Mercury Systems Inc (MRCY) 2024 Q3 法說會逐字稿

Good afternoon, and thank you for joining us. With me today is our Chairman and Chief Executive Officer, Bill Ballhaus. If you've 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 Bill 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。今天和我在一起的是我們的董事長兼執行長比爾鮑爾豪斯 (Bill Ballhaus)。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副本，您可以在我們的網站 mrcy.com 上找到它。比爾和我將提到的幻燈片簡報發佈在網站的「投資者關係」部分的「活動和簡報」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 financial 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.

前往簡報中的投影片 2。我想提醒您，今天的簡報包含前瞻性陳述，包括有關 Mercury 的財務前景、未來計劃、目標、業務前景和預期財務業績的資訊。這些前瞻性陳述受到未來風險和不確定性的影響，可能導致我們的實際結果或績效出現重大差異。所有前瞻性陳述應與收益新聞稿中幻燈片 2 中的警示性陳述以及 Mercury 向 SEC 提交的文件中包含的風險因素結合考慮。

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

我還想提一下，除了按照公認會計原則或公認會計原則報告財務業績外，在電話會議期間，我們還將討論一些非公認會計原則財務指標，具體而言，調整後收入、調整後每股收益、調整後每股盈餘、 EBITDA、自由現金流、有機收入和獲得的收入。這些非公認會計原則指標的調節作為今天投影片簡報和收益新聞稿的附錄。

I'll now turn the call over to Mercury's Chairman and CEO, Bill Ballhaus. Please turn to Slide 3.

現在我將把電話轉給 Mercury 董事長兼執行長 Bill Ballhaus。請翻到幻燈片 3。

Thanks, Dave. Good afternoon. Thank you for joining our Q3 FY '24 Earnings Call. Today, I'd like to talk through three topics. First, some introductory comments on our business and results. Second, an update on the progress we are making in each of our four priority areas: Delivering predictable performance, building a thriving growth engine, expanding margins and driving improved free cash flow. And third, expectations for our performance, both for the balance of FY '24 and longer term. Then I'll turn it over to Dave, who will walk through our financial results and guidance.

謝謝，戴夫。午安.感謝您參加我們的 24 財年第 3 季財報電話會議。今天我想講三個話題。首先，對我們的業務和業績進行一些介紹性評論。其次，介紹我們在四個優先領域中取得的最新進展：提供可預測的績效、建立蓬勃發展的成長引擎、擴大利潤率並推動改善自由現金流。第三，對我們 24 財年餘下業績和長期業績的預期。然後我會將其交給戴夫，他將詳細介紹我們的財務表現和指導。

Before jumping in, I'd like to thank our customers for their collaborative partnership and the trust they put in Mercury to support their most critical programs, and our Mercury team for their dedication and commitment to delivering mission-critical processing at the edge.

在開始之前，我要感謝我們的客戶的合作夥伴關係以及他們對 Mercury 支持其最關鍵項目的信任，感謝我們的 Mercury 團隊在邊緣提供關鍵任務處理方面的奉獻和承諾。

Please turn to Slide 4. As I've said in the past, while we believe FY '24 is a transitional year, I'm optimistic about our strategic positioning as a leader in mission-critical processing at the edge and our ability to deliver predictable organic growth with expanding margins and robust free cash flow.

請參閱投影片 4。 ，利潤率不斷擴大，自由現金流強勁。

Our Q3 results, similar to Q1 and Q2, reflect progress we are making in addressing what we believe to be transitory challenges associated with a multiyear increase of working capital and a high mix of firm fixed price development programs. We are executing on and transitioning these programs towards low and then full rate production and expect them to be a driver of our near- and medium-term organic growth.

我們第三季的業績與第一季和第二季類似，反映了我們在解決我們認為與多年營運資本增加和公司固定價格開發計畫高組合相關的暫時性挑戰方面所取得的進展。我們正在執行這些計劃並將其轉變為低速生產，然後是全速生產，並期望它們成為我們近期和中期有機成長的驅動力。

Additionally, in Q2, we paused the transition of our common processing architecture toward full rate production in order to retire risk and validate a highly producible, scalable design. This pause in production activity, combined with the investments we are making in this technology area, have led to expected impacts on Q3 bookings, revenue, adjusted EBITDA and free cash flow.

此外，在第二季度，我們暫停了通用處理架構向全速生產的轉變，以消除風險並驗證高生產力、可擴展的設計。生產活動的暫停，加上我們在該技術領域的投資，對第三季的預訂、收入、調整後的 EBITDA 和自由現金流產生了預期的影響。

That said, we believe we have driven to root cause and implemented corrective actions in our common processing area. In addition, we have initiated limited pilot production in Q4 which has returned positive results in terms of yield and is an important initial step toward full-scale production. We remain confident that the significant investments we are making in this area will lead to profitable organic growth, where we see robust demand for our unique ability to support our customers' stringent mission-critical needs.

也就是說，我們相信我們已經找到了根本原因，並在我們的共同處理領域實施了糾正措施。此外，我們在第四季度啟動了有限的試生產，在產量方面取得了積極的成果，是邁向全面生產的重要第一步。我們仍然相信，我們在這一領域進行的重大投資將帶來盈利的有機成長，我們看到對我們支持客戶嚴格的關鍵任務需求的獨特能力的強勁需求。

In Q3, we made solid progress in each of our four priority focus areas with highlights that include: Completing or retiring risk on 2 additional challenged programs in Q3 and an additional 1 so far in Q4; expanding our record backlog to nearly $1.3 billion, up 17% year-over-year; leaning our cost structure as we further streamline our operations, enabling increased positive operating leverage as we expect to return to organic growth; reversing the multiyear trend of growth in working capital with net working capital down 8% year-over-year and sequential reductions in inventory and unbilled receivables.

在第三季度，我們在四個優先重點領域中的每一個都取得了紮實的進展，其中的亮點包括： 在第三季度完成或消除了另外2 個受挑戰項目的風險，並在第四季度完成了另外1 個項目的風險；將我們創紀錄的積壓訂單擴大至近 13 億美元，年增 17%；隨著我們進一步簡化運營，傾斜我們的成本結構，在我們期望恢復有機成長的同時提高積極的營運槓桿；扭轉了多年來營運資本成長的趨勢，淨營運資本年減 8%，庫存和未開立應收帳款連續減少。

As we continue to make progress in what we believe is a transition year, we look forward to closing out FY '24 and expect to enter FY '25 with a clear path to delivering predictable organic growth, expanding margins and strong cash flow.

隨著我們在我們認為的過渡年中繼續取得進展，我們期待著24 財年結束，並預計進入25 財年時，將有一條明確的道路來實現可預測的有機增長、不斷擴大的利潤率和強勁的現金流。

Please turn to Slide 5. Following those introductory comments, I'd like to spend time on each of our four focus areas, starting with our first focus area, delivering predictable performance.

請轉到投影片 5。

Our Q3 results reflect a number of impacts that we believe obscured the underlying performance of the business. Specifically, we recognized approximately $39 million of items that we believe are transitory, including $16 million of program cost growth impact across our portfolio, $12 million of inventory reserves and scrap, $5 million of warranty reserves and $6 million associated with contract settlement reserves. These items reduced Q3 revenue by approximately $16 million, gross margin by approximately $32 million and the remainder impacting operating expenses.

我們第三季的業績反映了一些我們認為掩蓋了業務基本業績的影響。具體來說，我們確認了大約3,900 萬美元的我們認為是暫時的項目，包括1,600 萬美元的項目成本增長影響對我們的投資組合、1,200 萬美元的庫存儲備和報廢、500 萬美元的保固儲備以及與合約結算儲備相關的600 萬美元。這些項目使第三季收入減少約 1,600 萬美元，毛利率減少約 3,200 萬美元，其餘部分影響營運支出。

As in prior quarters, we experienced the majority of these impacts in a subset of our portfolio, representing approximately 20% of the business and the majority of our challenged programs. As such, this part of the business contributed negative gross profit in Q3 and obscured performance in the balance of the portfolio, which is performing well and consistent with our expectations.

