Q1 2025 Textron Inc Earnings Call
Peter Arment, Peter Arment, Peter Arment,
Emily: Good morning everyone and a warm welcome to the Textron Q1 2025 earnings call. My name is Emily and I'll be moderating your pool today. After the presentation you will have the opportunity to ask any questions, which you can do so at any time by pressing start followed by the number one on your telephone keypad.
Speaker Change: I'll now hand over to Scott Heggstrom, Vice President and Investor Relations to begin. Scott, please go ahead.
Scott Hegstrom: Thank you, Emily. Good morning, everyone. Before we begin, I'd like to mention that we'll be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings, and also in today's press release.
Scott Hegstrom: On the call today, we have Scott Donnelly, Textron's Chairman and CEO , and David Rosenberg, our chief financial officer.
Scott Hegstrom: Arunee's call presentation can be found in the Best of Relations section of our website.
Scott Hegstrom: Revenues in the quarter with $3.3 billion of $171 million from last year's first quarter. The second profit in the quarter was $280 million, found $10 million from the first quarter of 2024.
Scott Hegstrom: During this year's first quarter, adjusted income from continuing operations was $1.28 per share, compared to $1.20 per share and last year's first quarter [inaudible]
Scott Hegstrom: Manufacturing Cash of the Four Pension Contributions reflected a use of cash of $158 million compared to a use of cash of $81 million in last year's first quarter.
Scott Hegstrom: With that, I'll turn the call over to Scott. Thanks, Scott. Good morning, everyone. Overall, revenues were up 5%, led by Bell, partially offset by low revenues and industrial.
Scott Hegstrom: During the quarter aviation over 31 jets and 30 commercial total props compared to 36 jets and 20 commercial total props last year's first quarter [inaudible]
Scott Hegstrom: Aviation Operations continue to improve as the factory progressed toward pre-strike performance levels while ramping production production.
Scott Hegstrom: Textron Aviation's fleet utilization remains strong in the quarter, contributing to aftermarket revenue growth of 6% as compared to last year's first quarter.
Scott Hegstrom: Avation announced the sale of 17-year or 262-year craft will be used to train pilots for the
Scott Hegstrom: The Federal or the FAA announced certification of the GE Aerospace Cattle's TurboCrop Engine, marking an important milestone for the beach creptinologist program. Today's program is amassed more than 2700 flight hours and across 1,000 flights with three test articles.
Speaker Change: Abel Revinns, or up 256 million, or 35% compared to last year's first quarter, driven by strong growth in both military and commercial political lines.
Speaker Change: On the military side, execution of the plara, and strengthen military support programs contribute to significant growth from last year's first quarter. As we progress through the plara program, the focus this year includes the design maturation and deliverables toward subsystem and weapon system critical design review, our next major program milestone.
Speaker Change: On the commercial side, Bell delivered 29 helicopters up from 18 and last year's first quarter. During the quarter, Bell was awarded a contract for five additional CMV-22 aircraft. This award extends production through 2027.
Speaker Change: Nell Nell's personal agreement with our methods for 15 IFR configured 407GXIs, and an option for all additional aircraft with delivers expected to begin later this year.
Speaker Change: Moving to systems, revenues of the quarter were slightly lower compared to the prior year, largely resulting from the cancellation of the shadow program in 2024. Thank you for your hard work.
Speaker Change: Strong execution in the quarter, over 13.5% segment profit margin, up 110 basis points as compared to last year's first quarter
Speaker Change: During the first quarter, systems received a contract valued at up to 100 million from the U.S. Navy for support software development updates for its unmanned, minesweeping operations. Also during the quarter, the systems delivered the 13th ship to short connector aircraft craft to the U.S. Navy. The U.S. Navy, the U.S. Navy.
Speaker Change: Moving to industrial, we saw lower revenues in the quarter compared to last year's first quarter, consisting with our expectations for segment profit essentially unchanged as cost savings from our previous restructuring activities offset the impact of lower revenues on segment profit. [inaudible]
Speaker Change: Within Specialized Vehicles, we have completed the previously announced Strategic Review of the Power Sports Parkline, resulting in the sale of the Power Sports Business, including the Articap brand and its operations.
Speaker Change: Also, during the quarter, aviation successfully completed the first hover flight at the Nuva V300, a long range large capacity hybrid electric V-tall on men aircraft. This milestone marks an advancement in the development of sustainable and personal unmanned aerosystems. [inaudible]
With that, I'll turn the call over to David.
Thank you, Scott, and good morning, everyone.
David Rosenberg: Let's review how each of the segments contributed starting with Textron Aviation. Revenue is a Textron Aviation of 1.2 billion or up 24 million from the first quarter of 2024, largely reflecting higher after market revenue of 27 million.
