Howmet Aerospace (HWM) 6 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Howmet Aerospace Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Also please be aware that today's call is being recorded. I would now like to turn the call over to Paul Luther, Vice President of Investor Relations and FP&A. Please go ahead.

Thank you, Joe. to Aerospace welcome Results Quarter and Call. Conference morning, the Third Howmet XXXX Good John Chairman Chief Plant, Officer; by joined I'm Executive Giacobbe, Vice and and Executive President Officer. and Financial Ken Executive Chief John by will question-and-answer Ken, . After comments and have we a session. you remind and forward-looking events today's discussion to statements like will to relating would that I future expectations. contain

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

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

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

PT, a and strong quarter Thank Within commercial another engine was Howmet was revenue first company. Year-over-year in XX% earnings the growth. XX%, including continuing the aerospace was welcome, growth Quarter number, growth the you, XX% half. on QX for strong the call. everyone, trend, this to building spares growth Third

Operating extended in by Other vacations. record was income fasteners structures. especially $XXX Europe, revenue markets by increasingly in an call. engines declines, $XXX was the margin XXX Wheels digits reduced increased will double a XX% XX.X%, supported basis driven down, strong be margin up with while performing operating with million XX.X%. which at levels, and summer covered high EBITDA million, points, of a was was income results later market year-over-year in a of along and with with

XX%. However, million. approximately free million, cash to EBITDA strong XX% increase an a flow was of wheels to of $XXX flow cash per $XXX improving year-over-year. margin year-to-date Free deliver was Earnings share also $X.XX, healthy continued at

end million above buybacks quarter a after down, per flow EBITDA free cash deploying $XXX dividends. to The million expectations. $XX results set healthy share Overall, EBITDA, had $XXX with and to pay is and debt share million to earnings margin, cash million balance of of $XXX Howmet

on comment of which light our me guide. is Let fractionally revenue,

supplied we restricted duration further we can Boeing, our pending September, Boeing In pleased aerospace strike of business parts is and about over, that to strike. the now understanding gradually the are Naturally, the to return normal. the

in shortfall North was XX%. European notable were in was other weaker million Wheels principally $XX below market The conditions business. an approximately resulting QX, notably decrease wheels down XX% in revenue due to by revenue. revenues our America

I'll end now market provide the cover segments the before outlook to return company. by to details call additional I to business the Ken and for pass

John. you, everyone. Good Thank morning,

to Let's X. move Slide

the up healthy also of our aerospace to XX%. XX% the to despite continued revenue strong, to growth half. Defense with year-over-year, to and fighter up half which demand. aerospace restrict engine commercial the on the first Commercial was total XX%, was strike. driven XX% growth up programs in in the Aerospace Commercial decision built be due fighter supply growth strong Boeing first XX% by revenue aerospace market So spares building quarter third revenue growth remained on

a with commercial led revenue slowdown lesser expected, to Europe transportation in the As and North weakened extent, the market down XX% by America.

markets and industrial gas, other by general driven XX%, were a up up up ITT oil Finally, the XX% healthy up industrial XX%, and and X%.

by strong commercial and industrial, summary, performance transportation. partially in offset defense In aerospace, commercial aerospace continued

X, Slide the to P&L. move let's starting with Now

despite revenue remained high end XXX was a by revenue of adding the third EBITDA all headcount growth the as head being For year-over-year EBITDA, and exceeded quarter, the margin XX% were XX% On up quarter and basis, Engine count total EBITDA and up records outpaced earnings consecutive segment. approximately per share guidance. in flat the in

EBITDA was XX.X% Incremental delivered XX% EBITDA revenue Moreover, a of year-over-year. the both for records of team a was to and XX%. at $X.XX, earnings healthy which margin healthy up flow-through per share

Now flow. $XXX X.Xx. the continues for sheet cash and improve The the balance was and the end a a cash continues $XXX debt Cash cash strengthen. at was at balance Net to sheet flow free quarter cover was record million. to $XXX let's low flow of free was and of at QX EBITDA million, record to approximately Year-to-date million.

