.

現在期待 24 財年的指導。我們繼續在投資者日執行成長和提高利潤率的舉措。我們 23 財年的表現符合我們的預期，我們正在為 24 財年積蓄動力。基於這個原因，我有信心製定我們對 24 財年的指導，其中包括穩健的收入成長，年成長 4%，從 22 財年到 24 財年的複合年增長率為 7%。

Secondly, strong margin enhancement with adjusted operating margin up 110 basis points to 12%; and thirdly, modest free cash flow. Our guidance is in line with our stated Investor Day targets, solid revenue growth, strong margin enhancement and modest cash flow. Our growth in '24 is driven by the continued commercial recovery, a full year of V-280 development, broad-based growth in Defense and Space, offset by a decline in industrial automation. We continue to execute on our pricing and simplification initiatives and we will update you on progress throughout the year on portfolio shaping, footprint rationalization and building our 80/20 maturity.

其次，利潤率大幅提升，調整後營業利益率上升 110 個基點至 12%；第三，適度的自由現金流。我們的指導符合我們既定的投資者日目標、穩健的收入成長、強勁的利潤率提升和適度的現金流。我們在 24 年的成長是由持續的商業復甦、全年的 V-280 開發、國防和航太領域的廣泛增長推動的，但被工業自動化的下降所抵消。我們將繼續執行我們的定價和簡化計劃，並將向您通報全年在投資組合塑造、足跡合理化和建立 80/20 成熟度方面的最新進展。

Now let me hand over to Jennifer for a more detailed breakdown on the quarter and on our guidance.

現在讓我請珍妮佛詳細介紹本季和我們的指導。

Thank you, Pat. I'll begin with the headlines for FY '23, followed by a more detailed review of our fourth quarter financial performance. I'll then describe our initial guidance for fiscal year '24.

謝謝你，帕特。我將從 23 財年的頭條新聞開始，然後更詳細地回顧我們第四季度的財務表現。然後我將描述我們對 24 財年的初步指導。

Sales for FY '23 were at a record level coming in at $3.3 billion. This represents a 9% increase over FY '22 and adjusting for divestitures, 11%. Each of our segments contributed to our strong sales growth. The growth in Aircraft Controls was driven by the commercial aircraft recovery, offset somewhat by declining funded development work in the military business.

23 財年的銷售額達到創紀錄的 33 億美元。這比 22 財年增長了 9%，並根據資產剝離調整後增長了 11%。我們的每個部門都為我們強勁的銷售成長做出了貢獻。飛機控制業務的成長是由商用飛機的復甦推動的，但在一定程度上被軍事業務資助的開發工作的減少所抵消。

In Space and Defense control, sales grew as a result of the production ramp on the reconfigurable turret program and strong demand for satellite components. The growth in industrial systems related to increased demand for capital equipment driving industrial automation sales as well as air traffic recovery boosting flight simulation activity.

在太空和國防控制領域，由於可重構砲塔計畫的產量增加以及對衛星零件的強勁需求，銷售額成長。工業系統的成長與推動工業自動化銷售的資本設備需求增加以及空中交通復甦促進飛行模擬活動有關。

Our adjusted operating margin of 10.9% increased 70 basis points over FY '22. In Industrial Systems, our margin expanded 200 basis points largely due to pricing initiatives. In Aircraft Controls, our margin expanded 70 basis points. Again, pricing was a key driver of margin expansion, but reduced somewhat by negative impact on military aircraft funded development work. In Space and Defense Controls, our margin contracted 40 basis points as charges in our Space Vehicles business [MAST] and otherwise stronger core business.

我們調整後的營業利益率為 10.9%，比 2022 財年增加了 70 個基點。在工業系統領域，我們的利潤率擴大了 200 個基點，這主要歸功於定價措施。在飛機控制領域，我們的利潤率擴大了 70 個基點。同樣，定價是利潤成長的關鍵驅動因素，但由於軍用飛機資助的開發工作的負面影響而下降。在太空和國防控制領域，我們的利潤率收縮了 40 個基點，因為我們的太空飛行器業務 [MAST] 和其他更強大的核心業務的成本。

As Pat described, we've made progress in both our pricing and simplification efforts. Pricing has already begun to contribute to our margin expansion in fiscal year '23. Margin loss from our early learnings in space vehicles was behind us, and we'll see that benefit come through in fiscal year '24. And simplification efforts will show up more meaningfully in the out years.

正如帕特所描述的，我們在定價和簡化工作方面都取得了進展。定價已經開始為我們 23 財年的利潤率擴張做出貢獻。我們早期在太空飛行器方面的經驗所造成的利潤損失已經成為過去，我們將在 24 財年看到這種好處。未來幾年，簡化工作將變得更有意義。

Our adjusted earnings per share of $6.15 were up 11%. This increase is driven by our adjusted operating profit, which grew 17%, offset by a significant increase in interest expense. For the year, we had negative free cash flow of $37 million. This resulted from an increase in working capital, specifically physical inventories and a high level of capital expenditures as we invest in our facilities.

