Textron (TXT) 28 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Eric Salander	Vice President, IR
Scott Donnelly	Chairman, President & CEO
Frank Connor	EVP & CFO
Robert Stallard	Vertical Research
Sheila Kahyaoglu	Jefferies
David Strauss	Barclays Capital
Seth Seifman	J.P. Morgan
Ron Epstein	Bank of America
Pete Skibitski	Alembic Global
Robert Spingarn	Melius Research
George Shapiro	Shapiro Research
Noah Poponak	Goldman Sachs
Peter Arment	Baird
Cai von Rumohr	Cowen
Kristine Liwag	Morgan Stanley

Call transcript

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Operator

00:00 Ladies and gentlemen, thank you for standing by. Welcome to the Textron First Quarter Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. like President the of now Eric over would Vice Salander, Investor I to conference turn to XX:XX Relations. Please go ahead.

Eric Salander

XX:XX good morning, and Thanks, Lita everyone.

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

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

can in found presentation Relations Investor quarter first Revenues year's our profit the of $XXX quarter call last up XXXX. $X of in section earnings Our in was last Segment -- million, be in from the XX:XX first billion from website. quarter. up the $X.X the from year's $XX quarter billion were million

before year's year's XXXX. this to compared basis per During income net XX:XX quarter, quarter. over up quarter million reported I'll the to $XXX first With per from Manufacturing call contributions in first of the an Scott. of turn million share $X.XX flow first in the share pension adjusted last totaled quarter, on that $XXX $X.XX we cash

Scott Donnelly

and driven execution resulting were and everyone. morning, in the XX.X% segment demonstrated up a in quarter Eric Revenues in Thanks, by XX:XX Aviation good Aviation. quarter, Textron margins strong the margin.

commercial billion continued across volume in from We up deliveries new the XX:XX portfolio. product We begin continue up $X.X FAA we At first of aftermarket were last certification March, $X year ended strong last of XX to activity last and quarter On commercial in aircraft the delivered quarter, jet increased turboprops Order XX expect our XX is driven from year's Citation the XX our billion we deliveries commercial the down with to X% reflecting our very order products XX largely pricing, strong side the growth Bell, and backlog products quarter. with from year's demand, turboprops, revenues commercial in momentum sold. second and SkyCourier In quarter increased of first quarter. see by mix from in XX Cessna commercial higher from received very utilization. delivered and turboprop quarter. up backlog. and solid the Bell, XX:XX jets helicopters, We

continue During Army, demand the we fleet down we and markets the and withdrawal all and to its award Air from Force quarter this revision product Afghanistan with see of In select models Textron announcement APAC, primarily of aircraft submitted Bell on of lower quarter, Moving proposal building new support on Lift. reflecting a a on and strong saw air U.S. activity Moving down year's contracts. XX:XX volume, XX:XX adversary Systems. Revenues momentum At commercial final across orders. the Future were FARA revenue the and U.S. is impact quarter U.S. fee-for-service the aircraft Army expected contracts. in Vertical March, our increased our to to our last to Navy summer.

aerostat PTV driven Moving the higher year. pricing first in ship UAS on product system XX:XX guided vehicles environment, Systems a this by specialized deploy golf revenue Navy to quarter, and in our additional We volume abroad were industrial. UAS later U.S. to quarter and saw (ph) higher the on lines. destroyer. aerostat Systems a the expects deployed second in During successfully maritime missile

Kautex electric its at penetrate a revenues April fuel powered revenue from first supply global system regulatory in global On strong hybrid as auto year continue across Industrial a leader in our the XX% disruptions family aircraft brings OEM special PIPISTREL, acquisition and see end electrically market chain mobility, related turn to cargo vehicles. continue that, lines air mission most urban and specialized to to pioneer total to aircraft. offer strategy to and in XX:XX Frank. the I'll directly continue schedules, to development At roles. sustainable XX:XX our increased we X% hybrid we hybrid of Textron's ago, quarter, volume. to resulting call aviation, general of our closed technical to year-over-year lower the long-term level, in product XX% for aircraft shortages and XX, With and Kautex of We segment. support impact expertise over saw the of production demand product up the

