Textron (TXT) 18 Apr 182018 Q1 Earnings call transcript

Company Profile

Participants

Eric Salander	Vice President, Investor Relations
Scott Donnelly	Chairman and CEO
Frank Connor	Chief Financial Officer
Carter Copeland	Melius Research
Sam Pearlstein	Wells Fargo
Sheila Kahyaoglu	Jefferies
Peter Arment	Baird
Noah Poponak	Goldman Sachs
Robert Stallard	Vertical Research
Seth Siefman	JPMorgan
Peter Skibitski	Drexel Hamilton
David Strauss	Barclays
Cai von Rumohr	Cowen & Company
George Shapiro	Shapiro Research
Jon Raviv	Citi
Drew Lipke	Stephens
Ronald Epstein	Bank of America

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Textron First Quarter 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded. like Salander, the Relations. Vice now our over would Eric host, President I to conference turn to And of Investor go ahead. Please

Eric Salander

Thanks, morning, good Brad, everyone. and

we estimates Before in be statements today’s and detailed are risk call to in I’d various we forward-looking mention press to which begin, today. These release. discussing expectations and also factors, future subject during our our like filings will are SEC

Chief today, we and have Scott Officer. Chairman Textron’s CEO; our call Donnelly, Frank and Connor, the Financial On

an quarter. year’s Our website. on of the in contributions of in $X.XX $XXX of $XXX $X.X earnings $X.XX first be $XXX before cash Investor pension the was share, use found up last operations or year’s per adjusted call presentation Manufacturing Textron’s quarter. a can flow up compared year’s quarter. Relations per first use section of million, continuing cash Income million million billion, reflected quarter our of $X.XX from last cash last a in basis from to revenues share first were from

have the a Scott. We million that we cash. $XXX for to I'll our the Test to reached also Emerson approximately sell definitive agreement that, in With call Tools announced over & turn to business

Scott Donnelly

on consistent Thanks, our the Segment and systems revenues Eric, lower expectations. and Bell, revenue good The morning, in military in with up quarter the by were in everybody. higher for revenue Industrial, was quarter. up Aviation, offset Bell volumes partly

year's XX up On first the from last quarter. XX commercial side, in helicopters, we delivered

to quarter. deliveries, see production the the units We European XXX delivered positive continue as and to the reaction in customers ramp to first customer we

unveiling our HELI-EXPO we demand XXX, two of We and XXXGXi, closing also new avionic the FADEC a helicopter on system multi-aircraft Rolls-Royce an showcased orders. leadership the in Garmin At controlled for and with commercial upgraded engine. the to featuring market international continue February, innovation see

these of with launch Air six order Corporation an as for new announced Methods aircraft. the also customer We

Each On its the V-XXX following first demonstrate flight operation stages milestones the as towards full our of the front, Army step and of a forward a test military The moves great it flight in hitting agility pilot, early Valor aircraft next-generation by aircraft. tiltrotor new creating represents flown new in the airplane was to customer. of mode. the experimental the the program test in put opportunity another December, continues of hands milestone U.S. maneuverability, representing product aircraft aircraft in in to

were lower of and primarily revenues Systems, the to on discontinuance line. the SFW volumes, production down weapons Moving related to sensors

Aerosonde million for are U.S. test Unmanned the compared received two support of addition to on first with in as we quarter, and testing During this Army. for logistics began Marine leading racing value XX progress system, of to five month a shore our orders also good $XX we the Systems XXXX suspension contract $XX from the earlier single Textron product an the operations the At line a craft to Systems, Within million off-road combined making the to the Cat and product program proceed ship will new the NAVAIR acquisition booking pushback, Arctic our on X and Land water aircraft agreement flight also HRXXX growth further Wildcat was of off-road trials Mountain for each for ALPHA At for to unveiled and to the saw the growing We later Aviation beam increase Australia. our simulation quarter simulators Ansett full Airbus, line, models designed delivery best-in-class training XX% received TRU Training, we for suspension and At year. flight volumes full innovative outdoor with aircraft higher March summer. we an order we revenues first-ever of seasonality the prior builders Air the a UPS rear delivery units additional margin this with AXXX we and provide in saw in Snowmobiles, Alpha in Japan to for industry chosen the Commuter Industrial, the with first the GSE signed purchase Powersports a sim ground-breaking businesses. with delivering new Arctic business. scheduled in next innovation. for system, TUG and At due first are One our the reflecting demonstrating our timing Cat, year with down introduced performance. Overall, the product as our new inspired side-by-side quarter

from February XX of jet the number into quarter. mission up Australia, in and year. for Moving air to the granted we strength an We turboprops, Textron lines. deliveries XX commercial where to Singapore special models and has saw the two Aviation, These from and region. revenues configured including commitment X% King an XX Latitude year we a of New our Guinea multi-aircraft up China reflect five In product last ambulance order the turboprop fleet continued in improved delivered commercial Caravans We orders, in our jets, attended Asia-Pacific across with quarter, service last mix been certifications announced up were and in Papua Airshow demonstrating for Australia. Airs XX

the quarter. We deliveries had first China our two also into Latitude in

delivered midsized title consecutive most For category. the year, the the second jet as the business the Latitude in earned

towards the Longitude continue the its in to front, successfully and commanding later circumnavigating way. globe which certification reliability On demonstrating the APAC to performance Singapore Airshow work its expect the new made at Longitude, the along debut we quarter. of customers we and second the product The

we time look this customer interest. its development The tracking tunnel is to We significant a also of develop amount Denali line. an schedule to made generate progress and continues successfully wind accelerated on the to on aircraft as SkyCourier, completing testing

