This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Q3 2022 Textron earnings release conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question, please press 1 then 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1 then 0 command. If using a speakerphone, please pick up your handset before pressing the buttons. If you should require assistance during the call, please press star followed by the 0. As a reminder, today's call is being recorded, and I would now like to turn the conference over to the Vice President of Investor Relations, Eric Salander. Please go ahead, sir.
Eric Salander
Thanks, Brad, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, Textron's Chairman and CEO, and Frank Conner, our Chief Financial Officer. Our earnings call presentation can be found in the investor relations section of our website. Revenues in the quarter were 3.1 billion, up 88 million from last year's third quarter. Segment profit in the quarter was 299 million, up 20 million from the third quarter of 2021. Income from continuing operations for the quarter was $1.06 per share, compared to 85 cents per share on an adjusted basis in last year's third quarter. Manufacturing cash flow before pension contributions totaled 292 million in the quarter, up 21 million from the third quarter of 2021. With that, I'll turn the call over to Scott.
Brad
Thanks, Eric, and good morning, everyone. Overall, we had a solid quarter across our manufacturing businesses with higher net operating profit, cash generation, as compared to last year's third quarter, despite ongoing supply chain and labor challenges. Aviation generated segment profit margins of 11.9%, up from 8.3% in the third quarter of 2021, on slightly lower revenues, reflecting a favorable revenue mix with higher aftermarket volume and strong pricing net of inflation. We continue to see solid demand across our jet and turboprop products, resulting in backlog growth of $524 million in the quarter. We deliver strong performance, even as we continue to experience supply chain disruptions throughout the year that have impacted production schedules. In the quarter, we delivered 39 jets, down from 49 last year, and 33 commercial turboprops, down from 35 in last year's third quarter. Last week at NBAA, we also announced two large fleet orders that included an agreement with Fly Exclusive for eight XLS Gen 2 aircraft with expected deliveries in 2024 and up to six Longitude aircraft with deliveries expected to begin in 2025. Fly Exclusive also exercised its option to purchase an additional five CJ-3 Plus aircraft from its order earlier in the year with deliveries expected to occur in 2024. We also had an agreement with Fly Alliance for four XLS Gen 2 aircraft and options for an additional 16 aircraft, with deliveries expected to begin in 2023. At Bell, revenues were down in the quarter on lower military revenues, partially offset by higher commercial revenue. On the commercial side of Bell, we delivered 49 helicopters, up from 33 in last year's third quarter, including the 400th Bell 505 aircraft. During the quarter, we continue to see solid commercial demand across all our models. Moving to future vertical lift, we continue to await a FLORA contract award announcement from the U.S. Army. At Textron Systems, revenues were slightly lower in the quarter. During the quarter, ATAC announced a five-year IDIQ contract with the U.S. Navy to provide chase flight services for the F-35 program. Systems was also recently awarded a contract to provide aerosol and operational support on its fourth maritime site, services that are expected to begin in 2023. Moving to industrial, we saw higher revenues in the quarter driven by higher volume at both Caltechs and specialized vehicles, and favorable pricing principally in specialized vehicles. Caltechs, while revenues were higher in the quarter as compared to the prior year, we continue to experience order disruptions related to the global auto OEM supply chain shortages. Moving to E-Aviation, we're seeing increased order activity for our training aircraft like the Alpha Trainer, which is a low-cost pilot development platform. In the future, we will look to expand this training option to include the VALS Electro as we work to achieve an FAA Also, last week at NBAA, we unveiled our new Nexus EV tall model aircraft. Our updated design reflects our ongoing investment in the underlying research and development supporting Textron's long-term strategy to offer a family of sustainable aircraft for urban air mobility, general aviation, cargo, and special mission roles. To wrap up, we continue to see strong demand in our end markets, and our teams are executing well in a challenging environment. With that, I'll turn the call over to Frank.
