Spirit AeroSystems (SPR) 7 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc.

First Quarter 2024 Earnings Conference Call. My name is Candice, and I will be your coordinator for today's call. [Operator Instructions] I would now like to turn this presentation over to Ryan Avey, Senior Director, Investor Relations and FP&A. Please proceed.

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

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

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

and you, good morning, Ryan, Thank everyone.

of accomplished team what products compliance and day Let it. proud supply the we and of teamwork. the through the particularly and in And me industry, the out safety, ensuring at so set Spirit people outset say our and our we've the of quality in love that I industrial while every this I work system services. customers better make that proud to am

not For stabilizing primary objectives have on delivering customer and the strengthening company financially operations, commitments our Spirit, our of changed.

efforts. progress and that context, network component I'm going towards laser-focused make the frame a In industry. customers ongoing comprise aerospace engineers, objectives. continue are and is to manufacturers, of Spirit AeroSystems We of these global real critical a governments our that to

remains robust air firm. travel for Demand commercial and

of to capability customers. and a that and responsibility Our the is company collective is is our It our responsibility long defines term. capacity commitment at match core short Spirit to the and at

across diligently on we to demonstrate ensure capability possess industrial up production, deliver So as the system prepares industry the commitments. to we the and are our ramp working to

of talks moving we by of other make disclose, all like if to At not possible a I we liberty and with acquisition. to to discussions address at When March, the speculation discussions announcement. Those confirming Boeing. you are the to we'll understand, comment to that beginning an topics, company continue, with Boeing responded as something in and have further. about would Before I'm media we

last and observation. quality FAA from spoke air concentrated continue I resulting Those rapid the of changes Airlines accident. compliance, call, factors matures. and NTSB root our as our relationship proficiency, about on and response in systemic Boeing the Those by Alaska support with human At earnings mistake improving mechanic safety mitigating take to proofing foundational actions Spirit's

product we've on of foundation leadership, and governance. actions strengthen Building that improvement, to conformity expanded our

was Gregg Global of in team recently has leadership, In authority products an Airbus and expertise SVP served and quality decades. the safety the most and Boeing the He Southwest our terms industry at Gregg joined as is Technical in at expert for and the Vice FAA's Operations JetBlue. for possesses President for airline system. management management Brown an of of quality. Airlines having operator, Gregg X airline safety almost

a made XX industrialized with undertaking verify XXX. the joint to with been inspection days. on product this decision the Steps into Boeing product change to zone Today, a to shoulder in verification standardized process. aligns was fundamentally and inspection. The transformative conformity strengthen the significant. team's have shoulder process, This XX working was efforts Spirit change Partnering Boeing, conformity

have blocks, governance. insight, utilizing and quarter. end-to-end digital further interim, are and the move goal the tandem to but process quality streamline critical the this improvements reexamined is Ultimately, is teams with feedback fed week, In to working in analytics, results performed. quality further we upstream not improves we being our With in process the accelerating to to Each first station. it initiated back where building in the work the operation new changes

teams if and performance their quality Breakthrough safety realized point sustained and of be operations. production own at and the will

are engineering, not has discretionary and integrated enabling which management assurance, early requisite authorities, operations, in product from motivation resources, composed teams industry, our and floor. effort. that supplier We inspiration of new manufacturing the governance stage, to the quality governance, We're form This is greatest factory factory is of provides office the potential. the moving to the change customer. This unlocks but

I Now will the for on cash provide context quarter. usage

work in slowed stored inspect to call, incorporate our and we mentioned to product Boeing payment As ability ship including paused verification process. quality the improvements implementation The per reducing production place supplier below management on The by month nonconformances. the inspection the their new required process Boeing XXX in traveled they effect to systems, conformity and deliberately fuselage in all fuselages. that of addressing receive safety for utilizing changed XX completed

process. a XX The total result X. XX in units represents returns fuselages in to newly offset payment quarter through as of process. was Boeing but needed the work to of XX March the third the of million $XXX equilibrium. and we the produced production units To flow of be XX increase to that lack the our ship-in repaid an established quarter, Spirit beginning recognizing implementing units to prior fuselages, the This completion to the new place Advanced In process delivered system

system. additional and will modifying operationally chain supply provide strengthen We also deliveries appreciate detail. we greatly to is as XXX industrial Boeing's Boeing financially due Mark challenges. support the

near-term airplanes the XX% XXX our supply ensure with month XX to plans, levels optimal make rate of will deliveries chain original rate currently below production at XXX adjustments and per capability. and to we inventory approximately However,

closely are the our with We supplier partners mitigate to coordinating short-term disruption.

