Good morning, ladies and gentlemen, and welcome to the Howmet Aerospace Fourth Quarter and Full Year 2021 Results Conference Call. My name is Natalia, and I will be your operator for today. As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Paul Luther, Vice President of Investor Relations. Please proceed. Thank you, Natalia. Good morning, and welcome to the Howmet Aerospace Fourth Quarter and Full Year 2021 Results Conference Call. I'm joined by John Plant, Executive Chairman and Chief Executive Officer, and Ken Giacobbe, Executive Vice President and Chief Financial Officer. After comments by John and Ken, we will have a question-and-answer session. I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the company's actual results to differ materially from these projections listed in today's presentation and earnings press release and in our most recent SEC filings. In addition, we've included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release and in the appendix in today's presentation. With that, I'd like to turn the call over to John. Thanks, PT, and good morning, everyone. Let's move to slide four. First, let me frame the quarter for you. The environment was challenging with the new variant of Omicron emerging the day after Thanksgiving. Fortunately, once we take time to understand the changing nature of the pandemic, we find that the virus appears to be weakening, albeit it's quite transmissible. Boeing also continued to test us with reduced build or zero build of the 787 wide body aircraft as recertification is once again delayed and unclear. Despite these impacts, Howmet performed well, with revenues at $1.285 billion, improving well above last year and in line with Q3. Adjusted EBITDA improved both over last year and sequentially, and was $296 million, with an EBITDA margin at 23%. We were pleased with the margin exit rate for both the Q4 and the second half of 2021. The sales picture is one of strength in commercial aerospace narrow body production, healthy defense in IGT sales, combined with constrained sales of our high-performance wheel segment due to the supply chain constraints at our customers in the commercial truck manufacturing business. Clearly, both Delta and Omicron variants of the virus impacted production operations, but nevertheless, we were able to bring through a good level of efficiency. Turning to the balance sheet now and the cash flow of the company, adjusted free cash flow was a record at $517 million for the year, and well ahead of both last year and guidance, with a conversion rate of 117% of net income. We also made incremental voluntary pension contributions in the quarter, and if we excluded these contributions, adjusted free cash flow would have been 123% conversion of net income. For your information, the free cash flow conversion has continued in the last three years at a level well in excess of our long-term guide of 90%. The year-end cash balance was $722 million and reflects both the good cash flow conversion and the fact that in the fourth quarter, Howmet repurchased $205 million of shares at an average price of $30.32. The fourth quarter average diluted share count reduced to 431 million, and the year-end diluted shares stood at 428 million. The repurchase of shares continued in early 2022, with a further 3 million shares purchased for $100 million during the month of January. As of the end of January, the diluted share count has been reduced to approximately 425 million shares. Finally, the 2021 tax- rate was reduced by the work we've done, and the effect was $0.01 on earnings in the fourth quarter. We look forward to 2022, and I'll provide commentary when we get to the outlook section of our presentation. Meanwhile, I'll hand the call over to Ken Giacobbe. Thank you, John. Let's please move to slide five. Fourth quarter total revenue was up 4% year-over-year and flat sequentially. Commercial aerospace increased to 44% of total revenue, which is an improvement sequentially, but far short of the pre-COVID levels of 60%. Commercial aerospace recovery continued in the fourth quarter with commercial aerospace revenue up 13% year-over-year and 4% sequentially, driven by the Engine Products segment and the narrow-body recovery. Defense aerospace was down 22% year-over-year and 4% sequentially, driven by customer inventory corrections and production declines for the Joint Strike Fighter. Commercial transportation, which impacts both the Forged Wheels and the Fastening Systems segment, was up 20% year-over-year, driven by higher aluminum prices. However, the market was down 1% sequentially as the market continues to be impacted by supply chain constraints at our customers, which is limiting commercial truck production. Finally, the industrial and other markets, which is composed of IGT, oil and gas, and general industrial, was down 2% year-over-year and 3% sequentially. Now let's move to slide six, which sums up the year nicely. Let's start with the P&L. For the full- year, price increases were up year-over-year and in line with expectations as they are primarily tied to long-term agreements. Structural cost reductions were approximately $130 million, which exceeded our target of $100 million. Adjusted EBITDA margin for the year was 22.8%, which was an increase of 220 basis points year-over-year, despite $285 million of lower revenue. The fourth quarter exit rate was 23%. Adjusted earnings per share was $1.01, or 31% higher than 2020. Moving to the balance sheet, our cash balance was healthy at $722 million. Adjusted free cash flow was a record $517 million, which was well above the guidance. Free cash flow conversion was 117% of net income. If we exclude voluntary pension contributions of $28 million, adjusted free cash flow conversion was 123% of net income. Net pension and OPEB liabilities were reduced by approximately $275 million, while pension and OPEB expense as well as the associated cash contributions were