Mercury Systems Inc (MRCY) 2023 Q3 法說會逐字稿

Good day, everyone, and welcome to the Mercury Systems Third Quarter Fiscal 2023 Conference Call. Today's call is being recorded.

大家好，歡迎參加 Mercury Systems 2023 財年第三季度電話會議。今天的通話正在錄音中。

At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Senior Vice President and Interim Chief Financial Officer, Michelle McCarthy.

現在，關於開場白和介紹，我想把電話轉給公司的高級副總裁兼臨時首席財務官 Michelle McCarthy。

Please go ahead, Ms. McCarthy.

請繼續，McCarthy 女士。

Good afternoon, and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you have not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com. The slide presentation that Mark and I will be referring to is posted on the Investor Relations section of the website under Events and Presentations.

下午好，感謝您加入我們。今天和我一起的是我們的總裁兼首席執行官 Mark Aslett。如果您還沒有收到我們今天下午早些時候發布的收益新聞稿的副本，您可以在我們的網站 mrcy.com 上找到它。馬克和我將要參考的幻燈片演示發佈在網站的“投資者關係”部分的“活動和演示”下。

Turning to Slide 2 in the presentation. I'd like to remind you that today's presentation includes forward-looking statements, including information regarding Mercury's outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2 in the earnings press release and the risk factors included in Mercury's SEC filings.

轉到演示文稿中的幻燈片 2。我想提醒您，今天的演示文稿包含前瞻性陳述，包括有關 Mercury 的展望、未來計劃、目標、業務前景和預期財務業績的信息。這些前瞻性陳述受未來風險和不確定性的影響，這些風險和不確定性可能導致我們的實際結果或業績出現重大差異。所有前瞻性陳述都應與收益新聞稿中幻燈片 2 中的警示性陳述以及 Mercury 提交給 SEC 的文件中包含的風險因素一起考慮。

I'd also like to mention that in addition to reporting financial results in accordance with generally accepted accounting principles or GAAP.

我還想提一下，除了根據公認會計原則或 GAAP 報告財務結果之外。

During our call, we will also discuss several non-GAAP financial measures, specifically adjusted income, adjusted earnings per share, adjusted EBITDA, free cash flow, organic revenue and acquired revenue. A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release.

在我們的電話會議中，我們還將討論幾項非 GAAP 財務指標，特別是調整後的收入、調整後的每股收益、調整後的 EBITDA、自由現金流、有機收入和收購收入。這些非 GAAP 指標的對賬包含在今天的幻燈片演示和收益新聞稿的附錄中。

I will now turn the call over to Mercury's President and CEO, Mark Aslett. Please turn to Slide 3.

我現在將把電話轉給 Mercury 的總裁兼首席執行官 Mark Aslett。請轉到幻燈片 3。

Thanks, Michelle. Good afternoon, everyone, and thanks for joining us. I'll begin with the business update. Michelle will discuss the financials and guidance, and then we'll open it up for your questions. First, a quick note about the review of strategic alternatives we announced last quarter. The review is continuing, and we don't intend to disclose any new developments on the call today. As Michelle and I will discuss, we're running the business in the ordinary course as this process and bold and continue to execute on our strategic plan.

謝謝，米歇爾。大家下午好，感謝您加入我們。我將從業務更新開始。 Michelle 將討論財務和指導，然後我們將打開它來回答您的問題。首先，簡要說明一下我們上個季度宣布的戰略備選方案審查。審查仍在繼續，我們不打算在今天的電話會議上透露任何新進展。正如米歇爾和我將要討論的那樣，我們在這個過程中按照常規課程經營業務，並大膽並繼續執行我們的戰略計劃。

With that, let's turn to the third quarter. Revenue was above the high end and adjusted EBITDA came in at the midpoint of guidance for Q3. Bookings were in line with our expectations and our book-to-bill was 0.93. This follows 1.18 in the first half and 1.1 over the last 12 months. Q3 backlog grew 10% year-over-year.

有了這個，讓我們轉向第三季度。收入高於高端，調整後的 EBITDA 處於第三季度指導的中點。預訂量符合我們的預期，我們的訂單出貨比為 0.93。這是繼上半年的 1.18 和過去 12 個月的 1.1 之後。第三季度積壓訂單同比增長 10%。

Our largest bookings programs in the quarter were V-22, F-16, Aegis, AH-64 and a classified C4I program. We're positioned for strong bookings growth sequentially in Q4 as planned, given the timing of awards. Q3 total revenue increased 4% year-over-year as an organic revenue. Our largest revenue programs were LTAMDS, Aegis, F-16, F-35, and a classified C4I program.

本季度我們最大的預訂項目是 V-22、F-16、宙斯盾、AH-64 和一個機密的 C4I 項目。鑑於獎勵的時間安排，我們預計第四季度的預訂量將按計劃連續增長。作為有機收入，第三季度總收入同比增長 4%。我們最大的收入項目是 LTAMDS、宙斯盾、F-16、F-35 和機密的 C4I 項目。

GAAP net income and GAAP earnings per share for the third quarter exceeded our guidance due to a higher-than-expected tax benefit. Adjusted EPS and adjusted EBITDA declined year-over-year as expected. Free cash flow was positive, excluding the R&D tax impact. Looking forward to our results at the year level, we expect to deliver record bookings for fiscal '23 and a positive book-to-bill. Revenue is now expected to be flat to slightly up year-over-year, $30 million below the midpoint of prior fiscal '23 guidance due to awarded supply chain delays. Organic revenue is expected to be approximately flat year-over-year versus a 5% decline in fiscal '22. On the bottom line, we're lowering the range for GAAP net income and adjusted EBITDA by $34 million and $44 million at the midpoint. Free cash flow is expected to be around breakeven in Q4 and negative for fiscal '23. We expect lower cash outflows year-over-year, excluding the R&D tax.

由於高於預期的稅收優惠，第三季度的 GAAP 淨收入和 GAAP 每股收益超出了我們的指導。正如預期的那樣，調整後的每股收益和調整後的 EBITDA 同比下降。剔除研發稅影響後，自由現金流為正。期待我們在年度層面的業績，我們預計將在 23 財年實現創紀錄的預訂量和積極的訂單出貨比。由於供應鏈延誤，收入現在預計同比持平或略有增長，比之前 23 財年指導的中點低 3000 萬美元。有機收入預計同比大致持平，而 22 財年則下降 5%。最重要的是，我們將 GAAP 淨收入和調整後 EBITDA 的範圍降低了 3400 萬美元和 4400 萬美元的中點。自由現金流預計將在第四季度達到盈虧平衡，而 23 財年則為負。我們預計現金流出同比減少，不包括研發稅。

Turning to Slide 4. We're in our fourth fiscal year dealing with the derivative effects of the pandemic on the business. We've seen impacts in prior years on bookings and organic revenue. This year would be in the bottom line impact, primarily driven by lower margins. We're experiencing temporary margin degradation for 2 reasons: The first is a significant shift toward development programs in our business mix. And the second is the pandemic-related impact on product and program execution, especially as related to certain development programs.

轉到幻燈片 4。我們在第四個財政年度處理大流行對業務的衍生影響。我們已經看到前幾年對預訂和有機收入的影響。今年將受到利潤影響，主要是由於利潤率下降。我們正在經歷暫時的利潤率下降，原因有兩個：首先是我們業務組合中向開發計劃的重大轉變。其次是大流行對產品和項目執行的影響，尤其是與某些開發項目相關的影響。

Over the last several years, we won a significant amount of new business, both organically and through acquisitions. These wins decreased the ratio of production to development stage programs from approximately 80-20 to approximately 60-40 in fiscal '23, corresponding with the doubling in customer-funded R&D revenues. Our typical period of performance on programs, pre-pandemic was an average, approximately 18 months, far shorter than many of our customers given where we sit in the value chain. Over the course of the pandemic, this period increased to an average of approximately 30 months, driven in part by delays in development programs.

在過去的幾年中，我們通過自然發展和收購贏得了大量新業務。這些勝利將生產與開發階段項目的比例從 23 財年的大約 80-20 降低到大約 60-40，與客戶資助的研發收入翻了一番相對應。考慮到我們在價值鏈中所處的位置，我們在計劃上的典型表現期，大流行前平均約為 18 個月，遠短於我們的許多客戶。在大流行期間，這段時間增加到平均約 30 個月，部分原因是開發計劃的延遲。

In the initial phase, development programs typically carry gross margins in the low- to mid-30s on average. In comparison, more mature production programs gross margins are above 40% on average. Although this elevated ratio of development-stage programs has pressured margins over the past couple of years and more significantly in fiscal '23. These programs will drive Mercury's future growth as they transition into production.

在初始階段，開發項目的平均毛利率通常在 30 多歲左右。相比之下，較為成熟的製作節目毛利率平均在40%以上。儘管在過去幾年中，開發階段項目的這種高比例對利潤率造成了壓力，並且在 23 財年更為顯著。這些計劃將在過渡到生產過程中推動 Mercury 的未來增長。

We expect to see a meaningful margin expansion also as they transition and our mixed returns to pre-pandemic levels. The second contributor to margin degradation, as I mentioned, is the pandemic-related impacts on execution, supply chain delays and inefficiencies, long semiconductor lead times, tight labor markets and inflation have resulted in cost growth impacting both direct costs and R&D.

