Spirit AeroSystems (SPR) 6 Feb 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc. Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Rica, and I will be your coordinator today. [Operator Instructions] And I now would like to hand the presentation over to Ryan Avey, Senior Director, of Investor Relations and FP&A. Please. ahead. go Please

Officer, good me and Officer, I'm Avey, Chief Ryan Shanahan Thank are morning, Spirit's with Financial and President today Senior Executive Suchinski. President and and you, Vice everyone. Mark and Pat Chief

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

In addition, I and when reconciliation measures we turn refer our that, earnings over use like would you of presentation release to call discussing we With Pat. the and for results. to our disclosures to non-GAAP

I are my we how will update Ryan, accident. you, the focus comments. January address Thank you came his will X In when running Most of to fourth business progress solid Mark Today, we on we financials my at remarks financials was toward our footing. Spirit. will after the estimation, I in steps achieved on and here good the took operations everyone. the on quarter. the goal back significant and in My that mandate put morning,

demanded X team. January on different accident the focus by our a However,

those leveraging product to safety the to a taking into the system safety incorporating adding Consistent that and Since place to team was NTSB, with immediate with in-line by airline any our our focus was protocols, include people. our Within hours. conduct hard risk moment, and airlines FAA was enacted replicated that in our we it's service, response inspections the management the assessment. response countermeasures to a findings at customers, Spirit's activated processes ship Boeing within return on FAA's Boeing, action. days, performed The look supporting and

actions, manufacturing. we review Concurrent door a addressing both human our have include at factors, of nonconformities, the assembly immediate heart of teammates. product Boeing with by centered safety, manufacturing XXX of installation Spirit manually the the significant XXX actions and operations. is and with and mid-entry Boeing of processes. skilled the A on second plug our wave observation portion inspections of process People are those across build Incorporation detailed and and fuselage to performed initiated expanded company

and reliability high-quality factors to manufacturing human human products. must and in are in Repeatability, be any we for accounted capability And is efforts. produce our required condition mechanics improvement that conforming lens, through levers pulling mitigate focusing compliance inspectors, additional to we system, actions. mistake proofing observation. that and and X factors The quality human of proficiency to main management our are include The

more will testing We do training. and

greater will drive discipline the to QMS. We

aspire our technology of We goal better the ultimately achieve We correcting that perfection any improvement. tools, and available or today. to is X teammates with will basis defects. world-class known Detecting, for is perfection. The defects propending techniques is otherwise company nonconformities manufacturing enable and as continuous

utilizing We integrate to efforts analytics. are redesign organizationally realigning Boeing's QMS advanced and with expanding data more and process reengineering our to more accelerate

performed the of performed and increasing also are spirit Boeing We inspections. number inspections

here these integrate joined FAA the those efforts will we customers with have who in soon, And us with and Wichita.

aligned well. with brief detailed There are a actions. we and are improvements with collective additional is wave second we That of taking are of for implementation the in mobilized Boeing. some of our summary as actions point systemic plans The fully is

X defects for the airplane and solution is next That of of deployment will escapes. manual. automation remain X sections that and autonomation the to be improvement Our of wave fundamental the highly

largely The fuselage, On most manual. the sections back the the and XXX and workspaces. build have the most complex front are geometries physical is confined

have impractical. balance will to have right significant In to human-assisted full-scale There technology deployment. labs, that Broadly automated I a path is towards finding using the with receives I has is speaking, manufacturing look we team calm, moving accident. of we readiness and They and is recently level that technology human-assisted team. a responded X the the technology eye this proud in have and our appropriate robotics to accelerate. ensure Our have of of I resources reviewed our this how is technology. been team it confidence this research am with focused and very urgency. lot investments.

the not At integrate to project. as ongoing and form art our is operations this a with broad one-off actions point,

seamlessly. down. The aligned shift to they and The engineers Our our believe manufacturing sealers, because what engineering need us from understand and move that to being governance operations. their shift boss. is teams across top the is airplane mindset changes perform will we us what I will fully of are mechanics, implement in like quickly inspectors tell are surgeons. management to in and airplane tells the do. our away They

appreciate facilities, to what and teammates on Our not lots Receptivity I every their shop been and what's their positive. offices it heard lots and surprise every shift, need or ideas. they I've resolve me. improvements. of in of telling from goal corner and energy, need, Wichita factory when also minds. is candor our from me our of give them from floors the they make This have across issues does

of of Our the a Spirit workforce at their has importance understanding clear work.