與前幾個季度一樣，我們在我們的投資組合的一個子集中經歷了大部分影響，約佔業務的 20% 和我們大部分面臨挑戰的項目。因此，這部分業務在第三季貢獻了負毛利，並掩蓋了投資組合平衡的表現，而投資組合的平衡表現良好，符合我們的預期。

The approximately $16 million of development and production program cost growth is a near-50% reduction from what we experienced last quarter and consisted of: Approximately $6 million from our challenged programs, with more than half of the impact tied to one program; and approximately $10 million spread across the remaining programs. We continue to see the majority of our EAC cost growth isolated to the 20% of the business. While this level of EAC impact is above what we would like to see on a go-forward basis, we are encouraged that as we continue to refine our EAC process across our portfolio, this is the lowest level of EAC impact in 4 quarters.

開發和生產項目成本成長約 1,600 萬美元，比我們上個季度經歷的成本減少了近 50%，其中包括： 約 600 萬美元來自我們面臨挑戰的項目，其中一半以上的影響與一個項目有關；大約 1000 萬美元分攤到其餘項目。我們繼續看到 EAC 成本成長的大部分都集中在 20% 的業務上。雖然這項 EAC 影響水準高於我們未來希望看到的水平，但我們感到鼓舞的是，隨著我們繼續完善整個投資組合的 EAC 流程，這是 EAC 4 個季度以來影響的最低水平。

As shown on Slide 6, with respect to the challenged programs, during the third quarter, we progressed as expected by completing, exiting, or retiring risk on 2 of the original 19 programs. And in Q4, we have completed 1 additional program, and we believe we have now retired risk on 11 of the original 19 challenged programs that have driven earnings volatility in recent quarters. For the remaining programs, we expect to close out half this quarter and largely retire the challenged programs' risk as we exit FY '24.

如投影片 6 所示，對於受到挑戰的項目，在第三季度，我們按預期取得了進展，完成、退出或消除了最初 19 個項目中的 2 個項目的風險。在第四季度，我們已經完成了 1 項額外計劃，我們相信我們現在已經消除了最初 19 項挑戰計劃中 11 項的風險，這些計劃在最近幾個季度導致了盈利波動。對於其餘項目，我們預計將在本季度結束一半，並在我們退出 24 財年時基本消除受挑戰項目的風險。

Please turn to Slide 7. Turning now to the second focus area: Driving organic growth. Bookings for the quarter were $220 million, resulting in a 1.06 book-to-bill with a few opportunities moving out of the quarter awaiting the completion of our efforts to begin the transition to full rate production in our common processing technology area.

請轉到投影片 7。本季的預訂量為 2.2 億美元，訂單出貨比為 1.06，在我們開始在通用加工技術領域開始向全速生產過渡的努力完成之前，本季有一些機會移出。

Our backlog, now at a record $1.3 billion, is up 17% year-over-year. And notably, when we look at the bookings so far this year, approximately 80% of our firm fixed price bookings are production in nature, which we believe is a good leading indicator that the mix shift in our business is occurring.

我們的積壓訂單現已達到創紀錄的 13 億美元，年增 17%。值得注意的是，當我們查看今年迄今為止的預訂時，我們大約 80% 的固定價格預訂都是生產性質的，我們認為這是一個很好的領先指標，表明我們的業務正在發生混合轉變。

Several marquee wins in the quarter are worth noting. In January, Mercury finalized a production agreement with BlueHalo to provide digital signal processing hardware to support the U.S. Space Force's Satellite Communications Augmentation Resource, or SCAR program.

本季的幾項重大勝利值得注意。一月份，Mercury 與 BlueHalo 敲定了一項生產協議，提供數位訊號處理硬體來支援美國太空軍的衛星通訊增強資源（SCAR）計畫。

In February, we announced a 5-year $243.8 million indefinite delivery, indefinite quantity contract to deliver rapidly reprogrammable electronic attack training subsystems to the U.S. Navy. And we have received and are executing on the first production order. These subsystems build on more than 25 years of test and training technology from the Mercury processing platform to bring the most advanced near-peer jamming and electronic warfare capabilities to U.S. pilot training organizations.

今年 2 月，我們宣布了一項為期 5 年、價值 2.438 億美元的無限期交付、無限數量合同，旨在向美國海軍提供快速可重新編程的電子攻擊訓練子系統。我們已經收到並正在執行第一個生產訂單。這些子系統建立在 Mercury 處理平台超過 25 年的測試和訓練技術之上，為美國飛行員訓練組織帶來最先進的近點幹擾和電子戰能力。

As mentioned on our second quarter earnings call, we were chosen by L3Harris Technologies to provide solid state data recorders for the U.S. Space Development Agency's Tranche 2 Tracking Layer satellite constellation. The $31 million contract award supports 18 satellites following the delivery of hardware for 20 earlier spacecraft.

正如我們在第二季財報電話會議上提到的，L3Harris Technologies 選擇我們為美國太空發展局的 Tranche 2 追蹤層衛星星座提供固態資料記錄器。繼為 20 顆早期太空船提供硬體後，這份價值 3,100 萬美元的合約將支援 18 顆衛星。

I also want to mention a development milestone on a new strategic weapon system program that we announced last quarter with a booking value of $91 million. The team held a successful integrated baseline review with the customer, confirming that our approach will meet cost, schedule and performance targets. As a result, we received the maximum possible award fee for this phase of the cost-plus contract. We will spend the next several years developing and delivering prototype hardware for this critical national security program.

我還想提一下我們上季度宣布的新戰略武器系統計劃的開發里程碑，該計劃的預訂價值為 9,100 萬美元。該團隊與客戶成功進行了全面基線審查，確認我們的方法將滿足成本、進度和績效目標。因此，我們在成本加成合約的這一階段獲得了盡可能高的獎勵費。我們將在接下來的幾年裡為這項重要的國家安全計畫開發和提供原型硬體。

These awards are important, not only because of their value and impact on our growth trajectory, but also because they reflect our customers' continued trust in Mercury to support their most critical franchise programs.

這些獎項非常重要，不僅因為它們的價值和對我們成長軌蹟的影響，還因為它們反映了我們的客戶對水星支持其最關鍵的特許經營計劃的持續信任。

Please turn to Slide 8. Now turning to our third priority focus area: Expanding margins. So far in FY '24, we delivered margins beneath our targets. These shortfalls are primarily driven by the previously discussed impacts that we believe are transitory, and negative operating leverage from relatively low production volume, largely driven by development program delays and exacerbated in Q3, as expected, with the production hold in our common processing technology area.

請轉到投影片 8。 24 財年到目前為止，我們的利潤率低於目標。這些短缺主要是由先前討論的影響造成的，我們認為這些影響是暫時的，以及產量相對較低帶來的負面營運槓桿，這主要是由於開發計劃延遲造成的，並且正如預期的那樣，由於我們共同加工技術領域的生產暫停，第三季情況更加嚴重。

As we've mentioned in prior quarters, to achieve our adjusted EBITDA margin targets, we are focused on the following levers: Executing on our development programs and minimizing cost growth impacts, getting back toward a more historical 20/80 mix of development to production programs, driving organic growth to generate positive operating leverage, and achieving cost efficiencies.

