Spirit AeroSystems (SPR) 1 Feb 192018 Q4 Earnings call transcript

Good morning ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc.'s Fourth Quarter and Full-Year 2018 Earnings Conference Call. My name is Brian and I’ll be your coordinator today. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the presentation over to Ryan Avey, Director of Investor Relations. Please proceed.

morning, good and you, everyone. Thank fourth Welcome call. full-year earnings and to Spirit's XXXX quarter I’m and Gentile; Investor our of Financial Ryan Director Avey, Garcia. Relations, Vice and and Executive Officer, Jose Senior Spirit’s Chief with Officer, Spirit’s Tom and President Chief President today me by Jose opening will performance we regarding and comments After your questions. our outlook, take Tom and to In ask that we the question-and-answer one please. order question, segment, to allow everyone to limit in yourself participate you

or remind involve in Before may in goals detailed we projections need end that today we to filings to the in likely you in at the begin, risks, of discussion our and release, statement our SEC include any web I this forward-looking are our are earnings which presentation.

our and I'd With for and slide use broadcast over Gentile. to to earnings presentation a our measures And we today’s our In release reconciliation investor.spiritaero.com. turn discussing non-GAAP you website addition, Executive disclosures that, Tom our results. the Officer, reminder, and Chief call like on in to as refer presentation of follow we can you at

and good Ryan, call. Spirit’s Welcome everyone. and full-year you, Thank earnings XXXX fourth to quarter morning,

hard our a previous company in I’d His take moment Financial Kapoor role be the the XX strong record also years his like we to welcome outcomes. take CFO, and financial GE. like has quick Before acquisitions and look financial at put Jose year XXXX build a at and will the He I’d A seasoned today, disruptions foundation in number team’s The person to our Chief Sanjay getting shaping on finish extremely operations of delivered Jose the compared to particularly a The chipsets teams Sanjay to and prior Officer, Spirit. all track the for our targeted achieve with schedule Spirit. XXXs, integrations a and and Sanjay recover the thank played contributions drive XX to new opportunity is international to meeting crucial XXX results. Garcia. year. more consistent predictable chipsets experience XXXXs, master XXX at financial XXX background operational leading of in XXXs, than valuable is results XXXX schedule to and Jose to results. XXXs collaborating to and a in leader outlook, to to finance of with experience our requirements. place. are in as included meeting instilling from X,XXX worked discipline right continue strong, our Spirit record we early XXXs, commitments X,XXX XXX customer all

the strong production We overcoming all of performance are of programs. flow, This results EPS back deliver XXXX. and We to revenue, models. rates schedule free across solid cash met us and transitions our delivery our financial for guidance on helped increasing new in challenge

improvement. Importantly last the the from as productivity on segment significant the and gave results I fourth of improvement us trend margins quarter solid up call, our emphasis margin in third were and for XX.X% recovery mentioned continuing These in XXXX. Fourth the was XX.X% quarter, in were sequential margins. at driving confidence quarter a

While will XXXX. improvements operational to margins, some fourth over the boosted one-offs carry quarter overall

highlight the documentation partnership a longstanding past week fourth let's of This key finalized X. Boeing. further XXXX moment new the starting to strengthens this some agreement. between from Slide signed Spirit. Boeing want and definitive to agreement Now accomplishments take The review that on few takeaways a with agreement. major In new we a agreement we I quarter, the

investment pricing the Max, the and the next removes XXX a length rates well XXX, XXX line First XXX-X. production uncertainty of XXX announced based it rates establishes agreement currently programs certain for and pricing the The of to above And contemplates and The on XX rates only previous unit on below agreement XXX for agreement including XXXX years through lower airplanes the into per XXX XXX through increases. under up rate of per and XXXX. advanced decade. suspension freighters two at It for at addressed NG, for capital includes just XXXX then in beginning also repayments XXX,XXX a resuming certain ship of set. rate truly month. The a

provided is and also pricing XXX. cost reduction programs now have our With this in some XXXX. we to for XXX, after consent price XXXX joint has new Boeing exceed the in and new acquisition XXX planned established with to Boeing now This line expect place agreement, their unit we cost Asco. XXX agreement the of

agreed have related in claims the activity of to XXXX. XXX companies liability both release those disruption in certain Finally, to including

Following the our of free maintaining of revenue flow. conversion we target XX% cash new are per agreement,

excited customer. our largest to our are on build to to with We look and forward future continue relationship opportunities

used we XXXX, XXXX, In acquisition In repair during for the for addition parts agreement Boeing overhaul. we establishing an also pricing and also spare with long of planned Asco. maintenance term signed announced

new and Asco Spirit months Airbus compelling and three continued work to deal. we've for fit fabrication a closing content, our remains the content broadens the this as last on defense expands acquisition our strategic as business. In

pleased the clearance are week, progress formal review required which CO We have made the re-file Bel issues merger identifying we notification former Air by and European substantial This Commission the European bus to concerning for the our in is the raised structure. Commission.

is year. closing original the deal confident of and to the any deal the to the We economics. changes half in Our in first this remain close anticipate don't goal

unveiled and excellence our us XX%. of high grew to at addition, excellence increase In made productivity of XXXX, defense our in operations in We production Both and now McAlester growth at operating progress levels fabrication center center efficiency Wichita. and about drive help third X-axis and Oklahoma we of are revenue. on our rates, our fabrication party expand X-axis initially X- our In initiatives.

