Good day, and welcome to the Q3 2023 Howmet Aerospace Earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Paul Luther, Vice President of Investor Relations. Please go ahead. Thank you, Betsy. Good morning, and welcome to the Howmet Aerospace Q3 2023 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 today's presentation, references to EBITDA, operating income, and EPS mean adjusted EBITDA excluding special items, adjusted operating income excluding special items, and adjusted EPS excluding special items. These measures are among the non-GAAP financial measures that we've included in our discussion. Reconciliation 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 welcome everybody to the Q3 earnings call. The results for the Q3 were solid in all respects and exceeded the guidance given in August, which itself was a further increase on that provided in May and February. Sales are $1.658 billion, increase of 16% year-over-year. EBITDA was $382 million, an increase of 18%. EBITDA margin increased to a headline rate of 23%. Margin rate improvements reflect the continuing good work in all segments. I would like to note fasteners with another sequential quarterly improvement of 230 basis points, and additionally, the structure segment had a 320 basis points recovery from the Q2 rate. Howmet's year-over-year revenue increase flowed through to incremental EBITDA margin at a rate of 28%, which was in line with the guidance. Operating income increased by 22% year-over-year, and operating income margin was 19%. Continued top-line growth and healthy margins generated an earnings per share increase of 28%. Free cash flow was healthy at $132 million and helped drive shareholder-friendly actions, including gross debt retirement of $200 million, share buyback of $25 million. Lastly, we also announced a 25% increase in the dividend in Q4 on top of last year's 50% increase. Having provided this top-level summary, I'll pass the call to Ken to provide further details of revenue by end market and the results by business segment. Thank you, John. Let's move to slide five. All markets continue to be healthy, with revenue in the Q3 up 16% year-over-year and 1% sequentially. As expected, sequential revenue growth was impacted by normal Q3 seasonality. Commercial aerospace increased 23% year-over-year, driven by all three aerospace segments. Commercial aerospace has grown for 10 consecutive quarters and stands at 49% of total revenue. Commercial aerospace growth continues to be robust, supported by demand for new, more fuel-efficient aircraft, as well as increased spares demand. Defense aerospace was up 13% year-over-year, driven by the F-35 and legacy fighter programs. Commercial transportation, which impacts both forged wheels and the fastening system segment, was up 7% year-over-year, driven by higher volumes. Commercial transportation remains resilient despite normal seasonality. Finally, the industrial and other markets were up 10% year-over-year, driven by oil and gas, up 29%, general industrial, up 8%, and IGT, up 4%. In summary, another very strong quarter across all of our end markets. Now, let's move to Slide six for more details on the Q3 results. Starting with the P&L and enhanced profitability, revenue, EBITDA, EBITDA margin, and earnings per share all exceeded the high end of guidance. Revenue was $1.658 billion, up 16% year-over-year. EBITDA was $382 million, up 18% year-over-year, while absorbing near-term costs associated with net headcount additions of approximately 645 employees. The engine segment drove a majority of the increase by adding approximately 500 employees. Year-to-date, net headcount additions are just over 1,500 employees. We continue to increase headcount for the expected revenue ramp. EBITDA margin was strong at 23%, despite absorbing the headcount additions. Adjusting for year-over-year inflationary cost pass-through of approximately $15 million, EBITDA margin was 23.3%, and the flow-through of segment incremental revenue to EBITDA was at approximately 28% year over year, which was right in line with our guidance. Earnings per share was strong at $0.46 per share, up 28% year over year. The Q3 represents the ninth consecutive quarter with growth in revenue, EBITDA, and earnings per share. Next is the balance sheet. The balance sheet continues to strengthen while returning cash to key stakeholders. The ending cash balance was $425 million, after generating $132 million of free cash flow. In the quarter, $242 million of cash on hand was allocated to debt reduction, common stock repurchases, and dividends. Net debt to EBITDA improved to a record low of 2.3 x. All bond debt is unsecured and at fixed rates, which will provide stability of interest rate expense into the future. Our next bond maturity of $705 million is due in October 2024. Howmet's improved financial leverage and strong cash generation were reflected in Fitch's August credit upgrade from BBB- to BBB, two notches into investment grade. Moreover, Moody's upgraded Howmet's outlook from stable to positive in September. The balance sheet continues to strengthen and is recognized with the rating agency upgrades. Finally, moving to capital allocation, we continue to be balanced in our approach. In the quarter, capital expenditures were $59 million, which continues to be less than depreciation and amortization. In the Q3, we reduced debt by another $200 million. Year to date, we have reduced debt by approximately $376 million, which will lower annualized interest expense by approximately $19 million. We also repurchased $25 million of common stock in the Q3 at an average price of $49.32 per share. This was the 10th consecutive quarter of common stock repurchases. Share buyback authority from the board stands at $797 million. Since separation in 2020, we have repurchased