Q4 2024 RTX Corp Earnings Call
Lateef: Good day, ladies and gentlemen, and welcome to the RTX fourth quarter 2024 earnings conference call. My name is Lateef and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes.
Lateef: On the call today are Chris Calio, President and Chief Executive Officer, Neil Mitchill, Chief Financial Officer, and Nathan Ware, Vice President of Investor Relations.
Lateef: This call is being webcast live on the internet and there is a presentation available for download from RTX website at www.RTX.com
Lateef: Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding acquisition accounting adjustments, and net non-recurring and or significant items, often referred to by management as other significant items.
Lateef: The company also reminds listeners that the earnings and cash flow expectations and any other forward-looking statements provided in this call are subject to risk and uncertainties.
Lateef: RTX SEC filings, including its forms 8K, 10Q, and 10K, provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.
Lateef: Once the call becomes open for questions, we ask that you limit your first round to one question per caller to give everyone the opportunity to participate.
Lateef: To ask a question, you will need to press star 11 on your telephone. You may ask further questions by reinserting yourself into the queue as time permits.
Speaker Change: With that, I will turn the call over to Mr. Calio.
Thank you. Good morning, everyone.
Calio: As you saw in our press release, our fourth quarter adjusted sales, EPS, and free cash flow capped off a year of very strong performance for RTX.
Calio: In 2024, we delivered $80.8 billion in adjusted sales, up 11% organically, driven by 14% growth in commercial OE, 13% growth in commercial aftermarket, and 9% organic growth in defense sales.
Calio: Adjusted EPS was up 13% year-over-year to $5.73. We delivered 90 basis points of consolidated segment margin expansion, contributions from all three business segments, and $4.5 billion in free cash flow.
Calio: Customer demand for our technologies and solutions remains robust, and we ended the year with a backlog of 218 billion, up 11% year-over-year, including 125 billion of commercial backlog and a record 93 billion of defense backlog.
Calio: On the defense side, Raytheon's backlog continues its favorable mix shift and is now 44% international, up 8 points year-over-year.
Calio: We'll walk through the fourth quarter details in a few minutes, but I know everyone is interested in 2025. So let me first share a few comments on that front.
Calio: A favorable demand environment and the strength of our advanced products across commercial aerospace and defense position us for sustained growth in 2025 and beyond. On the commercial side, passenger air travel remains robust, and IATA estimates that global RPKs will grow approximately 8% this year.
Calio: Commercial airframe or backlogs also remain at record levels. We have significant content on the fastest growing platforms.
Calio: On the defense side of the business, there continues to be tremendous need for our products such as Patriot, NASAMS, F-135, GEMT, F-117, and Coyote, all critical equipment being used around the world.
Calio: We also expect continued strength and international demand for many of these products with key partners and allies in NATO and the Indo-Pacific committed to increasing defense spending.
Calio: And as everyone knows, it's pretty dynamic right now on the macroeconomic front, but RTX is positioned to perform in any environment.
Calio: Over the last several years, we've continued to qualify new and second sources in our supply chain. We've made substantial investments in capacity expansion and modernization of our infrastructure in the United States. We have strong partnerships around the world that support production and deliver services within the markets that we serve.
Calio: All of these factors support another year of positive momentum for RTX, and we expect full year 2025 adjusted sales to be between $83 and $84 billion, which translates to organic growth of between 4 and 6 percent year over year.
Calio: For segment profit, we expect 10 to 13% growth resulting in continued segment margin expansion with all three businesses again contributing to the year-over-year growth.
Calio: From an EPS perspective, we expect adjusted EPS at between $6.00 and $6.15, up 5-7% year-over-year. And for free cash flow, we expect between $7.00 and $7.5 billion for the year.
Calio: This growth supports capital returns to our shareholders, with over $33 billion returned already since the merger, including $3.7 billion in 2024.
Calio: Today we have clear line of sight to deliver towards the high end of our 36 to 37 billion capital return commitment by the end of this year. We are committed to continuing our strong capital deployment strategy as we move forward.
Calio: Our performance will continue to be underpinned by the strategic priorities we've been discussing the last few quarters, executing on our commitments, innovating for future growth, and leveraging our breadth and scale.
Calio: Let's move to slide four and I'll provide an update on each of these priorities. First, executing on our commitments.
Calio: On the GTF Fleet Management Plan, our outlook remains consistent with our prior comments.
Calio: As we've discussed, we expect to gradually reduce PW1100 AOG throughout this year, driven by continued improvement in engine throughput and our MRO facilities.
Calio: Last year, MRO output was up 30% with a significant increase in foraging production, and this year we expect MRO output to grow above 30%.
Calio: More broadly, we continue to leverage our core operating system, industry 4.0 improvements, and focused capacity enhancement to drive productivity across the company.
Calio: Last year, enabled by CORE, we continued to improve productivity across the company, growing sales 11% organically with less than a 2% increase in head count across RTX.
Calio: In this year, we expect to complete a record number of core projects to drive operational performance and continued segment margin expansion, with an emphasis on improving on-time delivery, reducing inventory, and reducing the cost of scrap, rework, and repair.
Calio: Additionally, we completed our goal of connecting 40 of our top factories to our proprietary data analytics platform.
Calio: We continue to harness this value to drive company-wide productivity improvements through equipment efficiency, better quality, and enhanced product flow visibility.
Calio: For example, last year we saw a 50% improvement in on-time delivery for Raytheon's circuit card assembly production line.
Calio: We also saw a 50% increase in equipment utilization in pilot cells at Pratt's Module Center for the F-135.
Calio: This year, we plan to double the number of product families leveraging this digital infrastructure, which will allow us to expand our use of data and AI in our aftermarket operations and product development.
Calio: Next, let's talk innovating for future growth. In 2024, we spent over $7.5 billion in company and customer funded research and development to advance technologies that address the immediate and emerging needs of our customers.
Calio: With our ability to rapidly bring new technology to production and meet rigorous customer requirements, we are uniquely positioned to deliver capabilities at scale.
Calio: For example, Raytheon's upgraded Coyote Effector recently demonstrated enhanced capabilities against complex drone targets.
Calio: Designed, produced, and fielded in less than 18 months, these enhancements showcase our ability to rapidly integrate software and hardware technology into products. And, as you may have seen, the Army highlighted the effectiveness of this upgrade with over 170 threats intercepted in recent conflicts.