the have and the and coming will reporting more from legacy rooted in this with we we regulators industry. from transparency. a weeks, formal their will learn That is In respond commitment in long urgency

as think I'll Now topics on I to mind have other a well. your shift you of couple

deliver the quarter us made in X production fourth total XXX we years. ultimately and progress to paused quarterly XXX the We First, stabilizing the line. briefly in highest allowed line the fuselages, which significant to stabilize,

and during quarter start to factory. enabled investments year a the with schedule balanced the production us the buffer to recover system made We which

Airbus which with to working discussions additional recognized but programs moment. engaged operations, programs we improve will we not AXXX long-term Second, the only and AXXX losses address on these financials. in That forward our in are address said, a are the to this Mark also day-to-day in quarter,

conclude and to need but we hope items continue ensure productive. Airbus February, are by with all negotiations The have addressed. to We been

We near-term call I'll important priority This on I by appreciate over results. turn the to review me. are the and operational their engagement with to Mark financial remains for converging an financial and solutions. partnership our you leadership. now

and constraints production This Pat, volatility, everyone. morning, significant ongoing in in higher-than-anticipated inflation. Quality to throughout resulted and costs. year. chain We supply experienced and schedule labor due pressures good the XXXX Thanks, challenges costs increased

on contractual with recovery agreement lead However, reaching we the with also and to bringing customer. resolution our spirits during executing board including a accomplished some largest largest year major milestones our Pat union, a favorable

of rates refinance which We raise, major a also and and across capital our our programs. capital many strengthened to structure debt increased due production

of financially. continue to focused we Spirit XXXX, the expect some these pressures stabilize operationally While and on entered to XXXX from strengthen both we execution and into strongly year

news a guidance are the Airbus, time. relation position rates Given approval provide not around in the our the XXX production to FAA we to as in well MAX at latest negotiations with ongoing as this

let you of Now our results. details take through me financial the fourth quarter

XXX space which on as Revenues Let's Boeing were commercial start the substantial on MOA from of XXXX. for X. XX% impacts segment and disclosed the included and billion, in XXXX, revenues fourth our the primarily the higher defense executed This October program. well programs, of the up previously as quarter pricing production increased increase quarter aftermarket favorable $X.X due was on Slide from adjustments to year-over-year

the deliveries increased XX% year-over-year. quarter in Overall,

to $X.XX reported per the of quarter our earnings Now of negative share $X.XX EPS. to positive We in attention fourth turning compared XXXX.

driven adjusted largely items, in $X.XX the period Operating year. XXXX, $X.XX was by impacts same our of compared Boeing and EPS to in compared XX% certain positive negative favorable from was Excluding the prior MOA. to XX% margin negative the

statement pricing adjustments cost XXX favorable liabilities of XXX favorably $XXX reversal through the result sales million reversal As fourth an as to increase the right we revenue. $XXX loss million, of reversed which included and the reduced a during of flowed which the to of $XXX obligation total million, which of of material XXX, quarter, forward income

and fourth and quarter driven AXXX forward programs the supply reversals of net was to $XX and million by costs. cumulative The in other totaled of million forward of loss and adjustments AXXX catch-up $XX quarter losses relate quarter compared labor $XXX $XX adjustments higher losses of and forward current unfavorable unfavorable This chain, XXXX. estimates cumulative were million to million. catch-up Fourth primarily

for forward beyond approximately We amount performance anticipated $XX also net obligations of million. XXXX recorded in the losses incremental

relate system, which to production The stabilize XXX unfavorable in we reflecting catch-up program, adjustments cumulative higher recover fourth have the and primarily quarter. done the costs to required

fourth was quarter Now quarter of turning to usage the for free $XX compared cash flow. flow Free positive of $XX XXXX. cash free in million cash to flow the million

also made capital programs. from XXXX. the accelerated effort in cash flow includes terms million working $XXX tooling disclosed certain investments fourth quarter of capital our and MOA both received the capital Boeing through per operations, free XXX the approximately to stabilize XXXX we on of In funding XXX of quarter the Fourth the and and and certain previously investments

commercial change with period due Now let's X. our commercial the programs XX% discuss our over to In the same the segment increased XXXX starting XXX fourth production positive quarter in as in primarily in our higher negative revenues XX% of favorable all XXXX of recorded on quarterly segment across operating performance, current to Slide the pricing X% driven compared favorable as estimates a increased from well Quarterly MOA. Boeing by period. to the margin year, prior

the million. of to These adjustments changes charges recorded segment of $XX million the of quarter I reversals unfavorable adjustments. of comparison catch-up million catch-up and net of $XX cumulative loss million cumulative fourth disclosed, included forward forward XXXX, which previously unfavorable in estimates, $XX and $XXX of In losses