Eric
Thanks, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation. Revenues of Textron Aviation of $1.2 billion were down $14 million from the third quarter of 2021, largely due to lower citation jet and pre-owned volume, partially offset by favorable pricing and higher aftermarket value. Segment profit was $139 million in the third quarter, up $41 million from a year ago, largely due to favorable pricing, net of inflation of $31 million. Backlog in this segment ended the quarter at $6.4 billion. Moving to Bell, revenues were $754 million, down $15 million from last year due to lower military revenues of $112 million, primarily in the H-1 program due to lower aircraft and spares volume, offset by higher commercial revenues of $97 million. Segment profit of $85 million was down $20 million from last year's third quarter, primarily reflecting lower volume and mix, partially offset by favorable pricing, net of inflation. Backlog in the segment end of the quarter at 4.9 billion. At Textron Systems, revenues were 292 million, down 7 million from last year's third quarter. Segment profit of 37 million was down 8 million from a year ago, primarily due to lower volume and mix. Backlog in the segment end of the quarter at 2 billion. Industrial revenues were 849 million, up 119 million from last year's third quarter, primarily due to higher volume and mix of 95 million, and a $58 million favorable impact from pricing, principally at specialized vehicles, partially offset by an unfavorable impact of $34 million from foreign exchange rate fluctuations. Segment profit of $39 million was up $16 million from the third quarter of 2021, primarily due to higher volume and mix. Textron e-Aviation segment revenues were $5 million, and segment loss was $8 million in the quarter, which reflected the operating results of Pithastrol, and cost for initiatives related to the development of sustainable aviation solutions. Finance segment revenues were $11 million, and profit was $7 million. Moving below segment profit, corporate expenses were $14 million, and net interest expense was $21 million. Our manufacturing cash flow before pension contributions was $292 million in the quarter, up $21 million from last year's third quarter. Year-to-date manufacturing cash flow before pension contributions totaled $810 million. In the quarter, we repurchased approximately 3.1 million shares, returning $200 million in cash to shareholders. Year-to-date share repurchases totaled $639 million. To wrap up, we now expect our full-year capital expenditures will be about $375 million and the full-year tax rate to be about 16%. For the full year, we are narrowing our earnings per share guidance to a range of $3.90 to $4 per share. Also, we are increasing our full-year manufacturing cash flow before pension contribution guidance to be in a range of $1.1 billion to $1.2 billion, up $300 million from our prior outlook. That concludes our prepared remarks. So, Brad, we can open the line for questions.
Operator
Of course. And our first question today comes from the line of Robert Stallard with Vertical Resources. Please go ahead.
Robert Stallard
Thanks so much. Good morning. Good morning. A couple of questions from me. It may be my numbers are wrong, but it looks like revenues in aviation and systems were a bit lower than what we'd anticipated in the third quarter. I was wondering if you could perhaps go into a bit more detail with what you experienced in the quarter, if it was supply chain issues and whether this has pushed some deliveries to the right.
Brad
Yeah, Robert, I think that's safe to say. As you know, we've been ramping up our production volumes through the course of the year. We continue to do that, but we have been hit by a number of supply chain, you know, challenges that have resulted in aircraft pushing out to the right. Our guys are managing through that. You know, we'll continue to work hard to make deliveries, and we'll continue to work on that ramp as we go into 2023 as well. So, you know, again, it's a very strong demand environment. Aftermarket has also been very strong, driven by high utilization. But, you know, for sure, we're continuing to see some difficulties around just getting parts. Labor ramp is, I'd say, picking up and doing reasonably well, but we've had some critical part impacts.
Robert Stallard
So, Scott, does this impact your division-by-division guidance expectations for the year?
Brad
Well, as we said on the last call, Robert, I think we expect aviation probably is going to come in about $300 million below what we originally guided. I think we're still on track to do that. I think we'll still make, you know, strong margin performance as the team's executed well. As I said, you know, it's a tough market or tough situation, but they're executing very well. So I think we'll be, you know, solid on the margin side, but a little bit light on the top line. I think at systems, you also mentioned, like systems are pretty close. I mean, they're kind of flattish. We still had a little bit of impact on that year over year from Afghanistan. But I think as we get into the fourth quarter here, you'll start to see some, you know, some slight growth in that business and Obviously, we expect that to continue into 2023. Okay.
Robert Stallard
Then just a technical one for Frank. On the corporate and other big decline year on year, what sort of run rate should we expect on that line going forward?
Eric
Yeah, I think we should probably think about $110 million or so for the year, so a higher level in the fourth quarter than we've been running at. Some of that depends, obviously, on share price, but in that zone.
Robert Stallard
Okay. That's great. Thank you very much.
Operator
And our next question comes from the line of David Strauss with Barclays. Please go ahead.
David Strauss
Thanks. Good morning, guys. Good morning, David. Scott, can you maybe touch on your manufacturing footprint in Europe, how you feel about things there from kind of an energy perspective and Also, how we should think about, obviously, in the core, you had a pretty big FX impact there. How we should think about the FX impact, given the Euro-dollar parity at the moment?
