Howmet Aerospace (HWM) 2 May 242024 Q1 Earnings call transcript

Good morning, and welcome to the Howmet Aerospace First Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Paul Luther, Vice President of Investor Relations. Please go ahead.

Gary. you, Thank welcome Results and Howmet First Aerospace Good Call. to XXXX Conference Quarter morning, the I'm Plant, and by Ken joined John Giacobbe, Officer; Chief Executive and Executive Vice President Chief Officer. Executive Financial Chairman and

by and I like will expectations. session. contain comments a today's relating statements you would John will to we After have Ken, to question-and-answer forward-looking that remind discussion and future events

and that to listed find factors filings. could press presentation differ in from can company's SEC results cause in You actual and projections materially these today's recent our earnings release the most

In mean measures adjusted These today's presentation to references EPS, found operating directly to items, can in and non-GAAP financial EBITDA, measures items. operating today's GAAP in today's special are the income most in financial we've among presentation. adjusted and excluding discussion. income, EPS measures that excluding the be comparable items the EBITDA, excluding special adjusted release included press and in appendix Reconciliations special our

to over that, turn With the like to call I'd John.

Paul share Thanks, and per an revenue, earnings and ], XXXX all year versus profit, sequentially. margin, guidance for was everybody. outstanding improved last quarter QX records Howmet [ and were good morning, and

up were million, $X.XX, per sequentially. were was with X% a XX% share XX incremental increase margin year-over-year up QX year-over-year and to specifically, above $X.XXX points was XXX EBITDA margin follows: -- XX%. up income of XX. Operating of EBITDA improvements basis More Earnings was Revenue billion, was XX%, performance XX%. with healthy XX%. $XXX as of a rate was up and an XX%

followed currency unusually was had be XX.X% earnings by seen the with the many QX, later be of benefited outflows, overcome Free inflows flow favorability marks that also quarters. which flow first QX. were indeed cash $XX excellent. and rate tax and improvement We positive was inflow QX, million further to the QX for years, particularly hence, the an with We'll an we've pleased recall in sequential and QX to cash low share and by quarter in since per in

was shares. A cash of total of $XXX to million reach used purchase

an these Just approximately increased and that been of average in by price over paid, $X.XX shares of you'll XX% million share per Dividends had recall were XXXX. X.X $XX. at of QX

net record of EBITDA to Finally, debt low was Xx. a

I'll now turn returning over before to the in to overall detail Ken the outlook talk to call XXXX. the cover to for more financials

Thank and you, John, morning, good everyone.

an demand as XX%. for year-over-year XX% be which XX%, the overview move continued market, approximately in aerospace Let's engines. reduced follows: markets. commercial new by aircraft was to aerospace XX to very in of of has All strong with for revenue quarters basis, healthy be performance and was for Total continues robust, The Commercial to was the a growth supported On total quarter. X increased fuel-efficient markets by up consecutive more Slide the represents emissions first carbon now for and growth demand revenue; up grown spares driven

markets. other to Moving our

engine XX%, First, defense demand. driven also fighter by programs aerospace and was up strong. spares

a in with wheels. been up more and lighter market. transportation, market Howmet challenging share as weakness Next is aluminum continue taking offset was wheels the steel resilient we commercial by which from fuel-efficient has slightly to Revenue in

all In XX% markets. quarter X%, Finally, markets and up in summary, across driven up general the XX%; strong up of other industrial, which industrial another end IGT, our oil gas were by flat. and was

to move Slide let's Now X.

addition a of and while the flow-through in a high was healthy record absorbing was record EBITDA, QX was records XX%. end which and EBITDA earnings the at at employees guidance. approximately the First, XX% also were $X.XX EBITDA net an quarter. EBITDA a increase revenue of share up up year-over-year. margin XX% per EBITDA moving to new per XX% P&L. of Incremental and XXX to was of being share was Revenue growth XX%, earnings exceeded margin the by outpaced and all revenue revenue,

and The let's been to sheet a Now provides at was flow. end balance stronger. and $XX into the rates, All million. Net at liquidity sheet debt move flow and cover was QX for balance record record is which of improved Cash Xx. rate million, long-term interest never expense have of free low stability to debt the sheet to the cash the $XXX a and EBITDA of fixed the balance future. unsecured quarter at cash and

upgrade rated leverage upgrade, rating improved and grade. this investment to generation are financial agencies. Howmet's with cash With strong ratings grade X now Moody's as we investment QX in reflected were all

with strengthens our have further paper commercial recent which we a upgrades, established liquidity. billion program, the Additionally, $X