Space to production. quarter turn fourth let's program up Defense on segment Space tanker increased & million Now last year $XXX higher to Defense activity than and Slide due X. XX% higher the KC-XX of to grew development &

on losses in Operating recorded of Boeing forward primarily to The higher due to of XX% losses of production losses The $X estimates and and margin million the were higher PA cumulative compared of catch-up estimates for catch-up driven program. fourth X% which the $XX primarily the period. primarily unfavorable in by to XXXX XXXX. for recorded decreased program driven segment cost million quarter adjustments, in in by unfavorable unfavorable forward compared and $X quarter were CH-XXK to cumulative million changes adjustments the the

to fourth continued recovery our with our due parts fourth with to Aftermarket margin results, XX% to compared XX% had higher quarter a plan track primarily XXXX, the primarily during due quarter has and meet period revenue let's XXXX, charge spare the aircraft up million, Operating at in a quarter XXXX. on X. to global For recognized onetime of Aftermarket for same was quarter strong of of aftermarket grow compared million of to is the sales. by adjustment $XX the $XXX turn of Slide strong to for absence XX% inventory the to XXXX.

improved year-over-year, XX% touch higher briefly our up now as production interest revenue operating came full driven in million expenses primarily well at primary results higher XXXX. XXXX offset million for to due due income and XXXX other aftermarket year let's commercial U.S. X. during by in compared of as currency defense year. billion. year-over-year foreign primarily our that, noncash revenues. partially the $XXX EPS $X settlement related by and expenses higher and Slide space to higher accounting adjusted With XXXX, plan, on other was sales to Other for volumes of and on segment XXXX in $XX decreased recognized current That's expense to pension losses receivables

stabilize and as inventory related higher support the Boeing schedule costs was MOA. tooling of than XXXX. factory spend flow a usage capital to use of well part we cash a rate million recover of previously Full flow higher due received the year to levels the Free and quarter increased increases compared customer-funded CapEx incurred to as $XXX expected, was as operations, in to to primarily usage in of XXX cash

of With with the that, and X. the balances the to exchangeable the let's from $XXX now common quarter fourth million and cash, turn of notes ended proceeds which during senior 'XX. issuance on stock year Slide of debt cash We reflects

year to if is with We maturities will $X.X income, now net XXXX. would are shares debt there significant notes, position, billion regarding ended which positive We There of if dilutive EPS, method be no debt. loss converted anti-dilutive. use results exchangeable being if the the they until net the implications in

with we your take be So that, questions. will to happy

Seifman of [Operator first Seth have Instructions] the from We question the on JPMorgan. line phone

where much a level thanks at the beginning Pat, now. to bit of right for is I maybe call. the comments very set guess XXX the

it rate the And factory the You the that mean a rate as when as Does past weeks and now we talked accident a miss the stabilized that took about a you the stabilizing given month? in that month? the year of with -- place specifically kind if and consider Do since Spirit about at the drilling that's took and the fourth is that traveled it's we've rate it that XX stabilizing what that given through of work. cut latest up over on effort of a in production read FAA we to quarter. Alaska now factory a move will for what saw at But at yesterday to we to still produce a XX higher. down if the issues be Boeing's kind that to XXXX few

And Seth, tell traveled factory are minimized allows to up production we work, that month that, it's buffer at everybody in we building I us I you rate. -- to a days, stay a buffer And about to that position. the and days in have mean talk those we our have by means have ability would stability, allow at when of month. buffer XX testing go cycling schedule but our a XX that

So from and a standpoint, adjust as how take in necessary. our if our from we're we'll that position, Boeing to good to schedules guidance

Maybe we I'll and not just essentially, issue, bound are a to normal characterize the it we and final when we flight to and can engineering a final there's process. of but if safety nonconforming a a and a and we then disposition those nonconformity, to issue, and any customers work communicate determine up a there's of basically the potential just that a address disposition of engineering we heads detailed that from a kind response. say, have there's look repair does a holes, exposure, analysis if scope see those preliminary get X Anytime we safety here's do flight then

