Textron (TXT) 25 Jan 232022 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2022 Textron Earnings Release Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded.

to Investor conference Relations, like host to now President, Vice Mr. would turn over the your I Eric Salander. Please go ahead.

Thanks, Greg, and good morning, everyone.

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

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

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

we operations fourth from income share. year's of per this continuing During quarter, $X.XX reported

$XXX before cash up million from flow Manufacturing year's contributions $XX pension in quarter, quarter. fourth last the million totaled

billion year. $XXX the were from million full up last $XX.X from revenues year, For

In continuing $XX XXXX, $X.XX Manufacturing segment profit pension XXXX. cash from compared billion, $XX XXXX. flow was contributions in million per operations Income to XXXX. up before up share, from million $X.X $X.XX was was $X.X billion from

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

morning, good and Eric, Thanks, everyone.

customer our fourth in across X.X quarter, see the flow of with year's strong closed record segment quarter. Our with of order we revenue as volume the net backlog. Also last quarter. inflation increased the to year to out product and grew business aftermarket profit demand quarter aviation billion portfolio year compared the deliveries In solid high aircraft another and reflecting ended strong pricing continue

aircraft XXX XX XXXX. commercial within resulted from for XX% the aviation five portfolio in XXX year TX turboprops up a a XXXX, Textron jets aviation Textron the For up revenues. year, last up strong delivered Throughout XXX and ago. delivered in aircraft year from utilization growth the product defense aftermarket year XXX in from we

reflecting revenue lower December, Army was aircraft down the in U.S. down by the HX the announced on quarter the and offset the V-XXX At the a of last program In that long winner competition. military designed expected slightly Bell Bells were work revenues testament range revenue. as support This V-XXX is partially Valor team continued the bell, on the wind commercial XX to as program selected prototype over higher hard of built of win. award in flew years this the future assault

over currently development funding of million The an contract billion by on the initial competing is filed vendor. with to XXX flyer of at related pending XX of activity hold the award the manufacturing year-end and engineering initial up months was outcome X.X first for protest

delivered Bell, commercial the we XXX up from XXX side On in in XXXX, of XXXX. helicopters

revenues systems essentially were fourth Textron to flat last Moving year's quarter. with

the Vehicle U.S. $XXX U.S. another the substance fourth the for of award at Army. was valued over the contract the quarter In delivered to to is the the the five-year systems the quarter from million to with Ship-to-Shore fixed munition During Also completion Marine Systems testing purpose the Corps period for announced system Program. trials. delivery Navy XXXX. U.S. vehicle built Marines Cottonmouth performance. Reconnaissance anti-vehicle awarded Advanced in Connector This after successful The through December,

by principally in Moving in pricing higher high vehicles. to quarter and favorable specialized and revenue the Specialized industrial, we driven both saw Vehicles, volume, Caltex

first aircraft Canada. [indiscernible] Moving to unit including fourth aviation, we in delivered the into the quarter, X Bell

XX [indiscernible] completion acquisition aircraft delivered the of April For year, the XXXX. the in following

executed full the our executed supply and team and our In was at It activity to customer Aviation's year end strong margin X.X above summary, profit labor very original product At the range. of well on as segment commercial billion a well saw XX% and strong border high-end we constraints. lines guidance team backlog demand. demand aviation, year despite chain XX.X%. across of the grew with

On our delivered first Air during to type enabling X customer, for the certification international XXXX. certification units FedEx, received U.S. sale SkyCourier and the X the achieved XX FAA from Force, new Defense, launch the aircraft. the Cessna front, military Light-Attack The Wolverine product we Textron Aviation of

the award future. solidified complete, pending into growth ICAP the the and should expect December expect FLRAA, Bell, engine. is first nearly for XXX stream On flight delivery an XXXX, segment long-term of the At outlook XXXX and will contract, drive FLRAA provide we revenue increasing Invictus the well has we that the

and the At programs airworthiness X Textron total award ATAC, Systems Reconnaissance weapons of anti-vehicle FX in FXs operational continued U.S. combat obtained increased programs. additional Vehicle military fleet we vehicle to Armor Development air with the Programs. support XX for across at Systems, bringing tactical demand robotic on advanced our also aircraft programs, work of the our munitions certifications

