Q1 2023 Textron Inc. Earnings Call
Speaker 2: I.
Speaker 3: conduct a question and answer session. If you wish to ask a question, please press one then zero on your telephone keypad. You may withdraw your question at any time by repeating the one then zero command. If you should require assistance during the call, please press star then zero. As a reminder, today's conference is being recorded.
Speaker 3: I would now like to turn the conference over to your host, Mr. Eric Salander, Vice President of Investor Relations. Please go ahead, sir.
Speaker 4: Thanks Bradley and good morning everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors which are detailed in our SEC filings and also in today's press release. On the call today we have Scott Donnelly, Textron's Chairman and CEO , and Frank Conner, our Chief Financial Officer.
Speaker 4: Our earnings call presentation can be found in the investor relations section of our website.
Speaker 4: $23 million from last year's first quarter. Segment profit in the quarter was $259 million, down $18 million from the first quarter of 2022. During this year's first quarter, we reported net income of $0.92 per share. Adjusted net income, a non-GAAP measure, was $1.05 per share compared to $0.97 per share in last year's first quarter.
Speaker 4: With that, I'll turn the call over to Scott.
Speaker 4: Thanks Eric and good morning everyone. We had a solid first quarter. Revenues up aviation, industrial and systems, largely offset by lower revenues at Bell, consistent with our expectations.
Speaker 4: At Aviation in the quarter, we delivered 35 jets, down from 39 last year, and 34 commercial turboprops, up from 31 in last year's first quarter.
Speaker 4: Aviation continues to see solid demand across jet and turbo products.
Speaker 4: Backlaw grew $136 million, ending the first quarter at $6.5 billion.
Speaker 4: In a quarter, Aviation received an initial award on the U.S. Navy multi-engine training system contract for 10-K ing Air 260 aircraft and associated support equipment.
Speaker 4: This contract includes options for up to 64 aircraft with deliveries in 2024 through 2026.
Speaker 4: Textron Aviation's fleet utilization remains strong in the quarter, contributing to aftermarket revenue growth of 9% as compared to last year's first quarter.
Speaker 5: Moving to Bell, we announce the appointment of Lisa Atherton as the CEO , succeeding Mitch Schneider who will retire at the end of April .
Speaker 5: and is only a confidence for our military customers.
Speaker 5: I want to thank Mitch for his leadership. During his tenure, he oversaw significant wins at Bell's military business, along with development of new technologies and product innovations.
Speaker 5: Earlier this month, the flower contract protest was denied and the U.S. Army subsequently cancelled the stop work order allowing work on the contract to proceed.
Speaker 5: On the commercial side of Bell, we delivered 22 helicopters down from 25 in last year's first quarter.
Speaker 5: During the quarter, we saw solid customer activity across all our commercial products and in markets, including an order from the Polish National Police for four additional Bell 407s, which will expand their fleet to seven aircraft.
Speaker 5: on hybrid quad was among five competing unmanned aerial systems that were down selected for increment two of the Army's future tactical unmanned aircraft system competition.
Speaker 5: Also during the quarter, System Delivery Craft 105 of the U.S. Navy Shifter Short Tetra Program.
Speaker 5: the seventh craft delivered to the Navy. There are now two craft remaining to be delivered under the detailed design and construction contract.
Speaker 5: both as specialized vehicles and Caltechs.
Speaker 5: Specialized vehicles, the golf business continues to see strong demand and pricing for its Elite Lithium product. At Caltex, we announced the first pentatonic order from an automotive OEM for a thermoplastic composite underbody, powder protection skid place.
Speaker 5: Skid Plate is part of the company's new Pentatonic battery system product line supporting battery electric vehicle production.
Speaker 5: Moving to e-aviation, during the quarter we announced two new US distribution partners on the east coast to further expand the existing distribution network.
Speaker 5: Also in the quarter, we finalized the agreement with Mesa Airlines for 25 Alpha trainer aircraft and an option for 75 additional aircraft. At Sunupon Northern Quarter, we displayed the Pipistrel Panthera and Bellus Electro aircraft receiving significant customer interest in both models.