David Rosenberg: Segment profit was $127 million in the first quarter, down 16 million from a year ago, primarily reflecting the mix of aircraft sold, partially offset by higher half-the-market volume. Backlogging the segment ended the quarter at $7.9 billion.
David Rosenberg: Louis DeBell, revenues were $983 million, up $256 million from the first quarter of 2024.
David Rosenberg: The revenue increase in the quarter was driven by higher military revenues of $154 million, primarily due to higher volume from the U.S. Army's flair program, and military sustainment programs, and higher commercial revenues of $102 million, primarily due to higher volume and mix.
David Rosenberg: 2nd Profit of 90 million with up 10 million from a year ago, primarily due to higher volume index of products and services.
Backlog in the segment end of the quarter at 7.1 billy.
David Rosenberg: and Textron Systems, revenues were $296 million down $10 million from Loster's First Quarter, largely due to lower volume, which included the impact of the cancellation of the shadow program in 2024, partially offset by higher volume for the Ship to Shore Connector program.
David Rosenberg: Segment profit of 40 million was up 2 million from last year's first quarter, primarily due to lower research and development costs partially offset by lower volume. Backlog in the segment end of the quarter at 2.3 billion.
David Rosenberg: Industrial Revenue for $792 million, down $100 million from Los Angeles, First Quarter, largely due to lower volume and mix. [inaudible]
David Rosenberg: Textron specialized vehicles revenues decreased 62 million, reflecting lower volume mix primarily in the engulf and cow text revenues decreased 38 million, largely due to lower volume.
Seifman: Seifman Profit of 30 million was essentially unchanged from the first quarter of 2024, as the impact of lower bond and mix was offset by the benefit of cost reductions from restructuring activities.
Seifman: Textron E aviation segment revenues for 7 million in the first quarter of 2025, and segment loss for 17 million has compared with the segment loss of 18 million in the first quarter of
Seifman: Finance segment revenues were $16 million and profit was $10 million in the first quarter of 2025 as compared to segment revenues of $15 million and profit of $18 million in the first quarter of 2024.
Seifman: Moving below segment profit, corporate expenses were 43 million, that interest expense for the manufacturing group was 25 million, life owe inventory provision was 29 million, intangible app that amortization was 8 million, and the non-service component of pension and post-retirement income were 66 million.
Seifman: Our adjusted effective tax rate for the first quarter of 2025 is 15.3 percent. For the full year, we still expect a rate of 18 percent. During the quarter we repurchased approximately 2.9 million shares returning 250 million in cash to shareholders.
Seifman: To wrap up with guidance, we are reaffirming our expected full-year adjusted earnings per share to be in a range of $6 to $6.20
Seifman: We also expect full-year manufacturing cash flow before pension contributions of 800 to 900 million.
Seifman: That concludes our prepared remarks. So, operator, we can open the line for questions.
Thank you.
Speaker Change: Thank you. As a reminder, if you would like to ask a question today, you may do so now by pressing Start, followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press Start, followed by the number two to withdraw yourself from the key. Thank you.
Speaker Change: Our first question today comes from the line of Robert Spellard with vertical research. Robert, please go ahead.
Thanks for watching. Good morning.
All right.
Speaker Change: Scott, both start with you. On the Arctic Cat disposal, I think Gratzon, getting that done. Are you considering any further portfolio actions here?
[inaudible]
Nothing that we're announcing Rob.
Speaker Change: We always look at the portfolio, but we certainly would never pre-announce.
and then the other major issue, of course, of them.
Speaker Change: The moment is tariff and the trade war. I was wondering if you've given any consideration to what the impact could be.
Speaker Change: I think the tar issue is one that everybody's talking about, I would say that when you look at our businesses.
Speaker Change: You know, first of all, our largest businesses in the aviation space, whether it's fixed wing or rotor craft .
Speaker Change: We are principally a North American manufacturer, the vast majority of that manufacturing is in the United States. Certainly we have operations in Mexico and in Canada.
The good news is that with the USMCA compliance.
Speaker Change: We're not having tariffs as things are crossing over that border. [inaudible]
Speaker Change: We do have quite a process that we are in the middle of just going through evaluating USMCA compliance, but I think so far we've seen it being very good shape. So we haven't seen a tire impact in terms of anything moving amongst our North American operations. [inaudible]
Speaker Change: If you look at the Celtics business, as you know we have manufacturing operations all around the world, you need to be close to those OEMs, but as a result all those products that we manufacture in different regions around the world are consumed in those regions around the world. So we're not subjected to tariffs on any of that.