正如我們在前幾個季度提到的，為了實現調整後的EBITDA 利潤率目標，我們重點關注以下槓桿： 執行我們的開發計劃並最大程度地減少成本增長影響，回歸更歷史悠久的20/80 開發與生產組合計劃，推動有機成長以產生積極的營運槓桿，並實現成本效益。

I discussed on this call our program execution and cost growth containment efforts along with our organic growth efforts. Regarding cost efficiencies, as previously mentioned, in Q1, we've implemented a series of cost-reduction actions. In January, we announced a corporate reorganization in which we streamlined and simplified our operations, consolidating our two-division structure into a single integrated structure, incorporating all of our lines of business and matrix business functions reporting into our COO, Roger Wells.

我在這次電話會議上討論了我們的計劃執行和成本增長控制工作以及我們的有機增長工作。關於成本效率，如前所述，在第一季度，我們實施了一系列成本削減行動。一月份，我們宣布了一項公司重組，其中我們精簡並簡化了我們的運營，將我們的兩個部門結構合併為一個單一的整合結構，將我們所有的業務線和矩陣業務職能納入我們的首席營運官Roger Wells 的報告範圍內。

Earlier in Q4, we announced the second phase of this realignment, organizing our U.S.-based business units into 2 product business units and an integrated processing solutions business unit, and centralizing our engineering, operations and mission assurance functions. Additionally, we stood up an advanced concepts group that is focused on advanced technologies, innovation and strategic growth pursuits.

在第四季度早些時候，我們宣布了第二階段的重組，將我們位於美國的業務部門分為兩個產品業務部門和一個整合處理解決方案業務部門，並集中我們的工程、營運和任務保證職能。此外，我們還成立了一個先進概念小組，專注於先進技術、創新和策略成長追求。

This second phase of our realignment will contribute additional efficiencies to our previously mentioned run rate savings of $44 million that we've already actioned. Approximately $24 million to $26 million of those previously actioned savings are expected to be recognized inside the fiscal year.

我們的第二階段調整將進一步提高效率，使我們之前提到的運行率節省 4400 萬美元（我們已經採取了行動）。先前採取的節省措施中約有 2,400 萬至 2,600 萬美元預計將在本財政年度內得到確認。

Overall, although we've seen the adverse margin impact of what we believe are transitory issues and negative operating leverage in FY '24, we believe the structural efficiencies of our realignment and other cost-savings measures will be evident in our margin profile going forward as we expect to return to growth in FY '25 and beyond.

總體而言，儘管我們在24 財年看到了我們認為是暫時性問題和負營運槓桿對利潤率的不利影響，但我們相信，我們的重組和其他成本節約措施的結構效率將在我們未來的利潤率狀況中顯而易見我們預計 25 財年及以後將恢復成長。

Please turn to Slide 9. Finally, turning to our fourth priority focus area: Improve free cash flow. We continue to make progress in reducing net working capital, which is down 8% year-over-year after years of expansion. Inventory was down sequentially by $11 million from $354 million in Q2 to $343 million in Q3, driven primarily by manufacturing adjustments associated with specifically identified inventory reserves.

請轉到投影片 9。我們在減少營運淨資本方面繼續取得進展，經過多年的擴張，淨營運資本年減了 8%。庫存季減 1,100 萬美元，從第二季的 3.54 億美元降至第三季的 3.43 億美元，這主要是由於與專門確定的庫存儲備相關的製造調整。

Notably, while inventory is flat year-over-year, WIP is up approximately 45% from our prior fiscal year-end from $83 million to $120 million, reflecting an increased mix of inventory progressed towards delivery.

值得注意的是，雖然庫存同比持平，但 WIP 較上一財年末增長了約 45%，從 8,300 萬美元增至 1.2 億美元，反映出交付過程中庫存組合的增加。

Even with the pause initiated in Q2 in common processing architecture, production and deliveries, unbilled receivables is down sequentially from $351 million in Q2 to $325 million in Q3 and down $63 million from Q1. The improvement in unbilled since Q1 is in part driven by Q2 and Q3 billings, which were the 2 highest-billings quarters on over time revenue contracts in the company's history. This included an increase in unbilled of approximately $15 million tied to four recent new bookings that generated revenue in Q3, all of which has now been invoiced in Q4.

即使第二季通用處理架構、生產和交付暫停，未開立應收帳款仍從第二季的 3.51 億美元連續下降至第三季的 3.25 億美元，比第一季下降 6,300 萬美元。自第一季以來未開票金額的改善部分是由第二季和第三季的開票金額推動的，這兩個季度是公司歷史上隨時間推移收入合約開票金額最高的兩個季度。其中包括與最近在第三季產生收入的四筆新預訂相關的未開票金額增加了約 1500 萬美元，所有這些訂單現已在第四季度開立發票。

Please turn to Slide 10. As discussed, we continue to make progress in our 4 priority focus areas. That said, for the first 3 quarters of FY '24, our revenue and earnings are below expectations primarily due to higher-than-expected cost growth and other charges as we proactively retire risk across the portfolio, especially related to our challenged programs, and lower second half volume tied to the pause in activities associated with the common processing architecture.

請參閱投影片 10。也就是說，在24 財年的前3 季度，我們的收入和收益低於預期，主要是由於成本增長和其他費用高於預期，因為我們主動消除了整個投資組合的風險，特別是與我們面臨與挑戰的專案相關的風險，以及較低的後半部音量與公共處理架構相關活動的暫停有關。

Aside from these headwinds, which we believe are temporary, we continue to set our sights on delivering above-average industry growth with low to mid-20% adjusted EBITDA margins over the longer term. For the balance of FY '24, we plan to continue to work on the transitions I discussed earlier, shifting our large portfolio of development programs to production, especially the remaining challenged programs; ramping up our common processing production line; and focusing our operational capacity on burning down net working capital, particularly in unbilled receivables and inventory.

除了這些我們認為是暫時的不利因素之外，我們繼續致力於實現高於行業平均水平的增長，並在長期內實現調整後 EBITDA 利潤率低至中 20% 的目標。對於 24 財年的剩餘時間，我們計劃繼續致力於我之前討論的過渡，將我們的大型開發項目組合轉向生產，特別是剩餘的有挑戰性的項目；加強我們的共同加工生產線；並將我們的營運能力集中在消耗淨營運資本，特別是未開票的應收帳款和庫存。

As I have said in prior calls, we believe that demand remains strong. Our outlook for bookings is unchanged and we continue to expect full year bookings above $1 billion. In addition, we continue to expect revenue in the range of $800 million to $850 million as well as positive free cash flow for the full fiscal year.

正如我在之前的電話會議中所說，我們相信需求仍然強勁。我們的預訂量前景沒有變化，我們仍然預計全年預訂量將超過 10 億美元。此外，我們繼續預計整個財年的收入將在 8 億至 8.5 億美元之間，並且自由現金流為正。

With that, I'll turn it over to Dave to walk through the financial results for the third quarter, and I look forward to your questions. Dave?

接下來，我將把第三季的財務表現交給戴夫，期待您的提問。戴夫？

Thank you, Bill. I'll start with our third quarter fiscal '24 results and then move to our Q4 and fiscal '24 outlook. As expected, our financial performance in the third quarter was below that of the prior year across all P&L metrics.

謝謝你，比爾。我將從我們的 24 財年第三季業績開始，然後轉向我們的第四季和 24 財年展望。正如預期的那樣，我們第三季的財務表現在所有損益指標上均低於去年同期。

As discussed in our prior earnings calls, we believe that fiscal '24 is a transition year where the organization is seeking to execute on both our challenged and development programs and then progress toward the follow-on production awards. Through that transition, we expect to recognize the small proportion of remaining revenues on the challenged program contracts.