supplier capacity meet to still production team is back The increases. safety Spirit the resynchronize snap synchronizing rate is future to our focused industrial commitments Airbus on driving and partner and quality and efforts, intent customers while Our to the to system and aligning defense Boeing. balancing to capability operations quickly our

conversations an both yet on Airbus, to over to interest earnings have These agreement discussed result best year, past been companies. attempting commercial in Turning reach the calls the we've we've as to a in of agreement.

delivery net incremental beyond continued the the losses rate the meeting losses this XXX the by rapid for including result quarter, anticipated programs, significant impact targets AXXX booked a obligations As XXXX. performance extending in we this Airbus demanded and of pressure on and

experienced both The strain commercial is on risk. supply operational chain being and an and by Spirit other the suppliers

continue highlight to and my performance I have are work continue to ensure while day We opening and their to focus with Airbus and to we'll the and of in safety strong remarks want They day execute far, close, And financially. teams. the to not out quality to the Aftermarket performing the today, and been risen considerations. operationally challenge and that of Defense thus commitments remain to the foremost it's

over turn call will open who through to you Mark, the let to financials before me the Mark? take that, we Q&A. With call up the

you, Thank Pat. everyone. good And morning,

have these number getting quarter been the our of covered in events items impacts last occurred call. into want I financial since Pat remarks, have first his results. that before As the there of to earnings a opening discuss

First, process Wichita product to allowing has no undelivered Boeing's collaborative travel the cash has the work. inventory and and quality This our contract enhance of created eliminate implementation higher longer a flow. consequently of units, on of lower and factories, rework, which teams been delayed assets program, and from delivery has XXX levels buildup led to the [indiscernible] verification in inspections including acceptance while rework moving effort but

in term, are the with changes. the process We long seeing process. slow our start, are improvement. customers' we benefit And of working resulting And to more despite slowdown be the to signs Boeing from mitigate synchronized the expect inspection with the

Over delivered. the next few systems our quarters, to up built production have units we expect aligned and

delayed. were incurred costs have that incurred chain rate, and production XXX higher to now supply been factory we has Additionally, the with align which

is current we XX the are XXX and during approximately units approximately the at down XX now now to XX. than the expect Similarly, of on year. our we rate anticipating throughout delivering program, lower of from plan XXXX, per Our rate original remain month, aircraft the planned approximately rest

negative a All our I year, are of these throughout know improve strongly liquidity you flow to on the cash want position. and but items actions impact current we on will that to focused have

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

first our up XX% of improvement The from programs Revenue due the production was So move Commercial for quarter the to was Slide XXXX. $X.X higher let's #X. quarter in on revenues. program to described and fewer billion, in due deliveries deliveries primarily my XXX on Defense I reasons the remarks. opening a the & the year-over-year to result XX% recorded decreased of Space as year-over-year quarter increased Overall

revenue fuselages XXX results. completed assets recognition and our accepted. overtime and through until the these reflected has inspection on process our financial have been The in-process not deliveries source quarterly new units accounting as recorded that towards ship set The in been not contract are counted

turn our compared to first quarter earnings let's $X.XX a share We negative XXXX. per reported EPS. the $X.XX in negative of of to Now attention

year. first Operating same of XXXX, was by changes adjusted compared negative higher to $X.XX compared negative in prior driven items, quarter to certain period $X.XX EPS Excluding estimates the in lower was of during the largely unfavorable XXXX. the margin

forward XXXX. net were million catch-up adjustments quarter unfavorable is $XX the catch-up cumulative of million losses adjustments First losses million. unfavorable and and cumulative quarter forward $XXX million to This in compared were of $XX first $XXX of