Speaker Change: You know, certainly in all of our businesses, we do have some parts and you know, suppliers that...
Speaker Change: that are either in Europe or in Asia, but so far, the impact of that has been, you know, pre-demonimists, and I think, you know, we'll just continue to monitor that as the situation evolves, but at this point we certainly don't see it as being something that's a material impact of a company. [inaudible]
That's great. Thanks a lot.
Peter Arment, Peter Arment,
Speaker Change: Thank you. Our next question comes from Sheila Kahyaoglu with Jeffries.
Sheila, please go ahead.
Speaker Change: Thank you. Morning, Scott and David. And David, I just want to say congratulations on keeping up with the eight-minute type script that Scott and Frank have. So congrats on that with the proposal. Thank you. Thank you.
Speaker Change: Scott, maybe first one on bell, just really updating performance. There are revenues up 35% equally, but between military and commercial. How do you think about the puts and takes on maybe the floral revenue contribution and profitability from here? [inaudible]
Thank you.
Speaker Change: Sure. So, Sheila, I think we had a very big increase, obviously, on a Q1 to Q1 basis. You know, we didn't have very strong.
Speaker Change: Performance in terms of delivers on the commercial helicopter side, but we also had a very large increase.
Speaker Change: on the FAR program. Q1 was sort of still early in the program. Obviously we're full-run. At this point, it's not only our internal level of activity, but a lot more suppliers on board as we're starting to issue drawings.
Speaker Change: You know, get things on purchase authorizations, and actually start to build, you know, first parts in many cases. So, you know, we're seeing a real step function. I do still believe if you look at FAR on a year of your basis, it's probably going to be up 20% or so. So it will be a contributor, you know, through the course of the year.
Speaker Change: I think the margins are roughly in line with where we guided. I think that will be relatively consistent through the course of the year.
Speaker Change: as we see a large mix of the flower program, driving a lot of the growth and commercial helicopter, early end deliveries as well. We're also, you know, tend to be a little bit the little little grow all grown larger rate. But I think all in all, they'll have a great quarter and we would expect to continue to see nice growth.
and Salah performance throughout the year.
Speaker Change: Can I also ask on industrial how the art to cat and certain product line sales impact revenues and profitability for the remainder of the year?
Speaker Change: Yeah, so we'll be down a little bit on revenue. When we did the guide, we assumed first quarter, which obviously there's revenue in line with what we expected here in Q1.
Speaker Change: You know, we did have some revenue through the balance of the year and expectation that we would need to run this as an aftermarket business. Obviously, you know, as a result of the sale which was really our desired outcome. So, thank you very much for your time.
Speaker Change: We won't have that revenue in the next three quarters, but it's a pretty diminimous number. So I think we'll still be in the guide range on the revenue side and probably have a little bit of movement towards the upper end of the guide in terms of the margin. We'll have a little bit of movement towards the upper end of the guide in terms of the margin.
Great, thank you.
Shup.
Thank you.
Speaker Change: Thank you. Our next question comes from Noah Poponak with Goldman Sachs. Noah, please go ahead.
Hey, good morning everyone.
Horno.
Speaker Change: Scott, maybe you could just talk about the demand environment in the private jet market.
Speaker Change: Obviously, it's hard to predict the future, but in the past when we've had macro concerns that we've at least seen some pause in orders, your 1Q book to Bill was still pretty healthy even though the equity market highs were.
Speaker Change: or Early March, but you know, April 2nd was after the quarter ended, so I know it's it's never super useful to break it apart month by month but just curious to what you're what you're seeing and hearing from your customers. [inaudible]
Speaker Change: Well, no, I mean, look, I think, as you point out, anytime there's a great deal on certainty in the world, you can see some folks pause a little bit and we're not seeing a dramatic impact. There's still more reactivity and flow that's happening, which I think is encouraging. And I do think part of it, no, is the fact that unlike the last. [inaudible]
Speaker Change: as opposed to, you know, Jesus, do I do it this quarter or next quarter? So, so yes, some, some customers are taking a pause but a lot of other customers are continuing with their activity and I think we still feel like the demand environment is solid and we continue to press on.
Speaker Change: Okay, and then maybe you could just give us your updated plan on production and delivery growth through the rest of the year as you continue to recover from the strike but have demand to deliver more airplanes.
Speaker Change: Sure. Well, I think we will see the ramp continue as we got originally, you know, we expected the first half.
Speaker Change: You know, to be a little bit lighter, to be a little bit lighter on the larger rate because you had a lot of that destruction still kind of working its way through.