正如我們在先前的財報電話會議中所討論的，我們認為 24 財年是一個過渡年，該組織正在尋求執行我們的挑戰計劃和發展計劃，然後向後續生產獎項邁進。透過這項轉變，我們預計將確認受質疑的專案合約中剩餘收入的一小部分。

But more importantly, we expect to move towards releasing significant working capital balances especially related to unbilled receivables. We then anticipate shifting our resources to execute on the follow-on production awards which we believe will begin to rebalance our program portfolio more heavily toward higher-margin, predictable production programs, as well as consume existing inventories. We continue to expect this transition to occur in Q4 and into fiscal '25.

但更重要的是，我們預計將釋放大量營運資金餘額，尤其是與未開立應收帳款相關的營運資金餘額。然後，我們預計將我們的資源轉移到執行後續生產任務上，我們相信這將開始重新平衡我們的項目組合，更多地轉向利潤率更高、可預測的生產項目，並消耗現有庫存。我們仍然預計這一轉變將在第四季和 25 財年發生。

In Q3, as Bill discussed, we made progress towards this rebalance with a continued focus on our four priorities. We made progress completing, exiting or otherwise retiring risk on our challenged programs. We expanded our record backlog to nearly $1.3 billion. We further reduced our cost structure to drive margin expansion. And we continue to work towards reversing the multiyear trend in working capital growth.

正如比爾所討論的，在第三季度，我們在繼續關注我們的四個優先事項的同時，在重新平衡方面取得了進展。我們在完成、退出或以其他方式消除我們面臨的挑戰專案的風險方面取得了進展。我們將創紀錄的積壓訂單擴大至近 13 億美元。我們進一步降低成本結構以推動利潤率擴張。我們將繼續努力扭轉多年來營運資本成長的趨勢。

With that, please turn to Slide 11 which details the Q3 results. Our bookings for the quarter were $220 million with a book-to-bill of 1.06, yielding backlog of $1.3 billion, up over $190 million or 17% year-over-year and $12 million or 1% sequentially. As Bill discussed, we feel good about the mix in our backlog with approximately 80% of our firm fixed price bookings this year being production contracts. We believe these recent bookings are a leading indicator of the shift in the mix of our backlog from development to production. We continue to maintain our focus on not only backlog growth, but the quality of our backlog in terms of margin and our ability to predictably perform.

接下來，請參閱投影片 11，其中詳細介紹了第三季的結果。本季我們的訂單量為 2.2 億美元，訂單出貨比為 1.06，積壓訂單為 13 億美元，較去年同期成長超過 1.9 億美元，年成長 17%，較上季成長 1,200 萬美元，即 1%。正如 Bill 所討論的，我們對積壓訂單的情況感到滿意，今年我們固定價格訂單中約 80% 是生產合約。我們相信，最近的這些預訂是我們積壓訂單從開發到生產的轉變的領先指標。我們不僅持續關注積壓訂單的成長，還關注積壓訂單的品質（在利潤率和可預測執行能力方面）。

Revenues for the third quarter were $208 million, down $55 million or 21% compared to the prior year of $264 million. As expected, revenues decreased year-over-year as we continue to prioritize resources to execute our challenged programs, transition from higher mix of development programs and aim to better align our operating cadence with prudent working capital management.

第三季營收為 2.08 億美元，比去年同期的 2.64 億美元減少 5,500 萬美元，成長 21%。正如預期的那樣，收入同比下降，因為我們繼續優先考慮資源來執行我們面臨的挑戰項目，從更高組合的發展項目過渡，並致力於使我們的營運節奏與審慎的營運資本管理更好地保持一致。

As Bill noted, we experienced approximately $16 million of cost growth impact in the quarter as compared to approximately $7 million in the prior year, which affected revenue. The $16 million, which was the lowest EAC growth in the last 4 quarters, was comprised of $6 million related to our challenged programs and approximately $10 million related to multiple development and production programs. In accordance with GAAP, this resulted in cumulative revenue adjustments to properly reflect progress on the programs due to the revised cost baselines driving an overweight impact in the third quarter.

正如 Bill 指出的那樣，本季我們經歷了約 1,600 萬美元的成本成長影響，而上一年的成本成長影響約為 700 萬美元，這影響了收入。 1600 萬美元是過去 4 個季度中 EAC 成長的最低值，其中 600 萬美元與我們面臨的挑戰項目相關，大約 1000 萬美元與多個開發和生產項目相關。根據公認會計原則，由於修訂後的成本基準對第三季產生了超重影響，因此對累計收入進行了調整，以正確反映專案的進度。

The $6 million cost growth impact related to our challenged programs was largely tied to one program, representing nearly 60% of the impact. This program and several others in our portfolio were impacted by an industry-wide supplier issue which has since been resolved, as well as technical execution issues resulting from facts and circumstances in the quarter.

與我們面臨挑戰的專案相關的 600 萬美元成本成長影響主要與一個專案相關，佔影響的近 60%。該計劃和我們投資組合中的其他幾個計劃受到全行業供應商問題（現已解決）以及本季度事實和情況導致的技術執行問題的影響。

While we executed largely in line with expectations across the remaining challenged programs, we did experience cost growth on certain other development and production programs in the quarter which impacted revenues in a similar manner. Of the nearly $10 million of cost growth impact related to development and production programs, we continue to see roughly 20% of the business driving the majority of this cost growth. The cost growth within our development and production programs was attributable to several factors, including the industry-wide supplier issue previously mentioned, technical issues resulting in incremental rework costs and risk-mitigation costs.

雖然我們對其餘面臨挑戰的項目的執行基本上符合預期，但本季度我們確實經歷了某些其他開發和生產項目的成本增長，這以類似的方式影響了收入。在與開發和生產計劃相關的近 1000 萬美元的成本增長影響中，我們仍然看到大約 20% 的業務推動了大部分成本增長。我們的開發和生產計劃中的成本成長可歸因於多種因素，包括前面提到的全行業供應商問題、導致返工成本增加和風險緩解成本的技術問題。

Finally, as we build and mature integrated processes and management systems, we seek to continuously assess our judgments and estimates, including potential future risks and opportunities based on the latest and best information available.

最後，隨著我們建立並成熟綜合流程和管理系統，我們尋求不斷評估我們的判斷和估計，包括基於現有最新和最佳資訊的潛在未來風險和機會。

Gross margin for the second quarter decreased to 19.5% from 34.3% in the prior year. Gross margin contracted year-over-year primarily as a result of cost growth impacts as well as higher manufacturing adjustments, especially as related to inventory reserves, warranty expense and scrap.

第二季毛利率從去年同期的 34.3% 下降至 19.5%。毛利率年減主要是由於成本成長的影響以及更高的製造調整，特別是與庫存儲備、保固費用和廢品相關的調整。

As Jeff discussed, we recorded approximately $16 million of program cost growth impact in the quarter. This represents approximately $9 million of incremental cost growth impact year-over-year. The remaining decrease in gross margin year-over-year was primarily due to higher manufacturing adjustments of approximately $16 million related to inventory reserves, warranty expense and scrap.

正如傑夫所討論的，我們在本季度記錄了大約 1,600 萬美元的專案成本成長影響。這意味著同比增量成本成長影響約為 900 萬美元。毛利率年減主要是由於與庫存儲備、保固費用和報廢相關的約 1,600 萬美元的製造調整增加。

With regard to inventory reserves, we recorded over $7 million more reserves in the quarter as compared to the prior year. The primary drivers of the specifically identified excess and obsolete inventory in the quarter were related to end-of-life components where design changes have occurred as well as configuration changes necessary to drive efficient production in the common processing architecture. Our process going forward is to procure end-of-life components with funding from our customers where possible.