Attack the Airforce Our AT-X was program Wolverine aircraft quarter. the which the begins second in in U.S. Experiment by chosen Light to second phase of participate

agreed to we Test & business Emerson. Lastly, Tools to our have sell

for transaction part of represents many a good to future an this business While industrial years, that, has been I’ll and Tools shareholders as portfolio With our over call & Test part return success our of turn Emerson. the for positions the Frank. important for

Frank Connor

million, was XXXX increase $XXX $XX on revenues. Thank everyone. in the good and in million quarter of from up you, profit Scott, $XXX a quarter the million morning, first Segment

and review of segments were $XX the due Let’s at Textron from At contributed $XX Aviation, was Backlog primarily the from starting and segment ago favorable due Segment period $XX $X.X performance volume million Aviation. ended the revenues year higher last year and this how up billion. profit in to quarter million, mix, with Textron up volume. each million price. a to price

down the the sold. $X Segment revenues $XX higher the and million XXXX, performance related reflecting increased $XXX million higher Arctic related primarily the the the primarily in discontinuance to improved million volumes. profit in $X end million, SFW first of first down Moving profit quarter. of the due marine segment segment billion. to quarter volume, was of Cat by revenues the quarter $X acquisition revenues At the to the from in and foreign reflecting favorable profit $X.X first decreased due $XX partially revenues year’s at $XX timing largely $XX to due segment mix revenues exchange, Arctic primarily of from were aircraft to due Industrial increased Weapons were to Bell, in military segment offset and quarter. primarily to up the billion to volume. Systems, production and was the XXXX. lower Textron revenues Backlog was the Segment in increased Backlog at at Sensors lower million, up despite million, XXXX in million profit million last was acquisition of year. higher $X.X the Cat increase commercial compared Segment Finance prior volume land.

segment expense last $XX $XX Moving profit, and million, million corporate flat was both below with expenses were year. interest

in to to guidance, shares we from of per shareholders. To X.X $XXX reiterating returning per $X.XX operations repurchased also are expected with wrap full share. cash $X.XX continuing share year million We million our EPS up

flow to per from continuing to continue the expected of divestiture operations of guidance pension includes earnings before Tools manufacturing We the & operations. also continuing the on our group contributions impact share concludes million $XXX remarks. and flow from cash cash This million. That Test of prepared $XXX expect

we line Brad, the open So, for can questions.

Operator

a ahead. Research. with Carter course. question Instructions] from Copeland do the go Melius We Of have [Operator Please line of

Carter Copeland

Hi. Good morning, gentlemen.

Scott Donnelly

morning. Good

Carter Copeland

wondering helpful? on Scott, some performance in aftermarket about profit fall are still us pretty how color improvement related the in a if sales Scorpion had good I color was be you versus might margin you give off much was there, Any maybe R&D, year-over-year and us just wondered mix I ex the would that overall there you quarter. how can Aviation, give the price on there. improvement

Scott Donnelly

job about, favorable and to talking were incremental the a know so Caravan gains back It push obviously, Well, of our been of it’s ago better side was on kind of think, in was well. and as to delivering I terms saw margin particularly as was of light do in we have a to as on volume cost, Carter, and in we good King we Air that but you helped the Teams above, price more up continue I the pleased and coming and continue mean, some the both volume, as year a certainly the some turboprop, some on performance for side well. there. turboprop little bit all to models, therefore, the have mix we lines see

Carter Copeland

aftermarket? the And on

Scott Donnelly

So aftermarket was good performance.

increase numbers because as the XXX driven largely in have some percent we standpoint just a the of have an we terms see programs. by been seeing a as some of how we treat that’s large engine not had You’ll small change and from in

without the well. the digit performance and So a versus digit reality actually look of there of topline will counting sort as low-single good high-single

Carter Copeland

the a then and mean, Okay. I well. month and I be And January I’ll the one know as one can is last momentum order always quarter, -- through February give light then

customers you’re of over last and seeing, months of evolving Just a real that in the time? and the three sales in with course seeing how even what team the terms conversations is what is the

Scott Donnelly

pretty strong, pretty Well, we right, usually and it quarter, remains January think first February are the quiet. and you’re

which bookings book-to-bill so turboprop it’s see driven to We both order good. relatively in continue across that, and jet positive strong lines, is

Carter Copeland

Okay. gentlemen. Thanks,

Scott Donnelly

Sure.

Frank Connor

Thanks.