調整後每股收益為 6.15 美元，成長 11%。這一增長是由我們調整後的營業利潤推動的，營業利潤增長了 17%，但被利息支出的大幅增長所抵消。今年，我們的自由現金流為負 3700 萬美元。這是由於我們投資設施時營運資本增加，特別是實體庫存和高水準資本支出。

Let's shift over to our fourth quarter results. The performance of our underlying business in the fourth quarter was exceptional. For the third quarter in a row, we hit a record level of sales for the company. Our key initiatives drove our operating margin expansion and cash flow performance was robust. We made progress on simplifying our business and took some charges in the fourth quarter as a result. We incurred $17 million of impairment and restructuring charges associated with planned portfolio and footprint rationalization activities, mostly in industrial systems.

讓我們轉向第四季的業績。第四季我們的基礎業務表現非常出色。我們連續第三個季度創下公司銷售額創紀錄的水平。我們的關鍵措施推動了營業利潤率的擴張，現金流表現強勁。我們在簡化業務方面取得了進展，並因此在第四季度收取了一些費用。我們因計劃的投資組合和足跡合理化活動（主要是工業系統）而產生了 1700 萬美元的減損和重組費用。

We also continued our journey to get out of the pension business, settling over $40 million of our projected benefit obligation through a lump sum buyout which resulted in a $13 million nonoperating settlement charge. We also recorded $4 million for unrelated asset impairments.

我們也繼續退出退休金業務，透過一次性買斷解決了超過 4,000 萬美元的預計福利義務，這導致了 1,300 萬美元的非經營性結算費用。我們也記錄了 400 萬美元的不相關資產減損。

I'll now talk through our fourth quarter, excluding these charges. Sales in the fourth quarter were $872 million, increasing 14% over the same quarter a year ago. The largest increase was in aircraft controls, sales of $377 million increased 16% over the same quarter a year ago. Commercial OE sales in the quarter were strong, driven by the continued market recovery and wide-body platforms as well as the growth on business jets.

我現在將討論我們的第四季度，不包括這些費用。第四季銷售額為 8.72 億美元，比去年同期成長 14%。增幅最大的是飛機控制領域，銷售額為 3.77 億美元，比去年同期成長 16%。在市場持續復甦、寬體平台以及公務機成長的推動下，本季商用原配設備銷售強勁。

Commercial aftermarket sales were at a record high. We had strong sales on the A350 program, which has been steadily ramping over the past several quarters. We also sold inventory associated with mature programs that we decided to exit as part of our simplification efforts. Sales in Space and Defense Controls of $241 million increased 11% over the fourth quarter last year. Adjusting for the divestiture of a security business last year, sales increased 13%, the sales growth was driven by increased activity on avionics and components for satellites and new defense work that's ramping up.

商業售後市場銷售創歷史新高。我們的 A350 專案銷售強勁，在過去幾季一直穩定成長。我們還出售了與成熟計劃相關的庫存，作為簡化工作的一部分，我們決定退出這些庫存。太空和國防控制領域的銷售額為 2.41 億美元，比去年第四季成長 11%。調整去年安全業務的剝離後，銷售額成長了 13%，銷售成長的推動因素是航空電子設備和衛星零件活動的增加以及新國防工作的增加。

Industrial System sales increased 12% to $254 million. We experienced sales growth related to high demand on flight simulation systems associated with the recovery in commercial aircraft flight hours. In addition, our industrial automation sales grew driven by demand for capital equipment. This business has recovered nicely since the pandemic, though we've been seeing orders slow down in recent quarters.

工業系統銷售額成長 12%，達到 2.54 億美元。我們的銷售成長與商用飛機飛行時間恢復相關的飛行模擬系統的高需求有關。此外，我們的工業自動化銷售額在資本設備需求的推動下成長。自大流行以來，這項業務恢復得很好，儘管我們最近幾季的訂單量有所放緩。

We'll now shift to operating margins. Operating margin adjusted of 12.5% in the fourth quarter, increased 210 basis points from the fourth quarter last year. The increase is due to pricing initiatives and to a lesser extent, transactions resulting from our focus on simplification. Operating margin in Aircraft Controls was 12.8% in the fourth quarter, up nicely from 10.7% in the same quarter a year ago.

我們現在轉向營業利潤率。第四季營業利益率調整後為12.5%，較去年第四季提高210個基點。這一增長是由於定價舉措以及在較小程度上由於我們注重簡化而產生的交易。第四季飛機控制部門的營業利益率為 12.8%，遠高於去年同期的 10.7%。

The increase was driven by retroactive pricing in the fourth quarter. In addition, as part of our 80/20 work, we've exited some mature commercial platforms and sold associated inventory. The resulting benefit to margins from that activity was offset by charges on funded development work that's winding down.

這一增長是由第四季度的追溯定價所推動的。此外，作為我們80/20工作的一部分，我們已經退出了一些成熟的商業平台並出售了相關庫存。該活動帶來的利潤收益被逐漸減少的資助開發工作的費用所抵消。

Operating margin in Space and Defense Controls was 12.8%, up from 9.4% a year ago. This quarter, we had the benefit of lower charges associated with our space vehicle start-up business, stronger core business performance and pricing initiatives. Operating margin in Industrial Systems was 11.9%, up 110 basis points over 10.8% in last year's fourth quarter. Benefits associated with our pricing initiatives drove this margin expansion. Interest expense is another area that's impacting our financial results. In the fourth quarter, interest expense was $18 million, up $7 million over the fourth quarter last year. Our adjusted effective tax rate in the fourth quarter was 18.5%, down from 23.4% in the fourth quarter last year as we benefited from higher levels of R&D tax credits.