Calio: We're leveraging the same rapid development cycle across the company, including on multiple classified programs, to meet our customers' urgent need to field improved capabilities.
Calio: We continue to make good progress on the GTF Advantage at Pratt, with the completion of all engine testing requirements, including a test schedule with more than double the endurance testing of the original program.
Calio: We're pleased with the results and are on track for engine certification in the first half of this year with deliveries to follow in the second half.
Calio: This type of innovation will continue in 2025 as we plan to spend over $7.5 billion again on company and customer funded R&D to both field new products and develop advanced capabilities that are critical for the next generation of commercial and defense platforms.
Calio: such as fuel efficiency, resilient networks, directed energy, autonomy, AI, and advanced materials.
Calio: We're also innovating how we do our work as we continue to implement AI applications across RTX.
Calio: Last year we saw benefits in areas including product testing, first article inspections, and RFP responses.
Calio: For example, using generative AI, Collins' avionics business has seen software testing cycle times improve by 3x while maintaining our same quality standards.
Calio: We have a plan this year to deploy another 40 use cases.
Calio: Through our continued initiatives to leverage machine learning and generative technologies, we expect to improve operational speed, cycle times, and capital utilization, while decreasing our dependency on external labor.
And lastly, leveraging the breadth and scale of RTX.
Collins: As part of our broader infrastructure plan to maximize utilization of RTX facilities, Collins is building out 125,000 square feet of production space in Raytheon's Richardson, Texas facility to support new wins.
Calio: including the multi-billion dollar award last year for the Survivable Airborne Operations Center Program.
Calio: Through leveraging an existing RTX facility, we have been able to reduce the investment for this capacity expansion by 50%.
Calio: And as we continue to evaluate our footprint, we've launched a significant number of projects across the company to lean out our manufacturing floor space and increase utilization, all with the goal of reducing our fixed costs and creating additional capacity.
Calio: Bringing us all together, we feel very good about the momentum we've created heading into 2025 and where our business is positioned. With that, I'll turn it over to Neil and Nathan to take you through more details on the fourth quarter and our 2025 outlook. Neil?
Thanks, Chris. I'm on slide five.
Neil Mitchill: As Chris said, we had strong financial performance to finish the year. In the fourth quarter, adjusted sales of $21.6 billion were up 9% and up 11% organically, ahead of our prior expectations primarily driven by commercial OE at Pratt.
Neil Mitchill: By sales channel, growth was led by commercial aftermarket, which was up 15%, and defense, which was up 10% organically.
Neil Mitchill: Commercial OE sales grew 10% as higher deliveries of Pratt more than offset the lower narrow body volume we expected at Collins.
Neil Mitchill: Segment operating profit of $2.7 billion was up 29% with segment operating margin expansion of 180 basis points versus the prior year.
Neil Mitchill: Adjusted earnings per share of $1.54 was up 19% from the prior year, driven by segment operating profit growth, which was partially offset by expected higher taxes and lower pension income.
Neil Mitchill: Free cash flow for the quarter was $492 million, bringing the full year total to $4.5 billion, which included approximately $1.1 billion of powder metal compensation and slightly higher year-end disbursements, including capital expenditures.
Neil Mitchill: In total, the full year included approximately $2.6 billion of impacts from powder metal, legal matters, and the Raytheon contract matter that we previously discussed.
Neil Mitchill: Also in the fourth quarter, we completed the sale of the Collins Hoist and Winch business as we continue to prioritize investments in our core.
Neil Mitchill: Lastly, we returned $852 million of capital to shareowners, primarily through dividends. We paid down $800 million of debt in the quarter, bringing our total debt pay down for 2024 to $2.5 billion.
Neil Mitchill: With that, I'll hand it over to Nathan to take you through the segment results and then I'll come back and share some additional details on our 2025 Outlook.
Thanks, Neil, starting with Collins on slide 6.
Nathan Ware: Sales were $7.5 billion in the quarter, up 8% on both an adjusted and organic basis, driven by strength in defense and commercial aftermarket. By channel, defense sales were up 13%, primarily due to higher volume across multiple programs and platforms.
Nathan Ware: Commercial aftermarket sales were up 12%, driven by a 21% increase in provisioning, an 18% increase in mods and upgrades, and a 9% increase in parts and repair.
Nathan Ware: And as expected, commercial OE sales for the quarter were down 6% versus the prior year, driven primarily by lower narrowbody volume on the 737 MAX.
Nathan Ware: Adjusted operating profit of $1.2 billion was up $172 million versus the prior year. Drop-through and higher commercial aftermarket and defense volume was partially offset by lower commercial OE volume and unfavorable commercial OE mix.
Nathan Ware: For the full year, Collins generated $28.3 billion of adjusted sales and $4.5 billion of adjusted operating profit, resulting in 100 basis points of year-over-year margin expansion.
Nathan Ware: Shifting to Pratt & Whitney on slide seven, sales of 7.6 billion dollars were up 18% on both an adjusted and organic basis with sales growth across all three channels.
Nathan Ware: Commercial OE sales were up 31% in the quarter, primarily driven by increased deliveries and favorable mix in large commercial engines.
Nathan Ware: Commercial aftermarket sales were up 17% in the quarter, driven by higher volume and large commercial engines, primarily GTF and Pratt Canada.
Nathan Ware: In military engines, sales were up 8% driven by higher volume across F-135 production, the F-135 Engine Core Upgrade Program, and F-135 sustainment.
Nathan Ware: This was partially offset by lower sustainment volume across other legacy platforms, primarily the F-100 and F-117.
Nathan Ware: Adjusted operating profit of $717 million was up $312 million versus the prior year, driven by favorable OE volume and mix in large commercial engines, favorable mix in Pratt Canada aftermarket, and drop-through on higher commercial aftermarket and military volume.
Nathan Ware: Pratt also benefited from an approximately $70 million dollar insurance recovery in the quarter.
Nathan Ware: Also in the quarter, CRAP booked $8.9 billion of awards, including $1.4 billion for F-135 sustainment.
Nathan Ware: For the full year, Pratt & Whitney generated $28.1 billion of adjusted sales and $2.3 billion of adjusted operating profit, resulting in 100 basis points of year-over-year margin expansion.
Nathan Ware: In addition, GTF engine shipments in 2024 were up 14% on a year-over-year basis.
Now turning to Raytheon on slide 8.
Nathan Ware: Sales of $7.2 billion in the quarter were up 4% on an adjusted basis and 10% organically.