X is these final holes, engineering to a disposition. there relative not And

a that associated the in impact we'll what repair expect corrective any We Based might then XX And next is action. that, that. the be the root-cause and determine hours. with on follow-on

now Thank have of Barclays. you. We Strauss David

may You proceed with question. your

the on the the stock that relates there? all Boeing side What with things, to is production Quick of point, matching status Airbus, is to expect buffer the should MAX your then million a follow-up of up AXXX terms conclude there. sheet. AXXX negotiates you And as balance it on in Airbus rate? with reversal us the really this to mark we $X At see of significant

term. the term short regards forward reserves Sure. to the David, sheet let have, comment me that second balance address we in your loss both and and long

think -- as mentioned maybe I 'XX, we it through XXXX. on we a call this relates in forward of we the be the the Boeing last and slightly stated to met first program, XXX that quarter we into loss would

but So -- that we XXXX CH-XXK, bit in really and would indicated XX as down in our it curves and loss cash include I AXXX cost in the is has AXXX the to you drive you then there XXX right. short-term unit got positive flow and little some a as it forward and come think on

we a ship in in there to what the or We're to days. ship few buffer as refer answer today XX place. available place, units are about to taking question Maybe just extra the the

on of complete the deliveries to So that inspections. delay plug mid-entry as as sure additional and -- all some rented make some we think as just conducting well inspections of to a any related to doing rework known can the the door

of Citigroup. We Jason Gursky now have

to you -- that. you Maybe just got fix for exactly can you Patrick a if question. X-part apologize have wonder I to understand how problem, the here.

little of we fix input are got got if sounds conditions here. about curious from I'm just plan So led get to your I that like perspective, you today. the It you've was describe a something. on us kind how we just to to wondering where your could a bit

bit up hold I before schedule has changed And once know for And the the have master Boeing's gone that then question of XX%, in part kind breaks of again. a different all you we out breaks you back the figure up on rate the is, and out, a this rate second anything of guys then future? fundamentally XX% on going types got historically, there. do can

fundamentally So have the whether whether or than go rate view context the in ability all on we slower in to I'm its go of in the past. we and the have just industry wondering, things up changed this, of in industry's up

go But how Yes, look I to and hard history. Jason, got had what fundamentals think I wish changed. at I is around here. tell haven't back rate breaks it's that you we I would the basic

Some some done has afforded the that that the of work Boeing's the the around chain us has rate Spirit changed. offer stability. I would have plan dynamics the quarter fourth to some in more schedule supply XXXX with align of

of to XX. the the term improvement time seen the that to chain. lot a improve near used supply of rate dynamics in have support We We've

have As on to it relates line virtually of rate all XX, the sight we issues.

point, and special to at majority this that issues related have of labor are Suppliers the to attention to. But we give material the raw availability.

and this in before. hardest of the I case done is of the quickly up XXX, part rate. go the its think it's given breadth, In do you how industry to judge how complexity been

a So but that there's events playbook can parametrically this environment. is have do, says to what adjust -- you we for in that the current

But there existing plan I we'll is XXXX And accommodate laid -- the incorporates direction. we are Boeing's the any that would if environment. changes, out say

Miles Thank of [ Research. Wolf now We ] have you.

of Or is QMS quality, if escapes have create of the greater Commercial captured of Boeing's pretty quality a And the some logic with and a been what does in Airplanes and is reabsorption? that solution Boeing if think, signals just of part existing integration these Wichita, we're I so, if inside QMS? still industrial And now into Boeing can the I what-if sooner? system with element -- of the for of Vice the perspective, the unique you're Pat, having for position Boeing give sort President Spirit. inside time of

not would but we're behaving to really of that much respond that part is if taking coordination we the Boeing you and integration as the to so I guess the refer hypothetical, and were now. I fact the place

of sat able So one be meetings, to if they our not company worked tell you for. badges, you people would off in you their took which

us of because should in of are trust and work existed built better the think I loops being that's even some that been the allow past that restored recently, feedback together. the to

been to what's Pat, tightness a feedback the is is reflection So behavior, case? the that clarify of the a always just change loop? Or that, that of of

think -- the as shoulder. I to seeing I are And the work constraints, and MOA day would surprised result financial working to we're opened seamlessly shoulder that. up aperture it really of every and the how the shedding a we're of I more quickly single much people more think together,

think a that the allowed between I MOA X change the So big to was the companies. increase us integration

have Kahyaoglu Sheila We now from Jeffries.

