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spk_0: ladies and gentlemen thank you for standing by and welcome to the textron fourth quarter earnings conference call at the time all participants are gonna listen only mode later we will conduct a question and answer session if you have a question please press one and then zero on your touchstone phone you may remove yourself from q and any time by repeating that one zero command if you're using a speakerphone we ask that you please pick up your handset before pressing the numbers as a reminder if you need assistance from an operator please press star and and zero this conference is being recorded and i would now like to turn the conference over to the vice president of investor relations mr eric salander please go ahead
spk_1: thanks gilliam good morning everyone before we begin i'd like to mention we will be discussing future estimates and expectations during our call today pay it forward looking statements are subject to various risk factors which are detailed nervously filings and also in today's press release on the call today we have got donnelly textron chairman and ceo and for encounter achievement financial officer earnings call presentation can be found in the best relations section of our website tax revenues in the quarter or three point seven billion down three hundred and sixty eight million from last year during this year's fourth quarter we recorded twenty three million and pretax special chargers largely related restructuring activities and industrial and textron aviation or seven cents per share after tax we also recognized at one time favorable tax benefit related to the sale of to canada a four cents per share excluding special charges and the one time favorable benefit adjusted net income was a dollar six per share compared to a dollar eleven in last year's fourth quarter manufacturing cashflow before pension contributions was four hundred and sixty seven mil lean down one hundred and eighty three million from last year's fourth quarter for the full year revenues were eleven point seven billion down from thirteen point six billion a year ago adjusted net income was two dollars and seven cents per share compared to three dollars and seventy four cents last year manufacturing cashflow before pension contributions was five hundred and ninety six million as compared to six hundred and forty two million last year would that i'll turn the call over to scott like jerking you're born your own or britain's was called up here with a strong are pretty performance in the fourth quarter as we saw mordor improvement systems industrial and bell the drove an increase in textile manufacturing margin to a point eight percent or law revenues a bell martyrs or to a point six percent were thirty basis or inches compared to the bar year despite lord military robot using commercial volume with over fifty seven crucial helicopters down from seventy six and letters fourth quarter on an older saw the japanese officially return it to flight operations and remember this continues growth a worldwide fleet of are pretty aircraft which has amassed or five hundred and sixty thousand flight hours what you to future vertical of or marca third anniversary of the to it is for in december with the aircraft are email flown more than two hundred hours army leadership in congress of inverse or the future vertical and we expect this will continue under the new administration
spk_2: in december the us army brought to the draft rp for the floor program for review a comment
spk_1: are we continue to it's fidel's select and blurb or remorse in mid twenty twenty two but systems revenues are down primarily a lower volume of the true stimulation training business in november systems announced the sale with commercial air transport similar bills see this transaction caused in january
spk_2: in the core a tough one the reoccupied of the us navy and marine corps flight fighter jet training sources for ram this contract expand the scope of the services we currently for right into the program is worth of the four hundred forty million over the next five years
spk_1: also in the quarter unmanned systems as war to sixty six million dollar contract for the us army for thirty six shadow aircraft the shadow platform now has over one point two million four hours wobbly who into industrial robots are down primarily due to reduce demand and the girl support group business with a specialized vehicles
spk_2: caltech the automotive production network has steadily improved since the low point in may and demand from our customers continues to ramp when the fourth quarter as revenues approach by your levels but we detect renovation revenues are down the corridor primarily a lower deliveries and aftermarket volume real over sixty one just stop and seventy one last year and sixty one to term props up from fifty nine and last years for core
spk_1: on the new product from aviation be and deliveries of a new tier three sixty with a use the quarter and and else you can hear to sixty social skycar kerber amputees to rush with three aircraft flying certification program for of just for of is computer over four hundred flight hours and the are on track for entered service the second half or twenty twenty one
spk_2: summary twenty twenty was a difficult year with many challenges for operations and i'm proud of the way or teams responded to focus on working capital management cross control the business generated a straw manufacturing flow performance for year
spk_1: our defense businesses were able to maintain our operations your customer arguments and delivery strong result on a commercial side we overcame tipperary manufacturing shut down the destruction that are and markets to law reform fourth quarter results
spk_2: and look for to carry that momentum is twenty twenty one
spk_1: this backdrop of projecting revenues of about two point five billion for textron twenty twenty one financial guides and aviation we're projecting girl from increased aircraft delivers on both jets enter abrupt including the entry into service of our new social skycar that are after more drone is driven by increased legalization at systems are expecting higher revenues and margin expansion primarily driven by girl but a talk emery land systems a bell we expect solid margin performance despite lower military commercial revenues are continuing to invest due to work left