Nathan Ware: The sales growth was driven by higher volume on land and air defense systems, including Global Patriot, NASAMS, and Counter-UAS programs, as well as five points from higher volume associated with the restart of contracts with a Middle East customer.
Nathan Ware: This growth was partially offset by the impact from the cybersecurity divestiture and lower volume on air and space defense systems.
Nathan Ware: Adjusted operating profit of $728 million was up $110 million versus the prior year, driven primarily by drop-through and higher volume, improved net productivity, and favorable mix, partially offset by the impact from the cybersecurity divestiture.
Nathan Ware: Year-over-year, net productivity improved by approximately 50 million in the quarter.
Nathan Ware: Bookings in the quarter were $9.5 billion, resulting in a backlog of $63 billion and a full-year book-to-bill of $1.48.
Nathan Ware: Key awards included $848 million to supply Romania with additional Patriot systems, highlighting the continued demand for air and missile defense solutions.
Nathan Ware: Raytheon also booked $1.9 billion of classified awards, $763 million for Stinger air defense missiles, and $591 million for the next generation Jammer Airborne Electronic Warfare System.
Nathan Ware: For the full year, Raytheon generated $26.8 billion of adjusted sales and $2.7 billion of adjusted operating profit, resulting in 100 basis points of year-over-year margin expansion.
Nathan Ware: Net productivity at the business was up approximately $116 million on a year-over-year basis in 2024. With that, I'll turn it back over to Neil to provide some more color on our 2025 outlook.
Neil Mitchill: Thanks, Nathan. Turning to slide 9, let me talk through the drivers of our 2025 outlook to Chris highlighted. Starting with sales, supported by the demand environment we've discussed, we expect total RTX sales to be between $83 and $84 billion for the year.
Neil Mitchill: Within this outlook, we've assumed that Collins' actuation divestiture is completed by the end of the second quarter.
Neil Mitchill: Therefore, on an organic basis, this translates to between 4 and 6 percent top-line growth.
Neil Mitchill: looking at it by channel at the RTX level and adjusting for divestitures, we expect approximately 10% commercial aftermarket growth.
Neil Mitchill: On the commercial OE side, sales are expected to be up mid-single digits year over year as we align with our customers on delivery requirements, which we see ramping throughout the year. And defense sales are also expected to grow mid-single digits across the company.
Neil Mitchill: With respect to EPS, let me take you through the year-over-year walk.
Neil Mitchill: Starting at the segment level at the midpoint of our outlook range, operating profit growth of 12% is expected to drive approximately 66 cents of EPS growth.
Neil Mitchill: Included in this segment growth is a headwind of roughly seven cents associated with the divestitures we completed last year and the expected actuation divestiture this year.
Neil Mitchill: And due to the progress we've made on paying down debt from the accelerated share repurchases completed in 2024, we expect a tailwind from lower interest of about five cents.
Neil Mitchill: Partially offsetting these items is approximately 15 cents from lower FAS CAS and non-service pension income, driven primarily by the actions we've taken to improve the funded status of our plans, as well as six cents from a higher share count.
Neil Mitchill: And finally, we also expect a $0.16 headwind from other items, which is primarily comprised of $0.06 of higher corporate expenses as we invest in our digital systems and capabilities, and $0.05 of higher taxes.
Neil Mitchill: All of this brings us to our adjusted EPS Outlook range of $6 to $6.15 per share.
Moving to our cash walk.
Neil Mitchill: The first piece of our year-over-year growth comes from segment operating profit and working capital.
Neil Mitchill: Combined, this will drive an operational improvement of approximately $2.3 billion.
Neil Mitchill: Specific to working capital, we expect a year-over-year improvement of approximately $1.3 billion, with the majority coming from inventory and contract assets as we deliver commercial OE product, achieve defense delivery milestones, and improve our supplier inputs and materials throughput.
Neil Mitchill: This also includes CapEx, where we expect to invest between $2.5 and $2.7 billion during the year, as we continue to expand capacity and accelerate automation efforts to support our long-term organic growth.
Neil Mitchill: Next, the one-time legal and contract matters that we paid last year will not repeat in 2025, resulting in a tailwind of approximately one and a half billion dollars.
Neil Mitchill: We also see a headwind of approximately $900 million, primarily driven by the absence of an R&D tax-related benefit in the prior year and higher cash taxes in 2025.
Neil Mitchill: Finally, we expect powder metal compensation impacts to be between 1.1 and 1.3 billion, which is up around $100 million year-over-year at the midpoint.
Neil Mitchill: All in, we expect free cash flow to be between $7 and $7.5 billion in 2025.
Neil Mitchill: With that, let's turn to slide 10 and I'll provide some details for the segment outlooks.
Starting with Collins.
Neil Mitchill: We expect full-year sales to be up low single digits on an adjusted basis and up mid-single digits organically.
Neil Mitchill: As I already noted, this outlook assumes the completion of the sale of the actuation business around mid-year.
Neil Mitchill: Adjusting for this divestiture, we anticipate commercial aftermarket to be up high single digits to low double digits, driven by growth in passenger air travel and mods and upgrades volume.
Neil Mitchill: Commercial OE sales are expected to be up mid-single digits as increased volume on multiple platforms is partially offset by impacts from the expected timing of our customers production ramps.
Neil Mitchill: And defense is expected to be up below single digits on top of the 9% growth we saw in 2024.
Neil Mitchill: With respect to Collins Adjusted Operating Profit, we expect it to grow between $500 million and $600 million versus the prior year, driven by drop-through on higher volume across all three channels.
Neil Mitchill: as well as higher pricing and continued progress on cost reduction efforts across the business.
Neil Mitchill: Finally, this includes an approximately 80 million dollar headwind associated with the actuation divestiture.
Neil Mitchill: Shifting to Pratt & Whitney, we expect full year sales to be up high single digits on both an adjusted and organic basis.
Neil Mitchill: By channel, we expect commercial aftermarket to be up below double digits due to higher volume across large commercial engines and Pratt Canada.
Neil Mitchill: Commercial OE is expected to be up mid-single digits with another year of similar large commercial engine unit delivery growth, partially offset by mixed headwinds.
Neil Mitchill: And military sales are expected to be up mid-single digits, driven by sustainment activity across the F-135 and F-100 platforms and the F-135 engine core upgrade program.
Neil Mitchill: For Pratt's Adjusted Operating Profit, we expect growth of between $325 and $400 million versus the prior year, driven primarily by drop-through on commercial aftermarket and military growth.