I'm this the Pat, per think profile. year do how the also break about you shipset, cash And could the current pass in 'XX just just per how cash its the that the with ask I change given flow just XXX you free does down? set, state, does we FAA additional profile step then sure. costs potentially ship rate XX% at into limit guys given Just in not 'XX, a cap? if

lot or think. Sheila, mean doing productivity of The I more No, improvement in fundamentals no. no, I'm reduction through go in improving and rates, of obviously can quality. that up of the cost things or distribute trying we're terms in flow the a that's you overhead cash just to Yes. we broadly.

achieving labor So that say, XXXX. I'll support those to built plan support, going aren't mirrors things cost performance a in around our We've change.

change We're from regardless a direction of working Boeing. to that in

probably need were rate just a the affected much costs, a we're a anticipating optimize capital same the by that we to way, working last much one that we dampen rate. to larger after year, at higher degree bit. might being be as So wouldn't that going Indirect because

of comments? there other opportunity real that. you the Mark, have do a there's where rates So stabilize regardless any

it the rate, an at I end hit that it, think Sheila, is rates absorption out, operating the as Pat leverage Obviously, go But got of the Pat. of years, No, higher key think the you rallied working next the talked from it's about standpoint. up couple in get on as that. factories day, here he's working we efficiently, on look you really the flow, and teams from production items the I you leaning the around the over about

the in so of And of to that rates rate variety quality. we're focusing over next we're actions go couple excited on, on of benefits see as we improving up years working those really financial that including the overall production through

and rates. So we production the over of next our think of do years, continue to we'll drive take the down couple advantage cost unit higher

Sheila, maybe here. add-on just one

I How we things do have I do to corrected, if we the get change healthy, that about things ordered. mean, with that go think fuselages. one I that think as to we we the what that's chain. to keep already think production have rates, the we've supply out we building figure can do back we them so do

So that I be still to sort need would we think one the through.

up, the biggest follow you do to is guidance. expect the And MAX just without cash free flow, to any 'XX positive giving given driver expect still free in you be do your cash of flow

let that. just Sheila, me address

relates I the what you in that marks production trying would as the regulatory planned to assess is with Airbus I the just around negotiations, of may additional increases we it cost the previously and to and quality question 'XX, front come in oversight. tell then had what rate us think

I direct But this give months, here really to -- more here. for a There's little answers we situation the As and not the much in We're flow. are about certainty. to give be know improve We of little working -- looking a financially. bit we're topic. us overall that we'll give coming an the you we more you said to I'm here, in not really there's still we're And in in a able a trying to important our digest need just too you think that to talk position dial concrete it's guys business us business avoid our time hard press aspect and the cash and for. the to release, current uncertainty But answer.

questions. to little and those give while, to not a now, come. So able we'll be address It's us but more

We Deuschle now Bank. Deutsche have Scott from

on have Pat, yet? priced you your content BXX

is one You more This on say the? that time.

of. kind XX

Yes, you BXX have priced on your yet? [indiscernible]

have We not.

can what And some them? Are you elements work to Airbus the referencing the something else? be is clarify with you this then, Pat, operating over might respect to Okay. negotiations? moving Or

is Well, understanding been our X were focus really between achieved companies costs that aligned date on reflected has XXX the and what real of the been and performance And on all focus to to have those. in the what has for the aligning price on needs around pay be along with be been that the right price. on is in they're level should that the that, And willing and to is expectations really productivity our discussions 'XX. of both XXX our and in substantiating

now Ken of Herbert RBC We Market. Capital have

Pat visibility how on pulling much how build. year. maybe say, as on inventory a suppliers use And of capital how with comment at this at Can MAX you the versus be the and and ask it wanted a rate on build? on Boeing much can you're cash of inventory MAX, in to back maybe upon shipments of Mark. half from the working your I to prepared much which of year depending you are savings schedules

Ken. Thanks,

take me that Let one.

expect it, in this expected briefly more higher XXXX, be mentioned I point than at year to at. as We'd we time. finished the to we think deliver at we through move Pat a had it out rate

from help a ordered inventory inventory XX to and build anticipation us to suppliers so that to support in the of And year month. throughout And that. caused our inventory we built

built We've tactically for the critical also with our production quarter, in strategic here buffers fourth system. components

a So in of really, higher the was you that inventory saw year, increase $XXX rates. anticipation million through almost throughout XXXX, in and

going plans sizable that up increase and support and tuned into month. We're suppliers to not As to the per we've make deliver have at at we and aircraft XX our because got XXXX, move are where here. to produce help

So to move drag into working we anticipate as released XXXX, would the I degree. XXXX that be say saw in to a I that big to would we capital

us talked to. what think summary, about are to at I Pat our so delivering cycling XX. suppliers factory in And

we And free really and that tailwind to work to forward so create to think stabilize there. some capital for the a flow. our goal is will as And optimize working as a here, move that factory, here we do us bit the we our we go there's of cash think that

add to plans what on suppliers just discrete buffer. and maybe managing And to how around is the they're Mark we're the saying,

them of maintain of do factory need terms to critical to in jobs the is So the the protect again, ask of one parts build the we the that things aircraft.