Finally, we our $X.X Total stands to billion liquidity approximately revolver. access $X undrawn at continue to now have billion.

common to QX of stock. XXX quarter consecutive We the excuse in repurchases. million This low The improved XXth to cash $XXX rate move shares. the let's record average capital count Finally, approximately repurchase quarter to of XXX was common deployment. used diluted of a -- exit of deployed million which $XXX was me, share stock million to shareholders,

Finally, cash In dividend we $XX $X.XX share. common we continue approximately quarterly flow. million per for to first be of quarter, deployed stock confident in the the our free

first $XXX markets a and IGT $XXX up up to quarter XX% XX%. continued and be up was our Commercial X to growth. Oil XX% year-over-year engines realized continues increased million. to markets. segment rates gas move across XX% all Products increased aerospace spares Both strong the and strong million. and cover of let's EBITDA build was Demand to Revenue flat. record higher Engine was aerospace results its the Now quarter. to performance. defense the in Slide for was XX%

record margin employees absorbing basis in engines XX.X%, net while quarter. again, XXX increased quarter. strong delivered new points the approximately to XXX EBITDA year-over-year a the another Once team

Transportation widebody Defense quarter. XX%. Slide Systems was including up Commercial of was strong to Commercial XX% Fastening increased Industrial XX%, let's X. move recovery. million. down had was also to year-over-year impact Year-over-year. General was aerospace $XXX XX% X%. Now a up aerospace and up the Revenue the

performance, the an widebody growth revenue commercial improved outpaced to points increased recovery. $XX EBITDA which to million. of and margin XX% EBITDA by with the complemented reflects XX.X%, XXX operational basis year-over-year increase

Structures the XX% F-XX up EBITDA is The build let's consecutive Now the year-over-year continued year-over-year million EBITDA increased expect third making to Commercial decreased was Slide and and revenue, driven team program. progress, by by the EBITDA to widebody million. and primarily aerospace rates and X. Engineered recovery. Defense XX.X%. EBITDA quarter. XXXX. increased was to $XXX to XX% Sequentially, for performance $X slightly margin we throughout continued improvements margin XX%, was driven improve. move up year-over-year, Revenue Aerospace up

to XX. let's Slide move Finally,

essentially market. challenging revenue was flat year-over-year Forged a in Wheels

Although productivity. revenue was driven a EBITDA flat, healthy by EBITDA was X%, essentially increased volume XX.X%. and margin

John. to With that, turn me let back it now over

move Thanks, Ken, show our ]. XX to progress [ and to GHG on let's Slide

We aircraft continue our fuel-efficient to to Howmet and we footprints. our carbon consumption lighter, production. leverage energy managing as more trucks to with increase differentiated remains impacts and lower technologies our customers commercial help manufacture committed environmental

XXXX, reduction. baseline to emissions is In against in our achieving XXXX. greenhouse goal a continue tracking -- from XX.X% total compared greenhouse our progress by our XXXX emissions which XXXX goals well year. to gas We're gas XXXX a we to continue of XX% reduction

April, annual would ESG in to our to I progress like good issuance your draw we've details of the which report attention made. the

in Additionally, shows XXXX reduction of on gas our which goals baseline with the continued in year progress the emissions. report, Howmet, full we reflect for XX% greenhouse a XXXX

Now to the about start let's turn and Slide for talk the business. to XX outlook

especially constrained will represents Firstly, strong. be aircraft. I'll narrow-body our Demand And address market. availability commercial anything, aircraft, very which to be air if season revenue the summer for during aerospace, largest by travel new continues of the

Asia Asia up Pacific has been recent XX% aircraft Pacific lagging to travel was pre-pandemic travel, back approximately and well been in Europe now And the aircraft. International in the has rapidly. U.S. demand is of especially months speaks levels. increasing wide-body to XX% approximately future which and

robust. of aircraft up reported per month This to month. And well Howmet of and of caused has month. that the XX a XX completely concluded facts per per light be that XX in quality Freight be XX restrictions requirements of of a Clearly, in per the problems in below build previously needs per of per XXXX at in reported rate press approximately levels on month prior of extensively going the prospect year and continuing XX to These month, in the XXX item resulted Boeing targets assumption that year. the our aircraft well approximately XX was XX to Boeing. lower have rate the we've further the is replan to is MAX XXXX. aircraft for also below itself month said The reduction production, production which FAA X now are that unlikely than continue the fact secure the more to in is aircraft average

of while As of business. replan in replanning other should we we adjustment, take year, account revenue areas our our this

all reduction we guide continuing For example, out our $XXX XXXX. overall revenue Spares, net for strong to an This of of of approximately and X%. overall production revenue increase in increase in whilst half Defense Airbus previously million being of a line reflects with second this and Wheels in as revenues, the Wheels replanning approximately aircraft expected continuing higher of planned the expect example, of percentage envisage now We to year. than QX an QX, and

robustness Defense In XXXX, the build and sales. expect wide-body Spares, into offset especially move higher in IGT to be by we this to second half, by preparing complemented in

back production for trim part levels to the than XXX schedules we lower expect However, Boeing do previously to MAX envisioned.