Speaker 5: With that, I'll turn the call over to Frank. Thank you, Scott. Good morning, everyone. Let's review how each of the segments contributes, starting with texture on aviation.
Speaker 5: Revenges at Textron Aviation of 1.1 billion were up 109 million from the first quarter of 2022, reflecting higher pricing of 58 million and higher volume of 51 million, which included higher defense and aftermarket volume.
Speaker 5: Segment profit was $125 million in the first quarter, up $15 million from a year ago, largely due to favorable pricing, net of inflation of $17 million, and the impact from the higher volume and mix, partially offset by an unfavorable impact from performance of $17 million. Backlog in the segment ended the quarter at $6.5 billion.
Speaker 5: Moving to Bell, revenues were $621 million, down $213 million from last year as expected on lower military revenues reflecting lower spares and support volume in V-22 and H-1 production volume. Segment profit of $60 million was down $31 million from last year's first quarter, primarily reflecting lower volume and mix.
Speaker 5: partially offset by a favorable impact from performance of 29 million, reflecting lower research and development costs.
Speaker 5: backlog in the segment end of the quarter at 4.6 billion. At text-run systems, revenues were 306 million, up 33 million from last year's first quarter, largely reflecting higher volume. Segment profit of 34 million was up 6 million from a year ago, primarily due to a favorable impact from performance.
Speaker 5: Backlog in the segment ended the quarter at $2 billion. Industrial revenues were $932 million, up $94 million from last year's first quarter, largely due to higher volume and mix at both Textron Specialized Vehicles and Caltex. Segment profit of $41 million was up $2 million from the first quarter of 2022, primarily due to higher volume and mix and a favorable impact from pricing, net of inflation, principally in the specialized vehicles product line, partially offset by an unfavorable impact from performance. Textron e-aviation segment revenues were $4 million.
Speaker 5: and segment loss was $9 million in the quarter, primarily reflecting research and development costs.
Speaker 5: Finance and Segment revenues were 12 million and profit was 8 million. Moving below Segment Profit, corporate expenses were 39 million. Net interest expense was 17 million. Life-hope inventory provision was 25 million.
Speaker 5: Intangible asset amortization was $10 million, and the non-service component of pension and post-retirement income were $59 million. In the quarter, we repurchased approximately 5.2 million shares, returning $377 million in cash to shareholders.
Speaker 5: To wrap up with guidance, we are reiterating our expected full year adjusted earnings per share to be in a range of $5 to $5.20. We also continue to expect full year manufacturing cash flow before pension contributions of $900 million to $1 billion.
Speaker 5: That concludes our prepared remarks, so Bradley, we can open the line for questions. Bradley?
Speaker 6: Thank you and good morning guys. I want to ask about Bell Profitability. I think you mentioned some favorable performance in there, but with the Flora protests now cleared. How does this change the trajectory of a Bell Profit? And how are you thinking that the dilution just given the development work? And just thinking about the bid overall, texturon's development value was nearly two times blockied. So.
Speaker 5: How do we think about this in terms of revenue contribution? Well, I say that we had anticipated or we had planned basically for a delay in Flaura when we gave our guidance. So Flaura is going to roll in consistent with how we had seen Bell in terms of the 3.3 billion.
Speaker 5: of revenue and eighth of quarter, nine and a quarter, NOP guidance. Obviously we had margins above that for this quarter. So, you know, we do expect.
Speaker 5: to be within that margin range that we had guided to. We do expect to see revenue growth. That we think this will be the low quarter for Bell from a revenue standpoint. So as Flora kicks in, you know, we talked about that being a lower contribution margin. We'll see ultimately, you know, kind of where we get in terms of booking rates on that, but we'd expect volume growth with some margin headwinds associated with that revenue coming in.
Speaker 5: But overall the team did a really nice job from a cost structure standpoint in this quarter offsetting that decline in volume. And we feel good about how Bell is positioned in the performance of the business.