我們預計，隨著它們的轉型和我們的混合回報率恢復到大流行前的水平，我們也會看到有意義的利潤率擴張。正如我提到的，導致利潤率下降的第二個因素是大流行病對執行的影響、供應鏈延遲和效率低下、半導體交貨時間長、勞動力市場緊張和通貨膨脹導致成本增長影響直接成本和研發。

In terms of R&D, Mercury is a leveraged commercial investment model focus on developing sophisticated new technologies and products. These highly differentiated capabilities are then used across multiple DoD programs. The cost growth we're experiencing is associated with certain new technology developments that are nearing completion and new product introductions, which are taking longer than planned. The higher costs are related to both labor as well as materials driven by labor and supply chain inefficiencies, manufacturing constraints and inflation. Approximately a dozen or so of our 300-plus active programs have been affected. In over 2 of the affected programs, more than 90% complete in terms of the total expected costs incurred. The good news is that once we completely develop into new product introduction activities, multiple programs will quickly benefit due to our product program leverage model.

在研發方面，Mercury 是一種槓桿商業投資模式，專注於開發尖端的新技術和產品。這些高度差異化的能力隨後被用於多個國防部項目。我們正在經歷的成本增長與某些即將完成的新技術開發和新產品的推出有關，這比計劃的時間要長。更高的成本與勞動力以及由勞動力和供應鏈效率低下、製造限制和通貨膨脹驅動的材料有關。我們的 300 多個活動項目中大約有十幾個受到了影響。在超過 2 個受影響的項目中，超過 90% 的項目完成了預期的總成本。好消息是，一旦我們完全開展新產品介紹活動，由於我們的產品計劃槓桿模型，多個計劃將迅速受益。

We expect these programs to complete over the next 2 to 3 quarters and transition to production-based contracts thereafter. This transition should lead to stronger fiscal '24 results, not only improved gross margins and adjusted EBITDA as cost pressures diminish, but also lower working capital as we quickly relieve unbilled receivables through shipment, invoicing and cash collections.

我們預計這些計劃將在接下來的 2 到 3 個季度內完成，然後過渡到基於生產的合同。這種轉變應該會帶來更強勁的 24 財年業績，不僅會隨著成本壓力的減少而提高毛利率和調整後的 EBITDA，還會降低營運資金，因為我們通過裝運、開票和收款迅速解除未開票的應收賬款。

As I said previously, our challenges are not related to end market demand, which remains strong. They're largely timing and cost related, they're short term, and they're not unique to Mercury. We're focused on controlling what we can in this environment given the technologies that we developed and the programs that we've won. Structurally, our business model and financial outlook are sound, and we're very optimistic about the future.

正如我之前所說，我們的挑戰與仍然強勁的終端市場需求無關。它們在很大程度上與時間和成本相關，它們是短期的，而且它們並不是水星獨有的。鑑於我們開發的技術和我們贏得的項目，我們專注於控制我們在這種環境中所能做的事情。從結構上講，我們的商業模式和財務前景良好，我們對未來非常樂觀。

We expect margins to naturally return to pre-pandemic levels as we overcome current execution challenges and as the supply chain conditions continue to normalize. Further margin expansion will follow is the late-stage development programs transition to production, and as we return to a more normal 80/20 business mix over time.

隨著我們克服當前的執行挑戰以及供應鏈狀況繼續正常化，我們預計利潤率自然會恢復到大流行前的水平。隨著後期開發計劃向生產的過渡，以及隨著時間的推移我們恢復到更正常的 80/20 業務組合，利潤率將進一步擴大。

Turning to Slide 5. We now have Alan Catcher on board as Head of Execution Excellence, Mitch Stevenson now leading our Mission Systems business, and Roger Wells continue to lead microelectronics. Under their leadership, we're driving continuous improvements in new product development, supply chain, operations and program execution. New leadership was instrumentally in clarifying the magnitude and timing of our late-stage development challenges. We're making progress on the engineering development challenges and manufacturing yields began to improve by the end of the third quarter.

轉到幻燈片 5。我們現在有 Alan Catcher 擔任卓越執行主管，Mitch Stevenson 現在領導我們的任務系統業務，Roger Wells 繼續領導微電子業務。在他們的領導下，我們正在推動新產品開發、供應鏈、運營和項目執行方面的持續改進。新的領導層在闡明我們後期發展挑戰的規模和時間安排方面發揮了重要作用。我們在工程開發挑戰方面取得了進展，到第三季度末製造產量開始提高。

We expect this progress to continue in Q4 and fiscal '24, allowing for final program execution. In addition, we're through the first phase of our business systems integration in Torrance, California, the former POC. This was delayed largely due to core-related travel restrictions and is on track to be completed in the fourth quarter. Completing these integration activities will increase our visibility across the business especially with respect to program execution and related labor and material costs as well as working capital. The Platform Systems business we built through a series of acquisitions over time, of which Torrance is the largest part to some amazing capabilities. In addition to the work that we've done around our secure processing and trusted microelectronics, we expect it to deliver long-term growth in the business.

我們預計這一進展將在第四季度和 24 財年繼續，從而允許最終計劃執行。此外，我們在加利福尼亞州托倫斯（前 POC）完成了業務系統集成的第一階段。這主要是由於與核心相關的旅行限製而被推遲，並有望在第四季度完成。完成這些整合活動將提高我們在整個業務領域的知名度，尤其是在項目執行、相關勞動力和材料成本以及營運資金方面。隨著時間的推移，我們通過一系列收購建立了平台系統業務，其中 Torrance 是最大的部分，具有一些驚人的能力。除了我們圍繞安全處理和可信微電子所做的工作外，我們還希望它能帶來業務的長期增長。

Although we made progress on the income statement in Q3, we still have more work to improve our balance sheet and cash flow. We expect that our impact program, together with improved execution will lead to increased margins, a reduction in inventory and unbilled receivables, resulting in improved cash flow.

儘管我們在第三季度的損益表上取得了進展，但我們在改善資產負債表和現金流方面還有更多工作要做。我們預計我們的影響計劃以及改進的執行將導致利潤率增加、庫存和未開票應收賬款減少，從而改善現金流。

Turning to Slide 6 and the industry operating environment, which continues to improve incrementally. Employee hiring at Mercury continued to outpace attrition in Q3 and the supply chain is beginning to flow more smoothly. We saw fewer supply decommits this quarter with some suppliers delivering ahead of plan. Semiconductors is still affecting program timing and efficiency, although to a lesser extent. Semiconductor processor lead times peaked in Q1 of fiscal '23 at 52 to 99 weeks and now range from 13 to 78 weeks prior to the pandemic, the average 10 to 12. Although current lead times on average are getting shorter, constraints in certain areas are still affecting new product development and program execution. We don't expect a significant improvement in lead times until the second half of fiscal '24.

轉向幻燈片 6 和行業運營環境，它繼續逐步改善。 Mercury 的員工招聘在第三季度繼續超過流失率，供應鏈開始更加順暢。本季度我們看到供應減少，一些供應商提前交付。半導體仍在影響程序時間和效率，儘管影響程度較小。半導體處理器的交貨時間在 23 財年第一季度達到峰值，為 52 至 99 週，現在在大流行前的 13 至 78 週之間，平均為 10 至 12 週。儘管目前的平均交貨時間越來越短，但某些領域的限制仍然存在仍然影響著新產品的開發和程序的執行。我們預計在 24 財年下半年之前交貨時間不會有顯著改善。

Semiconductor inflationary pressures remain a challenge also. In the third quarter, for example, we made approximately $10 million of end-of-life related semiconductor purchases where the prices increased nearly 9x. Our 1MPACT program launched in early fiscal '22 has continued to evolve and deliver positive results. We've streamlined our organizational structure and significantly strengthened our leadership team. We pushed margin expansion and working capital efficiency initiatives deeper into the business. In this inflationary environment, we're passing on higher costs wherever we can, and we've raised prices across the board on the commercial microelectronics side of the business. We're improving R&D investment effectiveness and consolidating our manufacturing facility footprint. Our digital transformation efforts in engineering, operations in the back office should also help improve our cost structure over time.

半導體通脹壓力仍然是一個挑戰。例如，在第三季度，我們進行了大約 1000 萬美元的與報廢相關的半導體採購，價格上漲了近 9 倍。我們在 22 財年早期啟動的 1MPACT 計劃不斷發展並取得了積極成果。我們精簡了組織結構並顯著加強了領導團隊。我們將利潤擴張和營運資本效率計劃更深入地推進到業務中。在這種通貨膨脹的環境中，我們盡可能地轉嫁更高的成本，並且我們已經全面提高了商業微電子業務方面的價格。我們正在提高研發投資效率並鞏固我們的製造設施足跡。隨著時間的推移，我們在工程、後台運營方面的數字化轉型努力也應該有助於改善我們的成本結構。

Turning to Slide 7. We believe the defense spending outlook remains positive. The defense appropriations bill approved last year as well as the President's budget request target substantial spending growth related to national security issues as well as continued support for Ukraine. An extended budget continuing resolution appears to be the base case scenario for government fiscal '24, including the potential for a full year CR. However, given the geopolitical environment, there appears to be strong bipartisan support for increased defense spending. Domestic and international defense spending is expected to grow in both the short and longer term, and we believe that Mercury is well positioned to benefit from secular industry trends. We've seen continued growth in demand for compute capability on board military platforms and an ongoing push for platform electronification.