Operator

Pearlstein have the a line of Sam do go Wells with Fargo. we ahead. question And Please from

Sam Pearlstein

morning. Good

Scott Donnelly

morning, Sam. Good

Sam Pearlstein

the certainly seems a early get your the some driving mix like based I the the businesses, seemed reluctant, certain lower sense this, businesses, lower stockholders on you’ve to guess, of the influence portfolio given about And thinking but views buyback I But earnings businesses? just over does lot, of makes just whether Scott, of talked to guess years growth activity. of reaction, earnings in it divest it seem about because terms out to dilution. of the return this and return

Scott Donnelly

to going the the sure, stated think any I these respect am to but I I best is it as with business, the return of that that low we Test Tools the segment Test our not as intent are to that to a and we make wouldn’t both ability Tools categorize & a them investments with have as run & right Well, our and in the business make certainly position well done businesses disposition and in business. great organically, acquisition

somebody our here. good something, and look, shareholders, along is what Tools that’s hand, fit are they for comes a we happened in portfolio obviously, their is and a it’s well entertaining the shareholders On if is that other puts a good says, think better on that to Test transaction think open as value something good think the and for then and business & we business. as table we our exactly

of for in us. when that feel a well-positioned Emerson the footprint Emerson shareholders and I Emerson a it business, into part to serves and it’s customer It’s that think thing I and marketplace. – so as it’s for that for would kind base much good it look Textron that better well shareholders, in their a the very you all obviously performed transaction channel, well. happen Textron think But allowed and and they good a at a larger be I is think likelihood of and

Sam Pearlstein

in placeholder put Okay. we that the yourself for And step-up buyback. making see I any, think and don’t a acquisitions you find usually you if year started in the when you a

think at about acquisition a to all the it because can buyback would about to or aren’t comment going like pipeline seeing So this, seeing, that’s seem you lot if come first you I fruition. just plus quarter’s what the probably you’re

Scott Donnelly

that we number balance we I that bolt-ons are things logical there Well, have businesses there out see step are use of comfortable general, about. don’t Obviously will able cash for that level talked something are There for that given our balance through is the plenty makes our though, position, the have up terms we out any If along we at have today. would the very disposition. I to looking think But to in debt a mean room sheet comes sheet of say, stuff I that manage and large that, activity keep horizon. is Sam, think, an financing I thing I on the of with Sam, we that sense eye we the from transactions. to particularly of I us, buyback on proceed to the in think of that that always like be that. always

of So we with up that M&A in have opportunities I are plan buyback very pop comfortable whether or think level regardless of the we not. our

Sam Pearlstein

you. Thank Okay.

Scott Donnelly

Sure.

Operator

Jefferies. Sheila And line the do have Please ahead. we Kahyaoglu of with go a question from

Sheila Kahyaoglu

Hi. Good morning, Scott.

Scott Donnelly

morning. Good

Sheila Kahyaoglu

that then, million and up on and Longitude expected elaborate was later comment a the backlog, QX Maybe and in drove could basis, jumping sort Aviation $XXX strength was if you if the what you it just is mostly sequential on starting of certification, could the delivery in in It there? QX? on further

Scott Donnelly

on really as driven a model-by-model were are contracts I’d service all booked some on book-to-bill there, defense don’t on we know, at whole. the now turboprop line backlog, longer we So, the side, term, by we a the the largely increase you had that book-to-bill a backlog. there There say, but and in strong XXX. you had was do Sheila, Textron which jet as some were as Aviation if line whole product strong look

strong I business. of all bookings would it segments the So, was pretty really, say, across

it in quarter. here the expect to In certify Longitude, do we terms of

We are test to a had and last would it’s accomplish in that like some kind not last couple delays some we to flying well. everything serious, but flights. last are just There of had flights builds. have of nothing is We

sales TBD, the get I quarter So more here does interiors expect we second other we or aircraft, mean, on in everything is into the still Whether of the a nature quarter and pretty first the it little happen that aircrafts. is of obviously, is going of happen than third will soon. a would lot well this one the have customization sort

can the will to it into depend really whether time So it at what will or we around timeline QX we turn FA done it and get certainly on final paperwork just – QX. that worst we get would in fall in case

Sheila Kahyaoglu

timelines Future my the maybe programs could if just comment of on your Vertical the for then those Thanks. one sort and military Lift, like And Okay. portfolio, two you hurdles on favorite Scorpion two? look and what

Scott Donnelly

customer Scorpion, couple just the customer a on We Well, activity. we are continuing some ago. international had weeks in a

Vertical partner So certainly On flying a had the active very development. army those the continue this we and Corps, with Marine They into the obviously, we are a continue. and army now dialogue, the very have dialogues Future Lift, program in lot said, its bought of aircraft.

very of is We are going stage the which envelope really working at expansion this on nicely. game

team very So following army a great is is on doing The that. carefully. job

budget their be determined. and out all still works this through how cycles to Now remains

and how our lot at obviously, faster budgets general a budgeted could currently like rate of capability that long and of are develop But new there. aircraft it terms going and go this. and just demonstrate thing maturity continue aircraft capability to a to we aircraft of army than thinking of sort just the think, view into deliver the a is takes from the what’s in and do much the to I our we

Sheila Kahyaoglu

you. Okay. Thank

Operator

line Please And go we of do from Baird. Peter a ahead. question the have Arment with

Peter Arment

morning, and Frank. Good Hi. Scott

Scott Donnelly

Good morning.