each reduced by approximately 54%. Net debt to EBITDA improved to 3.1x. Regarding capital allocation, we have taken a balanced approach. Capital investment projects for Forged Wheels at Hungary and Mexico are now essentially complete. Concurrently, we have been investing in automation projects in the Engine and Fastening segments. During the year, we paid down gross debt of approximately $845 million with cash on hand and reduced annualized interest costs by approximately $70 million. We also reinstated the quarterly dividend of $0.02 per share of common stock in Q3 of 2021. Lastly, we repurchased approximately 13.4 million shares of common stock for $430 million, with an average acquisition price of $32.07 per share. To sum it up, during the year, we enhanced our profitability, strengthened the balance sheet, and were balanced in our capital allocation. Let's move to slide seven to briefly cover the segment results. Engine Products year-over-year revenue was 9% higher in the fourth quarter. Commercial aerospace was 39% higher, driven by the narrow body recovery. Defense aerospace was down 26% year-over-year, driven by customer inventory corrections and production declines for the Joint Strike Fighter. Operating profit increased 10% year-over-year, and operating margin improved 20 basis points despite adding approximately 150 employees in the fourth quarter, which now brings our total employees added since Q1 to approximately 950 employees. Now let's move to slide eight. As expected, Fastening Systems year-over-year revenue was 3% lower in the fourth quarter. Commercial aerospace was 15% lower as we continued to experience production declines for the Boeing 787. Commercial transportation was up approximately 46%. Year-over-year, Fastening Systems was able to maintain segment operating profit on $7 million of lower revenue. As a result, operating margin improved 50 basis points. Now let's move to slide nine. Engineered Structures year-over-year revenue was 12% lower in the fourth quarter. Commercial aerospace was flat as the narrow-body recovery was offset by production declines for the Boeing 787. The defense aerospace market was down 26% year-over-year and flat sequentially. Year-over-year, Engineered Structures was able to generate $3 million more in segment operating profit on $27 million of lower revenue, primarily due to permanent cost reductions in a favorable $2.5 million non-recurring adjustment related to a customer contract negotiation. As a result, operating margin improved 260 basis points. Finally, let's move to slide 10. Forged Wheels year-over-year revenue was 15% higher in the fourth quarter. Approximately $28 million of the $31 million revenue increase was due to higher aluminum price pass-through. Pass-through of higher aluminum prices did not impact operating profit dollars, but unfavorably impacted operating profit margin by approximately 350 basis points. On a sequential basis, revenue and operating profit were essentially flat. Commercial transportation demand remained strong, but volumes continued to be impacted by customer supply chain issues. Aluminum prices were flat sequentially, resulting in minimal impact to sequential operating profit margin. One final comment on the segments. The incremental profit flow through for the segments in Q4 was 30% year-over-year and can be found in the appendix. The 30% includes a 55% increase in aluminum prices year-over-year, which adversely impacted the incremental profit flow through. If we adjust for aluminum prices, incrementals were above 70%. Now let's move to slide 11. We continue to focus on improving our capital structure and liquidity. In 2021, we took actions to lower our annualized interest costs by approximately $70 million through a combination of paying down gross debt by approximately $845 million with cash on hand, and also refinancing higher cost debt with lower cost debt. Gross debt remains at $4.2 billion. Net debt to EBITDA improved to 3.1 x, despite cash used for debt refinancing, share buybacks, and dividends. All debt is unsecured, and the next maturity is in October of 2024. Finally, our $1 billion revolving credit facility remains undrawn. Before turning it back to John to discuss the guidance, I'd like to point out a few items that you can find in the appendix. First, there's a slide in the appendix that covers special items in the quarter. Special items for the fourth quarter were a net charge of approximately $53 million, mainly driven by costs associated with non-cash pension plan settlement charges. Second, there's a slide in the appendix that summarizes the share repurchases that occurred in 2021, as well as the share repurchases in January of 2022. Remaining common stock share repurchase authority sits at $1.25 billion as of February 1, 2022. Finally, in the reconciliation of adjusted free cash flow, you'll notice that cash receipts from sold receivables is $0 in the fourth quarter. As a result of restructuring our accounts receivable securitization program in Q3 2021, cash receipts from sold receivables will be $0 going forward, and the entire impact from the sale of accounts receivables will be in cash from operations. Therefore, starting with Q4 of 2021 and beyond, the definition of free cash flow will be simplified and be cash from operations less CapEx. Please note that the net cash funding from the sale of accounts receivable has been $250 million since Q4 of 2020, which means that the sale of accounts receivables has neither been a source of cash nor a use of cash in 2021. With that, let me now turn it back over to John. Thanks, Ken. Let's move to slide 12 for guidance for 2022. The leading indicators for air travel continue to show improvement, notably for domestic travel. We continue to hold the view that we'll see an acceleration in revenue growth during the course of the year, following a fairly flat Q1 compared to Q4. The Engine Products business has led the