轉到幻燈片 7。我們認為國防開支前景仍然樂觀。去年批准的國防撥款法案以及總統的預算請求目標是與國家安全問題相關的支出大幅增長以及對烏克蘭的持續支持。延長預算的持續解決方案似乎是政府財政 '24 的基本情景，包括全年 CR 的可能性。然而，考慮到地緣政治環境，兩黨似乎都強烈支持增加國防開支。國內和國際國防開支預計在短期和長期內都會增長，我們相信 Mercury 處於有利地位，可以從長期行業趨勢中受益。我們已經看到對軍用平台計算能力的需求持續增長，以及對平台電子化的持續推動。

We're also starting to benefit from supply chain delayering and reshoring as well as increased outsourcing by our customers at the subsystem level. Our addressable market has increased substantially, largely driven by our strategic move into platform systems and the potential to deliver innovative processing solutions at chip scale. Our model sitting at the intersection of high tech and defense positions us well. As we announced in March, Christine Fox Harbison has joined us as Chief Growth Officer to help capture these opportunities. Christine is an impressive track record of driving growth, developing new markets and building successful partnerships in defense and commercial technology businesses. We're very pleased to welcome Christine to the Mercury team.

我們也開始受益於供應鏈延遲和回流以及我們的客戶在子系統級別增加的外包。我們的可尋址市場大幅增長，這在很大程度上是由於我們向平台系統的戰略轉移以及提供芯片級創新處理解決方案的潛力。我們的模型位於高科技和國防的交匯處，使我們處於有利地位。正如我們在 3 月份宣布的那樣，Christine Fox Harbison 已加入我們擔任首席增長官，以幫助抓住這些機會。 Christine 在推動增長、開發新市場以及在國防和商業技術業務中建立成功的合作夥伴關係方面有著令人印象深刻的記錄。我們非常高興地歡迎 Christine 加入 Mercury 團隊。

With that, I'd like to turn the call over to Michelle. Michelle?

有了這個，我想把電話轉給米歇爾。米歇爾？

Thank you, Mark, and good afternoon, again, everyone. I'll start with our third quarter results and then move to our fiscal '23 guidance and Q4 guidance.

謝謝馬克，大家下午好。我將從我們的第三季度業績開始，然後轉向我們的 23 財年指導和第四季度指導。

Please turn to Slide 8, which details the Q3 results. Mercury's revenue and net income exceeded the high end of our guidance, while adjusted EBITDA came in at the midpoint. Total bookings for Q3 were $245 million, yielding a book-to-bill of 0.93 as expected. Bookings linearity was still weighted heavily in the third month of the quarter, but improved versus the first half. Our total backlog was up 10% and 12-month backlog was up 9% compared to Q3 last year.

請轉到幻燈片 8，其中詳細介紹了第三季度的結果。 Mercury 的收入和淨收入超過了我們指導的上限，而調整後的 EBITDA 則處於中點。第三季度的總預訂量為 2.45 億美元，預訂出貨比為 0.93，符合預期。本季度第三個月的預訂線性度仍然很重要，但與上半年相比有所改善。與去年第三季度相比，我們的總積壓訂單增加了 10%，12 個月的積壓訂單增加了 9%。

We're entering the fourth quarter with forward coverage of over 80% and solid visibility to the remaining bookings required to achieve our forecasted Q4 revenues. Q3 revenue was approximately $263 million, up $10 million or 4% on a total and organic basis as compared to $253 million in Q3 '22. Avalex and Atlanta Micro are now included in organic revenue, having completed their fourth full fiscal quarter since being acquired. Gross margins for the third quarter decreased to 34.3% from 39.4% in Q3 last year.

我們正在進入第四季度，前瞻性覆蓋率超過 80%，並且對實現我們預測的第四季度收入所需的剩餘預訂具有可靠的可見性。第三季度收入約為 2.63 億美元，與 22 年第三季度的 2.53 億美元相比，總收入和有機收入增長 1000 萬美元或 4%。 Avalex 和 Atlanta Micro 現在包括在有機收入中，已經完成了自被收購以來的第四個完整財政季度。第三季度的毛利率從去年第三季度的 39.4% 下降至 34.3%。

The decline was partially offset by savings in operating expenses primarily within R&D as a higher proportion of engineers continue to incur direct labor on development programs. As Mark mentioned, over the last several quarters, we've consistently cited 2 key drivers of lower gross margins. First, a higher concentration of development program revenues in our mix. And second, the derivative effects of the pandemic, resulting in program execution delays, there is a close correlation between these 2 drivers that warrants a finer point.

這一下降被主要在研發中的運營費用節省部分抵消，因為更高比例的工程師繼續在開發項目中承擔直接勞動力。正如 Mark 所提到的，在過去幾個季度中，我們一直引用 2 個導致毛利率下降的關鍵驅動因素。首先，我們的組合中開發計劃收入的集中度更高。其次，大流行的衍生影響，導致程序執行延遲，這兩個驅動因素之間存在密切相關性，值得更細化。

In fiscal '19 through fiscal '21, we achieved a significant level of design wins, both organically and through acquisition, especially as related to the physical Optics Corporation acquisition. These design wins were predominantly within secure processing and mission avionics, 2 of our key strategic growth areas and translated into development contracts in our backlog. The onset of COVID in fiscal '20 and the transition to remote work added latency to our development efforts.

在 19 財年到 21 財年，我們通過有機和收購取得了顯著的設計勝利，尤其是與光學公司收購相關的設計。這些設計勝利主要在安全處理和任務航空電子設備中，這是我們的兩個關鍵戰略增長領域，並轉化為我們積壓的開發合同。 20 財年 COVID 的出現和向遠程工作的過渡增加了我們開發工作的延遲。

Slightly thereafter, supply chain delays began to limit availability of critical components followed by the great resignation, which created labor constraints across a number of our program executing functions. We began to see some margin reduction in fiscal '21 and fiscal '22, partially offset by lower R&D expenses as more engineers charge labor directly to these development programs.

此後不久，供應鏈延遲開始限制關鍵組件的可用性，隨後是大辭職，這在我們的許多程序執行功能中造成了勞動力限制。我們開始看到 21 財年和 22 財年的利潤率有所下降，但隨著越來越多的工程師直接向這些開發項目收取勞動力，研發費用的減少部分抵消了這一點。

This resulted in increased levels of CRAD as discussed in many of our prior earnings calls and public filings. The higher engineering labor content, coupled with low unit volume on most development programs contributes to average gross margins in the low- to mid-30s on these programs.

正如我們之前的許多財報電話會議和公開文件中所討論的那樣，這導致了 CRAD 水平的增加。較高的工程勞動力含量，加上大多數開發項目的低單位產量，導致這些項目的平均毛利率在 30 年代中期左右。

This compares to average gross margins of about 40% across our production programs. As Mark mentioned, our proportion of development program revenue has nearly doubled from approximately 20% in fiscal '21 to approximately 40% in fiscal '23. While the mix shift alone created initial pressure on gross margin, the derivative effects of the pandemic created concurrent execution delays and inefficiencies. The delays resulted in many of our largest development programs entering final testing and qualification in fiscal '23. We have encountered technical challenges as is typical for this stage across a dozen or so of our development programs.

相比之下，我們整個生產項目的平均毛利率約為 40%。正如馬克所提到的，我們在發展計劃收入中所佔的比例幾乎翻了一番，從 21 財年的約 20% 增加到 23 財年的約 40%。雖然僅組合轉變就對毛利率造成了初始壓力，但大流行的衍生效應造成了並發執行延遲和效率低下。這些延誤導致我們許多最大的開發項目在 23 財年進入最終測試和資格認證。在我們的十幾個開發項目中，我們遇到了這一階段典型的技術挑戰。

The resulting cost growth has a compounding impact on gross margin given that many of our active development programs are predicated on firm fixed-price contracts. Remediating these challenges has required incremental labor and material both of which have experienced inflation over the last several years. More specifically, the cost growth incurred in the testing and qualification stage of these development programs resulting in higher scrap charges as well as more senior engineering labor charges when the units did not yield as expected.

由此產生的成本增長對毛利率產生了複合影響，因為我們的許多積極的開發計劃都以固定價格合同為基礎。解決這些挑戰需要增加勞動力和材料，這兩者在過去幾年都經歷了通貨膨脹。更具體地說，這些開發項目的測試和鑑定階段發生的成本增長導致更高的報廢費用以及更多的高級工程人工費用，因為這些單位沒有達到預期的產量。

In accordance with GAAP, we continuously reassess our estimates to complete on these programs based on changes in facts and circumstances. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions require a cumulative catch-up of prior program margin performance. This resulted in an outsized impact in the quarter in which the changes in estimate were identified across these development programs.

根據 GAAP，我們根據事實和情況的變化不斷重新評估我們對完成這些計劃的估計。估計的變化是追溯應用的，當確定估計合同成本的調整時，此類修訂需要對先前計劃利潤率表現的累積追趕。這對本季度產生了巨大的影響，在該季度中確定了這些開發計劃中的估計變化。

As Mark mentioned, nearly all of the dozen or so development programs that have contributed to the fiscal '23 cost growth are nearing completion in the next 2 to 3 quarters. Completing these programs will not only rebalance our revenue and margin profile as we shift back to a production-weighted contract mix will also reduce susceptibility to cost growth across our program portfolio.

正如馬克所提到的，幾乎所有對 23 財年成本增長做出貢獻的十幾個開發項目都將在未來 2 到 3 個季度內接近完成。完成這些項目不僅會重新平衡我們的收入和利潤率，因為我們會轉向生產加權合同組合，還會降低我們項目組合中成本增長的敏感性。

As a frame of reference, historically, we experienced minimal changes in our cost to complete estimate. Through Q3, outside of these dozen development programs, we continue to experience the same trend of minimal changes in these estimates across the nearly 300 other active programs we manage. As we complete these development programs over the next 2 to 3 quarters, we will apply the lessons learned to the follow-on production contracts as well as development programs in our backlog to support more stable cost to complete estimates going forward.

