Textron (TXT) 18 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

David Rosenberg	executive
Scott Donnelly	executive
Frank Connor	executive
Peter Arment	analyst
David Strauss	analyst
Sheila Kahyaoglu	analyst
Myles Walton	analyst
Douglas Harned	analyst
Seth Seifman	analyst
Noah Poponak	analyst
Cai Von Rumohr	analyst
Ronald Epstein	analyst
Kristine Liwag	analyst
George Shapiro	analyst
Peter Skibitski	analyst
Gavin Parsons	analyst

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Textron Second Quarter 2024 Earnings Release Conference Call. [Operator Instructions]

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Vice President, Investor Relations, Mr. Rosenberg. Dave ahead. go Please

David Rosenberg

good and morning, Greg, everyone. Thanks,

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

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

of can presentation found the our be website. section Our earnings call Investor in Relations

from up billion, billion $X.X were quarter the in year's last quarter. $X.X second Revenues in

this income million $XXX During totaled to from operations the in was cash last year's share year's Manufacturing of $XXX contributions per pension million compared second quarter share in continuing flow second quarter, before quarter. second the adjusted $X.XX quarter, XXXX. $X.XX in to per compared

that, the turn over Scott. to I'll With call

Scott Donnelly

revenues XXXX. XX aftermarket second David. revenues quarter segment second product $XXX Backlog up had $X.X the from $XX the Good in year's million $XXX profit and turboprops, XX last of jets year, $X.X of delivered Aviation morning, the of Thanks, generating a up Aviation from first strong million, We higher up from XX%. XX XX across commercial million quarter, billion, last everyone. year. lines. ended to while of quarter billion, all this at from demand continued down see grew quarter

customers. Combined Aviation training cargo the systems passengers XX version the certified latest quarter, the Combi possible Aviation continues variants, of awarded and XXX to program. of to on a Also previously Cessna certified for deliveries a the cargo third of the and the quarter, our allows aircraft operators the contract variant began XX during to multi-engine versatility demonstrate the Navy. Air we've to In To variant this passenger King transport with simultaneously. U.S. SkyCourier. aircraft been date, the the under

first the aircraft we completed testing. test and assessment, have flight for conforming represents Citation over aircraft Ascend. milestone of In a date, is completed of hours first the To Aviation significant flight production XXX June, The flight program. the

At as compared Bell, last were revenues to year. quarter the quarter the in and second up profit

On Bell helicopters, year's down last quarter. second XX side, from in the delivered XX commercial

aircraft military, preliminary also to create DARPA's In of Technologies ramp. This quarter, on release FLRAA design orders program Bell was the X prototype phase military. leader Runway to SPeed for completed the place in to to as continues program drawings Bell long-lead success high-speed X-Plane Moving next the and builds and the Bell's while material as take-off for X continuing down, review, a technology. companies INdependent U.S. engineering for landing and of vertical selected program as tiltrotor the the

was X Army the This award delivery Systems Textron System opportunities Quad Systems pursue will awarded U.S. Aerosonde new program for for Hybrid continue realized in program to includes FTUAS the of test to options in quarter. X the and the revenues, higher evaluation. second quarter. an

system collaboration announced Robotic into operations Kodiak the its to demonstrate Kodiak XXXX. Textron Robotics. As integrate the Combat autonomous Vehicle of purpose-built Army's vehicle will a industry-leading in we part military System's uncrewed competition, later with autonomous

the experienced in and Moving profit revenues Industrial, quarter. lower to operating we

automotive end softer continue consumer As expected, we in demand to our see and markets.

We a for plan continue volume on cost to lower execute structure reduction the cost position to our environment.

sequential this improvement saw to expect the margin in improvement half second see As a of QX in result, and XXXX. we

Aviation. to Moving

into hover products flight has has vehicle program and systems we flight completed Aerospace. underground guidance Surveyor. integrating the and for later controls, The on in completion the We of plan and supports year. with Amazilia assembly. such the management reached new and During as flight a The vehicle digital vehicle Amazilia manned anticipated on milestone expertise Nuuva platforms, of this quarter, prototype unmanned our Nuuva testing, acquisition significant which the the capabilities team aircraft.

the that, call Frank. With turn over to I'll

Frank Connor

and Scott, good Thanks, morning, everyone.