spk_2: and industrial were expected revenue wrote a marked improvement callbacks as older man continued recover from pre to cook to pre covered levels
spk_1: a texture ostracize vehicles are also expected revenue growth and margin improvement as we continue to grow apart horse pills that pro shops we're projecting a job dps in the range of two dollars and seventy cents to with ninety cents per share manufacturing flow before punch your contributions expected to be the range of six to seven hundred million without altering the goal of difference
spk_3: thanks gotten good morning everyone
spk_1: segment profit in the quarter was three hundred and twenty four million down sixteen million from the fourth quarter two thousand and nineteen ninety three hundred and sixty eight million dollar decrease in revenues let's review how each of the segments contribute starting with texture and aviation revenues a text on aviation a one point six billion or down ten percent primarily due to lower citation jet volume and lower aftermarket volume second profit was one hundred and eight million in the fourth quarter down from one hundred and thirty four million a year ago primarily due to the impacts from lower volume and next backlog in the segment kind of the quarter at one point sir
spk_3: billion
spk_4: moving to bell revenues were eight hundred and seventy one million down from nine hundred and sixty one million last year
spk_1: primarily on lower military revenues and commercial value saying that profit of one hundred and ten million was down eight million largely on the lower volume partially offset by a favorable impact from performance primarily reflecting higher favorable program adjustments backlog in the segment end of the quarter five point three billion at textron systems revenues were three hundred and fifty seven million down from three hundred ninety nine million a year ago primarily due to lower volume a true simulation and training segment profit a forty nine million was up sixteen million primarily due to favorable performance backlog in the segment and of the quarter two point six billion industrial revenues were eight hundred and sixty six million a decrease of sixty one million from last year primarily due to reduce demand in the grass support equipment business within specialized vehicles
spk_3: segment profit was fifty five million up twenty five percent from the fourth quarter two thousand and nineteen largely due to a favorable impact from pricing and inflation
spk_1: and favorable performance partially offset by the impact of lower volume us finance segment revenues were thirteen million and profit was two million well then below segment profit corporate expenses were fifty million and interest expense thirty six million we recorded pre pre tax special charge and of twenty three million in the quarter related restructuring activities following the strong cat performance in the quarter we ended the year with approximately two point three billion in cash on the ballot she the two point three billion represents a higher than normal level of cash on hand reflecting a pre finding out five hundred million of two thousand twenty one debt maturities during the quarter we we pay three hundred and fifty million afloat emmerich knows that matured in november and three hundred and sixty two million of outstanding borrowings on corporate own life insurance policies that were drawn in the first quarter for additional liquidity in the corner we also reactivated our share repurchase programmer repurchase approximately one hundred and twenty two hundred and twenty nine million shares turning to our two thousand and twenty one outlook or begin with our segments on slide nine of the earnings call presentation and textron aviation were expecting higher revenues of about four point five billion reflecting higher aircraft deliveries for both jackson turboprops as well as higher aftermarket revenues segment margin is expected be approximately five point five percent reflecting the higher volume and increase production looking to bell with back slightly lower revenues of about three point one billion reflecting lower military revenues from a lower h one production and aftermarket volume and lower commercial delivers are forecasting a margin of about twelve point five percent largely reflecting a lower military and revenue is an increased our india investments related to flora and fauna rock
spk_3: that systems were estimating higher two thousand twenty one who where out of revenues about one point four billion
spk_1: segment margin is expected to be about twelve point five percent and industrial were expecting segment revenues of about three point four billion reflecting higher revenues a cow text and textron specialize vehicles segment margin is expected to be about six percent and finance were forecasting segment profit of about ten million turning just like ten we're estimating two thousand and twenty one pension income of about thirty million versus
spk_2: the pension cost of thirty three million last year or two thousand and twenty one pension and reflects the strong return on our pension assets for two thousand and twenty of seventeen point four percent and a change to the amortization period for accumulated actuarial losses for one of our domestic plans resulting in those losses being hammered type
spk_1: over a longer period are setting these favorable changes or a seventy five this point decrease in our discount rate to two point seven percent and a decrease in are estimated long term asset return a fifty basis points to seven point two five percent turning just flight eleven or and he is expected to be about six hundred million up from five hundred and forty five million in two thousand and twenty or met estimating cap acts will be about four hundred million from three hundred and seventeen million last year living below the segment line and looking at like twelve or projecting about one hundred and twenty million of corporate expense one hundred and thirty five million of interest expense and a for your effective tax rate of approximately eighteen percent or whole your two thousand twenty one adjusted dps guidance is two dollars and seventy two dollars ninety cents per share which excludes twenty to thirty million a pretax special chargers are the completion of our previously announced restructuring plan and a pretext gain of about ten million from the sale of to canada our outlook assumes an average share kind of got two hundred and twenty seven million shares as we continue to deploy the majority of our free cash toward share repurchases in two thousand and twenty one
