Textron (TXT) 29 Apr 212021 Q1 Earnings call transcript

Company Profile

Participants

Eric Salander	VP, IR & Treasurer
Scott Donnelly	Chairman, President & CEO
Frank Connor	EVP & CFO
Peter Skibitski	Alembic Global Advisors
David Strauss	Barclays Bank
Ronald Epstein	Bank of America Merrill Lynch
Peter Arment	Robert W. Baird & Co.
Seth Seifman	JPMorgan Chase & Co.
Sheila Kahyaoglu	Jefferies
Noah Poponak	Goldman Sachs Group
Carter Copeland	Melius Research
George Shapiro	Shapiro Research
Jonathan Raviv	Citigroup
Robert Stallard	Vertical Research
Cai von Rumohr	Cowen and Company
Kristine Liwag	Morgan Stanley

Call transcript

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Operator

And ladies and gentlemen, thank you for standing by. Welcome to the Textron First Quarter Earnings Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to your host, Eric Salander, VP of Investor Relations. Please go ahead, sir.

Eric Salander

morning, good and Brad, everyone. Thanks,

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

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

$X.X Relations billion, presentation can from the be section Investor of call the in quarter. our earnings in Our quarter billion in were up $X.X first last Revenues website. found year's

income restructuring $X.XX year's year's totaled pretax $X.XX on on to plan this Adjusted quarter. XXXX. the $XXX and $XX first $XXX contributions With of million, Manufacturing over after profit first of up special cash up the pension turn $X.XX share million first million During of XXXX quarter, measure for quarter to $XXX XXXX. income share tax we tax. XXXX per related net I'll TRU non-GAAP before flow in was quarter from million, share. income gain last Segment sale per it the the after in in reported excludes first $XX net million $X.XX net quarter $X from of of for million share pretax the that, charges, quarter of of Adjusted Canada, first to share the XXXX per was per $X.XX a compared per Scott.

Scott Donnelly

points quarter, by all segments. up Segment revenues. was quarter revenues strong good At Eric, in across quarter by military everyone. quarter the of higher for morning, revenues, Textron. driven basis were XXX Bell, lower and commercial margins partially a execution on our were Overall, offset first the the strong up Thanks, in

awarded modification multiple and future corporate, $XXX of demonstration commercial We side contract internationally XX of for helicopters commercial a program domestically million emergency delivered across models, in utility, solid services. Bell, year's for FLRAA. our competitive quarter. order saw from that first private, XX the including the phase quarter markets, and both medical of in we the last On and reduction and second end the was vertical across activity lift, up On the

are conclude we flight think Invictus highlight past that FLRAA, autonomous qualities the prototype, important where final the level flight of over This first V-XXX, the As hours in On we of in the flight. QX in the demonstrated way it's the over XXX anticipation I included performance activity with has on true through XXX impressive X demonstrated X-plus to is airspeed, about handling knots flight aircraft of of XXX years. of next continuing year. build Bell process X/X the and its manufacturing milestones

to and sites operating quarter, awards revenues aircraft XX CAPCAS in higher also next our responding we to flight with is for direct we to FTUAS the Aerosonde phase XX Systems demonstrations the had are up end. was the Tactical turboprops, quarter quarter execute III Unmanned Systems. was million the help contract test Army awarded the in growth million sorry, lower $X.X of last while the well program. of of our operation quarter, to the of look delivered platform, hours will sites. continuing quarter. HQ. as XX end commitment customer at vehicles of inform that delivered $XXX the soldier jet. which prototype $XXX flat were XX XL-based Army the testament successfully Textron related and with milestone participated across partially Also FX In for This backlog Textron X ongoing the the to the combat lower rodeo commercial in this flight certified vehicle Future XX is Air U.S. first pricing. define of operating Citation volume, and to At programs. the In X,XXX FX from to we quarter, Fort revenues, modernization as resulting U.S. the of margins. fleet. these as deployed At U.S. sustainment they in billion in Systems Benning existing the well completed a Force strong in Aircraft business the support from customer configuration. to the currently and offset systems down reflecting medium the Block year's RFI, at to requirements ATAC, to upgraded of up the by quarter, to were Order revenues ramp were the to continued quarter the Revenues delivery a our in We of aftermarket Systems robotic platform the year improved first jets, slightly Aviation's Aviation, RCV eventually future - flat last value I'm delivered to and Army's from shadow Systems In the Moving the quarter, Systems activity at the program. performance up for and

of We portfolio our also of announced delivered new the the X continued quarter. This existing example upgrade and in our model CJX is aircraft. in aircraft GenX another investment