Frank Connor

and XX:XX Thanks, everyone. good Scott morning,

Let's were largely $XX from of profit the billion. million first net $X.X U.S. described million quarter $XXX million higher ago, ended million million Systems, to our and an support $XX starting in quarter $X above XX:XX million. on from up down of performance. to due revenues million, Afghanistan largely $XX $XXX lower $X $XX commercial principally million profit was customers. offset our at of the lower contracts. million due billion from a primarily of profit of on review due the product XXXX, million, performance the due lower were shortages Specialized due the mix partially Segment from last $XX impact million volume Textron billion. volume and volume year's the the the ended ended quarter sold mix chain below of components of impact above. $XX of $XX profit unfavorable XX:XX systems during described the $XX down product in $X.X down in in year $XX Finance to mix, aircraft the of and of volume functional favorable a the and million and million, reflecting million primarily to $XX million. at was the XX:XX and revenues $XX partially last offset was Aviation military higher lower $XXX million. of ago, Bell, $XX the $XX the favorable and impact expense profit $XX $XXX lower were global billion. volume jet army's the line, commercial a of million segments largely volume lower from the line Corporate Segment million segment impact turboprop reflecting first from auto $X fee-for-service Moving Vehicles Segment withdrawal the in lower million $XX million, $XXX contributed pricing, down to of by $X each Industrial expenses and of to million. to $XX program XX:XX of quarter, volume OEM million million revenues fuel how to Moving primarily from segment the $X.X were segment of first year mix revenues Backlog $XX volume at revenues. million largely was period, from $XX profit. was Textron favorable year offset million in interest mix of from up a revenues supply and down favorable at million, fee-for-service primarily ago, Backlog $XX segment due At Aftermarket our adjustments by year, were of $X in $XX of million year, aircraft were million. from reflecting inflation due with on $XX million, Segment last segment Aviation. quarter reflecting impact due contracts. was million Citation and Backlog by of partially quarter Textron net Revenues of and from up higher mix pricing volume to

million expense million million $XX On related about cost new $XX of the of expense corporate guidance to guidance about provided where year's the of corporate last with efforts up For costs for first the we we a development range which expect million. of will expected of will quarter. million eAviation the expenses on second of January to of segment in PIPISTREL's now capabilities our Our to initiatives eAviation existing flow aviation quarter, million combine January. $XXX PIPISTREL's the a a million, guidance and development year, cash million in the million business results. $XX revenues $XXX in cost we the sustainable provided Beginning be reflects million, We manufacturing $XXX about This year of quarter which the million, prospective our for from from and returning $X.X Textron of to new operating shareholders. will in become our we of cash related to reflecting $XXX net segment include was in call, eAviation these $XX reporting were $XXX new $XX a in quarter, of XXXX, remainder before PIPISTREL loss the segment we expected our $XX to eAviation move segment solutions. XX:XX repurchased pension part the expect increase about shares be basis. about full contributions In included segment to accelerate eAviation, the million to

EPS full year, inclusive $X we're of per share, concludes to the remarks. of eAviation our That results. segment For prepared XX:XX the our reiterating $X.XX guidance

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

Operator

the go Thank Robert Stallard Research. first Vertical from question XX:XX ahead. is line of our And you. Please with

Robert Stallard

much. so Thanks XX:XX Good morning.

Scott Donnelly

Robert. XX:XX Good morning,

Robert Stallard

in there as any in that strong quarter. the wondering, Thank XX:XX you at any had types in you'd the whether -- the of noticed different Scott, if dynamics have could type a customer was aircraft well? very I first of seen whether you by you. quarter on very comment differences you for orders and a been change aviation terms noted

Scott Donnelly

X:XX more like whole across strong. continues jets, the where XX% international general, Not still Robert. portfolio usually XX/XX XX% see carriers, probably and turboprop, to more on the U.S.-centric momentum be turboprops. than we It's on really, around It's it's it's around

which fair what let's So from of over number still there dynamic a say, the terms through encouraging, similar quite last in seen quarter we've strong yeah, continued I'd seeing demand be of customers robust. of coming into to very here is of is number of to The dynamics transactions. terms continues kinds new the just the in kind year, we've are of the quite customers seen but say out the what marketplace, the

Robert Stallard

XX:XX That's great.

there guidance to your one cash quick Just the Is for any a for change year? flow Frank.

Frank Connor

staying $XXX XX:XX that. the at million, for No, We're $XXX million

Robert Stallard

XX:XX great. That's

much. very you Thank Okay.

Frank Connor

XX:XX Welcome.