作為參考框架，從歷史上看，我們完成估算的成本變化很小。通過第三季度，除了這十幾個開發項目之外，我們在我們管理的近 300 個其他活動項目中繼續經歷這些估計的最小變化的相同趨勢。當我們在接下來的 2 到 3 個季度完成這些開發計劃時，我們會將吸取的教訓應用到後續生產合同以及我們積壓的開發計劃中，以支持更穩定的成本來完成未來的估算。

As such, we expect to see improved gross margins, not only from the mix shift to production-based contracts but also due to the recovery from cost growth specific to these programs. In addition, where possible, we are seeking cost plus fixed fee structures on new development programs partially mitigating the impact of cost growth on future program execution. From a working capital perspective, these dozen or so programs have been a significant primary and secondary source of growth in unbilled receivables. We expect their completion in the next 2 to 3 quarters to allow for the billing and cash collection of nearly $30 million. Even more importantly, we have many other programs that leverage the same underlying technology or product or otherwise require the same specialized engineering resources currently consumed by these development programs.

因此，我們預計毛利率將有所提高，這不僅來自於向基於生產的合同的組合轉變，還因為從這些項目特有的成本增長中復蘇。此外，在可能的情況下，我們正在尋求新開發項目的成本加固定費用結構，以部分減輕成本增長對未來項目執行的影響。從營運資本的角度來看，這十幾個項目一直是未開票應收賬款增長的重要主要和次要來源。我們預計它們將在接下來的 2 到 3 個季度內完成，以便計費和收取近 3000 萬美元的現金。更重要的是，我們還有許多其他項目利用相同的基礎技術或產品，或者需要這些開發項目當前消耗的相同專業工程資源。

Therefore, as they are completed, manufacturing yields will improve across the shared technology or product and engineering resources will be redistributed across multiple other programs. We expect this to allow for the billing and cash collection of an additional $60 million of unbilled receivables.

因此，隨著它們的完成，共享技術或產品的製造產量將提高，工程資源將在多個其他項目中重新分配。我們預計這將允許額外 6000 萬美元的未開票應收賬款的開票和現金收款。

In summary, our fiscal year '23 gross margins have been pressured by both the proportion of development programs in our mix as well as execution challenges across a dozen or so of these programs, nearly all of which will complete in the next 2 to 3 quarters. We expect that overcoming these challenges will not only return us to a more normal, higher margin production contract mix, but also improved execution across multiple other programs. As a result, we expect to see improved gross margin as well as the release of over $90 million in unbilled receivables, resulting in improved cash flow and overall working capital level.

總而言之，我們 23 財年的毛利率受到開發項目在我們組合中的比例以及十幾個項目的執行挑戰的壓力，幾乎所有這些項目都將在未來 2 到 3 個季度完成.我們預計，克服這些挑戰不僅能讓我們恢復到更正常、利潤率更高的生產合同組合，而且還能改善多個其他項目的執行。因此，我們預計毛利率將有所提高，並釋放超過 9000 萬美元的未開票應收賬款，從而改善現金流和整體營運資金水平。

Q3 GAAP net income increased to $5.2 million or $0.09 per share from $4.1 million or $0.07 per share in Q3 last year due to a tax benefit of over $10 million in the quarter. We calculated Q3 income taxes using the discrete method, a more appropriate methodology given our year-to-date and expected fourth quarter results. Our third quarter operating and pretax results were lower year-over-year. due to the lower gross margins just discussed as well as higher interest expense. Adjusted EBITDA in Q3 was $43.5 million compared with $52.5 million last year, again, due to lower gross margin. Our adjusted EBITDA margins were 16.5% in the quarter.

由於本季度超過 1000 萬美元的稅收優惠，第三季度 GAAP 淨收入從去年第三季度的 410 萬美元或每股 0.07 美元增加到 520 萬美元或每股 0.09 美元。我們使用離散方法計算了第三季度的所得稅，考慮到我們今年迄今和預期的第四季度結果，這是一種更合適的方法。我們第三季度的運營和稅前業績同比下降。由於剛剛討論的較低的毛利率以及較高的利息支出。第三季度調整後的 EBITDA 為 4350 萬美元，而去年同期為 5250 萬美元，這也是由於毛利率較低。本季度我們調整後的 EBITDA 利潤率為 16.5%。

Free cash flow for the third quarter was an outflow of approximately $13 million, including the first payment of $19 million related to the change in R&D tax legislation. Excluding this, free cash flow would have been an inflow of nearly $7 million, better than our expectations of near breakeven entering the quarter.

第三季度的自由現金流流出約 1300 萬美元，其中包括與研發稅法變更相關的第一筆付款 1900 萬美元。排除這一點，自由現金流將流入近 700 萬美元，好於我們進入本季度時接近盈虧平衡的預期。

Slide 9 presents Mercury's balance sheet for the last 5 quarters. From a capital structure perspective, our balance sheet remains strong. We ended Q3 with cash and cash equivalents of $64 million. We have $511.5 million of funded debt under our $1.1 billion revolver, which provides us with significant financial flexibility. We observed a 30% reduction in supplier decommits in Q3. While this is a positive indicator of stabilization in the supply chain, it resulted in material receipts of $20 million more than planned for the quarter. This is reflected in the growth in unbilled receivables as well as inventory for the quarter. To some extent, it is also driving an increase in accounts payable, given the timing of certain receipts later in the quarter.

幻燈片 9 展示了 Mercury 過去 5 個季度的資產負債表。從資本結構的角度來看，我們的資產負債表依然強勁。我們以 6400 萬美元的現金和現金等價物結束了第三季度。我們的 11 億美元循環貸款下有 5.115 億美元的融資債務，這為我們提供了顯著的財務靈活性。我們觀察到第 3 季度供應商退訂數量減少了 30%。雖然這是供應鏈穩定的積極指標，但它導致本季度的材料收入比計劃多 2000 萬美元。這反映在本季度未開票應收賬款和庫存的增長上。在某種程度上，考慮到本季度晚些時候某些收款的時間，這也推動了應付賬款的增加。

Turning to cash flow on Slide 10. Although we saw more timely customer payment patterns reducing our billed receivables, this was more than offset by growth in our unbilled receivables, primarily as a result of development program execution challenges. In addition, some of the snapback with suppliers I just mentioned resulted in higher Q3 cash outflows. We leveraged our receivables factoring arrangement at levels similar to the prior quarter to help offset these impacts.

轉向幻燈片 10 上的現金流。雖然我們看到更及時的客戶付款模式減少了我們的應收賬款，但這被我們未開票應收賬款的增長所抵消，這主要是由於開發計劃執行挑戰。此外，我剛才提到的與供應商的一些回購導致第三季度現金流出量增加。我們利用與上一季度相似水平的應收賬款保理安排來幫助抵消這些影響。

Working capital continues to grow as a percentage of sales, largely driven by increased unbilled receivables and inventory. As discussed, we expect continued progress toward development program completion over the next 2 to 3 quarters. This should serve as a catalyst for the start of a significant reduction in unbilled receivables and improved cash flows extending through fiscal year '24. In addition, with the supply chain beginning to normalize and various impact initiatives progressing, we expect to have greater visibility predictability and control over inventory.

營運資金佔銷售額的百分比繼續增長，這主要是受未開票應收賬款和存貨增加的推動。正如所討論的那樣，我們預計在接下來的 2 到 3 個季度中，我們將繼續朝著完成開發計劃的方向前進。這應該成為開始大幅減少未開票應收賬款和改善現金流的催化劑，持續到 24 財年。此外，隨著供應鏈開始正常化和各種影響舉措的推進，我們期望對庫存有更高的可見性、可預測性和控制。

As a result, we continue to believe an appropriate target for working capital as a percentage of sales is 35%, consistent with pre-pandemic levels.

因此，我們仍然認為營運資金佔銷售額的適當目標是 35%，與大流行前的水平一致。

I'll now turn to our financial guidance, starting with full fiscal year '23 on Slide 11. The demand environment was strong in the first 9 months of fiscal '23 and getting stronger as we begin the fourth quarter. To reiterate, we expect record bookings and a positive book-to-bill for the year.

我現在轉向我們的財務指導，從幻燈片 11 的整個 23 財年開始。需求環境在 23 財年的前 9 個月很強勁，並且在我們開始第四季度時變得更加強勁。重申一下，我們預計今年的預訂量將創歷史新高，而且訂單出貨比為正。

Entering the fiscal year, we expect completion of these development programs in the first half with the follow-on higher-margin production awards throughout the second half. This supported higher revenue, improved gross margins and strong operating leverage in the second half and especially in the fourth quarter. Based on the development program execution challenges and related cost growth experienced to date, we are adopting a more cautious outlook for the remainder of fiscal '23.

進入本財年，我們預計上半年將完成這些開發計劃，並在下半年完成後續的高利潤生產計劃。這支持了下半年（尤其是第四季度）更高的收入、更高的毛利率和強勁的經營槓桿。基於迄今為止所經歷的開發計劃執行挑戰和相關成本增長，我們對 23 財年的剩餘時間持更加謹慎的展望。

Our fiscal '23 guidance for total company revenue is now $990 million to $1.01 billion. This represents flat to 2% growth year-over-year and approximately flat organic growth compared with a 5% decline in fiscal '22. The reduction from our prior revenue guidance reflects award and funding delays, including follow-on production awards associated with our development program as well as continued supply chain delays. GAAP results are now expected to be a net loss for fiscal '23 in the range of $19 million to $11.1 million with GAAP loss per share of $0.34 to $0.20. We now expect fiscal '23 adjusted EBITDA in the range of $160 million to $170 million, down 18% at the midpoint from last year. Adjusted EPS is now expected to be in the range of $1.36 to $1.50 per share. We now expect negative free cash flow for the fiscal year, both with and without approximately $30 million of cash outflows related to R&D tax legislation.