an how $X.X up year of billion of from mix a $XX profit quarter favorable higher second up review second $XXX million contributed, inflation the volume and ended net $XX million Let's of in each and million million. segment million mix offset from from higher first $XX were of of pricing from $XX of the reflecting in Textron partially Aviation. Revenues the volume $XX Aviation performance the million the of XXXX, $XXX million up Textron $XXX starting of at quarter. million. $X.X ago by and billion, and pricing quarter, due segments unfavorable $XX with of impact was million, Backlog higher to quarter Segment at the

to included Segment up to of which billion. million, $XXX research development military million favorable ramp the was up performance million partially due million, from last in year, higher due revenues $XX were the of million $X.X ended by FLRAA program. a profit Backlog Moving year's to $XXX $XX from at of last quarter quarter costs, from impact largely continue primarily lower mix. we offset million segment Bell the and as second $XX volume to $XX

At million in Textron higher last Backlog million, was the year quarter $XX million Segment ended from segment at $XX of $X.X up $X the profit a Systems, down ago. million revenues year's to quarter $XX volume second largely of billion. $XXX were from million. due

to $XXX mainly mix million primarily Industrial was lower $XXX second volume of from quarter Segment year's million, $XX and of $XX due down profit down volume of million the second revenues were XXXX, and to due million lower mix. million. from $XXX quarter last

in were second the segment compared in $XX $XX a the segment of of loss XXXX quarter to million million and XXXX. loss segment was of million Textron quarter second revenues $X eAviation

and revenues segment profit $X Finance was were million. $XX million

charges Corporate of Special pension related profit. the postretirement million. $XX was previously below for to inventory million. million. amortization expense non-service the $XX was expenses restructuring group million. components income Net were Moving $XX LIFO and the were provision Manufacturing $XX asset And million. million. announced interest $XX segment $X was Intangible were

X.X shareholders. in shareholders. we have quarter, Year-to-date, million repurchased shares, we returning the to to $XXX In million approximately approximately million cash repurchased $XXX returning shares, of X.X cash million

from concludes can the open prepared That Greg, questions. our for line we remarks.

Operator

Instructions] from Your comes Baird. question [Operator line Peter the of first Arment from

Peter Arment

in results. pricing the and Scott, over on your Frank, booked-to-bill Scott quarter? color a color aftermarket in any you on environment and one also you're nice aviation. Maybe in and us give just seeing little could what did the what market

Scott Donnelly

I much which the we've obviously, upgrades response is to strength models in lot we'll that to recently across as -- a across back It's Strong existing launches of we market of the of and here We're new in robust. terms like to half seeing continued done Ascend of models Sure, in whole the the expect family great. demand products, Peter. the and Yes. see Look, year turboprops. pretty all continues think end jets, be strong the and such. go

So one-to-one again, we've is flying. we're but aircraft I years, seen area, targeting robust still couple of as demand, would as say, which last that much sort for the of great are

the good in But performing. we is So been service to where in feel about continue particularly see strong business as that's we the quarter. XX% well, strength

pretty good So think portfolio, it's terms in end I market. again, across whole going the of the

Peter Arment

Frank. one just a And for quick great. then That's

think for of CapEx, Your you're million $XXX the half first the I year.

I is million. think your guidance $XXX

of guidance at up? kind of are the FLRAA, outside of slower drivers or plans the step-up? than in pace? coming you are a step to And what the what maybe main So Or

Frank Connor

we CapEx, half to in slower than a we're continue in second we'll to as a of first little obviously, half see Well, though. in the year, in tend bit be reflected expected. loaded growth the the those back-end numbers We

we that's stick growth So in a the number number we'll but will year with. opportunity a full kind now, second half. little that There's of pace, for in the given see probably

Operator

question David Strauss of Barclays. comes from next Your the from line

David Strauss

and Scott, on us can give at Aviation both you an chain just Bell? supply update

Scott Donnelly

problems of fewer it's of sequence and factory does some are business in we've our but deficiencies David. in that drag all, for still factory to issues to to that are continue we able is revenue performance resolved, still continue but that. in deliveries, continue But parts working us numbers managing number and higher we like drive higher to late through through give team, flow used rework have, on kind see Sure, years, does some that still there draw Aviation Look, the would heartache, the performance of these unfortunately now suppliers [indiscernible] things. and particularly, get it that margins. all I and a profit We're probably than create problematic. the the been around from that to There's and -- a think to

