Q2 2023 Textron Inc Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Q2 'twenty twenty-three Textron earnings release at this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you wish to ask a question. Please press one and then zero on your Touchtone phone.
You will hear the acknowledgment that you've been placed into Q and you can't remove yourself from that queue at any time by repeating the ones the at command.
Should you require assistance during the conference. Please press Star then zero and an operator will assist you offline.
As a reminder, today's conference is being recorded and I would now like to turn the conference over to our host Vice President of Investor Relations Eric Salander. Please go ahead.
Thanks, Kelly 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 Connor, our chief financial.
Officer.
Our earnings call presentation can be found in the Investor Relations section of our website.
Revenues in the quarter were $3 4 billion up 270 million from last year's second quarter segment profit in the quarter was $352 million up $71 million from the second quarter of 2022.
During this year's second quarter, we reported income from continuing operations of $1 30 per share adjusts.
Adjusted income from continuing operations, a non-GAAP measure was $1 46 per share compared to a dollar for dollar <unk> 11 per share in last year's second quarter manufacturing cash flow before pension contributions a non-GAAP measure totaled $242 million in the quarter compared to $309 million in the second quarter of 2022.
With that I'll turn the call over to Scott.
Thanks, Eric and good morning, everyone second quarter was a strong quarter with revenue up across all our businesses and solid execution generating a segment profit margin of 10, 3% up 140 basis points from the second quarter of 2022.
At aviation in the quarter, we delivered 44 jets down from 48 last year, a 37 commercial turboprops up from 35 in last year's second quarter.
Have you should continue to see solid demand across jet and turboprop products backlog grew $315 million ending the second quarter at $6 8 billion and the.
Quarter Aviation received an order for a loving special mission King Air 300, <unk> expected to deliver in 2024 and 'twenty five.
Also during the quarter aviation over the first passenger configured system Sky Courier, Illinois or purchase Hawaiian Inter island routes.
The new product front aviation announced the Cessna citation ascend and <unk>.
Based in May.
Sun will feature the latest Garmin 5000 avionics suite for passenger range of 1900 nautical miles.
From a cap experience with large windows and a flat for <unk> 545 D engine that features improved thrust increased time between overhauls and enhanced fuel efficiency.
Aircraft is expected to enter service in 2025.
Moving to Bell revenues were slightly higher in the quarter.
They'll be on ramping activity on the Florida program, including Onboarding engineers contracting with major suppliers and ordering long lead materials.
I'll also added $1 $2 billion of backlog related to the Florida contract during the quarter.
Also in the quarter Bell received an initial contract authorization for four additional B 22 aircrafts.
On the commercial side of Bell, we delivered 35 helicopters up from 34 in last year's second quarter.
At Textron systems, we saw continued solid margin performance on slightly higher revenues.
June systems delivered craft 107 to the U S Navy ship to shore connector program.
Craft delivered to the Navy.
Also during the quarter.
Systems aerosol and hybrid Quad UAS was among four competing unmanned aerial systems that were awarded design contract over the first option of the Army's future tactical unmanned aircraft systems program.
So this was also advanced as part of team links led by American run at all in the next phase of the U S. Army's XM 30 program.
Textron systems designated manufacturer team links.
The army Dallas like of two competitors for the next phase of the program, which includes detailed design and prototype builds.
Moving to industrial we saw higher revenues in the quarter driven by higher volume at both Catholics and specialized vehicles.
Specialized vehicles, we announced the new Liberty Ellis V Street legal vehicles powered by our elite battery system with four forward facing seats.
Within <unk>, we saw increased volumes year over year across all our geographic end markets.
Moving to aviation, we've got yeah, and wind tunnel testing on the Nexus E VTOL aircrafts.
These tests represent a significant step in the aircraft development process and supporting design validation activities.
Additionally, we continue the prototype assembly and systems integration of the <unk> are hybrid electric unmanned cargo VTOL aircrafts are facilities in Slovenia.
That I will turn the call over to Frank.
Thanks, Scott and good morning, everyone.
How each of the segments contributed starting with Textron aviation revenues.