more than $1 billion of common stock. We exited the Q3 with a diluted share count of 414 million shares. Finally, we continue to be confident in free cash flow. In the Q3, the quarterly stock dividend was $0.04 per share. The quarterly stock dividend will be increased by 25% in the Q4 to $0.05 per share. Now let's move to slide seven to go through the segment results for the Q3. The Engine Products segment continued its strong performance. Revenue was $798 million, an increase of 17% year-over-year. Commercial aerospace was up 15%, and defense aerospace was up 33%, with both markets driven by higher build rates and spares growth. Oil and gas was up 33%, and IGT was up 4%, as demand continues to be strong. As expected, Q3 sequential revenue was down 3%, driven by seasonal vacations. EBITDA increased 18% year-over-year to $219 million. EBITDA margin increased 20 basis points, both year-over-year and sequentially, to 27.4%, while absorbing approximately 500 net new employees. We are pleased with the continued strong performance of the Engines team. Now let's move to slide eight. Fastening Systems, year-over-year revenue increased 20%. Commercial aerospace was up 34%, including the impact of the emerging wide-body recovery. Commercial transportation was up 6%, general industrial was up 7%, and defense aerospace was down 5%. Year-over-year, segment EBITDA increased 19%. EBITDA margin was 21.8%, and it's improved 320 basis points over the last two quarters. Please move to slide nine. Engineered Structures, year-over-year revenue was up 18%, with commercial aerospace up 33%, driven by build rates and approximately $30 million of Russian titanium share gain. Defense aerospace was down 20% year-over-year. Sequentially, Engineered Structures improved production rates and revenue was up 14%, which was in line with our expectation of 10%-15%. Segment EBITDA increased 7% year-over-year. Sequentially, EBITDA margin improved 320 basis points to 13.2%, despite absorbing approximately 145 net new employees in the Q3. Q3 was good recovery by the Structures team, and we continue to expect further improvement in margins. Let's move to slide 10. Forged Wheels, year-over-year revenue increased 7%. The $19 million increase in revenue year-over-year was driven by a 13% increase in volume, partially offset by lower aluminum prices. Segment EBITDA increased 20% year-over-year, driven by the higher volumes. EBITDA margin increased 290 basis points, primarily due to the impact of higher volumes and lower aluminum prices. Finally, let's move to slide 11. Our balance sheet continues to be a source of strength, with healthy cash flow supporting a $200 million debt reduction in Q3. The $1.25 billion, October 2024, debt tower was inherited from Alcoa Inc. and has been reduced to $705 million with cash on hand. Since the separation in 2020, we have paid down gross debt by approximately $2.15 billion with cash on hand, and have lowered annualized interest costs by more than $120 million. Gross debt now stands at $3.8 billion. All long-term debt continues to be unsecured and at fixed rates. We will continue to focus on improving our capital structure and liquidity. Lastly, before turning it back to John, let me highlight one item. In the appendix, slide 18 covers our operational tax rate, which was approximately 22.8% year-to-date. The midpoint of our guidance represents a 500 basis point improvement in the operational tax rate since the separation in 2020. Strong performance by the tax group, and we continue to be focused on further improvements in our operational tax rate. Now, let me turn it back to John for the outlook and summary. Thanks, Ken. So, let's move to slide 12, and talk about the outlook for the next quarter and the year-end. So first of all, regarding commercial aerospace. Airline load factors continue to show improvement and resilience. Factor improvement for international travel, notably in Asia, also continues to increase. Domestic airline activity continues to be above 2019 levels in the Western countries. Given these load factors and the continued restriction of aircraft builds, the fleet of existing aircraft are having to work much harder. This is leading to robustness in the engine spares market, which is further increased by the fact that the deployment in recent years of new engine technologies, which are currently operating with increased replacement parts due to lower time on wing. You'll have read about this, and you can be assured that Howmet is playing its part in supporting both the technology upgrade in the high pressure turbine and through providing additional service parts. This will continue for the next two-three years and probably beyond. Moving beyond commercial aerospace to he defense markets. This market is also showing strength with the start of the gradual buildup of engine spares over the next two-three years to support the F-35 program, for which the fleet now stands at 975 aircraft and growing. These increases more than offset the continued bulkhead inventory correction in our structures business. Other markets of IGT and oil and gas continue to be very healthy. In commercial truck and trailer, builds and order intake continue to be good, despite the lower freight rates and increased price of diesel fuel. We continue to be cautious, though, as we look forward, until we see several months of data for new 2024 orders, which the order books have only been open for a month. The initial month was good, but we also know that, that orders can be canceled depending upon how the broader economy moves in recent months. In aggregate, we see limited risk of aircraft demand from both the commercial aircraft market and defense markets. The two markets aggregate to approximately 65% of our revenue, and that moves up to 80%, including the commercial