quarter losses. know to record XXXX. programs, AXXX but forward which to by AXXX $XXX large And as were were $XXX The our required the assumptions losses conclusion Airbus. these and of negotiations million obligations X we total losses current performance primarily losses accounting are anticipated result, drove inability AXXX as This includes respectively. AXXX a driven reach are as for million, the well forward due losses to our I and contract million to really XXXX, through $XXX with and current commercial programs adjust losses of and on a beyond

a orders. the The forward additional of remainder and cost firm of result growth losses production were

future Additionally, caused adjustments and million cumulative growth labor a verification delivery due related process and costs which units chain the undelivered changes, significant forward to the higher buildup primarily of increased unfavorable cost supply XXX in production $XX catch-up XXX to rates. associated to acceptances of drove Wichita. losses with support product program delayed The

cash product flow considered collect units XXX XXX to free units quarter flow. these built and the quarter unbilled cash in be be had delivery inspected on new period. turning $XXX first usage delivered, was number those usage process, of our cash flow quarter the free of earned million primarily by under they to in impact large we first first Free will the experienced Once compared to a on $XX the Having caused the production a free flow. significant delay Now of for units. can can and million cash XXXX, during quarter fully cash the disruption verification the negative

related The value prior payment Plan the received of to A. reflects flow cash termination cash $XXX million year surplus the free pension

delivery Slide cash, which of debt million unfavorable process. with disruption that, We turn X. with debt. $X.X of $XXX billion We ended to quarter cash and experienced the reflects let's XXX Now the of and with ended balances our on the the the production quarter on impacts

April, high change an to process of In product to on entered assets, were Boeing advances the with higher lower totaling in address and These we limitations costs production and the the verification factory into of rates. levels cash MOA Boeing used decreased Spirit's operational flows, provide contract FAA's $XXX million. deliveries the and inventory funds attributed cash imposition increased to

will in This as flows. quarter on treated be be of the cash statement reflected financing will advance the second financial activity and results

liquidity I As plans are strongly on position. to my and current improve in our we our mentioned working remarks, focused

Commercial let's quarterly X. with the along performance, segment Next, Slide on discuss our segment

changes our programs. production the change million, across the forward $XXX the same by adjustments primarily of in XXXX, to decreased of were estimates current Commercial net compared unfavorable largely operating the which quarter of to compared by the driven most with million. Quarterly on XXXX, $XX cumulative period. conversations changes included impacts, XXX first higher of higher in in in our with recorded and Airbus losses due estimates revenue assumptions primarily These disruption driven period of catch-up increased to Even margin

comparison, quarter during segment losses catch-up $XX of first million charges forward adjustments. XXXX, million the recorded In of and of of cumulative $XXX the unfavorable

segment Defense Next, Space & let's Slide on X. to turn

development as due to with teams well programs. classified quarter. compared performance XX% the the to of same grew pleased activity FLRAA to and strong to activities Defense team. the classified quarter CH-XXK higher Operating in and on $XXX Sikorsky the the execution period margin especially of as programs and by higher first are million Revenue XXXX, Space program & by increased We due the primarily this

up we during to let's now due revenue quarter segment had of due MRO year, X. Slide $XX take solid will in higher first activity With be another parts of your margin Aftermarket the compared million, XXXX quarter to results, first decreased period. our the the 'XX, happy lower questions. that, Aftermarket spare current turn prior the with to For over primarily to sales. of quarter to slightly Operating primarily

the Seth first Seifman comes So of line from our Instructions] question [Operator JPMorgan. of

the delivered Mark, from I was we think deliveries the think we and the come we should could Pat Spirit current XX the rate the when about the you saw of the year, wondering, difference rate quarter, with of marry were with being about of were that rate fuselages this year or in talk production forward going and that production out the between month? about more rest as underlying about the trajectory think if that up of and well. take first rest the the deliveries up the guess, think year over it XX, should actual to potential longer quarter? and produced deliveries of first we of those in month meet how but that and XX kind can excess Or XX about will we guess, the that of of plus, when XX the that deliveries happen I per the I production deliveries kind as how time a sort