Brad
Yeah, the FX has been, obviously, quite a drive, primarily in our Caltex business. And, I mean, obviously, we expect that to continue, but we'll manage our way through that. I think on the factory front, most of the impacts we've seen in that footprint in Europe have been driven really just by auto OEM issues around hitting their volumes. It hasn't been energy related at this point. Most of what I'm reading here lately is actually the energy situation seems to be a bit better than they expected heading into the winter. So we haven't had any indications yet that anyone's going to back off on their auto manufacturing based on that energy. It's really more of these other supply chain issues that they're continuing to address. Just to be impacted and look, David, you know, we go kind of by IHS data, you know, in terms of how we think about and forecasting, you know, volumes going forward. So clearly the year has been, you know, disappointing in terms of what was originally thought, you know, the volume should be achieved. But right now it's looking like IHS is probably, you know, forecasting, you know, sort of a mid to high single digit growth, you know, next year on top of some growth we saw this year. So that's, you know, kind of how we, think about the volumes of the business, including the European footprint.
David Strauss
Got it. Thanks. And Scott, I guess your latest update on Flora and the timing you're expecting now for a decision and, you know, what kind of incremental spending are you looking at for the rest of the year to kind of continue to carry on your effort? Thanks.
Brad
Sure. So the latest we're hearing is it's probably a November timeframe. Obviously, you know, we continue to work with the, Customer and, you know, we've got to make sure we've been working on this, as you guys know, for a very long time. We're not going to do anything that's, you know, other than supportive and doing the right thing for the program, making sure we keep the team together and keep making forward progress. Obviously, we still feel good about the program. And I think that, you know, there's obviously still some uncertainty around this. I mean, we don't know an exact date, but we're doing the right thing by the program, the right thing by the people. And, you know, while there is some uncertainty, I would say that we're pretty comfortable that, you know, we've incorporated, you know, any impacts over the total year from where we were on our plan in our guidance. So I think that, you know, we're comfortable that we'll land inside that guidance despite the impacts we've seen on the Florida way.
David Strauss
Thanks very much. Sure.
Operator
And our next question comes from the line of Sheila Kealu with Jefferies. Please go ahead.
Sheila Kealu
Hi. Good morning, guys. Just to follow up on the last point, Scott, you know, how do you think about Bell without a FLORA win? You know, what would sort of the scenarios look like for Bell without FLORA or potentially FARA? And maybe can you remind us of the R&D investment impact for FLORA associated with 2022?
Brad
So I don't think about Bell without Flora. Look, guys, I think we're in a good place. We will let the performance of our product stand and just kind of work through the process. Obviously, the Army's going through a very, very rigorous process here, so we'll bear with them and let this thing play out. But we're pretty bullish on that program, and we'll leave it at that, I suppose. You know, on 2022, the... The R&D has actually been down a little bit because we've had more of the cross-share activity, both on the FAR program and the FAR program. So even with some of the impacts that we've seen on some of the delays, I think we'll be fine there. We're working our way through it. Clearly, the FAR program is going to continue to extend. And like I say, hopefully here, compared to all the years we've been working on this thing, the FAR delay is a relatively short period of time.
Sheila Kealu
Great. No, that's helpful. And then I'm glad you don't think about Bell without Flora. But switching gears to aviation, you know, when we look at year-to-date deliveries, they're light. You mentioned supply chain. You know, how long does that linger? And how do we think about jet deliveries for 22 in total? And does it linger into 23?
Brad
Sure. Look, it's a good question. I think the way we're starting to lay out the years, we've been planning on ramping production all through the year. We've been achieving that. I mean, we have been increasing the number of hours and the labor and the activity in the factory. We're clearly not going to get to the number of jets that we were originally hoping to based on some of these delays. But we're going to keep that ramping activity going through 2023. So when you look at the incremental volumes that we had in 2022, we're not ready to guide 2023 yet, but It's not unreasonable to expect that we would see a similar increase in volumes in 2023 from what we saw from the 21 to 22 timeframe.
Christine LeWag
Great. Thank you.
Brad
Sure.
Operator
And our next question comes from the line of Seth Seifman with JP Morgan. Please go ahead.
Seth Seifman
Hey. Good morning, everybody. I guess just to follow up on that question, Scott. When you think about, you know, the strong backlog that you've been able to build here, you know, and you think about where deliveries might ultimately go, I mean, I assume the aim would be to be back to kind of the 200-plus level maybe in 2023, kind of, you know, the level that had been anticipated for 2022 before the supply chain issues. And then when you think about moving higher from there, would it make more sense to kind of focus on keeping that backlog, maybe expanding margins even a little further from this low double-digit range, and having a more steady delivery pace as we head toward mid-decade?