targeted this as Cessna progress we well the continues to towards SkyCourier second new the front, year. aircraft service the entering certification half to towards On product work program of

our models. fuel saw product and quarter, to our Moving in than year's by first strong total Specialized Revenues production Vehicles, volume customer see to the our electric driven last Vehicle were we price our more of new end X% demand systems quarter, volume continue higher to for At Industrial. Specialized in primarily startup from line. of the markets. X we up volume about across double hybrid vehicles of At retail Kautex,

customer course it great improve retail businesses generation turn to cash the industrial-owned improving, order targeted our work a expect increased the continued commercial the of and in in remains in demand In seen the we and the markets, call has end been quarter. year. at as strong throughout improving While shortages demand the summary, to we through that, over inventory in and which start with levels I'll below channel markets With Aviation year. supply flow our Frank. Bell disruptions, solid execution We've will was military

Frank Connor

everyone. morning, Good Scott. Thanks,

Let's the a in million review contributed, at Segment the the billion. million sold. segments quarter ended products due lower partially of profit $XX how were from and each Aviation higher the volume, $X.X up Aviation. the by starting ago, aftermarket Textron $X Textron pricing. due impact performance segment million profit in year, from offset with from of to largely primarily $XXX quarter, of was of at million Revenues down favorable last to mix a first $X Backlog year

from Vehicles. and Industrial quarter year, at million, last related favorable segment was were favorable up Specialized the to fluctuations. higher $XX $X.X on million. from At foreign million, to to Systems, million lift $XX quarter Finance in mix and research programs. a first from Revenues up $XXX Segment performance lower $XXX and partially $XXX inflation down $XX Backlog primarily price, last higher performance quarter, flat and future Specialized million, to military ago. up at $XX at due higher the ended million development exchange revenues profit primarily profit $XX revenues million the million, Backlog year volume Vehicles at Segment million, of Moving with was other. vertical largely million and as from $X $X.X billion. offset segment revenues, a mix, were the from Segment profit as revenues. in to higher due in of was million million billion. XXXX, year $XX due volume the ended and of segment by $XX primarily price of $XX million commercial of were net up million Bell. Textron $XXX quarter the revenues impact profit well and $XX were was

Moving expenses interest million. $XX the $X on we restructuring pretax were charges to special With expense respect charges below of segment recorded million XXXX corporate was plan, $XX million, line. our profit, and

gain of quarter to To up manufacturing in flow performance a completed $XX also of cash with range million of from in shareholders. Canada in $X.XX cash We we're expected with prior reiterating guidance contributions with pension million $X wrap improvement realized manufacturing repurchased million cash concludes on strong million up management. $XX year's on our focus EPS before we quarter contributions, X.X million pension contributions our of $XXX adjusted first planned our our to continued a quarter, guidance, remarks. $XXX our per Cash we before and the prepared to sale pension share, raising million. of returning In to million. of the $X.XX capital $XXX $XX flow $XX outlook million That We're a for TRU shares, working the was and pretax as quarter the inventory over last outlook.

So open the Brad, we can for line questions.

Operator

[Operator Instructions].

the comes of line Pete today Global. with first Our question Skibitski from Alembic

Peter Skibitski

Guys, billion out start so backlog you the at is there? kind the to putting seems where for real come young kind a what in Aviation, used in aircraft of positive we really like guys? Is of just it a guys. through low availability forced seeing that to point you it's are Are $X.X cycle you're the that just of customers

Scott Donnelly

here period if sure, time, been we've there And come availability Well, I between available terms I are fleet you in at used we're means for of of of out that aircraft years XX that's last of new old sales, correlation at sale. down. that the down seeing the And this under X% Peter, what's below what look think young think over number happened point, for that's and the aircraft correlated.

So that's without helping. a doubt, I think

more quite environment the so think time. aircraft right, that we've got positive, more are than also seen acquire demand looking people in I to is overall some you've

level the certainly is strong. So interactions activity, of number quite customer of the

just and I part And demand the in market number now. off again, factor just small right that. young a is so it is But that's in to of when happening, used strong there's of the think

Peter Skibitski

far mean, can I in as have think biggest tell. XX the I Yes. like years, backlog I that's as you

forced look at at production So this point? increases are to of you kind

Scott Donnelly

the Look, always at I schedule. are constantly this up, looking the think keeps we of course we'll the level through look production at of and Obviously, it demand tweaking year.

we'll adjust I to continue and think So monitor accordingly. it

Peter Skibitski

I the guess is about margin quarter but volumes to of for last points X first 'XX, Similar one the higher. me.

the reach takeout? now, Aviation you level know getting going a at pricing we - the pricing of you that cost don't lot of this just is you're segment is and structurally higher-margin really see level? right to rate from So if I Aviation do more point but kind touched forward a Or pricing, on know do you need