關於庫存儲備，本季我們的儲備比去年增加了 700 萬美元以上。本季特別確定的過剩和過時庫存的主要驅動因素與報廢組件有關，其中發生了設計變更以及在通用處理架構中推動高效生產所需的配置變更。我們未來的流程是盡可能利用客戶的資金採購報廢組件。

As you know, we are working on our common processing architecture and the changes necessary to drive efficient production. We experienced higher levels of scrap, especially related to the common processing architecture involved in several of our challenged programs. Due to the nature of the technology, the scrap material is high-value and cannot be reused or reworked. We have several initiatives underway designed to address more efficient and cost-effective producibility of these systems.

如您所知，我們正在研究通用的處理架構以及推動高效生產所需的變更。我們經歷了更高水準的廢品，特別是與我們的幾個面臨挑戰的專案中涉及的通用處理架構相關的廢品。由於該技術的性質，廢料具有高價值，無法重複使用或返工。我們正在進行多項舉措，旨在提高這些系統的生產效率和成本效益。

With regard to warranty expense, we recorded approximately $5 million of additional expense in the quarter as compared to the prior year, primarily associated with estimated costs related to repair and rework of some previously delivered common processing architecture products.

關於保固費用，與前一年相比，我們在本季度記錄了約 500 萬美元的額外費用，主要與先前交付的一些通用處理架構產品的維修和返工相關的估計成本有關。

As was the case in Q3, we expect gross margins to improve sequentially in the fourth quarter. That said, we believe the full year fiscal '24 gross margins will be below those of fiscal '23 given the higher-than-expected cost growth impacts through the first 3 quarters of fiscal '24. We expect gross margins to continue to be impacted by unknown risks that may materialize as we progress these challenged programs and other development programs through final stages of development and into production.

與第三季的情況一樣，我們預計第四季的毛利率將較上季改善。也就是說，鑑於 24 財年前 3 季的成本成長影響高於預期，我們認為 24 財年全年毛利率將低於 23 財年毛利率。我們預計毛利率將繼續受到未知風險的影響，隨著我們將這些有挑戰性的專案和其他開發專案推進到開發的最後階段並投入生產，這些風險可能會出現。

Operating expenses decreased approximately $2 million year-over-year, primarily due to lower R&D and SG&A expenses as compared to the prior year. These decreases were driven by the previously announced organizational consolidation of our divisions into one unified structure, incorporating multiple lines of business and matrix business functions in January 2024.

營運費用年減約 200 萬美元，主要是由於研發和銷售、一般行政費用 (SG&A) 費用較前一年減少。這些減少是由於先前宣布的 2024 年 1 月我們將各部門組織整合為一個統一的結構，納入多個業務線和矩陣業務職能而推動的。

The workforce reduction eliminated approximately 100 positions, driving $9.8 million of restructuring expense in the period. In total, our previously mentioned cost-savings actions in fiscal '24 are expected to yield over $44 million in annual run rate savings, of which $24 million to $26 million are expected to be recognized in the fiscal year. We are implementing additional efficiencies in Q4 as we complete this second phase of our realignment.

裁員減少了大約 100 個職位，導致該期間的重組費用達到 980 萬美元。總的來說，我們先前提到的 24 財年成本節約行動預計將帶來超過 4,400 萬美元的年度運行率節省，其中 2,400 萬至 2,600 萬美元預計將在本財年得到確認。隨著我們完成調整的第二階段，我們將在第四季度實現更高的效率。

That said, the third quarter of fiscal '24 included $6 million of contract settlement reserves related to anticipated settlements resulting from negotiations to reduce performance obligation on customer contracts that do not align with our strategy or otherwise do not have acceptable returns in exchange for lower cash consideration. We believe these costs are not comparable to the prior year, and thus, our run rate operating expenses would have decreased nearly $8.3 million year-over-year, reflecting the cost savings actions executed in the first and third quarters of fiscal '24.

也就是說，24 財年第三季包括600 萬美元的合約結算準備金，這些儲備金與預期結算相關，這些結算是透過談判減少客戶合約的履約義務，這些合約與我們的策略不符，或者沒有可接受的回報，以換取較低的現金考慮。我們認為這些成本與上一年無法比較，因此，我們的運行率營運費用將比去年同期減少近 830 萬美元，反映了 24 財年第一季度和第三季度執行的成本節約行動。

GAAP net loss and loss per share in the third quarter was $44.6 million and $0.77, respectively, as compared to GAAP net income and earnings per share of $5.2 million and $0.09, respectively, in the prior year. The decrease in year-over-year earnings is primarily a result of nearly $9 million of incremental program cost growth impacts, $11 million of incremental inventory reserves and scrap, approximately $5 million in incremental warranty expense, as well as $6 million of contract settlement reserves.

第三季 GAAP 淨虧損和每股虧損分別為 4,460 萬美元和 0.77 美元，而前一年的 GAAP 淨收入和每股盈餘分別為 520 萬美元和 0.09 美元。收益年減的主要原因是近 900 萬美元的增量項目成本增長影響、1100 萬美元的增量庫存儲備和報廢、約 500 萬美元的增量保固費用以及 600 萬美元的合約結算儲備。

GAAP net loss was also impacted by the temporary volume shift in revenues as we align our operating cadence with prudent working capital management. These factors were partially offset by over $2 million of incremental tax benefit year-over-year.

由於我們將營運節奏與審慎的營運資本管理保持一致，因此 GAAP 淨虧損也受到收入暫時變動的影響。這些因素被同比超過 200 萬美元的增量稅收優惠部分抵消。

Adjusted EBITDA for the third quarter was negative $2.4 million compared to $43.5 million in the prior year. Adjusted loss per share was $0.26 as compared to adjusted earnings per share of $0.40 in the prior year. The year-over-year decrease was primarily related to the same costs that impacted GAAP net loss and loss per share.

第三季調整後 EBITDA 為負 240 萬美元，而去年同期為 4,350 萬美元。調整後每股虧損為 0.26 美元，而上一年調整後每股收益為 0.40 美元。年減主要與影響 GAAP 淨虧損和每股虧損的相同成本有關。

Slide 12 presents Mercury's balance sheet for the last 5 quarters. We ended the second quarter with cash and cash equivalents of $143 million. We have $616.5 million of funded debt under our revolver. Billed receivables increased approximately $9 million due to the timing of invoicing collections in the quarter as well as reduced receivables factoring in the period.

投影片 12 顯示了 Mercury 過去 5 個季度的資產負債表。第二季結束時，我們的現金和現金等價物為 1.43 億美元。我們的左輪手槍有 6.165 億美元的融資債務。由於本季發票收款時間表以及該期間應收帳款保理業務的減少，帳單應收帳款增加了約 900 萬美元。

Unbilled receivables decreased approximately $26 million due in part to successful execution in billings across the program portfolio as well as the cumulative adjustments associated with the cost growth impacts in the quarter and our contract settlement reserves, as previously discussed. Inventory decreased approximately $11 million primarily as a result of the incremental reserve and scrap activity in the quarter. Accounts payable decreased over $8 million, evidencing the shift in our operating cadence aimed at better aligning the timing of material purchases with both contract awards and resource availability.

未開立發票應收帳款減少了約 2,600 萬美元，部分原因是整個專案組合的開票成功執行，以及與本季度成本增長影響和我們的合約結算準備金相關的累積調整，如前所述。庫存減少約 1100 萬美元，主要是由於本季儲備和報廢活動增加。應付帳款減少超過 800 萬美元，證明我們的營運節奏發生了轉變，旨在更好地將材料採購時間與合約授予和資源可用性保持一致。

Deferred revenues decreased approximately $11 million in the quarter, reflecting revenue recognized on the higher volume of customer advances we successfully negotiated with favorable billing terms, as we previously discussed on our Q2 earnings call.