Brad
Well, first of all, Seth, I think your thoughts on volume here in the near term are correct. We obviously would like to have had more in in 22, but it's probably reasonable to think that what we, you know, hope to get in 22 will be there by the end of 23. So we should back, you know, back to that kind of 200-ish number in the 23 timeframe. Beyond that, look, we'll continue to watch demand in the marketplace. It continues to be strong. As long as we see that kind of growing backlog, you know, in a strong environment, then we'll continue that ramp. But it's going to be, you know, a slow, steady ramp, right? I mean, we certainly like and we think it's better for I think we've talked about it's better for our company, it's better for our customers, it's better for the whole market to be operating with better visibility around the backlog that's out there in that 18-month kind of timeframe. Right now, the demand continues to be very robust. We're seeing a lot of order activity that's out in that 18-plus sort of timeline, and so we'll match production as we can to To meet that, if the market starts to ease back or slow down, then obviously we can taper off on the ramp. But I certainly don't see that being a case going through 2023, considering where the backlog is and where the demand environment is.
Seth Seifman
Okay, great. And just to follow up, very strong cash this year. And when you think about next year, other than what we might assume on the P&L, Are there any things you'd note about cash flow, either headwinds or tailwinds, heading into 23?
Eric
I think, no, not really. Obviously, we've had good working capital management again this year. Just like last year, we certainly benefited, again, from strong customer activity and deposits. But there's nothing from a kind of working capital or other cash impacts that are kind of out of line with where we've been.
spk05
Okay, great. Thanks very much. And our next question comes from the line of Pete Skibitsky with Alembic Global.
Operator
Please go ahead.
Pete
Hey, good morning, guys. Hey, Scott, I just wanted to beat a dead horse a little bit on aviation just because, you know, even at, you know, a little bit of a lower guidance number there, it still implies a pretty good hockey stick in the fourth quarter. So I'm just wondering kind of on the risk assessment front, you know, do you have the engines in-house already that you need and the parts and the labor trained up? Or is there still some risk to that number, do you think, given the ramp?
Brad
Well, look, as I said, there's always some risk to the number, right? But I think we're, you know, obviously our guys are working the heck out of this every day. They're tracking all the critical components. So I think, you know, kind of that number I gave you guys were, you know, probably a few hundred million under our original guide is still holding. Is there some risk to it? Yeah, I mean, one of the challenges is that we, you know, you get supplier issues that pop up every day. I think we're in good shape in terms of labor and the things we can control. Stuff pops up, we get all over it. But, you know, I think we've got a, you know, a pretty good shot at getting to the number that we told you. And if, you know, if we miss something, it'd be a few aircraft around a particular part that pops up between... you know, here and there. So the guys are, I work there every day. I, I think it's a good guide and, you know, could there be some risk in it in the environment we live in? Sure. But, um, I think we're, uh, our, our folks are all over it.
Pete
Okay. No, I appreciate it. Just one follow-up on the same segment, kind of post-MBAA, how are you guys feeling about, you know, kind of the health of your, of your customer base at aviation? You know, how'd the conversations go? And, you know, obviously I'm sure the macro backdrop was, was, uh, part of the conversations down there. I'm just wondering kind of what your net assessment is.
Brad
I'd say very positive. You know, I think that, you know, we're continuing to see some new people coming into the market. We're seeing some of our, you know, historical corporate customers that are doing fleet refreshes. You know, they're putting aircraft orders in, which, you know, obviously are, you know, deliveries are a ways out. But, you know, they're refreshing their fleets. Obviously, the level of flight activity in the industry, you know, continues to have kind of charter and fractional customers, you know, very motivated to bring additional assets online. So I would say all in all, it's really strong, Pete. And again, I also would put against the backdrop of hardly a bubble, right? I mean, we're talking about, you know, jet delivery volumes that are, you know, kind of back even still maybe below historical norms. So I don't think there's this, you know, euphoric, you know, bubble burst, but people are refreshing fleets. They're investing in their aircraft. It's a You know, we don't see this big pull in, right? It's just the market is strong and flying is strong, which is critical.
Pete
I was going to say, your exposure to Europe is still fairly limited like it used to be. I think it was only, I don't know, 20%, 25% of your citation volume.
Brad
Is that still the case? Yeah, it is. I mean, look, we're seeing kind of relatively normal from what we've seen historically. Jets are probably 80%, you know, roughly U.S., 20% international. You know, the King Air turboprop lines are typically the other way around, and that's what we're seeing. We're seeing maybe like 40% U.S., 60% international. So in terms of, you know, the good news here is that the demand across pretty much all the models is strong, and we're seeing, you know, nicks in terms of international versus domestic fleet operations that are kind of what we've normally seen historically. Okay.
spk05
Great. Thank you. And our next question comes from the line of Noah Poponek with Goldman Sachs.
Operator
Please go ahead. Hey, good morning, everyone.
spk16
Morning, Noah. Morning. Sorry, Scott. So what are you now planning for 2022 Cessna jet units?