Speaker Change: and aircraft that were in part built last year and still getting delivered through the first of this half of this year. So I still think we're very confident in where we guided, and we'll see these, you know, a couple hundred basis points below our guide here in the early part of the year and make up for that in the back half.
Speaker Change: The encouraging part is, as we leave the quarter, the metrics of our teams track around productivity and attrition and earned hours and all those sorts of
Speaker Change: of metrics that Ron and his guys drive every day, you know, leaving the quarter, you know, we're getting back to kind of where we were in the pre-strike. So I would say that we do feel very comfortable that we recovered from that disruption. Let's go.
Speaker Change: and those aircraft that we're now manufacturing, largely which will deliver in the second half of the year are...
Speaker Change: Arcy and the impacts of the productivity and efficiencies that we expected. So that model of sort of a ramp through the course of the year and improving margins, particularly in the back cap, I think is going to be what we're going to see.
David Strauss, David Strauss, David Strauss,
Okay, thank you.
[inaudible]
Speaker Change: Thank you. Our next question comes from Peter Arment with Bed.
Please go ahead, Peter. Yeah.
Peter Armand: Thanks, good morning Scott, Dave. I'm on the team resolution. I know you had limited new starts in the first half, but now we've got a full year CR. Any impacts from that on systems or any of the other businesses?
Peter Armand: Well, you know, that's a good question, Peter, I would say, that in general no. So when you look at this full year CR, which is obviously a very unusual.
Peter Armand: There were quite a few so-called amendments to that that provided specific guidance that allowed programs to increase floors a good example. That was in there at the number that we always expected.
Peter Armand: in terms of the appropriation process. So that's why you're seeing this ramp on the floor of size. I think we're a good shape there. Similarly on Ship the Short Connector, the next trance of craft. The next trance of craft.
Peter Armand: was in that number and so we're in the process of getting that added to the contract we're with the Navy in sort of real time here.
Peter Armand: Other programs, you know, like money was appropriated in that FY25, so it's there, so we're...
Peter Armand: We're hoping to understand final resolution here on things like RCB and FTS later on in the year but the good news is generally speaking order flow, contract activity in systems has been looking pretty good so far.
Speaker Change: That's great to hear. And then just a quick follow up on En aviation, just the latest on Donnelly, I saw the GE engine, you know, certainly certified in February . How's the rest of the program gone?
Speaker Change: The rest of the program is going very well. Peter, the last one of getting the engine certified is hugely important to us. As you guys know, as we saw the ladies on that side of the program.
Speaker Change: We've always continued to reflect this program, but in terms of all the formalities, we would kind of put other things in front of it, like ascend and some of these, you know, gen 2s on TGA 3s and things like that. So we kind of have, I would say we have Denali back in the queue here in terms of working through the balance of...
Speaker Change: Certification, as we've always said, the good news is this issue around the engine with certification was challenging, but the performance has been very, very good. So the aircraft is flying really, really well, we're thrilled with it, and we're sort of back into tune out with the FAA and we'll be working through the aircraft level certification. Thank you very much.
Appreciate the details. Thanks
Speaker Change: Thank you. Our next question comes from David Strauss with Barclays. David, please go ahead.
Thanks, Maureen.
Thank you.
One, eight, Scott, you, Scott, you, um...
Speaker Change: You talked about Caltech's no real tariff impact given the localized production, but how do you think about the demand environment for Caltech's given what's going on with tariff?
Speaker Change: David, that's a good question. If there's any risk to a lot of the stuff in general, economically, it's more so the entire city is what happens to macro demand.
Speaker Change: We try not to, we don't generally, you know, forecast on that, we kind of follow IHS, as you know, it's one of the only business really where we're not the end market guy so I don't have any crystal ball. All the,
Speaker Change: Antificate on what's going to happen to the global automotive markets, but the Q1 numbers were in line consistent with what we have expected. So far that's true in Q2, but what happens to the global automotive demand is
Speaker Change: I suppose anybody's guess, and obviously we'll roll up that one one or the other. [inaudible]
Speaker Change: Okay, and Dave, I mean, can you, it sounds like industrial margin, maybe a little bit higher, can you maybe just walk us through if there are any other moving pieces relative to the original guide, maybe corporate, you know, corporate tool, but lower than what you thought for the year, if there's, if there's anything else, we should know.
Thank you. Thank you.
Speaker Change: No, I mean, I think we would still expect corporate expense to normalize through the year, so we'll maintain our guide of $160 million.
Speaker Change: You know, interest expense will continue to trend up slightly throughout the years we expected just based on, you know, the turnover of our debt at the higher interest rate and the expected lower cash on hand, which generates an interest income. I'm on industrial, you know, I'd say the sequence thing remains the same we talked about.