Operator

XX:XX from Jefferies. with question is ahead. And Please Kahyaoglu go Sheila our next

Sheila Kahyaoglu

XX:XX guys. morning Good thank and you,

the maybe on, in only and lower pretty strong deliveries we X.X%. margins relative but the year-over-year just up gave to on maybe was aviation So first price guidance XX.X January, for quarter you thought, significantly than is

you're there? that expect what about talk could progress? pricing? better seeing you if How Scott, see to should we Can maybe, we So

Scott Donnelly

we're the future XX:XX continued we pricing that good pricing remains Well, into inflationary the out sure making of get in anticipation strong. I think Obviously, and selling pressures.

we're the are pretty a covered a in first you margins little flying that just on we up. quarter, Sheila, front. well strong the get think because here, is think Do I activity

of saw in aftermarket was revenue XX% our So we about here and QX business. strongly that service

the for probably certainly a So part in year. heavier a total we would little expect see QX little that's guided. and higher driving we what bit what's And mix margin that's to of than

equipment So a mix little aftermarket the original original strengthen bit will it's year. between sales a more sales. equipment obviously, And as here we of go through and

Sheila Kahyaoglu

maybe that, Scott XX:XX What segment then creating the Okay. a new and one over vector envision how on was behind years? And evolving that eAviation, -- segment. process next you more the few just do

Scott Donnelly

bell logic and XX:XX So, we in as aviation is, We of a And that had eVTOL. this corporate cross around team. kind business this doing because for segment space, talked out and this breaking that line. a sort engineers it's January, systems separate got our of about a was as funding thing. a are out new in from engineers were and We particularly folks building

With and We we're shareholders be on I going helpful importance, these the to to to kind sustainable give business. it's this increasing and that to of Its it PIPISTREL the investments obviously, of of So make XX:XX side. there, of a thought visibility sort PIPISTREL initiative that would aviation a results think break acquisition separate $XX $XX a as point million there. operating but is million, that. in in out are at the

had lot bringing R&D in aviation of a of the we're business corporate you'll as the I is some of actually that undertaken. well significant -- in sustainable some activities sort that the already making the that So of on to we are activities was the by PIPISTREL as product of see are segment an funding sort R&D of results increasing that obviously, that already and some line that around PIPISTREL driven said, accelerate to investments that

Sheila Kahyaoglu

you. Thank XX:XX

Scott Donnelly

I think better just will XX:XX it visibility. give

Sheila Kahyaoglu

XX:XX you. Thank

Scott Donnelly

Sure. XX:XX

Operator

move we next Strauss ahead. And XX:XX of go David the Please Barclays. line with to

David Strauss

Thanks. XX:XX Good morning.

Scott Donnelly

XX:XX Good morning.

David Strauss

deliveries read all going deliveries transition thought do you a or Scott, miss or XX:XX MX/CJX short impact the at any to the did to given GenX? little MX that you QX? I was

Scott Donnelly

just be course to year. couple probably a of would we think quarter, like terms up But in and but we'd probably expect deliveries not where was I through see people nothing XX:XX it it's, have I of the aircraft the growth mean, materially. that we we're in continue to Look, behind mean, aircraft getting of I to couple ramping the go as schedule, material. to we in gotten of but a the like hitting,

David Strauss

could in the thing And you across in terms relative of Bell initial about initial how request in the you final 'XX budget and the and Okay. 'XX requests? XX:XX to Systems maybe same Bell talk did fiscal the

Scott Donnelly

be. XX:XX out FY I came about would it think have 'XX to finally we where expected

funded them. Our we expected are programs where

and obviously, long would we we'll to when on FY 'XX out at at we think expected. in like a look looks funding have look at when budget, that getting the have appropriate and things see us, between out say, would those some terms would as is are came defense work to now FLRAA, There's like that the funded to have budgets numbers I actual I sold 'XX And this increased we overall are very what being around we put particularly of budget. FY on funding. an areas process. we future, that the and army FARA at things been look certainly

David Strauss

XX:XX Okay. much. Thanks very

Operator

And XX:XX go with Seth JP ahead. Morgan. to Please we'll Seifman go next

Seth Seifman

good Thanks Thanks. much very morning. and Hey. XX:XX

Just wanted of cash kind pace to ask deployment and of the repurchases. share about

so the like opportunistically? markets strong thought process? about at that far, to how expect happening. through us repo generation had approaching early year we've the share told the what's How You think acquisition repurchases earlier some to seen and you in did it cash the But on. setbacks year looks share cash that's did ramp play into And

Scott Donnelly

would to model we it I loaded. Well, say, XX:XX more as, tend back-end

some the I in more of in a share think the because moves do the here acquisition we did opportunistically quarter little -- of price.