Speaker 6: And then just maybe you've got one for you. How do we think about aviation pricing? I think you mentioned 58 million of gross price or 5%. Is that sort of what we should expect on the gross side? And how do we think about that as the dynamics of the market are changing?
Speaker 5: Yeah, I think so, Shia Loyal. I mean, obviously the pricing is, you know, well built into the backlog. I think we are on track in terms of our expectations on cost, so I would continue to...
Speaker 5: Expect to see pricing, you know, net of inflation as a positive. Demand is still good in the marketplace. I think, you know, pricing is...
Speaker 5: is stable out there as we look out into the future bookings. So again, I think the, it's a reasonable expectation to think that we're going to continue to see price net inflation as a positive going forward.
Speaker 5: is stable out there as we look out into the future bookings. So again, I think it's a reasonable expectation to think that we're going to continue to see price net of inflation as a positive going forward. Thank you. Sure.
Speaker 3: And our next question comes from the line of Doug Harnett with Bernstein. Please go ahead.
Speaker 7: Good morning. Thank you. When you look at the first quarter...
Speaker 7: and orders and aviation. Yesterday we heard from general dynamics that Gulf Stream had some hiccups around the banking crisis that Silicon Valley bank collapse that actually delayed a lot of decision making in pushing orders through. How did you find that period?
Speaker 7: Aviation. Have you seen similar things there in terms of order flow?
Speaker 5: Oh, look, I don't know that I would pin something specifically to Silicon Valley Bank, but we had a positive, greater than one to one book to bill in the quarter, which is good. We kind of guided to around a one to one book to bill. I think the lead time that we have right now in aircraft is in a pretty healthy place, and that's kind of what we're...
Speaker 5: What we're targeting, you know, I guess I would say that you know anytime you have financial disruption or Adverse events out there in the in the economy in general. It's certainly easy for people to say hey look Let me let me think about it or wait a little bit I think the you know the good position we have right now is we have enough backlog out there that you know Even if you have a quarter where you're down below one to one
Speaker 5: that's not the end of the world. If somebody defers out there for a few months.
Speaker 5: That's not a problem. That's the beauty of having a backlog. So unlike previous periods where you had some interruption and you'd see a delay, the neck would hit you in terms of revenue and profit in your term, I think we have sufficient backlog out there that even if you do have something where somebody waits a little bit, then that's fine.
Speaker 7: And then when you look forward and you're talking about a book to bill in the order of one this year, when you look beyond that, how do you think about the aftermarket? I mean, we might look at this as the aftermarket should grow somewhat proportionate to the fleet, but do you expect other factors to give you more growth there, such as more content for your airplane?
Speaker 7: pricing.
Speaker 5: Well, I think it's a lot more driven around utilization, right? So flight hours is more closely correlated with the growth in the aftermarket as opposed to necessarily the fleet numbers. I mean, our fleet is so huge that even adding small numbers in any given quarter doesn't make any real impact. So it's primarily driven around utilization and utilization in the fleet remains very high. So I think it's a lot more driven around utilization and utilization in the fleet.
Speaker 4: Very good. Thank you. Sure. And our next question comes from the line of Seth Seifman with JP Morgan. Please go ahead. Okay. Thanks very much and good morning. You saw the share of purchasing maps step up nicely in order. I guess if you talk about your thinking around that and maybe you want to talk about that. Okay. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker 5: things up here in the first quarter. We've always said that that's our primary return of capital would be through share repurchase.
Speaker 5: and do that opportunistically, we feel we've still been sort of...
Speaker 5: in a good place to be buying. And so we've stepped up $377 million in the quarter. Our cash flow in the company continues to be strong. We have a lot of cash on the balance sheet, as you guys know. And so I think consistent with what we guided at the beginning of the year, we expect to probably buy back somewhere in that five to 6% of the outstanding shares. So the first quarter was indicative of doing that.