Brad
No, we never give a specific number. I think from the top line, you're looking at probably about $300 million off of our original guide. Okay. And virtually all of that is, you know,
spk16
jet deliveries really so um okay okay so we can back into that and then you're saying do i have it correct that you're saying think about that growth rate in units that that implies for 22 repeating in 23 approximately yeah that's good okay and then how much visibility do you have beyond 23. well pretty good visibility i mean it's you know most of the aircraft i mean we have
Brad
Larger aircraft, frankly, are out in 2025 right now, and the mix of lighter and midsize are certainly through 2023 well into 2024, towards the end of 2024. So this backlog is obviously very helpful to us in terms of having the kind of visibility we need to run the operations, and obviously we'd like to do them a little more efficiently without some of the supply chain challenges, but I think we're... We're in a pretty good place, as we've had in a very long time, obviously, in terms of the visibility of the business. Okay.
spk16
So I guess, you know, that's all positive and, you know, really kind of major structural change in the business. But, you know, where the bookings are running, if they hang around in the zone that they're in now, you'd continue to run the bookings pretty far in excess of the revenue, right? which would build the backlog even further. So, you know, when do you get to the point where that's going too far and customers are going elsewhere or have to wait too long? Or is it just with the macro level supply chain bottlenecks, everybody's in the same boat and every OEM kind of has to do the same thing?
Brad
No, I think you just said it. Everybody's in the same boat, right? I mean, so... I don't know where that equilibrium point is when it gets out too far, but there's not like some other supplier or OEM that says, hey, I've got aircraft sitting around. So I think this is an industry dynamic as opposed to just being unique to us. I mean, obviously I feel great about how our guys perform from a profitability standpoint. I mean, look, this business is in fabulous condition, right? It's got great backlog, good visibility. It's generating very strong margins. It's generating very strong cash flow. I don't think there's a whole lot not to fight. Look, every day is hard with these supply chain issues and stuff like that, but our guys are fighting through it every day. I mean, I'm sure we'll be apologetic for these kind of margins and this kind of cash and strong backlog, and the guys, I'm not sure what else I would ask them to do. They're driving it hard every day and performing really, really well.
spk16
Great. Just lastly on price in the business – Are you actually now increasing price more in terms of the year-over-year rate of change than you were 12, 18 months ago when the market first strengthened? I get the sense that the price increases early in this strong demand environment weren't that big because you wanted to build the backlog, and now that you've done so, you can actually accelerate the pricing. Is that a fair assessment?
Brad
Well, I guess, yeah, I'm not sure I would do the, I don't do the first derivative on the pricing every day, but look, I think for sure this market has changed over the last 18 months or so as it's gotten stronger and it's a competitive market, obviously, so pricing and what competition's doing matters. But I think everybody, you know, I mean, the whole industry has seen, you know, stronger pricing. So, again, we look at this kind of on a model-by-model basis and, you know, what's going on with the competitive environment and, You know, it's not as, I'm not sure I can give you a simple answer on the slope of the curve, but it's strong, and I would say, you know, we continue to obviously very much focus on making sure we're getting price, you know, in advance of inflation. We think about this a lot when you start thinking about, you know, obviously we're taking contracts on aircraft that are in 23 and 24 and 25, and so you've got to make appropriate assumptions in terms of, you know, inflation between here and there, and and make sure you're pricing accordingly, and I think that we are.
spk05
Okay, thank you.
Operator
And our next question comes from the line of Peter Arment with Baird. Please go ahead.
Scott , Frank
Yeah, thanks.
Operator
Good morning, Scott, Frank.
Scott , Frank
Good morning, Peter. Hey, Scott, you've been talking about supply chain disruptions, obviously, all year, and you have a ton of experience in engines. Is engines for you still in aviation the biggest
Brad
uh shortage or are there other components like chips or other things that you would call out and just maybe any color you could provide on the engine shortfalls uh you know period isn't i mean look engines are strained and as everybody knows one particular model that's important to us that had had an issue that kind of stems back to this russian ukrainian uh you know sanctions but i think that's in recovery mode so we feel good about that you know bouncing back um but You know, I think the frustrating part for our folks, Peter, it's just sort of, you know, everywhere, right? Stuff happens. I'd say that, you know, overall our avionics suppliers have done a really nice job. You know, Garmin is critical to us. They've been able to meet deliveries. So they're managing their way, you know, that would be the area probably most highly concentrated in terms of semiconductor risk. So I think they've done a nice job. But it's, you know, this is the problem in this business, right? Every part is important. So it's... You know, there are certainly some, you know, things like the engine was an issue. I think that will resolve itself here in the next, you know, six, nine months or so. But, you know, these things pop up every week. It's just the world we live in. And our guys are kind of used to it. They just keep working it and they go manage each thing that pops up.
Scott , Frank
That's helpful, Collin. And just, Frank, just quickly, could you tell us what the aftermarket was up in the quarter and any comments on pricing? Thanks.