本季遞延收入減少了約 1,100 萬美元，反映了我們透過有利的計費條款成功協商的客戶預付款量增加而確認的收入，正如我們之前在第二季財報電話會議上討論的那樣。

Working capital increased approximately $12 million in the third quarter. However, we have made progress in reducing this balance 8% year-over-year after multiple years of expansion. The third quarter increase was driven by the self-imposed production pause initiated in Q2, combined with investments we are making in our common processing architecture which have delayed our cash flow conversion.

第三季營運資金增加約 1200 萬美元。然而，經過多年的擴張，我們在將這一餘額同比減少 8% 方面取得了進展。第三季的成長是由第二季開始的自我強制生產暫停所推動的，加上我們對通用處理架構的投資延遲了我們的現金流轉換。

As Bill previously mentioned, we believe we are making progress towards resolving the challenges in our common processing architecture as well as in transitioning challenged and other development programs toward production. As such, we expect to see reductions in certain working capital metrics as we continue to execute and convert unbilled to billed receivables and then cash.

正如比爾之前提到的，我們相信我們在解決通用處理架構中的挑戰以及將有挑戰的專案和其他開發專案轉向生產方面正在取得進展。因此，隨著我們繼續執行並將未開立應收帳款轉換為開立發票應收帳款，然後轉換為現金，我們預期某些營運資本指標將會減少。

In addition, we expect the mix of development programs to shift to better align with historical norms. And as we receive expected follow-on production awards, we believe we will consume inventory purchased in anticipation of these awards.

此外，我們預期發展計畫的組合將會轉變，以更好地符合歷史規範。當我們收到預期的後續生產獎項時，我們相信我們將消耗因預期這些獎項而購買的庫存。

Turning to cash flow on Slide 13. Free cash flow for the third quarter was an outflow of $25.7 million as compared to an outflow of $12.7 million in the prior year. The outflow was driven by the impact of our program cost growth and the associated impacts to achieve billings on those programs; the industry-wide supplier issue impacting a subset of our programs, which has since been resolved; and the self-imposed pause on the common processing architecture as we complete design modifications to allow for a transition toward full-scale production.

轉向幻燈片 13 上的現金流。資金外流是由於我們的計劃成本增長的影響以及實現這些計劃的賬單的相關影響所致；影響我們部分計劃的全行業供應商問題，現已解決；當我們完成設計修改以向全面生產過渡時，通用處理架構會自行暫停。

I'll now turn to our financial guidance for full year fiscal '24. First, we continue to expect bookings above $1 billion for FY '24 as our demand remains strong. Second, while we believe we have made progress in our four priority areas, and we'll continue to do so in the fourth quarter, the cost growth impacts incurred during the first 3 quarters, coupled with the potential for continued volatility, especially related to the single technology, may continue to negatively impact revenues and gross margin for the remainder of the year. We still expect both revenues and gross margin to trend lower than the prior year with continued expectation for $800 million to $850 million in revenues for fiscal '24.

我現在將談談我們 24 財年全年的財務指引。首先，由於我們的需求依然強勁，我們繼續預期 24 財年的預訂量將超過 10 億美元。其次，雖然我們相信我們在四個優先領域取得了進展，並且我們將在第四季度繼續這樣做，但前三個季度產生的成本增長影響，加上持續波動的可能性，特別是與單一技術可能會繼續對今年剩餘時間的收入和毛利率產生負面影響。我們仍預期營收和毛利率將低於上年，並繼續預期 24 財年營收為 8 億至 8.5 億美元。

We believe operating leverage will improve in Q4 due to expected sequential revenue and margin increases, coupled with the cost actions completed in the first and third quarters, along with additional efficiencies we are implementing as part of the second phase of our organizational realignment in Q4.

我們認為，由於預期收入和利潤率連續增長，加上第一季和第三季完成的成本行動，以及我們在第四季度組織重組第二階段中實施的額外效率，第四季度的營運槓桿將有所改善。

We expect GAAP net loss and loss per share as well as adjusted EBITDA and adjusted loss per share for fiscal '24 will be meaningfully below the prior year. While cash flow in the third quarter was disappointing, we expect improvement in the fourth quarter as we plan to complete or retire risk on a majority of our challenged programs, ship and bill final product, and convert unbilled receivables to billed receivables and then to cash. We continue to expect positive free cash flow for the year.

我們預計 24 財年的 GAAP 淨虧損和每股虧損以及調整後 EBITDA 和調整後每股虧損將大幅低於前一年。雖然第三季的現金流令人失望，但我們預計第四季度會有所改善，因為我們計劃完成或消除大多數面臨挑戰的項目的風險，運輸和開具最終產品賬單，並將未開票應收帳款轉換為開立發票應收帳款，然後轉換為現金。我們繼續預計今年的自由現金流為正。

In closing, we believe continuing to execute on our four priority focus areas will not only enable a return to historical revenue growth and profitability, but will also drive further margin expansion and cash conversion, demonstrating the long-term value creation potential of the business.

最後，我們相信，繼續執行我們的四個優先重點領域不僅能夠恢復歷史收入成長和獲利能力，而且還將推動進一步的利潤擴張和現金轉換，以展示該業務的長期價值創造潛力。

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

這樣，我現在將把電話轉回給比爾。

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

謝謝，戴夫。那麼，操作員，請繼續進行問答。

(Operator Instructions). We'll take the first question from Pete Skibitski, Alembic Global.

（操作員說明）。我們將回答 Alembic Global 的 Pete Skibitski 提出的第一個問題。

So I guess if all goes well, you're going to be at 4 challenged programs remaining as you head into fiscal '25. I'm wondering how deep do you think you have to go in fiscal '25 to retire the remaining risk on those programs? I just -- I guess I'm trying to get a sense of, assuming they're all common processing architecture-related, I'm trying to get a feel for how much technical risk remains on those programs.

因此，我想如果一切順利，當您進入 25 財年時，您將面臨 4 個面臨挑戰的計劃。我想知道您認為 25 財年需要採取多深的措施才能消除這些計劃的剩餘風險？我只是——我想我想了解一下，假設它們都是與常見處理架構相關的，我想了解這些程式還有多少技術風險。

Yes. Pete, thanks for the question. It's Bill. I'll take that. You're right that our expectation is, as we get to the end of this year, we'll have 4 challenged programs left. They're all related to this common processing architecture that you've heard us talk about.

是的。皮特，謝謝你的提問。是比爾。我會接受的。你說得對，我們的期望是，到今年年底，我們將剩下 4 個有挑戰性的項目。它們都與您聽到我們談論的這種通用處理架構相關。

Where we are with respect to the common processing architecture is we believe that we've gotten to root cause in understanding what was keeping us from getting to a very specific physical integrity that we need to get to in order for our technology to work as intended. And it's based on our understanding of the material science. And based on that understanding of the material science, we've been able to implement a change in the manufacturing process that allows us to get to the physical integrity that we need.

關於通用處理架構，我們相信我們已經找到了根本原因，了解了是什麼阻礙了我們達到非常具體的物理完整性，而我們需要達到這一點才能使我們的技術按預期工作。它是基於我們對材料科學的理解。基於對材料科學的理解，我們已經能夠對製造過程進行改變，使我們能夠獲得所需的物理完整性。

Now we're ramping up production. We've moved to initial production after we've done a ton of testing, a lot of analysis, seen our analysis and the empirical data all match up. So in the fourth quarter, we've done initial builds. We are currently in what we're calling pilot production, which will go through the end of the fourth quarter. And as we exit the fourth quarter, we expect to have pretty solid validation of our corrective action, which will then give us the ability and the indications that we need in order to ramp up to full scale production.