recovery to date, and we now expect that Engineered Structures business will see lower revenue in the first half of 2022 due to the continued delays with the 787. Fastening Systems is expected to show growth in the first half of 2022, starting in the first quarter. In terms of specific numbers, we expect the following. The guidance for Q1 revenue at $1.3 billion ±$20 million. EBITDA of $295 million ± $9 million. EBITDA margin of 22.7% ± 30 basis points, and EPS of $0.29 ± $0.01. For the year, we expect revenue to be $5.64 billion ± $80 million. EBITDA at $1.3 billion ± $35 million. EBITDA margin at 23% + 30 basis points and - 20 basis points. EPS to increase to $1.37 ± $0.06. Cash flow to be $625 million ± $50 million. Moving to the right-hand side of the slide, we expect the following. Revenue to be up approximately 13% versus 2021, driven by commercial aerospace, commercial transportation, and the IGT market. 2022 revenue guidance includes more than $125 million of material pass-through impacting margins by at least 50 basis points. For clarity, the price increases are excluded from the $125 million of pass-through. Adjusting for that, $125+ million of material pass-through, then the incremental EBITDA margins fall nicely in the 30%-35% range. Adjusted EBITDA is expected to be up 15% versus last year. Adjusted earnings per share is expected to be up approximately 36% versus 2021. Pension and OPEB contributions of approximately $60 million in the year. CapEx should be in the range of $220 million-$250 million, and that continues to be less than depreciation and amortization, resulting in a net source of cash. Adjusted free cash flow compared to net income is approximately 110%. Incrementals adjusting for the metal are between 30%-35%, as previously stated. Let's move to slide 13 for the summary of 2021. In conclusion, Howmet delivered really well in 2021, and I note the challenges that we overcame. EBITDA and EBITDA margin increased with a Q4 exit- rate of 23%. Operational productivity was healthy and structural costs reduced by $130 million. Pricing was improved during the course of the year and well above inflation recovery. Free cash flow was excellent and allowed for further share buybacks of $430 million or 13 million shares, while also improving the net leverage of the company and reducing gross debts by $845 million, and furthermore, reducing interest carrying costs of $70 million, thereby improving future free cash flow yield of the company. Furthermore, pension and OPEB gross liabilities were reduced by $440 million, which is another huge step in the improvement in the balance sheet of the company, and net liabilities by $275 million. Lastly, work performed on the tax- rate showed improvement with the rate reduced by 250 basis points to 25%. Thank you. Now let's take your questions. Thank you. We will now begin the question and answer session. We request that you limit yourself to one question. To ask a question, please press star one on your telephone keypad. Again, that's star one. To withdraw your question, press the pound key. We will pause for just a moment to compile the Q&A roster. Your first question is from the line of Robert Spingarn with Melius Research. Hi, good morning. You're on. John, I wanted to ask you about what we've been hearing on castings and forgings potentially being a bottleneck with capacity ramp from some of the OEMs and other folks in the industry. Could you talk about that? Sure. Yeah, I mean, I'll probably just give you what I think are three levels of response to your question. I'd probably just cover the first two. At its most simplest, no CEOs that have commented publicly have contacted me to register any concerns whatsoever. I mean, I could leave it at that, but I think I'd like to go a little bit further and say I'm really glad it's recognized just how hard and how exacting the production of such products are. It's a good job that there is inventory in the pipeline at many levels, starting with completed engines at Boeing and Airbus and also in the pipeline between us and the engine manufacturers. I think it would be also great to recognize the lead times with scheduled commitments to back up the skylines of aircraft production in full, assuming these volumes are required. The third level of commentary would be, I'll say, commenting on the whole supply chain, labor availability, skills, response times, etc. For right now, I have no recognition of this as a significant issue in any dimension. I think that's a fair point that there's so much uncertainty in the production rates. The other thing I'd ask on this is, if the competition might not be able to keep up, does this present an opportunity for you? Obviously, it always depends upon the parts that are in question. My expectation is that the spot business will pick up in 2022, and that will be to our benefit. Hopefully we can respond in the same way that we were able to respond in 2019 and pick up that additional business should it occur. I think that's probably as far as I can go at this point, Rob. Fair enough. Thank you, John. Thank you. Your next question is from the line of Gautam Khanna with Cowen. Hey, thanks, guys. Gautam. I was wondering if you could just spell out, quantify the change in guidance from the Q3 earnings call. You know, obviously the sales taken down, but, you know, what are you now embedding in terms of 787 rate, 777 rate? Just some of the moving parts. Okay Relative to what you previously had provided. Yeah. If I exclude metals from that revenue line, then the volume increase is around 11%, so close to that 12%-15% that I previously called. The reason for it being the lower end of that is down to the 787 and the lack of visibility that we have regarding that aircraft. We note that our customer hasn't provided any solid view on the line, and therefore we have to make our own assumption of volume of production. In addition, I'd say there's a bit of