I despite. the all is business So in think well performing all,

environment. tough a still It's

of lot supply that. working the you see training think a things some through lot and of see to efficiencies way most I people, reporting But and it. new a in companies chain, still and we're our like continue challenges

thing at Same Bell.

we're number key important. some we're as part a a this every getting of is number we have of but industry, We And said, deliveries But missed, working I are missing them suppliers. with smaller, those where in that components.

fighting most our coming to I to through all, get I in. are drive and late of parts work have said, our But continuing continue we're margins. that operational of to So some and deliveries around way done team's their as think, deliveries in good all

through keep of keep course we'll the down and year, So heads fighting the that think. through our I

David Strauss

And still jet which half jet year-over-year. expecting And you surprising. for were deliveries Latitude there, deliveries specifically comment year? first was bit flat you can and maybe your a where Okay. relatively year-over-year lighter are deliveries on the higher Are

Scott Donnelly

than in we that sure, performance -- the little on addressing the Latitude get to we David, Look, have are of quarter through, manage we gone, way would out. the one balance now that item deliveries to of 'XX where say, our and towards line these the working particular in we in of of hard through think we're had one had I and of couple would improved is but think be we'll kind some to I like higher specifically 'XX. where didn't those still They've a year. a Latitude I we'll do deliveries had had on for the end that lines see models. we're a expecting we few behind unit issues. we

margin despite line higher on basis. I overall, strong think and good the is And year-over-year performance business that a we unit of will the have will will -- mix deliveries. performance the So show we bottom that all still

Operator

next from comes Your of line Jefferies. from question Kahyaoglu Sheila the

Sheila Kahyaoglu

] Maybe the [ on has quarter. profitability really to Aviation. been in start good, Aviation XX.X

I think net price. points of basis XXX

the into puts do about new how And of and teens half? is level sort as low think profitability? we go for So Aviation and we takes second this the

Scott Donnelly

well, up. is is backlog look, we've got revenues team do up, I right? margin I mean performing the think Well, is Sheila, up,

pretty feel business we about the good So where is.

the supply in that As answer to think and it's not I I question, feeling are things go see year-over-year wish see basis year. easier. But But I David's we're strong the the think margins easy. the challenges where it. of We're said through we'll margins. of do And as a do is. still good we'll that about business continued with chain through always It's I again, balance strong guys my on not. it And that was working dealing we nature.

good our still we $X this a probably feel think I is billion We guide. year. this about business still think

think guide margin within on I be we'll well the front. the

through I as that earlier efficiencies the will we But part to price the getting by in factory. fact be you'll performance smaller again, on. better that I said we'll year drive in think goes and the continue see inflation the As year, offset that the spread, think

Sheila Kahyaoglu

Great. and the you and maybe think military FLRAA. Bell outside about on there do And side? opportunities of How then V-XX in there military just elsewhere the portfolio one

Scott Donnelly

right? add of outside I military So balance business Nigeria. doing I from mean did the the well, FLRAA of we the think H-X is

to production some V-XX So ramp Obviously, aircraft. quarter as now start is going aircraft to here that We We're been that XX year. that in 'XX program in this along. still that's FY benefit of the able X starts ramping the have saw were that up. added.

base, bit So we is of a little saw adding improvement. we that at look

go. to continues Program

we'll go or acceptance think adaptation we that I as into the broader of future. see here

'XX FY as well we'll the H-X, upgrade in V-XX on as and provide around SIEPU. beyond going that the opportunities on work announcements budget there's think I saw So some

do So obviously, unit while the to think I will production volumes, down. continue ramp

flow program. -- ramp that to make help of efforts good of We start the both we and that the will as some will the move towards V-XX production really that modernization on and FLRAA H-X lines mode the keep and to upgrade solid see

Operator

Your next of Myles question from comes Research. from the Walton line Wolfe

Myles Walton

Scott, I you if was aftermarket about growth. talk could wondering, the

side that, You whether there acceleration of or mentioned is XX%, the mandates decelerating. driving that good given anything is that's which Was on pretty or utilization military nature? that's nontypical or anything there is anything

Scott Donnelly

] growth continues continuing in particular good We the all be flying. for think The we're around business. the are is have military strong METS did flying. aircrafts I we But build general, all, pool people the strong in aftermarket are as contract. quarter see a Program in the just, spares [ strong, demand the aftermarket it's there. to on Navy Demand side. in Myles, to Again,

consumption So is doing are shop people visits. up,

in aftermarket feel terms overall. a So very place of I think in the we're we good