太空與國防控制業務的營業利益率為 12.8%，高於一年前的 9.4%。本季度，我們受益於與太空船新創業務相關的費用降低、核心業務績效和定價措施更強。工業系統部門的營業利潤率為 11.9%，比去年第四季的 10.8% 上升了 110 個基點。與我們的定價措施相關的好處推動了利潤率的擴大。利息支出是影響我們財務表現的另一個領域。第四季利息支出為1800萬美元，比去年第四季增加700萬美元。由於我們受益於更高水準的研發稅收抵免，我們第四季度調整後的有效稅率為 18.5%，低於去年第四季的 23.4%。

Putting it all together, adjusted earnings per share came in at $2.10, well above the range we provided a quarter ago. EPS was up 54% from the same quarter a year ago, driven by the increase in operating profit and the benefits of the legal settlement and lower tax rate. Relative to the midpoint of our previous guidance, our EPS was up $0.03 after adjusting for the lower tax rate and legal settlement.

總而言之，調整後每股收益為 2.10 美元，遠高於我們一個季度前提供的範圍。由於營業利潤的增長以及法律和解和較低稅率帶來的好處，每股收益較去年同期增長了 54%。相對於我們先前指引的中位數，在對較低稅率和法律和解進行調整後，我們的每股盈餘上漲了 0.03 美元。

Let's shift over to cash flow, which was another highlight for the quarter. In the fourth quarter, we generated $105 million of free cash flow. This represents free cash flow conversion on adjusted net earnings of over 150%. The key driver to the strong cash generation this quarter was working capital, in particular, collections from customers and timing of compensation and vendor payments.

讓我們轉向現金流，這是本季的另一個亮點。第四季度，我們產生了 1.05 億美元的自由現金流。這意味著調整後淨利潤的自由現金流轉換率超過 150%。本季現金產生強勁的關鍵驅動因素是營運資金，特別是來自客戶的收款以及補償和供應商付款的時間表。

Capital expenditures were relatively high at nearly $50 million this quarter as work progressed on facilities, most notably our advanced integrated manufacturing facility for military aircraft. We're continuing to invest in facilities to accommodate our growth, focus our factories and enhance our capabilities through automation.

隨著設施建設的進展，尤其是我們先進的軍用飛機整合製造設施，本季的資本支出相對較高，接近 5,000 萬美元。我們將繼續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。

Our leverage ratio, calculated on a net debt basis as of the end of the fourth quarter was 2.2x, around the lower end of our target range of 2.25x to 2.75x. Our capital deployment priorities, both long term and near term, are unchanged. Our current priority continues to be investing for organic growth.

截至第四季末，以淨債務計算，我們的槓桿率為 2.2 倍，約為我們目標範圍 2.25 倍至 2.75 倍的下限。我們的資本部署優先事項，無論是長期或近期，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 our initial guidance for next year. Fiscal year 2024 will be another positive step in our journey towards our long-term financial targets. Our operating margin will expand by over 100 basis points and earnings per share will increase over 10%. Over the past several months, we have worked on creating our aircraft business into 2 segments: military aircraft and commercial aircraft. As of the beginning of FY '24, they're officially split, and we will now begin to report on them as separate segments.

我們現在將轉向明年的初步指導。 2024 財年將是我們實現長期財務目標的另一個積極步驟。我們的營業利潤率將擴大 100 個基點以上，每股盈餘將成長 10% 以上。在過去的幾個月裡，我們致力於將飛機業務分為兩個部分：軍用飛機和商用飛機。從 24 財年開始，它們正式分開，我們現在將開始將它們作為單獨的部分進行報告。

The sales breakdown that we've historically shared will largely be the same as in the new organization. I'll also share estimated operating margins for these segments looking back at FY '23. We're projecting sales of $3.5 billion in FY '24, that's a 4% increase compared to FY '23 and a 7% CAGR from FY '22. We're projecting sales growth in military aircraft, commercial aircraft and Space and Defense and expecting a decrease in sales in Industrial.

我們過去共享的銷售明細將與新組織中的基本相同。我也會分享回顧 23 財年這些部門的預計營業利潤率。我們預計 24 財年的銷售額將達到 35 億美元，與 23 財年相比成長 4%，與 22 財年相比複合年增長率為 7%。我們預計軍用飛機、商用飛機以及航太和國防領域的銷售額將會成長，而工業領域的銷售額將會下降。

The largest increase in sales will again be in commercial aircraft. We're projecting sales to grow 14% to $785 million. The production ramps on our wide-body programs, most notably the 787 account for most of the increase in OE sales. Aftermarket sales will decrease from the record high in FY '23, reflecting the absence of some onetime sales activity that occurred in FY '23.