我們對公司總收入的 23 財年指導現在為 9.9 億美元至 10.1 億美元。與 22 財年下降 5% 相比，這表示同比增長持平至 2%，有機增長大致持平。與我們之前的收入指導相比的減少反映了獎勵和資金延遲，包括與我們的開發計劃相關的後續生產獎勵以及持續的供應鏈延遲。 GAAP 結果現在預計 23 財年的淨虧損在 1900 萬美元至 1110 萬美元之間，每股 GAAP 虧損為 0.34 美元至 0.20 美元。我們現在預計 23 財年調整後的 EBITDA 在 1.6 億美元至 1.7 億美元之間，較去年中點下降 18%。調整後的每股收益現在預計在每股 1.36 美元至 1.50 美元之間。我們現在預計本財年的自由現金流為負，無論是否有與研發稅收立法相關的大約 3000 萬美元的現金流出。

I'll now turn to our fourth quarter guidance on Slide 12. For the fourth quarter, we currently expect revenue in the range of approximately $269 million to $289 million. At the midpoint, this is a decline of about 4% year-over-year. Our revenue forecast for the fourth quarter is well supported by our existing backlog with over 80% coverage entering the quarter and strong line of sight to the remaining Q4 bookings.

我現在將轉向幻燈片 12 上的第四季度指導。對於第四季度，我們目前預計收入在大約 2.69 億美元至 2.89 億美元之間。從中點來看，這比去年同期下降了約 4%。我們現有的積壓訂單很好地支持了我們對第四季度的收入預測，進入本季度的覆蓋率超過 80%，並且對剩餘的第四季度預訂有很強的預期。

We expect gross margins to increase in Q4 as we complete certain of the late-stage development programs as discussed. We also expect to see improved operating leverage on higher revenue. We expect Q4 GAAP net income to range from $1.2 million to $9.1 million. We expect fourth quarter adjusted EBITDA to be $49.6 million to $59.6 million, representing adjusted EBITDA margins of approximately 20% of revenue at the midpoint.

我們預計第四季度的毛利率會隨著我們完成所討論的某些後期開發計劃而增加。我們還期望看到更高的收入會改善運營槓桿。我們預計第四季度 GAAP 淨收入在 120 萬美元至 910 萬美元之間。我們預計第四季度調整後的 EBITDA 為 4960 萬美元至 5960 萬美元，調整後的 EBITDA 利潤率約為中點收入的 20%。

Looking ahead to fiscal '24 and beyond. Mercury is well positioned for stronger growth, margin expansion and improved working capital. We expect our current backlog and strong fleet of existing programs coupled with increased defense spending to drive a return to high single-digit to low double-digit revenue growth.

展望 24 財年及以後。 Mercury 處於有利地位，可以實現更強勁的增長、利潤率的擴張和營運資本的改善。我們預計，我們目前的積壓工作和強大的現有項目群，加上國防開支的增加，將推動收入恢復到高個位數到低兩位數的增長。

On the bottom line, as our mix transitions from the current weighting of development programs, the higher-margin production contracts. We expect to see a natural uplift in gross margin throughout fiscal '24. In addition, as the margin headwinds from certain of our existing development contracts subside, we expect to see further improvement in gross margins. At the same time, continued supply chain normalization will position us to begin rebalancing the timing of material receipts with the availability of labor, allowing us to meet our customer performance obligations in a more efficient manner resulting in improved working capital levels. Finally, we expect continued impact savings to support margin expansion and improved cash flows in fiscal '24 and over the longer term.

歸根結底，隨著我們的組合從當前開發計劃的權重轉變，利潤率較高的生產合同。我們預計整個 24 財年的毛利率將自然提高。此外，隨著我們某些現有開發合同的利潤逆風消退，我們預計毛利率將進一步改善。與此同時，持續的供應鏈正常化將使我們能夠開始重新平衡材料接收的時間與勞動力的可用性，使我們能夠以更有效的方式履行客戶的履約義務，從而提高營運資金水平。最後，我們預計在 24 財年和長期內，持續的影響儲蓄將支持利潤率擴張和現金流改善。

With that, I'll now turn the call back over to Mark.

有了這個，我現在將把電話轉回給馬克。

Thanks, Michelle. Turning now to Slide 13. Demand is strong and getting stronger as we begin the fourth quarter of fiscal '23. For the year, we expect to deliver record bookings and a positive book-to-bill. We're positioned for continued progress and a rebound in fiscal '24 as we push our development programs across the finish line and transition to production. Overall execution improves and the supply chain conditions continue to normalize. Driven by stronger growth, higher EBITDA margins and substantially improved working capital and cash flow, we believe next fiscal year will begin a longer-term period of improved financial performance for Mercury.

謝謝，米歇爾。現在轉到幻燈片 13。隨著我們開始 23 財年第四季度，需求強勁並且越來越強勁。今年，我們預計將實現創紀錄的預訂量和積極的訂單出貨比。隨著我們將開發計劃推向終點線並過渡到生產，我們已準備好在 24 財年繼續取得進展和反彈。整體執行力得到改善，供應鏈狀況繼續正常化。在更強勁的增長、更高的 EBITDA 利潤率和大幅改善的營運資金和現金流的推動下，我們相信下一財年將開始 Mercury 財務業績改善的長期時期。

Looking out over the next 5 years, we're well positioned to benefit from increased defense spending, both domestically and internationally. As a result, we believe that Mercury can and will continue to grow organically at high single digits to low double digits.

展望未來 5 年，我們完全有能力從國內和國際國防開支的增加中獲益。因此，我們相信 Mercury 能夠並將繼續以高個位數到低兩位數的有機增長。

In addition to growth, our 5-year plan includes margin expansion driven by better execution as the supply chain conditions normalize, the shift in mix from development to production as well as continued improvement through impact. These tailwinds should lead to stronger profitability as well as greater working capital efficiency and cash conversion over time. In closing, I'd like to extend my appreciation to the entire Mercury team which is committed and working extremely hard to deliver improved results, my sincere thanks to all of you.

除了增長之外，我們的 5 年計劃還包括隨著供應鏈條件正常化、更好的執行力推動利潤率增長、從開發到生產的組合轉變以及通過影響力持續改進。隨著時間的推移，這些順風應該會帶來更強的盈利能力以及更高的營運資本效率和現金轉換。最後，我想對整個 Mercury 團隊表示感謝，他們致力於並非常努力地工作以提供更好的結果，我衷心感謝你們所有人。

Before we turn it over to Q&A, I ask that you please keep your questions focused on our earnings results.

在我們將其轉為問答環節之前，請您將問題集中在我們的收益結果上。

With that, operator, please proceed with the Q&A.

那麼，接線員，請繼續進行問答。

(Operator Instructions) Your first question comes from the line of Peter Arment with Baird.

（操作員說明）您的第一個問題來自 Peter Arment 與 Baird 的對話。

I guess -- I appreciate the details you kind of explained in development mix growing and kind of the derivative effects of the pandemic, and what you've talked about. I just -- what I'm trying to understand is that a lot of those things were kind of known 3 months ago that your development mix was growing and you were still dealing with all these lingering effects. And I'm just trying to understand like kind of the change from what the implied guidance was of potentially 31% adjusted EBITDA for the fourth quarter 3 months ago to now 18% to 21%. Just help me try to understand our lease bridge kind of the dynamics there.

我想——我很欣賞你在發展組合增長和大流行的衍生影響中所解釋的細節，以及你所談論的內容。我只是——我想了解的是，很多事情在 3 個月前就已經為人所知，你的開發組合正在增長，而你仍在處理所有這些揮之不去的影響。我只是想了解從 3 個月前第四季度潛在 31% 的調整後 EBITDA 到現在的 18% 到 21% 的隱含指導的變化。只是幫助我嘗試了解我們的租賃橋那裡的動態。

So big picture, I think as we were coming into the year, we were expecting that these development programs would be further along than what we currently are, right, as a result of some of the technical challenges. And we've experienced the cost growth associated with that. And as a result of the delays, Peter, we've also seen some follow-on award delays of high-margin business.

如此大的圖景，我認為當我們進入這一年時，由於一些技術挑戰，我們預計這些開發計劃將比我們目前的計劃更進一步，對吧。我們經歷了與此相關的成本增長。由於延遲，彼得，我們還看到了一些高利潤業務的後續獎勵延遲。

So it's really kind of the there's 2 things, right? The later-than-expected completion on the development programs with higher costs, plus a knock-on impact for higher-margin production awards that we're expecting in the second half. So those are the 2 main drivers. The other one is that I think we also have seen some supply chain cost availability constraints that have affected certain business in the fourth quarter as well.

所以這真的有兩件事，對吧？成本較高的開發項目的完成時間晚於預期，加上我們預計下半年利潤率較高的生產獎勵的連鎖影響。所以這些是兩個主要驅動因素。另一個是我認為我們也看到了一些供應鏈成本可用性限制，這些限制也影響了第四季度的某些業務。

Just if I could, as a follow-up, Mark, does this change how you approach just sort of bidding on some of these larger development programs in the future just because it sounds like -- these were technically challenging. Just what's your approach there?

作為後續行動，馬克，如果我可以的話，這是否會改變你在未來對一些更大的開發項目進行投標的方式，只是因為這聽起來像是——這些在技術上具有挑戰性。你的方法是什麼？

Yes. So I mean, if you look at our model, Peter, right, we've got a product program, commercial investment leverage model. And prior to the pandemic, right, we've done a really good job, I think, in developing new capabilities and quickly and cost effectively and then sharing those capabilities over multiple programs.