Myles Walton

I then $XX the And know didn't deteriorated had much get baseline in does on as or actually drag Okay. guess plan? performance improve disclosure, a performance you your comparison, that little can sequentially the I apples-to-oranges this imply bit million that but as

Scott Donnelly

as So you the know, a Myles, of right? there. stuff lot look, performance messy in is there's a category one

we're that talked not those we like would of some mean just about, our where at is cost standard it I of some to still sure, inefficiencies right? For we be.

for some there, other continues as know, manufacturing business a mean, reflects lot you I But in of variance. stuff there's So number part the also that to right? sure, grow. of

if a sales but basis, on So look line. on go also those that values basis you actual in year-over-year year-over-year these a numbers, are which through SG&A, percent line IRAD, a on performance basis, of dollar at

natural there's So SG&A. growth IRAD. natural There's in growth in

Look, in a legal this there there was quarter. settlement

that $X expect which million lots in go invest. there's and of things kind always continuing growing business there, to that's million, of $X most million, you a $X So would of through

Operator

Bernstein. comes Doug next from the Your of question from line Harned

Douglas Harned

On the Ascend.

share only total I think, revenues? X% Europe's about I are You you was Do revenues. particularly How you markets, see Aviation thought a international interesting. potentially as Ascend that in at bigger looking of Aviation of Europe, EBACE. for about, Asia? those introduced And your the offering

Scott Donnelly

more don't So obviously, share Jet change I been will The North has of know always revenue. American-centric. Doug, if business, dramatically it that overall

that. third usually second behind Europe, biggest America been our South has market. And

us, for share, So many been of much world, little cockpits, us new I a look in windows. we'll the as the the in the much product, which flat and engine it, a bump popular you run saw historical most business cabin This a specifically, better floor family. Ascend, has gives thrust great probably of as we takes essence at bit modernizes I the and see jet larger with everything. in over a home with really, think XLS Ascend side, mean, similar spread years that a

love will aircraft, from performance. customers think passengers, about I crews that everything to

biz expect we will sort and would I secondarily, of is it that the is then But still then American really that of that kind same hugely see South strong because And But market. largely share midsized North market. is the product jet American European. in a

the used those that all of with same would Ascend I see expect to see key kind position with segments So we'll across as we share XLS the family.

Douglas Harned

in Sky fleet, on that how Courier envelope large market of the ultimately to terms expanding you're could then Sky see How mean do seems the And And that, you be? Courier. of sort Sky Courier in I it be serve. can which ultimately -- scale?

Scott Donnelly

it's right if we is as has at of see great did a mean been pure strong thing and can a make them. mean, product, demand the big think I make mean, I moving I Combi everything lot Combi it's we're move version. what terms to recently just on aimed that's was fast they here The from a that acceptance exactly this regional of pax, you need very seeing obviously, also at. now, cargo to targets, as been where trying pax be We're XX of is cargo, in move them look need the the And really beast I to then I have you mean, markets Well, market. going cargo of airlines, the seating. they what most small world. the acceptance but sort and of a around with lot we to

Sky for Courier across I geographies. production domestic, to of now, lot right is us volumes. all the So continue pax, markets, up The with demand cargo the both issue combi, different the in segments think a those now is ramp there just international

Operator

Seth from the from of comes next line Your Seifman question JPMorgan.

Seth Seifman

you of saw felt can segment you where of if the wondering the the was talk I in in the go second potential the half, how cost-cutting of much program quarter Industrial a bit in about margin kind benefit second like the the much little more the on come? could how that still and we is

Scott Donnelly

that continue to expecting Seth, I grow an certainly expect we miraculous market I continue it give number, to the -- but turnaround demand. year. see We're don't mean not know in watching We're if we I'll as move a very the through exact end to closely. we

business to or probably generate look at probably most to we've I with of points of through, of continue QX. went done XXX But still out costs it's think year going restructuring that, actions the about be. you look that something back taking if align that that chunk at I take another Frank see the of we're will away. We'll that a the for should And square So half in of cost as we when in kind running you think the part here -- numbers big to where volume. the the X/X cost below we're incurred this we basis

see the cost it's keep now improved driving sequentially -- keep don't just that actions, demand terms turnaround is and end taking consumer strategy margins. some in So you of right the miraculous assume that