We grow driven about XX%, business defense programs. also our strategic and Sikorsky XXXX in by

congressional we our as defense delegation support strengthen Spirit’s from the with get strong We continue relationship to primes.

broke accurately managing free to We state-of-the-art inventory. digital production efforts of enable efficiencies. flow campus this year. was on our higher center a global space The more of by to new strategy production in later ground open Wichita rates improve area will Another up our center also logistics to time in on supporting progress and achieve valuable manufacturing will our

partnership on also and innovation We augmented campus. new construction will with agreed year handling, Wichita, and have automation, Prestwick for will our center innovation focus processes composite infusion to Aviation National laboratory Wichita prototyping rapid in XXXX. began virtual NIAR, efforts the and State's a Research, aerospace In of Institute open space assembly on reality. we Innovation we Scotland will materials, part last on which

additive to the on Norsk’s in be used In significantly XXX the cost. reducing effect, then with near-net first which can we titanium technology Spirit, decreasing we substantially manufactured will less waste, build product parts be energy, collaboration and Rapid Additional, Deposition the component buy-to-fly-ratio. structural finished at to shape a be installed Plasma using will Boeing Titanium. Norsk reducing

Finally, we returned share than three free million $XXX $XXX million shareholders. years, the adjusted and dividends. XXX% of in to with we in to Recently, cash last million repurchases in have flow shareholders $XX returned more

XXXX, authorization to our $X repurchase enter turning And our outlook. program, a we XXXX stands now at As share billion.

share will million. will None include be be cash and of numbers between we which we For per $X.XX. for $X guidance $XXX these $XXX $X.XX and earnings for the adjusted Asco between will billion between million billion. be flow update revenue of guidance will And XXXX, guidance and integration guidance Adjusted impact $X.X our free after the close.

We the the included - on deal. or the have the debt debt however from interest or the

the and last the margin master Also, on schedule expect normalize increases XXXX. level - remain recover of call, We earnings XX.X% in to segment deliveries. in production discussed rate I should in to all XXXX as

slide Let’s objectives turn our our strategic focus to XXXX on X.

objectives are growth. execution strategic and overall two Our

execution. is successfully number programs. production rate to with Priority start one Let’s our across multiple implement increases

been the month the proactively valuable detail XX and month execute XXX XX past has month of are We XX per year, on-the-job our the headcount from have to per and been learned XXX, AXXX. required in currently last concern. getting increasing to per hired, aircraft and lessons Most in Taking is aircraft rates we is aircraft areas training experience. these already diligent in in de-risked planning in

that in-sourcing sourcing our increased We parts shortages. have against supplier also diligence protect or dual

to are are rehearsals. tool prepare increases using for rate Another we

practice you at are higher improvements our These like provide official the for a take big ability sessions actions into us in practicing production practice increases. insights us for where rates game, to these to These rate make give place. Just rates. we need confidence execute with we

Execution The meet operations margin of performance execution is our key and Spirit productivity, commitments. targets to the areas of for safety was in XXXX. focus teams are quality second of priority an to

will and achieve levels. help working world labor chain build We through Executing step escalation, customer initiatives these supply offset cost down. on based initiatives in suppliers discounts will of our with headwinds also price cost volume class to material clean sheet to process our

in our of Detailed to industry frequently, to said smooth acquisition ensure I standstill. to first integration our to integration As you a run transition. fast this is growth the planning In priority well Asco. underway close growth is already priorities, have

experienced we cost Boeing on to programs. our attractive Second, aero will exploring on partner. along workforce, with an to and includes make largest manufacturing This our customers. participation Airbus and Spirit structures with techniques competitive content technology expanding work continue future programs expand existing us two structure advanced and the

and The expand our third Fabrication growth Defense priority is to businesses.

practices Defense, the relationships anticipate competitive application and initial strong capabilities We proposition XX% commercial we about sustained build cost million manufacturing, increase progress of have In a value $XXX best Spirit customers good capabilities. in developing internal made military to growth. for in design a has XXXX. including and for

look XXXX, third-party to million growing by rate and our XX% in production of business increasing higher we sales. Once fabrication will criteria. we ASCO, internal increases expect in on continue growth $XXX from order strategic we to close Fabrication our financial For meet inorganically production over driven to and

synergy footprint Our than constant a on our criteria percent in post currently the content strategic investment spirit greater than and of are Look at return trades. criteria fabrication military multiple are XX less a about financial content.

inorganic in We free you continue and lead use criteria. see Garcia back the growth continue will flow the detail to results. for we undervalued. that our to which to own shares these through cash absence buy ask targets, patient Jose In our opportunities of we acquisition will that, meet be disciplined I’ll to looking With Jose? financial suitable as

that to team the global world factory that facilities in I'm in be Spirits see in company. in the confidence Wichita. chance to only asking but there time, around of the thank morning beginning to looking of Thank are to here year, to the the tour and the I've traveling for future. teams this Spirit I've everyone. of since near excited you, forward I'm their join to on Board want good me been operations had I short the meet the and part great Tom

half a conference. the you details the the I'm in I and chance three when for that had and outlook also here only weeks, still of next review for Cowen meeting I've businesses looking but and I'm that our Given to will of New York I'm for many forward the to learning results financial week today. you summarize