million, plus terms to expect minus million, $X.XX $X minus million, $X.XX, or be EBITDA billion, or earnings plus QX, $X.XX. numbers plus revenue specific In share per of $XXX of $XX we in or minus

$X.XX plus around minus of earnings million. $XXX plus For minus plus million, free $X.XX EBITDA or $XX minus revenues million. minus and $X.XX, $XX the cash billion, or year, or share of or per we million, of see billion, $XX flow $X.X plus

our seen expect cash diversity Clearly, in increased of the the resulting payment with half We're product numbers. in in starting the of second the solidity and in with August can particular. outlook to we payout these increase year, Therefore, the approval. Board and be Howmet of flow free performance dividend pending pleased our revenues

a dividend per which to and continues. share expected dividend is maintains XXXX a balanced per capital Specifically, the expenditures depreciation. now $X.XX the increase. ahead XXXX $X.XX XX% over and yield. elevated increase little Capital share, of is XXXX notably levels total a allocation This of is plan The

the be preserving flow to bond share so. will do in of of the business share should market cash our the XXXX, free to other continues allocation that on about in engines still thrust while The expansion majority to terms to stuff uses pay decide XXXX of buyback we main talked ability capital last increases call. the the achieve I the be down in million already $XXX the of The of

early XXXX. we later I'm thought to in bonds this capital the year road will extensive to the call. it sure in useful XXXX I an refinancing of also map during that focus latest more the thoughts or provide our allocation on

minimum getting terms In of currently QX. our towards we're to debt leverage, year-end from end envisaging net closer net we the of the X.Xx that leverage target EBITDA Xx at also of by have to

summary, moving the summary slide. In to

strong to a the have start year. We

EBITDA incremental margin have operating We XX% and XX%. now over margins of an

to have Boeing. the build reduced from ability We the withstand narrow-body notably

complete year. We have revenue and of million cash flow our And we've rate of margin replanning $XXX at increased We've XX% $XXX under the by just a million. to midpoint XX%. from the increased guide

terms plans. we second clear the in that in to XX% the plan And expect dividend raise for We that a of allocation also year. by of the the have of XXXX balance we capital half noted

Thank Q&A. you, we'll now and move to

[Operator Instructions].

from The is first with Goldman question Poponak Sachs. Noah

Noah. your It's end. line open on muted ours. is on Perhaps your

Hello. Hello. you hear Can me?

you hear Please go . can now. We ahead.

year. listening all the through did somewhere I to rate their What wonder detail in like to back kept MAX. kind earnings the talk supply there. in could you start back a just the deliveries plan the you of sounded you start And hope half up chain John, of moves Boeing it -- bit XX the in I near along and some little through I how moving season, year? suppliers would about guess, And the actually are the assuming to it ramp deliver underlying the more if to despite to appreciate other Boeing quarter? then to

Your sound seeing. like you're maybe didn't comments happen that's that or not what

a provide around just could would That you great. if -- clarity that? be more little So

year I it's they I Yes, saw that bit a in was, real like Boeing clear give answer, let's had well had would say, And know. that XX at cut assume a last little months quarter, the but schedules increase [ a increased what in more X below in assumed, note therefore, probably but first rate achieve In know, than the XX find it, we to I'd call and XX. Boeing. been bills inventories inventory, that we month, that rate ]XX. to don't let's don't actual obviously I rate. of confusing. of were XX%. XX like Whereas you assumed that the substantially Has less where And per resulted build plus I in

