Mercury Systems Inc (MRCY) 2024 Q4 法說會逐字稿

Good day, everyone, and welcome to the Mercury Systems fourth quarter fiscal 2024 conference call. Today’s call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Executive Vice President and Chief Financial Officer, Dave Farnsworth. Please go ahead, Mr. Farnsworth.

大家好，歡迎參加 Mercury Systems 2024 財年第四季電話會議。今天的通話正在錄音。現在，我想將電話轉給公司執行副總裁兼財務長 Dave Farnsworth 進行開場白和介紹。請繼續，法恩斯沃斯先生。

Good afternoon, and thank you for joining us. With me today is our Chairman and Chief Executive Officer, Bill Ballhaus. 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 Bill and I will be referring to is posted on the Investor Relations section of the website under Events & 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。比爾和我將參考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.

轉向簡報中的投影片 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。

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.

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, and free cash flow. A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release. I'll now turn the call over to Mercury's Chairman and CEO, Bill Ballhaus. Please turn to slide 3.

我還想提一下，除了根據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，特別是調整後的收入、調整後的每股收益、調整後的EBITDA、和自由現金流。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。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 Q4 and fiscal year 2024 earnings call. We exited FY24 with positive momentum, delivering results in line with or ahead of expectations. And I look forward to that momentum continuing as we enter into FY25.

謝謝，戴夫。午安.感謝您參加我們的第四季和 2024 財年財報電話會議。我們以積極的勢頭結束了 24 財年，取得了符合或超出預期的業績。我期待進入 2025 財年時這種勢頭能夠持續下去。

Today, I'd like to talk through three topics. First, some introductory comments on our business and results as we close FY24; second, a progress update in each of our four priority areas established just over a year ago, delivering predictable performance, building a thriving growth engine, expanding margins, and driving improved free cash flow; and third, expectations for our performance as we enter FY25 and longer term. And then I'll turn it over to Dave who will walk through our financial results.

今天我想講三個話題。首先，在 2024 財年結束時對我們的業務和業績進行一些介紹性評論；其次，我們在一年多前建立的四個優先領域中每一個領域的進展更新，提供可預測的業績，建立蓬勃發展的成長引擎，擴大利潤，並推動改善自由現金流；第三，進入 25 財年及更長期時對我們業績的期望。然後我會將其交給戴夫，他將詳細介紹我們的財務表現。

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，以及我們的 Mercury 團隊對在邊緣提供關鍵任務處理的奉獻和承諾。

One other note, I'd like to thank Nelson Erickson for his contributions to Mercury over the years. I know many of you have interacted with Nelson on the Investor Relations front. Nelson has elected to pursue a new opportunity outside of Mercury and we wish him well in his future endeavors.

另外，我要感謝 Nelson Erickson 多年來對 Mercury 的貢獻。我知道你們中的許多人都在投資者關係方面與尼爾森互動。尼爾森已選擇在水星之外尋求新的機會，我們祝他未來一切順利。

Please turn to slide 4. In FY24, we made considerable progress addressing transient challenges in the business. As we enter FY25, I'm optimistic about our strategic positioning as a leader in mission critical processing at the edge, and our expectations on delivering predictable organic growth with expanding margins and robust free cash flow.

請參閱投影片 4。2024 財年，我們在應對業務中的暫時挑戰方面取得了相當大的進展。隨著我們進入 2025 財年，我對我們作為邊緣關鍵任務處理領導者的戰略定位感到樂觀，並對我們透過不斷擴大的利潤和強勁的自由現金流實現可預測的有機增長的期望感到樂觀。

Our Q4 and full year results were in line with or ahead of our expectations. Q4 bookings of $284 million and $1.02 billion for the full year, in line with our guidance of $1 billion and representing a FY24 book-to-bill of 1.22. Q4 revenue of $249 million and $835 million for the full year, above the midpoint of our guidance. Q4 adjusted EBITDA of $31 million, up 42% year over year.

我們的第四季和全年業績符合或超越我們的預期。第四季的預訂量為 2.84 億美元，全年預訂量為 10.2 億美元，符合我們 10 億美元的指導，24 財年的預訂訂單比為 1.22。第四季營收為 2.49 億美元，全年營收為 8.35 億美元，高於我們指引的中點。第四季調整後 EBITDA 為 3,100 萬美元，較去年同期成長 42%。

And Q4 free cash flow of $61 million and $26 million for the full year, keeping with or exceeding our guidance of free cash flow positive for the fiscal year. Q4 free cash flow was up $58 million year over year and represents the highest quarterly free cash flow in the company's history. We ended the fourth quarter with $181 million of cash on hand after paying down $25 million of debt.

第四季全年自由現金流分別為 6,100 萬美元和 2,600 萬美元，符合或超過我們對本財年自由現金流為正值的指導。第四季自由現金流年增 5,800 萬美元，創下公司歷史上最高的季度自由現金流。在償還了 2500 萬美元的債務後，我們在第四季末手頭現金為 1.81 億美元。

These Q4 results reflect solid progress in each of our four priority focus areas with highlights that include retiring risk across our remaining challenge programs, most notably executing the plan on the return to initial pilot production on our common processing architecture area, expanding our record backlog to over $1.3 billion, up 16% year over year, additional streamlining of our operations, enabling increased positive operating leverage as we return to organic growth, and reversing the multi-year trend of growth in working capital with net working capital down 15% year over year and sequential reductions in inventory and unbilled receivables.

這些第四季度的結果反映了我們在四個優先重點領域中每一個領域的紮實進展，其中的亮點包括消除我們剩餘挑戰計劃中的風險，最值得注意的是在我們的通用處理架構領域執行恢復初始試點生產的計劃，將我們的記錄積壓擴大到超過13 億美元，同比增長16%，我們的營運進一步精簡，隨著我們恢復有機增長，正運營槓桿得以增加，並扭轉了營運資本多年成長的趨勢，淨營運資本年減15%庫存和未開立應收帳款逐年減少。

With this progress in FY24, we are entering FY25 with a clear path towards delivering predictable organic growth, expanding margins, and improve free cash flow.

隨著 2024 財年的這一進展，我們在進入 25 財年時，已為實現可預測的有機成長、擴大利潤率和改善自由現金流提供了明確的道路。

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. In the fourth quarter, we delivered improved operating performance and we're able to more effectively mitigate what we believe to be the transitory challenges that have obscured the underlying performance of the business.

請翻到投影片 5。在第四季度，我們的營運業績有所改善，並且能夠更有效地緩解我們認為掩蓋了業務基本業績的暫時性挑戰。

In Q4, we recognized approximately $16.2 million of items that we believe are transitory, down from $39 million in Q3, including $9.7 million of net EAC change impact across our portfolio, $2.9 million of inventory reserves and scrap, and $3.6 million associated with contract settlement reserves.

在第四季度，我們確認了大約1620 萬美元的我們認為是暫時性的項目，低於第三季度的3900 萬美元，其中包括整個投資組合中970 萬美元的EAC 變更淨影響、290 萬美元的庫存儲備和報廢以及與合約結算相關的360 萬美元儲備。

These items impacted Q4 revenue by approximately $9.7 million, gross margin by approximately $12.6 million, with the remainder impacting operating expenses. The approximately $9.7 million of net EAC change impact is a 38% reduction from what we experienced last quarter, and consisted of approximately $4.4 million from our challenged programs and approximately $5.3 million spread across the remaining programs in our portfolio.

這些項目影響第四季收入約 970 萬美元，毛利率約 1,260 萬美元，其餘則影響營運費用。 EAC 變更淨影響約為 970 萬美元，比我們上季度經歷的影響減少了 38%，其中約 440 萬美元來自我們受到挑戰的項目，約 530 萬美元分佈在我們投資組合中的其餘項目中。

Although still greater than we would like to see, the magnitude of these items is the lowest in four quarters and reflects the progress we are making in driving toward predictable execution and steady growth.

儘管這些項目的規模仍超出我們的預期，但已是四個季度以來的最低水平，反映了我們在推動可預測執行和穩定成長方面所取得的進展。

As shown on slide 6, with respect to the challenged programs, since the end of the third quarter, we progressed by completing, exiting, or retiring risk on three additional of the original 19 programs. We believe we have now retired risk on 13 of the original 19 challenged programs that have materially contributed to earnings volatility in recent quarters.

