CIRCOR International, Inc.

Greetings and welcome to the SIRCOR International's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Mr. Scott Solomon, Senior Vice President of the company's investor relations firm, Sharon Merrill Associates. Thank you, sir. You may begin.

Thank you, and good morning, everyone. Before we begin, let me remind you that our earnings release and presentation are available on CIRCOR's website at investors.circor.com. If you'd like to receive copies of the materials, please email CIR at investorrelations.com, and our IR team will provide them for you. Turning to slide two, Today's discussion will contain forward-looking statements as they are defined under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements represent the company's views only as of today, November 14, 2022. These expectations are subject to known and unknown risks, uncertainties, and other factors, and actual results could differ materially from those anticipated or implied by today's remarks. While SERCOR may choose to update these forward-looking statements at a later date, the company specifically disclaims any duty to do so. You can find a full discussion of the factors in SERCOR's 10-K, 10-Qs, and other SEC filings also located on our website. As referenced on slide three, on today's call, management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release. Please turn to slide four. Joining me on today's call are Tony Najjar, SERCOR's President and Chief Executive Officer, and A.J. Sharma, Chief Financial Officer and Senior Vice President of Business Development. Tony will begin with a strategic overview and the highlights of our third quarter performance. A.J. will review the financials and discuss our guidance for full year 2022. Tony will provide our market outlook, and then management will be happy to take your questions. Now, please turn to slide five as I hand the call over to Tony.

Thank you, Scott. Good morning, everyone, and thank you for joining us to discuss our third quarter 2022 financial results. Before we review our results, I want to thank our teams across the globe for their continued focus on execution and for their resilience in the face of a challenging macroeconomic environment. Since our Q2 earnings call, I have spent most of my time with our teams and customers, including having the opportunity to spend time with our global defense sales team and customers at the EuroNaval exhibition in Paris and with our industrial sales team and customers at the Abu Dhabi International Petroleum Exhibition and Conference. I continue to be delighted by the level of customer intimacy that our teams are driving and by the strength of the SOCOR family of brands throughout the industries we serve. Our team performed extremely well in the third quarter and delivered excellent results. We navigated ongoing supply chain disruptions, the inflationary environment, and rising energy costs to deliver 26% organic quarters growth, 3% revenue growth, or 10% on an organic basis, as well as 550 basis points of margin expansion. Our results underscore continued success in executing on our strategic priorities These include, first, margin expansion, which includes value pricing, simplification, best-cost country sourcing and manufacturing, and factory modernization. Second, organic growth through new product development and leverage of our strong aftermarket position. And third, reducing our leverage, which we accomplished in Q3 through adjusted EBITDA growth and further monetization of our real estate portfolio. AJ will provide more details on our improved leverage and outlook in his prepared remarks. Turning to our third quarter highlights on slide six, organic orders increased 26% versus prior year, driven by growth in both segments. Orders in A&D were exceptionally strong, growing over 74% organically. The strength in A&D was driven by the defense aftermarket, various missile programs, medical products, the continued recovery in commercial aerospace, and pricing. Industrial orders were up 8% organically, supported by strength in our aftermarket, pricing, and downstream oil and gas, primarily in the aftermarket and capital projects in India. Pricing was strong in both segments, which is indicative of the power of our brands and our team's focus on maximizing value from the products and services we provide. Backlog at the end of Q3 was up 14% from the same period last year to $497 million, positioning us well for the remainder of the year and into 2023. On the top line, we reported year-over-year revenue growth of 3%, or 10% on an organic basis, with A&D up in the high teens and industrial up mid-single digits. We accomplished this despite the continued supply chain challenges, which impacted some of our largest businesses in the quarter. Our 70% increase in AOI was primarily driven by our industrial segment, supported by our core industrial business and downstream oil and gas. The margin expansion was heavily driven by our value pricing initiatives and cost out actions that our teams have executed in the businesses and at corporate. AJ will provide additional color on the margin drivers and the quarter during his prepared remarks. The demand environment for our products continue to be positive as evidenced by sustained order strength and our healthy backlog. We are positive about our business as we move through the fourth quarter of 2022 and look ahead into 2023. Moving to slide seven, each quarter, I like to highlight specific growth areas that our teams are driving. In Q2, we focused on new and adjacent markets where we are leveraging our core technologies and manufacturing capabilities. Today, I'll highlight a couple of key growth areas that our A&D team and Industrial Pumps EMEA team are driving. In AMD, we are highlighting two product lines for missile applications. First, our mechanical kinetic switches used in missile and bomb fusing applications. Designed to sustain extreme conditions, these are reliable, quick response switches used to sense motion and acceleration for safe in arm and impact. We expect the growth of this product line to continue with new products for fusing applications as well as applications for hypersonic missiles that we are currently developing. Second, our brushless DC motors, where we have won several new applications for various missile programs, which are currently in various stages of development. Our motors are used in the missile control actuation system, which is a core part of the missile guidance and control system. With heightened geopolitical tension around the world, advanced air defense technology is expected to play an increasingly important role in defending the U.S. and its allies. We expect to be part of supporting these critical applications with the current programs we are working, as well as future applications that we are pursuing. In total, we have generated over $17 million from these products year-to-date, up almost 40% over last year. Some of these programs are still in the early stages of development with modest revenues in the current year, but they are expected to deliver significant long-term growth for our A&D segment. The second growth area that I would like to highlight is from our largest pump business in EMEA and APAC, where we enjoy a strong aftermarket position. Our dedicated aftermarket team has been driving various initiatives, leveraging 80-20 principles and value-based pricing to drive growth and expand margins. We are forecasting over 22% growth year-over-year, with a significant portion of this growth coming from pricing. We expect the growth in this area to continue with our team's continued focus to maximize value from the products and services we provide. Before I turn the call over to AJ, I would like to provide you a quick update on our strategic review process. Our board, supported by our external advisors and the management team, continues to progress with the review. We are in the final stages in preparing for the formal launch and expect this to happen in the near future. At this time, we are not able to provide any additional details. Now, let me turn the call over to AJ to cover the financial results in more detail.