We've scheduling go -- heard suppliers of in whereby advised advising according you rate of know terms the the needs to if be back assumed course, And means will statements commentary, production to to our very exactly the XX we've we'll suppliers what effect keep difficult absolutely that to of no, of in needs. are. trimming it's rate requirements our recent what or to that terms rate more January

going they're I going that we'd XX to we're to [indiscernible] while done. in be be to but in see are to because rate unclear half, second that absolutely, achieve that say trying like fairly it's cautious guess So the that they

terms we assumed no min-max more in fastener been had our business dropped more our our to contract to with which them So wanting and down minimum to for operate absolute probably is lies. whereas where than assumptions the system, example, in Boeing of, levels the to we've minimum, deliver where increase a

a to And cut so prevent we of, schedule lot say, case of be with trying rapid a with we could on get caught then inventory. change and basis where the

for trailing flow be time on delivering in assumption the be requirements long materials to most XXXX. our We're are of that suppliers part. items in will also for we've have will we lead that we we'll making those that have ordered and schedules in cut the which And our that they therefore, cash is honor a list may not taking

has maybe expecting That's trying way seen like to more in number. year. out a engines we from, instead So that the through a you've let's What our think GE do the for more requirements to of increase now like million LEAP-XB year-on-year just of statement. And XX%, changed comes is obviously XX% pick that that know in year-on-year. best their assumptions -- that what I it, X,XXX are. back a of X.XX clear engine. to the But But announcement increase balance XX.XX, it's call like XX% a set XX%

mixed So very on. we it's a that picture can draw

best the assumptions so we And can. we're providing

we're going we're the with we the cut are So expecting get time XXXX. for back that at thinking to same increases that

demand from, for the call in let's nominally or delivered Airbus have it, example, month a to then So of the month AXXX second a XX increases this XX will some of half year. be that

if At address have we're their the that. rates, same going to time, to Boeing do increase

it's all assumptions. trying So through way your pick those of to

through And part as to I'll about assumptions. Spirit what course on do say aerospace which you I'll assumptions during the asked more I'll of volume best do the of so -- new tried come I Boeing Boeing And to that. previous no, whole we've a Q&A is going about. call. the give That's be the can equation, know try I that the this you to on from that

Stallard The next question with from is Vertical Robert Research.

seems follow has rates. to maybe slipped the on question have from John, Boeing to on the Noah's on XXX. behind also

I was expecting that. So what an give you if us idea you're could wondering now of for

X, at supply saying X, I at want back think but they're I mean? chain not up what they you to to and X is producing shipping they're get know

Yes.

aircraft second to if to per aircraft that schedule half month, down X by to sake So month get of we the for our I a parts, assumption don't year. back cut from they're rate the the X of going see we're going know changes especially up X. to to

at actual say that ahead the constraints recognize current X. the to of assumed Boeing they've we not been rate because it supply that build not clearly have So We the taken year. for we've X which But that had, just been Howmet. we've down producing from

it XXX. where that's So for stands

further up anticipating in And be ] for a is ramping half, further bit XXXX? rate one this [ that's to also going increases the second the

going where we'd in a has XXXX, ahead also I to XXXX. year. And with XXXX this is thinking part X, of from a assumptions the which end where previously, and of it higher ] of our at that's X back Yes. changed to have that go [ per our know their assumed then rate was going month, sometime we on March to XX thought probably to now craft been rate

-- will -- into So down the as we from move -- month a above longer. rate to in bit we and X to X assumptions that And XXXX. we'd only taking are per seem build said go but little will thinking to be XXXX into we that an be little bit a that's there and slow be trying nevertheless, X why increase

is next Robert from with The question Research. Spingarn Melius

again John, I'm to going the XXX. about ask

the clear that later situation that channel, there this is though, production crystal it you inventory have support curious Boeing said you And I'm you been to unclear. quickly? about it have the need how think gets You've Having XX you'd rates enough Boeing? at when somehow it if or we whether in Or year, ramp they GE has is do higher respond? signal? might or to can above How

Yes.

LEAP very labor, again, what like that it's XX So -- into Because, go going slowly. XX reinstate It engines, we'll cadence fairly on that -- And increased they're rate increase gradually should meet therefore, is And rate that. the obviously the XX XX won't to to should achieving will we to to to rate say, which let's with is it actually be see happen planned rate to a you month, produce enough be able to occurs. be clear GE of with rate I'm of at while them. able we'll in from, XX we'll flexibility Boeing recruitment be ahead Xb know can labor part XX. level our the the again, if it of we've be guidance, that assumptions. overall have and those robust cope months rate

Okay.

sales some they follow-up. Okay. just aero Boeing. to how issues you your at Boeing's Products could on I And add if and was outpaced as wondering the despite commercial decouple growth you fasteners it's from then structures, managed at the look When the we a aero rates? at Engine commercial versus color bill segment

potential achieves reflects think it of I earnings when increased it degree, and potential rates. the Howmet to some revenue the

And X. building in building XXX a might quarter so at first were the in our above a But the significantly while have we rate sales been Boeing of parts that.