the FAA. with Yes, per way. that of to based XX at it allow month of ship Seth, is a state We'll steady buffer year. about will appropriate place work aircraft when per in the increase their for think just be as time XX think might month to that And the this Boeing the on you maybe balance

the as volume So higher. I the it there, surge on Based of go think that us respond buffer should that's positions kind capacity. to then rate of

a just you. Seth, more here little bit color for Yes,

in full Spirit XX. then focus we'll the to so deliveries, the deliveries on quarter the deliveries and than see fourth process paid deliveries just we'll the I'd be x be a with year, our higher the Let's that okay, the we get roughly cash and expect work XX that where first will quarter second verification third cash. consistent product as quarter increase for month through

to we start in needs Boeing place after process And So that. some go more then have second goods finished through that our the will in the to ship inventory follow quarter. owned verification

quarter, again, cash units, will So -- and with then and see in revenue quarter. delivered those or we'll consistent units delivered higher the first third be go fourth the

Kahyaoglu. Your next question of comes line from Sheila the

there. to about and Airbus ask assumptions wanted I the

the in per assumptions and there? to the reach what tied Just given failure the forward quarter were agreement pricing there numbers? in within loss sort AXXX to the relief was the a XXX the pricing assumed some part those of new And was of

for Yes, assumptions, ensued price the a in Sheila, Yes, on question. based there were that thanks embedded higher time. the at had assumption an on our discussions previous

conclusion we a said, we able come been on haven't that. to As to

that we it's X So represented, orders booked Airbus that loss both in components. additional AXXX the XXXX forward really and Number is of I one benefit beyond is a pricing that think, AXXX. booked. reversal on It's previously

need normal we on growth of future said remarks, performance And then losses those those cost continue there were the and some performance production. obligations. the Airbus additional with stand-alone were on we're total to while the But a my the I the in company, specifically of just reversal And to million losses. benefits $XXX losses roughly future obligations associated so record

Airbus the us 'XX? clarify, assume level set of usage to can cash we business just for should Maybe and 'XX on what you sort in

you XX% balances. at is look or XX% I forward say What say that is would I if sheet about reserves this, and look would of Sheila, current loss at those you liabilities, to balance our Airbus

from I math can there. you think So do some

Gursky line comes of of next question The the Citigroup. Jason from

of what's And is wondering the guessing the all The idea what's be what X contextualizing us. Pat, How to going work for being to you suppliers aerospace traveled reducing a few that suspect here. if changes think to just through I'm spend minutes of ecosystem your And of changes you. going scale I it is, asking, kind this achieve could of was of essentially, of and this do turn, a philosophical you're asked how you is do? of asked in I in difficult to manufacturing? being you

at I all and just of here giving to think, going us be, really us to big is normal be? a maybe be think going good hand task on how is of how unusual would here Or helpful I the understanding this this picture, the call? for

Sure, Jason.

Let me break of different kind it pieces. into some

rent we the many in when of think that when are I'm take points system, starts the process stood system ends there think to along as So going about been terms are that's and facilities, discussion Wichita a production where the place. about that it this and along here many into production in in up load for inspections we there fuselage in characterize process Wichita, points

And better effort that action of and level, in from that very this are align we can X,XXX conduct that's talking details the more so system at a activity we all take corrective we're complicated that sense Wichita, our inspections feedback about. to been Boeing with The what the has in top in than cause inspections. that those drive production

an think single very in about in fuselage exacting about in feet have It's the that engineering commercial we we the that world, largest long have tolerances which aerostructure to and and you Boeing, XXX XX delivered build When standpoint. we to feet integrated diameter. the to it's from