PIPISTREL execute The to acquisition that So of strategy. not continue huge we outlay. the a was cash

our something balance sort handled we within of was So that that sheet.

the cash So we continue I as certainly through that have do and year. think opportunistically will to deploy available we work to we

Seth Seifman

Okay. XX:XX Great.

split And FLRAA sorry, early mentioned that here, July? in for to summer but expecting think I you award still

Scott Donnelly

what we yes. That's understand, XX:XX

Seth Seifman

very Scott. XX:XX Okay. Excellent. Thanks much,

Scott Donnelly

Sure. XX:XX

Operator

Bank Ron with of XX:XX is And question next Please from our Epstein America. go ahead.

Ron Epstein

morning. Good XX:XX

Scott Donnelly

Ron. Hi, XX:XX

Ron Epstein

maybe what there of terms was I thinking could maybe a back what if bolster are you follow as you XX:XX drew you peel could And bit a little onion on on the wondering, Pipistrel? else businesses? then out that in to your M&A

Scott Donnelly

do structure, product certainly guess, we let’s of say, a the in and of I front. in Well, equipped controls, we aviation think what XX small on (ph) need Ron And today, that sort capability on technologies architecture doing business flight well our eVTOL, certifications Bell, our in aircraft aerodynamic expertise. Part was and needs tiltrotor the I (ph) the capability just Pipistrel the the as which I is, and on think in tiltrotor capabilities heading loads, have at where is, obviously very in XX:XX like company look eVTOL to -- we're already to happen in things terms (ph) you is aircraft, essence,

combinations felt or for design a strength. not my this development had tremendous what's we we that don't we XX:XX and GA hybrid. eVTOL, that I critical is side propulsion a but a applications also to electrical we've at they speak have technical this mean around certify or to view, systems is but of Pipistrel perfect other any mean, battery gap from clause. in Pipistrel, standpoint We electric organic you of think and look side just [indiscernible] the management aircraft a I go an in in experience this. when like I And development, amount got whole electric of looked propulsion over capability, were

So the and I of piece certify about off and the think sort we aircraft develop of how in our that in think missing ability puzzle space. terms go of design, to

they've with got very would that work a the So get more understand their space deeply in I in after done leader and team, they and and say, interacting closed works. deal integrating usually the and are the superb real a capability we’ve

In about point, sure of you XX:XX happens good we're other won't at something stuff terms acquisitions we let think we'll it. probably this I but feeling comment So really know.

Ron Epstein

XX:XX All Thanks. right.

Scott Donnelly

Sure. XX:XX

Operator

Pete next with from our ahead. Global. Skibitski And Please question XX:XX Alembic is go

Pete Skibitski

morning, XX:XX Good guys. Hey.

but I the Bell's driven kind just commercial was by else? or legacy if this, something increase backlog, missed or Sorry, V-XX in that what sequential was of AHX or

Scott Donnelly

There are we PBL support PBL XX:XX contract. commercial, contract some signed but also, five-year, the for V-XX

Pete Skibitski

Okay. XX:XX

that Nigeria contract, you be it ask potential to this could because wanted like I sizable AHX you. So guys for seems about

contract how about time I revenue then in that? start frame of Wondering think signed, billion. think get $X maybe recognition to that when the approaching might on

Scott Donnelly

to hard an to on a but working need the been this contracting. the does where that's program it's get right. Pete, deal. a go case, an and I certification It to big congressional approval is Obviously, XX:XX through, this, we've still hurdle mean, while, important FMS develop right. was say, for through Nigerians this now

US So be contract the to Nigerian between negotiated to Government contract Government and then a needs us. a to around turn down and that it's

So always data it’s with FMS. associated any leery I'm providing of anything,

for to sure, the a the same But a of work milestone to probably get still process. was bit there's it contract. So to number major get congressional do of here through

not if -- at guide you stage. our that So into factored take in this certainly we have

Pete Skibitski

XX:XX Okay. Thanks so much.

Scott Donnelly

Sure. XX:XX

Operator

Robert from XX:XX Next, with Please go ahead. we have Melius Spingarn a question Research.

Robert Spingarn

Good Hi. XX:XX morning.

Scott Donnelly

XX:XX Good morning.