spk_0: and concludes are prepared remarks or greater we can open life questions
spk_5: thank you and i first question come from the line of robert stallard of protocol research please go ahead
spk_6: thanks so much to morning when him the first question on the aviation division and in the really she said the to tina continued good order momentum as or if you could maybe give given more clarity
spk_2: almost killing on out there in the market and in particular giving you full cost for twenty twenty one and how the availability of slots he's lucky well as the robber when you know when we use real for israel murder of update obviously we've seen you know sequentially from the no challenges and q two to three improved you for improved and we expect to see that momentum continue just based on the dialogues are going on with our our sales team so i think people are feeling like things are recovering and the remains they're obviously are you see the date around hughes aircraft for sale is it at record lows you look at citations that are you know less than ten years old it's only about one percent of the fleet so i think the the market has been strong not just as we seen increased you know interest in and orders on the news i but also very strong one
spk_1: on the you side
spk_2: for an activity has rebounded feel quite strongly november december and the us were actually up you know for our aircraft over your year ago so i think that the man and and or went and we were we recognize that primarily leader travel this point they're still pretty new to amount of what we think is straight business travel so is the you continue to return to normal we think we'll see you know ongoing improvements in the utilization as well so that a macro level considering the the little interest for seeing the momentum that we see through the the course of the year and the road very low levels of hughes aircraft that are you know within that ten year window in terms of age or all kind of pointing to continue to momentum and strike
spk_5: the no worse either business
spk_7: great thanks god and friend has to a confrontation i mister he said on the share came for twenty twenty one i was typing quick enough
spk_0: two hundred twenty seven million that's great thanks how much as
spk_8: thank you next to go to the line of carter copeland of millions research please go ahead good morning chance
spk_2: or even scott i wondered just a clarification on the comment you made on a bell margin and that continued investment in future vertical it let me know the investment sustained at the same level or does is there a headwind related to that as we look at twenty one or the others a headwind and twenty one quarter so you know obviously we started those programs in the a lot of party your they've been ramping through the the queue for and we expect to see that can to eat around through the course of this year is korea were obviously you know work and both floor and vara
spk_8: so far we talked about a little bit us going in that phase two of the of that risk reduction phase so that's fully rampton on the far program you know we've actually begun you know component manufacturing and some of the initial some we work on the on a flight test aircraft year ready for flight early next year
spk_2: okay and to that that peak and twenty one or will we continue to to trend upwards to twenty two
spk_8: you know with probably kind of to going to twenty two would be my guest are probably not quite ready guy twenty two but yeah understandable okay okay thanks for that and then friend just a quick clarification on that the pension peace how much longer to the amortization carry get on a on a lot lotta yeah for that the one planet went from it would have been and seven years and it moved out to twenty years
spk_4: okay
spk_9: and that a large portion of the the plan or she is it it it's our largest planets the
spk_0: thirteen afghans the textron master plan and a reason for that is that we move below ten percent of the participants in that plan being activists or yeah tired and so when you when you do that a change to the remaining life or expectation for remaining life rather than remaining service period
spk_10: yeah exactly are a great think that's very color
spk_11: thank you and next so that's the line and see like a yellow of jeffries please go ahead
spk_12: a good morning that bank and eric
spk_2: warner previously talked about recovering half of the delivery decline and eighty seven and twenty twenty one that implied delivery the that one hundred sixty five unit how do we think about that given orders foul painful one quarter yeah i think that's the woolworth they issue on us what we have laid out in terms of our assumptions the on in the guy that we gave you guys who are expecting the about half way back in terms of both new aircraft as well as our aftermarket volumes so know you know fight activity is picked up and we've been seeing you steady improvement in
spk_12: in the on your amount of activities going on the aftermarket so it will get all the way back to
spk_2: to nineteen and one year but we're suing that's also gotta about i have where they're sort of the stuff
spk_1: about call and then under that bell revenue guide i think it down about ten percent and what of the moving pieces to that you know i think be twenty two should be fairly stable is that an eighty one drop were a bit on the military aftermarket the on the military side it's primarily driven by each one so we're starting the ramp down on them or h h one deliveries
spk_13: and also we do expect at this point you know commercial be down as well so
