Q4 2024 Textron Inc Earnings Call
© Tony Robbins 2012
Please stand by, we're about to begin.
Speaker Change: Good morning, everyone. Welcome to the Textron Q4 2024 earnings release call. At this time, all participants are in a listen-only mode.
Later, you will have the opportunity to ask questions during the question and answer session.
Speaker Change: You may register to ask a question at any time by pressing star 1 on your telephone keypad. Also, today's call is being recorded, and if you should need any operator assistance during the call today, please press star 0 at any time. Now, at this time, I'll turn things over to Mr. Dave Rosenberg, Vice President, Investor Relations. Please go ahead, sir.
Dave Rosenberg: Thanks, Bo, 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 four looking statements are subject to various risk factors which are detailed in our SEC filings and also in today's press release.
Speaker Change: On the call today we have Scott Donnelly, Textron's Chairman and CEO, and Frank Connor, our Chief Financial Officer.
Speaker Change: Our earnings call presentation can be found in the investor relations section of our website. Revenues in the quarter were $3.6 billion, down from $3.9 billion in last year's fourth quarter. Segment profit in the quarter was $283 million, down $101 million from the fourth quarter of 2023.
Speaker Change: During this year's fourth quarter, adjusted income from continuing operations was $1.34 per share, compared to $1.60 per share in last year's fourth quarter. Manufacturing cash flow before pension contributions totaled $306 million in the quarter, down $74 million from last year's fourth quarter.
Speaker Change: For the full year, revenues were $13.7 billion, up $19 million from last year.
Speaker Change: In 2024, segment profit was $1.2 billion, down $127 million from 2023.
Speaker Change: Adjusted income from continuing operations was $5.48 per share as compared to $5.59 per share in 2023.
Speaker Change: Manufacturing cash flow before pension contributions was $692 million, down $239 million from 2023.
Speaker Change: With that, I'll turn the call over to Scott. Thanks, David. Good morning, everyone. 2024 results were impacted by work stoppage deviation and difficult end markets in our industrial segment.
Speaker Change: During the quarter, Aviation reached an agreement with the IM on a new five-year contract.
Speaker Change: While the strike was unfortunate, we did take this opportunity to significantly improve our parts flow to the production line, which we expect will reduce our out-of-station work and improve efficiency going forward.
Speaker Change: Aviation saw steady customer demand continue in the quarter supported by new product launches and our portfolio resulted in a year-end backlog of $7.8 billion an increase of $676 million from 2023.
Speaker Change: In December, aviation secured an order from Naval Air Systems Command for an additional 26 multi-engine training system Beechcraft King Air 260s.
Speaker Change: Also in the quarter, aviation continued to expand the global market for its versatile twin-engine large utility turboprop, the Sussex Skycarrier, achieving type certification by the Transport Canada Civil Aviation.
Thank you.
Speaker Change: During 2024, steady aircraft utilization within the Textile and Aviation product portfolio resulted in a 6.3% growth in aftermarket revenues.
Speaker Change: At Bell, in 2024, we saw significant growth with the continued expansion of the FLAR program, largely driving a 13.7% increase in revenues for the year.
Speaker Change: During the quarter, Bell received a follow-on award for the FLAR program as the U.S. Army exercised Option 2, an option for two limited-user test aircraft.
Speaker Change: On the commercial side, Bell continued to see steady order activity in 2024. For the year, Bell delivered 172 commercial helicopters compared to 171 in 2023.
Speaker Change: Moving to systems, the team delivered another strong quarter with a 13.5% segment profit margin.
Speaker Change: During the quarter, systems completed options three and four of the Future Tactical Uncrewed Aircraft System Program with the delivery of a production representative system to the U.S. Army in December.
Speaker Change: Also, during the quarter, Systems received an award from the Naval Sea Systems Command for the next production lot of nine ship-to-shore connector crafts with a total contract value of $960 million.
Speaker Change: Systems was also awarded a contract value of up to $106 million for mine-sweeping payload delivery systems from the U.S. Navy to support its mine-sweeping operations.