銷量增幅最大的將再次出現在商用飛機上。我們預計銷售額將成長 14%，達到 7.85 億美元。我們的寬體機專案產量不斷增加，尤其是 787，佔原配設備銷售成長的大部分。售後市場銷售額將從 2023 財年的歷史高點下降，反映出 23 財年沒有發生一些一次性銷售活動。

Space and Defense sales are projected to increase 7% to $1.0 billion. We're seeing strong defense demand across our entire book of business. Areas in which we experienced strong demand, in particular, our satellite components, missile control and new defense programs. Military aircraft sales are projected to increase 5% to $735 million. A full year's worth of V-280 sales will drive OE sales up in FY '24. While aftermarket sales continue to soften as defense priorities shift to modernization.

太空和國防銷售額預計將成長 7%，達到 10 億美元。我們看到整個業務領域都有強勁的國防需求。我們經歷了強勁需求的領域，特別是我們的衛星零件、飛彈控制和新的防禦計畫。軍用飛機銷售額預計將成長 5%，達到 7.35 億美元。 V-280 的全年銷售將推動 24 財年原配設備銷量的成長。隨著國防重點轉向現代化，售後市場銷售持續疲軟。

Industrial sales will decrease in FY '24. We're projecting sales of $915 million, down 7% from last year or 6% when we adjust for divestitures. This decrease relates to the softening of orders that we're seeing in industrial automation and is consistent with macro indicators for capital spend. We'll see increases in our other submarkets, partially offset the lower industrial automation business.

24 財年工業銷售額將下降。我們預計銷售額為 9.15 億美元，比去年下降 7%，根據資產剝離進行調整後下降 6%。這種下降與我們在工業自動化領域看到的訂單疲軟有關，並且與資本支出的宏觀指標一致。我們將看到其他子市場的成長，部分抵消工業自動化業務的下降。

Let's shift over to operating margins. We're projecting our operating margin in FY '24 to be 12.0%, a 110 basis point increase over FY '23. Operating margins will expand in each of our segments with the exception of commercial aircraft. Our operating margin in Space and Defense will increase 300 basis points to 13.5% due to the absence of charges on our space vehicle program and reflecting our otherwise strong operational performance.

讓我們轉向營業利潤率。我們預計 24 財年的營業利益率為 12.0%，比 23 財年增加 110 個基點。除商用飛機外，我們每個細分市場的營業利潤率都將擴大。由於我們的太空船計畫沒有收費，並且反映了我們其他方面強勁的營運業績，我們在太空和國防領域的營運利潤率將增加 300 個基點，達到 13.5%。

Military aircraft operating margin will increase 280 basis points to 11.6%. We'll benefit from having a full year of activity on the V-280 program in FY '24. In FY '23, our activity was interrupted by the delay in the contract award followed by a ramp up to the current activity level. In addition, charges incurred on certain funded development programs will not repeat as those programs are winding down.

軍用飛機運作利潤率將增加280個基點至11.6%。我們將受益於 24 財年 V-280 計畫的全年活動。在 23 財年，我們的活動因合約授予的延遲而中斷，隨後又增加到目前的活動水準。此外，隨著某些資助的開發項目逐漸結束，這些項目所產生的費用將不會重複。

Pricing will continue to drive operating margin expansion in industrial controls, where our operating margin will increase 80 basis points to 12.3%. In commercial aircraft, our operating margin will decrease 260 basis points to 10.2% as aftermarket specialists don't repeat. In FY '23, we had a number of onetime aftermarket initiatives that contribute nicely to our operating margin as well as the sale of inventory upon exiting mature platforms. In FY '24, we're projecting adjusted earnings per share of $6.80, plus or minus $0.20, which is up 11% over FY '23, reflecting strong operational performance. For the first quarter, we're forecasting earnings per share to be $1.45 plus or minus $0.10.

定價將繼續推動工業控制領域營業利潤率的擴張，我們的營業利潤率將增加 80 個基點，達到 12.3%。在商用飛機方面，由於售後專家不再重複，我們的營業利潤率將下降 260 個基點至 10.2%。在 23 財年，我們實施了許多一次性售後市場舉措，這些舉措對我們的營運利潤以及退出成熟平台後的庫存銷售做出了很好的貢獻。 24 財年，我們預計調整後每股收益為 6.80 美元，上下浮動 0.20 美元，比 23 財年增長 11%，反映出強勁的營運表現。我們預計第一季每股收益為 1.45 美元上下 0.10 美元。

Finally, turning to cash. We're projecting free cash flow for FY '24 to be modest. Relative to FY '23, we'll see stronger cash from net earnings and working capital while capital expenditures remain around the same level. We use less cash for working capital needs next year. Physical inventories will grow at a slower rate, reflecting the improvement we saw this past quarter. However, we'll see pressure from customers as we work down advances that came in during FY '23. Overall, we had a great quarter and our outlook for next year looks strong.

最後，轉向現金。我們預計 24 財年的自由現金流將會適度。與 23 財年相比，我們將看到來自淨利潤和營運資本的現金更加強勁，而資本支出仍保持在同一水平。明年我們使用更少的現金來滿足營運資金需求。實體庫存將以較慢的速度成長，反映出我們上個季度看到的改善。然而，當我們處理 23 財年期間收到的預付款時，我們會看到來自客戶的壓力。總體而言，我們度過了一個出色的季度，並且我們對明年的前景看起來很強勁。

With that, we'll turn it back to Pat.