At zero Textron of gulf equipment production Specialized continued leadership the its markets. emission to Vehicles, and equipment turf the in and development ground support company vehicles, maintenance

systems. on fuel in our Aviation, Pipistrel XX around vehicle Electro electric from contracts and certified world to awarded certifications were now programs we is than XX XXXX, countries. Velis in hybrid Caltex At receive continued the more the At for

projecting Systems, military revenue Looking by we're projecting FARA At expecting XXXX. across program and mid-single-digit growth on XXXX we're Bell, all Caltex. growth and specialized revenues. from businesses. lines At to growth expecting in higher Industrial, aftermarket higher At deliveries revenues revenue revenue across growth vehicles product At we're and our higher commercial Aviation, at driven increased volume. we are the

revenues Textron's flow for cash million to $XXX investments we're unmanned products range to for adjusted contributions pension billion technologies supporting in be With the billion. plan overall range flight trainers, Manufacturing Aviation, of and sustainable we $X the development of EV before $X.XX. At to is XXXX of solutions of EPS about aviation. next-generation and electric tolls general cargo, backdrop, in expected $X to $XX projecting guidance, in projecting continue this financial

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

everyone. Thanks, Scott, morning, and good

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

related quarter costs. unfavorable production, to from manufacturing staffing by performance disruptions includes lower billion. ended segment higher the in at Performance chain offset supply largely partially administrative the with inefficiencies and selling increased and $X.X associated Backlog

$XX down lower billion. mix, military a million, Moving million million Revenues quarter offset and by by lower partially primarily in $XXX revenues, reflecting commercial from of at the from performance. a Bell. was down volume impact partially reflecting segment from higher to were military $XX $X.X profit favorable ago, year, last million year Segment the revenues. Backlog offset $XX ended

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

mix, profit impact offset XXXX, exchange impact $X Industrial of $XX product an from $XXX were and revenues by impact higher from million last and million million performance. a million, line, partially reflecting volume unfavorable quarter foreign up primarily unfavorable was at favorable mix by from higher million of year, million partially from $XX in and vehicles of specialized volume up $XX offset largely $XXX rate fourth of fluctuations. an pricing Segment $XX from to the due million

million. Finance was segment solutions. XXXX, of million fourth of operating development with quarter Textron to eAviation for which segment $XX the were $X million, was development costs the research in loss and million Pipistrel aviation segment sustainable reflected were $XX revenues results $X along the and related and of initiatives revenues profit

segment corporate expenses million. in below net fourth Interest manufacturing for quarter. the was $XX the $XX profit, Moving expense, million were group

$XXX the Our manufacturing cash million flow contributions before pension quarter. in was

before manufacturing R&D quarter, from year the $XXX XXXX to cash up in shareholders. $X.X totaled pension tax law in million cash million prior tax returning In contributions payments we year, approximately the billion, change. $XX related shares, cash $XXX the million to flow despite repurchased X.X of higher the For million

to For in million repurchased XX.X we $XXX shares, approximately the million returning year, full cash shareholders.

segment results. XXXX, we the in we'll how change first quarter measure Beginning of our

segment these the the items income expense. will LIFO provision, non-service we amortization and statement be exclude from or We and will changes consistently separately across of other and companies on asset forward, Going with postretirement inventory the while profit. our will segments, profit, evaluating also our component provide a believe measuring business aligning more within pension income results more of reported consistent intangible These method industry. performance segment below reporting our

items. inventory year intangible quarter on of both On presentation in with excludes an of the XXXX Slide the per will website, non-cash Also reflecting to earnings adjusted report and prior results, results find recast the segment our LIFO asset amortization, and we effective first XX will share that the provision investor profit. you basis posted XX

range on be our cash $X.XX a to to billion. $XXX pension X. share million earnings flow per now be manufacturing Turning contributions XXXX expecting expecting of $X outlook We're $X share. about per Slide to before to adjusted to We're also in

Moving on approximately XX%. Slide of expecting to $X.X a XX% with Aviation. Textron in of segment margin beginning to is and expected XX billion; revenues segment We're about range outlook be to

and revenues range $X.X Systems, of we expect about to about to At We're margin we're to a with margin billion we're billion. of X.XX%. XX.XX% forecasting estimating be of of the a to Looking At of X%. in a margin XX.XX%. a segment revenues in X% Bell, $X.XX of about in Industrial, to X.XX% range expecting revenues about billion about range $X.X

expect reflecting aviation we investments $XX eAviation, a largely $XX segment in and loss revenues our solutions. At of continued million, of sustainable million

a Lastly, at of forecasting $XX we're finance, about million. profit

also non-service intangible $XX LIFO million $XX we're XX, million of We're interest provision; projecting amortization; pension $XXX at and asset million Looking $XXX Slide about $XXX million corporate of of income. projecting million inventory of expense. net about of expense;

full tax a expect of rate We effective approximately year XX.X%.