transportation business. Beyond the fundamental demand from airlines, clearly, we rely upon aircraft manufacturers being able to produce and build at the stated and scheduled quantity of aircraft, particularly narrow body aircraft. Looking forward into 2024, we envisage growth to be in the 7% range, plus or minus a percentage point. The headline sales number for 2024 is likely to be approximately $7 billion. This will be further refined when we see the achieved Q4 build rates from Boeing and Airbus, with their confirmed plans going into 2024. All of this will be provided in further detail in February, along with the assumed build rates. Our stance is normally one of caution. Moving specifically to the Q4 of 2023, we see revenue about $1.635 billion ±$15 million. EBITDA $375 million ±$5 million. Earnings per share at $0.45 ±$0.01. Regarding the full year 2023, revenues increased by about $100 million, from $6.4 billion to $6.54 billion ±$15 million. EBITDA is increased by a further $40 million to $1.485 billion, ±$5 million. Earnings per share has increased by $0.70 to $1.77, ±$0.01. Free cash flow is at $635 million, ±$35 million. In summary, we see strong performance with healthy liquidity and an increased guide for the remainder of the year. We consider the year-to-date progress to be very good, despite the continued choppy build conditions in commercial aerospace. We are comforted by the fact that any build misses by aircraft manufacturers will be moved into backlog, given the very strong underlying demand for travel, and in particular, the absolute requirements for fuel-efficient air engines and fuel-efficient aircraft with an overarching mandate of reduced carbon emissions. Our full year guide of $1.77 earnings per share is an increase of 26% year-over-year. This builds on the 2022 versus 2021 increase of 39%. Currently, in 2023, we've repurchased $376 million of debt and bought back $150 million of common stock. Our net leverage is further improved in Q3, and is heading towards approximately 2x net debt to EBITDA by year-end. All of the debt actions have helped accomplish our goal of reducing the interest rate burden in both 2023 and also going into 2024, with further improved cash flow yield despite the increase generally of interest rates. Thanks, everybody, and now let's move to your questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. In the interest of time, please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question today comes from Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good morning, everyone. Hi, Kristine. You know, John, Ken, PT, I guess, with a 7% revenue increase, for your 2024 initial outlook, what does that imply for aircraft production rates for the Boeing 737, 787, and the Airbus A320 and A350? And also, you know, when you talk to your customers, how much visibility are you getting for the ramp? Okay, I guess that's the big one, Kristine. So let me just talk generally about the 7%, first of all. Within that assumption is a mid-teens assumed increase in commercial aero, and more like single-digit increases in industrial, things like IGT, oil and gas, and general and other, while an assumed high single-digit decrease in commercial transportation. So, basically, in outline, you know, solid defense, solid general industrial markets, a healthy increase in commercial aerospace, but reduced by the high single-digit assumption on commercial transportation. That's roughly an outline. We see assumed build rates in, let's say, forecasting agencies. And for the most part, you know, we can see that they're gonna increase both wide-body and wide-body's fractional increase in mix next year. At the moment, specifically, for Boeing 737, which is what you assumed, you asked the question about. Our assumption is that it's somewhere between the mid-30s and 40, somewhere in that region. We don't want to pin it specifically at this point. You can assume that's, you know, within the range plus or minus I gave. It's really important that we see Boeing achieve the rate 38, which, we know is gonna be, you know, prior to now, it hasn't really happened, and it doesn't seem to be happening just yet, but we know it's gonna be very soon. But we're not yet ready to believe and input into our guidance, even though we can supply at rate 42, should Boeing be in a position to build at that rate. Great. Thanks for the color. Thank you. The next question comes from Robert Spingarn with Melius Research. Please go ahead. Hi, Scott Mikus for Rob Spingarn. John or Ken, I wanted to ask you a little bit about pension contributions for next year, and also just given the work you've done there, are you considering any sort of risk transfer to get rid of the pension liability and improve free cash conversion? We've been working with our pension liabilities for several years now, and we've indeed taken, over the last five years, from where we started, $several billion out of that net liability or growth liability rather. And we've always been focused on taking growth and net out together. Otherwise, you just leave yourself open to interest rate risk and mortality risk. And we've managed it down now to, I think about $750 million for pension and healthcare, something in that region. And so it's now, let's say, a tiny fraction of our market cap, and therefore essentially is not relevant. At the same time, while I, you know, I've noted that, you know, one other company, maybe a couple, have considered amortizing, there's... I'm not yet at that point willing to consider that. It's not that it's off the table, because I think it would be something which would be useful to do, but the other, at the same time, I think at this current time, there's other better uses of our, of our cash, and, and also I'm not willing to leverage to enable that to