Eric
Yeah, aftermarket remained strong. It was up 18% year over year, 37% of total volume for the quarter. So really, you know, kind of continued, as Scott said, to see, you know, strong flying activity and therefore strong volumes in the business.
Scott , Frank
Terrific. Thanks.
Operator
And our next question comes from the line of Kai Von Rumer with Cowan. Please go ahead.
Kai Von Rumer
Yes, thanks so much. So how much of the goodness and cash flow, that $300 million, came from deposits on aircraft? And thinking about next year, you've had such a big gusher from that source this year. How should we think about cash flow if Book to Bill goes back to about $1.0 million?
Eric
Well, we're not going to kind of break out separately the cash items. I mean, offsetting the deposit activity is we have seen a little bit of inventory growth as we've had these supply chain issues and we've seen some kind of slowdown in our ability to deliver. So there has been some offset. But kind of with a book to bill above one and strong commercial aviation, strong commercial demand at Bell, We benefited from that. Frankly, we benefited also from strong cash performance on the military programs at Bell. So it hasn't been all that. We've talked in the past about kind of generally the business over time wants to be around one-to-one cash flow to profitability. So we certainly have benefited kind of this year and last year from strong cash performance relative to that. And, you know, it'll depend on lots of factors, you know, kind of when we get to a slower, you know, kind of booking rate, but it will migrate back towards that one-to-one as we do that.
Brad
Look, I guess I would emphasize that we're conscious of this, right? I mean, I think that you enjoy a benefit here with strong commercial deposits in aviation, and some of you are also in Bell's commercial business, which has also seen very strong demand here. But you don't change anything else you do in terms of managing the business and making sure that you're fundamentally managing working capital and CapEx and all those things. So for sure you're getting a benefit of this, but I think we're delivering well over one-to-one, and that's because the businesses are doing a good job of managing their cash and then enjoying the benefits of customer-posit activity on top of that. So that's kind of the nature of where we are right now.
Kai Von Rumer
Terrific. And given this extra cash goodness, how are you thinking about deploying the cash?
Eric
Well, same as we talked about. You know, as we said, we've been an active repurchaser of stock. We've brought about $640 million year-to-date. You know, that's up from last year's year-to-date number. Last year, we ended up, you know, kind of low $900 million of share repurchase. And, you you know, kind of for the year and on a, you know, at least as we sit here today on a go-forward basis. We've been, you know, we've been buying back about 5% of our stock on an annual basis. And so, you know, kind of that type of rate is a good rate to be thinking about.
Kai Von Rumer
Thank you very much.
Operator
And our next question comes from the line of Rob Spingarn with Melius Research. Please go ahead.
Rob Spingarn
Hi, good morning. I just wanted to turn to a couple of the other segments for a moment. In the past, you've talked about systems being a low double-digit margin business, but it's been outperforming that last year and this year. Can we talk a little bit about the trend there? Is it going to stay more in the mid-teens?
Brad
It's a good question. We're not quite ready to guide for next year, but I think that business performs really well i mean it's uh it's always has some components of it you know for instance i think and you'll still see this everywhere right where there's fixed price government contracts you can't reprice those so there'll be some pressure on inflation on that front but there's also a constant flow of new programs and i think overall strong execution which has helped us deliver you know strong double-digit margins and i would expect that to continue okay and scott sticking with these other businesses
Rob Spingarn
Industrial was clearly strong, and I think you called out specialty vehicles. Could we talk about the forward trends there?
Brad
Sure. I think that the specialized vehicle business is doing well. Obviously, there were some segments of that business that took real hits through the COVID periods around support equipment and things like that that are seeing robust order activity come back into those markets as well, also achieving strong pricing. Our golf and specialized PTVs and whatnot is very strong. I think we have a great product lineup, and that team has done a nice job. Obviously, in that business, we also see supply chain challenges all the time, but the teams work through it, and I think we'll continue to see that on a steady improvement.
Rob Spingarn
And you haven't really seen any evidence of this recessionary fear hitting that business. I would imagine that business is somewhat sensitive.
Brad
You know, some are more sensitive than others. But absolutely, I think particularly when you look at the power sports world, we keep a very close eye on that. Inventory levels are still very much lower than they typically are in those channels because of supply chain challenges. So I think you need to get those to a healthy level. But absolutely, we watch very, very carefully because I think that particular piece, which is a relatively small piece for us, obviously – is very recession sensitive. But I think when you look at a lot of the municipal stuff and ground support equipment, golf, you know, these things have historically been pretty resilient in terms of how they perform, you know, even in a recessionary period. And I think we're well positioned in those markets, which are, you know, a much larger piece of the business for us.