about up from $XXX XXXX. expected in XX. $XXX estimating CapEx last million, Slide to million, million down to R&D year. will million is $XXX $XXX about be be We're Turning from

count XXX in of Our shares an million XXXX. outlook average about assumes share

That concludes remarks. our prepared

can open you the Greg, for questions. So line

[Operator Instructions].

ahead. Your line first Please the Sheila question Jefferies. of from go Kahyaoglu from comes

quarter definitely had a You've between FARA. busy

well. that. threw [indiscernible] an think And I on you congratulations bid in and So Aerojet as

aviation So I wanted ended margins recasting potentially think margins. How we think walk I to the XX.X%, XXXX? QX, do you LIFO. In about to in lower, focus including for the at on XX.X% the

we of of chain. a people Well, those on of just Sheila those that and I headwind obviously, impacts were brought on a good first knew training lot the lot quarter, new all, but so going is supply had thing interruptions. board And have all with getting of and to some -- a we folks think, which we kinds

of So in unusual did right rather the expense a in in take into than putting the impacts we quarter inventory. those it lot quarter, to

obviously, take there, still that did a reported in hit in number. we So LIFO on was that.

a there. So recast obviously, on that forward, be will basis going

XXXX, margins. into I go think you're not going converts I we in we're obviously, So higher we happens think to there. about what and LIFO think billion And that of almost at the going good guiding when probably we're revenue, again, to as have $X.X see,

So go we're bullish think to our I through higher pretty we margins XXXX. as on drive ability

about follow-up think term, Is in And goes maybe like how as that peak XX% here? a just margin you just just trough do steady a it margins as be from Can longer to it incremental it business? aviation?

based analyst know, XX% striving Well, in pretty good to we we've Sheila, on margins as And get business. above about the been that. feel pressures, aviation you

going much volume I be driven. look, So very think it's to

as conversion that I somewhere as our is. the have can Certainly, we're You we for go see convert we XXXX forward. market continue we XX%, where to we'll go that tend in guiding expect to and range. beyond in that, just guys XX% we that know

The strong, strong. QX. in The good remained fourth with and demand remained good bookings is demand news has quarter

of think what I basis. go-forward terms a on we good about. margins pretty feel environment, But So do in

of I XX% of in would that XX%, conversion of remain on revenue think growth. we kind a our neighborhood expecting sort

Great. Thank you.

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

talk through revenue, margins, Bell, the amount. up so just at decent you forecast could Scott, down

mentioned You FLRAA. it includes

assume help your So Does for there. win if you could what exactly is Just it FLRAA? you assumption that protest? post

David. It does. Sure,

the at April. of the ends first period So protest week

lower on the side. that coming in commercial of to margin time. we've a of of our the X/X be see good, nice And baked revenue period a obviously, continue the forecast to EMD lower the will dynamics what by had that bookings growth you side. tend we'll be in, then terms There'll we I commercial 'XX. is be mean have FLRAA the programs which but to in assuming for military side. that Obviously, on year will into of terms resolved in program and margin, on margin that's is a that our So and for We've revenue business. guide is estimates, decline we've expect good some that see offset

to revenue would is how XXXX Scott, we say how of for in FLRAA? revenue? And beyond specifically you terms expect in there can much ramp

A - Donnelly Scott

come and the see programs, going as which and is with obviously, this No. for and into I CMD, quite It's you better not we a sales production program. get but individual of the some all into time. we We're and things out, of FLRAA will clearly, out volume I terrific to along we as be for business. to a programs continue lot the a ramp expect said, and think obviously, whole grow specifics would into as think that it not revenue, going will then to of obviously, to margin. break great lot the good but successful expect 'XX, start the military with And it think we'll go turn I foreign margins a 'XX mean, will program boom I probably

the supply the at And the deliveries, And last us chain. year I originally of than later Could your were full just amount Okay. year. we beginning one a on aero fair for update the came you anticipating in there? think,

deliveries if year have how didn't have you this So done additional Thanks. supply chain could many you bottlenecks.

part end supply know challenges don't versus the we But if to kind issues. up based see of we the forecasting numbers, million continue dollars hundred labor that since initial into Well, look, of a I been expected we'll on light mid our express some go chain and would here fact we that year guide few the David. we've

at labor think new the lot through we're that some making has although but I least of and balance year, training on is certainly of it has the and improved efficiency front. a progress folks an that impact,

I a better, were suppliers of have think are we've but you still getting challenged always out had or there that a that struggling. couple number

of I that think try to our provide we've in of the this kind anticipated the color off why That's that back hundred of that So few we some into But year. half million expected to a be kind of we guide. that consideration. we taken