Robert Spingarn

at very in war quarter regarding anything change April? through the between of Could March into aviation even extension the volatility that and January just the into or cadence markets, starting talk you given the XX:XX the the did demand stock quarter. strong Scott, about the

Scott Donnelly

quarter. whole the very has really No, it through XX:XX didn't. activity The stayed strong

Robert Spingarn

then Okay. And changes -- any XX:XX and there? globally

Scott Donnelly

support mean, the of game, register to has off light dropped stage but of aircrafts player. at I the in We this of or Russian relatively that big flying guys, so or a iron kind Look, are assets was that's us the pretty tend don't immaterial. dramatically. minor as be service No. those obviously, to Most mid-size oligarchs of XX:XX Russia impact

Robert Spingarn

XX:XX there change demand and the vehicle would current Okay. And the inventory Just specialty the you then side, give how trends characterize just environment, there? the any situation? on us

Scott Donnelly

stabilization chain Sure. would some product XX:XX be levels. on battle, low are golf in demand at Yeah. extremely very Inventory to remains still lines, demand seen robust. market particularly the in other been It's is the but Supply of I getting of derivative the we're strong the -- golf day, our is the strong. areas. out. say, the PTVs. Look, we've that levels fight And in stuff chain. and supply every We've Pricing a some continues

of are side all demand, airline the had those You're things. would inventory of is we come serve, in encouraging, continue, getting in. activity back very still around that deliveries like, snow, ramping getting that by We parts through chain channel, day into challenges came to much finish caught them we there back done great say and we are supply would the and get in really able stuff of of every have out instance, chains. Things very the end year. I units but work instance, mean, say a so get like field. impacted challenges by which obviously markets has supply been out. GC, in out low of lines The lot very But that which general last those normally were across The up. the pretty the finally on quarter robust, I'd was which for I those order up again. up for strong

Robert Spingarn

color. for you Thank XX:XX the

Operator

Research. Please Shapiro we to with go Shapiro Next, XX:XX George ahead. go

George Shapiro

XX:XX Good morning.

Scott Donnelly

morning, George. Good XX:XX

George Shapiro

year little with consider to next want and XX:XX a while yet? book-to-bill wait production strong you a for further or raising you Scott rates

Scott Donnelly

kind to the know, increasing say, guys those of of continuing the as the we year. George, rates XX:XX backlog, talked this on level I as and through you we'll course the we're Certainly go we with that demand would of into about seeing XXXX. plan raise

a on real time pretty this do we basis. look, So,

XXXX already order on we'll yet, into but the ready demand. guide to stay increasing I committed certainly And we're continue as to to So go 'XX. we've those we continues ramp to well. as to certainly, activity on, on push the that We'll would that XXXX expect is stay in rates not

George Shapiro

XX:XX where lead you're that And what now? with and you are are the comfortable times kind of

Scott Donnelly

demand part lead that longer of to meet of XX:XX the that engines Well, of with and technologies. they're or sort day times so and that look, kind suppliers of ready other timeframe. But that lead, nine months we always There's our on sort so some lead in long certainly critical that that are ramp. work components are every forecasting

are critical balance but of of supporting our expectations for long And in time. the what not through So discussions understand just lead are year, real XXXX. the those happening they in this into the items, terms ramp,

George Shapiro

Frank. And quick one for one XX:XX

year Given good the of for X.X quarter weak some? system it's come down going your sales in is still the to first or guide the billion

Frank Connor

still We're maintaining of of No. XX:XX type that area. kind

lighter then We that see we'll and going expect systems be side half. will was into half the first the on second the and growth momentum

George Shapiro

what half? growth in drives the the And second XX:XX

Frank Connor

XX:XX Just and kind other timing activities of the program of things.

George Shapiro

very Thanks much. Okay. XX:XX

Operator

question from Goldman we XX:XX next a have Please Sachs. ahead. go Noah Poponak And with

Noah Poponak

Good morning, Hi. XX:XX everyone.

Scott Donnelly

Noah. Good morning, XX:XX

Noah Poponak

XX:XX full-year Is prior of morning? your this reiterated guidance all

Scott Donnelly

not I mean, yeah, of Well, changing any guidance. our XX:XX we're

Pipistrel on we the the held did we So deal. EPS. Obviously, range

think this catch we're overperformance guide, couple that areas. least at some the So And at we dilution. overcome some so. in point of have holding additional our can previous a we We by to

Frank Connor

we're… segments, not but, Yeah. XX:XX We're re-guiding yeah, the

Scott Donnelly

area. of think quarter, towards aviation do some spending level which of cover no, we with to I XX:XX be Yeah. and segments. But associated We dilution mean, on re-guide I will margin the color go is helps back expect in say maintain the to I every that, this that, side try usually would increased usually we that and acquisition provide high don't don't which we'll the at it R&D don't the normalize, the but I