Scott Donnelly

but Peter, to had obviously Well, do going we cost is, there's One out, mean a volume. had take with lot on. did - I that things I think two of

and price, frankly, rebound, So there's seeing - mix and an from of executing I aftermarket side a for think us. the performance nice we're parts is a the the stronger good There business in standpoint. a overall particularly business, that's was

saw and of some as for frankly, mix But So into us. you and was the saw driven demand go by utilization you QX positive aftermarket was contribution, overall increased actually good mix down pricing slightly. a some part

Operator

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

David Strauss

touched talk on bit about be you - your inflation Aviation. across kind of seeing? kind in in businesses, you little a might could material pricing the you Scott, relative to commercial on But pricing the environment raw all board of of that the

Scott Donnelly

of to We're - there's think try that. no a has strategy number what keep and cases, out pricing our there. seeing is we're successful I is that in been of but ahead What we've been to doing inflation Sure. inflation, it question

Bell So you're environment. the we're industrial through matter. Aviation, doesn't price a businesses, positive it seeing right,

David Strauss

Right.

Okay. XXXX the kind the Is how guess, in And I of is that business, the are the then that Aviation, much of XXX, portion you at market? large yet? can at all you on remind new corporate? what us And aircraft rebounding Fortune side of seeing

Scott Donnelly

out. expect that increase I of There's to track the Well, that are it's that year. aviation - more usually we balance mean, continue dialogue we starting come on, corporate give But to and will seeing don't specifically the the departments I alive. through are going or

are you for were cycles anecdotally, over aircraft, it obviously up continues aircraft of XXXX can't to March where the in comps think XXXX, up cycles great. and back flaky, on a to was this. kind actually in look the but if specific U.S. data the breakout was you XXXX. particularly number of again, domestically of give which I of our domestically for is going These - increase, sort Obviously,

like the just businesses still you some you're suppliers around it's personal restaurants, go and - are Customers lot think personally of but as things have I starting out predominantly a mean to to our out I starting to to and traveling that, travel. by starting about, we meeting, corporate and I'm I mean, travel. coming driven back. are clearly travel I see travel

starting activity happens, more that. that of flight and You're level, think pick see as to And corporate up. more more see we'll I department, buying

Operator

do the Ron of from we question Bank a Epstein of And America. line have with

Ronald Epstein

in going So smaller, most what most Aviation up? increase products product you where bigger? seeing I your in mean, Longitude, seeing own higher ticking the line, are the Latitude, are you

Scott Donnelly

good the it's virtually Well, every is of activity, and news which that jet Ron, model is good. here, have is we seeing turboprop strong

So jet it's and of across portfolio it's all literally, our the entire turboprop products. of

Ronald Epstein

feeling it, And give hearing, you're of what could quick you us lift. it. got future update if Got on then it, got seeing, a kind on vertical

Scott Donnelly

exactly progressing as Army Future said. the lift vertical is

for Phase As I obviously, we - our and contracts said, the X. got we competitor

Comments Response questions had draft the year. in. went now know You have back. come last out those late to come RFP

and drop timeframe. here RFP probably that the We so an industry expect in to day or real then sometime May ultimately,

those of was we us. wanted just very in they've So hugely wrapped demonstrated demonstrate. successful I guys We've that a much which on program to staying flight what schedule activity, think are our terms everything V-XXX told up

risk So the of phase focused do right second objectives the reduction. is the program, continuing is the of team which on now, to

progressing in I'd So going smooth phase same of formal And the risk a And as full-blown of it's it it's into parallel record. say development. kind this the the is transition working Army, that us from activity thing Army makes exactly told would. with the at path time that program a the RFP on a proposal reduction

Ronald Epstein

term? dropped And skinny with any better, that administration, longer was feel about budget any same the the do the prospects by the the you worse, for program

Scott Donnelly

inflation-adjusted are argue we'd the budget. enormous expectations about bit seeing. that pay would of could still fund But pretty And could always their expecting top I big see they little a And responsible They've their for has based it's sure, the modernization. of would They top intention think this. flattish They the reducing I for adjustment. we're focus. such. down priorities Well, been importance and amount said this legacy mean, on think line I modernization. they about have how put that getting that's been I they always funding, clear Their Army never were by really on focus what were on some very so

says - listen absolutely it's you if think I McConville very consistent, he very, time speaks to and the publicly, what think it's been General every I that's their intent.

seen again, So haven't about, that seen focus modernization right? support line is the everything and we've I think only Army that. that, is skinny budget, But on down the below terms top the details in talking certainly, the We continuing. of