Speaker Change: You know, with the year went on, you know, the restructuring impact will continue to take effect and we're starting to see that. So you'll see, you know, some sequential growth in the overall industrial number, as we go through the rest of the year and then as Scott said, you know, it's like benefit as a result of the transaction with our decat that we announced today. You know, we're starting to see that.
Thank you.
Thank you.
Speaker Change: Okay, are there any proceeds from the Power Sports Investiture and are you holding on to that after the Marka piece or did that go as well?
Speaker Change: The OptiMarket piece went with the business and there was some small proceeds that were in material that will be in the Q2 results.
Thank you.
and the rest of us. Thank you. Thank you.
Sure.
Peter Arment, Myles Walton
Speaker Change: Thank you. Our next question comes from Seth Seifman with JP Morgan. Please go ahead, Seth.
Yeah, hey guys, this is Alex on first set. Yeah.
Speaker Change: You know, maybe you wanted to kind of ask a follow-up, you know, regarding demand that you guys have kind of seen in aviation, you know, understand you guys kind of pointed to that there hasn't really been any major changes, but you know, maybe to put a finer point on it and kind of address, I guess, the fractional of flash, you know, net jet sides of things, you know, curious if you guys kind of, you know, have any color you could add on that, whether you've maybe seen any changes in kind of that customer behavior, you know, typically think of them as a little bit more [inaudible]
Speaker Change: Macros, that's it. So, you know, Terry Eski, you guys could kind of maybe provide, you know, some collater.
David Strauss, David Strauss, David Strauss,
Speaker Change: Now, I guess we don't normally try to provide NETJET's guide, I mean, NETJET's still taking deliveries of aircraft.
Speaker Change: You know, that's just still putting, you know, new aircraft on order, so I guess I probably won't give a lot of color as far as the net jet, you know, fractional and market, but certainly or activity continues, deliveries continue, so...
Speaker Change: I wouldn't break that out as a specific item one or the other.
OK.
Speaker Change: Anderson, and then maybe as a quick fallout, maybe if we could get kind of an update on how things are trending more recently in the supply chain with regards to aviation. I know you guys talked about an expected improvement in labor productivity following the strike as well as everything they're kind of trending towards expectations. Thank you very much.
Go to Beadaholique.com for all of your beading supply needs!
Speaker Change: Well, I would say that we still feel very good about where the supply chain side is at aviation. I think that's certainly one of the factors driving improvements in productivity. We don't see nearly as much out of station work. You know, parts of the air, so the flow is much cleaner. That clearly helps to drive. Thank you very much.
Speaker Change: of employment that we need to execute on the plan. Obviously, there's always a certain amount of hiring going along with retirements and things of that nature, but I would say that the part situation at aviation.
Speaker Change: is where we expect it to be. It's in a much better shape than it's been in a long time. There are always, as you can imagine, supply chain issues that pop up. They will always have been issues that pop up periodically, but I'd say at a macro level.
Speaker Change: The Supply Chain and Aviation is in good shape, and our workforce situation is in good shape, and that's what I think will help to drive that improvement in both the volume and the productivity efficiency and therefore margins as we go through the balance of the year.
Thank you for watching. We'll see you next time.
So, thank you guys.
Sure.
Speaker Change: Thank you. Our next question comes from Myles Walton with Wall-Free Search. Myles, please go ahead.
Miles Walton: Thanks, good morning. I'm wondering on the system's backlog, it looks like it declined sequentially about in line with your sales, and so maybe it's got back to Rob's question. I don't know if it was that one [inaudible]
Miles Walton: Peter's question on the demand in the defense complex. What, what if anything was ordered there and did you have any debug search that comes with that?
Miles Walton: You know, so I mean, I talked frankly about, you know, Shapiro's a good example, right? I mean, that was, you know, in the CR, or in the process of negotiating, you know, the Navy, but you know, that number, you know, that won't go into backlog.
Miles Walton: until we've definitiveized that contract. It tends to be very lumpy and I wouldn't read anything one way or the other into the pet systems backlog.
Speaker Change: Okay. And on the cash list statement, could you give some colors to the larger use of cash and operating cash flow from the other category? What was that?
Speaker Change: Yeah, there are really two components. Some additional inventory build at aviation that will normalize throughout the year and then just some payment timing at Bell from Q1-Q2 around some government programs.
Speaker Change: But nothing really unexpected in either of those, and we will get on the payment timing with Delval, we'll get those receipts in Q2.
Okay, got it. Thank you.
Good.
Speaker Change: Thank you. Our next question comes from the line of Jason Gursky with City Group. Please go ahead, Jason.
Thank you.