Neil Mitchill: This will be partially offset by increased commercial OE deliveries and mixed within that channel.
Neil Mitchill: And at Raytheon, we expect sales to grow mid-single digits organically as double-digit growth in land and air defense systems.
It's partially offset by lower development volume.
Neil Mitchill: Raytheon's adjusted operating profit is expected to be up between 150 and 225 million dollars versus the prior year, driven by drop-through on higher volume, favorable contract mix, and improved net productivity.
Neil Mitchill: Also keep in mind there is an approximately 35 million dollar headwind associated with the sale of the cybersecurity business in the first quarter of last year.
Neil Mitchill: In addition, we've included an outlook for some of the below-the-line items in the appendix of our webcast.
Neil Mitchill: All in, 2025 is expected to be another strong year of performance for RTX.
Neil Mitchill: A lot has changed since we issued the original 2025 targets several years ago.
Neil Mitchill: And while there have been some updates, the fundamental value drivers of the company and cash generation potential have not changed. Okay, with that, I'll turn it back over to Chris.
Thank you. Thank you. Thank you.
Chris Calio: Okay, thanks Neil. I'm on slide 11. As I said up front, I'm pleased with how we ended 2024 and the momentum we have heading into 2025. The growth we've achieved over the last few years has been remarkable. We continue to make the right investments to advance our market-leading technologies and capabilities well into the future.
Chris Calio: Looking ahead, we are a focused, technology-driven aerospace and defense company that is aligned with strong macroeconomic growth drivers and well positioned on the right industry growth platforms.
Chris Calio: Combined with technology synergies across our products and a strong balance sheet that enables us to innovate at scale, I'm confident we can drive sustainable growth in sales, margin, and cash flow generation, resulting in significant long-term returns to shareholders.
Okay with that, let's open it up for questions.
Chris Calio: In the interest of time and to allow for broader participation, you are asked to limit yourself to one question. To ask a question, you will need to press star 11 on your telephone.
Thanks, good morning.
Speaker Change: Maybe, Chris, on powder metal and the GTF, there wasn't a lot of discussion, so I'm taking that as good news that you're...
Still on track, still on plan.
Speaker Change: And maybe just to put a point to it, it looks like your cash expectation for spend in 2025 is the same. Are we still on track for an $800 to $1 billion step down in 2026?
[inaudible]
Speaker Change: Thanks, Miles. Good morning. Let me go through the main components here. As I said up front, the outlook remains consistent and the underlying technical and inspection assumptions all remain intact, so good news.
Speaker Change: AOGs have been stable. Now look, I've said this before, MRO output is the key enabler. We saw some very good progress last year. PW1100 output was up 30% last year. So very good, good progress in terms of material flow and in-shop performance.
Speaker Change: But we need to continue to ramp output to bend the curve here as we work our way through 2025.
Speaker Change: And we talked about a plan here of above 30% growth in 2025, and that's going to be critical.
Speaker Change: Now, the supply chain is going to be instrumental in helping us get there, and we've continued to see improvement there.
Structural castings were up 12% year-over-year.
Speaker Change: Isothermal forging's output was up significantly and of course that's important as we incorporate full-life powder metal parts into MRO. As you know it's already going into new engine deliveries.
Speaker Change: So again, there's there are a lot of puts and takes as you might imagine as we're going through this process and our 100% focus again is on bending the AOG curve to make sure that we get the assets back into our customers hands as quickly as possible
Speaker Change: and Miles on the cash side, you know, I think if you think back over the last couple of years we started out
Speaker Change: with a placeholder of half a billion dollars. We were able to defer that.
Speaker Change: You know, last year in 24, we ended at about $1.1 billion, so a little ahead of where we had estimated.
Speaker Change: And as you can see from today's, you know, comments, we see between 1.1 and 1.3 billion 425. We're going to continue to work with.
Speaker Change: our customers to manage the timing of those cash flows. And right now I'd say we have the residual amount parked in 2026. Could that...
Speaker Change: you know go out a little bit further perhaps. You know we want to make sure we manage the cash carefully on this program. We're happy with where we are with the customer agreements that we have in place right now with the vast majority of the AOGs are under a customer support agreement already so
Speaker Change: We feel good about the profile that we've laid out so far. All right. Thank you. You're welcome. Thank you.
Speaker Change: Our next question comes from the line of Peter Armet, of Baird. Your line is open, Peter.
[inaudible]
Speaker Change: Good morning Chris, Neil, Nathan. Nice results. Hey Chris, Chris, on the new administration, new spending priorities, how are you thinking, you know, with how Raytheon's aligned in terms of any replenishing stockpiles and how you see kind of that playing out for you? You've got a huge international mix, I think you've been working on that.
Speaker Change: 44% and just how you see kind of the uplift that's coming from the international side along with opportunities you're seeing on the replenishment side with the new administration. Thanks.
Thank you very much.
Speaker Change: Yeah, thanks Peter. Good question. Well, and you sort of led with it up front, right? The demand for our products continues to be really strong, right? Raytheon, a 63 billion dollar backlog.
Speaker Change: 1.48 book to bill. As I said in my comments up front, you've got 30 plus systems in operation in conflicts today defending the U.S. and our allies very, very effectively.
in the U.S.
It's about replenishment, as you referenced.
Speaker Change: As you move, you know, across the world, Europe, this is about integrated air and missile defense.
you know, continuing to replenish effectors.
Speaker Change: JEMT, AMRAAM, and the like. And as you move to Asia-Pac, it's more on naval munitions, the standard family SM-3, SM-6, continuing to ramp up there. So overall, again, we continue to see international demand be very strong.
Speaker Change: the NATO countries are continuing either to commit or actually spend above the 2% target. Think of what you're seeing in Poland, it's coming up on almost 5%. Again, international demand continues to be strong. We've seen that in our backlog, and that'll be a tail end for us.
Appreciate the cover, thanks.
Speaker Change: Thank you. Our next question comes from the line of Ron Epstein of Bank of America. Please go ahead, Ron.
Hey, good morning guys. Good morning.
Speaker Change: Yesterday, the Air Force bumped up the contract for NGAP to $3.5 billion, a big number. Where do you guys stand on the program? Where are we? How do we think about it? You know, kind of what's going on with that next generation engine?
Thank you.