Revenues at Textron.
Aviation of $1 4 billion were up $78 million from the second quarter of 2022, reflecting higher pricing of $95 million.
Partially offset by lower volume and mix.
Profit was $171 million in the second quarter up $22 million from a year ago, largely due to favorable pricing net of inflation of $52 million.
Arcelor offset by an unfavorable impact from performance of $23 million for.
Performance included unfavorable manufacturing performance largely related to supply chain and labor inefficiencies backlog in the segment ended the quarter at $6 8 billion.
Moving to Bell revenues were $701 million up $14 million from last year due to higher pricing of $21 million, partially offset by lower military revenue of $7 million segment.
Segment profit of $65 million was up $11 million from last year's second quarter due to a favorable impact from performance of $13 million, largely reflecting lower research and development costs and a favorable impact from pricing net of inflation of 9 million, partially offset by lower volume and mix backlog in the segment ended the quarter at $5 6 billion.
At Textron systems revenues were $306 million up 13 million from last year's second quarter, largely reflecting higher volume.
Segment profit of $37 million was down $1 million from a year ago.
Backlog in the segment ended the quarter at $1 9 billion.
Industrial revenues were $1 billion up $155 million from last year's second quarter, largely due to higher volume and mix at both <unk> and textron specialized vehicles of $121 million and a favorable impact from pricing of $37 million.
<unk> profit of $79 million was up $42 million from the second quarter of 2022, primarily due to higher volume and mix of $32 million and a favorable impact from pricing net of inflation of $17 million principally at <unk>, partially off set by an unfavorable impact of $10 million from performance.
Textron Aviation segment revenues were $11 million and segment loss was $12 million in the quarter, primarily reflecting research and development costs.
Finance segment revenues were $18 million and profit was $12 million.
Moving below segment profit corporate expenses were $21 million net interest expense was $16 million LIFO inventory provision was $35 million.
Intangible asset amortization was $10 million and the non service components of pension and post retirement income were $59 million.
In the quarter, we repurchased approximately $4 2 million shares returning $273 million in cash to shareholders year to date, we have repurchased approximately nine 4 million shares returning $650 million in cash to shareholders.
Earlier this week <unk> board of directors approved a new authorization for the repurchase of up to 35 million shares under which the company intends to repurchase shares to offset the impact of dilution from stock based compensation and benefit plans and for opportunistic capital management purposes.
To wrap up with guidance, we are increasing our expected full year adjusted earnings per share to be in a range of $5 20 to $5 30 per share up from our prior range of five to $5 20 per share.
We also continue to expect full year manufacturing cash flow before pension contributions of $900 to $1 billion.
Concludes our remarks, so operator, we can open the line for questions.
Thank you and again, ladies and gentlemen, if you wish to ask a question. Please press one and then zero on your Touchtone phone calls you'll hear an acknowledgment that you've been placed and SKU and you can't remove yourself from queue at any time by repeating the Wednesday, All command, we ask if youre on a speaker phone to pick up your handset before pressing the numbers once again for your questions. It's one and then zero.
Yeah.
Our first question will come from the line of Peter Arment with Baird.
Yes, good morning, Scott.
Good morning.
Hey, Scott I guess.
Let's start with aviation really strong performance.
On margins and top line.
Do you still kind of tracking I mean, I guess with the supply chain. The way there's been so much volatility how are you thinking about just kind of your delivery targets and just managing your skyline I know youre probably sold out now are much farther out just given your backlog maybe just some overall comments thanks sure.
Sure Peter look I think on the on the order activity. The market is still quite strong and so I think were posted a strong book to bill.
Again in the quarter.
Jets and turboprops. So I think we continue to be.
Really happy with how the market is.
Is behaving in terms of demand and pricing. So that's all good all good as I think you are hearing from everybody.
The biggest challenge still remains on the supply chain side of things I would say, it's not getting worse, it's probably modestly getting better but as you know the challenges of reports important right. So you may not have as many problems, which store kind of hit by that weakest link and if you look at our numbers. We are probably a few jets later in each quarter than we would like to be.