an inventory overhang on F-35, given that while we supplied to schedule during 2021, I note that Lockheed did not build the full quantity of aircraft. While the aircraft production is gonna increase in 2022 and increase in 2023, that's great, but we're gonna burn off a bit of an overhang in the early part of 2022, and then we'll see further volume improvements as we go into 2023, when that overhang hopefully will no longer be there, and it'll all be vaporized in the first part of this year. Those would be the, let's say, the couple of comments regarding the revenues for 2022 and the early part of the year. Does that cover it or do you? Thank you. Need a bit more? No, that's very helpful. Just to follow- up on Rob's earlier question on pinch points, have you seen any pinch points upstream with respect to nickel billet or what have you, given the PCP strike and Carpenter having the unexpected outage at Reading? I don't know, how do you feel about? Yeah. Pinch points? So far nothing on nickel. I recognize the Carpenter matter and I think that's gonna be a little bit of a pinch point in the first half of this year. Nothing dramatic that we see at this point, but definitely having some impact. Thank you. Thank you. Your next question is from the line of David Strauss with Barclays. Thanks. Good morning. Hey, David. Hey, John. I guess within that 11% revenue growth, John, that you're talking about, can you just give us an idea by end- market, you know, what you're assuming, I guess, you know, aero, defense, commercial transportation being the big ones, maybe industrial, if you wanna throw it in there. On Max, can you give us an idea of what you produced in 2021 and what you're assuming for production in 2022? Thanks. Yeah. By end market, commercial aero is gonna be up in 2022, led by narrow body, with not a lot happening on wide body with the 787 being the complete wild card in all of this. IGT should be continuing to be healthy and I believe to be up in the year. Commercial transportation for our wheels business will be up, and I think that as supply chain constraints ease, that we're gonna see a fairly healthy second half of the year in that business and a really great 2023. The weak point at the moment would be defense for us. I think it's gonna be flat to slightly down for the year, with most of that playing out in the first half of 2022. Oil and gas too difficult to call at this point. We're hopeful for an improvement but haven't planned on it. That covers the end markets. 737, I haven't got the exact numbers, so maybe while I'm chatting here, Ken can get them. But essentially, while we note the production for last year and its increase in the second half of the year to, I don't know what the number was, let's say 14, I'm gonna recognize rather than the numbers I've seen thrown around. We've seen that improvement, but again, we've been supplying it below that level, as the remains of the inventory's being burned off on particularly the LEAP-1B for us in the engine segment. That's hopefully gonna show healthy growth for us this year. Again, strengthening as we go through the year when we see the further rate increase and there's no inventory left in the pipeline to get burned off. Then should Boeing feel more confident and do consider raising the rate, that would be great for us and above what we've guided. Spares, just to comment on that's gonna be healthy for us this year by way of percentage increase. I'm thinking in, o n the commercial aero side, maybe something like a 30% increase in our aftermarket revenues, 30% +. But as you know, it's coming off a fairly low base, so the dollars are beginning to be interesting, but still well below our previous levels in 2019. Yeah. In terms of David, the exit rates on the 737 in Q4, we were at about 17 aircraft. As we look into 2022, consistent with what we said last quarter, probably low 20s in the first half and low 30s in the second half. Great. Thanks for all the detail, guys. Thank you. Your next question is from the line of Robert Stallard with Vertical Research. Thanks so much. Good morning. Rob. John, to follow- up on this, 787 issue, have you taken the 787 out completely from your 2022 revenue guidance? Then secondly, you know, assuming that's an accurate forecast, can you use this capacity for other stuff? We've assumed it's just a ballpark number, about 35 aircraft production for the year. It's just a guess with very limited production or maybe zero production in the first quarter. Assuming there's something, but not quite sure what, so we ballparked it at around that 35 level. In terms of those production facilities, if you take the airfoils that go into the engines, clearly that will release casting capacity. It's the dies are dedicated to that aircraft, so no, there's nothing that could be changed over there. For the most part, that type of fastening system, the titanium structures are dedicated to the aircraft, albeit, you know, there's enough capacity to produce for other customers for any of those flight types or any bolt fastener. You know, yes, there's, you know, we built DSM elsewhere, but we've already, you know, made provision to be at production rates for everything elsewhere. There's no upside in 787 being down. We'd just like the aircraft to get back certified and production to start and lift, and that would be very helpful to us. Yeah, that's great. Thanks very much, John. Thank you. Your next question is from the line of Myles Walton with UBS. Thanks. Good morning. I was wondering, I don't know if it's Ken or John, but on the cash flow, obviously, better performance in 2021. 