Operator

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

Peter Arment

driving on performance you good us Scott, Maybe and you've there Specialized some Vehicles. seeing give called out what's little could a color at just that? you're what

Scott Donnelly

if ground starting a support little in bit up These is the although lines, on is product that PTV retail probably you businesses guys to pricing. is on are also But equipment of pick activity of and environment, very those and executing soft, core well. is at off-road, as all area the all the Demand seen look We've course, exception demand - strong. still well. the then, solid the Golf

well battle supply it days. job is is some through day. team driving It's is product terms I guys like for but I chain bodes get that We and to every of a I volumes are profitability. inventory mean, of out working - executing continue tactically, kind future, well some getting the of business would and think in just improved executing the is and think higher out there worked just doing the the a struggle well. that. But more stuff to nice a drive levels,

Peter Arment

follow the supply to comment. up just on chain And

the Are stress from that. you seeing, is around businesses? We things continue industrials, your or like seeing different? impacts same the semi to hear are chips about chain I supply across and especially guess, it What other you

Scott Donnelly

much lot And It businesses, a businesses, for a I that of a true was certainly seeing with the the have has in operating pandemic. of So those most do lot fact of part. businesses our as kind to aerospace we're of they pieces kept also of of because the impact that. defense the through not that think lot

And has is capacity back chain better. you so out in many supply commercial cases, that still So come is running a obviously, down, and which lot of up there's these of there. demand with the share stuff,

challenges, yet shipping a there's kinds back getting operating. stuff. of in not them things, they guys It's forward, seen supply of the a think more lot every day. lot to haven't are go restocked. tactical and to chains get higher on certainly through But meet see all space. and demand, we issues, as volumes levels and work also Obviously, challenges that pretty up the that side to opportunity I only of industrial strong those we are much there's So But but inventory there's of

Operator

the do line with of question have we And from Seth Seifman a JPMorgan.

Seth Seifman

you wondering I little quarter. Good if was bit. could talk guys a

I of sort fourth in up quarter year-on-year deliveries first assessment QX improvement being then being think in quarter. about talked sort initially, of the QX, we and flattish

based probably bit sort think now a guess QX when I up see seen well? numbers that do seen in QX as the and came So from expectations above given about little QX on you've you where the backlog, what that, them you now in we've of you

Scott Donnelly

see order And business. obviously, year. a QX. a saw in what quarter. strong whole a right? very normal we there's delivery this The would of is Yes, to clearly, delivery I I cyclicality don't that expect, is, quarter. we QX mean, big the activity the usually QX usually, exactly usually lighter I think mean that's you lot difference is

our guide full that frankly, our future performance on for guided bodes So an of number. what terms I than of think that is better part had absolutely, Aviation raise in we'll see And quarters. well year the anticipation we

Seth Seifman

that putting year, like and and then guide? of the it up especially similar QX, think to out QX given clearly can give mean, think guess first be you'd expected volumes the what is with come on would I I there point, where and color than now, then should QX the I the - around might initial you for margin seems kind Aviation that margin some you quarter higher higher us it

Scott Donnelly

higher. we'll you're in also think that, go think think Seth. as be you is, of very probably in the is do going that's we at quarter the had But we I side. expect on of first in guide well. Systems will Well, other the stronger segments. a of in, rate well, can better a margin It part one see we'll that the on when each think is model and Aviation right, original margins probably strong obviously, percentages And on somewhat I the than Systems. reguide our back also We're our that to expectation And I raise guide part is the a about guidance not you terms our how you of put

Operator

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

Sheila Kahyaoglu

question investment the first my company-funded are Is and FLRAA you talk just side? FARA FLRAA, it's now. So about to sizable we timing the on future done and R&D on lift investment? I'm of Can vertical then the guessing the on And comparable Bell. FLRAA? is magnitude all

Scott Donnelly

both the and of FARA in activities part right the spending R&D FLRAA increased now, on. that going we of So is challenge have XXXX

get the and first part the in program to year. the FARA obviously, latter produce initiated full - flight aircraft of the starting And to of ahead has So to we've next here. ramped kind first speed

with is well. sort And that FARA a a activity, million runs that March. And So OTA, were have awarded, of then cost we're from dollars $XXX-or-so next of FLRAA company-funded that X/X government. and also a under the now all lot just we program that's program so as X/X program, share that which seeing that's that through

have have front R&D part FLRAA going both of the So and you Sheila, simultaneously. FARA of the we on X is headwind that right that's on Phase now,