at cash long-term were financial fixed All improved and leverage to and reflected BaaX. generation rates. Howmet Moody's rating upgrade debt unsecured strong in is X-notch

in strong Liquidity with upgraded remains balance to billion a program. of Fitch $X Howmet's billion undrawn by the paper cash a $X flexibility healthy Additionally, a outlook positive. commercial complemented revolver

$XXX of million paydown, dividends. Regarding to capital stock quarterly repurchases in approximately we common the debt quarter cash deployed deployment, and

For reduced through debt the million $XXX approximately actions. quarter, following X we by the

bonds First, XXXX the we $XXX redeemed the cash par. balance remaining with Payment of was million hand. at on

October we X.XX%. new XXXX, rate fixed of Second, is the $XXX interest in issued bonds due million

the $XXX million on maturity [ interest substantially XXXX. quarter combined XXXX of the in ] debt $XX All issuance, We plus year-to-date from remaining actions XXXX through will approximately November hand expense the million. reduce redeemed of balance bond XXXX the company's next has we interest which third The rate. Third, lower $XX the is by debt annualized fixed October on proceeds bonds. million used May cash a

million share record common of of average share. share to the September, was stock million an through exit million the XXX common of $XXX at quarter a quarter, we repurchased average consecutive at we of improved rate diluted QX shares. share. per $XX The repurchased QX price of price repurchases. XXth third low approximately to count Moving Year-to-date common stock $XX approximately $XXX of an In per stock average repurchases.

the share. company $XXX price Moreover, common approximately the repurchased Board October. from of share Directors stock authorization company is through additional at has an XXXX, stock per million price common October end share, of an for $XX at of an the average the of of repurchases of repurchased in X.X shares. Year-to-date $XX as of million billion per approximately October approximately Remaining of retiring approximately million $XXX $X.X average XX,

million the quarter, XX% increased $X.XX we to share free $X.XX third paid continue share. stock be as from per dividend flow. common we cash Finally, $XX in the per to confident dividends In we in

Now third to million. delivered was XX% spares was aerospace for XX% engine XX%. defense quarter. Engine X segment to and up and IGT up Revenue was and let's Oil was move Commercial $XXX cover record the gas XX% up Products the to results driven performance. another XX% growth. Slide by increased year-over-year up aerospace

revenue outpaced engine year-over-year revenue new be reach billion record to are which XX% growth XXXX. across Demand all EBITDA our spares strong a to in growth. engines EBITDA to volumes, with with a with of support increase expected $X.XX in quarter strong to absorbing $XXX while of an markets XXX net continues of year-over-year basis margin points to approximately the employees XX.X%, a million. increased XXX record record

revenue, once record quarter for and delivered again Engine's margin. The a team EBITDA EBITDA

Slide was let's move of and year-over-year higher, widebody Fastening XX% Now XX% Commercial including the to Revenue million. also the Systems had to impact X. aerospace strength. another $XXX quarter. strong increased the Boeing recovery

margins year-over-year XXX General was points EBITDA to margin growth through to of The and million. revenue outpaced which X% increased growth commercial excuse a revenue EBITDA an year-over-year performance. transportation, Industrial me, increase with $XXX commercial basis outpaced X%. of to XX%. team healthy revenue down and XX% operational expand continues Defense/Aerospace up was revenue was Year-over-year fasteners represents -- XX% up XX%.

basis program. Now revenue F-XX maximize Structures to product primarily to to points increased million. driven profitability. decreased growth was let's to XXX aerospace to continue move X% XX%. manufacturing and to $XX aerospace the Year-over-year Revenue rationalize and XX% year-over-year, was increased improve. X. XX% optimize XX% to footprint revenue Sequentially, outpaced and Slide EBITDA $XXX margin the by as XX% the we EBITDA Engineered mix continues up defense structures Commercial year-over-year up up performance was segment million.