這樣，我們就把它轉回給帕特。

Thank you, Jennifer. I'm really pleased with our outstanding performance this quarter, and I look forward to another year of even stronger performance in fiscal year '24. Now let's open the floor up to questions.

謝謝你，詹妮弗。我對本季的出色表現感到非常滿意，並期待 24 財年再創更強勁的表現。現在讓我們開始提問。

(Operator Instructions). Our first question is coming from here from Cai von Rumohr with TD Cowen.

（操作員說明）。我們的第一個問題來自 Cai von Rumohr 和 TD Cowen。

Yes. Thank you very much, and good performance. Did I miss it? I didn't hear a guide for free cash flow in '24 and much color in terms of what you expect?

是的。非常感謝，表現也很好。我錯過了嗎？我沒有聽到關於 24 年自由現金流的指南，並且就您的期望而言有很多色彩？

Hi, Cai. We've -- we shared that it's going to be modest. So we're going to have positive cash flow generation next year, but it's not going to be at a robust level. That's similar to what we had projected and shared back in the Investor Day in June. Looking at some of the pieces that make up our cash flow, we're going to have adjusted net earnings that are up. That's up about $20 million, $25 million. So that's a big part of it as well. Capital expenditures will stay around the same level. We have a little bit of an increase in depreciation and amortization. But the 2 things that are going to be moving the most are both happening within working capital.

嗨，蔡。我們已經說過，這將是適度的。因此，明年我們將產生正現金流，但不會達到強勁水平。這與我們在六月投資者日的預測和分享類似。看看構成我們現金流的一些部分，我們將調整調整後的淨利。增加了約 2000 萬至 2500 萬美元。這也是其中很重要的一部分。資本支出將保持在同一水平左右。我們的折舊和攤提略有增加。但變化最大的兩件事都發生在營運資金範圍內。

The pressure that we'll see is actually going to be in receivables and advances, and it's really related to the advanced side of it for the most part. We've got great customer advances in '23, especially earlier in the year. We had it on military commercial programs. We had a nice advance on the RIP as well. We started working them down later this past year, and we're going to continue to work them down such that the combination of receivables and advances is going to be pressure for us next year.

我們將看到的壓力實際上將來自應收帳款和預付款，並且在很大程度上與預付款方面確實相關。我們在 23 年取得了巨大的客戶進展，尤其是在今年稍早。我們在軍事商業節目中使用了它。我們在 RIP 方面也取得了很大進展。去年晚些時候，我們開始對它們進行研究，我們將繼續對它們進行研究，以便應收帳款和預付款的結合將在明年給我們帶來壓力。

But the real change that we're going to see the improvement is going to be driven by our physical inventories. We had a significant use of cash for physical inventories this year, especially in the middle part of the year. But we've made improvements. In the fourth quarter, we still grew our physical inventories, but it's done obviously a nice growing business. And we've been able to slow that down for 2 reasons. We're seeing benefits on the external standpoint. We've seen some components come and shake out that we can actually get product out of the door to a greater extent than we have in the past. In addition, we've got higher utilization within the company that's helping that flow as well. So we're projecting that the use of cash for physical inventories is going to continue around the improved level that we saw in the fourth quarter for all of next year. So that really makes it a much more better situation for cash than it was in '23. Obviously, in '23, we use cash. We'll generate cash next year, but there's still pressures associated with a growing business of -- [cautious] from that standpoint.

但我們將看到的真正變化將由我們的實體庫存推動。今年，我們大量使用現金進行實體庫存，特別是在今年中期。但我們已經做出了改進。在第四季度，我們的實體庫存仍然成長，但顯然業務成長良好。我們能夠放慢速度有兩個原因。從外部角度來看，我們看到了好處。我們已經看到一些組件的出現和發展，我們實際上可以比過去更大程度地推出產品。此外，我們公司內部的利用率也更高，這也有助於實現這一目標。因此，我們預計明年全年現金用於實體庫存的使用將繼續保持在第四季度的改善水準附近。因此，這確實使現金狀況比 23 年好得多。顯然，在 23 年，我們使用現金。我們明年將產生現金，但從這個角度來看，仍然存在與業務成長相關的壓力—[謹慎]。

And Cai, that's on a path towards improvements again in fiscal '25 and '26. And as we said in Investor Day, we'd expect free cash flow at that time to be up around 75% to 100%.

蔡先生，在 25 財年和 26 財年，這種情況再次走向改善。正如我們在投資者日所說，我們預計屆時自由現金流將成長 75% 至 100% 左右。

Got it. And then basically, if you could give us where are we in terms of meteor and meteorite charges? I guess meteor has been delivered through those charges? Or do we still have exposure?

知道了。然後基本上，您能否告訴我們流星和隕石電荷的情況？我猜流星是透過這些費用交付的？或者說我們還有曝光度嗎？

We've made a lot of success, I think, Cai, in reducing the risk on those programs. As we said -- as I mentioned in my notes on the call, 3 of the units, the first -- sorry, 4 of the units, the first 4 meteorite units have shipped to the customer. They've been integrated with the customer's hardware, they've been tested, they're subject to environmental testing, and they're ready for launch. So that's a really positive step forward. So the risk is burned down significantly in those programs.