2022 still at pretty elevated levels of conversion. I guess the question is why aren't you building more working capital, as you're ramping- up into the double-digit growth, likely this year and next year? Are there customers, you know, payables, coming in or, excuse me, receivables coming in, at pace and POs coming in better than you would otherwise historically wanted? Or are we just setting a new bar for cash conversion versus the 90% long-term target? No change to long-term guidance. Just that when you've got, let's say, CapEx below D&A for a period of time, that's healthy. We expect, as I guided the pension contributions to be lower in 2022 than previous year. We are expecting some working capital build and should we hit our marks in terms of, I'll say receivables and payables, then I'd be quite excited to use increased working capital in the back- end of the year because that would mean a very healthy exit- rate and great momentum going into 2022. A working capital drag for us is not the biggest deal, given the strength of margin, and we'd much prefer to see the improved revenues. Having said all of that, we do hope to further improve our inventory efficiency during the course of the year. It's part of, I'd say what we do. That's helping us reduce the pro rata, you know, working capital drag from the increased revenue. In summary, there is a working capital drag on cash flow. We're trying to improve efficiency, but would love that drag to be even higher because that shows strength, particularly in the second half of the year. Yeah. Great. And, Myles, what I would add to that, this is Ken, you know, it as John said, it's a modest cash burn in working capital. As we exited 2021, we built some inventory, specifically in the engines business on some of these key platforms in order to get ahead of the ramp. We think we're in good shape. Okay. Did you acquire any inventory from the supplier who may have been liquidating in the fourth quarter? Small amount, yes. Okay. Thanks. Thank you. Your next question is from the line of Seth Seifman with JPMorgan. Hey, thanks very much. Good morning. Hey, Seth. I wonder if you could comment on you know maybe not the exact number but in a relative sense the you know LTAs that are coming up this year relative to I don't know maybe if they're three to five years on average then you know you'd think of 25% coming up each year. Is this a heavier year or a lighter year? Kind of what you know is there much expectation for what that might be able to deliver this year? Yeah. So consistent with what I've said previously, that 2021 was a big year for us. You saw that, and I think the number through the third quarter was cumulative $60+ million of price excluding inflationary pass-through. The Q4 number will be issued as we issue the 8-K in a week or so's time. For 2022, the book of LTA will not be as big as 2021. Again, consistent with what I've previously said. Nothing's changed. We're, you know, well through our negotiations, but not completed for 2022, but well through. Our expectation for the price improvement is exactly in line with previous statements. Great. Thanks very much. Thank you. Your next question is from the line of Noah Poponak with Goldman Sachs. Hi. Good morning, everybody. Hey, Noah. John, I heard your comments on the math of the pass-through versus the pricing in terms of what that does to margins. Just, you know, the midpoint of the EBITDA margin guidance is a little constrained year-over-year. You know, it seems like, you know, sort of the high- end of the EBITDA versus the low- end of the revenue gets you to 35% incremental, but a lot of different places in the ranges don't get that incremental you've been speaking to. Maybe you're just trying to tell us there's risk to revenue, but you feel good about your operating performance. Just wanted to get your latest thinking on your, you know, incremental margin potential versus what you were saying last quarter. Yeah. Well, the last quarter I gave you a 35 ± 5% proxy, and we're well within that. I think it's exactly in line. I don't think anybody's gonna argue for a couple of percent with all of the variables around us. Some of those variables will be Omicron production disruption. I could talk about inflation, I could talk about recovery inflation, I could talk about 787, the F-35, the management of LEAP-1B inventory, and also things like container availability, never mind the cost of containers. There's a lot of stuff going on. Yeah. Within that overall context of uncertainty, then, I think the guide's just exactly in line, and we'll see how things pan out during the course of the year. You know, Okay. I'm not accustomed to disappointing, and the most important, I'd not disappoint myself. At the moment, I think we're in line. I think the most important thing is, you know, we are passing through, we can pass through these significant material changes and others. That's the important thing. It's not, you know, an excuse for reduced margins. That's fine. Well, what I'm trying to get to, it's an and conversation. We've given you a range where we will take this and deliver and hopefully deliver improved margins in 2023, just in the same way as we deliver the improved margins in 2022, I mean, 2021. 2021, as you know, was a 200+ basis points improvement over 2020. Then where we've guided you to, I think 23% midpoint, which would be an increase over 2020/2021. Fastening didn't see that as much in 2021 and is the furthest below pre-pandemic. Now that the revenue has stabilized there, is that where there's the most upside left moving forward? Well, I'm certainly optimistic for our fastener business because that's a good margin business. I'd be a lot more bullish about it, if I knew more about the 787. Yeah. While I don't, I'm gonna be fairly cautious. I still think that given, I mean, when you get into like sort through this, given, I think in the Q4 revenue's slightly down, but margin up, and if you think margin up when wide-body is down and 787 down, and given the differential or mix of fasteners on aircraft, it was a really credible performance for the fastener business. Okay. Thanks very much. Thank you. Your next question is from the line of Kristine Liwag with Morgan Stanley. Hey, good