是的。所以我的意思是，如果你看看我們的模型，彼得，對，我們有一個產品計劃，商業投資槓桿模型。在大流行之前，對，我認為我們在開發新功能方面做得非常好，並且快速且具有成本效益，然後在多個項目中共享這些功能。

What we're experiencing here is a very small fraction of the overall program portfolio. So as Michelle mentioned, it's about a dozen programs of the 300 active programs that we are currently managing. And the products go into multiple programs. So when you've got one issue, it affects multiple things. So it's the opposite of the leverage that we have when things are working well. That being said, we are nearing the late stages in terms of the development, test and qualification, and we do believe that once we get through it, you'll start to see things move much more quickly.

我們在這裡遇到的只是整個項目組合的一小部分。正如米歇爾提到的那樣，我們目前正在管理的 300 個活躍項目中大約有十幾個項目。產品進入多個程序。因此，當您遇到一個問題時，它會影響多件事。因此，這與我們在一切順利時所擁有的槓桿作用相反。話雖這麼說，我們在開發、測試和資格方面已接近後期階段，我們相信一旦我們通過它，你就會開始看到事情進展得更快。

Today, most of the types of contracts that we have are actually firm fixed-price contracts with only about 10% being cost plus fixed fee. And so where possible and where it makes sense on new development programs, we'll clearly seek to move towards the cost plus fixed rate structure. But it really does need to make sense depending upon the type of business and the actual business that we're pursuing largely because of our investment model. So we're far along on them. It's unfortunate that it's happened, but the critical capabilities tied to really important programs.

今天，我們擁有的大多數合同類型實際上都是固定價格合同，只有大約 10% 是成本加固定費用。因此，在可能且對新開發計劃有意義的情況下，我們將明確尋求轉向成本加固定費率結構。但它確實需要根據業務類型和我們在很大程度上由於我們的投資模型而追求的實際業務來理解。所以我們離他們還很遠。不幸的是，它發生了，但關鍵功能與真正重要的程序相關。

Your next question comes from the line of Seth Seifman with JPMorgan.

你的下一個問題來自摩根大通的 Seth Seifman。

I guess, Mark, can you tell us maybe I don't know if it's only a dozen programs, maybe the top 5 or 6 programs that are driving this?

我想，馬克，你能告訴我們我不知道是否只有十幾個程序，也許是前 5 或 6 個程序正在推動這個？

So we're not going to get into the specifics because the capabilities that where we're in the final stages of development are specialized in nature and we don't want to specifically link them to known DoD programs. But it is a very unique set of capabilities that we're producing. And I think they're very, very important in terms of the programs in which they're going into. So unfortunately, I can't really disclose too much asset.

所以我們不打算深入細節，因為我們處於開發最後階段的能力本質上是專門的，我們不想將它們專門鏈接到已知的 DoD 程序。但這是我們正在生產的一組非常獨特的功能。而且我認為，就他們要參加的項目而言，他們非常非常重要。所以不幸的是，我真的不能透露太多資產。

Okay. So they are classified programs?

好的。所以它們是機密程序？

Not classified, but linking certain technologies into programs, just given what we're doing is not something that we would normally disclose.

沒有機密，但將某些技術鏈接到程序中，只是考慮到我們正在做的事情不是我們通常會披露的事情。

Okay. Okay. And then maybe just the last point on this, and I'll pass along is in terms of these programs moving towards production, as Mercury kind of finishes its work on the development, presumably, you're supplying it to a prime contractor. Is there further technical risk on these programs that's out of your hands, as to when the customer is going to call on you to get going on production once you guys have executed on your part of the development work?

好的。好的。然後也許只是關於這一點的最後一點，我將傳遞的是這些程序轉向生產，因為 Mercury 已經完成了它的開發工作，大概是你將它提供給了主承包商。這些程序是否存在您無法控制的進一步技術風險，例如一旦你們執行了您的開發工作，客戶何時會要求您開始生產？

No, I don't believe so, Seth. I think the assumes that we can ship these products, our customers are going to take them because they need them for the work that they're doing. So I don't believe that there's any additional risk or delays associated with that. We've literally just got to get through the -- finishing up the development efforts and ramping up the new product introduction yields, which we began to see at the end of Q3. So hopefully, on the ones that are most important, we're already seeing the progress.

不，我不相信，賽斯。我認為假設我們可以運送這些產品，我們的客戶將接受它們，因為他們需要它們來完成他們正在做的工作。所以我認為這不會帶來任何額外的風險或延誤。從字面上看，我們必須完成 - 完成開發工作並提高新產品推出產量，我們在第三季度末開始看到這一點。因此，希望在最重要的方面，我們已經看到了進展。

Your next question comes from the line of Ken Herbert with RBC.

你的下一個問題來自 RBC 的 Ken Herbert。

Maybe, Mark, just to stay on these. As you think about the progress in terms of retiring the risk on these development and other development programs, what's your assumption for -- again, for the sort of the working capital relief in fiscal '24? I mean how much of a tailwind can this be? Is it possible to quantify that prior to official '24 guidance, but I think that -- the impact on cash, I think, would be very important as we think about the next year.

也許，馬克，只是為了堅持這些。當您考慮在消除這些開發和其他開發計劃的風險方面取得的進展時，您對 24 財年營運資本減免的假設是什麼？我的意思是這會有多大的順風？是否有可能在 24 年官方指導之前對其進行量化，但我認為——我認為，在我們考慮明年時，對現金的影響將非常重要。

Yes. Let me just talk -- let me just -- it's a good question, Ken. Let me maybe kind of take it down a level in terms of just the issues and kind of what we're doing. And then I'll throw it over to Michelle, who can talk about just the impact -- the positive impact that we potentially see with respect on bill. So at a working level, there are 2 late-stage products that are in development and new product introduction activities associated with them.

是的。讓我談談——讓我談談——這是一個很好的問題，肯。讓我就問題和我們正在做的事情將其降低一個級別。然後我會把它交給米歇爾，她可以談談影響——我們可能看到的對法案的積極影響。因此，在工作層面，有 2 個處於開發階段的後期產品以及與之相關的新產品推出活動。

As I mentioned, because of our product program leverage model are affecting multiple programs, and the first one, as I said, it's a very unique, one-of-a-kind sort of capabilities that's used across multiple programs. And so in the second and third quarter, we conducted a very extensive root cause analysis.

正如我所提到的，由於我們的產品程序槓桿模型正在影響多個程序，而第一個，正如我所說，它是一種非常獨特的、獨一無二的功能，可用於多個程序。因此，在第二季度和第三季度，我們進行了非常廣泛的根本原因分析。

Our customer in the U.S. government have actually agreed with our conclusions and the corrective actions that we've implemented. And so at this point, we're actually monitoring the actions for effectiveness and adjusting as we need to, to actually improve the product yields and throughput, which is kind of the stage that we're currently at.

我們在美國政府的客戶實際上已經同意我們的結論和我們已經實施的糾正措施。因此，在這一點上，我們實際上正在監控行動的有效性並根據需要進行調整，以實際提高產品產量和吞吐量，這就是我們目前所處的階段。

So we're now currently ramping up the production in phases. And just to give you a perspective of the progress that we made in Q3, albeit it's later than what we would have hoped and anticipated, we've gone from 0% yield on this particular product variant to now almost 90% against the program requirements. And we're actually on track to build tens of systems in the first half of the fourth quarter. And I think as Michelle had said, we're obviously applying lessons learned to ensure that these things don't happen in the future.

因此，我們目前正在分階段提高產量。只是為了讓您了解我們在第三季度取得的進展，儘管比我們希望和預期的要晚，但我們已經從這個特定產品變體的 0% 產量提高到現在接近 90% 的項目要求.我們實際上有望在第四季度的前半段構建數十個系統。我認為正如米歇爾所說，我們顯然正在吸取教訓，以確保這些事情不會在未來發生。

I will say that it's a very, very sophisticated technology that hasn't been done before. So that one, we're actually pretty far ahead on. The other one we've had an extremely strong collaboration internally. This enabled us to actually address some of the manufacturing issues, and we actually have returned to (inaudible) production. However, as we did that, we actually experienced another issue at the end of Q3 on one of the variants that in turn is affecting multiple programs. On that one, we actually expect to deploy a software fix to resolve the issue in Q4.

我會說這是一項非常非常複雜的技術，以前從未有人做過。所以那個，我們實際上遙遙領先。另一個我們在內部進行了非常強大的合作。這使我們能夠真正解決一些製造問題，並且我們實際上已經恢復到（聽不清）生產。然而，當我們這樣做時，我們實際上在第三季度末遇到了另一個問題，其中一個變體反過來影響了多個程序。在那個問題上，我們實際上希望部署一個軟件修復程序來解決第四季度的問題。

So you can kind of tell just where we're at, that we really are at the final stage is development and qual, which will then obviously allow us to ramp production, deliver the products and then invoice and collect cash. And so with that, just as a little bit of a background, why don't I hand it over to Michelle because these programs account for a significant amount of the unbilled receivables that we've got on the balance sheet? Michelle?