Speaker Change: At Industrial, the segment experienced lower revenues and operating profit in the quarter, primarily driven by the ongoing softness in specialized vehicles and markets.
Speaker Change: We are in the process of conducting a strategic review of our PowerSports product line.
Speaker Change: At E-Aviation, PIPSTO delivered 42 aircraft during the fourth quarter and 120 aircraft for the full year, while continuing our investment in electric and hybrid aviation platforms.
Speaker Change: Despite the challenges faced in 2024 at aviation and industrial, the company exits the year well positioned for future growth in the aerospace and defense businesses.
Speaker Change: A strong order activity generating total company backlog of $17.9 billion up $4 billion in 2023.
Speaker Change: On the new product front at NBAA in October, Aviation announced a significant advancement in aviation technology with the Gen 3 platform upgrades to the M-2, CJ-3, and CJ-4 aircraft, adding Garmin Emergency Auto Land along with other avionics and aircraft enhancements.
Speaker Change: During the year we continue to make progress in the Citation Ascend and Beechcraft and Donnelly development programs.
Speaker Change: Ascend has logged over 700 hours of flight testing, while Donnelly finished the year having logged over 2,500 hours of flight testing.
Speaker Change: At Bell, the U.S. Army announced approval of Milestone B in August for the FLAR program. Bell is now executing on the engineering and manufacturing development phase of the program and progressing towards the first prototype aircraft build.
Speaker Change: Bell's H-1 and V-22 military program highlights include an FMS award for the production and delivery of 12 AH-1 Zulu helicopters to Nigeria and over $1 billion in sustainment awards on the H-1 and V-22 programs.
Speaker Change: On the commercial side, Bell saw steady demand throughout the year, including its first 525 helicopter order for 10 units to Equinor, the Norwegian state energy company.
Speaker Change: In 2024, Tektron Systems made significant progress on several key pursuits.
on the U.S. Army's Robotic Command Vehicle Development Program.
Speaker Change: Systems announced the delivery of two Ripsaw M3 prototype vehicles to the Army for phase one of the competitive development effort ahead of a downselect expected in the first half of 2025.
Speaker Change: As part of the XM30 program, TeamLinx's advanced to the detailed design phase is expected to conclude with a critical design review in the first half of 2025.
Speaker Change: On the Advanced Reconnaissance Vehicle Program, Systems Continued its development work as one of two vendors selected to design, develop, and manufacture a 30mm autocannon prototype variant for expected delivery in 2025.
Speaker Change: Moving to FDUAS, the system has fulfilled its contractual delivery commitments and is awaiting a decision on a final downslide for a production award on the competitive program by the U.S. Army in the second half of 2025.
Speaker Change: Systems also secured the next production contract award for the Ship-to-Shore Connector and expanded maritime-maritime operations with the U.S. Navy.
Speaker Change: Moving to industrial, throughout the year we continue to focus on our cost structure to offset challenging end markets.
Speaker Change: At E-Aviation, Pipistrelle was granted an airworthiness exemption by the FAA for its VELS electric trainer, which allows U.S. flight schools to use the aircraft in certified pilot training programs.
Speaker Change: During the year, Uviation acquired Amazeli Aerospace, the developer of digital flight controls, flight guidance, and vehicle management systems for both manned and unmanned aircraft.
Speaker Change: Looking to 2025 at aviation, we're projecting growth driven by increased deliveries across all product lines and higher aftermarket volume with improved productivity and manufacturing efficiency.
Speaker Change: Moving to Bell, we expect revenue growth driven by the Flower Program and higher commercial volumes. At Systems, we expect low single-digit revenue growth with strong margins as we continue to pursue new program opportunities.
Speaker Change: In our industrial segment, we are projecting lower revenues largely driven by the suspension of power sports production at TSV and lower automotive volume at Caltex and expect cost reductions to drive an improvement in segment profit margin for 2025.
Speaker Change: At E-Aviation, we plan to continue our investment in the development of new hybrid and electric technologies for manned and unmanned aviation platforms.
Speaker Change: With this overall backdrop, we're projecting revenues of about $14.7 billion, up 7% from 2024, for Textron's 2025 fiscal year.