如投影片 6 所示，對於受到挑戰的項目，自第三季末以來，我們透過完成、退出或消除最初 19 個項目中另外三個項目的風險而取得進展。我們認為，我們現在已經消除了最初 19 個受到挑戰的計劃中的 13 個的風險，這些計劃對最近幾個季度的盈利波動產生了重大影響。

For the six remaining programs, two are nearing completion and represent ordinary course risk going forward. The other four remaining programs are associated with a common processing architecture. As I mentioned, we have successfully executed on our return to initial pilot production in our common processing architecture area.

對於其餘六個項目，其中兩個即將完成，代表未來的正常流程風險。其他四個剩餘程序與通用處理架構相關聯。正如我所提到的，我們已經在通用處理架構領域成功恢復了初始試生產。

We're in the final phases of reliability testing with significant risk retired, and are on a deliberate path to ramp up toward full rate production in the first half of the fiscal year, leveraging additional capital equipment and trained resources that we have in place. Given the progress in FY24, we will no longer separately address the challenged programs going forward, but we will keep you informed with regard to progress on our common processing architecture.

我們正處於可靠性測試的最後階段，重大風險已消除，並且正在利用我們現有的額外資本設備和訓練有素的資源，在本財年上半年刻意提高全速生產。鑑於 2024 財年的進展，我們將不再單獨解決未來面臨挑戰的計劃，但我們將隨時向您通報我們通用處理架構的進展。

Please turn to slide 7. Turning now to the second focus area, driving organic growth. Bookings for the quarter were $284 million, resulting in a 1.14 book to bill. Our backlog, now at a record $1.3 billion, is up 16% year over year.

請翻到投影片 7。該季度的預訂量為 2.84 億美元，預訂完成率為 1.14。我們的積壓訂單現已達到創紀錄的 13 億美元，年增 16%。

Notably, when we look at FY24 bookings, approximately 80% of our firm fixed price bookings are production in nature, which we believe is a good leading indicator that the mix shift toward production is progressing in our firm fixed price portfolio.

值得注意的是，當我們查看2024 財年的預訂時，我們大約80% 的固定價格預訂本質上是生產，我們認為這是一個很好的領先指標，表明我們的固定價格投資組合正在向生產的混合轉變取得進展。

Some wins in the quarter worth noting. A large production order from a prime contractor for Mercury processing solutions to be integrated on a key US Air Force program of record. Multiple large production orders for processing solutions employed in air and missile defense systems for US and international customers, including some which are actively engaged in Ukraine, and others which will provide critical capability in support of NATO's ongoing operations in Europe and elsewhere.

本季的一些勝利值得注意。一家主承包商為 Mercury 處理解決方案提供的大筆生產訂單將整合到美國空軍的一項重要記錄計劃中。為美國和國際客戶提供用於防空和飛彈防禦系統的加工解決方案的多個大生產訂單，其中一些客戶積極參與烏克蘭的生產活動，還有一些將為北約在歐洲和其他地方的持續行動提供關鍵能力的支持。

Multiple production orders for F-35 related electronics content, cutting across various subsystems in both our processing technologies and signal technologies business units. And a $13.2 million cost plus development award from the Office of Naval Research to advance sensor processing technologies, which will enable radar and EW capabilities to be designed on much shorter timelines by increasing the modularity of components at the chip level and leveraging the latest commercial chips from major semiconductor providers within a smaller and lighter footprint.

F-35 相關電子產品的多個生產訂單涉及我們處理技術和訊號技術業務部門的各個子系統。美國海軍研究辦公室授予1,320 萬美元的成本加成開發獎，用於推進感測器處理技術，透過提高晶片級組件的模組化程度並利用最新的商用晶片，可以在更短的時間內設計雷達和電子戰功能來自主要半導體供應商的更小、更輕的佔地面積。

These awards are important not only because of their value and impact on our growth trajectory, but also because they reflect our customers' trust in Mercury to support their most critical franchise programs. We know from engagements with our customers that our unique capabilities providing mission-critical processing at the edge align well with our customers' priorities and strong demand in growth markets, including sensors and effectors, electronic warfare, avionics, and C4I.

這些獎項之所以重要，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信任。我們從與客戶的接觸中了解到，我們在邊緣提供關鍵任務處理的獨特能力與客戶的優先事項和成長市場的強勁需求非常吻合，包括感測器和效應器、電子戰、航空電子設備和 C4I。

Please turn to slide 8. Now turning to our third priority focus area, expanding margins. We believe FY24 was an unusual transitory year where we delivered margins well beneath our targets. These shortfalls were primarily driven by the previously discussed impacts that we view as transitory, and negative operating leverage from relatively low production volume, largely tied to development program delays.

請轉到投影片 8。我們認為 2024 財年是不尋常的過渡年，我們的利潤率遠低於我們的目標。這些短缺主要是由先前討論的我們認為是暫時的影響以及相對較低的產量造成的負面營運槓桿造成的，這在很大程度上與開發計劃的延遲有關。

Looking forward, 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 towards a more historical 20-80 mix of development-to-production programs, driving organic growth to generate positive operating leverage, and achieving cost efficiencies.

展望未來，為了實現調整後的 EBITDA 利潤率目標，我們將專注於以下槓桿。執行我們的開發計劃並最大限度地減少成本增長的影響，回到歷史上 20-80 的開發到生產計劃組合，推動有機增長以產生積極的運營槓桿，並實現成本效率。

I've discussed on this call our program execution and cost growth containment efforts, along with our organic growth efforts. Regarding cost efficiencies, as mentioned in prior calls, we implemented a series of cost reduction actions during FY24 as we streamlined and realigned our organization structure, resulting in significant cost savings previously announced.

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，正如先前的電話會議中所提到的，我們在 2024 財年期間實施了一系列成本削減行動，精簡和重新調整了我們的組織結構，從而顯著節省了先前宣布的成本。

In Q4, we completed top to bottom leadership selection for the corporate reorganization initially announced in January, organizing our US-based business units into two product business units, and an integrated processing solutions business unit, and centralizing our engineering, operations, and mission assurance functions.

第四季度，我們完成了1 月份最初宣布的公司重組的自上而下的領導層選拔，將我們的美國業務部門重組為兩個產品業務部門和一個集成處理解決方案業務部門，並將我們的工程、營運和任務保證集中化功能。

Additionally, we stood up an advanced concepts group that's focused on advanced technologies, innovation, and strategic growth pursuits. With this significant effort behind us, we exited FY24 with a streamlined cost structure, an integrated organizational construct, and a strong leadership team that is well-poised to build on our momentum coming out of FY24 and drive improved performance towards our targeted business profile.

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。憑藉這一重大努力，我們在2024 財年結束時擁有精簡的成本結構、一體化的組織結構和強大的領導團隊，該團隊已準備好在2024 財年的勢頭基礎上再接再厲，並推動績效提高，實現我們的目標業務概況。

Please turn to slide 9. Finally, turning to our fourth priority focus area, improved free cash flow. We continue to make progress in reducing net working capital, which is down $93.3 million year over year after years of expansion. Inventory is down sequentially by $8 million from $343 million in Q3 to $335 million in Q4.

請轉到投影片 9。我們在減少淨營運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 9,330 萬美元。庫存季減 800 萬美元，從第三季的 3.43 億美元降至第四季的 3.35 億美元。

Notably, while inventory is flat year-over-year, WIP is up 44% year over year from $82 million to $118 million, reflecting an increased mix of inventory progressed toward delivery. Unbilled receivables are down year over year $79 million, or 21%, driven by Q2, Q3, and Q4 billings which were the three highest billing quarters on overtime revenue contracts in the company's history.

值得注意的是，雖然庫存同比持平，但 WIP 年成長 44%，從 8,200 萬美元增至 1.18 億美元，反映出交付過程中庫存組合的增加。未開立發票應收帳款年減7,900 萬美元，即21%，這是由於第二季、第三季和第四季的開票情況所致，這三個季度是公司歷史上加班收入合約開票最高的三個季度。

This record level of billings reflects our relentless focus on progressing our programs in order to deliver for our customers, and in turn, invoice and collect cash, leading to the free cash flow record performance in Q4. We believe the operational process rigor we've implemented in FY24 related to program execution and hardware delivery, just-in-time material, and appropriately timed payment terms will lead to continued reduction in working capital and improved free cash flow performance going forward.