Obviously, creating a little bit of inventory, but these things ultimately will.
We will sell but I think when we think about the guide and whats going forward, we're still very happy with the margins and the execution performance despite inefficiencies in.
Dealing with some of those supply chain issues.
Issues, but I think for the year it'll be a little light on the on the revenue side versus where we would like to be but those things will push into 2024, obviously so.
Net net of everything it's still a good strong demand environment and we will continue to fight our way through some of the supply chain challenges through the through the course of the year.
I appreciate that and just one quick follow up Frank did you disclose what the aftermarket growth was in the quarter for aviation at all.
So aftermarket for the quarter was was about 3% growth and 32% of total revenue.
I appreciate it thanks again.
Thank you we'll go next to the line of Sheila <unk> with Jefferies.
Good morning, guys and thank you may.
Just to start off a specific one on bell how do we think about the V 22 here the house Appropriations Bill included about 700 million.
Or potentially five V 22, how do we think about how that could add legs to this program.
Hum.
Laura.
Well, so what whats.
What's going on there Sheila is the Navy of course has now had a good while of deploying the CMV 20 two's into the Navy applications.
As you know that program was originally awarded in the program record was based on replacing the <unk> card.
So the number of aircraft was really sort of designed just to replace that mission.
We are hearing from the Navy and they've been fairly public about this has been some nice articles out there is that as theyre getting the CMV 22 into the fleet. They are realizing there is a lot of things you can do with the V 22 that you Couldnt do with <unk>.
<unk>, which was restricted to.
Big deck carriers and airports onshore so.
The versatility and the performance of the V 22 is leading the Navy to say look we've got other applications that would cause us to delight to have more of these of these aircrafts that hasn't been formalized yet on the navy side of things I mean, there's a lot of dialogue around that.
But what youre seeing in the and the house appropriations as those five.
<unk>, 'twenty twos, which would be above program of record is because of the versatility and the desire ultimately the navy to have more of these craft. So we'll see how this plays out over time, but we're obviously, we're very happy with the performance of the aircraft. The Navy is very happy with the performance of the aircraft and so hopefully we'll see.
Some continuing level of production now that we're sort of beyond the program of record.
That's great. Thank you for that color and then maybe a bigger picture one.
If you could start and I know youll be a barbell, so again <unk> got.
Some time on the Q, you announced a pretty large repurchase program in the quarter and how you're thinking about capital allocation and then start obviously with ascend.
Our capital allocation for repo versus new product.
So capital allocation. It really remains the same Sheila we've obviously continued to generate very good free cash flow.
We've talked about obviously, we invest significant capital back into the business and R&D and Capex thats going to continue but beyond that we're generating a lot of free cash flow that we've been returning through share repurchase activity, we talked about kind of a baseline of 5% to 6% or so of our share base a year from a repurchase standpoint.
We came out of the pandemic.
More liquid than we usually are and need to be and you've seen it in the first half of the year. We've we've repurchased a lot of stock and we expect to continue to be in the market opportunistically in the $35 million reflects kind of the need to have the shares available authorization available to do that we were down to $2 7 million shares on the <unk>.
Last repurchase and.
We're rolling through it pretty quickly.
As Frank said, Sheila I mean, I, certainly don't see it as a trade with R&D as you know we're fairly high R&D.
We think investing in new products is the key to growth I think we're seeing that play out right now when you look at aviation with the investments in latitudes and longitudes.
The a lot of the upgrades are a lot of our current products both on the jet and turboprop side Sky Courier now driving nice growth for us.
You said that we just announced so if you look at Bell, obviously, we've made a huge investment over the years and the Florida program in the far program. That's obviously now turning into a.
A great growth driver for us so across all the businesses, we're not going to change our strategy here in terms of R&D.
Keep making the investments that we think we need to make the product side, but.
Despite all that were obviously, making strong profits and strong cash flow and that gives us a great flexibility to allocate and drive some of that back through the share repurchase program and do it right we think for the shareholders.
Great. Thank you.
Okay.
Thanks, We'll go next to the line of Jason Gursky with Citi.