Speaker Change: We are projecting adjusted EPS in the range of $6.00 to $6.20.
Speaker Change: Manufacturing cash flow before pension contributions is expected to be in the range of $800 to $900 million.
Speaker Change: With that, I'll turn the call over to Frank. Thank you, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation.
Frank Connor: Revenues at Textron Aviation of $1.3 billion were down $242 million from the fourth quarter of 2023, reflecting lower volume and mix of $282 million.
Frank Connor: which was principally a result of production disruptions related to the strike.
Frank Connor: Segment profit was $100 million in the fourth quarter, down $93 million from a year ago, primarily due to lower volume mix and manufacturing inefficiencies, which included idle facility costs and higher costs associated with the labor disruption resulting from the strike.
Frank Connor: The backlog in this segment ended the quarter at $7.8 billion, up $219 million from the prior quarter.
Frank Connor: Moving to Bell, revenues were $1.1 billion, up $58 million from last year's fourth quarter, reflecting higher military and support program revenues of $67 million, primarily due to higher volume on the FLARA program, partially offset by lower volume on the V-22 program.
Frank Connor: Segment profit of $110 million was down $8 million from a year ago, primarily driven by mix as lower volume on the V-22 program offset higher volume on the FLARA program.
Frank Connor: Backlog in this segment, end of the quarter at $7.5 billion.
Frank Connor: At Textron Systems, revenues were $311 million, down $3 million from last year's fourth quarter. Segment profit of $42 million was up $7 million from last year's fourth quarter. Backlong in this segment ended the quarter at $2.6 billion.
Frank Connor: Industrial revenues were $869 million, down $92 million from last year's fourth quarter, largely reflecting lower volume.
Frank Connor: Segment profit of $48 million was down $9 million from the fourth quarter of 2023, reflecting lower volume and mix and inflation, partially offset by manufacturing efficiencies and lower selling and administrative expense, largely due to cost reduction activities.
Frank Connor: Textron E-Aviation segment revenues were $11 million in the fourth quarter of 2024 with a segment loss of $22 million, largely associated with research and development expense on new products.
Frank Connor: Finance segment revenues were 11 million and the profit was 5 million in the fourth quarter of 2024.
Frank Connor: Moving below segment profit, corporate expenses were $17 million, net interest expense for the manufacturing group was $21 million.
Frank Connor: LIFO inventory provision was $80 million, and tangible asset amortization was $8 million, and the non-service components of pension and post-retirement income were $65 million.
Frank Connor: In December, we announced a strategic review of our PowerSports product line within the industrial segment that resulted in additional restructuring actions.
Frank Connor: With these actions, we've recorded total pre-tax special charges of $53 million and an inventory valuation charge of $38 million in the fourth quarter.
Frank Connor: Our manufacturing cash flow before pension contributions was $306 million in the quarter.
Frank Connor: For the year, manufacturing cash flow before pension contributions totaled $692 million.
Frank Connor: down 239 million from the prior year. In the quarter, we repurchased approximately 2.8 million shares, returning 232 million in cash to shareholders.
Frank Connor: For the full year, we repurchased approximately 12.9 million shares, returning $1.1 billion in cash to shareholders.
Frank Connor: With that I'll turn the call over to David. Thank you, Frank. Turning now to our 2025, I'll look on slide 7.
David: We're expecting adjusted earnings per share to be in the range of $6 to $6.20.
David: We're also expecting manufacturing cash flow before pension contributions to be about $800 to $900 million.
David: Moving to Segment Outlook on slide 8 and beginning with Textron Aviation, we're expecting revenues of about $6.1 billion.
David: Segment margin is expected to be in a range of 12 to 13 percent.
David: Looking to Bell, we expect revenues of about $4 billion. We're forecasting a margin in a range of 8.5% to 9.5%.
David: At Systems, we're estimating revenues of about $1.3 billion, with a margin and a range of 12 to 13 percent.
David: At Industrial, we are expecting segment revenues of about $3.2 billion and margins to be in a range of about 4.5 to 5.5 percent.