into progress The continued we team and heading to continues XXXX. expect make improvements

let's move XX. to Finally, Slide

as down to long at margin XX% was Wheels be slowdown the flexed decline. the commercial margin XX.X%. minimize cost to hold expected Forged takes revenue of EBITDA decreased healthy transportation the continues the team year-over-year market. EBITDA as XX%

a I which of to million, John, The approved a expenses prior the credit was turning the favorable IRS. for Lastly, was R&D over in we $XX investments. In special a completed highlight appendix. that in credit before period item wanted the third by study quarter, Page on back associated R&D it approximately XX tax to resulted with

results investment from The was as special The our item. was favorable innovation in R&D and continued excluded credit noted technology. Howmet's favorable a credit reflects and tax

me over turn let John. back Now to it

Page Thanks, let's move and XX. Ken, to

and an moved of Starting strong to travel we before with to I have Demand both XXXX traffic. the compared markets Asia be specific overview the Air the freight normal commercial growth First, expect growth of me half XXXX. the for we into second continues XXXX for applies albeit rates air at, recent about passengers for as balance aerospace. as start guidance of moving This with robust. eased let with continues Pacific the the to to be X%. seasonality, past of to think, traffic

should for additional and underproduction healthy book higher outlook record the backlogs to order to for demand and aircraft, for orders, to and given growth spares years However, leading about production, the new approximately XXXX, very historic recent years minus the a lead aircraft of this future the XX% of continue look of commercial to aerospace our for of or we several compared products is In by minus. X% supported envisioned And company of to total or be about revenue plus year. to the growth norms. and growth passenger X% growth X.X%, plus

of similar the that this. but at noted be should It the -- a managed envisioned growth to we to we exceed managed XXXX, start

consistent confident. to aircraft and narrow-body need see we be production However, sustained to

digits F-XX legacy mid-single For be little higher. continues grow contributing. XXXX, at gas a both with to spares and to oil forecasted at IGT and all bit mid-single production, defense aircraft and aerospace digits, is solid growth with

truck X year. in of The and prospect be quarter to the year outlook of pickup the this some in second fourth half first the with commercial of wheels XXXX, of the for the muted continues quarters

the The half response XXXX effective of in envisioned regulations, to will become prebuying America, new second stages in North potential is it occur principally that early the which environmental truck of due XXXX. where to is

first turn of future August Let the in which for our to I the me when IGT I call topic time. demand, the now of to use AI words referred

address Firstly, AI. let me

current we Of and AI offices using keeping with developments plants. and manufacturing our are course,

for quarter revenues demand XXXX. would and capacity, Examples all increased has XX% future future effect next Howmet data since positively grown center mining like address computer electricity energy of start AI as the However, what the demand. the per I on over for the are over AI, impact few cryptocurrency years. address the we is builds to which

in of results expected from is Google cloud a IGT by of demand the Data of are Google they XX possibly usage hyperscalers was is in gigawatts Oracle, in This the and is search. AI and be nuclear center and combination billion gigawatts certainly query likely Much combination. Microsoft, increase to to Data electricity supply. power is approximately to that which XXx XXXX, Amazon, expected $XXX be XX uninterruptible build-outs by per fulfilled and center percentage XXXX some consumption Meta, electricity XXXX. require in generation to a

While what we the plans about forecast are new gas demand, are we see unsure exact generation.

example, GE Duke, turbine the and over generation we chain years. worldwide plans customer. Dominion network additional each given [indiscernible] this gigawatts for our see announced #X in For of since XX consider blades have a Siemens, where an blades not and and U.S. IGT we positioned Mitsubishi phenomenon, well are We supplier global gas Heavy next just AEP support the the but our supply a XX for as new turbine one given Howmet of Vernoma,

have XXXX. in in in this XXXX, will earnest begin effects While limited will growth

summary, be for over XXXX addressable Beyond optimism market years. that, Howmet. is to strong the In next the expected have we for several

envision me ahead turn impact significantly aerospace External since agencies our increases forecasting view. this commercial of aircraft to production Let significant. is

considered the assembly themselves. have on supply restart strike has the plus that Airbus Boeing gradual XXX settled, of We mentioned by the chain now impacts the lines