spk_0: no i think the and market will start recover their but there's a lot of are so much more commercial helicopter market is international it's pitch has been taught to get deals know closed here and in twenty twenty so when he will start see that pick back up again but it'll leave a little bit a little a decline and twenty one for commercial or as as well
spk_1: i'm thinking that got a trip like it
spk_14: thank you next so the line of george shapiro of shapiro research please go ahead
spk_2: a yes and scott i want to pursue the book to veil was like point eight six in the quarter i orders were certainly better than they were in a third quarter but the it came down from last year's fourth quarter just wondering you see any slowing in the quarter is
spk_1: people rushed to try and get deliveries by the ended last year to be the potential change in the bonus depreciation with the new administration
spk_2: no i don't think we saw any change in a as you know your years always yell end of the year tax driven regardless of administration's or tax policies it's always best to get that at first year tax on newburgh are what the depreciation schedules are so we we've always seen that you're sort of now that activity as we get into queue for and that's why you for as always been our our strongest delivered quarter but with respect to the order stuff i don't yeah when we saw the know twenty one of the extraordinary are obviously but we did see that incremental straight the and order flow
spk_1: through for thirty four and the and is based on dialogues and the level of interest in activity that's out there were feeling pretty good know towards that revenue guide that we gave you in terms of jet deliveries for the year so
spk_2: oh yeah as you know queue for is always our house delivery and so book to below the always had a challenge in there but i think we're activity certainly supports our our view on what the regular guy is for this year and and just on that yet projection for aviation implies about a thirty five percent incremental margin which is a pretty strong the man on me that reflecting better pricing that she wasn't saying are key kid or give a little more collar on wide so strong well we sort of do expect to see better pricing we have better pricing humor in queue for as well
spk_14: so you know given the the man environment we would certainly expect to see some continue price improvement
spk_0: but it's also enough to when you look at the at the your rear stories you've got a lot about personally you know cause it was in there and and twenty twenty and so were we certainly expect a rebound back to the kind of levels that we had in twenty nineteen with you know considerably better leverage than you would normally expect to see in that you know kind of twenty percent or so range
spk_15: okay very good thank you very much job like you
spk_16: think your next got to line up david strauss of barclays please go ahead
spk_15: thanks mine
spk_2: on a widowed
spk_1: scott just just back on the such a plan hundred and sixty five or so delivery can you can you talk about how yeah no i guess not in absolute terms but relative to prior years kind of household you are on that play and entering the years compared to what you've seen the past
spk_17: die every we don't use would provide a means of the other backlog numbers pretty comparable right so i don't think it's a a very different situation than than we're used to seeing new
spk_2: okay and then latitude longitude looks like yeah they they've been right about thirty thirty five percent of poll deliveries would you expect a a some more max and we'll maybe if you could just update us on longitude i think for a while i was the he always deluded was seen a deluded to margins where where that were that said today roth to the kind of the overall aviation average well i don't they are going to get into margins on particular aircraft but like david is no doubt that we had solution obviously when you see the initial aircraft build those are are always more expensive i think the guys are done for now chabal a working through that young houses are some interruption this years we shut down a plan bought a backup but i think one you
spk_15: on a on a good track to be a strong gross margin
spk_18: product for us i the demand is has been good you know as you know the thing is we have quite a few retailer crapped out there that sell property in the naturally doing really really well so
spk_19: i'm pro go in the gross margin by your crap but we're very happy with your launched do this
spk_1: okay and this mix makes with and deliveries lads the longitude you think in a similar kind of reigns what we see in the past ramp the i would i would expect so i mean it's it should be about same el cap i thank you very much true
spk_2: thank you next to the tunnel and of pete skybitz keep up olympic global please go ahead ignoring i've already at at i think i might have missed the if you mentioned what drove the big increase in systems backlog what was that gbs the primarily and then you know if a little was in terms of converting that to revenue is it just can be kind of the very slow ram through card twenty one twenty two
spk_3: so the backlog added systems or car across most of assignments feed so absolutely gbs the when in there which is it also hundred million dollars plus kind of business are we just started grilli to recognize the revenue on that and in queue for and so yeah that's kind of a five year we know so little ramp years we go through your twenty one in the twenty two
spk_2: we had some nice as the backlog we are we talked about some of the a jack wins both three compete with the navy his role as the ongoing cat caf
spk_20: your task order words and middle we had some obviously the shadow you know program on block for so it was across most of the segments but
spk_0: on
spk_4: okay another that's great it and just the margin their the games at all and half percent it should we be thinking that that kind of the new kind of steady state for that business or or you know to twenty one kind of benefit from from someone unusual dynamic