Frank Connor

morning. Good

Peter Arment

sustainable how land Are improving, overall Systems, the significantly margin or pretty is of you How you kind and I think well it performance – but above marine we our about should Scott, mean, really about should Hey, this outlook performance expectations. on we Textron there. there? is think that, nice mentioned seemed

Scott Donnelly

this rate think don’t is course I the the Well, sustainable margin through of right. year,

terms will feel gave think pretty in what you and about revert I we good it guidance we our of guys.

is think performing we’ll talked see hand, other years we working the is but and On over a great which executing on in time, expected. through those I the on is always as margin some are making a year. well. team mean, TAPV, ship-to-shore, have well. of obviously, test, the lower about course way integration as we challenging last rates But, deliveries, the but the are we I the team So just lot progress. we program doing team we the and is move our is through the

said, this make part we some and appropriate already have we authorized, now of be expect going would is year good process, later And this our advanced here pretty are production on As we make contract. is customer have proposal say, it’s with the enter details and sure we’d production on with signed through builder’s worked to that on that’s that to sure see the the we as no into the well now going course, operating is news working to we there in that and start right are of long actually our had great moving. the I leave craft the first working case, to appropriated something We and trials and activity material but water, shape, customer break able are have levels have so line soon. to on of the on that we craft the production and the

Peter Arment

the just really in That’s seeing driving are Yeah. helpful. a to were quick Bell that’s up up, nicely deliveries this? And follow particular you What be strong. XXX, continue that year-over-year, really on end-market XXX

Scott Donnelly

strong. the the we to demand us strength that’s world, say, that production meet been and XXX, Well, particularly really very ends, which seen ramp for the having around has light the just have you really been product, as

and GXI rates and to of strong have XXX demand strong, are, units terms as up. know, expect see there continues be the we year. well. very the as pleased particularly was up well-received XXXs we’ll in coming the over in production number be I tend that’s obviously, think, what and think going certainly loaded also of just we So of deliveries, XXXs XXXs, we see to to you the course I and back-end the

Peter Arment

Thanks, Scott.

Operator

a the we line Goldman Poponak ahead. do question from have And of Noah go with Please Sachs.

Noah Poponak

Hey. morning, everyone. Good

Scott Donnelly

Noah. morning, Good

Frank Connor

Hi.

Noah Poponak

don’t and closely Scott, just of a get recognize are I jet to watching backlog too think I the see stakeholders business the I the and in what’s your notable and granular But in legacy to understand of you market. that. Aviation change going lot to respect there, back sort want happening

moving that Latitude jet happen Defense Longitude can pure market? So the with given to I many this in Cessna the the production if pieces just be around what there side, willing in wondered quantify the book-to-bill was and and you’d time

Scott Donnelly

we in to that which in King the any – in strong we Caravan. and well, well jets, I had as Well, not as go we say would But certainly book-to-bill our the both Citation as granular into turboprop of Air all backlog. a models including breakdown are going more the are is inclusive legacy the of side,

I we backlog. that So demand see and market in our in strong the reflected continues be book-to-bill think to

Noah Poponak

to revenue to So compared was what of in the was? bookings zone the it’s assume safe jet in-production the segment total

Scott Donnelly

Yes.

Noah Poponak

this where seeing Got I what the see interesting like what -- then for would of out price and let help has guess you I am much be sort decide with production? the success it. the actually magnitude I come segment increases – trough you discussion on price at going you mean, how going seems you’re there? you just does point earnings I pricing pricing kind raise period of keep the you if is will of order to sort potentially there, us off of can and there at up you backlog raise to this how time some to in having it point are And maybe build, that you’ll question it before if the get But to asked production. given and of starts

Scott Donnelly

I think Noah. that’s true,

that been for saying trade have price will We volume. we

quarter I our look back we going I how sales we -- on or mean, can’t these think subsequent the is year-over-year guess, you are more of I we incremental which mean, teams data tell basis, to I at I obviously. measure a we trough, aircraft,

are we are continue that, we aircraft the on the at targets and So are price for price higher look getting price performance in to increases, get they driving I team as are just great volume. happy that not the quarter. we about. a the and putting job what This increases, that than the we list at as – we did still price very levels but mean, we are

lot the are I think trade better we warrants capital, better business, return the continuing that and But making. are we and to that’s this in a amount so you getting end to of need of a on the we make execute well the amount pricing in of investment see fronts. market

walking. We are

deals levels acceptable been the have to We walking away are not business. are price that from at that just

Noah Poponak

it. Got helpful. Really

comment Bell Bell, if Just me one seems aftermarket other up that on Commercial revenue the so, price and and like aftermarket Military of quick one, there? plus kind that, I was, going units total which or if tells and the where something side, accurate take the like Military that what’s OE like Commercial down, the it was roughly on XX% is Commercial was

Scott Donnelly

but I I your percentage can’t talking, you’re but near exactly was think… anywhere the I Noah, Military up, math, it aftermarket not mean, certainly up was follow the

Noah Poponak

Okay.

Scott Donnelly

revenue stronger difference, heck here the the have whole lot a than the little in but falls of make out is over QX of effect opposed there is some of into a in at our a course way XXX side it impacted the benefit the Military on again the to year, of stuff, is under that side getting particularly XXX is done, little in because bit a of this, when it’s you little stuff quarter the Military bit there terms is look the the just not historically a I hate again, by to as done But through XXX … unit flatter the way it’s the that, of year-over-year accounting year, there the way from the the see probably a it’s okay. of because year, we balance you’ll given Bell, going had. delivery

Noah Poponak

I it. see. Got

Thanks Okay. much. so

Scott Donnelly

Sure.