Speaker 5: In terms of what's been out there in the media and the press around this intellectual property verdict, obviously we're not going to comment much on that as it goes on through the legal process, but that's not something that we would expect to see cash come in any time in the near future. There's appeal processes, who knows how that's going to play out. That doesn't factor into our thinking in terms of share repossession at this time.
Speaker 4: Okay, great. I'll leave it there this morning and pass it on. Thanks very much. Thank you. And our next question comes from the line of Kai Von Rumer with Cowen. Please go ahead.
Speaker 8: Thanks for taking the question and nice results. So aviation, maybe give us some color in terms of relative trend you're seeing in supply chain. And also, what was the commercial bizjet book to bill because obviously you also got some defense orders there in the quarter.
Speaker 9: A.
Speaker 5: So the supply chain side guy is largely unchanged. I would say that, you know, kind of as we've talked about earlier, I think our labor position is in a much better place than it was. You know, we did bring a lot of resources in in the...
Speaker 5: In the third fourth quarter last year obviously that that does create some disruption Which as you know the effects of our conversion here is some of that inefficiency on wines here in the first half of this year But you know, we're largely staffed at the levels where we want to be So I would say on that front things are certainly improved, but we continue to have
Speaker 5: Suppliers, you know that have issues that are causing us to do things out of sequence and driving still some inefficiencies and And how we operate the plant so it's I'd say it's not getting worse, but it's not necessarily
Speaker 5: getting better, sometimes it's frustrating if you get one kind of result and another supplier becomes a problem. And we kind of expected that to be an ongoing issue through most of the balance of this year. So I don't think there's any big surprises there, but it's still a challenge.
Speaker 5: As far as the order, our book to bill was greater than one. We feel good about that. We don't break it out down to the individual models or programs, but certainly we're happy with how the demand is going and both jets and turboprops.
Speaker 8: I think we're in a pretty good place. Okay, and then a follow-up to Seth's question. You know 5.2 million shares is like two and a half percent. So essentially in one quarter you've done half of your buyback target for the year. You won FLARA, you had this bluebird of the DJI patent suit.
Speaker 5: What's the chance that basically the five to six percent is exceeded in terms of the repo? Oh look, I think we're going to continue to press on this opportunistically, Kai, and we'll see how it plays out through the balance of the year. But I mean, as you know, it's not really formal guidance. We just kind of indicate to you guys how we're thinking and there's no change in how we're thinking. It's continuing to be our primary means of...
Speaker 10: returning value to shareholders.
Speaker 10: returning value to shareholders. Fabulous. Thank you very much. Sure. Thank you.
Speaker 3: And our next question comes from the line of Roberts-Nallert with vertical research. Who's going in?
Speaker 3: And our next question comes from the line of Robert's Nallert with Vertical Research. Who's going ahead? Thanks so much. Good morning. Morning.
Speaker 4: First of all, Frank, you said you were holding the EPS and cash flow guidance for the year. Are there any changes in the divisional guidance for 2023? No, it's roughly in line with where we had been. Okay. And then Scott, one for you. So, double-digit growth in the quarters, so pretty healthy performance.
Speaker 10: How sustainable do you think that is given the economic backdrop that we're seeing, particularly on your shorter cycle products? Well, look, it's something to keep an eye on. I'd say that we're kind of roughly to the plan that we thought. I think we certainly expect to see and have seen softness.
Speaker 10: in some of the short cycle consumer sided things. But we're seeing strong performance still, let's say in some of the industrial and commercial applications. And when we look at our production allocations, for instance, we're certainly pushing some of our capacity and our volume to serve commercial industrial applications more so than.
Speaker 10: on some of the consumer side. So that's one where obviously there's some uncertainty. We keep a close eye on it. But net of all those things, there's enough demand across all of the different markets that we serve to drive that kind of growth. And I think we'll continue to see that through the balance of the year. Okay, that's.
Speaker 11: All right, thank you.
Speaker 3: And our next question goes to the line of David Strauss with Barclays, please go ahead.
Speaker 3: and our next question goes to the line of David Strauss with Parkleece. Please go ahead. Thanks, Maureen.
