CIRCOR International, Inc.

Greetings, and welcome to the CIRCOR International's fourth quarter and full year 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. 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 these 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, March 15, 2023. 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 SIRCOR 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 these factors in SERCOR's Form 10-K, 10-Qs, and other SEC filings also located on our website. As referenced on Slide 3, on today's call, management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP financial measures to the comparable GAAP measures are available in our earnings press release. Please turn to Slide 4. 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 fourth quarter and full year performance. A.J. will review the financials and discuss our guidance for the first quarter and full year 2023. 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 fourth quarter and full year 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 delivering very strong Q4 and full year 2022 results despite an overall challenging macroeconomic environment. Since our Q3 earnings call, I have spent much of my time with our teams and customers, including having the opportunity to meet with our industrial valve sales team and customers at Valve World in Dusseldorf, Germany in late November. More recently, I had the opportunity to engage with some of our key defense customers at the Middle East Defense Expo in Abu Dhabi. I also had the chance to spend more time with our teams at many of our locations in Europe and North America the kickoff 2023, and recently visited our two manufacturing sites and shared services center in India. I continue to be delighted by the level of commitment and focus on execution and customer satisfaction our teams display in every interaction and by the strength of the SOCOR family of brands throughout the industries we serve. After a very strong Q3, our team Again, performed exceptionally well in Q4. We navigated ongoing supply chain disruptions, the inflationary environment, and rising energy costs to deliver 19% organic orders growth and a 550 basis point improvement and adjusted operating margin. Turning to slide six, our results underscore continued success in executing on our strategic priorities which include, first, organic growth through new product development and leverage of our strong aftermarket position. Second, margin expansion, which includes value pricing, simplification, best-cost country sourcing and manufacturing, and factory modernization. And third, reducing our leverage, which we accomplished in Q4 through strong cash generation from operations and adjusted EBITDA growth. We have made solid progress in reducing leverage over the past four quarters and look to continue that progress in 2023. AJ will provide more details on our improved leverage and outlook in his prepared remarks. Turning to our fourth quarter and full year highlights on slide seven, organic orders increased 19% versus prior year driven by growth in our industrial segment. Industrial orders were up 29% organically in the quarter, supported by strength in our aftermarket, pricing, and downstream. For the full year, industrial orders were up 7% organically, driven by pricing, strength in our aftermarket, and downstream, which more than offset the exit of the pipeline engineering business and timing of a large Navy order in the prior year. Orders in A&D were down slightly on an organic basis in the quarter, as strength in commercial aerospace and Navy was offset by timing of a large medical order in the prior year. For the full year, A&D orders were up 24% organically, driven by commercial aerospace recovery, aftermarket, new products for missiles and hydrogen applications, medical, and pricing. Pricing in the year 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 Q4 was up 22% from the same period last year to $543 million, positioning us well for 2023. On the top line, we reported year-over-year revenue growth of 5%, or 11% on an organic basis in Q4, with AMD up in the high teens and industrial up mid-single digits. We accomplished this despite continued supply chain challenges in some of our businesses. Our 62% increase in AOI in Q4 was supported by both segments, with our industrial segment delivering another step-change performance compared to prior year, supported by our value pricing initiatives and cost controls. AJ will provide additional color on the margin drivers in the quarter during his prepared remarks. The solid demand environment for our products is evidenced by sustained order strength and a healthy backlog. We are positive about our business as we look ahead in 2023. Moving to slide eight, each quarter we like to highlight specific growth areas that our teams are driving. Today, I'll discuss industrial pumps and A&D innovations that showcase our product differentiation for severe service mission critical applications. On the left side of the slide is a new three screw industrial pump capable of handling higher pressures and lower viscosity fluids. This product leverages our industry leading technology for three screw pumps to penetrate applications that are typically handled by different pump technology. In head-to-head testing and severe service applications, SERCOR's new pump has demonstrated performance far exceeding competitive products. The product is in initial launch phase, and we are seeing early success. The pump will primarily serve the energy markets, which continues to show solid growth, as well as selected general industrial applications that require the higher pressures and or low viscosity performance. On the right side of the slide, our A&D team in France was selected to provide mission-critical helium valves for the new airship being developed by French aeronautical company Flying Whales. The airship will be lifted by helium cells and propelled by hybrid electric system powered by sustainable aviation fuel. Capable of transporting up to 60 tons of cargo, the innovative airship is designed to carry items such as blades for wind turbines, logs collected from steep mountain sides, construction materials being delivered to remote isolated location, or food and aid after natural disasters where railways or roads may be inaccessible. Our team worked side by side with Flying Whales for nearly 18 months to develop the requirements for this critical application. We leveraged our core technology and valve design and electromechanical actuation to develop an innovative solution. We are working with Flying Whales on another major package for the airship and are well positioned to capture additional content on this exciting program. Before I turn the call over to AJ, I would like to provide you a quick update on our strategic review process. As we announced in late February and reiterated in this morning's earnings release, our board, supported by our external advisors and the management team, continues to progress with the review. Our board, through its external advisors, is in dialogue with a number of parties that have expressed interest in acquiring all or parts of the company. Now, let me turn the call over to Ajay to cover the financial results in more detail.