這項創紀錄的帳單水準反映了我們不懈地致力於推進我們的計劃，以便為客戶提供服務，進而開發票並收取現金，從而在第四季度實現了創紀錄的自由現金流表現。我們相信，我們在 2024 財年實施的與計畫執行和硬體交付、及時材料和適當定時付款條件相關的嚴格營運流程將導致營運資金持續減少，並改善未來的自由現金流績效。

Please turn to slide 10. Entering FY25, I have high confidence in our team, our leadership position in delivering mission-critical processing at the edge, and our expected ability over time to deliver results in line with our target profile of above-market top-line growth, adjusted EBITDA margins in the low-to-mid 20% range, and free cash flow conversion of 50%.

請轉至投影片10。信心線成長，調整後 EBITDA 利潤率在 20% 的中低範圍內，自由現金流轉換率為 50%。

Although we will not be providing specific guidance this early in the year for FY25, I will provide the following color. In FY25, we expect to make further progress on the two primary challenges we have been tackling over the last year, specifically high working capital and the high mix of development programs, which we expect to see reflected in our FY25 financials in the following two ways.

儘管我們不會在今年年初為 2025 財年提供具體指導，但我將提供以下顏色。在2025 財年，我們預計在去年解決的兩個主要挑戰上取得進一步進展，特別是高營運資本和高組合發展計劃，我們預計這將透過以下兩種方式反映在我們25 財年的財務數據中。

First, as we continue to focus on bringing down working capital, we expect to allocate meaningful operational capacity to advance programs with large unbilled receivable balances, which generates cash, but relatively low revenue, given that on many of these programs, a large percentage of revenue has been previously recognized.

首先，隨著我們繼續專注於降低營運資本，我們預計將分配有意義的營運能力來推進具有大量未開票應收帳款餘額的項目，這些項目會產生現金，但收入相對較低，因為在許多這些項目中，很大一部分收入已於先前確認。

As a result, we expect our top line for FY25 to be relatively flat year over year, with the first half in line with last year, and an increase in run rate as we exit the fiscal year and begin to allocate more operational capacity away from legacy programs with high unbilled balances towards production programs.

因此，我們預計 25 財年的營收將同比相對持平，上半年與去年持平，並且隨著我們退出本財年並開始分配更多營運能力，運行率將會上升。餘額的遺留項目。

Second, while we have made significant progress on development programs across our portfolio, our current backlog margin is lower than what we expect to see on a go-forward basis, driven primarily by a small number of low margin development programs and programs that incurred adverse EAC adjustments in FY24.

其次，雖然我們在整個投資組合的開發項目上取得了重大進展，但我們目前的積壓利潤率低於我們預期的未來水平，這主要是由少數低利潤開發項目和產生不利影響的項目推動的。 2024 財年EAC 調整。

Given that a large percentage of our backlog converts over the next 12 months, although we expect low double-digit adjusted EBITDA margins overall for FY25, we expect adjusted EBITDA margins to start off in the high single-digits for the first half of the year and then expand in the second half as we complete these lower margin development efforts and continue to shift our mix towards production.

鑑於我們大部分積壓訂單將在未來12 個月內完成轉換，儘管我們預計2025 財年調整後EBITDA 利潤率總體將達到較低的兩位數，但我們預計今年上半年調整後EBITDA 利潤率將達到高個位數然後在下半年擴大規模，完成這些較低利潤的開發工作，並繼續將我們的組合轉向生產。

Finally, given our recent strong free cash flow performance in Q4, we're expecting to be cash flow positive again in FY25 with second half free cash flow higher than the first half.

最後，鑑於我們最近在第四季的強勁自由現金流表現，我們預計 25 財年現金流將再次為正，下半年自由現金流將高於上半年。

In summary, given the operational improvements over the last 12 months and our momentum coming out of Q4, I expect that our performance in FY25, in particular, our exit run rate, will represent a positive step towards our target profile. As we progress through the first half of the year, I look forward to providing additional insights relative to our expectations for second half and full year performance.

總而言之，鑑於過去12 個月的營運改善以及我們第四季度的勢頭，我預計我們在2025 財年的表現，特別是我們的退出運行率，將代表我們朝著我們的目標邁出了積極的一步。隨著上半年的進展，我期待提供與我們對下半年和全年業績預期相關的更多見解。

With that, I'll turn it over to Dave to walk through the financial results for the fourth quarter and fiscal year 2024, and I look forward to your questions. Dave?

接下來，我將把它交給 Dave，讓他詳細介紹第四季和 2024 財年的財務業績，期待您的提問。戴夫？

Thank you, Bill. Our performance in Q4 was in line with our expectations, and I will echo Bill's comments that the actions we've taken throughout the year have supported the improved performance that we delivered during the fourth quarter and highlights the initial progress that we have made given our objective to transition the business toward delivering predictable performance, building a thriving growth engine, expanding margins, and driving improved cash flow.

謝謝你，比爾。我們第四季的業績符合我們的預期，我將回應比爾的評論，即我們全年採取的行動支持了我們在第四季度交付的業績改善，並強調了我們在考慮到我們的目標的情況下所取得的初步進展。

We continue to expect a resource shift toward follow-on production awards that, in turn, we believe will begin to rebalance our portfolio more heavily towards higher margin, predictable production programs, as well as consume further existing inventories. We are also making strides in releasing working capital, especially related to unbilled receivables.

我們仍然預計資源將轉向後續生產合同，反過來，我們相信這將開始更大規模地重新平衡我們的投資組合，以實現更高的利潤率、可預測的生產計劃，並進一步消耗現有庫存。我們在釋放營運資金方面也取得了長足進步，特別是與未開立應收帳款相關的資金。

We expect to see these transitions become more apparent in our financial results during fiscal year 2025. Progress in our four priority focus areas is highlighted by a few key milestones that we achieved during the quarter.

我們預計這些轉變將在 2025 財年的財務表現中變得更加明顯。

These milestones included our ability to retire risk across the majority of our remaining challenged programs, expanding our record backlog to over $1.3 billion, continuing to streamline our operations to drive margin expansion, and reversing the multi-year trend of growth in working capital.

這些里程碑包括我們有能力消除大多數剩餘的受挑戰項目的風險，將我們創紀錄的積壓訂單擴大到超過13 億美元，繼續簡化我們的運營以推動利潤率擴張，以及扭轉多年來營運資本增長的趨勢。

With that, please turn to slide 11, which details our fourth quarter results. Our bookings for the quarter were $284 million with a book to bill of 1.14, yielding a backlog of $1.3 billion, up $186 million or 16% year over year. Revenues for the fourth quarter were $249 million, down $5 million or 2% compared to the prior year of $253 million.

接下來，請翻到投影片 11，其中詳細介紹了我們第四季的業績。本季我們的預訂量為 2.84 億美元，預訂比為 1.14，積壓訂單為 13 億美元，較去年同期增加 1.86 億美元，即 16%。第四季營收為 2.49 億美元，比去年同期的 2.53 億美元減少 500 萬美元，即 2%。

This represents an improvement over our earlier outlook that we described during our third quarter earnings call, driven by material receipts scheduled for Q1, arriving in Q4. As you may recall, we maintained a wide range in guidance as there were uncertainties in the fourth quarter that could have resulted in adverse impacts driving our performance to the lower end of our range. And conversely, the timing of material receipts planned in the first quarter of fiscal 2025 would drive our results to the higher end of our range.

這比我們在第三季財報電話會議上描述的早期預期有所改善，這是由於計劃在第一季收到的材料收入在第四季度到達。您可能還記得，我們​​維持了廣泛的指導範圍，因為第四季度存在不確定性，可能會導致不利影響，導致我們的業績降至範圍的下限。相反，計劃在 2025 財年第一季收到材料的時間將推動我們的業績達到我們範圍的高端。

As Bill noted, we experienced approximately $10 million of net EAC change impacts affecting revenue in the quarter as compared to approximately $16 million in the third quarter of fiscal '24. The $10 million, which was the lowest net EAC change impact in the last five quarters, was comprised of approximately $4 million related to our challenged programs and nearly $6 million spread across multiple other development and production programs.

正如 Bill 指出的那樣，我們經歷了約 1000 萬美元的 EAC 淨變更影響，影響了本季的收入，而 24 財年第三季的收入約為 1,600 萬美元。 1000 萬美元是過去五個季度中 EAC 變更淨影響最低的，其中包括與我們面臨挑戰的項目相關的約 400 萬美元，以及涉及多個其他開發和生產項目的近 600 萬美元。

The $4 million net EAC change impact related to our challenged programs was largely tied to the four programs associated with the Common Processing Architecture, representing approximately 65% of the impact.