Let financials XXXX our you the and our XXXX. me for of details then take through outlook

a new defense by lower of XXX. on and Boeing nonrecurring activity was the Let's year. billion, XXX slide deliveries on the and X% just adoption ASC as prior revenue of Boeing for X. partially activity, and by This the the standard, was result on the the the $X.X program increased year recurring on Revenue from XXX upset XXX lower driven Boeing revenue turn up recognized higher

We of Slide increase share, represents Also X associated instrument. FX $X.XX to the Asco adjusted debt EPS on includes per XXXX. associated This with year-over-year. for excludes the with and costs, XX% in the EPS transaction excluded adjusted per a financing. acquisition. share. expenses impact transaction the XXXX Moving to with our associated costs earnings derivative of our compared reported interest $X.XX the This debt

the of tax XXXX lower deliveries repurchase result program, profit a with adjusted XXX, ASC reminder, by of share on prior driven the impact on our on tax a MOU U.S. a the share the XXX lower well by Boeing improvement EPS as The partially adjusted margin and the lower the Boeing lower AXXX on As impact and and a the the executed XXX,as count increased in EPS a rate, offset of as the the reform we legislation deliveries recognized rate adoption was excluded XXXs. year-over-year of as

paid debt exclude related portion million year. instruments. on X. free Turning Slide adjusted year Asco the million increase for $XX to the million the on XXXX of Adjusted the last no transaction to cash free $XXX is a cash paid free includes acquisition. to which X% was flow payments, and cash impact FX This cash the compared reflects flow Asco flow year-over-year. $XXX on of This interest the derivative

well capital re-sharing Boeing receipt for flow adjusted As return a payment in driven customer improvements, XXX XXX. well XXXX volumes growth higher as as working increases, advances, excluded funding XXX rate free on tax for to payments, of partially cash lower $XXX XXXX cash by was reminder, The the step-downs of million production lower as repayments as and flow interim adjusted agreements. production free pricing cash to customer the Boeing, offset price by

cash to Turning third capital deployment returned more have marks our for or flow shares in In paid to X. XXX% $XX repurchased million than row the next million to share dividends. also This slide we of count, free XXXX shareholders on shareholders. we of million approximately a through $XXX X% year our X.X

almost share was of return. meet our through we to we of cash return have shareholder by repurchases continue XXXX. and repurchase to our reflecting and billion In At expect $X in share XX%. other flow $X.X the repurchased uses dividends absence free billion our total account the of cash five shareholders Over end the years, return that our target, our to commitment to authorization last boost we XXXX

basis look turn Operating $X.X and deliveries year $X by Partially was future XXX XXX. in was XX.X% reflecting to due at the XXX the the life XXXX, performance compared change due impacts in segment revenue to quarter. primarily up from for future increased future driven billion in the reversing This in the our lower to slide last XXX X.X% the after and This the recovery X% the In by future of let’s over maintained improved quarter quarters less let's margin concision X. defense the compared year to results, of and on for in higher lower was revenue margin product the the XX.X% to normalized Now XX.X% improvement the third losses estimates, segment elevation XXXX. sequential activity. in segment the On XXX billion forward on last on fourth XXX non-repeat a program. margin few offset to line.

XX was to the the lower offset to XXX, XXXX, non-repeat our $X.X Operating driven the on on Slide lower revenue the XXX compared results. revenue was forward primarily Boeing segment up XX.X% to propulsion driven for turning deliveries XXX. partially year deliveries In the primarily partially Boeing propulsion deliveries XXXX, billion, Boeing XXX, by in the our XXXX on losses by on of Now XXX. by higher ASC X% the for margin XXX, on XX.X% compared Boeing by lower offset Boeing

down the on segment AXXX. compared in XXX, Wing driven on the Operating $X.X revenue of by non-repeat by In higher Driven XXX. to the primarily Boeing terms, ASC and the let’s compared XXXX XX. losses was was our XXXX. XX% pricing by XX% Boeing offset and XXX partially turn Wing XXX margin lower to due deliveries XXXX, XXXX, results, Boeing on on lower for forward revenue For billion, X% the Slide to AXXX revenue the to

year now $X.X be adjusted to $XXX $XXX to Turning to we're XX. Slide guiding $X.XX, and share billion, between between adjusted free flow be and EPS This and million. $X cash per to $X.XX be million between revenue billion

expenditures increases guidance rate include Our above currently capital announced flow free does cash or rates. any production not

on XX%. of effective an based approximately is Our guidance tax rate

for the including to As transaction or a impact derivative back that does impact not of the turn acquisition it comments. of guidance the expenses I'll With reminder, instrument. include some our the closing FX Tom, Asco

strong growth deliveries. the through commercial is strength aerospace long at above which backlog Jose. driver achieving demand remained term most billion at industry highlights of the of our XXXX Traffic November. remains while year backlog Spirit market. X.X% Thanks important This trends the at record $XX in

the are best fortunate have aerospace to We significant all and content programs. commercial

sequentially acquisition end, before agreement on now programs. the and also the we guidance Boeing adjusted an the flow, summarize, adjusted month. EPS by the on defense all and new are refilling best made met free on cash improve XXXX, ASCO We year end position building progress margins emerging close the To deliveries in met of revenue, quarter-over-quarter,