rates accordingly to have [ inventory tempered the under due builds compared considerations. planned their ] We Boeing build further adjusted XXXX and to builds by for the

the growth to total growth we in so, to half growth XXXX, as X.X%, more with about we versus with stronger we first of about doing production. move outlook Boeing specific the through we Naturally, commercial the In as adjust be half. the X%, be plus in understand to second or the minus year will aerospace especially come revenue envision XX%

the near and full QX move and to let's the guidance. Now year term

$X.XX plus $XXX is spares. wheels QX earnings additional one truck The are of share make weakness of is Boeing and like year, would plus or numbers by from And million; $XX $XX for $X.XX, flow as billion, the [ I EBITDA comment of for and minus million. revenue plus billion, EBITDA million, free to $XX minus $X.XX; or share million; that minus billion, $XX ]. The of $XX minus of cash revenue plus $XX or sales $X.XX $X.XX million; specific $X.XXX minus offset plus plus follows: million; $X.XX, per minus additional $XXX million, of million, plus commercial earnings or of minus per any engine or or

One Board quarter is to future that in approval. only The in dividends. net plan XXXX, aggregate, increase I'd with other by first to X $X.XX final common comment is subject was a XX% to our from dividend regards payment the stock make increase. $X.XX headcount to the comment And final the third is XXXX the for in

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

come take Kahyaoglu time, we At from will Instructions] [Operator Sheila which our first Jefferies. question, with this will

as could It's any as by XXXX you've talked XXXX, planned. about enough. But easy a and given obviously, Maybe could about you've offset if from if Boeing in build your gave we about with line How QX -- close not given off, you that? rates, guide, That's talk being start weakness commercial spares. guide you you pretty thinking you've are the Street. that's in

unrealistic consider stance the for at aircraft agencies total external I've expect moment. tough it's Airbus, What I to December rate than yet And and get build increase and by year the is what is specific is It's don't the of forecasting at November balance rather that that, be approximately build done indeed platform production rather customer I to rate to in will next think time at this to the you or XX% from given look with actual or clear at the XXXX. at XXXX start what will rates Boeing by this Boeing which exactly the your in increase the if point. anyone

of And of course, reevaluate regarding several we chain and possible all and with the And then, think commentary as of types platforms. the so and well, to their of art I way their through constraints. need consider given supply of way build what themselves starting XXX, that Boeing the is the aircraft, parts aircraft Airbus

give best and more that guess get on call, So February our we've just taken color will Sheila. in I -- we our

though quite miserable a which of be year And build certainly, better feel But XX% been just more think let's it we've said really increase a year-on-year is for realistic to XXXX, has and number engine pretty and aircraft doable. as build. has a than indeed,

more. view And so we are this we looking forward to better things but taking stage a at know fairly cautious until

And Stallard Vertical our come Robert next question will Partners. with Research from

back of really just your on the risk be give I in revenue And destocking a follow-up some wondering rate on was idea whatever for of in also on form to you whether forecast. the OEM year? could aftermarket XXXX relation uncertainty? Sheila's production what might aerospace us any if included next revenues thoughts you've question this of

Yes.

revenue comes like because to of with increases, be of and course rates think we which heart fashion to questions, future I'd and several start fairly of topic I in deal a may the call. during spares this broad asked the it about So when the talking probably

billion the And with, last increase be billion this I'm expect indicated this is to in I spares press which all, now, our further going year call. $X.X of I revenue on think first that $X.XX think to about a gave, that morning, start number, release which we is off August about on our we quoting we

or what and a billion, those by and for is our positioning about spares first of strategic our the most is in I company. And of And is I'd when investors revenues the of was the revenues that aftermarket important think mean like Products think percentage which I point, exposure make, XX% obviously, I were higher one to about the fundamental XXXX, our $X that Engine business. the

years, XX% a my And given the level risen has next our is be that the as aftermarket our XX%. aftermarket in close XXXX, or go the and for of aggregates. X, growth spares revenues will very is that significant that, especially the content X exposure in year the well billion given or to of going that builds OE X excess over thought, increase, to in outlook $X.X And revenues to forward, is of and