Hey, good morning, everybody good morning.
Scott I was wondering if you could provide kind of a general update on the general aviation market. There was a show here recently up in Oshkosh I was wondering if you had any general learnings from from either that show, where your general view of that.
The general aviation market and then.
Second one would be just kind of an update from your perspective on.
<unk>.
The market for pilots.
Both for as they come in through the general aviation market and make their way maybe up into.
The Biz Jets and Heather aircrafts that are more important to you I'm sure Jason I think one of the nice parts about the market right. Now is this as much as we talk about the jets and turboprops and obviously, that's the bulk of our business, but when you look at in Oshkosh, which is really a show that's aimed around the propeller.
Market place in just 170 twos in the history of electric aircraft and all that kind of good stuff. So the demand is strong from top to bottom I mean, we were.
And have a great book.
Book to Bill in our 170 twos twos two sixes.
So you see really really strong demand from that customer.
Customer that we've always had a very strong demand from training school. So if we kind of shift into your pile will discussion.
There is no doubt people have talked for many many years about.
The shortages of pilots, which is coming up and we're seeing that right. So the training schools are putting a lot of orders and they are increasing the size of their fleet. So they can get more pilots through there's a lot of activity with frankly, some of the airlines buying a lot of aircrafts. So that they can get pilots not just pilots that come into the industry, but pilots that need to get the hours in order to.
Eligible to fly for the actual airlines and so those hours are our best built by using less expensive per hour.
It's a aircraft when we have a lot of demand on that side as well so.
The nice part here is it's a it's a robust market everything from our assessment of 172 or <unk>.
Small purposeful <unk> all the way up through longitude. So if the demand is very very broad.
Great. Thank you.
Okay.
Authorizations out there for us to award contracts to our major subcontractors, which is a huge part of the program obviously as it goes out through.
Through the industrial base.
They've authorized critical long lead materials that we need to support the initial flight aircraft. So.
The program has all.
The ramp it about as fast as I can imagine ramping such a such a large program.
So I think we still feel very comfortable with the guy that we provided in terms of where we're going to end up the year on revenues that program.
Drives a lot of the girls frankly, that's this ramping up.
Because of the way to think about this program is it certainly it's ramping here as we go through 2023, but.
The J docs are out there right.
The next few years. This is sort of a billion dollars a year program. Obviously part of that is retained by the government to run their program offices and things like that but I think we will very rapidly ramp up in the.
You know how far exactly where we expected to be which isn't that probably eight $900 million a year of revenue.
Okay and then just.
Follow up on.
Seeing some points and depressed about potential interest and some properties out there I'm just wondering if you could talk a little bit how you see the portfolio shaping up.
We probably won't provide any comments Terry on.
Rumors that or.
Out there in terms of M&A activity at this point.
Alright, thanks, Okay sure.
Thank you welcome next per line of Noah.
Goldman Sachs.
Hey, good morning, everyone.
Aviation margin is that that's one of the highest levels in awhile.
And the.
Incremental I think is a little higher than your.
Kind of long term framework.
And I guess, that's despite the performance number you cited if I had that back I'm I'm more in the mid teens and so I guess as I think about where that margin goes over time, obviously the.
Labor and supply chain inefficiencies, you're citing won't be solved immediately, but but also won't last forever. So.
Is it reasonable to think about the margin adjusted for that in the quarter is kind of a baseline you know plus an incremental for where you can go you know late next year into the middle of the decade.
Well, probably not ready to guide into the middle of the decade, just yet [laughter].
You have a pretty big backlog in that business now [laughter], well locked out or you know there's like.
I think the margins are very good. The guys. You write are working through you know challenges, which we would certainly hope will abate you know somewhat over time I mean, obviously, there's an inflation that's baked into.
You know the numbers at this stage of the game, but.
[noise] will will probably avoid doing.
Too much in terms of guiding out to the future other than that what he's a good gross margin products I mean, I think will be.
Way to long term thinking about this is going to be around that 2025 per cent.
Conversion and we're sort of looking at.