Seth Seifman

Okay.

you'd from where in a activity either good to Aviation. quick year-to-date fleet versus follow-up, coming And there order Great. order Is very customers is Okay. individual anything regard distinguish say just with the then maybe activity as customers? to

Scott Donnelly

across jet and all much spread the still both No, we're turboprop. the pretty and customer strong seeing is base

want be dice. looking continually of of demand. strong all pretty So you slice sell -- It's well to how to kind continued characteristics across it's about and

Operator

next from comes Sachs. Your Noah Goldman of Poponak the question from line

Noah Poponak

strong and and lead enough jet that care getting backlog the you're it's margins sort business you're output for not losing some Are customers to because are long and is you about do The where on that I you're of just remains, price just sales times some Or front? managing to on relative low that issue guess, good that? the okay demand how is. and an

Scott Donnelly

disadvantaged, everybody I mean time, an if out issue. but phenomenon, largely, there, the dramatically right? I same I different a might think you you're if industry lead is I with Well, think be this mean had is dealing you

there. We're selling, book-to-bill we're So we're but a aircraft, take above still delivering that orders into we're to out with into one. Obviously, years. but continue out those --

it's disadvantage -- or we're now, competing. But the in timeline, So say a it's X.X right I'd And think all right terms the cases. well of out at pretty I based on now in balanced. X in backlog, that's years, there We're advantage availability. obviously, competitive many out don't years

Noah Poponak

roughly to H-X Bell, additional The how adds annually in speak can Okay. that will future the orders that and what at go? far you out

Scott Donnelly

think I go programs But aren't all SIEPU, the No, I don't appropriated. like years. The order mean those was will quite so. that on mean, upgrade XX of number a Nigerian No. for I aircrafts.

So for things dialogue time. I improvement a don't think think I other nice say, very there's on same, to long a aircraft V-XX customers be right? that would on number V-XX are would get our very, that in of We enhancements. into opportunities. to Everybody going around knows There's that. program, with is I The the a

all platform, that programs would enhancements. And so over will like the investment you dialogues are flow ongoing But year. expect these and military any upgrades,

into So I forecast would those. on to think multiyear start I get don't necessarily a

Noah Poponak

the there? the comes -- to clarity much to Does just make modeled Did second do affect What last shadow just on How it then you that's one. does through provide out? decommission And sense Any can Okay. so the quarter? math margins? that walk the it correctly?

Scott Donnelly

the mean, So most something is be from worked or to look, already down through this $XX I QX. right? we going standpoint, like QX way to from a we've this that, about Noah, revenue our So is we're I of a wound -- modeling year as business million what mean obviously

kind if year. from the say, you enough the obviously, perspective. our of margin is for revenue we've minimis which all came I'd to de I our absorbed other balance to at in that seen up original a the the continue of of go business. out fairly shadow, growth that team guide from and of try we think through Again, obviously, that it's this business good So to look systems loss And make within one as where of hold nowhere,

us, that and a I think you in operate shadow, again, continue through sort has the business would new way their the XMXX. programs those unfortunately, shadow lot I most mean like to us ARV, But Systems, business the least to And probably well. the behind is So team stuff the managed going the has importantly, absorbed on largely got team there's positioned is and of that way of at focused on program. has the of loss I model FTUAS, opportunity. have the say RCVs, that largely, largely we

Noah Poponak

that do, a little looked tough mathematically Yes, to near-term. very at in Okay. least the

yes, that's So impressive.

Operator

Cai question von line of the Your comes next Rumohr Cowen and Company. from from

Cai Von Rumohr

Yes.

from you presumably should kind hope, flow-through margin? the efficiencies half your even as I negative more you've so if mix much so the as It are So didn't of we Scott, get Latitude, the improvement guys really And about diminishing margins, not know through ahead a of mix plus. restrain this the into even looks I looking second of could we a but sustain year been occur. be kind flow second are given I XX% that as though inefficiencies is in was that P&L of improving, don't last margins. and because experienced that inventory like going in of will half though, inefficiencies to yourself basically that we'd got know the type warning good for have you assume

Scott Donnelly

solidly But that range. sort I'm say going of mid-XXs sure go kind XX% strong, of XX% going we as I that would extremely to not that I the maintain think Well, year. look, I of we're be is think through to the in that right? it's the balance