morning, guys. John, on Russia, you know, there are discussions again on sanctions. How do you think this will pan out for the titanium industry? Is that a risk point or potential pain point for you? How are you thinking about all of this? If anything, because I did note comments in the press from Boeing regarding concerns about geopolitical stability and the impact for titanium. Should those concerns prove material or real, then that would be great for us because we've got titanium capacity. We'd be happy to commit to a long-term agreement with that customer or indeed any others. If there is geopolitical uncertainty, whether it's for the defense contractors or for civil aerospace production, then I think that's you know, yeah, we'd be happy to take your calls. John, I mean, following up on that, I mean, how much capacity do you have for titanium? How much of the aerospace industry's demand can you meet should, you know, this come about? It's clearly not the whole of VSMPO demand, that's for sure. It's like those who come first will get the contract locked and the capacity we're able to offer. Our reuse of revert and also titanium sponge, which for the most part for us comes from Japan, is not affected by the geopolitical uncertainties. I would certainly want to guarantee for myself that I got access to titanium. Thanks, John. Very helpful. Thank you. Your next question is from the line of Matthew Akers with Wells Fargo. Hey, good morning, guys. Thanks for the question. Can you kind of share your thoughts on headcount additions at this point? You added a lot of people in 2021. You know, are you sort of covered for this year or are there a lot more that you need to add that to support some of the ramp up later this year? We've tried to put headcount in sequence to those businesses that are, I'll say, the early movers in the aerospace recovery map. You've seen just under 1,000, I think the number is 950, net adds in our engine business. We think we're gonna start adding in our fastener business shortly. In fact, we already are adding in our fastener business. Trying to get ahead of that volume recovery that we see. In terms of access and availability of labor, so far it's been okay. I'm saying about 70% of it's come from people that we've recalled, and let's say therefore 30% from fresh labor for us. My expectation is that if things work out as we expect, then we're probably recruiting an additional similar number, probably somewhere between 800 and 1,000 people during the course of 2022. If things work out well, we'll be on the upside of that, and if not, we'll be on the downside. We'll keep adjusting it as we see fit during the year. If you think about what we've said to you today, is that we've tried to be thoughtful about the addition of labor to be ahead of the curve in training and taking those costs on so that we are not only able to meet our customers' demand in these, especially in those very difficult parts to manufacture, I already talked about. Also, we took the time and effort and cash costs of building some additional inventory such that we could protect for some of the volume ramp that we expect coming. We think that the demand actually could be quite healthy. Rather than get stressed about our production, we wanna be ahead of the game, and that's where we think we are currently. Great. Thanks, John. That's helpful. Thank you. Your next question is from the line of Timna Tanners with Wolfe Research. Yeah. Hey, good morning. Hey I just have a follow-up on asking about capital allocation. I know you mentioned that 2021 was a balanced approach. You did mention you don't see a lot of CapEx needs. I guess really just remaining trying to get an understanding of, you know, how you're looking at dividends versus buybacks versus refinancing and other opportunities. Thanks. Yeah. My guess at this point is that, given our healthy cash flow, we'll still be returning money of note to shareholders during 2022. In fact, if you think about it, we've already done $100 million in the first few weeks of January. So, that gives you an idea of our confidence and strength in the cash flows of the company. We'll feel our way through the year and see how we go. But you know, clearly, if all things go as we expect, then we'll be buying additional shares back during the course of the year with a cadence yet to be determined. But we you know, we have plenty of authorization to do so. Clearly, we're also gonna make sure we fund the business appropriately, and that's taken care of in a slightly higher CapEx number than before. I guess that when we get through our first quarter, which we'll be reporting to you in early May, we'll also just take a view of the dividend and whether we feel as though that would benefit from being lifted or not, or just do a sense check as we go through. I expect a balanced approach, but with probably more share buyback than dividend in terms of any cash flow implication for the company. I, you know, I'm willing to you know, consider all things. My guess is that when we exit 2022, we're going to also have improved the leverage once again, of a similar order of magnitude in terms compared to 2021. What I think we're gonna have is another end conversation where we're going to buy back shares, consider dividend, and improve our debt structure and improve our leverage, as we exit 2022, and that'll set 2023 up in a really good way. Okay, great. Thanks for the detail. I can't believe I just talked about 2023, and it's only the start of 2022. I must be getting carried away. Your next question is from the line of Philip Gibbs with KeyBanc Capital Markets. Hey, good morning. Hey, Phil. A question was on the pricing evolution. Safe to say that last year pricing gains were about $80 million, and I think you already said this year is probably gonna be something a bit less than that. Is that fair? Yeah. Well, the second part is I haven't commented on the first part because