與我們的受挑戰項目相關的 400 萬美元淨 EAC 變更影響主要與與通用處理架構相關的四個項目相關，約佔影響的 65%。

As Bill stated, we believe we have successfully executed on a return to initial pilot production. We are in the final phases of reliability testing, and we've retired significant risk in this area as we progress towards full rate production. Of the nearly $6 million of net EAC change impact related to the large number of other development and production programs, we realized ordinary course execution challenges across the program portfolio.

正如比爾所說，我們相信我們已經成功恢復了最初的試生產。我們正處於可靠性測試的最後階段，隨著我們向全速生產邁進，我們已經消除了該領域的重大風險。在與大量其他開發和製作項目相關的近 600 萬美元的淨 EAC 變更影響中，我們意識到整個專案組合中的普通課程執行挑戰。

Gross margin for the fourth quarter increased to 29.5% from 26.6% in the prior year. Gross margin grew during the quarter primarily due to lower net EAC change impact of approximately $19 million as compared to the prior year.

第四季毛利率從去年同期的26.6%增至29.5%。本季毛利率成長主要是由於 EAC 淨變化影響較上年減少約 1,900 萬美元。

Operating expenses increased approximately $5 million year over year, primarily due to higher SG&A expenses of approximately $11 million and increased restructuring and other charges of $6 million as compared to the prior year.

營運費用年增約 500 萬美元，主要是由於與前一年相比，SG&A 費用增加了約 1,100 萬美元，重組和其他費用增加了 600 萬美元。

These increases were partially offset by lower R&D expense of approximately $8 million, driven by our workforce reductions. The increase in SG&A was primarily driven by higher stock-based compensation expense of approximately $8 million in the current quarter as compared to the prior year.

這些成長被我們裁員導致的研發費用減少（約 800 萬美元）部分抵銷。 SG&A 的成長主要是由於本季股票薪酬費用比上一年增加約 800 萬美元。

In the fourth quarter of the prior year, there were forfeitures of nearly $7 million from our former CEO's stock-based compensation. The fourth quarter of fiscal '24 also included $3.6 million of contract settlement reserves.

去年第四季度，我們前任執行長的股票薪酬被沒收了近 700 萬美元。 24 財年第四季還包括 360 萬美元的合約結算準備金。

The increase in restructuring and other charges was driven by the previously announced workforce reduction that eliminated approximately 100 positions, resulting in restructuring and other charges of approximately $7 million in the current quarter.

重組和其他費用的增加是由先前宣布的裁員推動的，該裁員減少了約 100 個職位，導致本季度的重組和其他費用約為 700 萬美元。

The headcount savings combined with other non-headcount savings, including discretionary and third-party spend, primarily within R&D and cost of revenues, are expected to yield annualized savings of approximately $15 million, a portion of which is expected to be reinvested in the business with the remainder supporting improved profitability and operating leverage for our 2025 fiscal year.

人員節省與其他非人員節省（包括主要在研發和收入成本方面的可自由支配支出和第三方支出）相結合，預計每年可節省約 1500 萬美元，其中一部分預計將再投資於業務其餘的支持我們2025 財年獲利能力和營運槓桿的提高。

GAAP net loss and loss per share in the fourth quarter were $10.8 million and $0.19, respectively, as compared to GAAP net loss and loss per share of $8.2 million and $0.15, respectively, in the prior year. The decrease in year-over-year earnings is primarily a result of higher operating expenses of $5 million driven by SG&A, restructuring, and other charges.

第四季 GAAP 淨虧損和每股虧損分別為 1,080 萬美元和 0.19 美元，而前一年的 GAAP 淨虧損和每股虧損分別為 820 萬美元和 0.15 美元。獲利年減的主要原因是 SG&A、重組和其他費用導致營運費用增加 500 萬美元。

The decrease was also impacted by higher non-operating expenses, including net incremental other expense of approximately $2.7 million and interest expense of $2 million. These decreases were partially offset by higher gross margin of approximately $6 million, driven primarily by lower net EAC change impacts during the quarter as compared to prior year.

這一下降也受到非營運費用增加的影響，其中包括約 270 萬美元的淨增量其他費用和 200 萬美元的利息費用。這些下降被約 600 萬美元的較高毛利率所部分抵消，這主要是由於本季度 EAC 淨變化影響較上年減少所致。

Adjusted EBITDA for the fourth quarter was $31.2 million, compared to $21.9 million in the prior year. Adjusted earnings per share was $0.23 as compared to adjusted earnings per share of $0.11 in the prior year.

第四季調整後 EBITDA 為 3,120 萬美元，上年同期為 2,190 萬美元。調整後每股收益為 0.23 美元，而上一年調整後每股收益為 0.11 美元。

The year-over-year increase was primarily related to lower loss from operations in the current year as compared to the prior year. Free cash flow in the fourth quarter was an inflow of $61.4 million as compared to an inflow of $3.8 million in the prior year. The increased free cash flow was primarily driven by incremental cash provided by operations of $59 million in the current year as compared to the prior year.

年成長主要與本年度經營虧損較前一年減少有關。第四季的自由現金流流入為 6,140 萬美元，而前一年的流入為 380 萬美元。自由現金流的增加主要是由於本年度營運提供的現金較前一年增加了 5,900 萬美元。

Turning to our full year results on slide 12. Fiscal year 2024 was another solid year for bookings. Our book to bill was 1.22 compared to 1.10 in fiscal year 2023, yielding a backlog of over $1.3 billion. Fiscal year 2024 revenues were $835 million, down 14% compared to the prior year. Our fiscal year revenue decline was largely the result of net EAC change impact of $73 million, and the deliberate pause on common processing architecture production.

轉向投影片 12 上的全年業績。我們的帳面出貨比為 1.22，而 2023 財年為 1.10，積壓訂單超過 13 億美元。 2024 財年營收為 8.35 億美元，較上年下降 14%。我們本財年的營收下降主要是由於 EAC 淨變化影響 7,300 萬美元，以及通用處理架構生產的故意暫停。

Gross margin for the fiscal year 2024 decreased to 23.5% from 32.5% in the prior year. Gross margin contracted by approximately 900 basis points primarily as a result of net EAC change impacts and incremental manufacturing adjustments, especially as related to inventory reserve, warranty expense, and scrap.

2024財年毛利率從前一年的32.5%下降至23.5%。毛利率收縮約 900 個基點，主要是由於淨 EAC 變化影響和增量製造調整，特別是與庫存儲備、保固費用和報廢相關的調整。

Operating expenses for the fiscal year increased approximately $5 million compared to the prior fiscal year, primarily due to higher restructuring and other charges, as well as higher SG&A expenses as compared to the prior year. These increases were partially offset by decreases in R&D and amortization expenses as compared to the prior year.

與上一財年相比，本財年的營運費用增加了約 500 萬美元，主要是由於與上一財年相比，重組和其他費用增加，以及 SG&A 費用增加。與前一年相比，這些成長被研發和攤銷費用的減少部分抵消。

GAAP net loss and loss per share in fiscal '24 were $137.6 million and $2.38, respectively, as compared to GAAP net loss and loss per share of $28.3 million and $0.50, respectively, in the prior year. The year-over-year decrease was a result of approximately $73 million of net EAC change impact, additional manufacturing adjustments, and contract settlement reserves.

2024 財年的 GAAP 淨虧損和每股虧損分別為 1.376 億美元和 2.38 美元，而前一年的 GAAP 淨虧損和每股虧損分別為 2,830 萬美元和 0.50 美元。年比下降的原因是約 7300 萬美元的 EAC 淨變化影響、額外的製造調整和合約結算準備金。

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 the 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。這些因素被年增稅優惠部分抵銷。

Adjusted EBITDA for fiscal year 2024 was $9.4 million compared with $132.3 million in the prior year. The decrease was primarily related to lower gross margin and reduced operating leverage. Free cash flow for the fiscal year was an inflow of approximately $26.1 million compared to an outflow of $60.1 million in the prior year. The increase in the current year was primarily driven by the progress we've made in converting our unbilled and trade receivables to cash.

2024 財年調整後 EBITDA 為 940 萬美元，前一年為 1.323 億美元。這一下降主要與毛利率下降和經營槓桿下降有關。本財年的自由現金流流入約為 2,610 萬美元，而前一年的流出量為 6,010 萬美元。本年度的成長主要是由於我們在將未開立發票和應收帳款轉換為現金方面取得的進展。

Slide 13 presents Mercury's balance sheet for the last five quarters. We ended the fourth quarter with cash and cash equivalents of approximately $181 million after making a $25 million payment against our revolver. We have $592 million of funded debt under our revolver.