But be we into as for guide the year's that still 'XX, think going of So we've terms about way. we all consideration chain along the proper are supply challenges there next think 'XX to guide. in taken

much. very Thanks

Vertical Research. next Stallard Please Your comes from question the go ahead. Robert line of from

walk I of us to cash Frank. was it you why decline I'll XXXX? if you could manufacturing and start with give in modestly expect sort wondering flow some on the

have that volume. Yes. with higher reflection R&D credit capital a slightly we It's also, commercial lower a working continue of an associated from cash activity in do change. expecting we're And expectation tax we'll to V a from continuation of see good deposit But taxes performance the standpoint. just the

a of book-to-bill we're relates activity, of headwind on of type it where it in we bit So relative that of have of as kind X:X expectation terms cash to framing kind deposit been. kind a and to little has

been indicators Also, about to increasing the off activity industry about activity in having impact starting lot some you? impact lead business seen jet on order Have for of for maybe of then any one say, you leveling used of, Scott. of the inventory Okay. a any around slow. And commentary

No, we fourth was I I healthy. quarter. quite with Robert. our in haven't that, think order remains seen the It mean, consistent the third rate quarter

keep bit has obviously, in to kind of -- are We think very hard of vintages? track some those? a are it's sale, like What used aircraft these people available indicators, at of I the when been when leading look you their strong. market for see little increase think, what of what an

low the still to very at looking some aircraft are They're people levels. on market. put So

new seeing effect aircraft. knock-on into market for we're So the not

seen that's haven't of of material activity the going there So change order activity. we out in terms level in a

people I mean, there's of It's lots understand. to ready reports. frankly hard

aircraft Sometimes but there's compared flying in compared of region, 'XX compared many comparisons to to round. by of 'XX last so size quarter, to the it's by

on So we have meaningful haven't that order impact a seen any of activity.

much. so Thanks great. That's

Arment from comes question next Peter Your line from of the Baird.

back tacking maybe and just regarding the circling question supply David's just chain Scott, and just on inflation.

are -- the And sounds costs little talk higher like now? right a sounds getting you're in could I bit you there? how passing maybe a mean, input things it are holding Or little also, they So like just in just then better? it

working the healthy factory. it's where don't some on terms of suppliers. too and to and have very Well, better chain I specific getting suppliers very we had want struggling. I specific But see getting trying and job still are Obviously, go think much the them to getting we have suppliers get Peter, we do challenges, detail, healthy we're but parts side, them supply in into them we've clearly mean, better. where into areas and other I with a components,

our around. efficiency that. hit from to and work out-of-sequence we We'd It's parts do like standpoint, us. obviously, And doing swapping of stop an to lots

work guys every through Our have to day.

it's that I some I that hard hey, suppliers I about a and think getting new but are a then we're big up. seeing having problem. know don't a said, So catching time one I that's in As better the of lot just got got right? say, coming you same, there suppliers are

We working struggling XXXX they're have them just there we to factored again, a not it, we get couple we've think on and year, quite trying that how back into schedule. but we're And yet. will there They're at play all out. been

of side we things, to We're pricing very focused price, get that. the inflation. net of terms In Peter, continue on of

to these As back. to increase, got we drive price costs input get that

a job pretty doing are of good guys the think that. I

we're you at, could think [indiscernible] pretty bit you bill we systems quick kind but funding systems, go as defense the for follow-up mean, are modest forward. little longer growth on I how as this of showing How do and term? looking just year, robust looking you a just post And talk a

the look with through you [indiscernible] When in seem look fiscal they fine what was expectations. of budget, us. terms Well, look, to at omnibus at current think line I year's on the numbers, when we our in came this

growth, good It's new great. put we're business do kind well. news of across wins just growth. thing. I systems program munition back all the had almost which continues Obviously, The particular one Sentinel So the that That's in fine. some at not lines. think product side, is it's to really is we've the to

The had negotiating production as here ship-to-shore, we'll made but We'll DD&C and said, business next ATAC we've has Our shortly, by year deliveries. start production deliveries. finish the I this the nice growth. start

Our across businesses within kind growth. appropriated It the a guiding was And the systems. electronics budget with of all nice to consistent had really guys. what you of is business is we're has omnibus that obviously

the Thanks, color. Appreciate Scott.