for that think that the of given is and And company OE that the for and really I company, it therefore, what so shareholders. less for volatility owners volatility That's -- means less the implies exposure good the production. with the

reported should quite topical point, I supply So chain in the And I press and important think think production. then like of on most the and heard because spares I'd particular, which of commentary around turbine more lot of and engine that's seen to impact its the with you've in in engine framework constraints deal and blades availability resonate. a spares the

point to XXXX going on repeat I'm that is blade, of LEAP in the again, by currently the output XX%. say which we So our one -- is specifically provided used that is to call data from last engines up type that and

the across and output XX%. top which blades for build. engine specific designate it part builds end we over course, when don't spares, is And goes to goes XX OE company of engine manufacturers, by a it the to casting turbine of whether for leaves market our up And all the Howmet,

had interested party Airbus Given about demonstrate production the so through lack go of to and by having and the for production. Howmet meeting we commentary and data, specific a of show joint could at gliders is engines we asked that every

I remarkable, many for XX% could engine final of the in what new the increased what the we're the those by FAA Howmet specific left have production the blade, we've engine approval. customer. pending or And while and of tens is and And to also about, fact, that I've new sets is thousands, of blades talked the plus blades EASA. delivered think, just that type production is awaiting approvals see they that and and And XX% by also been producing the castings XXX overall,

been covered And think into the given going is say, in the I've on say, generally strategic what's company, of So good more in production puts, more the the the think, than, which moves a positioning and current I specific engine and about going sets future position XXXX, terms of is much situation. that in our specifically that, let's forward. production any I is, output commentary both fundamental transitory which really I'll just everybody also course, of for much

of well customers And to in we're be working output, really course, further increases required. try our would with to which drive ideally

so requirements, we spares and increase more importantly, of increasing as that And both the in spares the expect year robust And which going to percent production to and also engine to trend revenues. of are also next the leading engine, spares for total robust. in be longer-term increase our a even be company

which And as think of sell good to able parts all and that GTF the thing that more want, more blades parts And really robust of we the are LEAP low-pressure is more those turbine well. structural engine be of aircraft us for I both other course, Advantage the fan is engines, so Engine. engines, production, is we'll castings, the of course, other indeed the part that robust we more of then what and for turbine which for make production

the I with as of all increase out, fundamental the company. important of specific strategic answer you less significant aftermarket given thing for percentage the positioning question, the pretty and it your revenues but given think volatility broaden in our a comprehensive very content that, a that's in to is So most

Doug Bernstein. our come with question from And Harned next will

the over to lines see LEAP-XA, you've now current over the you think of terms understand kind to new And investment production automation of and then of John, because the you blades likely do and presumably is understand what are LEAP-XB going the profile planning to be? the production describing I'm new blades trying so also time? for in the for forth sets How in And airfoil what both where just got capacity, time. continue rising year. new the doing next today that you're to that on capacity you for blades I your that wanted blades about on we're LEAP-XB were for to

the not in said given increases, business. for sure increasing engine everybody in robust I the higher engines but heard temporary increased. But of we think And significant, the about. Doug, the on time commented been pressures the aims wing think, what you've and increased has production more are increased which requirement that has engine with the operating the regarding visit investment only demand for that that of production given I'm shop also, I frequency certainly for exactly our requirement spares aircraft is the written the But exact time overall and modern that not essentially, given the over the temperatures increase quite is even issue, in effect increases, that means more fact particular, investment. spares,

we therefore, the the increase and looks detailed right capacities just with see, over that but to demand capacity. for invest the And years, to over our X what indeed, having year agreements like customers we've and along that our looking years, conversations X very and X next next, been with not

demand really, up the believe we increase I'll aircraft to years increase we've And over in so which that for have what and both is production, been spares say, the the next to for that many future meet commensurate but in see well. OE both we're aircraft of narrow-body signed is -- going our increase in also production terms the through pattern I best demand, position production few understanding production years, with that as to wide-body in and

wing willing issues with change increased those for increases, And further demand certainly X take rate years. of to additional shops change engine X the out increased even think just I the it in care that time at be let's the the over say, of think years, the we'll to those to customers comment for that. between also think addressed you or -- engine will frequency of spares albeit uninterrupted of accelerate that our while much building I next will spares next beyond visits. with I'm overall different MRO years, on the I the next see see percentages not And X, further X