spk_21: you know i think it's the over again this is probably it looks as a very defense oriented the own business i meant so ten twelve percent margins is or where we would expect that business to be okay thanks guys
spk_2: church thank you next week outline and china relief at city please go ahead a bank or hague morning sky he just a tad twelve percent about as who are bell margin of fan margin opportunity understood the reasons for this year and that you start a lot of fpl a any sort of thoughts on the opportunity for got margin on the other side of that the hill versus the normalize rate that to speak
spk_21: look guys i added it's gonna depend so much on on where volume goes right into mean the that you know what can it be twenty twos and and each one's and never miss opportunities or the old it's i mean i don't know they were raided the guy that you know one of our challenges the chavez he is yoyo these okay programs and even the i'm a kosher doesn't come through revenue right so it's l it there's the elevator swings into of ammonia be program at least you'll start to see know some revenue growth associated with the are decide which is not going to be build our high margin obviously so it's know it'll depend a lot on what that makes looks like so i think until we have a lot more insight into where the contract award are or where they are on of the ellen in some of them as opportunities it's pretty hard to the give you that that next alan twenty two and beyond
spk_1: it's understood and and understand aviation and fully appreciate your stove looking at getting half of the drop the last year back this year but has given the conversation with your customers including the fried operators
spk_2: is there still an idea that this can be a structurally larger market going forward and therefore when do you feel again get back to this twenty nineteen production and delivery levels and watch the margin opportunity be around that new injury still feel that double digit is is in the cards in the will haunt me in term now i would say that we still feel like for a macro standpoint social standpoint are you want refer to it that know them
spk_0: is this jets particular that light midsize is going to very much be a favorite meal we're seeing a lot of new customers come into the market and we certainly have dialogues in their customers on new aircraft sales we know that's happening in in charter and fractional and and club it's really across the board i think as part of why you see the reflection of so much you'd aircraft act
spk_22: every is the demand out there supports know of part one thirty five operator up or years all these guys are rc very very strong demand and that's just really driven by leisure because we haven't seen much rebound yet on the business side of our travel movie certainly expect to see that same dynamic as businesses started to travel yeah so i
spk_2: think structurally a macro level it will drive a larger and market which is good for everyone it is a participant in this on the digital world and that's why we feel like will get younger still an overhang obviously of of the it impacts and nothing a lot of business demand yet which is why we think will see half that recovery back to nineteen this year and i think with your pretty good about that and then we would certainly expect to see you don't back to that ninety level when you get into that a twenty twenty two timeframe and as on the margin opportunity the still a double digit margin business when you get back to those levels bill and again i think you know we'll see very strong arm conversion leverage as we get back to those levels that we were and them you know that the more probably are more normalize twenty twenty five percent on the got the on that many thanks sure thank you next are i never on epstein a bank of america please guy had yeah a good good morning i express the question and scott what's your sense on the support for future vertical lived with the change of administration and the possibility of a flattening by did environment you're an admin and others like components but have you can get about four hours is lara can oh look around everything we have heard and i think the army's been growing public about this is that modernization remove me very very very important part of their strategy and they continue to be committed to to putting these things for obviously the the focus on you versus are spending a lot of money on their legacy platforms is what they talked about now for a couple several years and they continue to talk about that is the as their primary funding source and even talk about and straight the in all the in a challenging but environment they know that they need to modernize a lot of these important platforms and about our see i feel is one of those and that remains rather top priorities
spk_23: ah the general candle been very clear to a than very clear they are going full speed ahead the fact that the draft dorothy you know came out when they said on on flora and on and their expectations the have a and r p out here in the not too distant future and nerd still committing to a dance like that's out than that
spk_18: on middle of twenty twenty two and everything we see is is still one hundred percent full commitment full speed ahead
spk_0: a great and then maybe a topic that nobody brings up anymore but just discuss what's going on with it if anything if it's parked in a garage collecting dust her what's up with the scorpion like does it just over are you guys still trying to market or am
spk_24: i'll agree stood still why they are crap on occasion and do certainly with it we had low government so high some interest but a day for the last year so are the primary focus on the military solid business has been getting the eighty six or it's or vacation and you know the or force your didn't you know to program only for a small number of aircraft obviously on but it they give us
spk_0: they should outweigh would deliver the first aircraft
spk_25: to them so we help the at the pipes are here wrapped up pretty soon we have you know international customers that are have already acquired and proposal that are going on for that aircraft's i think we'll get through that first
spk_7: and answer where we go from there