Speaker Change: Yeah, I'll take that one Rons, Chris. So look, regardless of where NGAT is and the timing, and there's been a lot in the public out there, we've continued to develop our NGAP solution.
Thank you for your attention.
Speaker Change: We've gone through rigorous testing over the last few years. We've been really pleased.
Speaker Change: with the results there. I can't get into too many of the details as you might imagine, but this is something where we've had a lot of resources on it and have been very pleased with the testing that we have seen. And this funding will help us continue in that area, continuing to drive.
Speaker Change: down any risks on the key requirements that are there. So very pleased with that award. And again, we think we're gonna have a very competitive offering.
Speaker Change: And how much of a tailwind is that for Pratt this year or I mean how do we think about that just kind of on a financial side?
Thank you.
Speaker Change: Well, I'd say, you know, between the engine core upgrade on the F-135 program and this work that we're doing, we've got Pratt in at mid-single-digit growth for the military side of their business, clearly a tailwind here, Ron, I see this continuing to grow.
As you know, more broadly speaking...
Speaker Change: A lot of the older aircraft continue to fly, the aftermarket remains strong.
Speaker Change: So, I'd say by and large, this is a tailwind for Pratt and I'm happy to see this funding being put in place over the next number of years to continue this development.
Great, thank you. You're welcome.
Speaker Change: Thank you. Our next question comes from the line of Scott Toyschler of Deutsche Bank. Your line is open, Scott. Hey, good morning. Morning, Scott.
Speaker Change: Neil, are there any components of the Free Cash Flow Outlook in 2025 that you would call out as?
Speaker Change: potentially normalizing or reversing in 2026 apart from, of course, the powder metal costs. And I'm mainly just trying to get a sense through whether this broader working capital improvement can remain a persistent tailwind beyond 2025. Thank you.
Speaker Change: Sure, appreciate the question. You know, I know there's been a lot of focus on our cash flow and we're focused on that.
Speaker Change: entirely here within the company as well. And so as we look at the outlook that we just put out for 25, think about $7.2 billion at the midpoint.
and about a billion two of powdered metal.
Speaker Change: So, you just do the math there, operationally, about $8.4 billion, now there's a $1.3 billion working capital.
Speaker Change: tailwind baked into that year-over-year improvement. But as you can see from the level of inventory we have and the level of contract assets, we think we've got, you know, additional runway to continue to improve working capital turns as we
Speaker Change: moved beyond 2025. So we have a lot of work to do here in 2025 already, but we're very confident. We've been focused on this for a couple of years. Didn't get there last year, but I think we're well-stocked.
Speaker Change: to support the ramps of our customers in that regard. The only other, you know, non-recurring item, if you will, that I think about in 25, we've got a couple hundred million dollars set aside for an international tax payment that we'll be making here in the first quarter following
Speaker Change: a court finding that came out earlier this year. And there's always a couple of puts and takes, but by and large, I'd say, you know, that eight and a half billion dollar range is fairly strong operational baseline.
Chris Calio: Great. And Chris, just to clarify, has Boeing restarted issuing purchase orders for 737 MAX avionics equipment yet?
Speaker Change: Yeah, Scott, we're back, you know, with Boeing working the ramp, as you might imagine. Frankly, we were working it even throughout, you know, the strike, making sure that we were ready to go when they ramp back up, continue to engage closely with them on that.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Rob Stollert of Vertical Research. Your question please, Rob.
Thanks so much. Good morning. Good morning, Rob.
Speaker Change: It's probably a question for Neil. On the 2025 Aerospace OEM guidance, it looks
pretty conservative compared to
Speaker Change: what Airbus and Boeing are currently saying. So I'm wondering if you've built some contingency into your forecast or if there's anything going on with inventory for example that's impacting that guidance. Thank you.
Speaker Change: Sure, yeah, let me make a couple of comments. Rob, let me let me start with the Collins side. You know, I understand the question, you know, with production rates.
Speaker Change: anticipated to be going up considerably. There's obviously a little bit of
Speaker Change: inventory in the channel here. We've we've taken a prudent approach I think at this time of the year to contemplate that in the in the Collins outlook.
Speaker Change: It's not across the board. I think it's targeted to specific systems within, you know, the narrow body.
Speaker Change: you know, value stream. But as we look for the year, we expect the ramp to continue to go up. And as you can tell from the inventory levels that we have at Collins, feel
Speaker Change: well positioned to meet a rising rate ramp should we see a faster growth as the year unfolds. On the Pratt side, maybe just a couple of comments for additional color there as well.
Speaker Change: Large commercial engines, you know, we were up 14% in unit deliveries last year.
Speaker Change: I expect a similar level of unit growth as we look to 2025.
and then as you look at Pratt Canada.
Speaker Change: You know, they were relatively flat, up about a percent on their units, but we expect that to tick up as well in 2025, probably similar to what we're seeing on the large commercial engine side in terms of units.
Speaker Change: Offsetting that, of course, is a little bit of mixed headwind, but we're pretty happy with the performance that Pratt generated at the end of the year. Good pricing on their engines, and we see that continuing as we get into 25. Now a little bit early to...
Speaker Change: to kind of get ahead of ourselves here, but if there's upside we're prepared to and capacitized to meet that growing ramp.
Thank you. Bye.
Thank you.
Our next question.
Thank you.
of Jeffries. Your question please Sheila.
Good morning, guys, and thank you.
Speaker Change: Maybe just, you know, still picking up on Commercial Arrow on Pratt, 2024, if we look at the
Speaker Change: OE growth, it was about 21%. GTF deliveries were up 14. So is that seven point delta all price and spares on GTF? How do we think about that in 25? And on Pratt, EBIT growth of 350 at the midpoint or 370.
Neil Mitchill: Does that all drop through to the free cash flow bridge too, Neil? How do we think about negative engine margin factoring in, more investment in GTFA, and just aftermarket incrementals?
Thank you.
Neil Mitchill: Yeah, so let me start with the OE top line and then I'll move to the, you know, how that's dropping through in our walk for 25.
Neil Mitchill: You know we had a good mix of engines delivered last year at Pratt and so as I look at this year I think we'll see a modest tilt towards more installs but we're still going to see a very robust
The majority of Pratt's
Neil Mitchill: um, profit growth will come from aftermarket. We're going to see really good drop through on the aftermarket.
probably to the tune of $500 million or so.
you'll see your expected level of drop-through.