And our question Deutsche Deutsche Bank. come next Scott with will from

John, you'd margins about be offer can to about at the in reacceleration what's incremental just quarter? driving if bit And this strength in was for anything point this margins to willing in set I the incremental a you think going next us year. into this trend on what to means curious talk there's level recent fourth how

want don't as get into year because linear. certainly think to I any margin commentary for nothing's I appreciate, ever next you

You a times margins the extrapolate not things and at certainly because just can't occur line, different for rates.

the think when top of that down the top your just is your convert one that of to for change rate your change determinants I line, rate to but -- at of then rate line. of a ability higher level margin is of the . And also not efficiency.

one to take requirements of we're we going getting to given things And to the of labor those company think of trained increased future going this forward. out where, to capacity, I the going we're expectation the think year. so as have uncertainty, production It's also the impact those I benefits given the volume, we're to to meet the that have leverage in people the build a see going and of our next significant while lot

patch good pretty a hit company. terms productivity probably we've or the the X last of increases X in over quarters within So

in demand. we the the be engine of our commence company hold and levels we increased of to while performance we've talking recruited QX our to XXX our that equipment hiring quality workforce to of in trying our quarter. into that people go in So and about the such year, need good for balance reaccelerate quarter, they've really we zone and first in new business while of will much the respond maybe X in you've we've to net -- that that that the that in is net the for XXX keep expecting can going really think, maybe we're levels as the the second the a to delivery And and been so customers' been able I when XXXX production, seen trained

net of margin the of at plus think point anything at from we've that point, And year. in think don't then got I apart comments any about the regarding the volume we've that. this the this I So extrapolate you X.X% or next don't time, But seen I've have increase benefits this for minus. which And I from requirements, the again, next spares can talked acknowledging indeed, puts again. indeed talked go the where about year, continued, hiring I've we side see into additional hopefully, OE that effect also in really supply going on as spares a question. that we of position, into and production the then aerospace us excellent both XXXX picking of increase on commercial

Strauss next from David of our And Barclays. will question come

so gains on engine you've at level, given based I on that off the level XXXX XX% pickup? So aero I guess, accelerate in share share to come a in that the there of be know just But that growth 'XX, the that start turn 'XX. a in in side aero expect revenue 'XX, would market lot bit, are in out a things that revenue of market will hinted kind but If go to growth more you potentially. at does would into this your high

last about thinking where and response keep supply X, always almost supply supply what's X, production. I is Yes, the trajectory a now heard years the over constraints commentary X chain. about point a first of to chain And of the lot aircraft we've chain

performance. ease begin supply I for see as one chain the each healer. a is and think further is to And great constraints to the potential I think have time mentioned, wider I those improvements in

the emissions, Airbus think as and to increase targets the XXXX that what year but I be the of given so just is obviously, to a fundamentals still really the XLR the the of footprint airlines, And is the to introduction XXX I new But continue first flux AXXX, and there increasing for for oversight that those be certainly, is FAA similarly AXXXs, in and where particularly world the constraints able while can is Boeing, mean, parts to production back think you of of solved. which confidence new their not other there efficiency for supply in as really for going importantly, restart important. increase which more the demand well, are the even chain have carbon under additional we'll here and But fuel gain overlay to for aircraft I production.

requirements the lack there would aircraft production. given wanted aircraft seen probably in service, of those So for and held the than been you've longer have are ideally

can going XXXX of which So XXXX, surely backlogs still by think out than are year the another sorting there. to maybe and we're and position don't be be better is in a while I totally aircraft flux is that the smooth