Speaker Change: Yeah, good morning, Scott. I wanted to ask you a quick question about the defense businesses of both at Bell and maybe systems. You know, we clearly hearing a lot from DoD. [inaudible]
Speaker Change: that the future is going to include a lot more unmanned autonomous and attributable systems.
Speaker Change: I'm just kind of curious what you're seeing both on the demand side and whether there are new programs of record that are being stood up or whether there's an increased usage of OTAs and we've got some non-traditional actors that are coming in.
Speaker Change: in garnering some wins, utilizing some products that they've developed that are unmanned autonomous and
Speaker Change: Trittable, and kind of how your company is responding to this new vector in demand and what that
Speaker Change: R&D and contract types that you might be working on in the future. I'm just kind of curious that there's going to be a bit more I rad here and for a fixed price, contracts going forward. Thanks.
Speaker Change: Sure. So I guess I would say with respect to unmanned, without a doubt, there's a continued focus in that area. Obviously things like F2AS are on the horizon, which is
Speaker Change: The Army wants to make sure that that aircraft can be unmanned. Now that doesn't necessarily mean they're going to fly it as an unmanned aircraft. The aircraft will be able to fly up to earth.
Speaker Change: You know 12 guys in the back when you into a you know an assault insertion but relocations and you know different missions there might be places where they want that so certainly you know one requirements on on a new platform like that. [inaudible]
Speaker Change: is that it needs to have the capability to perform autonomously.
Speaker Change: You may recall, good news is we flew the actual original. [inaudible]
Speaker Change: V280, you know, with, you know, secretary pilots obviously, but we flew that on an applying this mission.
Speaker Change: You know, many years ago, so ensuring that the capabilities in these platforms for either, you know, optionally or unmanned, you know, capabilities is becoming very, very standard.
Speaker Change: in terms of other activity that's out there. Look, we've talked in the past about our high-speed detall.
Speaker Change: program. I think we're working with the military children, sort of one of the next steps of that, so certainly when you look at technology that's still in that in DARPA, you know, slash, you know, sort of special operations, there's activity there which again is very focused on. [inaudible]
Thanks.
Speaker Change: When you look at your remote combat vehicle, right? But again, there's an area where we've invested for...
Speaker Change: A better part of a decade for autonomous land vehicles as well. And of course, we have our custody programs and things that we continue to support and on-man line sweeping. So, as a company, we have a lot of different programs everywhere from production to...
Speaker Change: working with the DARPAs of the world on the platform. So it will be a continuing focal point and I think we're in a very good place. In terms of the contract type, I would say that I continue to see the trend being that when you're in production. Thank you very much.
Speaker Change: that, you know, the military will lean towards fixed price contracts and, and frankly, we're fine with that, you know, when you have a compression product, you know what I think it's an everyone's interest to try to drive fixed price.
Speaker Change: Contracting, but in most development activity, as far as good example, when you're in the EMD phase, you know, you're large across-plus, most of these other contract types.
you know, where you're working with...
Speaker Change: You know, earlier development, even if it's both its developmental, they're tending to stay to the cost plus, you know, or best effort, you know, kinds of contracting [inaudible]
Speaker Change: Okay, that's helpful. I just can't, as a follow-up, one of the things you didn't mention there is a tritable systems. I'm just kind of curious on the...
Munitions Side, or...
Speaker Change: You know, a suitable math seems to be a phrase that we hear quite a bit coming out of DoD these days. I'm just from a product perspective. What does that mean to you and is it an area that's of interest to you?
Thank you. Bye. Bye.
Speaker Change: You know, it's credible, I guess most of the stuff for sure, that I just mentioned there are sort of platforms or derivations of platforms [inaudible]
Speaker Change: There are certainly much higher dollar value, so those would not fall into a desire for those to be charitable. But that's not in our historical focus, but for sure there are some small programs that we're executing that would be more along that charitable line.
Great. Appreciate the color.
Sure.
Speaker Change: Thank you. Our next question comes from Kristine Liwag with Morgan Stanley . Please go ahead, Kristine.
Christine Luargue: Hey, good morning, everyone. On Bell, we saw a nice positive uptick and commercial helicopter deliveries in the quarter. Can you talk about the demand environment, customer profile pricing, and whether you'd expect this strength to continue?
Speaker Change: I would say, on the bell commercial side, the demand is solid, I mean, overactivity is good, it's across pretty much all of our models, all of our product lines, everything from the 505 up through the
Speaker Change: The 412s, as you know we have our initial 525s book, we just wrote it on
Speaker Change: You know, signed a deal with Omni to get five to five, you know, out into their routes to do route proving so I would say pretty much across the board whether it's, you know, paramilitary.