蔡，我認為我們在降低這些專案的風險方面取得了很大的成功。正如我們所說 - 正如我在通話記錄中提到的，其中 3 個單位，第一個 - 抱歉，4 個單位，前 4 個隕石單位已發貨給客戶。它們已與客戶的硬體集成，經過測試，接受環境測試，並已準備好發布。所以這是向前邁出的非常積極的一步。因此，這些計劃中的風險被大大降低了。

We haven't yet shipped a meteor satellite to the customer. They are in developments and finalization. I think it will be sometime during next year that we deliver a meteor satellite to a customer. There are some further deliveries of meteorite. I think there's another 3 units have been delivered to our customer site.

我們還沒有向客戶運送一顆流星衛星。它們正在開發和定稿中。我想我們會在明年的某個時候向客戶交付一顆流星衛星。還有一些隕石進一步交付。我認為還有另外 3 台設備已交付到我們的客戶現場。

So my summary is that we're making good progress with it, Cai. We've more and more hardware shipping through. There is still some development work ongoing. So you can say, yes, there still remains some risk, but we're not anticipating any charges.

所以我的總結是，蔡，我們在這方面取得了良好的進展。我們運送的硬體越來越多。目前仍有一些開發工作正在進行中。所以你可以說，是的，仍然存在一些風險，但我們預計不會產生任何費用。

Good. And I guess the last 2. First, can you give us any color in terms of the quarterly rollout of earnings over the year. And maybe on the industrial, you're looking for a big dip in industrial automation. How much of that is the divestitures? And how much of that is just the business softening?

好的。我猜是最後 2 個。首先，您能給我們介紹一下今年季度收益的情況嗎？也許在工業領域，您正在尋找工業自動化的大幅下降。其中有多少是資產剝離？其中有多少只是業務疲軟造成的？

The Luxembourg entities that we're looking to divest is about $15 million of revenue in total. So that's and maybe helps you characterize the piece that's being taken out of the business. We are expecting a slowdown in the industrial automation business. We've sort of signposted it for a while now that the economies are slowing down. And Germany has seen 2 quarters of basically stagnant economic growth. And so we've built that into our plans for the year. I mean, we've already -- we took some restructuring charges in this quarter. That's sort of getting ahead of that contraction in business that we're showing here, and that's what helps us maintain our profitability through the year in the industrial side.

我們打算剝離的盧森堡實體的總收入約為 1500 萬美元。因此，這也許可以幫助您描述正在從業務中剔除的部分的特徵。我們預計工業自動化業務將放緩。由於經濟正在放緩，我們已經注意到這一點已經有一段時間了。德國經濟成長已連續兩季基本停滯。因此，我們已將其納入今年的計劃中。我的意思是，我們已經在本季收取了一些重組費用。這在某種程度上提前了我們在這裡展示的業務收縮，這有助於我們在工業方面保持全年的盈利能力。

The other thing is that we will -- we've had nice margin expansion from pricing in Industrial during FY '23. We're going to build on that going into '24 as well.

另一件事是，我們將在 23 財年期間透過工業定價實現了良好的利潤率擴張。我們也將以此為基礎進入 24 年。

I mean you have the sales down. Usually, you don't account for divestiture until it's done. So have you -- is the 50 -- is your guide assume the $15 million or the $15 million from Luxembourg will take it down even further.

我的意思是你的銷量下降了。通常，在剝離完成之前，您不會對其進行會計處理。那麼，您是否認為 50 國集團的指導方針是 1500 萬美元或來自盧森堡的 1500 萬美元將使其進一步下降。

It Is only in for a short period at the beginning of the year, Cai.

蔡，這只是在年初的一小段時間。

We have it in for a quarter out of the 4.

我們已經收到了四份中的四分之一。

Okay. And the quarterly pattern, what are you looking for in the first quarter? What sort of a range?

好的。還有季度格局，第一季你看什麼？什麼樣的範圍？

So in the first quarter, we're looking for $1.45 plus or minus 10%. So it's a little bit of a slower start. We've seen that in other first quarters as well. And so that's what our numbers are telling us, and we'll share more on the second quarter as we get into the first quarter.

因此，在第一季度，我們預計將上漲或下跌 1.45 美元正負 10%。所以起步有點慢。我們在其他第一季也看到了這一點。這就是我們的數據告訴我們的，當我們進入第一季時，我們將在第二季分享更多資訊。

And we have a question coming from Michael Ciarmoli with Truist Securities.

Truist 證券公司的 Michael Ciarmoli 向我們提出了一個問題。

Real nice results. Pat or Jennifer, just -- can you give us any sense as to what the pricing true-up in commercial was in the quarter? I was thinking maybe $6 million ballpark or so? I'm just trying to get a sense of what the underlying margins are looking like in '24. Obviously, you've got that big bump here in the fourth quarter.

真正好的結果。派特或珍妮佛，您能否告訴我們本季商業廣告定價的真實情況是多少？我在想大概 600 萬美元左右吧？我只是想了解 24 年的基本利潤情況。顯然，第四季你已經有了很大的進步。

Yes. So when you look at '24, you see that our commercial margin is down because we don't have that true-up. So that is actually making up for a large portion of that.

是的。因此，當您查看 24 年時，您會發現我們的商業利潤下降了，因為我們沒有進行調整。所以這實際上彌補了很大一部分。

And there's less aftermarket in '24 as well, and the aftermarket has got good margins. So it's a mix shift as well, Michael.