And so stock. areas, also suppliers in look we've unpredictable. critical are buffer we They're when their that those history at built

get So got don't our the work balance down build of up. are there reliable we turns way with, to a -- Then we'll buffer they optimized there, inventory teams build we've time, those are suppliers the and off turn some them to and probably stock. trying inventory to to to suppliers want them taking we and start highly turns consistent continue will the at inventory but kind same the where bleeding the need maximize those

So parts. it whereas dance the and in XX levers, do was are teams the pulled able order the it's just one think all a to I past,

XXXX. see improvement in So a I expect real to

Harned Doug have of now We Benstein.

When have lot the already there concern weekend. could at a that But of in of you're have longer introducing you can and things of drilled the quality of redesign, miss up be as about things be that over Alaska some can the There's incident process holes and same issues be escapes across that to the time, that time doing automation this be Max term. the But scales, came company. the things those X some you like like the with talked another on I deal really think been done, the may that incident. X

broader that produced? sure make you that How any been do also that identify you things situations might already as have be in issue redesign, an the you do can essentially

And Yes. about remember just the me into No, and we for maybe the quality overall good. in I asked you call, question. expand Thank that you last can that.

I product looks answer looks the FA's that our product management quality management question safety system really to quality at safety. think is the system at short

through there feedback -- But we first system nonconformities been diagram, is between product management lens. would safety maybe a the has be our just So Venn our our what a safety the lot that of QMS. find priority you'll for the think risk overlap product assessment XX been there safety to first the parallel, and look drew in I through has if look lens. And at

We evaluating. we're that have X discrete categories

look to to down and going that If through mechanic examination plans lens it at the fuselage by XXX observations a mechanics XXX have safety, of build and this of process. we're you the include we've the of master how product we detailed that is X,XXX built, of a installation our review that there direct doing distilled through

in the I interpretation inspections. of maybe sections technology, Medium think, the now this short That's term? of us the and And broader quality term answer less at is you And and of when well, equipment human-assisted more question forward are Doug, where what in Spirit airplane. what and about long you term And the doing doing for we it's and rear is is, it's is less focus, on automation. think parallel, manual, where more are long quality? about, more manual to most work the

there, in almost gymnast. a If you you'd mechanic working have a be to are

be areas. human at, well, the implemented. factors of looking four very focused address So we're some we other to how bridging this technology really is as We're in do

The first test got we train more. is to more, proficiency. We to got

job. of do is I And think second The is always here Bill Bellecheck compliance. your

people to have and the their show up job. part piece compliance is do So of

warranty. I they their but there's job, be committed mean, them element to need an help do of we to personal will

last aircraft. third of mistake-proof. is not our a floor. there's do spending factory And It's the one more time can we team it's The inspections, the more is, on to of observation. just but The things the build lot probably

So at look to and we're product come were here war safety. plans, in that's term, to see really room the -- that our to if you trying our by human prioritized you address factors near

we now Is be And where being that you've there feel the near issues, it way a a this if you months. you've I really I way characterize confident over what's to quickly the last seen least follow path? and on just you at can are term had to here, got have that I few much closer to there Is the characterize a this delivered, a when guess. mean, up. in on to chance handle like escapes solid feel the in

It's can it, mean -- how wrestle the best I how think that's to all predict the that. predict Yes. about that I the know of I it, the do to but I we hard. with question future? don't just we that some talked way we things

this. I short it's making us suspenders order, progress will belt in think, we these and the can making things So in that confidence here mitigate stick, give real

one we other Boeing more working been inspections the weren't inspections. say as of we've with and though inspections more do doing is to lot I'd a