投影片 13 展示了 Mercury 過去五個季度的資產負債表。在用我們的左輪手槍支付了 2500 萬美元後，我們第四季末的現金和現金等價物約為 1.81 億美元。我們的左輪手槍有 5.92 億美元的融資債務。

Billed receivables increased approximately $20 million sequentially due to the timing of invoicing collections in the quarter and $10.5 million reduction to our receivables factoring in the period. Unbilled receivables decreased sequentially approximately $21 million, due in part to continued successful execution in billings across the program portfolio. Inventory decreased sequentially $8 million, primarily as a result of the increased throughput across a number of programs.

由於本季的發票收款時間表以及本期間應收帳款保理業務減少了 1050 萬美元，帳單應收帳款環比增加了約 2000 萬美元。未開立發票應收帳款較上月減少約 2,100 萬美元，部分原因是整個專案組合的開立發票業務持續成功執行。庫存環比減少 800 萬美元，主要是由於多個項目的吞吐量增加。

Notably, while inventory decreased approximately $2 million year over year, WIP is up approximately 44% from our prior fiscal year-end, reflecting an increased mix of inventory that has progressed toward delivery. Prepaid expenses and other current assets decreased sequentially approximately $26 million primarily from the income tax refunds during the quarter of $24 million.

值得注意的是，雖然庫存同比減少了約 200 萬美元，但 WIP 較上一財年末增長了約 44%，反映出已向交付邁進的庫存組合有所增加。預付費用和其他流動資產環比減少約 2,600 萬美元，主要來自本季所得稅退款 2,400 萬美元。

Accrued expenses increased during the fourth quarter, primarily due to $20 million of accrued compensation costs related to our incentive compensation plans and payroll expense. Deferred revenues increased approximately $3 million in the quarter as a result of additional milestone billing events achieved during the fourth quarter.

第四季度應計費用增加，主要是由於與我們的激勵薪酬計劃和工資費用相關的 2000 萬美元的應計薪酬成本。由於第四季實現了額外的里程碑計費事件，本季遞延收入增加了約 300 萬美元。

Working capital decreased approximately $62 million or 10% in the fourth quarter, and approximately $93 million or 15% year over year. These decreases evidence the progress we've made in reversing the multi-year trend of growth in working capital with sequential reductions in inventory and unbilled receivables.

第四季營運資金減少約 6,200 萬美元，或 10%，年減約 9,300 萬美元，或 15%。這些減少證明了我們在扭轉多年來營運資本成長趨勢以及庫存和未開立應收帳款連續減少方面取得的進展。

Turning to cash flow on slide 14. Free cash flow for the fourth quarter was $61.4 million as compared to $3.8 million in the prior year. As Bill noted, this marks the highest quarterly free cash flow in the company's history. As Bill had outlined in his earlier comments, we will not be providing detailed guidance for FY25 at this time, but I would point you to slide 10 for some qualitative comments.

轉向幻燈片 14 上的現金流。正如比爾指出的那樣，這標誌著該公司歷史上最高的季度自由現金流。正如 Bill 在先前的評論中概述的那樣，我們目前不會為 2025 財年提供詳細的指導，但我會向您指出幻燈片 10 以獲取一些定性評論。

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

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，以展示我們業務的長期價值創造潛力。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) Pete Skibitski, Alembic Global.

（操作員說明）Pete Skibitski，Alembic Global。

Hey, good evening, guys. Nice quarter. Maybe we could start out talking about the CPA area and the four challenged programs there. You seem pretty confident that it's going to shift to the full rate production. I don't know if we should think the end of the first quarter or the end of the second quarter, but maybe go into more detail about the reliability testing and why you're confident that will complete? And when it does complete, are those four programs not going to generate a meaningful amount of revenue this year? Is that the right way to think about it? Thanks.

嘿，晚上好，夥計們。不錯的季度。也許我們可以開始討論註冊會計師領域和那裡的四個面臨挑戰的項目。您似乎非常有信心它將轉向全速生產。我不知道我們是否應該考慮第一季末或第二季末，但也許可以更詳細地了解可靠性測試以及為什麼您有信心完成？當它完成時，這四個項目今年不會產生可觀的收入嗎？這是正確的思考方式嗎？謝謝。

Yeah. Thanks, Pete. So just to reiterate where we are, we've gone through root cause corrective action, put in place the manufacturing process changes based on our understanding of the root cause and the material science, have been very deliberate in ramping up the production line with a lot of in-process testing along the way, and really pressure testing the corrective actions that we've put in place. All of that has been going to plan.

是的。謝謝，皮特。因此，重申我們的現狀，我們已經採取了根本原因糾正措施，根據我們對根本原因和材料科學的理解實施了製造工藝變更，並非常謹慎地提高了生產線的產量一路上進行了大量的過程中測試，並對我們已經採取的糾正措施進行了真正的壓力測試。所有這一切都已經計劃好了。

So I feel really good about the progress to date and how things are progressing. We have plans to ramp up to full rate production in the first half of the year.

因此，我對迄今為止的進展以及事情的進展感到非常滿意。我們計劃在今年上半年實現全速生產。

And as I mentioned, the critical path to ramping up is really behind us. We have the capital equipment in place. We have the additional people trained that we need in order to ramp up to full rate production. So I feel pretty confident about the path we're on to ramping up. And so we have a backlog that we need to deliver on.

正如我所提到的，提升的關鍵道路確實已經過去了。我們擁有適當的資本設備。我們對所需的額外人員進行了培訓，以提高全速生產。因此，我對我們正在走上的發展之路非常有信心。因此，我們有積壓的訂單需要交付。

I think there is a combination of programs where the majority of the revenue has been recognized and a backlog where we will recognize revenue. And we'll work out how we allocate the production across the capacity as we ramp that up.

我認為，大部分收入已得到確認的計劃與我們將確認收入的積壓工作相結合。當我們提高產能時，我們將研究如何在產能中分配生產。

And so that will play out over time as we work our way through the first half. But I'm anticipating that as we work our way through the first half, we will get up to full rate production, we'll work through the unbilled and the backlog associated with those programs.

因此，隨著我們上半場的努力，這將隨著時間的推移而發揮作用。但我預計，當我們在上半年工作時，我們將達到全速生產，我們將解決與這些計劃相關的未開票和積壓工作。

We're holding the four programs open really through the ramp-up of production. But as I said, everything seems to be going to plan. And then as we said before, as we ramp this production up and we make progress on delivering to our customers, there are follow-on opportunities that we're expecting to see.

我們將透過提高產量來真正保持這四個項目的開放。但正如我所說，一切似乎都在計劃之中。正如我們之前所說，隨著我們提高產量並在向客戶交付方面取得進展，我們預計會看到後續機會。

So I'm pretty optimistic about where we are right now. I feel very pleased with the progress that the team has made. And look forward to working our way through the first half, which I think will give us much better visibility into the second half based on the progress that we actually make. Hopefully that's helpful.

所以我對我們現在的處境非常樂觀。我對團隊的進步感到非常高興。並期待我們在上半年的工作，我認為這將使我們根據實際取得的進展來更好地了解下半年。希望有幫助。

Jonathan Ho, William Blair.

喬納森·何，威廉·布萊爾。

Hi, good afternoon. And let me echo my congratulations on the strong quarter. Just wanted to understand, when we look at your, I guess there isn't formal guidance, but when we look at 2025, what are the levers that could swing your results either more positively or negatively as we look towards the future? And it does seem like you have stronger visibility, so what is sort of maybe keeping you from giving that guidance? Thank you.

嗨，下午好。讓我對這一強勁的季度表示祝賀。我只是想了解，當我們審視您的情況時，我想沒有正式的指導，但是當我們展望 2025 年時，當我們展望未來時，哪些槓桿可以使您的結果變得更加積極或消極？看起來你確實有更強的可見性，那麼是什麼可能阻止你提供這種指導呢？謝謝。

Yeah, so first, let me just speak to the visibility. A year ago, we were talking about the path towards our targeted profile, and in particular our margin profile. We had a number of factors that would bridge us from current level of performance to that targeted margin profile. And it was things like, first, reducing the volatility that we had seen in the business tied to EACs, inventory write-downs, contract matters, RMA reserves, et cetera.