So when thickness we of within the about XX,XXX sheets [indiscernible] roughly quality skin be paper. quality, of X skin talk must

we X talking court. about in thickness. a paper And the basketball size of we Boeing nothing when high when of excess So says, of they're expect that sheets about think about school fuselages perfection,

also fasteners. skin, it's XXX,XXX the on -- install XXX,XXX We about

with tolerance a greater than fingernail. have no So fasteners could can what detect there are your that you

done Boeing. where goes before a inspection there's consolidate inspections to So what it is these here to final all in of Wichita we've

there And fuselages, they definition what them, first is immediately about Dave that we go their and pacing to goal what ability the Calhoun is to those put they load we can can when item of into to cannot their disrupt down blankets installations, start to talks And floors work would ship work is any type X. the position immediately travel at because the them for on all we provide of day that clean

this we've realigning in made eyes we've engineering and manner inspections, exacting improvement so the that an been the substantial to same. It's doing of humans are changes Boeing the and in interpreting from we step how saying of we of away think inspecting of inspect we've specifications inspect, how made function that in eyes long And assembly. Spirit way migrating condition the a digitally together. the I do the we all that where

have expectation benefits we've The by in the is see actually My second short a function been this seen year, of the here improvement we'll That's first XX% of the just half quality. in quarter. term about change a the in quality. level in step that

drive to eliminate Maybe always faster there time is will and inspection this goal take expect. and place see I'll back your and points. on so stop where most a I the than need over in And the that believe ultimate Our work probably people performed for is that different touches position many question. if

Yes. follow-up to quick one Maybe But No, okay. sorry, that. I'm Ryan, great. doing -- just it's that.

kind process happen approaching going and more on the to it So And it's of really of relatively like whole a here. understand that inspections how this Or fashion. change of we're and this scale way get more Boeing to better, a just both really going of a timely are big kind trying thing? is in will will hard be? a you to this manufacturing? an going evolutionary change sounds of me path I'm how done represent learning on quickly, But does is all in more probably represents visible there kind this to how get

through of We hard miles month of X,XXX portion in in process good March the hard internal the stand ran the us. work moving where the work is work closer this was physically we'll our X fuselages to production that rate behind operation April. the think operations. I exceed XX, the process, work did being in May, done. and done of inspection Well, The the normalize up activity is is And

burn start we'll So backlogs. to down the

has I lift think the heavy occurred.

utilizing the improve rates. and really the this beyond. get Now it's I to to XX, rate the really supports rapidly to and the findings all higher XX foundation which quality rate is position, mean

companies think, The that So step incremental. significant. behind big done, the function realigning where us, I work and but will part be two is is of it's the

next question from David line comes The Strauss Barclays. with the of

been units my in that of this and there get Pat. clarification and gone the One joint side? have it verification with clarification put work ship question Has like process the pricing the there, negotiations a from to you sounds main the any of progress That's on point And many but question of those as through the quarter main Airbus did a AXXX and this question. negotiating potential point, potentially then on the to at XX Boeing? negotiations MAX Airbus Or acquisition side you're didn't question. given -- AXXX, take pricing this kind with back how produced, my The at part my

Sure.

address we'll been unit on conversations conversations supply this XXX just ramp-ups advances maybe focus XXX XX% is increase with the we Mid-May, Maybe year the majority burn of those everybody, the the addition subject different the to of and to And to and many me Airbus on question. the the just of The the goods, first tend first freighter. the given in levels. the of in Let significant broadly ULR integrity the of of the on XXX. quarter. delivering on remind finished place the in start third ramp-up the in lots an kind on from paid we'll the with down terms have out processing by we've I work more of Airbus, then start buffer first

increase XX% an year. XXX in side, the of X On it's

intensity you there. an going can of imagine, as there's conversations on So

stopped never talking We have price with about Airbus.

all in different about But price. And won't our further I other third We haven't a go And with made talking maybe Airbus. and stopped forward path explored relationship there. there's the production we'll the never on economics point, we've fronts, we've progress, to and partner continue system. to

question of line The the from of comes Capital Markets. RBC next Ken Herbert

to follow yes, and you on up I I up, I if Airbus line, to incremental I this. But wanted substantial already would on rates to the addressed the just in just support as what apologize wanted that terms You're follow if this -- could, investments side, particular, in of AXXX the looking Airbus sort talked year. you growth characterize for has mid-teens? about the at you've of

growth I the was profile few think aggressive next pretty over the years.