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

this say, I businesses the them. a I'm the to think wondering I of sort consensus fair guys macro year, maybe sure have Scott, you see, some component think later your mild is have just recession we'll year. there I'm to some cyclical out this that of for And guys

So necessarily of you businesses it over to Citation, growth is the of as and whether kind top-line thinking for not Are and slow in or those TSV way not, right margins agree kind that now? your type guys like not prudent you maybe of businesses maybe to see guys maybe you with you or hire? even in about that it your protect

we'll I we to sensitive we've mild have at think that, Those recession. to think situation that thinking every look have more don't in cyclicality I a I not kind to going economic going mean, there's like absolutely business, of be time I right? XXXX, we be back think We frame. are of scope lead So going some that. But than of kind thinking said, something 'XX an something others. almost factored to the dramatic. the recession more in have Peter. in in that's We're it's don't certainly about as

have look us think different impacted we those a I'd when recessions, aviation in that difficult been been backlog. than at the the has area the because most a I in place And look, I very has back slowdown sessions previous previous we've think in pretty say, modest you we're significant business. always a

But if got which would So go expect recession, nature will in sitting of you were is us slowdown to entirely to see continue you I backlog that slowdown -- you'll that a X even the in a possible. it I almost into there booking. really bookings on. think to modest that execute you've allow a of you'll if see years

that years, had as we help haven't think bunch that I through for of And And will ride you a know. you Peter, it.

down margin that I and would our that So to bookings, in of not one us it's think a in but translate that something slowdown would generation. terms slow revenue

That's fair. Okay.

Just one to for Nigeria? are with Scott, closer me. deal any one AH-X that guys signing you last

between know, a in the kind it's -- that, mean And Peter, of of be right? up process, the I can U.S. nature the being government government. that Well, would signed little that FMS of as So contracting and while. because that ends you ourselves take

you. Thank enough. Fair Okay.

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

a numbers. How Frank, if you of could much in just the quarter? couple fill in up was aftermarket

Well, the at XX%. sales was a percent aviation, of as aftermarket

kind So that, based of was the you it can do V on XX%.

was [indiscernible] year, the and I think it for in quarter. the [Indiscernible]

Yes. was aviation. sales of at And the for XX% total aftermarket year

Okay. specifically but XXX assume deliveries. 'XX, looking on And at deliveries that didn't you Scott, revenue forecast based I Is fair? XXX, the somewhere you're for mention,

revenue the about mids probably hundred obviously, on guide, of certainly that that would than I lot is when heavier if ago, Yes. you have 'XX look got years and at It's to different, back think you couple be we're been we've it's quite of -- somewhere our a dialogue And we the and be going and super mids George. in few mean that's of a the to aircraft but to aircraft. going neighborhood, right? mix around

million And that chain margin quarter if added back mentioned than weaker the issues, at Scott, couple I you quarters. still was last $XX the fourth looked of supply and for even I the the

there? on was else what So going

is rate know reported. largely drove through to probably LIFO, Well, took around inefficiencies -- margin which something impact that the where was the the we that I what don't XX about us $XX we and or million

it Thanks. That's good. for Very me. Okay.

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

was to a it, it of not. backlog alluded just is ago and multiples the what but you've is years your few production several Scott,

So are time how thinking this about at wait airplane? point? managing customers you wait what's average you're long making for an the And how

look, look we you longitudes from mean to those the couple be think a model should it and at the out I Well, aircraft and of When years. does larger latitudes model, And in the vary family, right? that's generally where you tend XX- into should they a smaller deliveries. be But kind those cycle to be Those get aircraft. again, in to are. of the When shorter probably order XX-month that of some window.

think we're So has terms and is production about our drives of how forecast then when sales we our volumes that time that's what then, of laying and managing which we're in it. slots into what frames, team kind available

entering now business? the Okay. that's that's the hitting How the does P&L jet aviation pricing pricing now compared in to backlog

It's better.

stable? or Increasing

mean, don't sure. I not a gap. we measure I'm

-- You mean is pricing of that inflation,

strengthening, what know where years? price allow more were to guess market extend is, Is backlog been price wondering as you was the as of I been consistent to you pretty not the period the been has I'm strategy? much taking there a take time it few you've I as stronger. last that the market's before taking price? now the first Was for Or

been pretty consistent, It's Noah.

of time. have right, and sure had you for been expensive generate double-digit of and be to But R&D. pricing things to We the as our which, certifications through is demand believe obviously, we've margin to these kind a standpoint. a It's is margins. pricing, mispriced back the lot that, that's been mean, a as the need get very business, profit to which these driving market develop long a case. is price this fair a from this has them you helpful business business guys to know, make like always and think strong, pricing I it's I opinion,

a competition? Okay. what be FLRAA from on would And credible case protest your

there don't would be I one. think

Thank you. Okay.