Noah Poponak

cash No, pretty is earnings the the XX:XX weak I quarter. where Okay. given flow in seasonally Yeah. and mean, usually just

been quarter, ago it. those in the a you had looking when it for Just got maybe outperform in where given seemed came to you quarter what even

the same page there. sure on we're just to So wanted make

Scott Donnelly

for said, the as strong which quarter, think you But XX:XX for in us. we last see year, when Yeah. a seen had I customer these that I able we've years. deliveries previous that backlog, I in mix strong plan number model will more linear that's will quite guys because is to we've be than linearity No, of we than and about years. And think you good having aftermarket all more do we're as what had talked things, production, look, activity

Noah Poponak

Okay. XX:XX

aviation honing in that a Just again, on forecasted mean, the that low environment. strong XX% to of pricing for year, I start with it a over sort in XX% incremental was There's the margin was the way the year. It's quarter.

You would your your coming that. year? what's like the past have utilization better, latest thinking low can could period incrementals land had quarter. in on for into you through Recognizing capacity just in where as you've and move you incrementals mix I the a volume It a on seem the than point those mean better here. have the

Scott Donnelly

And than quarter, were XX% stronger last XX:XX year-over-year year's Yeah. that's a Again, mean, in Absolutely, are basis, was relatively the revenue, deliveries I going probably is mix I XX%, like we're driven. this feel certainly stronger. off low levels, right. mean, this a considerably we've incremental. it light we on that. year largely always the

benefit And get so out that. of all some we overhead

great quarter. we delivered feel So about the in I we margins think the

quarter. a this strong we'll very a but very it's mixed have I think know was year, you strong

Noah Poponak

to outside in XX:XX lead Okay. where of the And time any airplanes. you, to needing wait aviation moved the times lose just well to buy you've that long models for talked having for have customers frame Are range then as in it too on out the so Has not that a there a customer to range? moved airplane. of an keep anything about past for

Scott Donnelly

expectations right, every terms are. is I XX:XX of in Well, customer look, what different, their mean,

at of that last point or For market's the year changed the this lot sure in there's a dramatically customers right. so,

industry. not there, an just lead that's that a I I have up this are cycle and can would here get aircraft call case, historically in the can short they've times The So or where been on folks back right. hey, thought, finding

continue part customer production being of a our That we is, we lose here So, going of look, a we situation because so we rates said, into as I create want don't plans increase because we will next about don't. certainly to expect talked timing. where year to

So but continue demand with and it balancing see act is do the to need a we we we certainly backlog market. to, this here, the in

want don't to a We our But, increase yeah, will we I meet do situation. avoid try continue continue put rates, to to to will responsibly with we make production work to we problem. ourselves sure in suppliers bad that increases to but need think and to that

Noah Poponak

XX:XX Okay. That's excellent.

so much. Okay. Thanks

Scott Donnelly

XX:XX Sure.

Operator

XX:XX Peter Arment Please with And is next our question ahead. go from Baird.

Peter Arment

Hey. Good Frank. Scott, morning, XX:XX

Scott Donnelly

Peter. morning, Good XX:XX

Peter Arment

Scott. Hey, XX:XX

Frank little the more on a should of continue in curious of Maybe of aftermarket, On that the a there? activity, that color that the see know I lot flight how to flow that? think step XX% if what's through. of so but flight kind behind kind just just activity I mentioned continues, we that mix quarter. expect the the up I'm or you just sustaining really

Scott Donnelly

Sure. obviously, I'm as XX:XX are that. we aftermarket revenue change all drives flying strong, predicting don't a Well, in hours our and very Peter, that the I ultimately know. not

continue robust hours. we see think very flying I to

business, just our year. opposed down. service strong will will think equipment side aftermarket the an I course whole more It's to through ratio the so aftermarket expectation going of as up, ramping the original go that that OEM stay And to business which about change is

That's We're XXs our low at that on just aftermarket. XX%. percentage the of terms normally right? a basis strong, in it's pretty in in So

Frank Connor

revenues. last XX:XX total was of XX% Full aftermarket year Yeah. of kind year

Scott Donnelly

function. it's So XX:XX a

right. and denominator here, We numerator a have

numerator OE grow just this going the think I side. is to on the is

going the stay So a the whole will aftermarket to change is little mix year. reason to bit. strong have But for certainly no believe I the