Speaker 12: Good morning. Scott, BizJet deliveries in the quarter, were those a little lighter than you were anticipating? Just looking at how much inventory, I know you always build some inventory in Q1, but there was a pretty big inventory build in the quarter. I don't know if you missed some deliveries or where you...
Speaker 10: we're very disconnected from what we indicated in terms of the guide for the year.
Speaker 10: Okay, was that supply chain related customer decision? What drove those delays? Most of the delays we're going to see through the course of the year are supply chain related. Just getting parts and being able to get things sequenced.
Speaker 10: and through test we haven't seen any real change in customer behavior that's impacted anything.
Speaker 12: Okay, and then I was wondering if you could maybe give a big picture look or how we should think about Bell given all the various moving pieces, thinking beyond this year, obviously with Florida now in house, H1 ending, V22 rolling off, I think, not sure what the outlook is for V22 aftermarket, but.
Speaker 12: How should we think about the growth profile for Bell, you know, thinking out over the next couple of years, giving all these moving pieces?
Speaker 10: So, I think I kind of indicated this as well. We certainly expect revenues to be increasing in Bell.
Speaker 10: through the bounce of the year and into next year as the flower program is ramping up. So I think on the revenue grow side, we feel very good about that clearly as we bring in a higher proportion of primarily cost-plus development effort that's going to be at lower margins and those production program volumes on.
Speaker 10: on V22 and H1 that have been going down. So you do have that mixed issue. That's kind of where that led us to the guide that we have out there this year. And I think that's kind of where we would expect to be as we go forward. So we're going to get this thing back into a growth mode, but it is going to be heavily weighted towards.
Speaker 10: a cost plus relatively lower margin piece of the business that's going to be offsetting lost revenue that's a higher margin. But I think it stays a healthy business, but it's certainly not going to be at the margin levels that we've seen in the past number of years.
Speaker 10: plus relatively lower margin piece of the business that's going to be offsetting lost revenue that's a higher margin. But I think it stays a healthy business, but it's certainly not going to be at the margin levels that we've seen in the past number of years. Okay, that's helpful. Thank you. Thank you.
Speaker 3: And our next question comes to the line of Miles Walton with Wolf Research. Please go ahead.
Speaker 4: Thanks, good morning. Good morning. Scott, in the last 12 months I guess, or 18 months, the last two additions to your board of directors were a couple of defense executives and Richard Ambrose and Tom Kennedy. And I'm curious if sort of the trend there is indicative of where you might want to be taking the portfolio directionally.
Speaker 4: more towards defense and if so, is it indicative of the organics with Flora obviously being a contributor or more inorganic from an M&A interest?
Speaker 10: Sure, look, these are both guys who have, to your point, a lot of deep experience in the aerospace and defense world. Our company has always been sort of a net 30% defense with the growth that we're expecting to see in the systems business.
Speaker 10: With the growth obviously we're expected to see in flora and ongoing opportunities in the near future here I think of future opportunities in Bell and systems. I felt like it made a lot of sense for us to beef up a little bit more on the on the AD side of the company. But if these guys are recent retirees or current.
Speaker 10: They know acquisition, they know defense, and they know our space technology. So I think they're two great ads onto the board. So there's no real super underlying message, but obviously these are a couple of real high quality individuals that know our space very well.
Speaker 4: Okay, very good. And there was just one clarification I could on the Florida disclosures from the protest that talked about a cost plus incentive portion and a fixed price incentive portion. Can you just illuminate us on maybe where the fixed price risk you've taken on is and isn't? Thanks.
Speaker 10: Well, I think there's two principal pieces of the fix. Price one is kind of a program management and operation layer, which I think is low risk. We sort of understand what that is. And then as you guys know, there's several deliverables under this full program. There's the EMD phase.
Speaker 10: which has about eight aircraft that are part of the development tests, limited user tests for the Army. Then there's eight craft that are the first initial production craft, and the material that's in there is at a fixed price. So,
Speaker 3: But it's heavily weighted towards the cost plus. Thanks again. And our next question comes to the line of George Shapiro with Shapiro Research. Please go ahead.