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

Just your you LIFO isn't in through I adjustment a guys inflation one. not include sort help this of you unfair quick Can it mean, think are costs? to making. me

Yes.

provisioning, very to is cash Look, LIFO segment question. just remains still segments. the taking good so sure provisioning a thing price. the which a I've right? we're this So I'm that's of for impact. supplier. new -- by a higher I we contract actual phenomenon with Ron, a understand parts Ron, have only part. engineer is full segment. the And make have a It in that That's that inflation just -- So now the LIFO but in The the I bought at LIFO price again, out simple is accounting, much a one

As that LIFO of part and shows parts up, first price those actual the the the new up to basically them for soon raising taking that as paid part. I other price is provision

it's So actual an process. accounting provisioning It's cost. not an

when in that It's the the only of what that I That nature gets part out last-in, higher consumed cost. be segment. that this to get -- it accounting that's provisioning is dollar aircraft, pulling of first-out where performance. my So that going real in is to we're It inflation in an by the segment. is of and is cash

you margins they what to we pro guess I didn't is GAAP adjustment? though were question back another So to for if do XXXX, be that to look if your the way would frame at forma

LIFO full You'll have you'll number. that disclosure, Well, that see right?

in the else LIFO. are see total You'll LIFO. our no is there space But, one Ron, on

LIFO. So we're on

need accounting, For that and you to tax accounting. conform between

So we not But book purposes. environment an economic for from tax said, Scott and And standpoint those tax derive essentially accelerating as inflationary in a true a a cost. benefit we costs of by accounting that that basically is everyone was sheet because effectively realized balance never the else provision not this of up in on our about $XXX have profit with LIFO hung consistent million space. it's

take from never we has number, we certainly, felt a it that. that performance And accelerated the a become the a function and true It So the bigger but here is segment have, to to in as true was highlight of LIFO economic turn it accounting the out is into inflation will it because LIFO cost treatment has a not segment that important inflation essentially business. cost economic of performance, business.

has We've been has this Ron, LIFO. LIFO. Textron issue. on on always So been always an been

been inflationary all Frank It's bookings. you everyone always It's a other FIFO a companies a LIFO an drive. sudden, small. But these been relatively it's else as a environment, non-inflationary bit a accounting Again, instead issue. an said, number. of -- with in It's of big non-economic environment, accounting. So does space, not our small of in have

these get we of about what are investors from differences. a lot So questions

so, the out that And look, And we reality is taking think I make the manage right? sense. don't way, this business

it's when our It's plans, economic. mean, not with not business, when sit managing, that the they right? operating our we're do we calls I down we're like doing we something control,

manage that. how the that's And not at don't businesses, right? look so, we We

it these report since LIFO. sense in that but for that held inflation makes segment those and they anything not real -- control accountable They actual part higher guys on So financial control impact. don't that's get how also control manage -- that's do we're out not either. we to not They do and the that right? they So the real taking on managing segment of operational counts, that on it what

Got it.

Okay. Thank you.

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

guys allegedly, mentioned, you went after Sheila as AJRD. So

Pipistrel. buy did You

won FLRAA. You've

tend to doing you're you're space, pure So air business If it plays, either like whatever. valuations across is your B. look for higher more valuations of looks be we doing kind becoming aerospace, conditioning, it and looks like the A at

thinking of about now? off So Caltex. think of I are are Scott, spinning your think you strategic initiatives? At point, that you considered as thinking business, How you you one any

as changes it something we'll about looking leave we're earnings shaping Cai, don't always I think to part or think at. And at of going the It's call. No, we're talk that. portfolio I

the they're making you it any like can theirs. give better on looks but paper, substantially certainly, because Okay. don't your vehicle on Great. -- know, what the very what is is as -- case why Lockheed's I us help Lockheed protesting to than And

the that Look, process going obviously, Army on between mean, is I and Lockheed.

development, comment I amount can't know, an going probably for been as suppliers we process. work just So process this an enormous all been I from the guess too say of right? robust that decade, on a It's unbelievably Army both and would prototype, you between much. design, -- test, has flight. There's this been

right inconceivable of our we been this and needless behind to with say, so, on to us it's to excited the in get Lockheed. proud -- we're choice. me, but and And for of I'm would thing Army and It's the leave sure to as Army they the process. we'll don't to the I is. what that program the did, what kind And made flaw team think I'm hard have understand me get

one last I mean, the And even Terrific. you've is good cash down though deployment. year-over-year. cash got flow,

a sheet. balance good You've got

and heavily I also leverage of Pipistrel. basically lot you bought You've a really there. But share on mean, focused repurchase.