And earlier, of a we as sure, said inflation as Latitude we side lot of lower than price have particularly and heavy part a some is in retail the have Latitude. which will margin mix. have QX probably less had. than of are frankly, those fractional some, do spread on number We I that, for So deliveries,

going always there's some but good So also on. are headwinds, that there's things

business put guide think inefficiency. within there generating feel the that is this well we is we And out the mid-XX% I good So generating margin, strong despite revenue continued well, this ongoing performing a backlog. like business strong growth, generating margin, at

I which So place. think that business to shows the I deliver we're in guide very clearly that we think is there, had a out on track still good

Cai Von Rumohr

Terrific. continue And aggressive be repurchase. of even terms you to secondly, actually, then aggressive, more share in

million, shares. You bought million $XXX X.X

What you're walking rate. at of terms in the should expect X% the So second away in we repo basically a half?

Scott Donnelly

just but that cash focus some add but we're standpoint. business. capability flow. to dollars, small think good did technology a will as us, as generating about we'll We Bell. repo, to where getting Textron also eAviation, small Cai. think continue Aviation We're eAviation some the well cash good we future I not at feel business opportunities strong Frankly, relatively very But Amazilia, is I -- on real the help of acquisitions at on

we'll bulk and the have but right that. dollars. small we Clearly, So buyback, to strong of allocated think I the were generation flow do to cash are these the that -- continue now

Operator

the next Epstein Ron comes Your line of of from question America. from Bank

Ronald Epstein

a your you that do demand Could for Sky any from version Yes. is customers? of quick Courier? Maybe points. just guess I there bigger a of couple

Scott Donnelly

guys. know version next aircraft, Ron, -- it. It's don't we from to I big -- those of I bigger that I from do But just of need don't one to a market. standpoint, a in mean, first with regulatory where sits, really we short fits that well in very closely work aircraft. designing that haul FedEx particularly cargo really, it all, on I mean of a Obviously,

it in it well. to LDX of So kind be really was where designed space fits really, container that really

then you XX that on pax side, the regulatory takes care comfortably hit thing XX from passengers. And a line, this and pack standpoint, of

you up things And the think than start into now that. So space. do I our step ATR bigger anything and that, that's think world to really I to like don't

been like that gap that of there light which market went where demand up and we're in and smaller has then kind really cargo is in seeing the We and obviously market into in run side. of when Sky you sweet from from huge think the I was was market our home felt standpoint. Caravan, a a that of Courier air transport pax that, sort spot a

Ronald Epstein

it. on line frame this. where guys, I I okay? if environment Got for no mean owned. everybody want in like that you put I then Everything down How do white-tails. that mouth, seems you that's experienced And in Aviation. but It going before, unique -- have to you we're your words a don't is Have ever

Scott Donnelly

I right? Ron? mean shouldn't most a of history the its be go But business in talked be Well, business, We're a right, I think white-tail you to there. to This was -- probably wasn't, it most to of not XXXX. is look, have back years, business, of this business. a going for and jets white-tail we about this

business X-year financial model of financial types, business on crisis, happened post from XX crisis I to that of what of the -- XX months kind backlog. to should off operate should think sort operate. how depending This a anywhere a wasn't

supposed aircraft right? when for idea, Again, that's is you back a down not think line, and be. are, is this new rolling to good it to decades. certainly industry is it's that's an going, have that should the This that where how industry works And where So where where know and this it's we I stay.

Ronald Epstein

I last And one great. can, one. Yes. quick just if then That's

curious. Just

the the Aviation? business that broader help you could Can anything make that that technology Textron the some mentioned broader investments You just actually highlight that Aviation. Aviation, might inorganically you're Aviation, you to learning just of could back flow outside in of

Scott Donnelly

like is we to nature unmanned the at are control, flight Nexus the need when believe almost is you doing, the the automated, essence, case, things Nuuva. like be what Nexus, there's Look, not still, of there look capability in these digital things even particularly aircraft it's fly-by-wire, highly like of that if person levels inherently in in cockpit a Sure. autonomous. automation And autonomous. very the a we're with if in Even a person, of

area on look first done in for a is guys, of had. they you the that fly-by-wire when fly-by-wire. at XXX V-XX, the So the We've is commercial this that is instance. The lot this. Amazilia V-XXX's We've of helicopter fly-by-wire. world all the done expertise Obviously,

levels just capability needs as we or at but I be more products is think more we Nuuva, in to what But not expensive things point have to the this. go high-end, Nexus and but than to of future a going these capability, of to So in digital much families lower company you've upgrades do it and products like see enhancements very like systems. fly-by-wire, forward, seen price these control, quasi-autonomous for

we're through so you'll And the acquisition and and the that's fundamental both Nexus Nuuva technologies future. both using, fixed-wing in I technology and start the lower price believe, the will, like point, that that are implementation the in things rotorcraft and markets working of to developing see

Operator

next Your question the line comes Liwag from of Morgan from Kristine Stanley.