Certainly growth as we look into into 2024 and beyond but again, it's going to be in some part constrained by.
Supply and also ours, just looking and making sure that we're we're tracking to where the demand is in the marketplace again, we've talked before about the health of this industry should be running with a substantial backlog in and we are now running with a substantial backlog and that's a that's a good place for the whole industry to be so.
In the near term.
Is it reasonable to expect that price net of inflation number to grow because I think you're I think the pricing and your backlog is still better than what's hitting the P&L now although correct me if that if that's wrong and then if inflation is decelerating it would seem like.
Both the top and bottom bottom top and bottom end of that number would be widening well what can we do feel good about the pricing that's going into the backlog, but we are still seeing inflationary pressures the rate of inflation is certainly coming down, but there is still inflationary pressure out there.
Yeah, I remember you know we have some longer term supply contracts. So we we get a nice job of responding to.
Demand in the market and.
Create a more appropriate pricing environment, but there is some lag effect associated with our contracts and just the flowing of inflation, but we we still feel very good about where we are.
Net of inflation, but but there is a lagging impact on some of those costs.
Okay, and just just last piece on it is is your price.
Your your rate of change in price decelerating with Ah you know maybe.
Some normalization in the market or did you you you know not increase it so fast that it needs to slow and and the rate of change is just kind of holding at this point.
Oh, no I have not run a first derivative on our price.
But but I don't know I I I, yeah, we probably won't go into that that level quite that level of detail, but suffice to say you know, we're still getting pricing and you'll good about you know how that price demand is working on the market.
Alright I appreciate it thank you.
We'll go next to the line.
For to call research.
Thanks, so much good morning.
Hi, good morning.
Scott <unk> industrials M. A good cool to that both on the top line in the margin and how sustainable who do you think these guys food and do you see this as a sign that the U S. Consumer he says still holding and they're pretty resilient.
Oh look I I do think it's a good sign for sure Robert I mean, the automotive guys recovery is kind of ever geography is is encouraging to see those volumes going up in there.
And I think the Catholics guys did a nice job of converting on that we still continue to see strong demand.
You know, a little cross golf and turf and consumer products I mean, so yeah I mean, it's.
It's they're they're hanging in there right I mean, I think we all still we're a little bit about the you know the high end consumer but things have been had been pretty reasonable now as you know there is a certain seasonality these businesses and although we do a lot of summer shutdowns and things.
Things like that so you know the <unk>.
Quarters, usually a stronger or three quarters or is it a little bit lighter in terms of the revenue on those businesses, but look better the whole thing I think that the demand environment.
Has been improving in our teams are doing a nice job of executing on that.
Yep and then frankly technical question for you you May Z P. S guide by 10 cents can you give us some idea of where that's coming from within the operations.
Yeah, I mean, it's it reflects you know kind of strong first half and you know the earnings obviously that we just report it so there's a little bit in there for you know kind of share count and some other things, but it's it reflects a solid first half of the year and just Ah continuing good execution in the the second half of the year is Scott said I think.
Kind of there's a little bit of volume you know at aviation that is kind of probably be liked relative to our guide, but industrial as private covenant stronger then we had first thought from a top line standpoint, and overall salad execution across the businesses.
That's great. Thanks, so much.
Thank you I'll go next to the line of George Shapiro with Shapiro research.
Good morning, and good numbers.
Scott.
You think we still do 200 deliveries and we should not maybe call that 190 or something given that we seem to be missing a couple of the quarter.
I think the number is gonna be a little bit lighter than we originally had in there George So I don't I don't think it's gonna be 200.
I just said I think the execution of strong I think.
No margins and.
Contribution earnings are going to be where we expected them to be but it's going to be with a little bit lighter top line.
Driven by you know.
Trying to get the aircraft out.
And.
Obviously those those are aircraft it'll move into 2020, Ford's sales that are still going to happen, but I do think it will be a little bit lighter on the year than what we originally got it on the top line.
And that's at Bell is the margin guide still good assuming that this quarter was particularly strong.
I had some fully belt, yet so log into a weekend in subsequent quarters.