IGT business F-XX aircraft I that electricity, the around production therefore, like by we see so and to of of just improve demand no the I the really what or as and F-XX. our be example, And get even increasing to as the go legacy world talked going think positive is and the on fighters certainly I an of of countries that demand for F-XX forward. diminution the call all with for, I that vectors demand for expect about combined that optimistic

in. capacity And usual spares plus so we're -- demand the putting and

should XXXX a on XXXX. think get optimistic be that we further I can up step pretty

Research. will come Wolfe question with And our Walton from next Myles

the the John, last think, your of areas on years of side. the has from of I over initially guidance growth biggest been one couple defense

the conservative going, the I'm in, deliveries years? curious, only that's And obviously, and just F-XX airfoils last structures within have, as kicking growth? it given for the mid-single-digit couple sure And so mid-single-digit getting think is you of is placeholder in do why busters the I'm terms is of you business back

take XXX Lockheed At let's stated the say, moment, aircraft. you if production,

deliveries are it each know, been have given that they've somewhat struggled we think issues than XXX, resolved. been produce that I have less being year, as to or that the but software was all

think see And we're or so production I next years. deliveries higher going over the than X to X

still maybe for XXX level. production the And up a maybe XXX to little incrementing bit

end the to engine, X% to Europe XXX X in is fleet so I'm the we And over so I X,XXX demand mean that's see increase aircraft spares of more few increase next decade. it's worldwide. only that the the optimistic to over indeed, years, it's And by like now X%. aircraft going because

few additional So demand bodes that spares OE the for years. demand over well next engine

from the cleared inventory, but on customer improve, XXXX. that So out continue say, should occur particularly but given builds into there's the quarter anticipated, also of left that, cleared little But I'm think bit the still have if to about been at excess which part which bulk in quarter, into I XXXX, this that was hopeful also inventories it's titanium not didn't doesn't a And I'm out and is some docket side, head then last over, hopefully optimistic side, possibility, the with a that. this it begin on not XXXX.

optimistic, And it change to don't think but not labor. quarter the So think that's this able I with their But could a that, at mid-single themselves yet. I this struggle should call. then half little because to know of should, going I I'd legacy say, of first course, quarter, find point, year. or more of digits improve bit increase the next next say, become we And production, Boeing they right I'll is which fighter

between this split at Okay. of and Is And defense/IGT just spares. about point? billion the commercial even clarification, that a $X.XX

in level IGT I the months. side of Yes. mean rate absolute let's But been and the the commercial that and of last, has on gas because say, defense I'll of the and significant and say, XX COVID has we growth oil of in see and terms the, builds higher had post-COVID with very didn't interruption then that. been higher all that the because absolute the

that -- that I'm is because And about can the, XX-XX. say, struggle way correct aero to to to point, on going thinking Ken every And me the with the guess but roughly, I so the used at of let's the it to currently be noncommercial I'm aero and this it XX% XX% single commercial growing mind, we're side, number thinking keep but front the I'm in faster.

around commercial $XXX plus accelerating exit compared minus up million Defense And great million, year. numbers year. look lot the at aero it right is, $XXX then or performance but of year-over-year, or on right? XXXX, and are the numbers minus, Myles. probably there, the the to I'd But around a But IGT, this key as as plus And we

more it's all good. So

come from our question JPMorgan. Seth with will And next Seifman

think of It we aftermarket a the sounds very the by in demand answer the newer and lot engines. spares demand. about it of to wanted seeing, I you're much aftermarket of planes like but just staying -- is sounds ask no, like a longer demand is driver service driven as terms the here older in

you kind to so all X- at And outlined? the growth retirements for extent at that of interfere were that to expectations your period spares increased see really we to X-year . that over some point with that doesn't