Neil Mitchill: on the military side of the growth in the business. And offsetting that, of course, is gonna be some negative engine margin headwind. I'd put that in the range of 150 to 200 kind of range as we see the volumes continue to tick up. But as I've said for a long time now,
Neil Mitchill: You know, getting these engines out in the field is healthy for the fleet, and it just gets us started faster on, you know, getting to the aftermarket phase.
Neil Mitchill: and as you think about the aftermarket phase of the GTF today.
Neil Mitchill: sitting in a really good position. It's growing at a robust rate.
It is profitable, and we've been profitable for several years.
and I think there's continued runway, not just on the...
Neil Mitchill: on the margin side, but as you know, given the nature of these agreements, those future shop visits are going to come with cash payments. And so that will create additional tailwind for Pratt & Whitney and for RTX as we look out over the next few years.
Great, thank you.
Speaker Change: Thank you. Our next question comes from the line of Seth Safeman of J.P. Morgan. Your question please, Seth.
Thanks very much, and good morning, everyone. Morning, Seth.
Seth Safeman: Maybe a question and maybe a tag on a quick clarification at the end. On the question, you know, the the age of the fleet is obviously supporting growth in the aftermarket at Collins. When you think about growth from here, how do you think about
Seth Safeman: production and deliveries back about, you know, five or six years ago, as we headed into the COVID period, the number of planes that are coming off warranty and how that's going to affect aftermarket growth at Collins. And then just quickly, if you could talk about the number of large engine deliveries you expect at Pratt this year.
Good morning, Seth. Let me let me start maybe on...
Seth Safeman: on just the installed base kind of comment. You know, we've been talking a bit about, you know, we were at obviously lows of deliveries back in the 2020, 2021 time period with each year thereafter growing.
and, you know,
as Collins delivers.
new products.
Seth Safeman: they're under warranty for a period of time. So you can expect.
Seth Safeman: that each year that rolls off a warranty is larger than the year that preceded it, at least for the last several years. So I expect that to continue to provide some tailwind to the Pratt install base. Think about it. They've got
Seth Safeman: $160 billion installed base out there, and so it's going to begin generating even greater volumes of aftermarket going forward. So that's how I think about the aftermarket there.
Seth Safeman: Just to follow up, you know, Pratt is similarly situated. You know, there are about 800 v2500 shop visits in 2024. We see about the same exact number as we look at 25, so continued robust demand. Retirements are very low.
Seth Safeman: And we expect that to continue as well for the next several years, at least. And in addition, we're getting good content on those shop visits because, you know, 20% of those engines haven't seen their first shop visit yet.
Seth Safeman: and only 55% have seen one. So we've got plenty of tailwind in the installed base of both of those businesses, looking over the next five years.
Thank you.
Thank you. Bye bye.
Great, and then on the deliveries?
[inaudible]
Seth Safeman: Yeah so yeah just just to clarify here we had about 14% growth in the units delivered of large commercial engines in 24. We expect about the same growth in 25.
Thank you.
Thank you very much. Yeah, thank you.
Speaker Change: Thank you. Our next question comes from the line of Jason Gursky, UpCity Research. Your question please, Jason.
Speaker Change: Yep, thank you. Good morning, everybody. Thank you, Jason. Chris, I was wondering if you could spend a few minutes talking about your top three or four priorities for the year. I suspect some of that will be productivity, so I'm just kind of
Jason Gursky: Curious to get an update on productivity across the company. Maybe where you are relative to where we were pre-pandemic and what it's going to take to get us back to the...
Jason Gursky: productivity that you saw then. And then Iron Dome, what does that mean? What kind of opportunity is there for you all if we do really put up an Iron Dome here in the United States? Thanks.
Yeah, thanks Jason.
Jason Gursky: So, on the priority front, as you might imagine, with a $218 billion backlog, our number one priority is executing on that backlog and executing on our commitments. And I'll tag on, of course, the GTF.
Jason Gursky: You know recovery plan there and making sure that we continue to ramp MRO the demand out there continues to be robust both defense in commercial our customers need our products
Jason Gursky: And so we've got to just continue to ramp on the Pratt and Collins side. We've got to continue to have a healthy supply chain to make that happen. We have a number of people embedded in our supply chain for that reason.
Jason Gursky: At Raytheon, we've seen now the seventh quarter in a row of material receipt growth.
Jason Gursky: So, happy about that. We need to continue to ramp on rocket motors, I'd say, on some programs. Jason, we're in a healthier position on others.
we're falling behind but
Jason Gursky: Again, this is all about executing on the backlog. Now, a key piece of that, of course, is kind of your second question, which is on productivity. You heard what I said up front, 11% sales growth, 2% headcount growth.
Jason Gursky: These are the kinds of initiatives that we need to continue to drive in order to deliver the backlog at the margins that we've committed to.
Jason Gursky: Again, a big part of that will be our core operating system, continuing to increase the number of engagements. And those are things you just see across the business, leaning out our factories, leaning out our processes.
Just becoming more efficient all around driving waste
Jason Gursky: out of the system. And we're also making investments, Jason, in automation, in AI, things that will continue to drive productivity without the need to add headcount. Again, doing things faster and cheaper along the way.
And then your third question on Iron Dome.
Speaker Change: Well, look, as you know, we're a major partner in Israel's Iron Dome today. I suspect in the U.S. you're going to probably need to evolve that to address different types of potential threats.
perhaps longer-range strikes.
Protection of Infrastructure.
Speaker Change: But again, layered integrated air and missile defense systems are core to us. It's the bedrock of Raytheon, and they are, you know, among the best at it, and so we're ready to engage on this as it takes shape over this study period, view this as a significant opportunity for us, something right in our wheelhouse.
Great, thank you.
Speaker Change: The New York Times, the New York Times, and the New York Times.
Speaker Change: Thank you. Our next question comes from the line of Gotham Kenna of TD Cohen. Please go ahead.
Gotham Kenna: Yeah, thanks. Good morning, guys. I was wondering if you could just...
Speaker Change: broadly comment on the supply chain, where you're still seeing constraints in the past. You've talked about heat exchangers and seats and the like.
Sounds like a prat.
Speaker Change: the output is getting a lot better. But if you could just talk broadly where the pinch points are and kind of how those have progressed maybe over the last 90 days.
Yeah.
Speaker Change: A lot of them, the pinch points and the areas of focus are, just as I was going through previously, again, structural castings for us, 12% year-over-year growth at Pratt, need that continued.