I our think better a job harmonizing what together. work we're of doing is

in much same at up here it rent being keep mitigate And Wichita. more it -- looking our skin the -- trying what time, found them at in in same the together way, the these it's to fastener rider are those and But we're where to we're ends of So disruptive are all working time fix. quality. interpretation some when of

now We from Research. Shapiro George Shapiro have

if Mark, you had was I XXX the quarter, as that look had in in the had the mean high margins margin the had at underlying this and you quarter, like deliveries. and deliveries commercial, X.X%. high XX.X% But you've the you highest I XXX first relatively

put of look process production kind that quarter? improve work Now that that we and the of as mentioned be the went is into forward you extra in would what try on just And the a reflective normal this. you

and I to it's quarter disruptive the that, of the mean, state did say quarter. quarter pause very commercial George, in We assess entered state fourth margin. a a Pat we just normalized schedule behind kind is fourth in talked I about, hard the a would that

fourth was investment there to a so in stabilize factory the the And of lot through saw that quarter. in catch-up. the unfavorable cumulative And you come

fuselages We quarter that deliveries X delivered the years. most we in did than the fourth in

metrics definitely the in time schedule we've that jobs a And exited the year operational shape as had cost were So behind there been long big we to we long, investment when production stabilize the system. we we than a was best the all in think XXX here. of about

to So as forward to investment what were made I but are start relates we the the here talking depressed it stabilize and margins the don't definitely normal about operations. they want to lean

quarter. the fourth you to Anything we And Pat, work of in top good of lot cover, did a want that? on

stable made question investments will not it, little financials stabilize the bit cash, you we're we although capital it's once was come what a But pressure also margins, on. that factory a with the addition, also here is focused working your the on to It in that's that put but and factory, and And margins. of cash. about wasn't more goal have about

you that quick looks won't certainly, I that to more would that spent free what this of quarter. and And or flow actually some you in fair CapEx Is was mean, follow-up, XXXX so you The benefit is the a it million that spending that of much a Mark. than I you other CapEx, a one on be think $XX because missed like statement? cash quarter, couple things. enumerated

for That's we move the of that right, we accelerate some into about right? back We'll Boeing, operations did with stabilizing sure, XXXX, think co-investing of some stabilize system. to and buy as George. that the CapEx we as We

And some said, of you a will so back that XXXX. in benefit come as as

We UBS. of now Parsons Gavin have

of following flow. on the A on moving or just there up cash on end pieces Maybe 'XX. question lot in George's

tell? out I in should think MOA, the ratification. What working year besides some clean are a eye for there labor moving the relatively we items the can the or closeout advances other we an best keep 'XX onetime the other capital, is are Or contract of 'XX pieces? pension

several As both there was you in onetime good bad said, XXXX. items, and

we today. stand anticipating here As we not we as significant about XXXX, think one-offs are

in indirect overhead aware not coming any back and But that focused the of items on also side about are We free I'm just working business. we're XXXX. talked to of what about and it's type but running of operations, sizable flow of the improve some things. the XXXX I think of talked costs the hard. working the some we the and cash Gavin, tailwinds we're in about We opportunities saw capital

We now have Noah Poponak from Goldman Sachs.

You may proceed.

volumes, Pat then you've in for putting to framework certain range where of have volumes used to specific go and margin term RSI at targeted Mark, cash longer a the at flow when had what's equivalent right? your latest and can levels. a future, are at any -- free thinking You targeted back just your your range history compared on

of you're new your customer thinking how at through about Right? there you what evaluate cost you don't know about you costs are as shaking go while the You're where how you of that renegotiating also pricing renegotiations? target? I'm pricing in the of these through pricing going to Is are any volumes curious per costs double unit is even volumes, you low kind So then you where are moving way a process factoring volumes hear the are sort higher out such at or -- right? and as talk that

we'll to X benefits with I some the worked let we've our curves on the will chain Noah, the with costs. our Okay. shoulder address me fourth as from it optimizing unit of are the a We've get customer one took your AXXX point we what understand on learning AXXX just second unit first we think what quarter work where shoulder here, long-term X to lot pressure supply next like, as look over and doing forward or years. losses, the forward relates here. costs put additional about which we move been But now, as we

that based and that with know that best would side. We've we really we're now. conversations done the way as describe a I our enter is the deep customers dive internally on that best what that's to we can on assess that the the using Airbus And information we as

longer it term, to As relates

we Noah the XXX Many supply cost of level This about would comes the Airbus pricing , with chain of when a that are which out and us from for work old And transfer like suppliers. a going a evaluated to Maybe good I'll the allows to has think reduction, just to. right those we've the history suppliers. coming add the example, to transfer jointly Airbus work. suppliers Bombardier on we portion is that. costs, of those the significant to get

I confident feel in cost So that basis.

understanding good particularly productivity cost assembly, We the in curves and Belfast. a have also of fairly for

hold curves those would and But there's of I higher cost. say that's So a the history X% really learning And XX% a the true. of on or just production. XXX,

So get for kind as there's holds price to, raw a then labor we of baseline normal material need to increases. and back that and that adjustment a

a familiar different think don't these creates -- basis really with So there's we're cost increased estimating I it rates that that not with.