Rob Spingarn
Of course. Thank you very much.
spk05
Sure. And our next question comes from the line of George Shapiro with Shapiro Research.
Operator
Please go ahead.
George
Yes, good morning. Scott, on the supply chain issues, it seems like it's affecting your business more than, say, like Gulfstream at the high end. Is there any differentiation you can say as to why?
Brad
I haven't, George. I have a list of all the parts we're missing right now. I could call Mark, I guess, and see if he has some extra ones, but the, no, I don't. I mean, you know, again, guys, look, I think this is a world we live in, right? We have the challenges. I think our guys have done a nice job, you know, through this. I think we will have a strong fourth quarter. It's not without, you know, some risk on a part popping up here and there, but it's, I don't know how to explain the difference between the commentary with the you know, with some of the high-end stuff versus, you know, where we are. But it's something we're going to manage our way through. It'll be fine.
George
Okay. And, Frank, can you provide some comments on what you see for pension next year, given the big changes we're seeing in DR and asset returns?
Eric
Yeah, we don't expect it to be a headwind. We're, you know, obviously we've got a lot of work to do in, fourth quarter and calculating the numbers and everything, but it should not be a headwind for us.
George
Okay, and then one last one. Scott, you've been saying that the delay in Florida has been a cost to you in terms of carrying all the people. Can you quantify at all how much of a cost it was to Bell in the quarter? Because the margin at Bell still looked pretty good this quarter.
Brad
Yeah, well, Bell had a very strong quarter on the commercial side, and I think we'll, you know, continue to see strong commercial business, and we talk a lot about aviation, obviously you guys asked, but the commercial helicopter business is also seeing very robust demand, and those guys are performing well, and, you know, it's obviously offsetting the, you know, historical military programs, which continue to ramp down a little bit, but, look, I think on the floor at George, it's, you know, obviously it was in our original guide, that's why we're, you know, we're certainly seeing, you know, lower absorption, you know, we expect it to be kind of under contract, you know, at this stage of the game, but It's something we're managing our way through, and like I said, I think we can't quantify or wouldn't quantify exactly the number, but suffice to say that we can live within our guidance based on, I think, where we are and our expectations for the floor announcement toward the latter part of this year.
George
Okay, thanks very much.
Operator
And our next question comes from the line of Christine LeWag with Morgan Stanley. Please go ahead.
Christine LeWag
Hey, good morning. Scott, on aviation, you mentioned pretty strong orders and incremental interest you're seeing from corporate buyers. And, you know, book to bill is pretty solid at 1.5 times. So from your conversations with your customers and potential customers, what's the key impetus for the incremental order? Is it replacement, capacity increase for new customers, the biz jets? And how sensitive are they from the financing environment?
Brad
Well, it's a bit of all the above, Christina. I mean, so, I mean, obviously we have some corporate customers out there that in the quarter, you know, placed orders because they're going to replenish, you know, turn over their fleets of aircraft that, you know, as you know, the corporates, you know, they're used to sort of looking out on that 18 month, two year or so timeframe, you know, as they plan their fleet refreshes. So the lead times that are there right now aren't you know, something that they're not accustomed to and that kind of fits in their plan. So we are seeing that activity. We are still seeing some new activity. And again, we continue to see, you know, a lot of, you know, there are certainly new people that are coming in more than normal that are buying a whole aircraft. But we also see just the demand of new people coming into the market that are using either fractional or, you know, charter operations. And so we continue to see strong demand, you know, from those customers as well. So it really is across the board, which is, I think, You know, again, very healthy for the industry.
Christine LeWag
Thank you for the color. And maybe switching gears, Scott, in the past, you know, your sensor-fused weapon exposure, albeit only support in the past few years and no longer production, it had limited the European owner of your stock. Now that you're completely out of the sensor-fused weapon business and it looks like you're completely out of support too, and you have the only electric aircraft certified for passenger use, it seems to me like your portfolio is more attractive on an ESG basis. So are you seeing any recognition of the portfolio shift? And are you seeing incremental interest from European asset managers and ESG investors? And how do you think of that evolution?
Brad
Well, it's a good question, Christine. And I don't know specifically, you know, those funds that have historically not wanted to, you know, invest in the company in large part because of the SFW exposure. And as you know, that doesn't exist anymore, so I think that's not an issue on the overall ESG front. Without a doubt, you're going to see certain funds out there that are going to be more oriented towards companies they think are investing in that future in terms of particularly electric transportation. And I think we have a very good story. I mean, obviously aviation is an area we're investing in, and frankly, particularly as a result of the Pipistrel deal, are a leader in that field. And we're also very strong on the electric side in terms of our vehicle businesses, right? I mean, we've pioneered over the years a lot of that electrification, and frankly, that's spreading out across that business in a big way, including ground support equipment and turf care equipment. That trend is going to continue to happen. So I can't speak specifically to the European funds, but I absolutely and consciously, obviously on our part, we think we're engaging in strategies that will help make us more attractive to funds that have ESG criteria.