David: At EAviation, we expect revenues of $45 million and a segment loss of $70 million, reflecting our continued investment in sustainable aviation solutions. At Finance, we are forecasting segment profit of about $25 million.
David: Looking at slide 9, we're projecting about $160 million of corporate expense. We're also projecting about $130 million of net interest expense for the manufacturing group, $165 million of LIFO inventory provision, $35 million of intangible asset amortization, and $265 million of non-service pension income.
Go to Beadaholique.com for all of your beading supply needs!
We expect a full-year effective tax rate of approximately 18%.
David: Turning to slide 10, R&D is expected to be about $500 million, up from $491 million last year. We're estimating CapEx will be about $425 million, up from $364 million in 2024.
David: Our outlook assumes an average share count of about 184 million shares in 2025.
David: That concludes our prepared remarks, so operator, we can open the line for questions.
Speaker Change: Certainly, Mr. Rosenberg. Ladies and gentlemen, at this time, if you would like to ask a question, simply press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2. Once again, that's star 1 for questions, and we'll go first this morning to Sheila Kayalu of Jeffries.
Sheila Kayalu: Good morning, Scott, Frank, and David. Maybe, Scott, if you could start off with the aviation guidance. Can we talk about the 2025 deliveries? I think it's implied around 190 deliveries versus 151 in 2024. Can you talk about the quarterly cadence of jet deliveries as well as maybe turboprops just given the Q4 delivery number?
Scott Donnelly: Well, I do think that the numbers, obviously, will ramp up through the course of the year. Sheila, you know, we're recovering. I'd say the factors are getting back to, you know, towards full operation, coming out of the strike. You know, we will continue, as we, you know, have been for some time, you know, expanding our...
Scott Donnelly: Our production capacity as we go through the year, and that's largely driven by parts, which I think we're in fairly good shape, and ramping up the workforce. And again, I would say early signs, you know, coming out of the contract agreement, we're seeing a little more stability in the workforce, which is good, and that should enable us to
to see that ramp over the course of the year.
Scott Donnelly: As we talked about in the last call, we're probably going to see...
Scott Donnelly: Also, you know, significant progression in terms of margins as we go through the year. We will have a lot of deliveries here in the first quarter that would have been 2024, you know, deliveries. So, obviously, they're priced at 2024 levels, so I would expect to see both volume and margin progress through the course of the year.
Speaker Change: Maybe if I could just follow up on the margin ramp, can you talk about that bridge as we think about the 7.8% exit rate for Q4 for aviation, how we think about that progressing and the contributors to that?
Speaker Change: Well, for sure the 7.8 is an anomaly, right? I mean, we had a obviously unusually low volumes with the strike affecting, you know, a third or more of the quarter and certainly we took a, you know, a inefficient, you know, current period expense with all of our overhead that wasn't burdened, you know, we couldn't burden on volume. So the 7.8 is certainly an anomaly. I would expect
Speaker Change: As you think about us going through the year, it will see progression. If you look at the guide, obviously we're probably one to two hundred basis points probably below the guide and probably finishing up more like 100 to 200 basis above the guide as you progress through the year to get to that average.
Great, thank you.
For more information, visit www.FEMA.gov
Speaker Change: Thank you. We go next now to Peter Arment of Baird.
Yes, good morning Scott, David, and Frank.
Speaker Change: Frank, good luck with your retirement. Thanks for all your help over the years. Thank you. Hey, could you talk a little bit about the – Scott, just – or David, maybe you want to weigh in on just the – your outlook for, you know, cash flow for the year, just given the earnings you're projecting, which is –
Speaker Change: Obviously, a pretty nice snapback. Just some of the moving parts, it seems, you know, maybe it was a little lower than we were estimating, but maybe we didn't have all the inputs, but thanks.
Speaker Change: You know, in Q4, so we'll see our normal, you know, relatively light cash in Q1, and that will grow over the course of the year. But I think we're pretty confident we'll be in that $900 million range, but, you know, as is normal, it will be more back-end loaded.
Speaker Change: Okay, appreciate that. And then maybe just Scott in general. I know Sheila talked about, you know, aviation and...