Speaker Change: to continue to ramp. We need to continue to ramp in the isothermal foraging production. We own a lot of that value stream, but there's other pieces of it that we don't. We need to continue to see that ramp up.
Speaker Change: Collins, it's been microelectronics, generally speaking. We've seen those lead times, you know, come back into line. So feel about, feel good about that, you know, at Collins.
Speaker Change: There's really like 33 suppliers that drive about 50% of the overdue, you know, line items. And so laser focused on those 33 with, you know, people embedded there to drive that. And then again, at Raytheon, the big piece, of course, Rocket Motors, as I just mentioned.
Speaker Change: seeing progress on some programs need a ramp, you know, on others.
Speaker Change: So, as your question suggests, the supply chain is going to be critical to executing on the backlog that I just mentioned, and so it's a critical focus area for us. You mentioned seeding and heat exchangers.
Speaker Change: I'll just say on the on the interiors business sort of writ large at Collins a double digit sales growth last year So feel good about the trajectory is that business continues, you know to recover
Speaker Change: feeding specifically. Now we continue to work through the certification there. These are complex, especially on the first class and business seats.
Speaker Change: and the certification requirements are relatively high. They've got a high bar there, but we think we have our arms around those and what we need to do there and get those certified, you know, to the air framers and then out to our customers.
Speaker Change: And then on heat exchangers, I would tell you that we continue to make progress on the production ramp and the recovery. Doubled production output last year and remain on track to recover to the needs of our customers here in 2025. So feel good about the progress there.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Matt Akers of Wells Fargo. Your line is open, Matt.
Hey, good morning guys. Thank you for the questions.
Speaker Change: Can you touch on pension? It looks like FAS, CAS, a little bit of a headwind in 2025. Is the thought that that will still sort of bleed lower in the out years and if so, you know, what's kind of the headwind we should think about for FAS and CAS?
Speaker Change: Yeah, thanks, Matt. Yeah, you know, we definitely see a headwind here. 15 cents, as we outlined in our outlook. Our plans remain really well funded. In fact,
Speaker Change: We ended the year with a funded status of 104%. And so as a result, over the last number of years now, we've employed a de-risking path.
which essentially is enabling us to...
Speaker Change: designed a plan to protect that funded status. And so as a result of that, we will expect to see the income come down a little bit.
Speaker Change: and it has. But by and large, the plans that we put in place for the pension remain really, really strong.
Speaker Change: We continue to see income and expect to have significant income, you know, beyond, but it'll trail off a little bit each year.
Speaker Change: after after 2025. So obviously there's a lot of assumptions that go into the pension but by and large you know we're in a really good position as we exited 24 and I expect that to continue.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Ken Herbert of RBC Capital Markets. Please go ahead, Ken.
Yeah, hi, good morning. Morning, Ken.
Speaker Change: Can you provide, for Collins in particular, can you provide any disaggregation of provisioning versus repair of the parts of the business? And I guess as part of that, is there any incremental risk you're seeing around destocking at airlines as they think about spare parts across the Collins portfolio? Thank you.
Thank you.
Speaker Change: You're welcome, Ken. Let me let me start with the last part. You know, we haven't really seen any significant de-stocking. Obviously, the aftermarket growth for the last several years has been tremendous, and I think
Speaker Change: You know, we're expecting at the RTX level about 10% growth.
Speaker Change: again here in 2025. If you think about the Collins side of the business in particular and break it down a little bit, you know, we still see parts and repair up in the high single digits, maybe a little bit better. We're getting really good, obviously installed bases growing. I just talked about that. Plus we're getting good pricing.
Speaker Change: On the provisioning, probably a little bit more in line with the OE growth, mid-single-digits, which tends to track the delivery of new aircraft. What's going to be a bright spot for Collins this year is mods and upgrades.
That'll be over 10%.
Speaker Change: coming off a year that was flat. Obviously, that depends on the kinds of upgrades that are required, often regulatorily driven, but you know that's another area that's expected to be strong for Collins as we go through 2025. So, feel really good about, you know, where we are and, you know, obviously
Speaker Change: going back to that installed base of $160 billion, and over at Pratt, it's also very significant. So a lot of tailwind in the aftermarket going forward.
Thank you. Thank you.
Thank you.
Thank you for joining us. Thank you.
Speaker Change: Thank you. Our next question comes from the line of David Strauss of Barclays. Your question please, David.
Thanks. Good morning.
Hey David.
Thank you.
Speaker Change: Two-part question. Neil, first on GTF aftermarket, you gave some rough color there. Could you just be a little bit more precise where exactly you're booking GTF aftermarket today, I guess in 2024, and expectation for 2025? I think previously back at the Investor Day in 2023, you talked about...
Speaker Change: getting to mid-teens, after-market margins on GTF. That's that's my first question. And then second question on on Collins.
Speaker Change: You know, I think you had previously talked about this being a 40-plus percent incremental margin business, getting close to 20 percent margins in 2025, we're obviously not going to get there.
Speaker Change: What's the right level of income around margins to think about on on Collins going forward? Thanks All right. Thanks, Dave for the questions. Let me start with the aftermarket, you know Let me let me give you a little bit of Background here. Obviously the aftermarket is growing substantially as we do a lot of
Speaker Change: accelerated shop visits as it relates to the powder metal matter.
Speaker Change: And the margins are not quite at the mid-teens level, but I will tell you that they're near double digits. And if you average the last couple of years, they're over double digits. So we've been doing a good job of getting margin in the aftermarket.
Speaker Change: And we've talked about some of the EIS contracts that we have here, and as those continue to age out and burn down and get replaced with newer contracts with the airline customers, we're getting good pricing because the engine's performing really, really well. And so in addition to that,
Speaker Change: We're putting a lot of new material and enhancements into the engine to improve its durability.
Speaker Change: And as Chris alluded to in our prepared remarks, the GTFA coming online at the end of this year, which Chris will probably comment on in a minute. So, you know, all of the right ingredients there for continued growth, certainly on the top line.
continued expansion of margins as we move forward.
Speaker Change: And, you know, really pleased to see that for the last several years, this has been a profitable part of the Pratt & Whitney business.
Speaker Change: and as the V2500 continues to be fairly steady for the next several years.
Speaker Change: you know, the GTF is going to be tailwind to Pratt.
Speaker Change: as we get, you know, into the later part of the decade.
Speaker Change: Really good there. As far as Collins and the incrementals, if you look at the outlook we put out today, you're going to see about a 40%.