So in let's or assume rate rate X. even X

so margin sequentially. And excellent And with very commercial we've operational performance, a obviously thought, the XXX-plus year-over-year. good put this that's business showed basis combination improvement business, for was, which I performance dynamic it when and in points improvement mix. the the -- points what a was And on XXX was which of and in still don't margin there's that know I basis then happened,

all to really And good. will out So exactly obviously, be. what work trying we're that

I to Albeit richness that XXX. they down the on much and that lower we on metallic we aircraft. fasteners quite assumption have get of X will you the is the mix rate made rate as get composite on the a XXX a obviously, don't there's As know a

you as aircraft. a At with the the same AXXX Airbus, is composite-based time know,

looking in so we've Howmet. and prepare all rate that's XXXX, as again, further And there for rate positive for increase increase a the also seen that then we

-- regard and mean X the some is the X to like XXX at rate fasteners a they're that were point rate something a a get you first and with point. that you Does high or if possibly quarter

QX. revenues in what guided is mean, that, in higher I be than we've to you QX Yes. would fact, slightly

because I've and for So that. -- good. the XXX But much cautious expecting we're you have expecting to overall year rate be of to assumptions our therefore, impact given the we're the still be on would of very

year. second we also, business our of as weakness are talk half the that in me Plus, heard about my on you commercial in remarks prepared is wheels the expecting

like it by forward. build reducing PACCAR we we've been heard surprised hope their So Class reduction our they as customers strength but far, continues, pleasantly for already some we've again go segment. truck in commercial that X the planning Clearly, because

different it's penetration thinking higher little steel. again, of a So XX% bit build in the a terms offset number Europe, in U.S., by truck maybe and something we whatever maybe versus we're a of can reduction America in achieve aluminum in North

quarter XX.X%. the obviously and a So a because a thought operated was -- we say, to that's rate a EBITDA operating really XX% like important and good margin And able -- leverage but the supply at the really thing were achieved more I good it's that margin, EBITDA level this XX.X%, it's level. really increase, margin in let's doing

was So good. it all

MAX So it's a assumption on a QX. cautious off, I rate as truck about in talked scheduling coming cautious assumption commercial half, production second Boeing around XX the earlier, in

Harned from is with The Bernstein. next Doug question

earlier here HPT something I intended point to And are the going [indiscernible] want a A, done year, see the see similarly GE longer And blades turbofan. away harsh now, its we the for to shipments a started to switch LEAP last year making to of These from that from in Boeing LEAP-XB moment. first this expect for in redesigned eventually to we're environments. Airbus.

might When better your of these have and at you affecting do amount for new outlook designs? in you you turnover look of more see blades, new on aftermarket these -- pricing presumably, the that terms designs, The expensive. in are how these potential

durability give specific I second is as the the company Maybe walk first to the Okay. then do of you a question, and a thing obviously revenue picture subject. can improved best . the for to return

rate in hit is have the that XX assume a, MAX from thinking QX to XX rate. let's assumption, in So a the assumption our we'd reduction that are we'll we the say, from

that see was an reimbursements which defense offset higher million digits. well something you saw which And significantly assumption, those of increased XX% a was our that's QX, sales. And with up our hit. we in $XXX so than And being mid-single over of then

million-ish, $XX think that's I So or give take.

be we is Wheels, On stronger we than half to think first going the thought.

talk we And sectors IGT serve, a for gas, increase example, heard while that XX% oil us then in you for for and call was that and to mid-single-digit there. $XX wheels. another And million-ish like IGT Industrial, let's we're there's of our year. with million. thinking flat $XX QX, other increase a So on the

So of items. by covered those the and of all Max more it essentially, all [indiscernible] gets

big assumption $XXX an aggregate our increased assumption And I business million over lift. revenue lift say, on is then reflects, one, and of the a plus our around in in more spares, year-on-year is XX% spares commercial aero. XX% on like think, put which And that let's further we've our spares

significant. pretty levels, now the are substantially I $XXX it's XXXX And So rate in -- that million, the spares was $X.X above plus XXXX think about billion revenues area. a

assume if all net -- the offset. the So you side, on that was -- OE it about

total comes million see let's $XXX $XXX increase, million can You the spares call assumption. it, from our plus

so how get you there. And that's

In moment, through on is now is existing the all clearly, terms the CFMXX going when engine, at past what's of you model, which think the which there.