Speaker Change: Maybe you just talk about, I mean, you obviously have very strong bookings in refreshed product lines, obviously drawing a lot of new interest. Maybe just if you want to highlight just what you're seeing on the demand environment, whether it's, you know, broad-based or any particular markets that are stronger than others. Thanks.
Speaker Change: Continue to sustain demand through the course of the year. Again, we're probably looking at a one-to-one book to build just because we think that's about where things ought to land given the lead times of where most availabilities are for our different products. So one-to-one is what we're baking into our basic plan.
I appreciate all the call. Thanks, Scott.
Speaker Change: Thank you. We go next now to Robert Stollard of Vertical Research.
Thanks so much. Good morning.
Hello, everyone.
And Frank, best of luck for your retirement.
It's been quite a ride.
Thank you.
Speaker Change: What happened there was that supply chain or was that more on kind of your own in terms of getting the factory. We started post the post the strike.
Speaker Change: Well certainly versus our original guidance for the year, yes. It was probably more in that mid teens aircraft and that was largely driven by the fact that.
Speaker Change: I mean, we Didnt, we really didnt get the factory running again until really the beginning of October so or I'm sorry, the beginning of November So we really lost a third of the quarter.
Speaker Change: Having the workforce out so.
Speaker Change: As I said earlier I think the good news is the folks are back its good to have a contract agreement in place for five years.
Speaker Change: I think the workforce is pleased with the outcome, we're fine with the outcome and everybody is ramping up.
Speaker Change: We're really we did for sure or lose a third of the quarter with not having a production operation in place.
Speaker Change: Yes, Yes, I was just looking at you took down the revenue forecast of five five and you're a little short of that.
Speaker Change: I guess I guess, just following up there how do you feel about the gaming.
Speaker Change: In supply chain in terms of the ramp youre looking at in terms of deliveries for 2025.
Speaker Change: Look David I think I think we feel good about it I mean, that's why that's where we're guiding where we are I would say that the.
Speaker Change: The third party parts supply chain pieces coming into the factory are certainly in a much better position than they were.
Speaker Change: Throughout the course of 2024.
Speaker Change: It feels very good the other critical part is obviously stability of our workforce and retention.
Speaker Change: And again since the contract has been signed and we were very happy with the number of people that came back even folks that had been with us for a very short period of time before the strike.
Speaker Change: Hung in there and came back once the agreement was put in place.
Speaker Change: And the attrition numbers, we're seeing are certainly improve from where they had been through the course of the rest of 2024. So I think the momentum is in the right direction now we've got a lot of work in front of us here to.
Speaker Change: To get deliveries that were supposed to be in 2004 done and ramp it up but I would say.
Speaker Change: The early look in terms of.
Speaker Change: Aircraft coming out of the production lines, the tack times, which really helped to improve over the course of the year are operating as we would expect so I think we're at this point feeling pretty good that we're going to be able to make that ramp and deliver on the guidance of $6 1 billion.
Speaker Change: Okay and.
Speaker Change: Timing for 10 certification what are you looking at and as the Aviation Guide.
Speaker Change: And it all to that timing.
Speaker Change: Well look I mean, obviously, we're expecting it to be.
Speaker Change: In the course of the year.
Speaker Change: We got to work this through the FAA, if there's not an issue or a problem, it's it's going well, but clearly the.
Speaker Change: The actual certification as an FAA action I think we feel great about the flight testing the program is going very well.
Speaker Change: We do have a few aircraft in the year. So yes, it's part of our guide, but certainly not material, but we would certainly expect to get the first few aircraft delivered.
Speaker Change: Late this year.
Speaker Change: Great. Thanks very much.
Speaker Change: Thank you well go next to Ron Epstein of Bank of America.
Ron Epstein: Yeah, Hey, good morning, guys.
Speaker Change: Good morning, Rob.
Speaker Change: Is there anything Scott you've seen with maybe the change in administration that could be.
Speaker Change: And added a little tailwind for <unk>.
Speaker Change: Private aviation.
Speaker Change: As an example have you heard any discussion around.
Speaker Change: Some form of accelerated depreciation coming back or something like that that historically has been.