spk_1: okay thank you very much
spk_2: turn thank you next to to the line as statement at jp morgan please go ahead sorry your line is open please i mean if your phone if it's needed or pick up your hands and a piano speakerphone
spk_25: mr statement
spk_2: well more than will go next line of peter arguement of baird please go ahead
spk_26: ah yes morning as gotten frank
spk_18: scott the question regarding a liquidity you guys have a continue to generate a lot of cash and looks like in a contagion madagascar on forward what if you guys have a target the liquid the ratio when you start to be more aggressive in terms of deploying it
spk_27: well if you look at were still be a little bit conservative around the the qashqai but recall part of what the cash at city on the balance sheet right now is that we prefer hundred this year's maturity maturities which about five hundred million dollars so that i'm
spk_17: that casual come out of our or balance you to pay off the debt on his to drawn to that are do the sheer on after that we don't have another one until twenty twenty four i think we're in very good the issue on cash as we said we have hillary initiated are are are buyback program and so certainly we will allocate capital to doing that and
spk_1: they will be a little conservative may be here is beginning to make sure we understand where the and markets what's going on with economy but i think it gives us plenty of degrees of for flexibility on forward yeah and just a clarification on the canada
spk_2: aviation planned for deliveries just kind of for staffers the second half assuming i assume it's kind of your normal second half waited when we think about delivered the delivery kitten yeah i would say that i mean i think it's know look like go kind of a normal year for us a try family that their thanks kirk thank you and we'll revisit mr statements line with jp morgan please go ahead
spk_1: great that thanks very much as the morning think i've figured out how to allow for my phone kind of i am
spk_27: oh as just real quick i apologize if i missed that at the beginning but
spk_2: if we talk about the expectations for the industrial business here and sort of the in effect fairly nice profitability were that stack that between for a cow and vehicles even if it's not a number but that kind of qualitatively and then sort of you know where you are on that the path of where you'd think profitability can be in on in vehicles a pure soul i think was a nice rebounds and in businesses are we going to twenty twenty one the trajectory on the tax side oh yeah yeah we usually use i just data and kind of that you've got like everybody does so i think expectations for seafood recovery in the automotive market is it is what works
spk_27: acting was her was all that not that i'm driving in the queue for
spk_17: there's always yell as as all the other guys have been wrap him back up some to watch and issues a shortage here and there but the larger they're working through those and i think our deliveries will be of
spk_2: no much improved hearing in twenty twenty one you're lot a hybrid which is good mix for us we were really good position that single market so i think we we feel pretty good about the the trajectory that the cow taxes on and on and frankly back it or you know sort of strong ugh margins on the vehicle side know x the ground support equipment business good i think that's going a big country to be challenge years until we start to see that commercial aviation business coming back or we certainly like to see another solid year and in golf ah mean the ptv business which was very strong yell for us knowing of in about yep last year respect see that continued momentum and tower sports when you look at the everything from the a tv side by side and you know you've been through the snowmobiles retail has been very strong
spk_17: and to be as we've been struggling to keep up just because we got in own supply chain challenges based on in a small suppliers and cold and whatnot so i think that business will see growth in part by continued growth and on the demand on the retail side and in part we know we've you know have average talking to do so that the the inventory
spk_2: we i'd i'd rather see the maternal very low level and high level obviously so i think we're good place on but we w geography growth bomb based on both and market retail the and as well as a horny toad to restock deals out there
spk_7: and then no longer term that thoughts on unprofitability and in that that that yeah i will continue to see that that business
spk_2: growing the the the margins in the struggle businesses are good on the on the off road side you know when you see more volume in the business obviously the capability manufacturing capacity is
spk_1: is considerably greater than what we've been seeing last couple years here and turns or manufacturing rates and as we continue to grow those which includes twenty twenty one
spk_28: and there's no question will see improve profitability in that segment the business
spk_27: and then just don't want one follow up on aviation you mentioned
spk_18: and i strength and usage of rational and damn charter aircraft at did you think about that mic in terms of your customer base on evolving significantly in that direction know as we look out over the course of the next couple years
spk_29: oh i think that we've always seen that next writer the issue is usually a balance were your companies or the army and get most of our customers are they own their own companies and they will be at the outset that use the asset for go business and and we're travel so i like go in dynamic right now the marketplace you see so many using it your more for leisure the businesses because of a lack of the number of business trip to the old when we see new customers coming into the market yogurt customers are kind of come in and i think those assets will be deployed much like our historical customer base i still use for gold mrs and and leisure travel