As XXXX, margins to your businesses, defense Boeing our as her on continued target production closure total we’ll for with With efficient our increases, take levels,XX.X% and to return. shareholder questions. and integration well of Airbus of and we'll rate is is execution happy focus begin historic XXXX, continued recovering to normalize as fabrication ASCO our and growth commitment be that,

Epstein with of Lynch. will first come America Merrill [Operator Ronald from Please question ahead. Instructions] go Bank Today's

Tom, vertical you the think how for do Boeing business. the you Embraer’s they’ve This the It you like more opportunities Embraer about think a got deal. in market the about of is do your programs calling the before capabilities got how aircraft structures Liwag Kristine think competitive looks about after Ron. and like for larger When and replacements fairly Tan strategically, middle on integration advantage the XXX, or new and significantly deal?

of be know we'll we Embraer I that stress early one continue about things is it But the with Boeing. shapes wing propulsion aircraft being composite Well of decades rates the so very large that. and yet building impact high as large able much what as at to will experience monitor and the would has It's Spirit don't days, fuselages, metallic segments building, industrialize of of complex in and production. literally for commercial to well

to we're on the per XXX up to XX this aircraft going XX and AXXX in in year we're later year So month. be

lot of experience. have we a So

respects their talent or our careers many a of systems competitive many equivalent engineering very Prestwick. engineers basis. mean because BA really strong over in we to Airbus engineering started OEM I our addition off And of talent also are our have have low Boeing because in in talent. extremely scale We is in or global caliber cost and on

have a can So for on the that to of defense lot all of new and the we our be think can any customers side commercial both we and competitive we bring the advantages side programs.

So we're very that. with confident

And be expected headwinds bit XXXX flow there I or having the could at XXX? do when free free higher. a reduction your and cash to then starting look XXX XXX flow and repayments payments then in with cash suspension unit repayments have follow a to XXXX from the I aside Boeing beginning in price up guess outlook you if any would other Are XXXX for XXXX.I and not the your from the on little of with

highlighted that's headwind. We've that before. Well natural Right.

So the offsets in the challenges really and part, that you at our inventory. like on had holiday work various keep and on in we the thing obviously to when a areas But lot payments is working work financing vendor XXXX, particularly with things advance that. a in in of other look we did of mind lot capital performance in

Some of those XXXX. to aren’t repeat going in

those And that advanced things will so XXX in offset repeat. the part, of don't some holidays

Next Greg ahead. question Konrad will be with Please go from Jefferies.

agreement of from the reduction, a reduction. or the Boeing little that Can detail around year some One more the that of of initiatives and of cost parts the was maybe so what's you cost of focuses different the supply a maybe with some undertook provide ago? chain joint you the

Right.

three XXX aircraft very we Boeing have the reduce on often both cost, jointly XX/XX basically So any particular share it, the an of these And important is XXX. program. want is parties is activity and to because programs we then controls benefit. will a a OEM, And that lot but programs, it then jointly identify when reason the area can the now in it's of what fund we entails the where we XXX, on the

have any of design control. and material a over changes. So, they lot own They influence

benefiting there's to do of for if the them programs And require they bigger apart. reduction support. engineering cost are in And reduction, a be for so, Boeing many incentive the cost

just Boeing the material there, wanted lot look an that So, and engineering. you Boeing programs issues to we in put program, in And absolutely you and example, a would help and at these in XXX cost benefit would place if the give design so changes. is of the drive to

help And so, absolutely critical. Boeing’s is

a in skin benefit game we that them to have want they lot more will so get the done. So, and

whole it it think it's - the And Boeing. productivity So, of it. that's so, a basis very We of and drive win-win part X.X excited. really we parties. both the was And thought called we're will that's with what an help benefit and important Collective we that Resolution it'll

gets about just talked follow-up And you Can to units? you renewed changes talk what XXX, those in the after kind confidence then profitability XXXX. you about pieces moving that, on Boeing of what maybe over there, having there,

Right.

we're the and come right on down XXX now Boeing So, costs. learning reduce working to curve

for and will Boeing XXXX our we And that we or unit we've hit price XXXX, projection so, when line our then with line projected XXXX as negotiated at the look after cost unit the cost. exceed

material now labor, the infrastructure working things and so, well And right that are we're as on overhead. and as

one materials, be on So, would printing. XD example

bracket we ratio. It’s together just will initiative. help cost first introduced that the doors holds the of part. a That’s our part. reduction an titanium So, reduce example XD-printed a that And It’s buy-to-fly around. a

process and ways also We’re looking can we improve flow. that reduce at

we So so we’ve and across a that the really And to do the of have then last material system sheets that flow. how chain reduce up material activity the a we're I our area on and system. at to we multiple every we looking for comparing starting new that's focusing duration the makes looking we're in then introduced supply cost material. us are variation process of that units fairly mean the XXX tracking on address duration additional take production we And efficiency the total the and variation of is And out with cost. two costs. comprehensive the at enabling thirds manufacturing strategy about example, reduce clean