是的，首先讓我談談可見性。一年前，我們討論了實現目標的路徑，特別是我們的利潤率。我們有許多因素可以幫助我們從目前的績效水準過渡到目標利潤狀況。首先，減少我們在 EAC、庫存減記、合約事項、RMA 儲備等相關業務中看到的波動性。

Second, making progress on our cost structure. We built this business through 15 acquisitions over nine years, and so really needing to integrate the business and drive efficiency into our cost structure. We talked about a mix shift toward production and the margin uplift that would come with that.

二是成本結構取得新進展。我們在 9 年間透過 15 次收購建立了這項業務，因此確實需要整合業務並提高成本結構的效率。我們討論了向生產的混合轉變以及隨之而來的利潤率提升。

And then the rest of the bridge towards our target margins was really around other efficiencies and operating leverage that we would see, primarily driven by the volume increases associated with development programs transitioning to production over the next couple of years.

然後，通往我們目標利潤的橋樑的其餘部分實際上是圍繞我們將看到的其他效率和營運槓桿，這主要是由未來幾年過渡到生產的開發計劃相關的銷售成長所驅動。

So you fast-forward to today and your comment on visibility, our backlog is at a record high, and that provides a certain level of visibility. We've also made great progress over the last 12 months in a couple of those areas in the bridge. First, in reducing the volatility, and you can clearly see the trends as we've worked our way through the year, and then how we were able to work our way and manage that volatility in Q4.

因此，您快進到今天以及您對可見性的評論，我們的積壓訂單達到了歷史最高水平，這提供了一定程度的可見性。在過去 12 個月裡，我們還在橋樑的幾個領域取得了巨大進展。首先，在減少波動性方面，您可以清楚地看到我們這一年的工作趨勢，然後是我們如何能夠以自己的方式工作並管理第四季度的波動性。

We made very significant progress on our cost structure and driving efficiency through the cost structure, and you saw the progression through the year and the run rate savings that we've talked through. So now as we think about going forward, the things that I'm keeping an eye on that will really dictate the speed to which we move towards our target profile that's above industry growth rates, it's EBITDA margins in the low to mid-20s, and it's free cash flow conversion at 50%.

我們在成本結構和透過成本結構提高效率方面取得了非常重大的進展，您看到了這一年的進展以及我們討論過的運行率節省。因此，現在當我們考慮未來時，我正在關注的事情將真正決定我們實現高於行業增長率的目標的速度，即 EBITDA 利潤率在 20 多歲左右，自由現金流轉換率為 50%。

So the speed with which we'll move towards that targeted profile will be dictated by some things that happen in '25 and some things that happen outside of '25. In '25, in the first half, we're focused on development program execution because that really drives how quickly production programs will ramp up.

因此，我們實現目標的速度將取決於 25 年發生的一些事情以及 25 年之外發生的一些事情。在 25 年上半年，我們專注於開發計畫的執行，因為這確實推動了生產計畫的啟動速度。

In particular, the ramp up of our common processing architecture, because as I just mentioned, there's unbilled and cash, there's revenue tied to backlog, and then there are follow-on production awards that will come with that.

特別是我們通用處理架構的提升，因為正如我剛才提到的，有未開票和現金，有與積壓相關的收入，然後還有隨之而來的後續生產獎勵。

And then we have other follow-on production bookings tied to development programs that we've been executing on, we've recently completed, and we plan to complete. And then we also have our operational capacity, which, as we said in our prepared remarks, in the near term we're allocating to programs with high unbilled balances which will free up a lot of cash, but there won't be much revenue associated with that. So that's what our qualitative commentary is all based on.

然後，我們還有其他與我們一直在執行、最近完成和計劃完成的開發計劃相關的後續生產預訂。然後，我們還有我們的營運能力，正如我們在準備好的發言中所說，短期內我們將分配給未開票餘額較高的項目，這將釋放大量現金，但不會有太多收入與此相關。這就是我們的定性評論的全部基礎。

So to your question of what would lead things to impact our financials faster, I think it would be our completion of development programs, the success and the ramp-up of our common processing architecture production line, how fast our development programs are transitioning to production, and when we see those production bookings, and how quickly we're able to burn down the unbilled balances so we can free up the operational capacity and put it back towards backlog with revenue.

因此，對於您提出的問題，什麼會導致事情更快地影響我們的財務狀況，我認為這將是我們開發專案的完成、我們通用處理架構生產線的成功和提升、我們的開發專案過渡到生產的速度有多快，以及當我們看到這些生產預訂時，以及我們能夠以多快的速度燒掉未開票餘額，以便我們可以釋放營運能力並將其重新用於收入積壓。

So those are the factors, those are the things that we're focused on. And my expectation is, as we work our way through the first half of the year, we'll get really good insight, obviously, into our progress in each of those areas, but then the implications on our outlook for the second half of the year and the full year.

這些就是因素，這些都是我們關注的事情。我的期望是，當我們努力度過今年上半年時，我們顯然會對每個領域的進展有很好的了解，但這對我們下半年的前景有何影響年和全年。

So those are the things that we're thinking about. And what I think we can point to as to what will drive the second half and whether things happen quicker or not. So I know, Jonathan, a long answer to your question, but hopefully that rounds out the picture.

這些就是我們正在考慮的事情。我認為我們可以指出下半年的推動因素以及事情是否會發生得更快。所以我知道，喬納森，你的問題的答案很長，但希望這能讓圖片更完整。

Ken Herbert, RBC Capital Markets.

肯‧赫伯特，加拿大皇家銀行資本市場。

Yeah. Hey, good afternoon. Thanks for taking the question. I just wanted to ask, as you look at the sort of a push towards continued risk reduction and getting, obviously, to the 20-80 split you talked about in terms of development to production programs, when do you expect to cross that threshold?

是的。嘿，下午好。感謝您提出問題。我只是想問，當您看到持續降低風險的推動力，以及顯然達到您提到的從開發到生產計劃的 20-80 比例時，您預計什麼時候能夠跨越這個門檻？

And then, as part of that, there seems to be significant new business opportunities today, just when you look at the growth in sort of spending and outlays today and a lot of what's happening in defense markets around missile, missile defense, and other areas. What is your appetite for sort of new business these days? And are you able to participate in some of the sort of some of the opportunities today as you continue to drive down the risk profile?

然後，作為其中的一部分，當你看看今天各種支出和支出的增長以及圍繞導彈、導彈防禦和其他領域的國防市場發生的許多事情時，今天似乎存在重大的新商機。您最近對新業務有什麼興趣？當您繼續降低風險狀況時，您今天是否能夠參與其中的一些機會？

Yeah. Ken, great question. Thanks for the question. Well, look, I think we feel very good about the market, the tailwinds, our positioning. I think that's evidenced by what we're seeing in our bookings, 1.22 for the year, our book-to-bill, and a record backlog. What we've been really focused on, based on what we've seen in the business over the last several quarters is managing the volatility in the business and, specifically, what we bring into the backlog.

是的。肯，好問題。謝謝你的提問。好吧，我認為我們對市場、順風和我們的定位感覺非常好。我認為我們在預訂中所看到的情況就證明了這一點：今年 1.22、我們的訂單到帳單以及創紀錄的積壓。根據過去幾季我們在業務中所看到的情況，我們真正關注的是管理業務的波動性，特別是我們積壓的內容。

So this last year, in FY24, we brought in a number of development programs, but many of them were cost-plus in nature, which we think is much more aligned towards us working on next-generation products, introducing innovation, getting new platform positions. But having a set of contract terms that are more commensurate with the risk than what we've seen looking backwards where we felt like we had a high concentration of firm fixed price development programs.

因此，去年，在 2024 財年，我們引入了許多開發計劃，但其中許多本質上都是成本加成，我們認為這更適合我們開發下一代產品、引入創新、獲得新平台職位。但是，我們擁有一套與風險更相稱的合約條款，而不是我們回顧過去所看到的，我們認為我們有高度集中的固定價格開發計劃。

So we feel like we're striking the right balance of pursuing new opportunities, taking advantage of the opportunities in the market and our positioning, but doing it in a much more appropriately risk-adjusted manner with the cost-plus nature of the contracts.

因此，我們覺得我們在尋求新機會、利用市場機會和我們的定位方面取得了適當的平衡，但以更適當的風險調整方式和合約的成本加成性質來做到這一點。

Pulling those aside, getting to your mix question, when we look at our firm fixed price bookings over the last year, we've seen about 80% of our firm fixed price bookings as production bookings versus development. So I think that's a leading indicator of the mix shift moving in the right direction.