that'll be in our 10-K in the weeks to come. Okay. You talked about the pass-through, I think largely in the Forged Wheels business for 2022. Aside from the labor bill that you expect over the course of the year, you know, any other incremental inflationary factors that you guys have, you know, maybe at a bit higher level than you were expecting three months ago or something that you don't have hedged out? Energy costs are high, that's for sure, particularly in Europe. If you were to go to almost any country in Europe, all of them having differential percentages, then the cost of energy because of their, I'll say policy towards renewables, et c. I'll say security of energy is causing that to be an elevated level. It's also higher in the U.S., but nothing like the increases that are there in Europe. I draw your attention to energy as one thing. Of course, we're all familiar with wider general inflation increase that's there. I guess that's about it really. Just a second part to that energy comment that you just made. Are you all hedged in terms of your energy exposure there, or are you feeling the brunt of the spot market gyration? You can assume that it's pretty costly to hedge energy and therefore, we'll be incurring additional energy costs during the course of the year. Those which are, let's say, not covered by our customers are all contained within the guidance we've given. As I said, our guidance is within the incremental range already provided when you adjust for that metal pass-through. Thanks, John. Appreciate it. Thank you. Your next question is from the line of Paretosh Misra with Berenberg. Thanks, and good morning. On your CapEx guidance and recognizing it's below depreciation in 2022. Is there any larger project that you're undertaking that's worth flagging? No. I mean, there's no significant projects at all. So there's no capacity expansion, for example, in our engine business, as we've had previously. We, Ken's already commented that we finished the capacity expansion in our wheels business in Hungary and Monterrey, Mexico. So that's also behind us, and expect to see the benefits of that capacity available for our customers as we go through the year, in particular into next year. So that's all good. If there's one theme, I think we are gonna have an elevated spend compared to previous years. It's the culmination of many of the automation projects that we've started throughout the company. I've been willing to commit to those additional projects, in fact, I stimulated in many cases those projects, because I really do feel that's gonna pay dividends for us in terms of muting our augmentation of labor and also taking those inflationary costs for the future in terms of just managing our productivity. I think going along with that productivity, we'll also gain further improvement in our quality indices. As you probably recall from previous earnings calls, I have noted that the improved quality and delivery from Howmet over the last two or three years, and we'd like to continue that path. I think automation is gonna be key to do so while we go through the volume ramps that we are for the next two or three years. Interesting. Thanks. Then just a quick follow-up on your comments regarding the aftermarket. Sorry if I missed that, but did you say how big your aftermarket business was last year in 2021? I did not. But for clarity for everyone on the call and defense and aerospace, the mark we called out in 2019 was about $400 million, and that's closer to $500 million these days. The $400 million, which was in commercial and industrial, dropped to the depths of, let's say, the pandemic to about $100 million or less. Compared to, say, 2021, it saw a fractional improvement in the back- end of the year. It's on that commercial aerospace business where I believe we're gonna have a 30%+ improvement in 2022 for spares, both the narrow body and wide body. Got it. Thanks, John. Business jet as well, because business jet is really going very well. Got it. Very clear. Thank you. Your next question is from the line of George Shapiro with Shapiro Research. Yes, good morning, John. Good morning, George. For the last couple of quarters, you've been a little bit less in revenues than you thought, but the margins either been as good or better than what you've been guiding to. How long can you continue to do that if we see the recovery somewhat slower, so the revenues continue to be a little bit less than expected out there? Okay. Well, certainly if you say compared to what I'd have liked to have seen in the back- end of 2021, then, you know, revenue would have been a disappointment. As you know, we can only supply that which our customers want. I think all of us recognize that, I mean, if you call out one instance rather than go through, you know, everything, then 787 overshadows everything in the back- end of the year, and in particular, effectively production going to zero in the fourth quarter. So, yeah, revenue lines are a disappointment. Most important thing really is that despite all within that output. You know, containing that through our cost reduction programs and our efficiency, despite all of the impact of Omicron and that production disruption that it did provide. Plus, if you also want to like you know pile on, you can add all of the additional protection that we try to provide our employees so we can maintain production. It's like testing regimes, and we've been whipsawed, as you know, by mandates and governments and court you know changes. Again, a lot going on. If you look at the guide for the first quarter, you know, it's not really if you then go through it closely and you'll say, well, part of that revenue, let's say maybe it's half, is material pass through, so there's not much volume. But when you adjust for that material, you'll see that margin is right on top of where we, you know, exited the second half of 2021. At the moment, what we're telling you is