buy what get can engineering And a programming, say then them our We or have of engineering sourcing work provide help we're our from help process. to a how and with we with see can machine where costs with it the things them help is and lot scale. we cost We means logistics, we cost. cost is a part clean reverse processing. can of much when to We suppliers that we So sheet the because them support. strategic should to

those So things help get there's help to we so costs. lots three of center access down also our costs. to drive suppliers introduced We've of can ways and in-source down four we can excellence

where we bring the and addition, work. a levels rigorous of have process world-class call transfer work in In and suppliers we we over week course that and negotiations event a have in disciplined we to hypercompetitive move a have that very we our negotiate of pricing process the then

of the costs. those all curve So things And cost driving the XXX. are helping those us material down on achieve world-class we're that are ways

Audrey Next Robert with be ahead. question from Suisse. Credit will and Preston Spingam Please go

start quarter. Nice on the

call, So you little that the XXXX. just some the of bit in XX% to made touch the on comments growth out on in defense you called a so in

of how in versus ramping different are platforms? volumes you capturing much terms considering terms share that new just growth, in on So, of

Yes.

I So said grow about that to we wanted XX%.

XX. right. All

not X-X, yes, and X-X.

is way existing their they we’re to and that really on low our expect But There the what think rate attack. phase production. significant a the But just that leader fabrication we programs that are programs. of we're ongoing really not is initial anticipating continuation doing had new is that production the as I is, heart So, we're new development some into business get win. through defense any

augmented growth area. existing in the programs it's by defense work fabrication incremental their really some continuing the So

To Boeing. to development Boeing's perhaps M&A? little contemplate new or signed MOA a of touch you what then it on proposed cover bit extent And platform more a with the that

work. does get it What that. us address that likelihood in is stabilizes we'll specifically chance I puts it doesn't think that to position and though it our the good And enhances bid. on a it a bid to It relationship really

no there's guarantees. Now

the to really work us competitiveness have with this that be innovation, have can where to expertise do partner. valuable is what can that our bid place a demonstrate we a to compete. to on cost to enables position our we And we and We in chance manufacturing our have agreement our a and on win and that be

UBS. ahead. Louis Please go from be with will question Next Raffetto

So I the there? wondering color provide any up I you get really just you can on color Looks if sales was digits, guys more guidance. double additional guess strong

of is on best the about all in fuselage, Well, we thrust if so And for really pylon. you the revenue the beneficiary wings the aerospace as as flaps XX% and being the next make the in the flaps the the programs one well at on of XXX of that year thing including the industry. reverser the structure we're the XXX, commercial the

the wing on the the the We spoilers. well of X triple the as and on the AXXX. the AXXX package We’re make XXX. big leading We're trailing edge the XX% AXXX edge, the on as on about

aware fact So and aircraft rapidly. we're of growing in it's backlog, fortunate and you're very the well Boeing have that Airbus about and XX,XXX

go and XX and So at XXXX. in point to next if It's big you a growth look a from rate up largest in revenue at to it it's XX is going chunk up. our some about program for planned projections it's and year, XX% of of course XXXX XXX. our That's

the to that other the price XX, the XXXX. from are aircraft month XXXX during really, XXX, addition, benefit despite that there going some to the MAXs per downs. decline. period this fact where in step revenue XXX effective really XXX, about is so Boeing about some In In customer XXXx. rate in will in addition mix is also XX% then The drive XX XXX words us. transitioning will And going change from to MAXs from XX% Then

course And last XXXX will our look hold start dropped the to delivered which and of was results. year. about then should in XX it units really it you the we'll it AXXX recover throughout that and at about if see XXXX, XX that the number exceed units units to XXXX of in in in will year XX.X So the units benefit of

so And drives XX aircraft rate and month. again going some then to revenue. AXXX is per up that And

driving really embedded things, is which So when or XXXX it's our organic up XXXX. revenue overall you growth from those all that add growth

think just you’ve through? also XXXX XXXX? the And about quarter. - some any additional built one got $XX anything follow there fourth in million came weather million having $XX up. like other recovery to quick built for supplier severe I to and I any in that the Anything you into other know Is talked

No, supplier XXXX. we're not planning disruption on any major in

a always everybody enhance last reasonable was We suppliers practical it job very not did some cash, funds we but So always trying in relationship. the and of were to from I good year. to mean collect terms was able

So were suppliers pleased made with recover. effort the to we our very

this into there those address We are we'll with issues, individual haven't specifically built suppliers. anything year if

On back which Matthew actually goes the XXXX. issue of Hurricane to

of total $XX the of incurred our shipments know cost. course because for million freight, probably a year of about over As you expedited we

insurance carriers at Now with the year we and last million. did $XX for settled submit the end claim we fourth quarter an insurance our of in