現在我們正在提高產量。在我們進行了大量測試、大量分析、看到我們的分析和經驗數據全部匹配之後，我們已經開始進行初始生產。所以在第四季度，我們已經完成了初步建造。我們目前正在進行所謂的試生產，該試生產將持續到第四季末。當我們退出第四季度時，我們期望對我們的糾正措施進行相當可靠的驗證，這將為我們提供全面生產所需的能力和跡象。

So I would expect that as we're exiting the fourth quarter moving into the first quarter of FY '25, we should have the validation that we need to make that assessment.

因此，我預計，當我們即將結束第四季並進入 25 財年第一季時，我們應該得到進行評估所需的驗證。

Okay. Okay. So at some point in the first quarter, you'll have a sense whether you can ramp into full production on those programs. Is that a good way to think about it?

好的。好的。因此，在第一季的某個時候，您就會知道是否可以全面投入這些項目的製作。這是一個好的思考方式嗎？

Correct. And really, this is all about getting to a sample size that we think is statistically significant. I mean, the units that we've built, all the testing that we've done during the quarter, all indicate that the corrective action we've put in place gets us to where we need to be from a physical integrity standpoint. We want to see that over a much larger sample size to increase our confidence in the corrective action.

正確的。事實上，這一切都是為了獲得我們認為具有統計顯著性的樣本量。我的意思是，我們建造的設備，我們在本季所做的所有測試，都表明我們採取的糾正措施使我們從物理完整性的角度達到了我們需要達到的目標。我們希望在更大的樣本量上看到這一點，以增強我們對糾正措施的信心。

Okay. I think I got it. Just one follow-up for me. As you guys thinking about kind of going forward in the '25 and '26, how are you thinking about on-ramping new development programs, right? Just given -- we've heard about the challenged programs. But I also feel like maybe there's some other development programs that have had some issues but aren't part of the challenged programs. So how are you thinking about taking on new development programs? And how should we think about the technical risk associated with that going forward?

好的。我想我明白了。只是我的一個後續行動。當你們考慮在 25 和 26 年繼續前進時，你們是如何考慮啟動新的開發計劃的，對嗎？剛剛，我們聽說了受到挑戰的項目。但我也覺得也許還有一些其他開發計畫存在一些問題，但不屬於受到挑戰的計畫的一部分。那麼您如何考慮開展新的開發計畫？我們應該如何考慮未來與之相關的技術風險？

Yes. It's a great question. And you've heard us talk in the past about our historical mix being around 20%, 80% development to production. We've recently been in this dense phase of 40% development, 60% in production. Our goal over time, at least in order to hit our targeted EBITDA margins that we've talked about in prior calls, is to see that mix move back towards 20-80.

是的。這是一個很好的問題。您過去曾聽我們談論過我們的歷史組合大約是 20%、80% 的開發到生產。我們最近正處於 40% 開發、60% 生產的密集階段。隨著時間的推移，我們的目標是看到這一比例回到 20-80，至少是為了達到我們在之前的電話會議中討論過的目標 EBITDA 利潤率。

But the mix isn't the only driver. The makeup of the development programs is a big driver. So for instance, the challenged programs that you've heard us talk about, they're all firm fixed price development. While we won some large development awards this year that we feel great about that are cost-plus. And so the risk profile on those is very different than firm fixed price development.

但這種混合並不是唯一的驅動因素。開發計劃的組成是一個很大的推動力。例如，您聽到我們談論的有挑戰性的計劃，它們都是固定價格開發。雖然我們今年贏得了一些大型開發獎項，但我們對此感到非常高興，因為這是成本加成。因此，這些風險狀況與固定價格開發有很大不同。

If you look at our bookings so far this year, we feel like the makeup of those bookings are taking us toward that target of 80-20. And specifically, of our firm fixed price bookings this year, 80% are production and 20% are development.

如果你看看我們今年迄今為止的預訂量，我們覺得這些預訂量的組成正在帶領我們朝著 80-20 的目標邁進。具體來說，在我們今年的固定價格預訂中，80% 是生產訂單，20% 是開發訂單。

And then one other thing I'd point you to is the level of rigor that we are putting into our bid and proposal activities, and then our program baseline activities once we win a contract and implement it is much more mature than it has been historically. And I think one piece of evidence of that is one of our largest development contracts, the integrated baseline review that we went through this quarter and received very good grades from our customer and the highest incentive fee that we could earn on our program is a good indication of the maturing of not only our bidding, but also our program baselining activities.

我想向您指出的另一件事是，我們在投標和提案活動中的嚴格程度，一旦我們贏得合同並實施合同，我們的計劃基準活動就比歷史上成熟得多。我認為這方面的一個證據是我們最大的開發合約之一，我們本季度進行的綜合基線審查，並從我們的客戶那裡獲得了非常好的成績，並且我們可以在我們的計劃中賺取的最高獎勵費是一個很好的回報。

We'll take the next question from Sheila Kahyaoglu, Jefferies.

我們將回答 Jefferies 的 Sheila Kahyaoglu 提出的下一個問題。

Just wanted to maybe ask on the top line. With one quarter left to go, you guys do have a wide range in the fourth quarter. Backlog and book-to-bill is starting to turn. But how do we think about that wide range and your visibility into fiscal '25? Any indications you could provide on that front, especially given a fairly easy comp this year and production mix being 80% of bookings?

只是想問最上面的問題。剩下最後一節，你們在第四節確實有很大的射程。積壓訂單和訂單到帳單的情況開始出現轉變。但我們如何看待這個廣泛的範圍以及您對 25 財年的可見性？您可以在這方面提供任何指示嗎？

Yes, Sheila, this is Dave. I would say the first part of the question, yes, it is a wide range as we approach Q4. And there's -- when you look at the midpoint of the range, we feel that's the right midpoint of the range. As we think towards -- additional -- could there be additional cost actions that happen between now and the end of the year. And that's what gives us confidence in the lower end of the range.

是的，希拉，這是戴夫。我想說問題的第一部分，是的，隨著我們接近第四季度，它的範圍很廣。當你查看範圍的中點時，我們認為這是該範圍的正確中點。正如我們所考慮的那樣，從現在到今年年底，是否可能會採取額外的成本行動。這就是讓我們對範圍低端充滿信心的原因。

And on the upper end of the range, it really is about timing. And are there -- largely, for us, at this stage, it would be material that staged for the very end of the year. And if it comes in the very end of the year versus the beginning of fiscal '25 would be the difference.

在範圍的上限，這確實與時機有關。在現階段，對我們來說，很大程度上，這將是在今年年底上演的材料。如果它發生在今年年底與 25 財年年初，那麼情況就會有所不同。

So those are really the drivers. We're not at a point where we're thinking about guidance today for FY '25. So we're not putting anything ahead of us right now.

所以這些才是真正的驅動因素。今天我們還沒有考慮 25 財年的指導。所以我們現在不會放任何東西。

Okay. And then maybe on free cash flow usage, if you could just talk about that a little bit. It would be the $26 million in the quarter compared to your comments last time about being close to breakeven. So maybe you talked about working capital improvement. If you could just give us a little bit more detail there as we think about the improvement into fiscal Q4 and getting positive to breakeven free cash flow for the year.

好的。然後也許是關於自由現金流的使用，如果你能稍微談談的話。與您上次關於接近盈虧平衡的評論相比，本季的營收將達到 2,600 萬美元。也許您談到了營運資金的改善。當我們考慮第四財季的改善以及今年損益兩平的自由現金流為正值時，您能否給我們更多細節。

Yes -- and so we feel good about the positive cash flow for the year. We see, and Bill talked about the highest billings we've had the last 2 quarters, and so that has set us up well heading into the fourth quarter.

是的——所以我們對今年的正現金流感到滿意。我們看到了，比爾談到了我們過去兩個季度的最高賬單，因此這為我們進入第四季度做好了準備。

The variance on the cash flow when we were looking towards breakeven, I talked about the industry-wide supplier issue we had, had in Q3, which pushed some of our billings that we expected to get out and collect in Q3, they pushed them out towards the end. So that was -- more than half of that variance was driven by that.