Sheila Kahyaoglu

good. picture question name There's then element And a it, backlog DoorDash, in Netflix, because just every a on maybe the Cool. Uber, bigger Aviation was Okay. you industry. so technology

guys for they've emerging I very it of be, say, because in a these they're seeing these up the in not over or So are a where thought, some whatever that? portion you only their your customer because Aviation, change years, guess you models with and become guys as customer next might good wheels you a composition, are X technology operators charter to in bigger mature fractional general been while. for But seeing you

Scott Donnelly

mean, fixed-wing a there's our seen business Up haven't a good that's this side. mix really we the point. at shift with obviously, part Wheels I of Well, on been

continuing well see the just As are announced with on business. Wheels mean, rotorcraft the to I going doing NetJets relationship. also strength through side you same fleet. I the in NetJets the into helicopters doing we our know, fractional think the terrific the Bell guys very of Up We're side

be So we're seeing over. to we seen big there strong But haven't as mix well. demand a shift

to the seeing strength everything charter providers Up operators fractional right you're of providers like and NetJets. Wheels through the like that So kind from membership up now

the models So like now. growth the different across right business it demand all those is seems in

Operator

from a with we And Sachs. question line of Noah Goldman the Poponak have

Noah Poponak

number through Aviation. you is expect to that order improve usually XQ you Do seasonally move order the as quarter lightest Scott, sequentially your in year?

Scott Donnelly

of Well, strong. think is level to sales activity Noah, I be continuing our

expect market, given that through So see the I I year. continued seeing, of the expect the that strength demand to would we're course in the

largely expect down starting I you dialogue more to larger there a started of to were more that, business coming that start so departments do well. have weren't lot corporate think those Now the - see flying as departments we shut talked for pandemic and more back, come back, there's right? not So as we're and to and to about of folks corporate we've before, as sort see flight and see corporate travel that were frankly, there's operators

is demand strong, guide which our this environment would but it's is book-to-bill not good. So - we the I'm at sure remaining point,

Noah Poponak

maybe kind But to And end stall head The good. a seems virus then the some the now the over Okay. years. in back and looks right commercial The better had of few last fakes maybe place. would look to not out. around or there's pandemic some in questions indicator whether flyers data particularly the is where they new leading has go have brought better once data market

bigger Just versus see we sustainability I to you thinking reverse mean, us are through again? could picture, customers. the data, overall, a How talk something that here the on you

Scott Donnelly

when seeing revert aircraft, right? that's someone's something to out not that back we're So likely Well, people buy of that.

So think stay if afford in it. And accustomed someone's Are a can Absolutely. to convenience bought kind time, those going made using whole to that some going are think folks stay the tend bought they people productivity be you this the might be almost the to into people commercial? the they become that and commitment over on-demand see a revert stuff those might to But people back and with in I are come there it, market. fracture, charter the and of to aircraft, to market. I I market, once think of that

Noah Poponak

And did set over you're then thinking landed on margin of the quarter. ramped the time us Maybe durable, the last the on half it in year, Okay. margin, just level about Systems. back Systems where first how at in just sustainable it

Scott Donnelly

team the I mean, well. is been Well, really very I durable. it executing I think think has

into going ahead the order those know, FX investment you to you make of and couple winning expense a over that that program, of years, was last programs a ATAC we be that like investment those contracts. had to for eligible As lot and in contracts the had of

having we gainfully out through there So a revenue. of are those with and employed and generating expenses now revenue Those went period margins. no assets

strengthen swings, the business. the those helping of in I some think, to So are margins

of performance the been overall, the business has strong. think I quite

As you we of the on than margins the we're will side production the the ship-to-shore, of which as the transition and the clearly We'll development ship-to-shore see have better side side. transitioning. this from know, development go forward

of So elements that you it. really And lot to is things, expect look they to perform those performance has continue at I a think well. I this performing will a macro good as

than of of on earlier, opportunities that couple is that guided stronger expect that probably As are I years. to also over continue originally next said the is the part side. new X increase think of an will awful I Systems we guide roost that will we have that X, pursuing we the business lot margins our to I'd come course say what

do So really Noah, Afghanistan. of they're some sites. place. some of have half I here take I our of little in year in the we'll as think of will fee-for-service headwind, get a That on good think a the wind-down we in our down bit back

and run the that other the which conservative very been are operating are But we've think bit opportunities in redeploy asset future between business about there you but I happen, sites to of we will I today sites. I how to probably gap think have that and terms values. - think those locations, little a a of

to will segment. big not expect performance that good it's in margin But and and little in the strong would year. see a but probably revenue that I back bit reduce margins enough impact, half strong of So of the good it's continue really it a here to