Speaker 4: Yeah, good morning. Got the supply chain issues. I mean, let's do an incremental margin of 14% in aviation is quarter. That's the same that you had in the fourth quarter and the performance impact, 16, 17, million is similar. So, do you expect that the rest of the year or can you overcome?
Speaker 10: some of the supply chain issues that you had mentioned are going to continue. Sure, George. I think it'll abate in the back half of the year. As we talked about, a lot of those efficiencies are things that were experienced in the back half of last year. A lot of that obviously goes through inventory, so that releases with the aircraft deliveries during the first half of this year.
Speaker 10: Obviously, that anticipates that performance and disruption will be less in the first half of this year than it was in the last half of last year. I think more or less so far we're seeing that. I think our factory is running better. That's largely, as I said, attributable to the fact that we've got the resources on board. There's still issues. Turnover's higher than we would like. There's still more term than historical, but certainly the plant is running better.
Speaker 10: in a more efficient way. Now, supplier issues still pop up, as I said, but net of all that, I think that we will see better, lower impacts of those efficiencies in the back half of the year than the first half of the year. So even with that 14%, which again is kind of where we expect it to be, I think for the total year, the overall conversion, which is
Speaker 10: Sort of you know, 24 or so percent, you know, which is appropriate for our business is still something We expect to realize for the total year Okay, and then have you changed anything about deliveries expectation for the year?
Speaker 3: And our next question comes from the line of Peter Arment with Beard. Please go ahead.
Speaker 4: Yeah, thanks. Good morning, Scott. Frank, nice to be back. It's got you've had a lot of questions on aviation. I'll just ask one quick one. You know, there's been a slight kind of increase in used aircraft out there. I'm sure it's in production aircraft still remains very low. Just maybe any comment to you you're watching or from your perspective on the used market. Sure Peter, look obviously we watched this very carefully and.
Speaker 10: And you see numbers coming out and they look like big percentages, of course, that big percentages on very small numbers. So I think when we look at the used...
Speaker 10: available, you know, when you look at kind of that zero to ten years old, it's less than, you know, it's around a couple of tens of a percent of our fleet. so.
Speaker 10: It's a really, really small number. I mean, we're talking about nine aircraft that we know of right now that are under 10 years old versus our fleet size of over 7,000 aircraft.
Speaker 10: You know, look, it's a trend that we see in the marketplace, but remember, on an absolute basis these are very small numbers, right? So the available for sale is less than a few percent, and about half of those are 20, 25 plus year old aircraft.
Speaker 10: Still a very, very positive environment in terms of used aircraft available for sale.
Speaker 3: Thanks so much. Appreciate the caller. Sure. And our next question comes from the line of Pete Skibitsky with Alembic Global. Please go ahead.
Speaker 13: Good morning, Scott and Frank and Eric. A little bit of a follow on to I think it was Miles' question on FLARA. Typically, congrats, you get past the GEO review on FLARA, big milestone there, but now you have to kind of switch to a keep sold strategy, right?
Speaker 13: I'm just wondering, Scott, from your perspective, what your view is on the technical and schedule risk to the development contract, you know, as you kind of move from the aircraft in your configuration to the exact production configuration that the Army wants. I'm just wondering kind of how you gauge the risks and if there are any important milestones that we should be...
Speaker 10: or touch points.
Speaker 10: Army pilots flying them, as you know, as we went even through the formalities of the formal RFP, and during this whole period of time, the proposal evaluation, there was ongoing effort.
Speaker 10: under the OTA for the SCERR program, which was continuing to reduce risk and finalize design, activities, and risk reduction, even whilst the proposal evaluation was going on.