we think we can continue to convert effectively, while, you know, I'll say waiting for the volume. For me, the really interesting bit is what happens in our second quarter and second half. You know, we'll know a lot more as we go through when we see firmness of production schedules. We, you know, we're getting a little bit more optimistic for the second quarter. Certainly we feel more optimistic of the second half, even though when you think about it in the round, it's never good to have a year where you're back-end loaded. That's always gonna be the nature of it when you're in a recovery situation that certainly the commercial aerospace market is. In recovery, it's gonna be that way through 2022. It's gonna be that way through 2023 as well. I'd say all good, George, at the moment trying to hold things together. We have held things together while, you know, say the market hasn't been kind to us by way of volumes. Then, you know, should we get a little bit of a whiff of increase like the same as we had in Q3, then I'm hopeful we're gonna convert and maybe, you know, enter those sunny uplands as I think. Okay. No, it's been impressive performance. I just wonder how long you keep it going if you don't get the revenue. Yeah. Well, I guess I mean I keep, you know, if you want me to light that candle at night, make sure that I want the volume, you know? Because, you know, operating with, you know, the lack, I mean, the headwinds we've had over the last few quarters and year or two years, it's been tough. You know, the answer is we've converted, we've done what we should do and delivered, and I'm looking forward to the volume improvements which will happen. You know, it's a strong statement, but will happen during 2022 at some point. Thanks very much. I think it's also important to keep the big picture in mind. Despite all the little bits of stuff that you deal with, the big picture is let's just consider, you know, revenues are going up. We're in recovery. The commercial aerospace business is going to improve. Narrow body is leading the way. Volume increase, whether it's from Airbus and Boeing and hopefully stronger for Boeing. Hopefully, you know, aircraft will start being delivered in China shortly for the narrow body. I mean, it's all good. Let's keep focused on the big picture here. Very helpful. Thanks very much. Thank you. Your final question is from the line of Noah Poponak with Goldman Sachs. Hey, John. I just wanted to try to better understand what's going on with the 787. I'm a little surprised by your comments that you're sort of not hearing much from them. I mean, is that surprising to you? I know they have a lot of inventory, but they're talking about restarting the underlying production rate. Presumably, they need to give the supply chain that info. So, what's going on there? Then putting their comments aside, what's your assessment of what's happening there, why it's taking so long, and when it starts back up? Well, I don't know if my assessment counts for much at all. It does. You know, I think it's Boeing's assessment makes a lot of difference. My take is Boeing rightly don't want to get ahead of the FAA in providing commentary. I don't think that's been helpful in the past. Therefore, I think you know, a cautious line is being taken. My thought is that I'm gonna call it the MPS Italian Leonardo problem is behind them. Solutions are done. The gaps which were there in terms of shims you know, are being worked through. The issue around the doors has been solved and is being worked through. I think the audit of the supply base in terms of supplier conformance has been completed. There's a lot of milestones which I think are being done. Everybody is a bit snakebit on making predictions for the aircraft. My hope is that during this quarter or latest early in the second quarter the FAA give recertification. Then I think that those aircraft will be flowing 'cause clearly there's a fundamental demand for this composite wide-body aircraft and its efficiency. It's a great aircraft. You know, if you just look at some of the summer cancellation of schedules by the airlines, they need those aircraft. As it gets recertified, production will begin to lift from the, let's assume that the, you know, those penny numbers are being done currently, and we're gonna see rates of five, you know, in the second half of this year, five per month, that is. I think that's the way it plays out, but I'm not in control of those events at all, and I'm just trying to give you know. Yeah. A view, albeit it's a view that, you know, as I said, doesn't count for much, really. No, it does, and that's helpful. I guess given the inventory they have and then that the production rate would start pretty low and maybe be there for a bit, while it may sound surprising to me that they're not giving you a schedule, they don't necessarily need to because they're gonna restart at such a low rate. Combine that with the sensitivity of being ahead of the regulator, that would explain what the communication is right now, even if things are gonna restart. Yeah. Relatively soon. Yeah. I do believe they need to get back to the five a month and, you know, overall, you know, if we're not careful, there's gonna be. If we end up at zero for an extended period of time, then it's gonna be really difficult to get production rates up for that aircraft. I mean, that's. Right. It's a difficult aircraft to build. As we all know, that was an aircraft where not only was the fundamental technology changed, but that was combined with a supply chain change of great note back in, I'd say the 2008-2009 timeframe. When you think about all the different subs around the world, let's say from probably as far away as Japan and lots of other countries as well, then there's inventory in the system all the way through, and that'll take a bit of burning off. Okay. Thank you very much. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.