把這些放在一邊，回到你的混合問題，當我們查看去年的固定價格預訂時，我們發現大約 80% 的固定價格預訂是生產預訂，而不是開發預訂。所以我認為這是混合轉變朝著正確方向發展的領先指標。

And then in addition to that, over the next 12 months, since such a high percentage of our backlog converts to revenue over a 12-month period, the margin dynamic that I referred to where our margin today in our backlog is slightly lower than what we would expect to see going forward, driven by a small number of legacy development programs that were either impacted by EACs or have very low margin, or where we're investing because we think the return warrants the investment, I think that should all transition over the next year and be replaced by higher margin bookings. And we already started to see that in FY24.

除此之外，在接下來的12 個月中，由於我們的積壓訂單在12 個月內轉化為收入的比例如此之高，我提到的利潤率動態，我們今天在積壓訂單中的利潤率略低於我們預計未來會受到少數遺留開發項目的推動，這些項目要么受到 EAC 的影響，要么利潤率非常低，或者我們正在投資，因為我們認為回報值得投資，我認為這應該全部過渡並被更高利潤的預訂所取代。我們已經在 2024 財年開始看到這一點。

And so I have a good feel that we'll be transitioning that backlog margin out over the next 12 months and see the improvements that we expect to see. So anyways, I think that transitioning to the mix should continue to happen over the next 12 months. And we don't think that we're passing on any market opportunities because of some new approach to risk. We think we're pursuing those opportunities but with the right contract terms around them.

因此，我有一個很好的感覺，我們將在未來 12 個月內消除積壓的利潤，並看到我們期望看到的改善。所以無論如何，我認為在接下來的 12 個月內應該會繼續轉型為混合。我們不認為我們會因為一些新的風險方法而放棄任何市場機會。我們認為我們正在尋求這些機會，但周圍有正確的合約條款。

Michael Ciarmoli, Truist Securities.

邁克爾·恰莫利 (Michael Ciarmoli)，Truist 證券公司。

Just first, a clarification. Are the CPA-related programs, are they going to be margin dilutive relative to normal historical fixed price programs once they do, or relative to production programs when they ramp up?

首先，澄清一下。是與 CPA 相關的計劃嗎？ 一旦實施，它們是否會相對於正常的歷史固定價格計劃，或者在它們增加時相對於生產計劃，稀釋利潤？

I don't think so at all. First of all, there's nothing around the root cause corrective action directive action that would even incrementally affect our gross margin on those programs. And I think this is an area where there's strong demand, there's tailwinds in the market, we have differentiation, and really a unique capability to meet very stringent mission requirements that, if anything, I could see the opposite effect in actually being additive. So no, no concerns about them being diluted to our margins.

我完全不這麼認為。首先，根本原因糾正措施指導行動中沒有任何措施會逐漸影響我們這些計畫的毛利率。我認為這是一個需求強勁的領域，市場上有順風車，我們有差異化，並且確實具有滿足非常嚴格的任務要求的獨特能力，如果有的話，我可以看到實際上是附加的相反效果。所以不，不用擔心它們會稀釋我們的利潤。

Sheila Kahyaoglu, Jefferies.

希拉·卡哈奧格魯，杰弗里斯。

Thank you, guys. Maybe just on my last point, with EBITDA margins, they were better in Q4, but then stepped down just given the backlog dynamics you both talked about. So is that just timing? And we should expect low double digits to be sort of the normalized level in '25 and stepping up in '26?

謝謝你們，夥計們。也許就我的最後一點而言，就 EBITDA 利潤率而言，他們在第四季度表現更好，但考慮到你們都談到的積壓動態，他們就放棄了。那麼這只是時機嗎？我們應該預期低兩位數將是 25 年的標準化水平，並在 26 年逐步上升？

Well, I think there's two impacts, and I'll start and then Dave can chime in. But I think the two impacts are both the backlog margin dynamic that I pointed to, and then just volume. And so we're expecting to start off the first half of the year in high single-digits.

嗯，我認為有兩個影響，我會開始，然後戴夫可以插話。因此，我們預計今年上半年將以高個位數開始。

But as we move to the back half of the year and we see the margin transition in the backlog and we also see the additional volume in the second half, we expect to see an improvement in our margins tied to those effects of the transition of the backlog and the positive operating leverage. But Dave, please add if there's anything to add.

但是，當我們進入今年下半年時，我們看到積壓的利潤率發生變化，我們也看到下半年的額外數量，我們預計我們的利潤率將有所改善，這與業務轉型的影響有關。積壓和積極的經營槓桿。但是戴夫，如果有什麼要補充的，請補充。

Yeah. No, I think that's right, Sheila. I mean, it is largely driven by the margin in the backlog, and so we expect that to increase as we go through the year. And we're replacing new bookings for things that we're burning out of backlog.

是的。不，我認為是對的，希拉。我的意思是，這在很大程度上是由積壓的利潤所推動的，因此我們預計這一數字會隨著今年的成長而增加。我們正在為那些積壓的訂單更換新的預訂。

And as we complete some of the contracts that we have some tailwinds on from the prior EACs, but then it is -- the other side of it is exactly what Bill said, we've been a business that largely in the first half of the year has lower volume and then ramps up in the second half of the year, and you saw that again in the fourth quarter. And so that volume will definitely drive improved operating leverage and higher EBITDA in the back half of the year.

當我們完成一些合約時，我們從之前的 EAC 中獲得了一些順風車，但事實是 - 另一面正是比爾所說的，我們的業務主要是在上半年今年的銷量較低，然後在下半年有所增加，並且在第四季度再次看到了這一點。因此，這一銷售肯定會推動下半年營運槓桿的改善和 EBITDA 的提高。

Jan-Frans Engelbrecht, Baird.

揚-弗蘭斯·恩格爾布萊希特，貝爾德。

Good evening, Bill and Dave. Congrats on a good set of results. I'm on for Peter today. My first question, a big focus in fiscal year '24 was focusing on retiring the technical risk outside of the common processing architecture, and you're very much on track with your prior messaging having solved at least 13 of these. But is there anything that you're tracking internally in terms of unbilled receivables or any metric or ratio that you want to achieve in fiscal year 2025 that we can sort of track over the next few quarters as you report?

晚上好，比爾和戴夫。祝賀取得了一系列良好的成果。今天我來接彼得。我的第一個問題是，24 財年的一個重點是消除通用處理架構之外的技術風險，而您先前的訊息傳遞已經解決了其中至少 13 個，您的進展非常順利。但是，您是否正在內部追蹤未開立應收帳款或您希望在 2025 財年實現的任何指標或比率，以便我們可以在您報告的未來幾個季度進行追蹤？

Well, look, I think the KPIs are really consistent with driving towards the target profile that we've been very consistent in describing, and that's above industry growth rates for the top line, EBITDA margins in the low to mid-20s, and free cash flow conversion of 50%. And addressing the two transient -- primary transient challenges that we've seen in the business, which is the high mix of development programs and high working capital, FY24, we made significant progress on the development programs in mitigating technical risk.

嗯，看，我認為 KPI 確實與我們一直在描述的目標一致，這高於行業的營收成長率、20 多歲的 EBITDA 利潤率和免費現金流轉換50%。為了解決我們在業務中看到的兩個暫時性的主要暫時性挑戰，即開發計劃和高營運資本的高度混合，2024 財年，我們在降低技術風險的開發計劃方面取得了重大進展。

We also made considerable progress on the working capital, and that's a KPI that we continue to be focused on and expect to see that continue to come down in FY25. And also, in FY25, see a step up in those KPIs associated with our targeted profile, so step up in our top line growth rate, step up in our margins, and again, being free cash flow positive for the year. So I think it's just a continuation of the KPIs that you've heard us talk about for the last year, and certainly our focus for the last year, and the four priorities that we put in place just over a year ago.

我們在營運資本方面也取得了相當大的進展，這是我們繼續關注的關鍵績效指標，並預計在 2025 財年繼續下降。此外，在 2025 財年，與我們的目標概況相關的 KPI 將會有所提高，因此我們的營收成長率會提高，利潤率也會提高，今年的自由現金流將為正值。因此，我認為這只是您去年聽到我們談論的 KPI 的延續，當然還有我們去年的重點，以及我們一年多前製定的四個優先事項。

Pete Skibitski, Alembic Global.

Pete Skibitski，Alembic Global。

Yeah. Thanks, guys. Just want to understand something on LTAMDS, it's a big program opportunity for you, I know. And I just want to understand more on that front. Is it one of the four CPA programs? I ask because I think Raytheon got a very large, I think, it's sort of an LRIP order.