Okay. That makes sense.

past, your I to around million when X% you the want in referencing about business. $XXX think flow address term. margins you're But long X% business of I and $XXX worth get generated prediction the first the to free to question the future. don't in cash this to what into And think then million

think to and As higher profitability we a go levels. rates the up those that we obviously back and cash a can to will get revenue from help I flow a standpoint,

those million, and There before cash the I item is are it $X of drive But to the drive some single of to we work talked cash $XXX think flows us we're back inflationary headwinds up help as business interest. the debt $XXX it IM because about like some need carrying million to I contract. that to on of going think is biggest pressures the billion relates we to that

positive couple interest Not will similar but that get drag we next it need the cash leverage take the interest books. drive down had that back over our that only to that of help we to we've past. So down our standpoint, the measures, the if debt. And a pay to to will off from levels can historical balance get we back years, flow, in can cash sheet

Vertical Robert Stallard comes of Research. next from Your question

acting other your to that Airbus with part that you said personnel made of wondering on if Pat, impact any perhaps customers. as this I in they're I now Spirit of relationship wanted just was Boeing. particular follow on earlier are if to you sort comment up and a has

meet. so. and the I've the a think and Boeing do great. the I the and real $XXX a to is focus the difference And as driving leadership feedback positive Boeing at just is as together the transparency meet guess working Google improvement. effort is more we've But I $XXX number don't of million. people as the than Meet, the Airbus, as I get quite quickly we few been do know on they at but just come I'll the interaction doing identical. get use direct isn't -- I Rolodex reviews my executive through program But I'd on is million feedback I from of I Google say almost and

I tries right way. done get the job mean, to everybody the

system. get tricks I able the Boeing, treatment is familiarity just think together we my well. Spirit of navigate [indiscernible] out And just But their with and to just things in more behavior with pretty done to were because working a how few of have I bag my strong. the and

of Your Securities. next Ciarmoli Truist comes from Michael question

like longer comp, file seems it talking we're nothing to term. in quality. is cash EBIT tied tied next to Pat, airplane margin, at XX% talk is on about you're boss, you only month, and but the like -- I tied if compensation I incentives, lots If and revenue, quality safety looks the quality. maybe If paramount. look the not the cash about quality to of annual we put all your to got on generation everything guess going I or proxy, It just to spot, quality here,

I changing mean, compensation focus some of towards are on a this drive more behavior planning of you to quality. on guys

I'm really It it. now, working right will different. be the on will significantly to And be And heaviest weighting quality. design

performance. I So can't the we behaviors at that is Anderson want threw to she true can to Donna and measure [indiscernible] right -- make a probably shout system drives too but it sure idea. strong, the I'll manipulation the do out out just

metric, there's an really we're in You at the penalty to utility quality for escape. significant their look got a industry

drive at if of really escape. one in do it there's any metric, trying should. much how reduction, measure but look So wouldn't type we're also Only what defect to the really but we

the well kind So of it works changing fundamentally, what and your drives is behavior. the we're now right place answer sure that in we and making question put we're

you. final Peter to Thank Baird. comes our W. Robert Due from Arment of time, caller

LRP? Pat, the the mentioned Mark Yes, price Mark, color more a on just the mean maybe to is program. losses expect one. could And a then you CH-XXK if when you you of some a forward B-XX give timing quick there I just, just there. know little I

of of program. terms the -- what any health Just color in the

you [indiscernible] we don't Why don't answer Why the answer XX. switch? I'll the

Absolutely. Peter. Yes. Thanks,

we sign LRIP to report and half obviously, so goal arrangement We're initial about be customers, on the in this that later company. value to the the that we'll the regards back our on BXX, side up our to the is negotiations think complete program. in back development of end which the the of tail more to year on we able expect program, contracts in to On type the year. cost-plus And of is here that when our for add a

is our what that's be year. later negotiate as going focus so contract And that to in we the

maybe comment We're we just personally only deliver time that rate the on and track get 'XX, a turn not every supports in on Marine Hill needs Lockheed Yes, that to the consumes it Martin deliver CH-XX program, the can to, teammates 'XX. around higher at so also the production we disappointed in airframes on but to we've Stephanie our week, Corps. my of and committed

enjoy I Call joining no of and can further XXXX Fourth disconnect AeroSystems lines, Conference you for now We the And Thank your have would the please to Spirit like here. call and the And rest day. now questions. Quarter confirm you all may conclude has I concluded. your