24 年的售後市場也較少，但售後市場的利潤率很高。所以這也是一個混合轉變，麥可。

Okay. What was it about -- was it in that $6 million range that you took retroactively in the quarter, just so we can kind of do some rough math on it into next year?

好的。它是關於什麼的 - 是否在本季度追溯的 600 萬美元範圍內，以便我們可以在明年對其進行一些粗略的計算？

We've only a limited number of customers there, Michael. It's gotten too sensitive to be giving our actual numbers. Sorry.

邁克爾，我們那裡的顧客數量有限。它變得太敏感，無法提供我們的實際數字。對不起。

Fair enough. Got it. And then, same thing for aftermarket, I guess, good year, tough comps, you're selling some lines there. Are you seeing any changes with the underlying trends on an apples-to-apples to business is that you're keeping?

很公平。知道了。然後，對於售後市場也是如此，我想，美好的一年，艱難的競爭，你在那裡銷售一些產品線。您是否發現您所維持的業務的基本趨勢發生了任何變化？

For the commercial aftermarket?

對於商業售後市場？

Commercial -- commercial aftermarket, yes.

商業——商業售後市場，是的。

Yes. So that business, we definitely had so many specials that came in. You remember that we had specials in FY '22 and a bunch of those actually continued into '23 as well. The one part that we've seen growth in the underlying business is on the A350. And that's happened over the past few quarters. So we're still seeing that continue to grow. But most of the underlying business, I would characterize as stable with maybe that one exception.

是的。因此，在這項業務中，我們肯定有很多特價商品。您還記得我們在 22 財年有特價商品，其中許多實際上也持續到 23 財年。我們看到基礎業務成長的一部分是 A350。這就是過去幾個季度發生的事情。所以我們仍然看到它繼續增長。但我認為大多數基礎業務都是穩定的，也許只有一個例外。

And then you've got the noise, the very positive noise that we experienced in '23 associated with certain initiatives and activities that we've had on platforms that are not of a recurring kind of constant base, as well as exiting some work that we were able to sell some nice inventory outcome. So I consider it, it's stable, but there are certain elements that are growing on somewhat.

然後你會聽到噪音，我們在 23 年經歷的非常積極的噪音，與我們在平台上進行的某些舉措和活動相關，這些舉措和活動不是反復出現的恆定基礎，以及退出一些工作我們能夠出售一些不錯的庫存成果。所以我認為，它是穩定的，但有些元素正在有所增長。

And I'd agree with Jennifer's comments. I mean flight hours and fleet utilization are high again. And that's the stable part of it that's driving more business into us on the aftermarket side and the absence of the specialists that really reflected in the reduction.

我同意詹妮弗的評論。我的意思是飛行時間和機隊利用率再次很高。這是其中穩定的部分，它在售後市場方面為我們帶來了更多的業務，而專家的缺乏真正反映在減少上。

Got it. And then just back to Cai, if we take one more shot at modest cash flow. I mean the puts and takes as we can look at net income, D&A up a little bit. CapEx, it sounds like inventory still builds. I mean, it's modest $25 million. Is that kind of how we -- and I know it's consistent with what you guys called out at the Investor Day, but is that the general direction? Or is there a bigger sort of advanced repayment receivables headwind.

知道了。然後回到蔡，如果我們再嘗試一下適度的現金流。我指的是看跌期權和看跌期權，因為我們可以看看淨利潤、D&A 略有上升。資本支出，聽起來庫存仍在增加。我的意思是，這只是 2500 萬美元。我們就是這樣嗎——我知道這與你們在投資者日所呼籲的一致，但這是總體方向嗎？或是否有更大的提前還款應收帳款阻力。

Yes. The biggest thing that's going to happen is going to be the change in the physical inventories because we grew so much. As you saw during the year, we had such wide variation in our cash flows. And even this quarter, we came in higher than we were anticipating. So the timing of these things just have -- can have some decent size variability, and that's why we've limited to just saying modest. It will be cash flow -- it's not looking at $2 million of cash flow or something just close to 0, but we're not at the robust level that we'll ultimately get back to either.

是的。即將發生的最大的事情將是實際庫存的變化，因為我們成長瞭如此之多。正如您在這一年中所看到的，我們的現金流量變化很大。即使在這個季度，我們的業績也高於我們的預期。因此，這些事情的時間安排可能會有一些相當大的變化，這就是為什麼我們僅限於說適度。這將是現金流——它不是指 200 萬美元的現金流或接近 0 的現金流，但我們還沒有達到最終恢復到的強勁水平。

The big driver is going to be really in the physical inventories. We're seeing that utilization internally come through. And that feels like we're in great shape. What's happening there is there's more of the training that's happening that's getting through in our throughput. And so that's actually helping. We don't have as much turnover where we need to have more folks go through training where they've got those hours that are not efficient in it.