Speaker Change: A nice catalyst for for private aviation.
Speaker Change: I don't know specifically that.
Speaker Change: The accelerated depreciation impact, but I have to say Ron I think in general.
Ron Epstein: Most of our customers are small to mid sized businesses entrepreneurial.
Speaker Change: Hi, net wealth immediate abroad.
Ron Epstein: Range of customers obviously.
Ron Epstein: Yes.
Ron Epstein: I think that in general tax policy regulatory policy is encouraging to them and therefore, they feel good about their businesses our businesses are likely to be successful in growing and that certainly is nothing but helpful. In terms of.
Speaker Change: How do they get their head around Capex.
Speaker Change: Capex expenditures like new aircrafts, so I would say I Wouldnt point out one particular item when it's obviously, it's quite early here and we don't know how all the tax stuff is going to work its way out, but I think in general just the nature of our kinds of customers.
Speaker Change: That they think the outlook for business is good and that's that's good for the prospects of a private aviation.
Speaker Change: Yeah that makes a ton of sense and if I can follow up that Tianjin directions, just a little bit.
Speaker Change: A while ago right you guys did scorpion and I always thought that was kind of cool.
Speaker Change: And the dirty at the time didn't seem to have a big appetite for that.
Speaker Change: Does seem however, there does maybe potentially you seem to be a change in more of a maybe a push towards more commercial terms contracting contractors, taking more risk do you see any opportunities for you guys with maybe like a scorpion two point now.
Speaker Change: Parenthetically, something like that with maybe the changing environment with.
Speaker Change: Potentially more commercial type contracting.
Speaker Change: Well I don't know about a specific around the Scorpion, Ron I will I would say that.
Speaker Change: And this administration for years ago, eight years ago to four years ago. However, you want to think about it.
Speaker Change: There was certainly a mindset that we have to find ways to grow faster right and so our acquisition system.
Speaker Change: This was according to the Otas and the MTA and the army as creation of things like Futures command.
Speaker Change: Frankly helped to accelerate and drive a lot of the things that we're working on today. So again, it's very early obviously.
Speaker Change: When he talks about acquisition reform I, Wouldnt say I expect huge things in terms of real change to policy, but expectations that whats good for the Warfighter. Good for the taxpayer is to figure out how to accelerate programs and so again. It's early we don't have any any data yet, but I'm certainly hopeful that the incoming administration.
Speaker Change: And within the building is interested in figuring out how to accelerate things commerciality is certainly a part of that but just frankly, how do you. How do you make the process run faster and get things up for fighter quicker.
Speaker Change: I think we would we would clearly be a beneficiary of that we have a bunch of great programs.
Speaker Change: That I think the Warfighter side of the military we'd love to see them get out into the hands.
Speaker Change: In the actual combatant commands and hopefully we'll see some of that happen.
Yeah. Thanks, Thanks, a lot Scott Thank you.
Speaker Change: Thank you well go next now to Gavin Parsons of UBS.
Gavin Parsons: Thanks, Good morning.
Speaker Change: Good morning.
Speaker Change: Just maybe two questions on the aviation margin you mentioned still having some impact of the disrupted 24 deliveries slipping into 25, just was hoping you could give us some sense of how much of that excess cost you're absorbing in that 12% to 13% margin guide.
Well were not.
Speaker Change: It was a big driver.
Speaker Change: Devin.
Speaker Change: Of the Q4 number because we did take in period expense a lot of overhead, which otherwise would have been into our sort of base cost spread across aircraft deliveries and given that we were light we did take a pretty significant.
Speaker Change: Hit on period expense, but as we think about the go forward number we expect and have built a plan.
Speaker Change: Around margin rates than normal volumes of aircraft delivery, so I wouldn't expect to see.
Speaker Change: Any significant period expensing associated back with the with lower volumes of 2024.
Speaker Change: And then anything that you can give us on what you're expecting on net price and performance for 25.
Okay.
Speaker Change: No look I mean as I said.
We certainly expect performance.