And Airbus be has of been investment possible. profile that that would pretty mid-teens vocal that about guess, the pushing within you as program, facility? support chain rate talk the much supply about with Belfast you I to cost a predominantly, on as to Can sort particular on

than Yes. and do in month deliveries Ken, XXXX. mentioned doubling last that's in we're from to to more a where frame, just the of projection time we in XX as 'XX you essentially XX-plus 'XX getting then 'XX, And compared percent talking about it, the you said, when were Pat increase a year.

other would investments required a capital there's in our things autoclaves and pieces property equipment, no have of So and we doubt like from that facility equipment. plant significant be Belfast

CapEx we can that the meet XXXX half production our of take for. into so customer asking year So is to rate to has in place ramps that and this those back that start

much would higher hiring do maybe on another to are have staffing CapEx? the to a you the and put ask level how rate? is Mark, to that Or Belfast finer point it, support you way you facility what there Can at

Yes.

people current staffed we requirements. and We're production year. not the overstaffed now, back to the higher half the still as we're support meet the the move into of to middle there. to right So adding We're

XXX we the things looking as than year. we that said, more first XX, somewhere this little of in ballpark did XX delivering to at And here, we're year. around a first So units last

the through bringing So in but we're them the on getting there's board, it we be support the here, bar training them, more while done. folks labor, them we're ramp work learning people to the call the hiring in but those lines, of those green process process process, on to rate of getting

be As required. we and there chain. to 'XX, further think and will be supply about by alignment further will will that CapEx additional 'XX done need be hiring be the There

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

in of on Pat, that interest but of I sorry Gitlin running to piece for curious your Dave know himself the CEO. you'd that Boeing care future potential out position? if potential and took thoughts for share blunt, I'm your your

No, I up question, every for my focused wake And plans. the here, our and single Spirit, our teammates suppliers, Myles. day on customers that's Yes. thanks shareholders.

Okay. for a second to I'm going was okay. that go question,

that or sort of So how audit of against facilities, you've quantify the those a those can failed of inclusive master of ran of Spirit's the audit many you Boeing part and failed audits to FAA points as audits? submitted schedule addressed recovery have

team, and but right been And action. mitigating follow-up. with just that then every confident very of has mean our the to I I been ask were Yes. focus really addressed off head, top item that a go documented I'm were I there has have my remember that the our XX findings

thing mean the to action I have it's one So plans.

parts sure what tagging and And make that's things scrap think these you're I storage that The other is following to were of like to. focused materials, on referring we're through.

right. That's

But of more week and the on than half addressed improvement I quality they -- followed what We've and through the week. progress with to those. grow plan And by our was we those mentioned week had just XX% -- in and continue to lot over week quality this to before, audited as a our have the attention going three and this continue we're across year. The on programs. second isn't of improve seeing the that benefits confidence and other plans seven's

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

down to there quarter, Two reduction it I looked margin around on How up for own you some Airbus was going provide you was something the you're The wind had you. time. that these kind this negotiations been profit of guess. to one I X that to gets from for questions, was mentioned much you've Mark, it longer-term threaten Or in of that? that in reductions. make to think admission, point What how to color And at and your X underlying I could inefficiencies for caused this going was be me like Do X.X% to much it One investments? you mean, fixed Pat. were that margins? just not by of months like some you, resolution? And then, X%. be having on like if the embedded

George. Yes,

the Let second of jump FAA that can and audits process first me execution of the continue Pat to about side the the the question, we in was the disruptive, to up process. things. the take Airbus then units in of operational very, of disruption investigation, enable talked We the this and inspection on quarter, and the very And all inspect the right? standing NTSB

now we're all that in some so put on and profit pressure been of contract the and our it's amounts rates booking embedded that our And margins has here.

that I this of lot standpoint. about a long impact investment it we're margins. But making. a particularly we learning on program, rates, benefits think the the it and profitability It's cost and a that think think the a the and is this near-term Pat implement when long-term talked on this negative we has that over on the we have about the long through it as onetime the XXX won't from from get pressure impact take term, over term,

It's now. just -- it's right painful

think business up as will off this from syncing we're the We're pain the a doing about Short-term right now. right and think we future. things I standpoint, pay the system.