Peter Arment

a just chain, particularly hearing lot helpful. with we're just Then XX:XX pressure That's in supply the about the aerospace. on calls

guys it How would out, with characterize didn't of sure dealing You it. you're call you that? I'm but kind really

Scott Donnelly

dealing chain with everybody's challenges. it's supply Peter, XX:XX

managing job I of think does a issue from to our team issue. great

As some we're There's to couple behind employees. some mean a supplier ones, that good go through. least And issues are way parts we've be critical continues that up in news But it little critical of a got got their Russia. is we see challenge. a before. ramping at most suppliers those suppliers bit supply they've couple I on created The resource. to that a to have had having built a suppliers all the as just us out Because our basically work I couple Russian just up suppliers said, of able employees, there's to that stuff creates a schedule sanctions. finished couple but suppliers, working some a ramping chain, goods, process were It is unfortunately, a our suppliers on was gap, of result things things of there where is we're and right? that's that not these unavailable

So we're gap to a how a way a of, but we it somebody expecting through to gap. timing or are have kind there? think in who aircraft kind transition knows we'll aircraft few Again, that manage to XX:XX here got our creates it, and the of affect mean, I I do of it or does that. resource an

build But something at incorporated be these our good late certainly I we game. the and standpoint hold think are things the our risk. of aircraft see from we financials everything, aircraft can news and that it's continue there things is that some are can timing a The can very do production in together. processes most where

through some to Peter, to to think able again, going a So pretty few year once here catch a an be things have we'll worked manage this there we'll I couple that. for of impact but flow way starts I it's everyday be quickly items us that it. by we thing. There's those think the up the aircraft and part or through could most our of

Peter Arment

details. the Thanks. Appreciate all XX:XX

Scott Donnelly

XX:XX Sure.

Operator

ahead. of go we with Rumohr Cowen. Next, XX:XX Cai line to Please go von the

Scott Donnelly

on Hello? mute. you Cai, might be XX:XX

Cai von Rumohr

Yeah. XX:XX I I'm me. on was correct. Excuse mute, here.

lift you guys, fixed And of basically Pipistrel has So cargo rotor the applications designs. shown you've wing for and kind focused have cruise on market. models to on UAM extent focused the tilt

these what greatest As markets are think put two that you? together, do interest to you target of are you the

Scott Donnelly

Cai. it's Well, a XX:XX question, great

for is certainly electric electric a means that here a perspective story by and to think and I probably think one kind be there's the hijack we could electric sort It of that no of play is for market market. aircraft. that a want hybrid range or broad that But real market only market for time. long huge UAM electric in. I very of aircraft. And from a applications hybrid my

interest don't you on answer. and but unmanned this talk we unmanned them. customers trying doing And a them space, mentioned, are work from cargo. going platforms do a like, figure lot lot out in There's good As that to to the of about have point, the take cargo, know of if that's to existing I XX:XX you how

kind done what that I in the It's machine. they're cargo Pipistrel in think is some what cargo for serious the unlike military some work the of doing of not the pound done, done, Pipistrel that has but frankly, is world with some X,XXX the architecturally, of side, of space has a we've work unmanned aircraft smaller utilization. this

hybrid of more other those in work could market that market. mega things add in. bringing no and the try there's, electric are one. So the play So to GA us, a is, this accelerate side I of to to some But here or UAM the the R&D we'd opportunity Cai, is that electric. only additional XX:XX sort a of be means traditional certainly by There's for some on this that that we think to to bet need there's aircraft like some that

has happen. to happen of some we're the pretty frankly, are trainer for stuff hard. I done, faster think of electric think, GA cargo some from that Pipistrel going market everything to opportunities the UAM all at pure them And These will to sorts. of that looking all than the is I

Cai von Rumohr

XX:XX Great.

if certified. lot mean, targets. about tougher you got get lot years, being if of today you you on to on are talking at to from guys mean, the four to do certified a three, vision things UAM, actual FAA a you and have we're I it, look what I with So other the who think focusing getting

So imply, R&D after lift if spend. really going terms that you're in a fair would of that, your

million envelope kind what of have Like, to rough should big? to potential XXX in? terms an go you do million, that's How is we so So in because could about does of go it any that? sense think the XXX a this

Scott Donnelly

objective not little And when space, number already that, right. it lot Probably big factories. And the of give you segment separate a a it's We kind facilities when talked Well, that placing space. are into XX:XX the frankly, year creating our where work companies building into amount that become the don't before, of infrastructure good through and have. what some of a is spending it's we've you out of here investment by part my of in this view. that couple on obviously, Does Remember we'll about of bit sort guys hundred. we to Cai, look at of we're visibility in money year. that some