Operator

the line Robert have from we ahead. do a go And with Vertical Research. Please of Stallard question

Robert Stallard

so much. morning. Hi. Thanks Good

Scott Donnelly

Good morning.

Robert Stallard

follow whether question Noah’s is share up similar constant? on seeing competitors relatively whether price of I’ll your you’re discipline? to market pricing think in business levels environment I And jets, on holding overall your the

Scott Donnelly

different don’t that terms Well, end know that comment behavior there and competitive I seeing the look, of a I in dramatically are out we that anything the the obviously, could I mean is nature market. that’s market it’s there. very of

So on line, I we hold are continuing need said our price we get to as because to pricing up.

Now, do we our pretty a with to mean certainly someone lose probably if big price lose line, we deal hold market, pricing. because the think deal willing we deals to go a I you need level. because of the or of their a is we’ll that? with to to competitors we lower where there’re deals to are the have I part deal and leave - and pricing But

Robert Stallard

XX of But where perhaps months moment stand ago? relative the comfortable in share, to in terms you market with are you

Scott Donnelly

so. think I No,

how are in the products strong. and I look think well the that’s regarded. aircraft, and we think it’s pleased we you in the And quarter, I both are is are I think which midsize light doing if with demand because our the

is Our regarded. service network well

repurchase think and generally brand, high. our strong very rates are have I a customer we

it’s of the so our win think a does job that them. the and company team managing good for I for a it’s good customer

popular So they’re products.

Robert Stallard

cash post-tax this you you. a And from was anticipation then of business cash Frank for operating for couple contribution the also on the the questions proceeds if expect? disposal. us that give the your And you what Thank year? quick Wondering can

Frank Connor

from businesses. and but Yes, performance from of million standpoint, and that the our a we’ll is about again, within everything guidance we’ll after-tax absorb net cash And the cash the there other impact, the disposition. $XXX some

Operator

from of Seth line And with ahead. JPMorgan. Siefman question we do go have the Please a

Seth Siefman

talk under And if matters how first can ahead lift first to looks reconnaissance goes a it if much do wonder helicopter about if your kind it I Or point lift? Scott, view future or matters vertical bit of vertical from Army the a you more lift? aircraft? medium of a with little future

Scott Donnelly

what Warrior are. down. an Well, ago, have look, the folks talk Kiowa going years and aircraft. Obviously stated of capability, look path that is aimed couple of Army I do And we are continuing think V-XXX that’s several for and took sort important where Cape assault were does matter. their it that they at with where the they requirements long-range X, right they when or that think is The to a need unmanned shines. the Aviation their really part. going sort to about is Set And we been the which of really that’s think certainly V-XXX out

decide to So want Aviation handle their continue how obviously do the will Army they work and to programs. different

think to a different and number I a missions obviously aircraft. Army fly Aviation number has different of of

we on V-XXX does, So obviously we’ll think it evolve that always role I think the impact and of as over work and and continue that view will time and the to with them emphasize capability the that to and category, in that something Cape requirement. X If they Set elect we’ll solve then to obviously so-called you do can how talk them about engaged Aviation. Army it have more be

Seth Siefman

a see might time frame And the do determination? that make for Army you when

Scott Donnelly

I No, don’t.

going and I just sure. am it time, on, I of work lot over will evolve think is there a

Operator

a Please And Hamilton. go line question do ahead. from have Skibitski with the we Drexel Peter of

Peter Skibitski

language? not to the is but strong dam would return or Scott, wondering reform the that question, coming you when too much of kind bursting into a the belabor am terms that up tax demand, aviation the backlog sequentially of I Bizjet at the use here, play of fact in it’s term is time so

Scott Donnelly

I dam I don’t bursting. say wouldn’t know, Peter.

reform of tax the is think it. part I obviously

certainly A upgrade that’s is a of in that I are driving there I demand. there order confidence infrequently some think and think are who aircraft, importantly, but are not demand market. don’t long more been business because to those is time. years I say upgrading is like seen more aircraft have that to It’s solid a I’d that used lot positive backlog. strong. lot and people to older. People I say, it’s they dam And we there They I out the the through went think down flow. looking out crazy, Like have than natural invest. frankly are looking why a we know of to there getting natural I People that’s mean bursting. some

Peter Skibitski

Is the demand? increase mainly impact domestic? of any Are international you seeing outside from kind

Scott Donnelly

mostly jet Well, is domestic. still

in side. seeing that’s on at are of When international balanced the jet and look market terms more the a improvements demand domestic. we turboprop, well international as Although you in some

and when demand back on the quiet first Air market think families. does lot year, at the turboprops important obviously pretty that international quarters I importantly notably the because that side looked come obviously the generate last more both on couple the turboprop very was of and a King which Caravan for us seen is we you for have

Peter Skibitski

just XXXs, dead, And sale quarter. then closed sale think in you orders the ask just XXX call of the want the one? them whatever Philippines. want two quashed last, of read XXXs other a number I number Canada I that to in to completely sounds I activists you sizable or that it Is on some - like sale to pretty And two,

guess is being So level, over are still I one pretty pretty XXX years term? shape that couple of the the next decent sort the we quashed, sale for despite