當我們尋求盈虧平衡時，現金流量存在差異，我談到了我們在第三季度遇到的全行業供應商問題，這推動了我們預計在第三季度收回和收取的一些賬單，他們將它們推出了到最後。所以，超過一半的差異是因此造成的。

And this was non-conforming material that we had gotten -- we had to go and change out products. And we're not the only ones that got it. Across the industry, other people got it, had the same thing. We had to change that out, take it out of product, put conforming material in and deliver those products before we could bill and collect.

這是我們收到的不合格材料－我們必須去更換產品。我們並不是唯一得到它的人。在整個行業中，其他人也明白了，也有同樣的事情。我們必須改變這一點，將其從產品中取出，放入合格的材料並交付這些產品，然後才能開立帳單和收貨​​。

So that was the single-biggest driver on the cash variance for the quarter. So we don't view that as anything that would recur. So that will be part of our Q4 -- obviously, our Q4 collection.

因此，這是本季現金差異的最大驅動因素。所以我們不認為這種情況會再次發生。所以這將是我們第四季的一部分——顯然，是我們第四季系列的一部分。

Your next question comes from Sam Struhsaker, Truist Securities.

您的下一個問題來自 Truist Securities 的 Sam Struhsaker。

I'm on for Mike Ciarmoli. I was curious if you guys could maybe give a little bit more color on how you're thinking about the pipeline of future opportunities, just kind of looking at -- backlog is obviously really good, but it seems like there might be a bit of a decline in bookings from a year-over-year perspective, so from like new orders and things like that. How are you kind of looking at the long term about -- how do you feel about the pipeline long term in that regard?

我代表麥克·恰爾莫利。我很好奇你們是否可以就如何思考未來機會的管道提供更多的信息，只是看看——積壓工作顯然非常好，但似乎可能有一些從同比的角度來看，預訂量有所下降，比如新訂單之類的。您如何看待長期的問題—您對這方面的長期管道有何看法？

Yes. This is Bill. I'll take that one. First, your comment on the backlog. Like we said, we feel really good about not only the size of the backlog, but the makeup of the backlog, and in particular, this year's bookings and the mix associated with that.

是的。這是比爾。我會接受那個。首先，您對積壓的評論。正如我們所說，我們不僅對積壓訂單的規模，而且對積壓訂單的組成，特別是今年的預訂量以及與之相關的組合都感到非常滿意。

We did see some orders slip out of the quarter tied to the work that we're doing on the common processing architecture, which is understandable that customers would want to see us making progress, getting the production back up and running and then eventually getting back to full rate of production. So that did impact bookings somewhat in the quarter.

我們確實看到一些訂單從本季度滑出，這與我們在通用處理架構上所做的工作有關，這是可以理解的，客戶希望看到我們取得進展，讓生產恢復正常運行，然後最終恢復正常達到全速生產。因此，這確實對本季的預訂量產生了一定影響。

But as we look forward at our pipeline, we feel good not only about the size but also the mix of that pipeline as well. And as we said before, just longer term, we feel like we're in a very strong part of the market, an attractive segment of the market with good growth rates, and I think our pipeline reflects that.

但當我們展望我們的管道時，我們不僅對該管道的規模感到滿意，而且對該管道的組合也感到滿意。正如我們之前所說，從長遠來看，我們覺得我們處於市場的一個非常強大的部分，一個具有良好成長率的有吸引力的市場部分，我認為我們的管道反映了這一點。

(Operator Instructions) We'll take the next question from Jan Engelbrecht, Baird.

（操作員說明）我們將回答 Jan Engelbrecht、Baird 提出的下一個問題。

The first question, just if we take a step back on the sort of '19 challenged programs that were identified. Can you just give us a sense? Of the 11 that's been resolved, sort of how many of those have transitioned to production contracts? Have you exited any? And how many do you expect to sort of transition to production in the coming quarters?

第一個問題，我們是否可以退一步討論已確定的 19 年受到挑戰的項目。你能給我們一個感覺嗎？在已解決的 11 個問題中，有多少已轉為生產合約？你有退出過嗎？您預計有多少會在未來幾季過渡到生產？

Yes, this is Bill. I'll take the question. Let's see. As far as exiting, there have been a couple that we have exited. The balance, we have completed and generally are on a path toward production is how I would characterize those. And for the ones that are outstanding, we are on a path to close out half of them this quarter, which we expect to transition over time to production. And the 4 that are remaining are associated with the common processing architecture, all of which we expect to transition to production.

是的，這是比爾。我來回答這個問題。讓我們來看看。就退出而言，我們已經退出了一些。我們已經完成了平衡，並且總體上正在走向生產，這就是我對這些平衡的描述。對於那些表現出色的產品，我們計劃在本季度關閉其中一半，並預計隨著時間的推移將其過渡到生產階段。剩下的 4 個與通用處理架構相關，我們希望將所有這些架構過渡到生產。

Just a quick follow-up. Just -- if we just look at your recent wins in space with BlueHalo and then also on the Tranche 2 and all the tailwinds that we're seeing in space with missile tracking and missile defense, situational awareness, should we expect Mercury to sort of more aggressively target space programs in the next couple of years?

只是快速跟進。只是 - 如果我們看看你們最近在 BlueHalo 和 Tranche 2 方面取得的勝利，以及我們在太空中看到的導彈跟踪和導彈防禦、態勢感知方面的所有順風車，我們是否應該期望 Mercury 能夠未來幾年更積極地瞄準太空計畫？

I mean, if we just look at the SDA Tracking Layer and Transport Layer, if you get -- with L3, if you can get sort of consistent awards on future Tranches, I would think that, that would be a very attractive program as it will sort of almost roll over every 2 or 3 years as the satellites need to get replaced. And just any comments on space and Mercury in the longer term.

我的意思是，如果我們只看一下SDA 追蹤層和傳輸層，如果你能通過L3，如果你能在未來的部分中獲得一致的獎勵，我認為這將是一個非常有吸引力的計劃，因為它由於衛星需要更換，幾乎每兩三年就會滾動一次。以及從長遠來看對太空和水星的任何評論。

Well, we think it is a growth market for us. We're very pleased with the orders that we've received. And I also -- we're also pleased that it's a good mix, I think, of production contracts, like BlueHalo, as well as new development contracts that we've won that will be drivers of longer-term organic growth.

嗯，我們認為這對我們來說是一個成長的市場。我們對收到的訂單非常滿意。我也很高興，我認為這是一個很好的組合，包括像 BlueHalo 這樣的生產合同，以及我們贏得的新開發合同，這些合同將成為長期有機增長的驅動力。

So it's a market that we think is attractive, we're well positioned and we're focused on. And back to my earlier comments, is why we're so focused on executing on the development contracts that we won.

因此，我們認為這是一個有吸引力的市場，我們定位良好並且專注。回到我之前的評論，這就是為什麼我們如此專注於執行我們贏得的開發合約。

And everyone, at this time, there are no further questions. I'll hand the call back to Mr. Bill Ballhaus for any additional or closing remarks.

而大家，這時候，也沒有再問什麼了。我會將電話轉給 Bill Ballhaus 先生，請他發表補充或結束語。

Well, at this point, thank you. I appreciate the interest and the attendance at the call, and we look forward to updating everyone next quarter. Thank you very much.

嗯，在這一點上，謝謝你。我感謝大家對電話會議的興趣和出席，我們期待下個季度向大家通報最新情況。非常感謝。

Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

各位，今天的會議到此結束。我們衷心感謝大家的參與。您現在可以斷開連線。