all of think some versus you thoughts the where repurchase, going, us maybe is As give dividends, that. about about M&A share cash

to terms has say of business. a now we Pipistrel A&D of to mean great the kind capital the deployment. be turned and of important our great us little technology into in are look at in sustainable in most Cai. there, view to out flight. I of the terms to Bought some future the is company your look, of yes, opportunities be question, And I that world relative within would focus our Well, would comment, we out always earlier space

would buyback. in But then done doing the well. We've if expect our been great. We other look number of come the X%, we again, X% to But for years as deployment we're been of capital some at and opportunities along, A&D I deals, continue that smaller has probably track share did the space, this that. and in X%. XXXX our kind that's principal like X%, the on in another past year, last would of that's We've

much. very you Thank

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

demand would profile the replacement? Or an are aircraft placing Any customer in understanding for orders? they for growth, that environment more for seeing context demand Scott, of are give -- corporate, update Are that they buyers? they Are new can these additional individual in be the fractionals? us you terms the environment? you're aviation, helpful

Sure.

attractive We robust own this private family of place mix. customer usual I a provide sales. companies, base, we be necessarily buyers side. asset. think still still continues for It's same The for new great see mix well That's to of held for get fractional marketplace. haven't It's that our of public want companies. to strong. particularly the know option lot of companies, It kind really seen the new coming to doing to fractionals easy That's would is Fractional a certainly not on a whole a There's I much in. how a but people There's go. change. that aircraft It to into buyers is people say.

same seen robust instance. which plus King XX-XX again, see range, in Again, we Air normal. kind of to we've like are by the It North activity, Turboprops international being internationally. remains is as more stronger the also driven around jets on domestic versus largely XX% market, that XX-XX American for probably

is the buyers. So in that terms that, traditional our of is of trend kind customer who

for for color. mentioned. now, that to years the can solution? to Are do vertically suppliers or that deliver problems chain their strong demand up And struggle you long-term of on other some need supply you alleviate supply can solutions, the like the following some a these to to your What you continue so bizjets? the actions other chain take? of I you actually the What Thanks Great. maybe on that like integrate what's there pressure? for mean few issues mitigate can for you anything

and that's a suppliers part where we of Look, I kind smaller were have Yes, cases, as us some them question. them a of some they it's we business. and our basically did technologies good mean, mix. acquire integrated and in

did actuation We track past home And in interiors just good a the space. a That's a these year it us. in deal volume have was critical of ours. past It's was but supplier a Again, very this did. critical We doing the the we in for future. unique great of that for technology aerospace run the record aren't big numbers, a critical Most some areas, around and acquisition. us been technology. a a

And get so us for really, to It's really working well helped it's us. track. far, out on back

It's But for that. there's that vertically very integrate us be always we're small their percentage sense guys make that are doesn't suppliers some where technology sales. capital of a a to to going intensive. It's there out

cases, on just in working we keep those And so those folks.

I to speed. think a them. those suppliers Obviously, are all trying to for it's good get up business back

resources Again, don't some in I'd of have and and we've getting that of are suppliers seen But a have think of are just getting back recovered. say of folks in working some I perform. It's couple that or aware there's those the a there. place take place are don't will already to suppliers there. on problem a tier getting abstinent But still matter that of I'm work. bit children them we them fair want they get out there that

Thanks, Great. Scott.

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

to stick Kind the of just on a asked. one Kristine I'll follow-up here. last question

probably I still the I from think from a deliveries down to NetJets deliveries mix are while XXXX, are perspective, in higher. total think the

or think that about so growth customer delivery incremental do you you And from about think with little mix kind a coming the diversifying of here, growth top the more as bit more more?

I'd probably you also [XXX] the soon. from about for order pretty -- imagine slug a And whether expectations has them? that And then, how NetJets [ph] think of latitudes next latitudes, the like for come about into think the conclusion you

a a of single a when of it to back that is more NetJets. But about not of know Well, what look, Remember, what than NetJets to so people. all, fractional I concentration percent was think fractional is think sales eight frankly, sale that in versus don't you the fractional, is selling sale, Remember buyer a this jet. so diversification, today. or aircraft XXXX, first a out diversified of I there on aircraft

is customers. sale we whole a sale bunch NetJet that from a every different to So to make of NetJet

it's diversified. So quite

a NetJets again, not this through don't an private, a than market of matter fly actually fraction buying overall see choose and people is to any to aircraft, market So a for you're that wildly track mix going fractional, because, expect aircraft. wanting fractional the strong is to that lot they're of demand. to I whole it If which people do are different a more or people the