Scott Donnelly

activity is lot think I on. going There XXX so. of a

XXX nice a As know, were closed quarter, of demand. lot you we has in XXX and the couple as said, deals a that there international

are always deals they up until close. foreign So fluid right

about play QX. out Again, feel it a basis pretty it So is, delivery more demand XXX where think so will tend I be good on through of well is year. a does the to activity, and there QX, that lot towards we

Operator

have And with we question the do a line David Strauss go Barclays. of ahead. Please from

David Strauss

at amount. stuff on backlog there the there? a XXX Bell about fair ask Was any to Wanted going down

Scott Donnelly

in to as you right. lumpy, went that year. think will tends through was of side go that know, some see And to the is David, the down But normal military of be there cycle you’ll it its Bell, what very XXX there. of I because continue sort Well,

as just add and one-year will the well would to into However, when you’ll not three will we a that seem when used be we future, that sign XXX happens, the backlog not we going to too negotiations multiyear which I but backlog. the distant here years do close where get go to because see five point of of expect all in

over increase issue do XXX dramatic particularly a So got something we would you’re to type you’ve real peaks and bleed five some of where valleys course that the on deals lot multiyear a military The that. see on going years. V-XX, like you’ll of see down and the would around and around

David Strauss

I the cash then then flow follow on And wanted and to working forecast. in capital QX up

So year-over-year. was it but looked down working drag, actually were it significant down pretty inventory like looks year-over-year. a like Receivables was capital

there? looks So Does flow stripping by a ops already like lot And just up your what’s not little there? going just it actually bit. on on Greenlee if a what’s cash so, Thanks. then but going that And forecast went from out? include

Frank Connor

little a I geography did We nice - that It’s the than translation was Working better I build, mean, gets but to is working capital see always of there was it on capital quarter. the as last makes result did some again year. from a first of XXX year-end seasonal. Yes, again job change bit think a inventory difficult. in we quarter-end

things Some they’re assets shift now. inventory of into other contract because of XXX out current assets and because

again a little first to flow well. But of happening are quarter in side typically from the standpoint that receivable You on where cash relative bit we accounts see quarter. the a overall, good as

kind associated make & there forecast other full we’ll For flow of with we some for as and up cash the areas. Tools that in divestiture the of with impact Test, that within be better performance said, will absorb but kind year, of cash operating

David Strauss

the any tax quarter? It Frank, in QX. then, rate pretty change the for was in And low expectation

Frank Connor

discrete some that of guidance to right think but in No, the the year full had had indicated is rate for kind we about. we the still items QX,

Operator

go question have Rumohr from of do Company. & Cowen the line a with we von Please Cai ahead. And

Cai von Rumohr

In the the in third XX-K number and will and the price look that $XX said XX-Q million that quarter. a you Aviation What in year-over-year first fourth at quarter? like plus was

Frank Connor

office that? sounds done. it having renovation Cai, like work you’re some you Can repeat

Cai von Rumohr

third the price What million a quarter. in it in for quarter? Aviation fourth and first was the The was Yes. $XX plus

Frank Connor

million. net about of quarter in be price inflation the So $X will first

Cai von Rumohr

was Aviation book-to-bill was like any it looks there your - And X.X. impact at

You would XXX a number? at X.X mention really it change be lower would the Or it that is year-end? XXX. book-to-bill? So backlog a If we’d use

Frank Connor

backlog. impact, as into said, there Scott some defense was I business No, service mean, that of XXX an brought

jets it. book-to-bill, have in that’s activity So and both as of in said, kind we But turboprop. still we strong and strong order

those, correct. going the of not of each are directionally numbers of We of are into types get kind to those specifics but

Scott Donnelly

Yes , about as numbers you know, each for of number we don’t are calculate or publish that categories, your these right. but

Cai von Rumohr

Arctic move low overstock And Augusta of the us still quarter, maybe at at And estimates going. is how of in the valid? then in given first are terms Cat to update that very the terms clearing full-year channel Industrial,

Scott Donnelly

described the think the industry quarter. it’s selling of year is first equipment And you whole we January, difficulty that ago. a had into in of Cat we months in where March outdoor you’re look dirt. think, this, couple we all, but that the I haven’t done at difficult selling I February snow, didn’t a I a QX have Arctic Cai, started is, power when you frame, time mean, that challenges

- where tends cost a a within have So have business. revenue be don’t of of but you the lot the it the have you basically quarter to business, you

that’s So year. cycle, feel the it think about doesn’t perspective our and just how on I a we affect natural

both In was snow ours dirt you of the a are pleased look through we and big terms of happened year, of course of reductions inventory which if - that with focus the inventory results. reduction, a lot the yielded at

that aged pretty there significant is So inventory. in reductions

be you’ve got about. are about, think lot stuff excited that of and combined of that’ll dirt a and the product and and aged fact look are the got dealers exciting new lines, the so think of floors that a between we pretty you stuff lower that have both new that the excited And across the snow on inventory you’ve I dealers product we lot pretty

we So pretty are for where about we good feel the year.

Cai von Rumohr

And the one, the last EACs at you could quantify Systems?