Speaker Change: incremental margin. I'm not going to get ahead of ourselves today, but I'd say longer term.
Speaker Change: We see nothing that says that the Collins business can't return to its pre-COVID.
Speaker Change: margins, they've done an incredible amount of work to drive cost out of the business.
They have even more actions in place.
Speaker Change: for 2025. And I think there's tremendous opportunity. You know, obviously we've been dealing with some inflation that was unplanned. And the OE volumes, if I were to look back four years ago to what we were assuming versus where we are today, they're below that today. So I think they've done a nice job to compensate for.
Speaker Change: under absorption in the business and there's clearly some runway as we look ahead and beyond 2025.
Speaker Change: Chris, any comments? The only thing I was going to amplify on, David, was on the advantage. Obviously, we're very pleased with where we are.
from a testing and certification perspective.
Speaker Change: But the GTF aftermarket margins are going to be all about driving increased time on wing on the installed fleet today, and those things we're going to be delivering before GTFA fully cuts over. And so we are aggressively continuing to put in and develop.
Speaker Change: enhancements to improve time on wing, whether those be additional cooling holes, whether those be coating.
The other thing I'll tell you is
as we've gone through the GTFA certification process.
We are identifying elements.
Speaker Change: that we can go bring back into what I'll call the base program.
Speaker Change: These are things that maybe a few years ago we weren't sure we would be able to port over.
Speaker Change: But we're feeling today like, you know, that's something we really want to pursue and have an avenue towards. So again, that'll be very important as well to drive the GTF aftermarket margins.
Thanks very much.
Speaker Change: Thank you. Our next question comes from the line of Noah Popenak of Goldman Sachs. Please go ahead, Noah.
Hey good morning everyone. Hey Noah. Hey Noah.
Speaker Change: Neil, you just touched on it at Collins, but I wanted to ask if I take a step back and zoom out and look at those 2025 segment margin targets from 2021, and you referenced that a lot has changed.
Speaker Change: which of those are still achievable in the medium-term and have just had, you know, cost inflation or some other more transitory headwind versus which of those have structurally changed and the old target is just no longer relevant?
Thank you.
Excuse me.
Speaker Change: Listen, I think all of the margin targets we've talked about are achievable in the business in the long term. You know, if you take them one by one Collins has shown significant
Speaker Change: margin improvement already. We have another 150 basis points of margin improvement baked into the 25 outlook.
Speaker Change: and the actions we're taking in the supply chain, they will get there too. It's going to take a little while. Obviously, there's been a number of headwinds that we could not have contemplated back in 2021.
Speaker Change: when we put these targets out there, you know, we were among the first company talking in the COVID environment publicly, so it was really, you know, unique times.
Speaker Change: You know, we've also lost over three-quarters of a billion dollars of sales due to the Russia-Ukraine conflict. So, there's been a lot of changes, but I think we've done a lot to overcome them. At Pratt,
you saw good margins coming out of the fourth quarter.
Speaker Change: And again, we think Pratt has the potential to grow its margins to where.
We thought they'd be today. They're not too far off.
The top line has grown faster.
Speaker Change: And obviously, that's been driven by aftermarket in the GTF, which comes with a lighter margin, but still positive, as I just talked about. And then, of course, Raytheon, see no reason why that can't get to margins that are north of 12, 12.5% as well. So the productivity there at Raytheon continues to improve. We saw
Speaker Change: Good improvement in 24, we're expecting another $100 million in 2025, year over year.
So, I think all things are on track, but...
Speaker Change: you know, there's been a number of changes, but I think we're doing what we can and controlling what we can control. Yeah, I mean, David, some puts and takes for sure, but I would say that we feel even stronger about the underlying fundamentals of each of the businesses. Inflation was a huge headwind.
Speaker Change: when we put those out in 21. But I would just say our conviction around the fundamentals and margin runway for each of the businesses remains strong.
Speaker Change: Okay, and Neil, what's your latest assumption for the last year you have a GTF powdered metal cashflow headwind?
Speaker Change: So, as I said a little earlier, we've got the residual amount parked in 2026 right now. You know, we've done a nice job, I think, of managing.
Speaker Change: the profile, the cash flow so far. We're working very closely with our customers, obviously to support them, but right now I've got that parked in 2026. Could it linger a bit? I suppose, but I think we're talking about a tailwind when we go from 25 to 26.
Okay, thank you. You're welcome.
Thank you. Our final question.
Speaker Change: comes from the line of Scott Mikes of Melius Research. Please go ahead, Scott.
Good morning, Neil, Chris.
I was hoping if you guys could...
to provide some color.
Speaker Change: on the production rates implied in your guidance for the 737.
A320-787-...
How do they progress through the year?
Speaker Change: And then also a quick question on Collins. Do you have any update on the certification timing for the new business class seats there?
Speaker Change: Yeah, thanks for the question. I don't I don't want to get out too far ahead of our customers. You know, you'll hear from them over the coming days, but we are expecting commercial OE growth, as we said, up in in the mid-single digits. Our focus, frankly, as I said earlier, is continuing to work with the supply base to make sure that we are all in sync.
Speaker Change: I want to make sure that they know what they need to deliver and that we're doing everything we can to help them, which is why we've got hundreds of folks there doing that. So again, you heard Neil say this.
Speaker Change: At Collins, we've got the capacity to continue to ramp. We've actually gone and protected some long lead items in case the ramp is even greater than we think.
Speaker Change: But we're gonna stay super tight with the customers and make sure that we can continue to support them going forward. On the seating question, again, as I said earlier, those are some very complicated...
Speaker Change: certification requirements and we are working through some testing but feel like we've got our arms around those generally speaking and have a path forward.
All right, thanks for taking the questions.
Nathan Ware: With that, I would now like to turn the conference back to Nathan Ware.
Speaker Change: All right, thank you, Lateef. That concludes today's call. As always, the Investor Relations team and I will be available for follow-up questions. Thank you all for joining us today and have a good day.
And this now concludes today's conference. You may now disconnect.
David Strauss, David Strauss, John
[inaudible]
and John Wick.
Speaker Change: Unknown Speaker 60th Birthday Jeopardy! conspiracies, conspiracy theories, conspiracy theories, conspiracy theorists, conspiracy theorists, conspiracies. The future of the neoclassical great is about to begin
Speaker Change: We've also got Nellie will hear. Thanks so much for writing a book.