And some We if gave and XXXX. don’t it us fair again, so have in costs. built we it for took other And was in a relief had settlement weather We that severe - anything combined with on we’ll occurs. we it Airbus it. felt address

question David will with be Next from Please Barclays. go ahead. Strauss

David. on Matt It’s actually for

Just of quick balance sheet. a couple details the on

the So, that was related of for forward liability to to and the happened the explain there? look balance both there? course you shift Boeing there was agreement… lost what short-term at long-term liabilities contracts’ - so, some Can Is and

turn I that don't to So, Jose? why

geography the to with As Boeing year, term of which part settlement no sheet. of It has the program. short some we impact It’s is of last economics liabilities end X.X, term. inside the balance on at from the shifted of the CR the the long really

Boeing the the story. as part repayments know, it, the in basically XXX of and and delayed, that's of that's Some you were

of trial now? XXX, with as to rate practice can about actual talked And you know started move follow-up, you is are I higher Have yet? XXX Boeing producing Boeing sort you the increases, guess your moving actually I rate I rate guys say runs. what the But a production up? guess at you and

XX still go and at to Not We're XXX will the already. yet. make for practicing decision Boeing we're that. Boeing when But above

normal into the we practice And we so, are row usually to like us XXX, - revert day. units But month at alternate for producing three And we starting move But now, days then a we it’s them aircraft and three. rehearsals three day right cycle. we’re this to rate is units XX of then next a three day. now already. what the one means to do rate about with what XXX. we we the on per - we that deliver per to XX go back call delivering Right in three

go Herbert will be Please Ken Canaccord. Next ahead. with question from

Tom, I of to wanted getting Asco. sort on this ask for Congratulations re-applied. just

two-part the And question or last or of are to year need Just outlined of what you one sort a then here. some say economics sort or any assumed from is of upside through? it part you Asco? as and be of that to resubmission changed the or to it terms high time of confidence the level contribution there part to is outlined as I'll you keep or closing the second that the the resubmitted fair you you’re your the still negotiations to go you a very sort deal and now that, Did risks in

issue and that nothing Well conditions, all that to in the multiple. and had this do Airbus changed. of meant country the raised consortium XXXXs the opposed it that Belairbus as to The with terms was was within so deal had be first established only to a each Right. the with to one commission the of really of structure and deal in terms economics entity

a And all partners any that conditions structure of yes. it And would so was the and Belairbus just the Airbus any Airbus, It change was work. able was terms our supportive then and or didn't the refile. I underlying very work extremely we say competence, lot have to requirements to with get commission meet that to that did partners higher that line and the in of is everything We between level was work raised and that align the contracts. of within Airbus were most and terms refiled. concerns the the then we to do to and Belairbus within economics of collaborative. directly. of we in confidence did individual to of There now directly the

it level the conference move to work a now evaluate it. of confidence. date us and have conversations at the to So point, the XX my will yes we've and level then commission They’ll that - take give is What forward. we've our them we’ll given higher we it’s But the they higher. will had, done that about is decision do days have

go is The next Stanley. ahead. question Morgan from Rajeev with Lalwani Please

wondering at comment I we progress progression that you Rajeev. did how time X then that way for And meaning the think Jonathan as This as XX.X%. margin of you from about guess through could if should with year. I quarter the Was down is quarter was in better? and actually on the on we the almost the over start rate contractors

really first drove what the on in margin Well operational was Right. continued focus improvements. quarter

is that overtime. disruptions we traveled did and our That work we of overtime meant the did work we our one as down had had less that required fewer less things we So we suppliers. from

So that thing. one was

expedited at fourth any have all quarter. the freight in didn't also We

was the that rates we got required future. a contractors production more as direct for we had higher And prepared fewer So help. we of because in staff then

because hatches we're batten discretionary QX three things of improvement activities. a efficient down and of out deliveries really and lot drove pushed on all really those other a lot on spending then our So focus the and we in the just we discretionary was of

kind and margin the of Jose So point overhead as is the in at allocations And next were which one-offs said a through to nice good repeat. we was it’s a of to a But There the was goal normalized course basis a as our increase ending XX.X% QX QX of of last ASC XX.X%. year. in for in for improvement the steady in related compared continuation in QX XX.X% year said, which a additional impact we of rate. the some we're back we the for XXXX. can we beginning also were XXXX build us puts XXX. at the can solid our XXXX we've essentially we tax beat really at were built levels kind and on reform marching to very XX% amounts of that was confident And target time, stable in in long-term And in, then production in to we're and entering margin that XX.X% some on a kind won’t

I - you Asco-related one. Do the includes just interest? see one If quick could other guide

Yes.

year, recall, the have on have the because already last books. interest we Asco. didn't on debt the to as we So, this debt. include we year It’s But you related

all included our on numbers interest the related in debt to the the Asco So, this is acquisition year.