是的。謝謝，夥計們。我只是想了解 LAMDS 上的一些東西，我知道這對你來說是一個很大的機會。我只是想在這方面了解更多。它是四大註冊會計師課程之一嗎？我問這個問題是因為我認為雷神公司收到了一個非常大的訂單，有點像 LRIP 訂單。

And so I would expect you guys to receive an order from them at some point, I guess, relatively soon. And so we're just wondering if you could give some color on that for us, if it's one of the remaining issue programs? And whether or not it is, should we expect a large booking later this year related to that?

因此，我認為你們會在某個時候收到他們的訂單，我猜，相對較快。因此，我們只是想知道您是否可以為我們提供一些信息，如果它是剩餘的問題計劃之一？無論是否是這樣，我們是否應該期待今年稍後與此相關的大量預訂？

Yeah, thanks, Pete. And I'm sure you've seen the recent announcement from Raytheon about their funding, and I won't comment on that, which we think is good news. To answer your question directly, it is not one of our challenged programs. And it is separate from the six that I addressed, the two that I think are just ordinary course risk, and then the four that are tied to the CPA.

是的，謝謝，皮特。我相信您已經看到了雷神公司最近關於其資金的公告，我不會對此發表評論，我們認為這是個好消息。直接回答你的問題，這不是我們的挑戰項目之一。它與我提到的六個風險是分開的，我認為這兩個風險只是普通的課程風險，然後是與註冊會計師相關的四個風險。

And it is a program where it represents us successfully completing a development program, and then in FY24, getting a production award. I also think it reflects our disciplined approach to execution and how we're approaching that program.

這是一個代表我們成功完成開發計劃並在 2024 財年獲得製作獎的計劃。我還認為這反映了我們嚴格的執行方法以及我們如何實施該計劃。

Meaning, strong program management, system engineering up front, being very disciplined in how we order material and stage it, consistent with our integrated master schedule, and are executing on that program in a very deliberate manner right now. So it's one of the programs we feel very good about. We talked about in the past that we do expect that to be a driver of organic growth going forward, and our expectations remain the same on that front.

這意味著，強大的專案管理、預先的系統工程、我們訂購材料和分階段的方式非常嚴格，與我們的綜合主計劃一致，並且現在正在以非常審慎的方式執行該專案。所以這是我們感覺非常好的項目之一。我們過去曾談到，我們確實希望這成為未來有機成長的驅動力，並且我們在這方面的期望保持不變。

Michael Ciarmoli, Truist Securities.

邁克爾·恰莫利 (Michael Ciarmoli)，Truist 證券公司。

Hey, guys. Thanks for taking the follow-up. I guess, Bill, you touted the book to bill being strong. Bookings are down two years in a row. I mean, are you guys losing share? And can you talk to that and talk to whether or not the core underlying business is actually showing growth?

嘿，夥計們。感謝您的關注。我想，比爾，你在這本書中吹捧比爾很強壯。預訂量連續兩年下降。我的意思是，你們正在失去份額嗎？您能否談談這一點並談談核心基礎業務是否真正顯示出成長？

I'd say the one dynamic that we've seen relative to bookings in FY24 is that some of the challenges that we've had on development programs have led to delays in bookings. I wouldn't characterize them as lost bookings.

我想說的是，我們在 2024 財年看到的與預訂相關的一個動態是，我們在開發計劃方面遇到的一些挑戰導致了預訂的延遲。我不會將它們描述為丟失的預訂。

And I think a great example of that, our follow-on orders associated with our common processing architecture, where we deliberately stood down the line so that we can put in place the corrective actions. We're ramping it up, and we expect to see follow-on orders coming as we make deliveries to our customers.

我認為一個很好的例子是，我們的後續訂單與我們的通用處理架構相關，我們故意站在一邊，以便我們可以採取糾正措施。我們正在加大力度，預計在向客戶交貨時會收到後續訂單。

And when I think about our pipeline, our conversion, our conversion rates, I don't see anything in our conversion that gives me concerns around competitive dynamics and losing market share. So we feel good about our book-to-bill given where we are. I think that's a good leading indicator of where we're headed. And if anything, we've just seen some delays rather than losses tied to the development programs.

當我想到我們的管道、我們的轉換率、我們的轉換率時，我沒有看到我們的轉換中有任何讓我擔心競爭動態和失去市場份額的東西。因此，考慮到目前的情況，我們對訂單到帳單的狀況感覺良好。我認為這是我們前進方向的一個很好的領先指標。如果有什麼不同的話，那就是我們只是看到了一些與開發計劃相關的延誤，而不是損失。

Noah Poponak, Goldman Sachs.

諾亞·波波納克，高盛。

I think you referenced a few years of transition from development to production in the main programs that you're alluding to in that mix transition. Does your fiscal '26 look like the medium-term profile that you're referencing? Or should we be thinking of more than just fiscal '25 as kind of transition years to that run rate profile? And when do you next expect the business to have positive GAAP net income on a full year basis?

我認為您在混合過渡中提到的主要程序中提到了從開發到生產的幾年過渡。您的 26 財年財務狀況是否與您所引用的中期概況相似？或者我們應該不僅僅將 25 財年視為向運行率狀況過渡的年份？您下次預期公司全年 GAAP 淨利為正值是什麼時候？

I'll let Dave take the last one. Let's see, on the transition, as I think about, again, the bridge from where we are towards our target profile, really with the progress that we made in FY24, there are two pieces of the bridge that I'm most focused on. One is the transition out of backlog of the remaining low margin development programs and the programs that have been impacted by the FY24 EACs, that's going to give us a step up towards our targeted EBITDA margins.

我會讓戴夫拿最後一份。讓我們看看，關於過渡，正如我再次思考的那樣，我們從現在到目標的橋樑，實際上，隨著我們在 2024 財年取得的進展，橋樑中有兩個部分是我最關注的。一是剩餘低利潤開發計劃和受 2024 財年 EAC 影響的計劃的積壓工作的過渡，這將使我們朝著目標 EBITDA 利潤率邁出一步。

The rest of the step primarily is going to come from the volume lift that we'll see from development programs that we have in-house, that we've executed on where we're awaiting the transition or working through the transition to production.

剩下的步驟主要來自我們將從我們內部的開發計劃中看到的銷售提升，我們已經在等待過渡或過渡到生產的地方執行了這些計劃。

Now there's a number of those programs. It's not one or two, it's a number of them and they each have their own profile to roll forward into revenue. But as I think about our organic growth over the next couple of years, it's going to be primarily driven by those development programs and their transition to production. And they happen on different timelines.

現在有很多這樣的程式。這不是一兩個，而是很多，每個人都有自己的形象，可以轉化為收入。但當我想到我們未來幾年的有機成長時，它將主要由這些開發計劃及其向生產的過渡所推動。它們發生在不同的時間線上。

We talked about LTAMDS as more near term, but we have a number of other programs that we'll be feathering in as we exit '25, as we work our way through '26, and get full run rate benefit of those programs in the back half of '26 and '27. So there's a number of different programs. But as I think about our organic growth for the next couple of years, I think we have good line of sight tied to the development programs that we've won, executed on, and are working our way through the transition from development to production.

我們談論的是 LTAMDS，但我們還有許多其他計劃，當我們退出 '25 時，我們將在 '26 中努力，並在 2019 年獲得這些計劃的全部運行率優勢。部分。所以有很多不同的程序。但當我思考我們未來幾年的有機成長時，我認為我們對我們已經贏得、執行並正在努力完成從開發到生產的過渡的開發計劃有著良好的視野。

Yeah. And I think I would point back to Bill's comments around the color we're putting around FY25. And I'd point back to our adjusted EBITDA margins that we expect, which is low double-digit adjusted margins overall in fiscal '25.

是的。我想我會回顧一下比爾關於我們在 2025 財年所採用的顏色的評論。我想回顧我們預期的調整後 EBITDA 利潤率，25 財年整體調整後利潤率較低，為兩位數。

Mr. Ballhaus, it appears there are no further questions. Therefore, I would like to turn the call back over to you for any closing remarks.

鮑爾豪斯先生，看來沒有其他問題了。因此，我想將電話轉回給您，請您發表結束語。

Okay. Thank you, operator. And thanks, everyone, for your interest and participation today. And we look forward to providing another update on Q1 FY25 in our next earnings call. Thanks very much.

好的。謝謝你，接線生。感謝大家今天的關注與參與。我們期待在下一次財報電話會議中提供有關 2025 財年第一季的最新資訊。非常感謝。

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。