Speaker Change: Factory efficiencies to be up significantly versus 2024, and Thats a driver of a lot of where we are where we think we'll end up with the margin that we have guided in terms of price look prices still.
Speaker Change: Is still good in the industry, but there is also inflation out there. So as we've talked about before I don't expect a huge spread on.
Speaker Change: The net of that.
Speaker Change: Most of our performance improvement most of our margin improvement.
Speaker Change: Getting back to where we should be here in 2025 as a result of much better.
Speaker Change: Factory performance.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: And we'll take our final question. This morning from Pete's Kubicki Linda Global.
Linda Kubicki: Hey, good morning, guys. Congrats ranked one Keith.
Speaker Change: Hey, guys this longer fiscal 'twenty five continuing resolution is that impacting your military programs at all.
Linda Kubicki: Oh.
Linda Kubicki: Pete I have not seen it have a big impact I mean, what we hate the uncertainty of it.
Linda Kubicki: I think our certainly our customer hates it because they're constantly.
Linda Kubicki: I mean, they're trying now through 2026 budgets when they haven't.
Linda Kubicki: To finalize 2025.
Linda Kubicki: But I think the expectations the customer appears to be.
Linda Kubicki: Executing to what they expect their 2025 budget to be and has sort of been appropriated and sitting on the shelf waiting for.
Linda Kubicki: The final action so.
Linda Kubicki: It's very disruptive I think it's it's a it's a.
Linda Kubicki: It's a horrible process, obviously and it takes a lot of time and energy away.
Linda Kubicki: Away from the.
The customer can be focused on other things, but the good news is most of our programs are already.
Linda Kubicki: Already funded programs Theyre not new starts there are.
Linda Kubicki: Some things as you get further into the year that will become new starts, but we certainly expect that the CR will be resolved you'll have an actual budget before that becomes a problem.
Speaker Change: Got it okay. Thank you just one last one for me.
Speaker Change: Across the whole company in terms of the New administration is there anything on your radar in terms of new regulations or policies or the tariff issue that can be either positive or negative for the business.
Speaker Change: It's on your radar I think maybe one thing in terms of if we get tariffs towards Canada does it does that impact both commercial at all just anything on your radar that you can share with us. Thanks.
Speaker Change: Yes, sure look Pete I think on the positive side again, we've talked about just sort of what our expectations are for the overall business climate less regulation, probably a better tax Reza.
Resolution than maybe otherwise could have happened so I think from an overall business environment standpoint those.
Speaker Change: Very positive on the tax front on the on the on the regulatory front on the military front as I said I think we have an administration coming in that has in the past been pro how do we figure out how to accelerate how do we go faster, which would be again net good for us.
Speaker Change: The tariff is very much a wildcard.
We don't know.
Speaker Change: We don't know the specifics of <unk>.
Speaker Change: Clearly we have operations in Mexico, we have as you noted a pretty significant operation in Canada, particularly on the Bell commercial side.
Speaker Change: A lot of the value of the dollars are things that go over from the U S into Canada, and then back assuming those don't get hit but we do have some big important suppliers like Canada that saw a lot of interest to us in both rotary and fixed wing and we do have our bell Mirabel operations.
Speaker Change: On the commercial side of Bell so.
Speaker Change: Look it's an unknown and so we're not we're not really positioned one way or on the other thing we got to see how this plays out and.
Speaker Change: Yes, I think a lot of this is around negotiations and working on how do you how do you deal with the free trade agreements on a go forward basis. So.
Speaker Change: We're just going to kind of hanging in there and see how it plays out.
Speaker Change: Got it got it helpful. Thanks, guys.
Speaker Change: Thanks.
Speaker Change: Thank you and ladies and gentlemen that will bring us to the conclusion of today's Textron Q4, 2024 earnings release call, we'd like to thank you all so much for joining us today and wish you. All a great reminder, remain remainder of your day. Just a reminder, today's call will be available for replay beginning later today by calling one 808 <unk> hundred 951 to five.
Speaker Change: Or four zero to 220150 to again, thanks for joining US everyone and we wish you all a great day Goodbye.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Uh-huh.
Speaker Change: [music].
Speaker Change: Okay.