Seth from ahead. question Next Seifman be JPMorgan. Please with will go

Seth. reading on think level Airbus higher front don't we've should the I rates. Ben and about could investment get the what was for is about expect for I AXXX here. hoping you XX about been here. the This But profitability of think I about change in a month, required above you talk if as you in a And moving mean, might how your we to little for bit of that profile? press

rates even Right. No XX to incremental up stated previously or We're of announced go that has to the investment. capacitized Airbus higher.

invested we've It's the capital So, there. already.

no And the there's investment decide if that. XX.X infrastructure right any go they They're to we place that and does, go But it year. now at have capital additional will this higher so, if it we indication don’t do to up. have in and all

then And quick just one one. more

of capital how of that? give color return about how cost fits on for kind of into If some the you're us thinking XXXX, could kind you kind Asco

we what they've Right. threshold. That with will in on than return capital do XX%. Well, past. - was Asco our I did going deal, greater returns par the been was the when to it's is the What will mean be the

And place. in so that's

three end in we we quarter, of would would which We quarters case first to let's expect the of close it say results include. have that at the

million we $XXX example Asco’s so that. $XXX annual revenue for So, would get and of is million

are The is We million. incorporate will or synergies to to XX take about months fully us X% expectation XX that. $XX about expecting

- and a close of at marginal when some creative net And flow in dollars, we net boost try little so income as there's we'll that, will on in million bit then a XXXX. of look cash income, based be finally we headwind, couple to offset

The other have recall from second Asco, cash purchasing the from just last that this additional is finance half And you it may price way we of the balance say the year. I million. as we purchase sheet point of our $XXX standpoint should at the on thing is will was some

in about our some was that prefunded hedge the purchase So place. of We've we the you had million. $XXX saw cash price because of already

million $X So, And authorized loan term we’ll and about basically that's then, year. million to authorization to is $XXX do repurchases $XXX expect share the once repurchase complete. so cover of of itself. our acquisition And why billion the resume our use from acquisition share our cash cost we then the last or board

with & Rumohr Company. Next question go will ahead. Please be von from Cowen Cai

you and XXX last year, saw, XXX as only Boeing XXX to to So, this deliveries year. you have deliveries you probably guys time a versus predicting but lead delivered Boeing Boeing is shipsets

like the to to many assume over be give going to can XXX home. number deliver? So, you I you get how us has shipsets are them

planning. we go And going Boeing our obviously, as mean, all them. the we up all to It's to per go year are I deliver significantly That's to Cai, Yes. Boeing’s if schedule. on programs up the going to they they're and aircraft is this driver, month in shipsets the will bigger be XX XXX. the

going to of going that's Boeing. absolutely But the be So, to deliver. be how ahead big driver we're of we'll

delivered XXX they shipsets As Boeing we XXX year, and this you saw XXX. delivered

ahead little them a bit the fact of of upstream. always just we're we're because So, that

another are programs of drive How - on what customers? much Jose, maybe is the revenues then, you to XX% and defense of And XX% you had question I fab. walk could so, growth talked - because that external us growth the going in

current Great. low for a fab help production rate with that with covet production. And heavily to CH-XXK program, that also you, get parts the from low essentially key of a lot our supplier to to going the growth XXX is up at that’s cost. fab our producing regard and for disruption it's to fab, that have be are us getting And is defense come last growth reason do on did really kicking we programs most that honest relied in million is the into year, then we our in. strategic the and to initial it and of Then

Then most in is third-party rate. would we focus us help our third defense. priority revenue, sure first to of make be like major terms to more while party, So can to do get on up that of current all going of really is the going be to we the cover to is production, to so

can that. commercial past, haven't again, some lot defense all new mostly and of the on already in somebody And the that looking get to either So a and we've lot involved bring detail produce for of supplement expertise we some they that new talking of primes receptivity of parts finding in capabilities the we're to a been to who's the been the market and in And as before. or programs seen start were programs.

Jose cum quickly catches the what Slide XX, could were? of sectors each you walk last us and forward adjustments for they through the

Yes.

see they $X.X can sort quarter, In for fuselage quite the cuts. So were were million systems have cum we the small. of as you they

and I the big programs in ones just fuselage pluses two minuses? ones those were mean programs or in, then what and I what mean, the

detail Cai gone that’s into in of that something the we haven’t the level past. really

it but the out. general call. instance He catches And bit XXX so think the kind can the but for actual was Ryan quarter of I balanced details. essentially were program, would we now this available think to little a into from I in team provide was will was additional of we headwind - refrain There the negligible. after color, right from trying go be some

So later. can Ryan you through specifics the walk negligible kind and of

Next question Asher be will Carey Please with from Baird. go ahead.

that XX of per be what month. the What's and the are of or up all helpful. out question looking touched around sequence detailed Curious production an specifically efficiencies in that discussion on insights moving and early no a well about longer at you've kind Thanks. bit a of seeing does on what a occurring any little moving still sort improvements practicing would issue you're take rate you have the or I or there's been line. XXX metrics at

that executing the But issue operating in the to programs up Well of that day occasional efficiency. comes we're as the and have something on opposed factory the current levels with might day. very We general efficiently. make caught quality up good ship all at a us always is next