Scott Donnelly

performance, by Yes, we Cai. had don’t segment, break but out those we good

Operator

Shapiro And the do from with Please of have Research. a line George Shapiro ahead. we go question

George Shapiro

zero out know if did the year’s how quarter? went we to we in to which the last took quarter, Scorpion first R&D, Scott, the compare underlying R&D

Scott Donnelly

that the Well, Aviation R&D way lower modestly higher do by quarter we and the you’ll the and don’t have color at provided segment think, have is modestly segment. Bell. business this again, in spending I spending out that by we played the George, But

obviously we went are So still spending you’re Scorpion right, Longitude. to continuing down on nil, virtually but

everything side see on accelerating full some and the doing We flight around are in can so all that and we we Denalis the are increased operations that’s the Bell spending then SkyCouriers V-XXX, XXX obviously with the do we’ll work going test on there. well. And back

out played how we quarter play our that pretty with the consistent the expectations are and I And way what the the is So it gave year. that’s will you. guide over think out

George Shapiro

second into Longitude R&D fact certification delayed quarter, getting the level affect the that that’s not the the is And to going quarter? second in

Scott Donnelly

the No, overall won’t affect it level.

We on we of have the point testing SkyCourier moved year on activity Longitude the of and but Denali spend. huge that’s this and things, programs. going spend of a more into now the side little have later a flight than amount Most the would liked not at into has R&D

George Shapiro

That obviously quarter. year-over-year, been at more see by and should lot what around the is but And margin like we be a Scorpion going an if XX%, and would take R&D to help the it number XX% look this comes that out getting more of forward. above saying mix because price-in out you’ve incremental I try of kind around me

Scott Donnelly

I think net costs terms have there, we’ll pricing together. all of that how but I in sort all our and know the and of our incrementals expectation go conversion that into of inflation don’t of of more talked range. and we around George all that that’s things XX, gets geography XX%

George Shapiro

Scott. the one, And last

price this how production? the you make sit have there you’ll increase production So of you running the rate like many saying quarters have been though between book-to-bill and before and even the trade-off

Scott Donnelly

don’t on would we sure to market, about now. make it and out start in backlog we produce efficiency here all that We conservative different than the is. continue market see is can we at looking where you I don’t in are tweak at each driving absolutely sense activity we bit us demand take know, if to But our a few a our driving around that. of obviously and we fairly operations. each mean, much makes a line as But this types. the view can more set flex if and between Look, is a model demand the its that looking focus we aircraft, I price, that But hard that. individual up are try seeing and how strong that and economically. we only for there a is good and the market a right and then level enough model we model little feel time, demand go absolutely reaching George, demand there do we’ll pricing

George Shapiro

I I more. guess have one

usually buy-ins in it The are this any doesn’t of different be the first like subsequent be margins the that lowest year. It higher to year should are look going quarters? given

Scott Donnelly

largely I probably think true, that’s George.

Operator

go with We Jon have ahead. line from the of question Raviv Citi. do a Please

Jon Raviv

one last on pricing. one maybe talk just Aviation Maybe about

been competing one guys against the pricing think I has that has for you of back use held things jets.

the new Whether So going? in can you more the are conversations on customers seeing offer now versus any how those used? are color value

Scott Donnelly

available is as used including good of news the some that the we are low impact of for dynamic knock-on think in with a to sales. young number smaller. sort there say industry, question new that relatively now have jet I Well, the continues for is time, the used seen current relatively aircraft low I’d of is no has models aircraft are hours get sale that

So created the activity that new aircraft in not of there the there number on the market, sales the quickly. some at issues the us to look certainly pretty them of out used And you past. in those move tend for jet aircraft is

new is have a there to new a that as new jets So to to are to competing the a that jet warranty, a out think of who wants low-time reality five there relatively who asset. is have aircraft whole wants seven-year to for who not lot wants about someone have

we expect are competition will So side and that think that I would the the certainly less used case. from continue I to be seeing

Jon Raviv

point? this then at how new updates you thinking are pricing about Any there? one feeling entering are service? the strategy about on Hemisphere going products. into And you How more Longitude into And

Scott Donnelly

treating lot of get Well, treating are activity flying way in this you there on the here, obviously, have customers an I been Longitude, awful the the is lot we through same certification aircraft. that of aircraft. we mean, are rest the A the thing. of when

into and a It’s I in best impressing that customers when trying class. the a our standpoint. that we Obviously, that an so really we impressive sure think it’s need it’s we got performance of can margin. a are bring market. But, the certification on sure again, maintain to we investment return that done aircraft on good that to it. are at it moving make thing market a to It’s that really get features and make lot get aircraft aircraft to significant like price the integrity reasonable appropriate an start we do from you a

engine of are then some In the what we everybody to engine for terms And knows plays basically issues that waiting was been and knowing Hemisphere, and of point around move look, performance think slated have the engine the there see program make forward that, have based the on how At out. decisions that I is. the aircraft. our this suspended we’ll

Jon Raviv

to like to say the just those be should of see going delivery is we bit to earnings fair year light year deliveries going incremental still to some we felt one, throughout XQ timing, a due level? kind of is improvement XQ last just Or any the moved of then this And that off around? it

Scott Donnelly

where QX as fair of is and we’ll incremental activity. it’s I QX both I we through quarter, assume see said think the move with QX with feel volume again, year. the about kind of deliveries I order was the of good usually Well, in terms course think lightest as that we to George, and