spk_2: and and and so you see the it you know the out that that mix between sir as a retail and fractional charter mccain fairly similar over the next few years as it has in the path in terms of your deliveries oh yeah i'm sorta you talking about how me any are being sold and gonna what we will call retail through the throughout much of the world i do i think that the next is going to look much like as you oct twenty older the cycles it it's days a bit about that same ratio obviously we're latitude longitude out there that that has helped us get back to our more normal share in the in the of and the fractional world so but no idle the euro cod structural change between you know those who choose the to operate by only a fraction of and aircraft vs you know flying a charter vs owning oh aircraft right on thanks very much
spk_29: church
spk_2: thank you well know next time a pop up happening at goldman sachs please go ahead hey good morning everybody
spk_29: or
spk_30: scott
spk_29: what's happening with shadow replacement
spk_2: is that happening rather than happening and and how how big is and an annual revenue for you at this point
spk_29: so the shadow replacement which is the up to us program
spk_2: is ongoing as for i know there were several different platforms which were deployed to different army bases to do their own soldier evaluations there's a another step in that process you're coming up in a in a few months which the army of the rodeo although bring each other platforms all one base and the soldiers will operate those different systems and that will help them to inform them in terms of what are the requirements i think the army current plan
spk_1: on a yeah says they'll go through all those evaluations this year including that rodeo and by the end of the year have come up with what they have as their requirements
spk_30: document wish they would then turn around and an issue as an art piece i would expect i would probably sometime early and in twenty twenty two okay and can you give us a sense for how much annual revenue that contributes to systems at this point oh i don't know i don't think so we don't break out revenue within the individual second line but as you saw we just got her or for sixty six million dollars which is building where i crapped in the block three configuration so you don't shadow operations obviously continue upgrades continue and i expect we'll see that
spk_2: sort of activity up until the army decides what they're going to do a turtle their next generation platform
spk_30: okay
spk_2: and then following up on that on a bell margin discussion
spk_1: yeah i guess anyway to size the
spk_2: the future vertical left investment incremental investment you're making and i guess
spk_4: a gif started the year forecasting that segments margin to be about twelve and half percent as if done for this year and then have exceeded that
spk_31: and i guess i'm on a we hang of it i guess if maybe there's less upside the shares you definitively making investment or if you still have some of the mature program upside drivers that you normally have
spk_29: but we don't we have headwind on the increased already on the feel program so young but flora and far going on at the same time and florida are far i'm sorry is you know reach you point your work or if they're going to cost around building flight test
spk_0: article so no i think it largely reflects your first while we are going to see ya somewhat lower revenue in the are driven by those lower delivers around a horns and and commercial offset with some hierarchy
spk_32: on on the on the of your program and that's why we're regarding somewhat lower revenue and a fairly modest margin compression based on that is already
spk_2: kick can he sighs how much higher the ideas no okay and then just one last one with on the question of the quarterly progression through the year at aviation
spk_1: yeah i know it's always seasonally
spk_2: no heavier in the back half first the first half but i'm assume that is correct to assume that it will be significantly less
spk_1: the back half loaded and it was in twenty twenty given the pressures that were there in the first half the year
spk_2: well you're get know i would say that it's it's going to be characteristically heavier now que for those are our biggest quarter to one wasn't
spk_1: you're done you're wasn't hurt that badly frankly into one last years these can just happened in march so i think that the que one and you know what your we your basis won't look very different than and know than you warn in in in twenty twenty years twenty twenty was find your the real big difference is going to be that hard
spk_33: deliveries and into to and you three are gonna be you'll be a more normal whereas you to into three of twenty two thousand you are
spk_32: for nearly well
spk_2: okay
spk_1: okay that's awful
spk_2: thanks so much pressure think you will go next to line of christine lilley lot of morgan stanley please go ahead he has good morning i got with fewer commercial flight and three pairs available as that commercial airline still recover one would think that the men for business jets to recover at a cheaper rate than obama overall the turn of business travel other other i them with a dynamic that we should consider in law why that may not be the case because that would think that with you options the commercial flight especially when you get to that ah you know the smaller have and us manufacturing the yard is this should really be recovering at a faster rate than overall market yeah i do think you're saying that so know the dynamic is a joke joker business aviation flight hours have risk maria recovered much faster than commercial obviously i mean they were up over and about a viper said they get in november december in the us there were actually up about what they had been in in prior year so but the dynamic i you don't easier to moderate that a little bit is that all that recovery really is driven by leisure travel so so you know in a normal year old yeah we probably get this this data's not collected exactly this way so it's it's hard to get the exact numbers around it but i mean you'd certainly say that deal most airflow on most bizarre flying our business trips and then there's no limitation of utilization those aircraft for leader travel