Our the to rehearsals, suppliers operating do of rates system the production With enabling things us and where regard to the are relatively it’s is stress see delivering. work We are. smoothly. at don't much traveled what have to are shortfalls higher the

back go areas see also things, going for example, want if we’re are few where the move to up, forth. like productivity around When identified number you to have you rates looked a more some have go - identified we production we've obviously, that have incoming we so our like more move and can dollies assumptions we right. in labor And dollies and and We've more thing here, at. identified that to material hire to parts of So, some we’d people. to another few fact, the that

level around. looking tools sure for of hand also go to the higher example, with hand enough employees, We’re that at, making tools we have

rehearsals and our production, rates then then the see rehears is the gives chance us lower So, do breath of what to back really again. fix what's we to and it required relax a and catch exactly we can that, then

the now identify rate going to those that least different to break system, the six XX. rehearsals gaps make the and gaps at between fill can rate official and break are we before we’re do where So, we the stress expected so

will given. be that the rate? I a in give the one back-half-weighted And all more from production you it follow-up us cadence me. how guidance earnings, for increase to appreciate able given you'd Are

accelerate Well, the course to actually of over start increases rate because will the take production the effect. the year

is XXX you'll XXX, and of about starting think Boeing in the XXX again back year. be more of Boeing the but the you half will those half Boeing a back when So, in the impact bigger see year. now

be factor. going certainly So, that’s a to

kind the In this be going and margins, a margins of rehearsing. do the inventory first we That's of as ramp up stress to system. tighter in quarter little terms will bit

And were fourth quarter of they just balance so back like margins again saw in the in half up, quarter. out the increase first The from the a fairly significant XXXX. it’ll did margins the year. in We to

expectation gradually a then bit So in XX.X%. to again, will see will start similar QX, is in a In increase. were average the XX.X%. and at low And about XX.X%. QX, XXXX. pattern year It for up little start it example, margins And were there for you'll

will go Partners. Please Vertical question The next be from Krishna Research ahead. with Sinha

and or kind why rates there. the you're those than Is On higher are producing the XX? is square Can above that some like the are AXXX, published producing the XX that that mentioned, of out for put has AXXX the rates official that XX.X you spares you something you a Airbus for with just us only AXXXs official month there? rate when there XX.X Airbus

up that. do things rate offset it's bit Well, a roughly build been like weather official buffer delays to announced. any I But little because and higher what's probably the think than we're we

the slightly so And delays So past, on we we're so with we're on have than at just system Airbus some agreed at that would I during program, the higher and at of prudent the the say pretty the close. rate that’s course to Airbus a different. why we've AXXX that rates a stoppages in into are. producing we weather the have year. And because But AXXX, again, that’s rate of buffer it's and could we built the just had Nothing units And we're be stated few Airbus. building

to how those of And obviously, programs. those then, higher need there’s will to that will to or then rates? I guys rates? in it you'll the mean, long production a you when when been take how And far plants on through lot to increase chat on advance will actually know flow the increase go rates

notice. both generally give Well, sufficient OEMs advance Right. us

bigger for on XXX because lead package. have Our longer a Boeing just a bit little time is work we

bit past. it's the operation time because is usually in so, Airbus, And little XX-to-XX-month shorter With it's lead different. the a

we We do trade event give already us. lead that but that But we've they preparation we'll to get timetable lead make to both We've in that up rate. decision, sufficient that time they whatever give been OEMs have do doing always have doing adequate to to us the - already less time been in confident Prestwick. meet again, we're things And studies.

between And textile Because has big good talk and of then work legacy CHXX-K. But also got a know, you've about that you to new the things? on or relative of think work there. don't I two can just I on a quick package versus, kind that. Obviously, composites question split the package a aerostructure-type those structure alloys material

about mostly Is the you mostly talk it So Can that? composite? structure aluminum? is of CHXX-K

Right. troops heavy a the how the it it can are many much really Well, basic Sikorsky. the build deliver go, been fuselage. we it able a to that The to is composite to a it's then and part fuselage But of the to fuselage aft really on and of it's the to similar delivered be and a It’s is Spirit, very it of part And composite is proud on AXXX. have lot because assemble of forward we for lay-up carbon again, how expertise we’re techniques, lift how lift, helicopter and us the do that hand of it, that proud good fast from commercial very kind similar of astounding at think be the And Marines, material CH-XXK. The we're very similar aircraft at to regard, and we material. aircraft, in I we capability fiber apply the process, can in we're We've terms a can that program. they capabilities program. carry. on to XXX work fabrication

bit? on Can ramp a talk that that? the about little What's you

expect units kind we're production next in right it the one, low the we course to of up rate in we're rate over just couple production Well, It'll Block mid-XXXXs. now. in be that. full initial several the of of of don't first until for the years. But ramp

go Seaport Please last question from Today, ahead. Sullivan will Josh Global. be with

comments your been modernization. to the on discussions, of budget thoughts the have curious triad. Just legs ability There nuclear about three public around some afford all

your your Just discussion the just balance into curious B-XX about triad Spirit the the and thoughts and on the fits from between how that and end.

an obviously and bombers. the is that the the not But missiles, I'm area. the submarines triad in expert

at it's look the B-XXs that which limited. fleet, are we're the flying old. you years If still fact bomber fairly is I mean, XX

by way. Now, those were all the Wichita, built in

very XX they So certainly them, life. B-Xs And so long a we're about about there's or had B-Xs. and XX of but only only proud

fairly a it's limited fleet. So

very solid. be And role triad proud a the the looks And on we’re for program. new B-XX the to of so bomber

seven with the of prime. were that one suppliers along named We’re

this today’s today's session, this time, thank We everyone attending Thank at conclude well time, to for now question-and-answer conference. At you. as presentation. you disconnect. do want may today’s this will as And