Speaker Change: Border Patrol, Medical, Oil and Gas, you know, we're seeing strong demand across pretty much all of the, the Ellicottropotoclines.
Speaker Change: Great, thanks. And Scott, if I could add another one on business jets, I mean on aviation. Historically, we've seen a strong correlation of US investment spending and demand for medium sized business jets.
Speaker Change: and with this administration focused on bringing manufacturing back to the US, are you seeing any early indication of increased demand from corporate clients who may want to restore manufacturing or anything like that?
Speaker Change: You know, as I said, I think we're, you know, we continue to see a strong, you know, demand environment. I don't know, I don't know if I know how to correlate that to, you know, a company that's bringing reshoring per se, but I would say, you know, in general, despite the fact that there's a great deal of uncertainty and...
Speaker Change: Without a doubt, the tariff situation is helping create some uncertainty, but I think most companies in the mid didn't so long-term.
Speaker Change: It's usually important that doesn't get talked about here a lot just because of all the other you know things that are going on but I think most people view the the mid the long terms of favorable environment so I think that's part partly what's what's driving that is reshoring and growth you know in the US helping that it could be I don't know that I have any [inaudible]
It's a good environment.
Thank you. Thank you.
Great, thank you [inaudible]
Speaker Change: Thank you. Our next question comes from Gavin Parsons with UBS.
Please go ahead [inaudible]
Speaker Change: Hi, Scott. And David, this is you all samples for Gavin Parsons for you guys. Giving the curing to demand environments or business tasks and giving us some more color on how net pricing and performance have been here today. And if it does align with your expectation for 2025.
Speaker Change: So, as I said, I think the environment for BizJets remains solid, our own reactivity continues to flow. You saw that in the first quarter in terms of what to build.
Speaker Change: and as I said earlier, I think you'll have some people that will take a brief pause here, just some of the uncertainty but you know given the nature of the backlog and the overall you know I think people's longer term economic outlook.
We continue to see good old activity.
Speaker Change: And don't have the aviation after March at, can you guys give us a mark all around this tragedy in place for continuing to build the segment and then how does impacting the overhaul of the abilities? Let's see.
Speaker Change: The FMR business was up 6% in the quarter, which is good growth, so we see flying hours.
Speaker Change: You know, stays robust so our service centers are busy, parts flow into the aftermarket is obviously strong so you know that's a really important part of our overall you know company and you guys know we serve a huge install base and that's largely driven by you know by flying and people are flying. [inaudible]
Perfect. Thank you.
Speaker Change: Thank you. Our next question comes from Ron Epstein with Bank of America. Please go ahead.
Speaker Change: Can absorb an awful lot of wait and still provide really good performance with good payload and still hundreds of miles of range, even with a lot of battery load. So.
Speaker Change: So caravans have actually been used.
Speaker Change: A lot of companies is tested for this activity.
Speaker Change: So now again, where that goes in.
Speaker Change: If the right answer or do you have a hybridized version of it that I think is all steel.
Speaker Change: To be determined but for sure a caravan is one where.
Speaker Change: You can you can you can electrified people have electrified cars and then we work to support those companies, we're not doing that ourselves, we're working with those guys to support their efforts.
Speaker Change: Towards ultimately hopefully certification, where you would have an electrified caravan.
Speaker Change: Now there's meat on that bone is that a market you might get into I guess, that's what I'm getting that right given that you have in house technology anyway.
Speaker Change: Yes.
Speaker Change: Well I mean I won't go into all the gory details here, but I mean, a couple of companies. We've worked with them, we do have arrangements where.
Speaker Change: Let's say they are doing the work we are supporting them and provide them information they would own let's say a supplemental type certification that with what you would take a caravan and modify it.
Speaker Change: To put it into service as an electrified aircraft and we have the ability to take that and incorporate that.
Speaker Change: Basically into a production line. So if we see sufficient volume sufficient demand.
Speaker Change: Absolutely looked at incorporating that and turning that into a production product.
Speaker Change: Got it got it and then and then maybe just one last one changing gears.
Speaker Change: Nobody's really asked much about.
Speaker Change: The M&A front.
Speaker Change: Is there much out there I mean, you guys are looking at stuff.
Speaker Change: Fence tax seems to be a space, where there's a lot of interest in kind of.
Speaker Change: Software driven hardware and that kind of thing.
Speaker Change: Are you guys thinking about anything like that or if you could just give us a broader feel about how you're thinking about the current M&A environment.
Speaker Change: Sure Ron look I mean, we continue to to look all the time, we've been in a number of deals, but we do look at.