has say Yes. fault, the I maybe not to in industry your Thanks, time question, threats And have Financial to And again. experience solutions manifests partner is And the effective. to would work at message commitment situation. this I of day, the answer elastic to our But just and of risk operational is risk. to together. are the my almost supply, end until been and a have and find we we as have not. all this Mark. George, share itself time this integrity ultimately to it's system tried

they've their what So done, secured if at supply with has you look agreements. Boeing us from

type some to that have having, we to continue come protect will conversations conclusion. Airbus supply. I do am confident of we're we'll to Now need to with we the same And and that the

Pat, conclusion on a guess, of I kind for working when now. you've to it what to mean, But going it while get that been quite I gets

Well, family them me threatening to I And that's have way take. have probably a to a more get And customers to going only all that have financially but is their do have not some this, the way the what parts a strong have to ensure with that partnerships we're production those their drama, to or are not time, real the to rates, few of business. these But of ship meetings. think meetings. But we'll have supply. same at going family it's to to we

next comes Parsons the The from question line UBS. Gavin of of

rate Pat, notice you means little you rate. the for that the in but how to suppliers, much give per mentioned a need what aligning just Can detail month? us back workforce that retaining ability for any own go factory snap your you'd to above reflects costs, more changes? on if XX And

this time of on Right. spend a Yes, subject. we lot

areas, suppliers, two When monolithic. about chain not into maybe it's suppliers. talk we talk X, we it When XXX are first. the I'll of about the So break there critical think X supply

same. about all they're that raw suppliers XXX material that, They're the in to not So fasteners. forgings, provide addition

with and treat to need so analysis they're supply we've A or create doing them formally of do where is, then we communicating rate. the and doing part forward higher to really going we informally the buffer we'll a do probably stock what critical production all, continue first chain. trying we've big the critical of differently, of been So component what been of but

Where warehouse Where had work set space we check the store to support the for on do all make sure to a around back of like We so around Then terms suppliers continue don't limitation? or to of can come that have the that to enough analysis the discussions produce need buffer address have perform the chain need themselves that in supply stock there's we the statement snap to say, we of that they're higher through. PA? goes viable that So supply do now. they programs to rates. have chain goods the an, can I'll would the we shortages buyers the book there's whole we that production

door. to our where out and this up go When years. go have we're talking I've people to we figure COVID, and in act the sleeves and these out said to industry doesn't the we And now. balancing what of It and XXX% aren't is we'll our isn't team roll about disruptions think everybody way The down our reality this, get make months, a up that it's have a through break, break. good so of operations, rate, is internal So kinds news teammates that performing our is not for this variable sense and with okay? we're

in We've our their part of company. they're lot critical invested a training,

here. So we're the find right to balance trying

So it's in of it we like balance coming and couple as make We'll COVID. prepared of talent. next with hard smaller a don't the a training to which we're the quality a things and maintaining of system through We're did repeat not the numbers, to issue decisions of of then that But of is about numbers the recovers, have talking out a issue bridge some here we financials shutdown do. go big COVID. some weeks, or

Those the back turns conversations, approach respond I decisions union, to solid we've as be preceded being rates constituencies, but their quickly a by to very Boeing other think up. got able will

add Gavin, Yes. on it's margin a of would follow-up the I here. bit just a conversation because

profitability for impact said, going to additional to just rates, And going the near-term best cash. to it's But right? future the thing costs, Pat production As long the a have we're protect carrying be some to it's term. and

-- is going be is the this demand said, to up Pat in there. The we're As going rate. production,

production the our hard protect system situation very time. working balancing same financial at we're the so while And to

per MAX Great. for month XX I I just could If you deliveries XXX so appreciate x the detail. say XX, the confirm, heard about year? I

it would time. at point roughly We in Yes. XXX-ish this call

question next Rumohr The comes from Cai TD von Cowen. of

about -- by the and Pat, to XX%? has building? because folks talk availability to ability plant and we also So Textron be And there get Maybe when talk about labor also talk about Ireland Wichita the what to been surge about attrition? and able to