最大的推動力實際上將來自於實體庫存。我們看到內部利用已經實現。感覺我們的狀態很好。那裡正在發生的事情是，我們的吞吐量中正在進行更多的訓練。這實際上是有幫助的。我們沒有那麼多的人員流動，我們需要讓更多的人接受培訓，但他們的時間效率不高。

So that's definitely turning. What happens in supply chain. We saw some good news this quarter. We'll have to see how that actually comes. That's the variable that we've got with us. But we're projecting right now to be at the level of growth that we had in the fourth quarter, which was quite low compared to where it was in the first 3 quarters of the year. So that's where we are on projecting that. We'll have free cash flow generation, but we're also mindful that we're growing the business as well.

所以這肯定是轉變。供應鏈中發生了什麼事。本季我們看到了一些好消息。我們必須看看這實際上是如何發生的。這就是我們所擁有的變數。但我們現在預計將達到第四季的成長水平，與今年前三個季度相比相當低。這就是我們的預測。我們將產生自由現金流，但我們也注意到我們也在發展業務。

Got it. Got it. And then last one for me. I think, Pat, you made and Jennifer made a lot of comments, a lot of different markets. I didn't really hear much on medical. It looks like it's only going to be up about 1%. Any kind of simplification, restructuring, pricing? Anything that you can say in sort of that market in terms of what's happening '23 to '24.

知道了。知道了。然後是我的最後一張。我想，帕特，你和珍妮佛發表了很多評論，很多不同的市場。我確實沒聽過太多關於醫學的事情。看起來只會上漲1%左右。任何形式的簡化、重組、定價？關於該市場 23 至 24 年間發生的事情，您可以說任何話。

Yes. There was some realignment going on within the market with some of the distribution channels changing during the course of '23, Michael. That resulted in some flow-through of our flushing through of inventory that was in the system, and so that caused a reduction in demand on us. That's partial part of the picture that's still normalizing. That's the main thing that's going on, some changes in the market dynamics. Yes, let me stop there.

是的。邁克爾，在 23 年期間，隨著一些分銷管道的變化，市場內部正在進行一些調整。這導致我們對系統中的庫存進行了一些流動，從而導致了對我們的需求減少。這是仍在正常化的圖片的一部分。這是正在發生的主要事情，市場動態發生了一些變化。是的，讓我就此打住。

(Operator Instructions). Our next question coming from Kristine Liwag with Morgan Stanley.

（操作員說明）。我們的下一個問題來自摩根士丹利的克里斯汀·利瓦格。

This is Justin on for Kristine. You mentioned that defense is now half of the book of business. I was just hoping you could touch on maybe how you're thinking about the defense budget environment and sort of what are the baseline assumptions that underpin the outlook for next year? And what sort of maybe scenario planning you're doing given the sort of range of potential outcomes?

這是克里斯汀的賈斯汀。你提到防守現在已經佔了業務的一半。我只是希望您能談談您對國防預算環境的看法，以及支撐明年前景的基本假設是什麼？考慮到潛在結果的範圍，您正在做什麼樣的情境規劃？

Audio broke up slightly when you started the question, but I think it's around the defense budgeting for next year and is there going to be any impact if there let us say, or delays in Congress or delays in continuing resolutions. And if that was the question, Justin. We're not expecting any impact on our business next year as a result of that. That will be a transient thing that will get resolved, but it won't affect the programs that are actually running in our facilities at this time.

當你開始提問時，音訊略有中斷，但我認為這是圍繞明年的國防預算的，如果我們說，或者國會的延誤或持續決議的延誤，是否會有任何影響。如果這是問題所在，賈斯汀。我們預計明年的業務不會因此受到任何影響。這將是一個暫時的問題，將會得到解決，但它不會影響目前在我們設施中實際運作的程序。

Okay. Perfect. And just maybe back on the margin guide for '24. Is there a way to parse out sort of how much lift is coming from the pricing initiatives versus the simplification efforts?

好的。完美的。也許又回到了 24 年的利潤指南。有沒有一種方法可以分析出定價舉措與簡化工作相比有多少提升？

We haven't split that out, Justin, in detail. What we did say during the Investor Day was that the pricing activity will be coming in stronger at the front half of our program over the 3 years and the simplification activities would flow through in the latter part of the 3-year period. They take a little bit more time to execute and therefore, you see the benefit of them further downstream. So what you're seeing today and in the last 6 months or so, feeding through an industrial and aircraft group is predominantly coming from pricing activity.

賈斯汀，我們還沒有詳細地把它分開。我們在投資者日期間確實說過，定價活動將在三年內我們計劃的前半段變得更加強勁，而簡化活動將在三年期的後半段進行。它們需要更多的時間來執行，因此，您會在下游看到它們的好處。因此，您今天和過去 6 個月左右看到的情況是，工業和飛機集團的資金主要來自定價活動。

There are no additional questions in the queue. I'll turn it back to you, Pat, for any closing remarks.

隊列中沒有其他問題。帕特，我會將其轉回給您，請您發表結束語。

So thanks, everyone, for attending the call. I think we had an outstanding quarter. We're really pleased with the progress we're making on our journey, and we look forward to reporting further progress in the Q1 call, which will be my fifth earnings call. Thank you very much. Bye now.

謝謝大家參加這次電話會議。我認為我們度過了一個出色的季度。我們對我們在這過程中取得的進展感到非常滿意，我們期待在第一季電話會議中報告進一步的進展，這將是我的第五次財報電話會議。非常感謝。再見了。

This concludes today's call. Thank you for your participation. 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。