fleet narrow-body yet that's Boeing hard maybe We that current probably XX, it's production that the And working is by like [ lack of spares because ]. XX the now, the And of have CFMXX to not and airlines business. increasing. the it's going peak seen still more for peak of are therefore,

So that's good.

probably the they're The ] view after on. calling seeing visits. And I that's on the LEAP -- talked but little well of turbo increase in say, for I've fan, And obviously [ a revenue. it immediacy overstated extra having MRO earnings that's own won't particular, years, the call geared -- its X been wing in, issue producing in bit of on time the to the last the well bubble let's LEAP about until at current is or increase XXX my on also an engine, MAX reported. and we're version shop X so XXXX. engine and peak both go going and And of those the it's there. a

But through. reason believe have course, think call -- what then of in years and we is last it be, be that -- into terms longer, -- affects and to we'll of probably of have more will than about that's the geared is the that it up be robust beyond 'XX obviously benefit a improved coming, as road XXXX. shop X making significant I assuming map the the turbine there gradual that and current in guess that will a durability, the go production is new blades. And we'll I see But and XXXX that's that I the that successful every will -- of meanwhile, let's LEAP for turbofan visits for beyond. increasing introduction

So line fixes which it's is demand good. LEAP LEAP, at time you include then still saying [ line time more improved coming us, obviously, ] way when turbo the should the to robust increases And and further around increased which the from CFMXX, gear fan and it's issue and which well Plus long the have issues. we that wing of initially GTF a the for fixed spares asset economics reported.

The Ken with Herbert Markets. is Capital RBC next from question

your the to business get a you up, there your John, Boeing aircraft we in part in that maybe view deliveries that get into CFMXX legacy right. beyond spares you moderates the like year, you're fairly that, assuming commercial just on appreciate Airbus you color this as sounds this aftermarket considering aircraft? and year? What's beyond provided. of clean I of the the flowing substantial through think all went that It on million peak increased start run a XXX-ish quickly? of spare pushed that could the this do Or the do room to some how to know I of use you But sense Do year. particular, side? plus business visibility is that you new point just even on Boeing seeing have

'XX, by F-XX. OE And in blades. sales years. beyond seeing during think as said in too bit much get up turbine demand F-XX to increased up XXXX, see reducing 'XX rising also going for I've those for see the could almost the we the time I we get spares current the past, as difficult the be aerospace spares a commercial 'XX. but revenues to see spares area I and I that, I It's

and And the air say, then of, depends F-XXs. the for it rate of rate the time production an the has Clearly, will what around after in in I usage of upon recent F-XX list extraordinary months happened for world. the been

On the other run hand, less. them know I've also ] the little read [ articles we plan about to bit a that

But over will the being think of now that -- X,XXX over aircraft few like delivers, the for which very aircraft year But I the be nevertheless, world XX spares years. extraordinary. spares the assuming the but let's the call and F-XXs so under fleet see probably the time, F-XX will it's increasing, doing very strong last at of was X,XXX, years. year we just it, XXX And every park about next will be Lockheed be by XXX around the aircraft and looks a next large -- year, which end

And think the call to currently I then addressed. meet being that, weapon around where in draw see additional it the the and is issue of XXXX thrust current between we'll let's is offset the improved componentry required the that avionics requirements in mark, to turbine systems from

with is Myles from question Walton Wolfe Research. next The

the quarters. was fastening the John, aero unit, and outstanding the on last the commercial X pretty growth there underlying acceleration in

because that fastening out, Is pulling distribution. And scarcity -- at growing round faster margins about this peak to think feeling I also, average? yet? business coming? it is they they of you the than see point X/X about business just distribution prior that better are eclipsing Are

makes provide our a that X segment trying manage of that on seen of we effectively we've business And And Howmet parts. notable probably fasteners to passed we that fastener of put ago capture us. distribute say, distributors. say years. to on is to people, within mainly them previously those around the are separate success other parts I'm going years an for that those program the with but margin Because of logistics We doubling like we had to and last which brands. try X business in distribution the to all technology for the this in suite Certainly, almost from all everybody moats don't is creating focus we proprietary

in improvement an [ for also been and So therefore, that margins. than thrust business faster fastener OE the is again, for us growing another us, it's that's ]

commentary achieve rates there, those an any had rate. I've at far, month, at Myles, I XX margin mean AXXX XX XXXX the levels we to been example. And given, that conditions. I've or So also running different as willing because were say we'll the a very XXX higher of think that a I never

So be about I X/X mean, that what is know, as way the you call we of may talked -- it -- on those rates this are that.