Several apart Seth. in question parts that there, pick to

legacy pushed shop engines, think about I been So think yet. and further and that's the retirement. fact And the the of the peaked the aircraft probably lack that by have don't the of VXXXX fact visits CFMXX, out let's

everybody But X which introduced visits the at LEAP the years, peak. to only turbine think gone wing of your I be both space products, that pushed to after that those being to the engines issues for So CFMXX true well-documented early which requirements out demand and is stage and likely VXXXX, sustained assumptional given you now if earlier-than-expected expected the on of X It's was new the the I going you've that beyond I'll peak 'XX for there possibly and of absolutely time to GTF Well, blades those improvements is say, to a applies very previously driven 'XX, XXXX think robustness are coming got back think don't increased the is significant probably of more and suite think with . But I that that's shop the a more peak improvements. X for statement expectation. the 'XX. engines or by, engines. that I -- be that, dip Meanwhile, gradual even expect decline. the then

year from anticipate of there visits on So liability. which and bigger we about been weight shop the higher the wing which a creating of cycle many I've of we has are is, next robustness about. with demand of packages long-term talked time improvement even are now. is we've excessive that part improvements years adopted much trend But growth because But where the for stacks with every up the talked as those aircraft new

I've that's I in all it So of question. covered think your

thing legacy also will engines yet. saying the is So that only I'm continue to the peak

of America. come our will next question And Ronald from with Epstein Bank

a got of out in expand not? of M&A into to talked do there we too some is lot you your I there mean are that? kind can area just But maybe continued kind thinking skill haven't set? or How the of capital We've you about one business your adjacencies much turf. about core deployment Is any out focus.

Yes.

even private So we at a come have coming of certainly position are choice, have the market the look out to in potential things to majority companies the recent we the I run given in election past. in the past of thought may more hurdle less is have some change given hands administration, deals the possible yet. know future. don't may of really been and though equity and ability acquisitions those which hurdles in It's the that constraints which to study the

to early just commentary -- too It's there. speculative from apart

we'll possibly a be enough that say do also want technology So if position a saw small to to in we and to tuck disciplined you small, It's we we buy us but important company do, ones, a to they're last us are to enable another player that engine in. fairly in for did one and capability our take quarter. to but level the consider

if be the size market decent But given of the some do we're to, we're also willing company. to others then going of say, they to need cap

So we're willing to look.

the it that at compare basis. our back, of a again, own to buying and have also on returns looking to risk-adjusted cash-on-cash We stock

be want disciplined that in so money to for returns shareholders. And of of the terms we -- very for

from stock in the And M&A as we'll albeit terms so well, look healthy reinformed. in or and nothing to to keep of above appropriate, and we back obviously, capital, still X well currently continue to our see. see is move and willing stocks it quarter buying but also of next on go examine look returns our any that positive cost out at the can that we we But that as we'll the have

here Khanna next question come our And TD from with . Cowen. will Gautam

you be throughput to type more an because product? view mentioned true this. Howmet you easier great to wanted working good are of guys blade And high-pressure ask results, John, Two I it's to to up is opportunity things. as And all, on the and therefore, on second there manufacture. a it guys. do or it on quickly the turbine relatedly, pricing GE less Does higher XA. might confer that get aftermarket that

and I I'll the when variant, to approved, package blade. every the is, going it configuration LEAP-XA that to of understand engine, is think is I the comment new say, about comment don't going for mainly aftermarkets go because turbine change of new new that

of going that full and we'll et cetera. performance -- the forward. see then So fitted OE production content, production spares in where whole both obtained anything is goes for additional to And that question

to we said, hundred the sets be. some that all increase to some optimism question. engine as So this production I may in as manufacturing several I in And addition the that blade. the year producibility, think we provided deals of have to of existing with part have, of it turbine And that type

then early that's well. of we're be, well to that, clarity us will FAA be lead I of subject for this in absolutely hopefully, the production. and say, near-term a or LEAP-XB another that, concerns, cut long-term on so EASA to But over terms yields And Boeing still I'll to oversight. type several than or what in -- for year have nothing so as forward pleased timing from to . also now looking but quarters of months to with the days over giving again, So it's a blade. several new which terms in at later the think I'm but did going But and point, yet it very see very the into I

your may disconnect session this And question-and-answer today's conference. and presentation, you for lines. to in addition you concludes today's now our attending Thank