Oh look I think Belle is tracking right on where we expected from a from a guide standpoint so.
We're still seeing you know good execution on a lot of the production side of things, obviously flora coming.
Coming in is nice, but in terms of driving the top line clearly it absorbs a lot of overhead and the business, which helps you don't maintain the level of profitability and and some of the other product lines, but as.
As we talked about the the absolute numbers and we don't have as much of your 22 H one production as we had but we're gonna still I think posted a number that's very.
Very much in line with what we got it.
Alright, just one follow up on industrial I mean, it was particularly strong I mean, I went back and looked at was the best quarter since like utility 18, and that's probably the business wasn't even the same at that point, although cats, Texas, obviously there so.
Comment anymore, I mean, it would seem like the sales you could would be 3.6 billion guy here for the year and the margin suddenly would look like it could be based on what the margin was this course of your comment a little bit more on that yeah.
Oh look I I think we do have you know judges said look aviation is probably a little bit light on the regular line I think industrial will be up a little bit stronger on the revenue line to offset that as we go through the year I do think that the the margins, there's probably a little bit of upside of the margin, but certainly just conversion on that revenue will give us a little bit of upside on the year in in getting us.
What is factored into the.
The rays on our on our guidance of Dps level. So I think we're we're happy with all that's going on the industrial side and again, it's strong demand.
Recovering in your auto side, you don't see as much drag on automotive manufacturing and that's good for us at Caltech and golf and turf. In these markets are are staying pretty robust. So I do think that's kind of the way we think about mostly all set here, we'll see we'll see some nice upside on the revenue there and that will bring with it you know.
Some increase in an op certain.
Certain incorporating part of our our raised for the year.
Thanks very much.
We'll go next to the line.
Ailes Walton.
<unk> research.
Hey, you have had a lower federal on for miles are Ya.
Good morning.
So I think you guys have just a little bit with the ongoing disruption I guess like an aviation, but at what point do you think that the pricing benefit will sort of overcome or or more than overcome the sort of been negative on the performance side.
Well I mean, it is right now so are you know when you look at our pricing right now is even even none of inflation is still enough to overcome.
Some of the challenges in terms of the inefficiencies driven by that so I'm the only willing supply stuff. So I I think that's a trend that we've had here for awhile and I expect will continue to see that as we go into the future.
Okay, and then I think he makes it so it is 190 that they're right now we're gonna think about it or would you be a little bit higher than that for the year.
We're not going to guide a specific number but you know I mean, I don't think it's b.
[noise] and light by a couple of hundred million dollars is probably the right way to think about the the top line, but again I think from a performance standpoint margin standpoint will.
We should be more or less than where we got it.
Okay. Thank you very much.
Thank you.
T D counting.
[laughter], yes, thanks, so much.
Strategic clashed and you know obviously.
Business is growing with flora.
The.
A number of other programs and yet when you look at your <unk>.
Business.
Really a niche player and you're all so.
You know with a G E D.
Those guys strategically.
You said you'd like to increase.
How big would you like to get and what sorts of things would you consider buying to bolster your indeed business.
Well.
That's a good question catalog, obviously, we'd like to be bigger and I think that the approach we're taking year is the.
Investments that we've made in our existing businesses is driving a lot of that growth. So I think if you look at aviation all the investments that we've made and continue to make and in those new platforms.
You know you reference a couple of other names like I think the you know obviously, we made a huge investment in far over the years, that's gonna drive a ton of growth and shows that we can go.
Head to head on a program by program basis, and win and and drive a lot of organic growth. When you look at system. Some of the things that you know.
We talked around the or what's now I'll refer to as X I'm 30, and ARV with the Marine Corps you know there's things out there that are you know.
Potentially significant growth drivers were were going head to head with.
Some of the guys that are are the the biggest you know.
Names in the in the business and I think we can win against them. So.
Our focus continues to be making sure that we're making the right investments so that we can drive the organic growth.
And while we do acquisitions, if there's the right opportunity that comes along absolutely, but we've got a.
I you know I've always felt.