But to open think Yes, Carrier the what of issues, lot all is Any it's because that Part process about is much we're and the understand we showing I will about, the So of past But certification kinds the quarter, anyway, investments you XX like challenging, those this to and get the resources our to which challenging. investments some we of very Sky certified time. talking and as the very are just work what don't something what an the engineering guys one it's good have. a We numbers. do those extent visibility look, will program But people we XX through segment I the know is traditionally need our we right. XX:XX of Part that certification are. think, can awful already all Obviously, aircraft, that. of aircraft leverage for programs, breakout but be we process. look, tooling they that

have process and with certified with how to and and obviously, work similarly, navigate now the that I to Pipistrel understand aircraft the there. So through office. process we FAA an out And already have worked frankly, electric get know that they with think

framework is regulatory the think I people So don't understand. one lot a that of

we it. think I do understand

Cai von Rumohr

you much. XX:XX Terrific. very Thank

Scott Donnelly

Sure. XX:XX

Operator

go with XX:XX Please Stanley. Liwag ahead. Morgan we to Next, go Kristine

Kristine Liwag

good morning, Hey, guys. XX:XX

Scott Donnelly

XX:XX Good morning.

Frank Connor

XX:XX Good morning.

Kristine Liwag

reporting ability about? the do concerned on then of more have a you also, discuss where terms are can which stronger pricing your and And that segments? inflation, In XX:XX effect you ones of to pass you on through

ScottDonnelly

Well, versus XX:XX obviously disclose price will inflation. look, we

I that not in the is in that the here about where future how are inflation just what to our most will reasonable but like. into we're that nice the the products guys doing and out really priced near-term, of are expectations of we're delivering offset in think businesses, recognizing look pricing the our with job getting a environment inflationary

territory, is to we've much as real is and get mean, inflation sort then, we new that. just offset doing And The that. I priced what have to as So, right. it's of of been very it is, kind this

as and harder So, fixed that, you're as are it. look, that that clearly, programs, it's new contracts factor in some more well. did if you've through that government to put inflationary on had we But little we price price a working pressure pressure

So I think, a in it talk about general, lot. we

teams I our very what's understand inflationary priced on to an offset. the standpoint and are think sensitive need to to going from get

Kristine Liwag

similar with XX:XX these maybe world consumer Bell? for partnerships when an the eVTOL, coming companies, other to pursuing Thanks, business some you players think would new direct airplane, Scott. same of of now you the build distribution or following do do relationship. around to on the the strategic for you but tech market these ridesharing figure the And the the at market go-to companies, at different eVTOL side look they're what to to How that be up into time, out trying trying and

Scott Donnelly

fleet relationships I into charter big we very, cargo business. operators obviously, XX:XX for right? fractional, this Well, a look, similar, companies. mean, we today, with where I very normal as have or operating mean, I course or think of it'll instance, do companies programs we be other have

that I as don't don't all XXXs Cessna and what mean, Obviously, I selling with aren't announcements for the easy. worry We and leveraging talk single is yet. and to and XXXs right. that, by our part and doing that the Brands. people Bonanzas, the talking around do and Pipistrel I way. these us, servicing right. that every So future We'll evolves eVTOL, years world we into are and that in today about think, be selling see When sales about team direct out starts that's consumer, business Beechcraft Cessna think We need at I also we're all specifically about all. of build. sell brand. that's under the things are the that aircraft you around market business XXXs Pipistrel models there I I But just this XX:XX well do defined day, the the to

all about customers. those what those And product to to will absolutely our sell We access in and player ability our a be worried customers that. at I'm do. we not to It's

Kristine Liwag

the Great. XX:XX Scott. Thanks for color,

Scott Donnelly

XX:XX Sure.

Operator

no other have we And XX:XX questions.

You may continue.

Eric Salander

Okay. XX:XX

just call. and that the why the don't end you number replay So give them will

Operator

you. through available and XX starting Eastern A.M. is digitized Thank Time available XX XX:XX Ladies replay October and conference at this will for at gentlemen, today be midnight.

by that for does Thank replay replay service. participation for enter code your access access AT&T Again, today. X-XXX-XXX-XXXX access that you And may using is conference You for number X-XXX-XXX-XXXX teleconference and the the and conclude of digitized calling code for dial-in your the XXXXXXX. of the XXXXXXX. with

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