Operator

have Copeland a Melius with from of line Carter Research. do we the And question

Carter Copeland

out all various might about I some to the portfolio wonder, at look relative what that's And an a have perspective and question, on land not think market your it and a love you that Obviously, accelerate of of model out think one, ample this. of of the R&D capital do kind inside what is whole that in of of vehicle Scott, of to VTOL, eVTOL some put in How take makes and but and to in you that that kind excitement? really advantage get sort unorthodox that? like projects about sense all capital and the SPAC phase or that whatnot. a there and you and Bell fund investments I'd your supporting as funding there in out you and lot there fund hierarchy, pull stuff to technology maybe

Scott Donnelly

to think It's early and I for call. a that little it's us question, a make good

We have some very strong R&D capability.

that a frankly, technology, obviously. as That's for already looking a we've in lot exists have space you been a at know, of while. that, the company, We

tiltrotor. a VTOL look some to urban The know actually frankly, look, know to know actually to air small space, how make it. our at the aircraft. continue We in how take of we we winner architecture be how to make And that's aircraft. view And this to mobility make we likely tiltrotors. see We so you

So to largely, We issue technology. on. fixed-wing new is, down or in space, a to a what's shelf hugely very many in we is how we of important to to want system. working the that propulsion to our a that think vertical that that for stuff here. make lot actually certify takeoff technology. in I the it's of move without of technology the the And structure know guys is the comes move us been to make of where are industry. and the around successful. that the however, We But undertake obviously in fact, these by We have that's know propulsion sure on make having be And airplane, the are that and capable lot the our our technology categories. sure are never going would we battery This battery driven when a time always system go right landing the craft the has right

right we'll point. be of what might think obviously, that, So sort that's teams, time. determined move like, look that and as the make that have when to it's we've on And following that been the and our got structure this we working at to

Carter Copeland

to Is wholly it you it safe say to organic and that owned be regard? in prefer

Scott Donnelly

look to R&D know a the options we'll - preferable one I I this than we the want the at more go And structure committed terms we I in at and all we're make it phase right there We technology. really that's that think we can have And about the clearly, to technology ability the is way right we're a think structure. opposed sure do other. I that's of successful don't mean, think right in I worrying to Well, more mean, now, product. we own point. another. capital or make as

Operator

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

George Shapiro

But less. King Aviation the not I in Scott, in help and a delivery X that it's were release X MX was mix, deliveries actually look the at profit why. I less higher in quarter. is mean, Sovereign I the says the Airs was quarter. mean, mix if clear the big

mix could you a bit expand the favorable if So on what little just actually was.

Scott Donnelly

So has it a favorability center mix really a the that's demand versus from strong been mix rebounding which the We saw the parts do service mix part good to aftermarket, us. where was, of what's within for has and labor.

George Shapiro

I of couple what And yet, aftermarket a assume down, percent. was you said the

Scott Donnelly

it was parts modestly, Well, importantly, aftermarket very more within down service. was more mix the heavily but very, that than weighted to

George Shapiro

below in orders were somewhat Okay. And And the actually They implied petered orders QX pretty kind are time, 'XX. similar at quarter look this back and that. go QX if I we 'XX. of in of of out then after

that 'XX it's peter what's going we some this in out not confidence and your 'XX? to So time, like saw

Scott Donnelly

in quarters, now. from pricing level months of available by or is X couple of just - the customer X tell X of we to is or feel It's were hours how we've mean think we've months XXXX, from this a X X, seen. now. that has we're months not as metric, I for used And positive. back you you can now, of from can't we going be environment now. are up said, new months that months really people where from as last at it's coming dialogues. I strong now comparing in, look strong macro X it's every we're the the I young that sale, seeing when talked about we're you from promised activity, now been George, number seeing XXXX. a I represent at over they - to aircraft we're number all right The months flight are as X now, now, to tell X it's I environment, for from the where all

George Shapiro

low? the for year last you quarter. one, mean the substantially this my then I And isn't did guide quick why $X.XX

guidance, If is weakest this your for substantially. you that you probably and that, pretty of we get know quarter just low to annualize new end the Aviation the quarter

given quarters only are Aviation a what subsequent weakens offset that's of to $X.XX you figuring strength in you the guide $X? to So

Scott Donnelly

pandemic in QX, the we'll around at our - as in stronger think or everything in Right I recovery we're and - that plays now. a and here year good, conservative businesses that looking still defense the on terms issues again, as I end that we're think of Systems. strong. the in right an George, market industrial feels don't outperformance the strength some eye we'll it's kind be very And making and raised expectation keep any but profitability the it's our little And world guide whether Well, Aviation of here in to we of our continues. now, because demand, Obviously, bit aerospace feels see the to that's on, is how economies continue it have continue going that out. goes year we're to sure