as So and lots at business there of how selling the that's every That's customers And lots doing I think diversified do an base and their that out NetJets backlog being NetJet that customer now one as fraction day. work year of know, for things closely associated to what on And looking these they a mix working obviously, based you of diversified of very when is talking aircraft. into broad sales that's selling a things out team a roughly guys with we out our very these come mix, about the of aircraft. do range It's mix. very kind of we sale. is and look market. They're a the very I with and in good

part it's business. and So great part of great of our it's a a our backlog,

be you selling are the sale, they're It sales at customer tends to guys that out out is a forces ones kind spend because wholesale margin it's as lower it the large but population. that there, know, on a and and to money of reaching

base these of business, really other and fractionals a So our really, NetJets important remains owners. through part as fractional really customer the important as a are of part it's

the with forecasting far as we are discussions in terms in deal volumes. NetJets, constant As unit of

end on work to of of business a get the of a comes kind next. to you quantity what you As arrangement the that's two obviously. we'll towards get where NetJets particular with buy, of rolling in the us, But reflected numbers work obviously, forecast of regardless actual But one-year and the process size longitude the and is what and on really backlog arrangement our NetJets between ourselves a latitude is overall that's volumes. of kind between

Thanks, helpful. Scott. very That's Great.

And comes line your Please the Doug go question today ahead. from of Bernstein. last from Harned

In as to you at do around How And slowed sequentially I discussion the backlog back look grown compare has a to of wait when go you long. size it too this point to in new quarter? wanted the over backlog the to the it the quite as clearly that's aviation bit where the out you're years. are how they lose other going you there's just a time if wait the -- flat you do have sales there? words, contrast basically customers for demand seeing to

So this point? do constraint from at a see you growth on that the

now, you could were the yes, seen and situation. obviously, are really get these are whole months haven't should get customer. is situation frankly, then Well, in for that If similar used assets. lose need this an They a aircraft a that I the already situation. buy a And go nature. else we complicated think somebody can I industry think XX times, mean whole their to to aircraft is I that. in aircraft. industry a or we customers I have something in And aircraft where There I this mean of could think, they But X tomorrow, an couldn't aircraft. years sell had be. somebody right it's where you industry lot used in

long The class. X this So way we're you should in It your ago aircraft and business. didn't today XXXX we've XX, look, industry where industry a a this not very, backlog business. years time. has -- to like craft the what aircraft, past be backlog XX By of specify the remember, really should Generally the what very configure much last aberration have been seen in this has very, since where look time sitting backlog like, and years. is this a you speaking, this for customize a normal the actually worked been is

When though, is material you that today, things to is in as cycles would look you past see the make in production what which when seen the we've a want to get clearly always to your and capacity? increases out solution capacity, Now happen situation, you to add situation, good well.

some remember, as of Look, and delivered times, backlog, team aircraft what through as selling are selling at these there at serial certain struggling I is it delivery about our dates. don't and it's don't tactically. numbers production mean much. But think you supplier hear they're we talk our I look we're capacity the so out obviously, that we issues, that

dates then schedule you production manage your those in make what committed how you've dial that's and are. that backlog to this match sure you delivery got to So

you're to slots going then then you order those you softening would out and the production. in future rate, of a if see fewer in to your the So start adjust sell

always you your more more XX or latitudes I looks have like a of long there again, of to XX-month, all X-year that. sort do industry has could XXXX, you X these say, XX, capacity worked. and ability And then of that you how If modulate sudden the production timelines, MXs, out at But it you as kind think this looking do as you gives you're hey, accordingly. it

constraints look are from at chain, the one would there right difficult? to point areas you just thing. some And as most that the you last When specific coming now supply

that products, Yes. not are We're do little numbers a going there's a a particular stuff of yes, of a always tell from I sure. biggest that. not technologies couple that the I couple part biggest of particular couple mean particular challenges. suppliers a going throw on, of mean there's under of bunch our couple I can constraint. to suppliers you to But I'm are our but particular going for bus.

be If guys you very would that in these of get back line, a helpful. couple

And right It's lot all again, build rid having go harmful good, aircraft a getting a and swap in to inefficiencies lot because, you've production we're where more a all It's the stuff that delivering to chase now turn running customers. more production smooth for our of runs things that got and doesn't all into, about operation we to when we've parts a dates the very, of mean sudden, sequence. aircraft very do of us out our around. around again, committed

you. Thank Great. Okay.

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