Kristine Liwag

strength that, that kind backlog. on Ron's is Scott, I crisis Frank, levels look, in question mentioned mean of and you almost pre-financial the in the Aviation we're Scott clear. back regarding

back I quarter, have the the margin. mean at performance you highlighted of financial Aviation this would margins also headwind to been crisis in that is levels out If XX.X%. take you

tail headwinds is secure, So the I kind new normal backlog hold mid-teens the continues off of performance when in the Aviation? guess, and margin to the

Scott Donnelly

better are would with associated items, expect say guess as of deliveries, chain again. those these for as factory get we supply some do seasoned over to things inefficiencies. I time And those for becomes we get workforce I better what our is, more sure, look, performance Kristine, Well,

some sales to be right? more going And do We going things business. said, think we business, sales from continue see of I numbers we I R&D fundamentally see to of also a the when So those more the these invest commissions higher areas. But sales. going have continue but with in performance again, we necessarily as a R&D, growth improvements are the headwind not see around associated to of percent there also just are forward you're underlying to as going to are standpoint, in will

not reasonable we're But that And your continue bottom last going see the continue going we forward. a of business. to to it's performance few put to to see margin So improvements question, line there over is answer the number the that look, think I out Kristine, expect to I right clearly, think in years, this we'll now.

Kristine Liwag

expanding then really I moving question. The how maybe budget faster European guess, little European hasn't seems opportunities U.S. with either a be steeper than of or low, But portfolio for been leverage defense to inorganically? organically a It of budget. your you think defense helpful defense European to pretty interest about part the business context. capabilities, And your the That's also pivoting what's a huge do in higher, the sales? historically. and

Scott Donnelly

of partner countries those organic just business Europe. an opportunity, Well, part There's our sales not, I that expect of I of huge some we a from look at in the in sales you will that's Army have as become like as part number businesses parts international is perspective, including a saw noted, a to campaigns obviously things is mean on go we important focused, really happen It's military of Black the things. as big also many not FLRAA looking do over many, sales around think, things past. program, world. where the you time. like the Europe. has the been at Hawk do for We clearly, FLRAA decades, And that

opportunity. relationship rotorcraft at pursuit sort if I you guess, again, again, the So now, European around announce right Leonardo of did look with of a next-generation we rotorcraft teaming

a that of be market. that organic, that's to would kind that's product So European but tailored

we out forward. think those do I pursuing are opportunities So compete we'll for and there, those, going and there are

Operator

question next line George Research. comes from from Your Shapiro of Shapiro the

George Shapiro

the first been about billion as last half. Aviation, orders about have Scott, same year's in $X year-to-date the

you orders think reach the can of $X.XX you was strong? particularly year's last billion quarter, that You had in which third

Scott Donnelly

I That's to know. of we -- up as going as mean, a X our year. guided, to George, think is this we're end don't still I we kind view. X

But here that. think X is good we're I last our again, normalized So we're where -- they stronger do activities in at order if to you of look year, a X more sort is world expectation book-to-bill than a target. were

sporty. coming think I billion great. don't $X.X obviously. I'd through continue, to year strong, love is half see of are I the pretty a But probably necessarily the that is quarter We which mean first

George Shapiro

year, stay last was at were maybe up of obviously with end couple do or mean, it? year level in year-to-date million second going one then inventory last for that the inventories I hundred end less that deliveries, for but million it close to And the you the the above like of Okay. year -- end quarter a expect in better still quarter. to $XXX of where come down to you, Frank, are to million, the up at $XXX the second to of

Frank Connor

expect to Well, of we'll of for business year, inventory to in grow sell certainly in to But the in order next half year. we products. back the inventory order liquidate the need kind

expect date. growth the year-end, we'll basis some inventory year-over-year we on not levels seen at see to a So at but you've

from overall, say other obviously, capital working I'd in that offsets areas.