Speaker Change: What are the multiples look like what are the earnings look like and is it something that we can do that would be accretive and if it's something that we thought.
Speaker Change: Thought we could get a price point, where it's accretive we would absolutely.
Speaker Change: Changing entertain adding things like that obviously, particularly in our in our A&D space.
Speaker Change: Look I mean things maybe here a little rocky with some of the uncertainty in the world but.
Speaker Change: Do you see a lot of these deals are just kind of a little bit on the <unk> side in terms of multiples and not something that we thought could be accretive for our shareholders.
Speaker Change: Got it all right cool thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question comes from Pes Kubicki with Alembic Global. Please go ahead.
Speaker Change: Good morning, guys.
Speaker Change: Hey, Scott the release stated that and I think you Might've mentioned the Bell military Sustainment volume was up year over year can you talk about where that's coming from I assume maybe it's H. One N V 22, I don't know if its weighted one way or another but could you talk about that and maybe if that's sustainable or was just a timing thing.
Speaker Change: Sure.
Speaker Change: It is the legacy so called legacy platform. So H, one and V 22, we continue to have.
Speaker Change: Ongoing contracting activity with parts with <unk> and things of that nature. So.
Speaker Change: As you know is always also a little bit lumpy right, we often find ourselves in situations, where we're out there building because we know the demand is there and then just contracting takes a while and so when those contracts get definitive <unk>.
Speaker Change: Stuff that we have that would move from a company funded long lead gets put up against that.
Speaker Change: Contract. So you always do have a little bit of lumpiness, but but yes, it's related to each one and between two programs, but I expect that to continue to be that these aircraft are.
Speaker Change: Our flown every day and they generate a lot of aftermarket demand and we expect to continue to support that for many many many years to come.
Speaker Change: Okay. Thank you and then just I just wanted to follow up on Jason's comment earlier question earlier about unmanned, but sticking kind of to the unmanned surface vehicle area, where you've participated in the past with the coffee and I think you guys announced the tsunami family.
Speaker Change: Just wanted to ask you know is this a marketplace on the USPI side, it's really.
Speaker Change: Growing rapidly you mentioned and you dropped in classified earlier in your comments and I ask because I think theres been a couple of startups that have emerged out of stealth mode fairly recently.
Speaker Change: With some money behind them and so I'm just wondering if this is an area on the surface side, it's really kind of poised to grow or if you're you know.
Speaker Change: You know maybe more balanced type of a view and do you think it's going to be.
Speaker Change: A few more years of experimentation before we see something bear out there.
Speaker Change: Well look I do think it is growing I think.
Speaker Change: LG I would go back to when you think about early days of unmanned aircraft systems.
Speaker Change: The proliferation of those missions in different types and whatnot has grown.
Speaker Change: Dramatically from just ISR to weapons Asian, obviously, you've got very long range high altitude stuff, you've got very tactical all the way down to almost micro.
Speaker Change: Versions of the system. So I think youre seeing the same thing happened.
Speaker Change: Unmanned surface vessel area, obviously, we've been a player in this from the very very early days of it with custody.
Speaker Change: Not surprising the first applications.
Speaker Change: Everyone knows that are out there are around nine huntington's is a place you'd like not to be as a person when you're out there doing my hunting operations. So.
Speaker Change: Whether its sweeping or interdiction, that's an area that we've played we continue to do that.
We work very closely with the Navy and have for.
Speaker Change: Quite some time and supporting that mission and also supporting now the integration of new platforms onto those sorts of of Kraft I think they have a road map that shows more craft of different types and different missions going into the future. We are working with them on that.
Speaker Change: All the way to the extreme and you mentioned it.
Speaker Change: Is something like tsunami, right, which is sort of a net attributable higher.
Speaker Change: Higher volume lower cost.
Speaker Change: Again with different mission payloads.
Speaker Change: Going forward in <unk>.
Speaker Change: That's a good example ever it talks about sort of these new companies and putting money behind it we've been putting money like this for a very long time, and we have programs to show for it so.
Speaker Change: These things do take investment upfront for sure, but I think the tsunami is a good example shows you can go compete with all these new upstart companies and we actually won because we too have put a lot of money behind this and invested in future applications.
Speaker Change: Great. Thanks for the color.
Speaker Change: Sure.
Speaker Change: Thank you we have no further questions. This concludes today's call. Thank you everyone for your participation.
Speaker Change: A replay will be available until Thursday may 11.
Speaker Change: 11, 59 P M eastern time.
Speaker Change: Access the replay by dialing the United States local number 19, nine full slide 86194 and use the access code 86 590 <unk>. Thank you everyone for joining US today you may now disconnect your lines.
Speaker Change: [music].