Sure, the issues. a at Cai. industry. the is We challenge Labor look are big scarcity to what

Forgings, raw the labor top of list. to and the come material

Wichita, differently to market have of that's of the a past. need So than here differently. long term go skill train the to done one where in part lot talent to for great I have mean is, we we we a there's skill and country for that it's in

So you the said in as been your approach to definitely hiring people than will. has it past, going to be different it

predecessors. a they're as the is different committed as with talented and What We them workforce. found so train just when we've basics, have we as their far

we -- getting recruit is of an So how train think how I rates. production and we but important these higher part

you quality give these hard always on training We is required. it's of same can the you prepared have kind similar of you I Northern money, challenges But the world for the that it's the so people in Textrons of same in rates, And spending think labor, think that's I the the a about us. hasn't labor people that to they of at the they're been unnecessarily aren't production strike balance type when challenge. but Attrition competing think a Ireland. of industrialized bring marketplace but as so enough time, not produce always problem when for

of The Peter next question Baird. Arment comes from

ask in wondering Really one-offs how X? on I'm just on of Defense. that if quarter. sustainable margin could was I XX performance maybe good the nice given quickly just there is Or the that kind just rate any of Mark, performance?

XX%. somewhere We've sweet our Defense spot the were right there. between historically on Yes. I Thanks, target to And think program we we in said Peter. XX%

be what So to I recorded. benefits that no were we would consider significant there

on really was execution couple CH-XXK. on think of just quarters, we some the challenges we've I have. contracts that the it The good last had

to there. job has done very wonderful there production processes, the working think I customer hard please of team improving Our they're really a and our Sikorsky

bad. significant, or either good So again, nothing

we perform. the they do, think that to I team And should our put we we've forward, business expect margin to about there. we perform out targets if going that continue think to as

Michael The Securities. comes next from question Ciarmoli Truist of

assets just the IP a tooling of quick obviously, in if us two-parter then, what is mean, by here. maybe Boeing? can Pat, advances. some And you we your tell throw much percent I already Wichita of owned how in

transaction, other repaying follow-on was I'm to just them value a do each guess XXX. own? already the still if on there then get You're much I of sense to how a potentially they is that it changes, trying process and that all shareholders move improve cash. margins a improving these you're sell Why for making the will to out-year quality. to wholesale Boeing? good Presumably, is inspection, And

their it's your tooling In question IP. the me with and just of around around of let assets Yes, industry The consistent OEM. whether Wichita. the was typically guess products. any kind your specifically address OEMs own it's Michael, with questions and -- our associated production autoclaves, And right? The overseas. is tape it's fully the functioning that it's part, whether holes, the facilities, property, or brick-and-mortar, equipment for Spirit, a it's call machines, drill So in business. it, whether the broaches the owned equipment, laying plant to most U.S. It's and by consistent, I

tooling Airbus, relates it's right? the Spirit we think for of in production ownership, ownership. Boeing, way characterize be and it. the the products It's the -- to own IP, joint that's on that it lot whether Bombardier, It they that owns et But would the used As cetera. the contract, rest of sole just assets could I I depends build a of the

fasteners, most optimization, by asked, answer in of needed question unlocked materials, things you amount of the these be Same OEM. just for we supply of raw production higher I'll forging, delivery are that for And the that significant whether broader think they the of the can unlock. safety, that's reintegration when operations value operations only terms of Maybe chain value a it's cost. internal goes of quality, can rates,

drive kind acquire. material that's of so and the future. And of a of another of the wing case on the of represents manufacturing the expertise largest the those for whether part programs. to fuselage really the to the the for engineering XXX, It the broader hard is build that's value or The XXX opportunity efficiency. proposition skill it's sharpening major Spirit, In fuselage

XXX you're is [indiscernible] expertise at or Spirit that's and similar. whether Wichita their So Bombardier, of years, Brothers here depth

quite -- but OEM really that unlock can So often, only it's value. the

day. all and rest Ladies you today's joining your a great to this concludes our call. Q&A of like now I gentlemen, Have session. would for thank

lines. your disconnect now You may