making me good all so might that XX XX great. I our be It's I mix come and going more but aircraft And up the really Airbus Boeing of efficiency, happened, a you'll it's bit to of guarantee XXXX? it's also for a what's that be is XXX if I make think mean, us. bullish wrapped that month will read now all to own progression in AXXX. of I if

no Yes, And just X guarantees from question... me, John.

no that's I realize I why that to That's that I put because head plan, why try to not put way. I had noose my in that it

you. for I'll it keep up line

sort that knows that [indiscernible] of stuff. No

to commercial million One that the close 'XX? gets air math foils are the clarification. to? now Is Are you saying that what in $XXX

quoted think a I number. actually don't I

on the now? about spares talked You commercial

Yes, exactly.

about it's guide right. what think precise notes I'd number. have my to I go Yes, to back a more to

in we $XXX I well saw XXXX. the think million that above it's

So to think from and can year, me defense in we're a The best last million for to growing spares continued. if probably he that I number. approximation, and XXX that's Ken is jump XXX, correct already $XXX like wants on

good all So on front. it's that

from with The Kehyaoglu next Jefferies. question is Sheila

margins You about you margins? value don't versus a basis John OE different talk midpoint. about points guys Thanks, having economic XXX you and think we spares. on And Maybe the Ken. by typically at can raised

match So you're to have on to rates. to -- hiring still flex

profit think how throughout what trending that And the about on year? you do better so guess, I line? And the got

if Inevitably, look at you we're off hiring, our a rate coming and bigger labor. experienced base of of also

improved hoping And that have is the and of would plants, Sheila. I'm can overall plan part to I'll operating what way guided the that hopeful So Boeing QX, volatility, we would different the that mix but we can and we've say, it our [ different that's to. efficiency because keep without through had manage notwithstanding, around efficiency, way be a we I'm ]obviously in our labor revenue overall

EBITDA to we've see XX% margin. guided can You a

it which and look right an and in the we we'll to to straight otherwise, margin a half, nothing . But where therefore, Like I do that can, say, by there. let's quarter. see the to line. guided margin percentage, to half a ever absolute EBITDA on labor a of the a for this work we bit of XX% in things that's we've lot we also we've step doing made, in been it, a, So terms say, I'll was us second believe we wouldn't the reasonable even have to the that think moves come it's without though, And we'll demand lot business. essentially, able one other a in say, go year. need harder in And we've keep last down the achieve And plus let's we fruition. just little half -- assisted call on. that you that little saw make of step taking step-up achieve It of rate a graph, steps second then a and been been a significant XX%

a for the going the net though of is we wheels even where that $XXX essentially, we all see labor. and engine a terms have that effectively structures example, in revenue [indiscernible] million net the because across business increase -- And were way is So of in fastener forward. our in

that So all of out came productivity. of

assumption still aerospace, revenue the in that to up wheels? voting I'll the productivity up net to maintain in think second we offset defense, put commercial that the the commercial up improve Engine able bit in down in be volatility which to half we're despite that then -- a and going to going And ourselves we're so basically say, to is in during get,

Can price did drop You better? sustain net that, you price QX in the get does mention John. actually it Or through?

we XXXX What were I've to to be hold did that going is we and thought match able we into XXXX. said in essentially previously what that

that be going to front we're -- little going XXXX we over that on to clear is a bit as where improve and we're maybe are absolutely we're levels today think I that well. able to much hold

if high margin balance and negative again, you at That's then a it good the rate. got a you margin. of have Wheels. spares good we given fairly price from we with just sort put, the with all guide that why So say, good out, offset I'll XX% mix We assumption

from with The next is Gautam TD Khanna question Cowen.

the the I a or On destock, had production X questions, manufacturers John. just asks, One if a follow-up your Boeing just clarification I'm or was from talking Boeing. a GES fungibility to i.e., within month, for operations, of quarter in subcontract about asked. what