working inventory do is are but the payables and business. flattish some and of need there for year. offsets type associated in number think with capital So the growth we But we things that, grow order kind obviously, to other

George Shapiro

last the one. primarily pretty weak in of one said In Industrial, much first vehicles. special you quarter, was And because

This kind quarter, said didn't say or of that. you

we do in weak So that and relatively special this Kautex both quarter? vehicles were assume

Frank Connor

-- and a second on down year-over-year both vehicles but basis, had wasn't a was Kautex. was specialized strong it weak. very year, just last Kautex particularly quarter It frankly, we Well, in

more a as basis, off up down both year-over-year a a kind as a on of was specialized standpoint. well really but bit sequential So quarter from year. last volume basis But was down margin Kautex on a a very vehicle had a quarter-over-quarter, standpoint you coming on But second was year-over-year a strong tough basis. compare it

Operator

line from the Pete from of comes question next Alembic Skibitski Your Global.

Peter Skibitski

Piston aviation, versus the to lighter and all? about year-over-year think your your not that lighter that of like in some experiencing seeing any the jets to you're we seems And at deliveries But the larger as on little particular maybe the Aviation aren't so. consumer were or first I'm extend TSV, customers half in your as the it Scott, of turboprops. guys because at asking on a you even less that jets. well, softness Citation bit comments the in Kautex

sense. want I want there. customers I Obviously, understand health bigger your of the a the just how to but So you're seeing balance just to sheets, get

Scott Donnelly

say I'd mean, aircraft, you lighter we're at I MX, strong look Pete. CJX, demand. Yes, CJX, seeing our when

XXX we're on very high, most hard book-to-bill to guys So those for very is I the good. them remains part, Even to aircraft mean, I find training right? just right? make demand It's faster, trying Piston mean, anywhere. a the Pistons,

the a obviously, think again, get XX things. looking be of and whatever jet of side or The the over I even is good. time, can out you it may these business business one balance in of Piston good. people side So is side for backlog, light jet that, the year and there's so are It's months, the with lighter stronger sheets,

we It's kind finance flow So just to discretionary that's of continue see sort that's order of there. kind market good point-of-sale down. consumer, of generally that --

As around I that. said, we're aligning costs

ago. of products year As It's Frank really a this lot it's a softer strong a kind quarter. tough, particularly of had for now. those We said, quarter

XXXs, look sort adjustment the cost the continue you and no, I jets absolutely or at production not of even the light market well. price Bell And volume very match for when so But do we've necessary XXXs. that. alignments mean, seeing rotorcraft point to that those, Bell we're to behavior lower made

Peter Skibitski

Okay.

Any looks it expect none like profile that to [indiscernible] guys? Last program passed for change its you looks Interesting. me, Okay. like so just for one on you the review. guys GBSD. It

Scott Donnelly

continuing with We're to closely don't. very I Northrop. work No,

think number things have originally well. added a We've had program progressing program. the been the of we that scope I had to is what on

piece great a have with program we these think of guys. is the going I relationship That So well.

the to as itself in of I been the missile media, a opposed lot a know, have issue. guys around the you As mean, big the just infrastructure cost issues

there sure, scheduled progress and think of continuing talks the I on make customer talks are are on weapon which well the to system. continue see program their piece think, them. on about program, documented. the to, about increases we our Northrop for I overall But challenges, them, well So we're good execute scope

Operator

Gavin UBS. your Parsons final question line comes And from today the from of

Gavin Parsons

kind what's the tracking you the Aviation can But Industrial around just the below. sounded It below little a guidance range? on and stay or align update margin guide little a and like initial go with in line to above of thoughts, horn maybe bit

Scott Donnelly

good I'd a we think did like actually there. job to pretty

having I think are a year. guide Aviation well their guys great in the and

think And below the a are just But I segment really be in the things little talked come about, businesses of and we pretty we in because think strong probably where well. Industrial bit as that lower volume, good we'll the that in guide I consumer Bell above net, guide, will and on little of feel performing most particularly Systems space. businesses. performance those their both are a probably about

Gavin Parsons

pricing Okay. similar It on digits you're seems into just Appreciate getting it. mid-single level it And maybe then backlog on like today? going a the Is on orders. deliveries. maybe still what's

Scott Donnelly

price say going continues would the in to to mean probably but I strong certainly not price give I marketplace. forecasting, be we're

So...

Operator

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