Operator

have Lipke do Stephens. from question the with of Drew go ahead. we line a Please And

Drew Lipke

color provide we on question just any earlier mask an Bell to seeing kind of can back what circling that and around trends we can Bell, trends seeing within that backlog order commercial, you understanding Military are backlog Just commercial and the there? are

Scott Donnelly

I last year trend think this positive. year, been Really market and backlog continues into to commercial has activity through strong. the our be and order the build

Drew Lipke

an you all having quantify of what And just maybe the synergies you the benefits that overall here? you can for maybe then portfolio what comment are synergies us? Maybe And those brings are under industrial perspective? to industrial on from can one roof

Scott Donnelly

are would I Industrial they’re competitive They’re And industries. am businesses. of and the their right I and I sizable very pretty think mean, on that’s their players pretty how I businesses in really how the them. question. very sure respective in each big own we answer in not it’s markets manage strong their

Drew Lipke

in seeing on And opportunity sales? last does What you international more sort of of for one terms What systems. opportunities the then just your that pipeline look portfolio administration’s are unmanned like with push you? for

Scott Donnelly

there all U.S. significant opportunity just for I been really Systems, business not is international our think has policies. but businesses Unmanned our export greatly by a which for always Well, that been impacted

or unfortunately, and by lots European either which come won tell every export that. see policies. because that I opportunities of of countries you will year, are And everybody our think other go we

effectively that compete Russians, or Whether certainly the from done Israelis, other to the Chinese, still but be rhetoric good. we by countries those there to international allow to huge marks turns be been that But that that hearing by like be execution rhetoric into compete determined. allows are in to and actually to seen. the in it’s and say, the hindrance a policy positive sounds by language the of blocked companies the remains space, that U.S. would that is business, The to is us lots business we participating. So that’s European I are by

Operator

Ronald we America. ahead. Please have line from of a of go Epstein Bank with the do And question

Ronald Epstein

quick Just a things. couple

on driving it now back? bringing and turboprop come the that? back. that mysteriously demand, What Because it’s sort On disappeared, happened? sense What’s your what’s what's of

Scott Donnelly

I don’t know, Ron.

or lot and Just both applications, and government for of was demand struggling a question a I Medevac, a It which go was obviously Look, I lot lot economies then of sort The made the think do sector came of a aircraft private spot. expensive the and patrol, been dollar down, international these strong, a pretty and for dollar of lot foreign more went tough strengthened special while, not. when that, economies extremely back. were acquisition the wasn’t and U.S. and were of of sort aircraft they a it was in them. a like problem. into want border it just It that a big think

I seen that So strengthening the of as intersection dollar some have the think and some weakening has we the generated of capability. economies, of those

deals. ever able we to not weren’t share it’s that we like So lost or win

sectors. that go economies great the Caravan King dollar aircraft them, for tough to I our after. family it allowing mission weakening It’s both meet think family and them They again and sought in think economics Air are just and government They’re both I back private them was highly purchasing. to and for is the aircraft. strengthening

Ronald Epstein

going? program had Now real launch on, you customer. in seen And follow a the you how the kind as a since is nice program of follow-on SkyCourier, Have the launch? interest

Scott Donnelly

We have had a ton of inquiry, Ron.

Caravan. you mean, Caravan could think the a that just do aircraft. workhorse to I that notion space that for today I the Right? - years fits as a we I refer it mean twin in

passengers both have were about cargo we and as go a We And of interested all a that thought I into think a need know, calls perfect you it. used notion really a things serious those do opportunity on that aircraft, to of in had, the the a to It’s sort twin of we once you it of the people been that? announced, it about. XX-seat version was burner Can thing. are we with was that well back do when a are have the we version all one? clearly said, this the to something over FedEx getting we aircraft find had cargo. this bigger work are And world. And as this, always for customer larger over to and opportunity that’s have, move should They’re you reputation as perfect from version always used something for pass

a to home going it’s run. be think I So

got and that. have we to we really We are great demand a launch customer beyond expect obviously, have going strong

Ronald Epstein

to program development is where be the roughly now? expected And you tracking

Scott Donnelly

wind got work. We tunnel the absolutely. through Yes,

with that’s these we to aerodynamic Ron, don’t exist. and to our to construction, how design invent It’s it, Remember, are the go new we know mechanical, have it, something wildly is. go know that an happy to where pretty exist. work are we we It’s engines go how avionics right alley, thing that this and up do it. build So is aircraft

team speed timeline. and pretty success the here this the knows a a So from aggressive really our way nothing on important, to making it in standing is huge is doing there and market

Operator

we Research. with And have do of line a question the from go George Shapiro Please ahead. Shapiro

George Shapiro

to Yes, do this buyback? do I just year? try the perspective Are an going and accelerated you was just the of give share you you are some in evenly wondering to that. going on through If can buyback, terms

Scott Donnelly

course year. over right or it year. George, of are to probably going plan just we that assumptions course mean, doesn’t Our ASR I the is something the like that the would we now, of do an play it out but to our the continue just through preclude that, that are

Eric Salander

Okay. thank for for call joining And you our Ladies and today. concludes us. gentlemen, that

Operator

And ladies Thank your AT&T and gentlemen, for Service. conclude you Executive does conference using for today. that Teleconference

disconnect. You now may

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