Speaker 10: So I think you know the good news here is we have a really really solid technical baseline for the aircraft itself We have a great team that's in place ready to go that you know that is being reassembled here to now go to execute the EMD program Obviously there's a lot of new stuff here around the mission systems and development of that capability and the most
Speaker 10: system for the, in the interest, the architecture of the mission systems and how they accommodate changes over time. But I think that we have a really, really good technical baseline, the aircraft that we're about to go design and build and fly is very, very close to the aircraft that we've already designed and built and flown. So I think there's a big chunk of a risk that has been very effectively reduced. And we're ready to...
Speaker 10: in terms of the architecture of the mission systems and how they accommodate changes over time. But I think that we have a really, really good technical baseline. The aircraft that we're about to go design and build and fly is very, very close to the aircraft that we've already designed and built and flown. So I think there's a big chunk of a risk that has been very effectively reduced and we're ready to go get at it.
Speaker 3: Okay, I appreciate the color. Our next question comes from the line of Christine Louag with Morgan Stanley . Please go ahead.
Speaker 1: Hey, good morning. Scott, Frank, you know, when you look at the portfolio today, it's clearly stronger this cycle versus the last Aviation's got a backlog, Belfst secured flora and dutchels is stable now with the balance sheet pretty low What's your appetite to expand into another vertical and tap into secular growth markets? I think that we
Speaker 10: We do have a very strong balance sheet. We have a lot of cash on hand. We have strong cash generation in the business. We'll continue to execute on our buyback programs.
Speaker 10: continuing share buyback we would look at it but as I said it would have to be something where it's a clear wind and always contrasting that with what's going on with our share buyback program. Great thank you. And with that our last question comes to the line of.
Speaker 3: Ron Epstein with Bank of America. Please go ahead.
Speaker 4: Hey, good morning, guys. Good morning, Ron. Scott, could you kind of walk through, you mentioned earlier on the call.
Speaker 10: This is kind of back to Myles' question about positioning the company for some more growth and defense and the opportunities ahead of you in Bell and Systems. If you could walk through a couple of those that maybe you find particularly interesting for the company. Sure. Well, Ron, I would say that the flower wind on a standalone basis is hugely important to our future. Our guys have done a great job.
Speaker 10: all kind of waiting on the engine side to have that thing fly, but getting the Army activity continues in risk reduction and further definitively finitizing that program. So clearly I think that's a great opportunity. I think we have a great solution. There are activities which again are publicly out there in terms of the future systems that the Navy and the Marine Corps are looking at.
Speaker 10: which I think a lot of our technology, particularly in the tilt rotor space, will potentially be a great solution and can leverage off a lot of the investment that we've already made on the 280 program. Those are likely to be adaptations, but again from a technological standpoint I think we're in a really good place for some of those future opportunities. High-speed VTOL bell, you know, arguably a little bit further off, but you know, that's another step.
Speaker 10: I think that leverages our fundamental core capabilities to go to even higher speed, higher performing, longer range assets. So I think Bell, in my view, Ron, I guess I would say, I think we have a phenomenal franchise around Tilt-Rotor, and I think we have a lot of opportunities to continue to grow that franchise.
Speaker 10: on a number of different adaptations of that technology into the future. On the system side, okay, there's a lot of programs in there, I think we've, the win on the Sentinel program with Northrop is a driver of growth for us going forward as that moves ultimately from EMD into its production phases here in the future.
Speaker 10: We have some great new wins on the munitions side with the XM204s and XM250s. Again, a great franchise for us for a long time, which is really growing. I mentioned our down select on FDUAS.
Speaker 10: Shadow continues to be a good program for us, but the future tactical UAS with the Army is certainly a big opportunity. There's a couple big land vehicle programs, as you know, ARV on the Marine Corps side, OMFE on the Army side. So I don't want to wrap the list up, but there's lots of opportunities out there for which we've either won or we've been down selected, or I think we're up.
Speaker 10: demand being driven from the war in the Ukraine. Are you seeing orders for stuff that maybe 18 months ago you wouldn't have expected? No, we're really not wrong. We're not in that sort of munitions space. I mean, there has been some dialogue around some land vehicles, but they're largely EDA, things that are in surplus in the army that would come out.
Speaker 2: Got it. Got it. Thank you.
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