因此，您可以說出我們所處的位置，我們確實處於開發和質量的最後階段，這顯然將使我們能夠提高產量、交付產品，然後開具發票並收取現金。因此，作為一點背景，我為什麼不把它交給米歇爾，因為這些項目佔了我們資產負債表上的大量未開票應收賬款？米歇爾？

Yes. Thanks, Mark. Yes. From a working capital perspective, the completion of kind of the dozen or so programs that we referenced will result in a reduction of about $30 million coming out of unbilled as we ship that product. And we think some of that release will occur in Q4, but occurring much later than we had originally expected, obviously, coming into the quarter. So we're going to see that cash convert more likely in Q1 of '24 and Q2 of '24. But almost more importantly is just when we complete these dozen or so programs because of that shared technology product or need for those same specialized engineering resources across multiple other programs. Those other programs are essentially waiting in line, right? And so there's another $60 million of unbilled receivables that's waiting for release.

是的。謝謝，馬克。是的。從營運資金的角度來看，完成我們提到的十幾個項目中的一個項目，將導致我們運送該產品時未開票的金額減少約 3000 萬美元。我們認為其中一些發布將在第四季度發布，但顯然比我們最初預期的要晚得多，進入本季度。因此，我們將更有可能在 24 年第一季度和 24 年第二季度看到現金轉換。但幾乎更重要的是，當我們完成這十幾個項目時，因為共享技術產品或需要跨多個其他項目的相同專業工程資源。那些其他程序本質上是在排隊，對吧？因此，還有 6000 萬美元的未開票應收賬款正在等待釋放。

So once we can resolve the technology issues or the common product issues, and we distribute those engineers to these other programs. There's another $50 million that we can convert to cash, which we believe will convert also in fiscal '24. So really where you're going to see that working capital impact across these programs is around that unbilled release. And when you take that $90 million and think about what it means from a working capital perspective, it's a 10% reduction when you're looking at kind of trailing 12-month revenues.

因此，一旦我們能夠解決技術問題或常見產品問題，我們就會將這些工程師分配給這些其他項目。我們還可以將另外 5000 萬美元轉換為現金，我們相信它也將在 24 財年轉換為現金。因此，您真正會看到這些項目對營運資金的影響是圍繞著那個未開票的版本。當你拿出這 9000 萬美元並從營運資金的角度考慮這意味著什麼時，當你查看過去 12 個月的收入時，它減少了 10%。

Your next question comes from the line of Jonathan Ho with William Blair.

你的下一個問題來自 Jonathan Ho 與 William Blair 的對話。

I guess one thing I wanted to understand a little bit better is that in terms of the program dependencies and specifically around the yield issues that you've been experiencing, like how do you think about sort of the ability to remediate this? And then maybe what gives you the confidence that in FY '24, we'll actually see these issues resolved as opposed to maybe a continuation. Just want to get a little bit more clarity around this.

我想我想更好地理解一件事是，就程序依賴性而言，特別是圍繞您一直遇到的產量問題，比如您如何看待修復此問題的能力？然後也許是什麼讓你有信心在 24 財年，我們實際上會看到這些問題得到解決，而不是繼續下去。只是想更清楚地了解這一點。

Yes. So again, as I kind of mentioned in the last question, Jonathan, we're pretty far along. We're a root cause in the -- one that is probably been the most impactful. And the customer agrees were actually -- have already begin to ramp up production in phases and the yields have improved dramatically in the third quarter. Now we wished it actually has happened earlier than that. Because again, the fact that we weren't able to deliver it sooner has resulted in some of the follow-on awards not occurring in the time line that we previously anticipated.

是的。所以，正如我在上一個問題中提到的那樣，喬納森，我們已經取得了相當大的進展。我們是 - 一個可能最具影響力的根本原因。客戶同意實際上 - 已經開始分階段提高產量，第三季度產量大幅提高。現在我們希望它真的早於那發生。再一次，因為我們無法更快地交付它，導致一些後續獎勵沒有在我們之前預期的時間線內發生。

The second issue with respect to this product, we've already begun to ramp one of the variants in production which is fine, and we're just waiting for a software fix for the second, which is teed up for the fourth quarter. So I think we're firing up along that we know what's going on with these programs, these technologies that are shared across multiple programs. And the fact that one -- and there will be shipping products literally in the first month and the second month of the quarter to the programs that our customers need the capabilities. So I think we've done enough work to understand where we're at. We've got to root cause ramping up production and the customers need the capability. So I think we've got a high degree of confidence. The other thing that if you step back and you just look at these dozen programs that Michelle mentioned, all the 2 of the programs were actually more than 90% complete in terms of the total expected cost, and we expect for these programs to be completed within the next 2 to 3 quarters in total. So I think we're actually in a pretty good position.

關於這個產品的第二個問題，我們已經開始在生產中增加一個變體，這很好，我們只是在等待第二個的軟件修復，這是為第四季度準備的。所以我認為我們正在努力，因為我們知道這些程序正在發生什麼，這些技術在多個程序之間共享。事實上，在本季度的第一個月和第二個月，我們的客戶需要這些功能的程序將真正運送產品。所以我認為我們已經做了足夠的工作來了解我們所處的位置。我們必須從根本上提高產量，而客戶需要這種能力。所以我認為我們有很高的信心。另一件事，如果你退後一步，看看米歇爾提到的這十幾個項目，就總預期成本而言，所有這兩個項目實際上都完成了 90% 以上，我們希望這些項目能夠完成總共在接下來的 2 到 3 個季度內。所以我認為我們實際上處於一個非常好的位置。

And I guess one final point is that it's the first time that we've experienced this level of volatility. I think we've got a -- we went back and kind of looked at the history of our estimates to complete across the very large portfolio of programs, and we've seen very minimal turbulence over the course of the last 3 years. So it's a confluence of events, very sophisticated technology, but hopefully, we're near the end here.

我想最後一點是，這是我們第一次經歷這種程度的波動。我認為我們已經 - 我們回過頭來看看我們估計的歷史，以完成非常大的項目組合，並且在過去 3 年的過程中我們看到的動盪非常小。所以這是一個事件的匯合，非常複雜的技術，但希望我們已經接近尾聲了。

Your next question comes from the line of Sheila Kahyaoglu with Jefferies.

你的下一個問題來自 Sheila Kahyaoglu 與 Jefferies 的合作。

It's Scott on for Sheila. Mark, we always thought of Abaco as kind of one of your closest competitors in the space and AMETEK reported this morning and like they pointed to Abaco is seeing pretty strong growth with margin expansion. I guess the natural question from that is just is there any market share shift happening in the market? And I know it's difficult to comment on other businesses, but is there any color you might have into what's driving that delta and performance?

斯科特替希拉上場。馬克，我們一直認為 Abaco 是您在該領域最接近的競爭對手之一，阿美特克今天早上報導說，就像他們指出的那樣，Abaco 的增長非常強勁，利潤率也在擴大。我想由此產生的自然問題是市場上是否正在發生任何市場份額變化？而且我知道很難對其他業務發表評論，但是您對推動該增量和績效的因素有什麼看法嗎？

Yes. So as we said, Scott, right, it really related to this dozen or so sets of programs where we're developing highly sophisticated technologies and capabilities that fan out over multiple programs. it really ties to 2 things, just the development, engineering development delays associated with the capabilities and then ramping those new products into production. So we don't think it's related to anything with respect to erosion of margins with respect to competition or anything like that. It's literally related to cost growth on the programs as we are going through these specific challenges.

是的。所以正如我們所說，Scott，對，它確實與這十幾套程序有關，我們正在開發高度複雜的技術和功能，這些技術和功能會分散到多個程序中。它實際上與兩件事有關，只是開發，與功能相關的工程開發延遲，然後將這些新產品投入生產。因此，我們認為這與競爭或類似的利潤率侵蝕無關。當我們經歷這些具體挑戰時，它實際上與項目的成本增長有關。

Michelle, I don't know if you want to add anything to that?

米歇爾，我不知道你是否想補充什麼？

No. I would just highlight the continued strong demand that we have. You can see it through our bookings, although Q3 was below 1, it was as expected. And year-to-date, we're above 1 as we have been for quite some time for several of the last few quarters.

不，我只想強調我們的持續強勁需求。你可以通過我們的預訂看到它，雖然Q3低於1，但符合預期。年初至今，我們在過去幾個季度中已經有相當長的一段時間高於 1。

Your next question comes from the line of Michael Ciarmoli with Truist Securities.

你的下一個問題來自 Truist Securities 的 Michael Ciarmoli。

Mark, I just got to go back to Peter's first question. I still don't understand how EBITDA got cut 45% in 90 days. I mean you're talking about these 12 programs, things you thought in the beginning of the year, but I mean, this was just 90 days ago. You had given us this implied fourth quarter I mean, is there anything else happening? Was that just an aggressive view? And I guess more on the EACs, are they captured here? Can you tell us what the negative EACs were?

馬克，我要回到彼得的第一個問題。我仍然不明白 EBITDA 是如何在 90 天內減少 45% 的。我的意思是你在談論這 12 個程序，你在年初想到的事情，但我的意思是，這只是 90 天前。你給了我們這個隱含的第四季度，我的意思是，還有其他事情發生嗎？那隻是一種激進的觀點嗎？我想更多關於 EAC，他們是在這裡捕獲的嗎？你能告訴我們負 EAC 是什麼嗎？

Sure. So look, if you go back to it, as I mentioned, right, entering the fiscal year, we'd expect the development of these programs in the first half. with follow-on higher-margin production awards expected in the second half. It's set of circumstances that basically supported the higher revenues, improved gross margin and strong operating leverage that we forecast in the second half and especially in the fourth quarter. The challenges that we've had, obviously, is that it's taking us longer to get the development assets across the goal line that is not only affected the estimates and the cost to complete in Q3, which is a cumulative catch-up, but as a result of those delays, it had an impact on follow-on awards also back at higher-margin follow-on awards in the fourth quarter, which combined is -- counts for roughly 2/3 of the overall growth.