You Wanna do you don't want to have to do a deal right. So I think that there are strategies continue to make the right investments on the organic side. So that we can drive really good growth.
And if something comes along that makes sense from an accident standpoint, we're we're happy to look at that.
So when you look at things do you look at it from a holding company perspective, this would be a good business.
Or you know are there specific skill sets.
Would be complementary to watch you.
That would make you a stronger player.
Helicopters and whatever.
Oh look I think right now it's primarily looking you know in the a and D. Space you know things that would help diversify us in terms of this are strengthened A&D.
I don't think it's likely that you see something that specifically in the.
The helicopter space I, you know I, just don't know that there's there's targets out there where you do that in from.
Government standpoint, an antitrust standpoint, you know I don't I don't think you would probably see much activity.
Space I'd be kind of surprised I think he'll look a complimentary A&D capability, certainly where we bring technological capability, where the target would bring type of all the capability. This.
Some synergistic, but I think in large part.
Providing.
A more well rounded more diversified energy company.
Great. Thank you very much.
Thank you and our last question will come from the lineup Christine.
Morgan Stanley .
Great. Thanks.
Economic uncertainty and increasing interest rates I mean, ultimately the demand enticing for business Jackson General aviation continued to be robust.
Surprised by the bears pretty much. So what do you think is driving this.
And how long just apply do you think the market continues to be.
Oh look I think the demand environment is driven by the fact that people.
You know a particular people who come into this market and started using aircraft an experienced what private aviation was all about I've had a great experience you know I mean, the the their time machines right. It allows you to do things that you just can't do if you're using commercial transportation. So.
The productivity the efficiency the ability to get from your word anywhere at on your time and you know in an expeditious way.
Is something that the you know the more and more people and I think he and this was you feel by doing the Covid you know there's a lot of people got exposed to this market that had not in the past and.
They're turning out to be a great tool and so I think that's what's continues to fuel a lot of the the demand in this marketplace. So it's.
It's you know obviously, we offer a lot of products across a broad range of a price points in performance and I think that's why we're seeing you still fundamentally very strong.
Demand environment and as you know, it's not just our company and our products, but across the you know very very broad range of of.
Of General Aviation.
Yeah, and I guess when you look at the portfolio.
And likes cabin [noise].
Large cabin out of the market continues to also be phobos at this point when you look at this the Cessna portfolio, which app your appetite to go bigger.
[noise] to Columbus in the hemisphere, it didn't come about but is there right.
Jus, an airplane of that size or or even larger.
To the larger cabins.
No I don't think there is like I. We we did look at one point is you know.
Would we stretch the top end of our.
Form we did have programs of the time in it.
For technical reasons and.
We.
We ended up not doing those programs I think that part of the market now, particularly as you grow larger in that market, which is kind of a choice. We were faced with is a very well served market. So I think we're better off focusing all of our R&D in our energy and our investments.
In the sort of up to that Super mid size on the longitude. We've been doing is you know a lot of great.
Upgrades to a lot of those programs are platforms.
Platforms all across our portfolio.
We continue to make the right investments Denali is still in development and that's gonna be a home run for us.
And which we just announced I mean, that's right in the sweet spot of our market.
I'm in the market that we've had a great track record in the past with previous aircraft and I think this and it will be really well received and drive a ton of growth for us. So.
This is I think that and we're we're very focused on.
Making those investments across everything from our little Cessna 170, twos and now of course, and the electric space with a bit of a stroll in the aviation.
All through launched too, but I think that's a that's a pretty good place for us to be and that's where we're going to focus our R&D efforts.
Great. Thank Scott.
Sure.
Thank you.
And gentlemen, today's conference I'll be available today 10 am eastern time running to July 27th 2024 at midnight.
You may access to AT&T replay system by dialing 18662071041 and entering the access code of 8467989 and then.
National Baylor's may call 4029700847.
Those numbers again are 18662071041 are 4029700847 with the access code of 8467989 that does conclude your conference for today. Thank you for your participation in for using a T M.
T as in conferencing, you may now disconnect.
We're sorry, you're conferences ending now please hang up.