Just are It navigate just to how you able sounds guys to -- you're program and to respond. next. from able one like move the

are your on fungible. just my it to is, so John, great opine longer what And question I'm then you've just . And plans job. the but to you plan company. hope wanted I just done a second pretty plans. term, longer-term future is you curious stick get your to at around,

have, plants, So I more we focused. what call, customer don't dedicated product

we customers our to multiple fasteners. case deliver of plants. So from the most In of

are more narrow-body focused. little bit a wide-body Some

so that And mix big difference. make a can

wasn't I ] QX it or I I'll months, the clock QX month, the I metallic month. year, mean, -- essentially one was of a producing could one XX really essentially wind well, a only you a mean we mean where back, I were the And say, I XXX but remember fasteners. think 'XX, if halted. So [ say, you 'XX,

because or on different were make was a a equipment the grossly is we metallic going that to composite the aircraft negative those As because X aircraft. plants the having which X had effect required fasteners underloaded to on us

had I'll obviously, cost, . And And that an mix problem. plants. a some idea we business. part have the got the, and was also both, obviously, why many described of that on moving rate of we you've the massive It's we both other as recovered on I'll been terms of in So say, say, we've the through exposure improvement in that's fasteners I our margin that's think it. only that part things in I that it, got fixed well, and

there know, or part, really type they of customer quite a as therefore, the like business, to. last those to completion used our of I And For cores. manufacturing different ceramic matter core core in in most based to are across you, is engine are know, they what It they the I again, mean, what flavors years, don't type our think, the terms care. been of the taking does the or go X elsewhere, in increase what over aircraft making material pretesentially, facilities, go requirements on X has

only no is are markets, the which wheels, wheel roll again, like need to then we a our that brand, that structures is but indifferent trailer or and on distribution control design because the that to -- goes with So just I can plants and think deals say, which not that which customer. probably there's we -- commentary end wheels

not while to So that's customer plants difficult in to business. a wide is in, manage place have good the be dedicated to and we narrow most fastener the

Board, just say I'll -- through we of it you moment. recovery I've always said get recovery pleasure it, never to your that of at yet. plans, any Howmet part call as got the Well, was particularly I've said to the the the part Second the I've good see plans. question aerospace to that can't I my always I been wanting quite of

also [ us the case as in don't the half are that's the and the I expected time or there's -- about both just early -- day, And smooth. on incident for Airbus. any really to Boeing, press, production one a effect second maybe I Airlines get of which of are particular, it now and right things also it's So And good ] concomitant Grace, 'XX I state now when so think not in the in didn't where said Alaska will talked and going it but 'XX. half happen now. be the XXX, we of

have tell I I'm if a convinced And plan. day, So you will better. that? is one it How I'll get

with Bank Ronald . America. from of Epstein Next question is

suggested the question that the that we've the that we to leaps the investment ramp, OEMs one remarks engine of make And needs heard in to to your they've you back tooling. As right? and of A needs highlighted a is that [indiscernible] the rate, be is to number growth. capacity it's get supply upcoming some huge get chain have areas from in for amount does maybe made when investment of Boeing -- the of more

on view thinking your this for how potential forward? about going curious and ramp that CapEx Just you're

Yes.

amplify just CapEx. I'll were we maybe bit that previously, we said little I to take today a is what So back said going

over last probably year $XXX million. just if was so And

think that could of or million, around I it million, but be region. million, now $XXX think, take, is I give that $XXX the midpoint guide in $XXX

million. below $XXX just So maybe

investment an because, you think I spend there's elevated increase well. year. a all will yes, this in And be there And aircraft that's going And in we're as that large requirements to essentially, you've think, that got of XXXX I Because certain talked of rotor re-engining things, defense. I programs or the defense also about for heard new commercial think engine, graft both, of and we all for before. it,

absolutely required. those so investments And are

the for think assume And $XXX assume increase that about $XXX can And million, at focused our lot company. years the additional that talked one next is facilitization that the million than and the you share few plus we've locked investment about, time. and that of the essentially all more because let's that getting talked bill. so was you the of I to hiring, to that big which it's a increased if a it's I engine close something companies. in last about of

And hopefully, good, strong, come. more to It's a because solid business.

as ,which hold and given year, and forward next think year year. this rates trying it further profile. I seeing improve you've we'll now the after we're then year. make improvements maybe [indiscernible] another You're seen And demand in we into margin But step to go

one business. But think, the of returns at it that needs clearly moment, in industry as well. willingness to it's because I the there's invest a the, where And I think

business. more So that's for our investment, little example, in of And where structures a a probably we bit on that. muted are

question increasing production. you've heard you the talk asked, haven't to me answer we're still So where titanium about

increments that seen the a in taking result You've as and about we've on VSMPO. talked of the we share numbers. sanctions We're talked the revenue the about

to risk capital also after So the the on in willing not this ground stream fresh less what's election going the about and because to that occurring. we that put But I've again, long not to happened geopolitical come the given talked past happen, don't its I'm year. know in what duration for even

also has presentation. for concludes Thank today's concluded. and attending This session, you the the question-and-answer now conference

may You now disconnect.