當然。所以看，如果你回到它，就像我提到的那樣，進入財政年度，我們預計這些項目將在上半年得到發展。預計下半年將獲得後續更高利潤的生產獎勵。這些情況基本上支持了我們預測的下半年，尤其是第四季度的更高收入、更高的毛利率和強勁的經營槓桿。顯然，我們面臨的挑戰是，我們需要更長的時間才能使開發資產跨越目標線，這不僅影響了估計和第三季度完成的成本，這是一個累積的追趕，而且由於這些延遲，它對後續獎勵產生了影響，在第四季度也以更高利潤率的後續獎勵回歸，合計約佔整體增長的 2/3。

The other is related to supply chain availability part on other programs. So Michelle, I don't know if you want to talk a little bit about why the impact was so large in the third quarter. And just from an accounting perspective, how it is that you've actually got a taking into account the changes in estimates in a particular period.

另一個與其他程序的供應鏈可用性部分有關。所以米歇爾，我不知道你是否想談談為什麼第三季度的影響如此之大。從會計的角度來看，您實際上是如何考慮到特定時期的估計變化的。

Yes, sure. So Mark, as you said, the drop is really a function of the execution delays on the development program. So it's pushing those follow-on production awards outside of the fiscal year and into and then the incremental cost that we are expecting, not all of it program specific at this point, planning for unknown unknowns in some cases, right? That is just a one-for-one drop-through, right, to adjusted EBITDA because again, it's a cumulative catch-up. And then as you said, there's supplier commitments have put kind of critical material receipts needed for the quarter outside of the required window.

是的，當然。所以馬克，正如你所說，下降實際上是開發程序執行延遲的一個函數。因此，它將那些後續生產獎勵推到財政年度之外，然後推入我們預期的增量成本，目前並非所有計劃都是特定的，在某些情況下計劃未知的未知數，對嗎？這只是調整後 EBITDA 的一對一下降，對吧，因為這又是一個累積的追趕。然後正如您所說，供應商承諾已將本季度所需的某種關鍵材料收據放在所需窗口之外。

So we are in constant communication with suppliers. And although we have seen some level of reduction in decommits. We are constantly getting updates from those suppliers. And in some cases, what we found was that those commits were pushing out to a point where we could not complete the product or progress it to a point where we would be able to recognize the revenue.

因此，我們一直與供應商保持溝通。儘管我們已經看到退役數量有所減少。我們不斷從這些供應商那裡獲得更新。在某些情況下，我們發現這些承諾被推遲到我們無法完成產品或將其推進到我們能夠確認收入的地步。

But I mean -- but I guess on January 31, I mean, this seems like a pretty risky forecast you gave us, expecting all this to get across the finish line. I mean all of this just manifested in the last 90 days, though.

但我的意思是 - 但我想在 1 月 31 日，我的意思是，這似乎是你給我們的一個非常冒險的預測，期望所有這一切都能跨越終點線。不過，我的意思是所有這一切都只是在過去 90 天內體現出來的。

So we've been wrestling with the development and the team was making progress. But then like any other late-stage development as you're kind of moving into not new product into the actual NPI stage. We were -- we had challenges with the yield. It's a very sophisticated technology that we couldn't get the technology through the NPI process yielding in a way in which we previously expected. So the engineering development was actually complete, but we couldn't actually get it through the production processes.

所以我們一直在努力開發，團隊正在取得進展。但是，就像任何其他後期開發一樣，您正在進入實際的 NPI 階段，而不是新產品。我們 - 我們在產量方面遇到了挑戰。這是一項非常複雜的技術，我們無法通過 NPI 流程以我們之前預期的方式獲得該技術。所以工程開發實際上已經完成了，但我們實際上無法通過生產過程來獲得它。

We've gone from -- I mean it's hard to actually forecast 0% yield. None of the engineering of the production team was expecting that. So over the course of Q3, we went from 0% yield to actually exiting the quarter at 90% yield on one of the primary products and capabilities. Then we had the issue on the other product variant, which we actually began to ramp as the quarter progressed and then hit a soft west snack.

我們已經 - 我的意思是很難實際預測 0% 的收益率。生產團隊的工程人員都沒有預料到這一點。因此，在第三季度的過程中，我們的一種主要產品和功能從 0% 的收益率變成了實際以 90% 的收益率退出本季度。然後我們在其他產品變體上遇到了問題，我們實際上隨著季度的進展開始增加，然後推出了軟西部小吃。

So it's literally late-stage development, new product in production and qual issues that obviously, we guided at the time with the best possible information with respect to what would happen and things just got pushed to the right. So the forecast was accurate coming in. And as we experience these issues, we needed to step back and look at the estimates to complete, which is why you see the changes in Q3.

因此，從字面上看，這是後期開發、生產中的新產品和質量問題，很明顯，我們當時以關於將要發生的事情和事情被推向正確的最佳信息作為指導。所以預測是準確的。當我們遇到這些問題時，我們需要退後一步，看看要完成的估計，這就是為什麼你會看到第三季度的變化。

Yes. Mike, I would also just add one of the examples that Mark just went through, we had execution underway earlier in the year. But because we got to that kind of test and qualification point, we didn't meet performance back. The nature of the units meant that we had to scrap them in their entirety. There was no salvaging of the units. And these are pretty meaningful scrap events, tens of thousands of dollars every time they occur, every unit. So there was significant rework needed at that point. We have the most senior engineers on our team working through it.

是的。邁克，我還要添加馬克剛剛經歷過的一個例子，我們在今年早些時候進行了執行。但是因為我們達到了那種測試和資格點，所以我們沒有達到性能要求。這些單元的性質意味著我們必須將它們全部廢棄。沒有搶救單位。這些都是非常有意義的報廢事件，每次發生數万美元，每個單位。因此，此時需要進行大量返工。我們團隊中最資深的工程師正在努力解決這個問題。

And so as you can imagine, higher labor costs because of the seniority of those engineers. And then the material costs that are needed to recover are actually at inflated cost values, right, because they're more recent material purchases. So it's very dynamic in terms of how the issues are being resolved. And as Mark said, we can make our best estimate in terms of what yield will be. But again, it's very dynamic. It has changed really throughout Q3, and it's the new facts and circumstances that are now reflected in our results for the year.

所以你可以想像，由於這些工程師的資歷，勞動力成本更高。然後需要恢復的材料成本實際上是虛高的成本值，對，因為它們是最近的材料採購。因此，就如何解決問題而言，這是非常動態的。正如馬克所說，我們可以根據產量做出最佳估計。但同樣，它非常有活力。它在整個第三季度都發生了真正的變化，現在反映在我們今年的業績中的是新的事實和情況。

If you go back to the model, Mike, the product program model has got a tremendous amount of leverage associated with it. And it's part of the reason that customers really want to work with Mercury, right? We're spending high levels of our own money on internally funded R&D to develop these capabilities that is amortized or use the multiple programs.

如果你回到模型，Mike，產品程序模型具有與之相關的巨大影響力。這也是客戶真正希望與 Mercury 合作的部分原因，對吧？我們將大量自有資金用於內部資助的研發，以開發這些攤銷或使用多個程序的能力。

Yes, the good news in that model when it works is that we are able to deliver technologies and capabilities far more quickly and far more affordably than if it was on a per-program model. The challenge that you've got is that in this particular instance. And it's probably the first time that I can recollect in my history as Mercury that this has actually occurred. It's just given the sophistication of the technology where we've had challenges.

是的，當該模型起作用時，好消息是我們能夠比在每個程序模型上更快、更實惠地提供技術和功能。您面臨的挑戰是在這個特定實例中。這可能是我作為 Mercury 的歷史中第一次回想起這確實發生過。它只是考慮到我們遇到挑戰的技術的複雜性。

And again, some of them are related to just the effect of the pandemic and the challenges that I don't execute in. We're now getting negative leverage, right? Meaning a couple of these technologies or products are actually holding up multiple programs. Now once we get through the development and the NPI activities, which were close the multiple programs will quickly benefit, meaning that we'll actually begin to make rapid progress, we believe, which is so less cost growth in terms of the income statement, we'll be able to ship systems at higher margins.

而且，其中一些僅與大流行的影響和我沒有執行的挑戰有關。我們現在正在獲得負槓桿，對嗎？這意味著其中一些技術或產品實際上支持多個項目。現在，一旦我們完成了開發和 NPI 活動，這些活動已經關閉，多個項目將很快受益，這意味著我們實際上將開始取得快速進展，我們相信，就損益表而言，成本增長如此之少，我們將能夠以更高的利潤率運送系統。

Once we start to ship the systems, we'll obviously be able to invoice and collect the cash, and we've got a significant amount of unbilled receivable tied up right now as Michelle mentioned. So we're not done, but we made a lot of progress in Q3, just unfortunately, with slower progress than what we had previously anticipated.

一旦我們開始運送系統，我們顯然能夠開具發票並收取現金，而且正如 Michelle 提到的那樣，我們現在有大量未開票的應收賬款。所以我們還沒有完成，但不幸的是，我們在第三季度取得了很多進展，進展比我們之前預期的要慢。

This concludes our Q&A portion of today's call. I now will turn the call back over to Mark Aslett for closing remarks.

今天電話會議的問答部分到此結束。我現在將把電話轉回給 Mark Aslett 作結束語。

Okay. Well, thanks very much, everyone. I appreciate you joining the call today. Thank you.

好的。嗯，非常感謝大家。感謝您今天加入電話會議。謝謝。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連接。