Operator

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

Jonathan Raviv

you question rates lead that biz to which in How on much your general needs - time been higher? ago. look What's that's just long margin? could not what of for we've And guys when control? going mean happen to thinking to number, double-digit back that A production on too jet. what get Essentially, about the at

Scott Donnelly

look very sort those dialogue think at speaking, window. a process, flexibility are with I out X-to-X-month stuff of items regular us rates would critical we time. lot longer is It's have about X-month to not we maintain that lead a in right? suppliers gives some generally awful some it's down. And or that dialogue real-time of on engines up look, maintain a tweak what annual an production in flexibility basis. And around that I close there we Well, but that, there Obviously, understand and to that like lead think like We that thing. that's an X,

Jonathan Raviv

too And then talking margins, just get those which double-digit What to do maybe Scott. to ago. you've about numbers, to long the on not been got you

Scott Donnelly

volume, good to pretty tend these volumes. be that And are - the as fairly I we're think at Look, running low still gross margin products.

volume So drops that bottom lot that's in grow back the margin And the as clearly to path we to of to business. business, a double-digit the see get that that line.

Jonathan Raviv

deployment, this capital or quarter, are a point? Got cash balance. M&A, pretty on big light, about thinking at? repo capital and where still size How a it. you would of the And focus other kind you what carrying in M&A bit then at deployment options if And looking you're

Scott Donnelly

along Well, something activity comes again, would be that think M&A we as appropriate. any that

areas in we'll Our to and continue look. the focus that's certainly space, has been that more A&D where

sort we and that to deployment, are opportunistically. we're of continue default is stock the doing - As buyback expect economy would through doing the and to performing, on we our get little a conservative see we clearly see the focus ramp as and capital just go Again, year. to as QX, the in to how businesses how

Operator

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

Robert Stallard

announced good any business Scott, were if they selling wondering, interest special I you've seen pretty vehicles Ingersoll their in a quite expressions recently Rand price. of And portfolio? for was your

Scott Donnelly

going not comment the activity of any kind this to on at We're at of all M&A point. specifics

Robert Stallard

about? open be thinking Is to would this something you

Scott Donnelly

activity on comment to at this We're not M&A at going all point.

Robert Stallard

just Maybe a else something couple Frank, you. ones Okay. small then. for of

was any think And you it didn't quarter. the if I George, to that. cash like And the specific give it more on I that I year. then mentioned this you for maybe color some wondering an item sound wonder other was raise TS was but if us I not You that. in wanting reason - could there's was for think guidance

Frank Connor

that, category. look, the in we Q. piece way about the talk other. It's of no other Yes, just the there's it the It's

So of that's the category. description of that part just

So in terms of else kind everything. performance, everything was of price clean

in So saw there flow, obviously a good cash was in terms very other cash of quarter. But performance first the no piece. we flow

or provision range high to our that we for We're end where it but that is to left now. earnings, of continue. end expect cash guide given the the certainly, the higher We the probably leaning of towards number

Operator

we have of the And Cowen. von line Cai a do question with from Rumohr

Cai von Rumohr

your Aviation, margin target. was your up at So year to full

us because Aviation. good You preowned losses, your quite still mentioned importance? and at very For so R&D, could but the example, you things on factors some profits haven't you well kind relative give or color aircraft, were other why of aftermarket, numbers those price the on explained

Scott Donnelly

is the strongest. Cai, true I margins of the think our industry. all part tends to in be It

that book, a future quarters. is which is which what into going see So pricing, good. saw We order mix contributor. our price think, did is I over good see we'll significant We positive that positive inflation, for

takes dropping given frankly, of has pricing it see, environment environment of there, to the start our to aircraft in those you'll is the been think balance aircraft move and that's I out improving. been used what terms

that seeing into those we margin And year, back know, volume need heading. to in get so the And are as to the grow a through year business. where contributors back back this a to to business think were up XX% all we increased you of 'XX. come next into we see And margin we're as and see I that's healthier coming volume factors to where into

- spot, volumes. higher to which it's it's been good strong importantly, most going good, lead good And actually to pricing product. as is So on book-to-bill, not mix, It's a right? it's one result of

Cai von Rumohr

your of that I the if margin blow year. than mean, Systems going clearly basically, And to thought. the better away case, for So you X.X% you're kind said you that's target is

that's I goodness what else low, there am So the south going and in your Systems? looks missing? guide obvious something Aviation offset to but Is

Scott Donnelly

No, there's not.

through things think And it on I course to are of eye year. we'll the good. continue the an keep

As XX XX George your friend never be the noted, is days going rate know what we order to XXX downstream. days, days,