Christine LeWag
Great. Thank you, Scott.
Operator
And our next question comes from the line of Ron Epstein with Bank of America. Please go ahead.
Ron Epstein
Hey, good morning. There's been a ton of focus on Florida for obvious reasons, but could you walk through some of the opportunities beyond Florida? The Navy is looking for some helicopters down the road, as is the Air Force, and You guys talked about it a bit at AUSA, but not everybody was there. So I was wondering if you could kind of walk through some of those other opportunities that are beyond FLARA. Sure, absolutely, Ron.
Brad
Look, I mean, you're right. Everybody asks a lot about FLARA. We're obviously very interested in the outcome of FLARA, but, you know, Bell is hardly a one-trick pony, right? I mean, there's a lot of other stuff going on. I think when you think about the maritime strike and Aura, look, there's active AOA activity going on right now in the in the Department of the Navy, thinking about what they do with their future of aircraft replacement programs. Obviously, we think that our offering, which is in that tiltrotor space, is very attractive to them. I mean, these are services that obviously today operate V-22s, and they need aircraft and assets that can keep up with V-22s. So I think we feel like a tiltrotor solution is is a good answer in that space. These programs are relatively early on. Like I say, they're doing their analysis alternatives, and that'll lead to more acquisition activity here in the next couple, two, three years. So we're very close to those programs, obviously. The Air Force, as has been fairly public, is talking about what they want to do for frankly, higher speed VTOL, right? So even beyond the kinds of speeds that we see today in a V-22 or in a V-280 class of aircraft, we're highly engaged, you know, with the Air Force on those sorts of programs. So, you know, I think there's no doubt that, you know, what we're seeing with the Army, you know, and obviously that's a huge opportunity to replace that, you know, sort of the Blackhawk class of aircraft, that you will see similar programs in the Navy, Marine Corps, and you know, in the Air Force in one form or fashion. And our guys are highly engaged in those program opportunities.
Ron Epstein
Got it, got it. And then maybe shifting gears back to Cessna, a bigger picture question. When you look at the portfolio of Cessna airplanes, is there any place that you think you need to do a refresh or not? And how are you thinking about new product development given that, you know, the business is in a healthier place than it was just a couple years ago?
Brad
Yeah, look, I think we have a very robust set of refresh programs. We've launched a couple of these Gen 2, Gen 1 mod programs. We have more of that in the works. We think it's really, really critical to be rolling those out on a fairly regular frequency. So we have a couple that are in the works right now that we haven't yet announced, but obviously the work is going on. On the clean sheet front, we have the Denali program, which is still under development. I think if you look at both jet and turboprop, you know, there's a robust level of activity. I mean, I love our product lineup right now. I think the longitude, latitude obviously have been, you know, home runs in the market. The SkyCourier is just getting in, you know, kind of getting to rate in production with great demand. I think that's going to be a home run product. Denali will similarly, I think, be a great product for us. And the line is, you know, be sprinkled with a couple of these, you know, refresh programs, you know, here in the coming years. Got it. Thank you.
Operator
And our next question goes for the line of David Strauss with Barclays. Please go ahead.
David Strauss
Thanks for taking the follow-up. I just wanted to ask about the H1 and how that kind of rolls off from here and what sort of headwind we should be thinking about to Bell as that program runs off. Thanks.
Brad
Sure. Look, H1 is about to wrap up its program record in terms of the U.S. sales. We have some FMS programs that are still under production, but those clearly will be ramping down here over the next couple of years. Service programs continue to run, but no question, David, that program will continue to ramp down here in the next couple of years.
David Strauss
And, Scott, could you quantify how much in revenue H-1 currently accounts for?
Brad
No, we don't break out the individual programs, David, but Look, obviously our plan, you know, is largely based on the fact that you'll see a ramp up in Florida, you know, program activity that will, you know, largely replace what we're seeing in the ramp down on the H-1 program.
David Strauss
Got it. Thank you.
Brad
Okay.
Operator
Okay, Brad, that completes the call. And ladies and gentlemen, this conference will be available for replay. After today at 11 a.m. Eastern through January 24, 2023, you may access the AT&T replay system at any time by dialing 1-866-207-1041, entering the access code 2659646. International parties may dial 402-970-0847, and those numbers again are 1-866-207-1046. and 402-970-0847, again entering the access code 2659646. That does conclude your conference for today. Thank you for your participation and for using AT&T Conferencing Service. You may now disconnect.
Disclaimer