spk_34: i think what we're seeing right now is almost exclusively lear travel so you've got almost back to where you were on a more normalize basis into the flight hours but all of the fly almost all of line is we are so as you start see the economy recovers as he travel restrictions come down to see more business
spk_18: flying again you start see conferences coming back in business trips and meetings your these sorts of things that when you add that on top of what we're receiving and strong demand on leader side that you will see you know very strong demand
spk_35: on the business side dramatically over what we've seen in the past and it is because of they know dynamic that you're talking about witches with though you know fewer flights your for someone to go from a small a small airport area to a trip it's going to land them in another small airport area with fewer flights to get through hugs it's a day i mean it's it's very challenging with those those know schedule and i think health is also part of that people feel more comfortable and getting into an aircraft which is themselves or family versus on getting on a commercial aircraft so now the issue is that the the rebound which has been much more pronounced and always seen a commercial he is ah always your and so are believers when you add business travel back on top of that that you will see this you know in a in a very strong recovery but again today even though we're seeing and are you feel very good about the rebound and in travel it really is only on the leader side because you still have very little business travel and that's what muting it a little bit
spk_36: but i expect that will change yeah as economy starts to come back and people start to travel on business trips
spk_4: thank you and if i could add another question and a separate topic
spk_37: on or be a lot of new enshrined in that urban air mobility market are you thinking about that he think the air attack the industry could really gain traction on and also what what the progress on your next that ah aircraft
spk_4: so i think that the yeah we've as you know we made investments in our next as platform we continue to to work on that program but we are being a little cautious here to gauge how much we spend and where we invest understand what the regulatory environment go look like because there are two issues your one is no these are aircraft that are going to have you will use and i'm and therefore they will have to go through a full regulatory approval process those standards are evolving and trying to understand with certainty what will take certify such an aircraft and the other is they are taxi model and get and we don't operate their taxi model but obviously the other business case of how much you invest and what the volume much i will depend on
spk_35: on know how are these businesses going to operate and again there is i believe a real a lot of regulatory uncertainty as to getting approval for the readings and you know where these things going to fly in of what altitudes and what kind of controlled airspace you know for the for those are the vision that people have around their taxi they're still lot of uncertainty around what that regulatory environment looks like so i would say that i think when you hear think about the technology that's involved in the ability to design and certify and aircraft that can be that mission our team and bells out
spk_36: absolutely call by capable to do that i would say far much more so than a lot of the other hype the to hear out there but i do think we have to be cautious here in terms of not getting
spk_2: too far out front office
spk_38: regulatory environment is very uncertain in order and
spk_39: the allow that business model to be successful
spk_2: thank you thank you and what on the next line of guy bomber please go ahead yes thanks so much so if you haven't told already roughly where or is the tax rate guide for twenty one and on the pen shit you've gotta swing of sixty three million ads it looks like
spk_35: fifty deaths to your margin a keen sense earnings is that mostly center at bell and at aviation thanks ah the tax rate is eighty percent and i we and we had mentioned that i'm on the on the pet
spk_2: inside the impact of is on does not impact l could bell as a separate plan so the the impact is otherwise spread across the rest of the businesses as well as any corporate employees got it and then i r and d at bell i assume you know that you mention that the bit the the big lift in our and day it you know how does that can can you into next year because i would assume
spk_35: on on on v to eighty and how your aren't the is at a lower level predominantly at fault are are and how far in the future you know does that level of off
spk_36: or and a continue roughly well absolutely right guys on the floor or activity which is illustrated right now right around or you know they're sort of than of phase year where you're finishing the
spk_2: the faith is to of the see our program on flora that goes until
spk_1: march
spk_2: with twenty two so that level of activity is in that time for a minute and it becomes the lesser of the to the one that's real would drive law the aren't the here for the next two years is the far program
spk_1: he goes right now you're in the middle of all the details of design your starting component manufacture assembly
spk_2: as you go into twenty twenty two your first boy is at the under twenty twenty two so you have a all the cost in twenty twenty two is really driven by the far program and completely all design and getting ready for fighters program
spk_35: the going to twenty twenty three he that's really the flight test program through that the course of that either so that the program you know schedule and so the relative level barney is is highly driven by far off on particularly should get in the twenty two twenty three
spk_0: does your to little more palatable a thing of you to increase in far as been a yoyo through the pier
spk_18: terrific and then one last one i am asked deployment
spk_0: you know if you've basically taken care of your of your near term maturities it looks like you're focused total they on our share repurchase
spk_40: you know to what extent do you think he out of and a and or dividend
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