So us if the I'm seeing strength kind in see end to raise sure to and of we're for further we continue the that guide. opportunity market that there's demand, the

Cai von Rumohr

people before. never up who one, Carter's planes to question, built people money last And have are to throwing the at follow

relevant You have the technology to mobility. guys that's actually whole some urban

opportunity money assume some could is the has an kind oriented what's product I to it have gets clearly, first-mover going Assuming of certified who feel advantage. that a and and you moving take? who by clients Because are guy quicker? getting to mean, fray way, a have first into you miss taking going you and do I reasonable that the not

Scott Donnelly

Well, Cai, anything here. I'm worried not missing about

this We've design certification is many an think our proven. of execute and the of done times. an I quite aircraft ability to and the aircraft development on

I useful market my a air urban is aircraft as out of certify battery technology. and potential technological terms the sure to very, fixed-wing have amount large of said or think you technology have it think in a earlier, go there's make obviously, there to mean, largely aircraft, to mind, some you an on the to done the do in really but teams. in sitting very takes talented down our think enormous mobility, I have capability that I and around place we've past for and we're all We in of an technology it what the build a there. need And in VTOL. to design people I comes the that

So we a people. of great have team

business. key a engineers created resources sort of for well and called a we the now and from group pulling fixed-wing Scholl those the a right know, you as aviation, and out is that as the both As Bell, Textron of eAviation breakout Systems efforts together our technology Aviation some running of across Rob at at

game. business be out about time worried it. crazy working we'll don't that very pick on not public there of to that we again, we're I have be an I and So it. I'm market? on a about keeping this have making right and working we dominate item. are wildly But certified am claims system aircraft gating we this, successful of on, And space. that's really could that you to obviously to stage going that the work. But at to have all. to we're look, at this but some place think these a worried need We're do and guys actively the eye have this. working the on going to make one our that's never in And We're propulsion an or executing, And

Operator

Morgan Our Stanley. with comes Kristine last question Liwag the line from

Kristine Liwag

new your access chain go Scott, you and where own following vertically have staying versus planning of lot expand the integrated industry, a other are to solution value manufacturing? point, parts own manufacturing. entrants that Should E-Z-GO into vertically you operations questions. on the solution down. But clear certification direct-to-consumer they aircraft of provide It's and this up into these within integrated appetite the and your technology what's these also a

Scott Donnelly

aircraft don't Well, We've in determined, it. between aircraft idea, and to who services and operate also there's mean but opposed and building that's understand for needs day and operating someone to you, the time difference not much be why designing sells and long aircraft day I I'm game produces okay? to in To a aircraft. with I be been and personally in certifying very a this the honest out.

business. than like designing mean, NetJets. big and to is I is a what - Wheels I It's at easy. not and and We Up. run look we that's people It's operating look, model business fully that it's business. complex operations don't think totally how maybe like such and have big you look a different people people appreciate look, Part business, I aircraft. a XXX certifying at building mean, an

exist, the I why that saying it's not Well, who's of I'm term integrated but has know I exclusively frankly, existing view my or one other. know to can't vertically way. be be would that why way why guess I totally don't it - So don't guess, someone I the

good a as the really with there I on-demand much providing relationship. end a expertise lift think big to reinvent opposed with today And wheel, accelerate and opportunity mean probably out So look, the markets. we're as master of Up. and aircraft complex frankly. working, there's you obviously a to I have guys like He's working kinds help Wheels XXX operation. and these that to running trying aviation Kenny our as companies They're know, that's in of

Kristine Liwag

you a if earliest revenue where flight, the about be? we then, when you think passenger that when would see would be And year would do E-Z-GO customers, UAM, operational think for were fully helpful. Scott, to That's flight

Scott Donnelly

That's a and from around Well, that we standpoint, vehicle. will what the that be be terms when needs this pacing to have there, in of range I be support to it's terms out what's say. technology I haven't is mean, item why there piece I and right? a kind in drive to the we useful going why Because there a of say is to certification useful is something largely frankly, date think can what in vehicle, I'd And battery making know needs a put what gated practical mind, that's a there that, of my date. margins, the

fly And But actual can why, Part that's something you question really the mean that does timing sooner again, operation, worried XXX the it that's fly that. this. about than and something I'm you sooner that's passenger put the it that? Of piece, of certify not can't course, to an than Now real into mark. carrying

you're And a do going when the pull useful air think trigger you I you something think certifiable that work. have practical the to that's vehicle. you

Eric Salander

questioning the concludes that Brad, Okay. queue.

Operator

that, AT&T ladies gentlemen, for today. and special conclude does TeleConference and that you your for your participation, using with for And Thank conference services.

may You disconnect. now

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