occur. So, essentially, we're aware of it. We continue to work at our plans. I can see us potentially picking off one or two, and do partial annuitization, either within a plan or in a total of a plan. But you shouldn't expect to see that liability extinguished enough to pay the premiums to insurance companies to enable that at this point in time. I, I think that may come over the next, you know, say three to five years at some point, but not yet. And the assumption we have for next year is that, you know, cash contributions will be a little higher than this year, but at this point, not material. Thanks. I'll stick with one question. Thank you. The next question comes from David Strauss with Barclays. Please go ahead. Good morning. David. John, you mentioned your work on upgraded blades. Wanted to see if you could give a little bit more color there around the timing of when you, you know, when you think you'll be producing, upgrading, producing, and delivering upgraded blades to both GE and Pratt. Okay. So both for the GTF Advantage engine upgrade and for the LEAP-1A, 1B upgrades, those have been something that we've been working on for several years now, and if anything, let's say are a little bit later into production than originally envisaged. Although those push backs and timing have not been as a result of Howmet not being ready. So, you know, we're in good shape. I've commented in the past that that increased performance in the high pressure turbine leads to increased complexity, and with that is value. And we certainly have, you know, been intimate with the engine manufacturers to improve the performance as the engine temperatures have seemed to be higher than originally envisaged, and therefore, to help improve time on wing. I feel as though specific timing for both, what was originally called Lean burn, has now a different code name for GE, and I think for the Advantage, for Pratt & Whitney, you're best asking them, for timeline disclosure, rather than myself. You know, we, because we, you know, we have a, an agreed plan, but, you know, that can, and it has been varied, according to the specific needs of, of those engine manufacturers at this point in time. Okay, fair enough. I'll ask them- Thank you. It's far better, it's far better, David. And then, Ken, I guess a two-parter for you. Just quick comments on working capital through the end of this year. It looks like you're kind of a pretty big, you know, reversal benefiting in, in, Q4, and thoughts on that into 2024. And then, pension expense, you know, you brought it down a little bit for 2023, but what, what are you looking at for 2024? Thanks. I'm gonna comment on the working capital first, and then let Ken amplify. And then let Ken totally deal with the pension side. And the reason why I wanna talk about the working capital, because it's also tied up with the specific, you know, operations and status of where the Howmet different business units are. So, first of all, in terms of working capital, I mean, AR or accounts receivable and accounts payable, they just move on the day's assumption. So if revenue goes up, David, as it has, then clearly we have more dollars tied up in receivables than we had. But that's a good answer, because, you know, if it's whatever days it is, and I don't know if we're very good disclose it, but you can back engineer it. But our days are pretty constant, and so because revenue went up, a few more dollars went on, but the days in receivables exactly the same. Same in payables. The big wild card on working capital is always inventory. And so far, inventory is still elevated, more elevated than I would like, but just because I don't like it, doesn't mean to say it's not where it should be at this point in time. So this with the, I'll say, status within each business of where we are operationally and in terms of, you know, start from, let's say, volume recovery. So if you take our wheel segment, which was the first division to show volume increase, manning, and then moving through towards stability and now smoothness of production, our days of inventory are in really good shape. And indeed, I believe we're at close to world-class levels. If I look at our engine business, which is our second division out of the gate in terms of building of revenue, increasing manning, and that's continuing to increase, we have gradually been smoothing out production, albeit we're not in the same level yet as we are in wheels. And so what we see is gradual improvements in efficiency of our inventory holding and days on hand. And, you know, I think that will continue to improve again in the Q4 and into next year. So I'm pleased with this trajectory, but we're not yet at where we need to be on our engine business. In terms of fasteners and structures, those are at very different points. Fasteners has been later in the cycle in terms of volume pickup. As you know, we've been recruiting this year, building it up, and you've seen, first of all, the margin begin to respond to that, and also mix and production efficiency. And also you've seen a little bit of a calming of recruitment in that business in the last few months. Although we're still in that we say, recruitment mode and replacement mode for employees, but trying to improve efficiency. At the moment, the days on hand is well out of order in terms of where it needs to be, and is not yet improving at all, but will begin to improve, I believe, as we go through 2024. In the case of structures, that's probably our worst business in terms of days on hand. And if you remember, last quarter wasn't particularly a great quarter in terms of the throughput of the business. And so I allowed that business not to focus on inventory, but just to use inventory as the buffer to help stabilize the manufacturing operations, and therefore improve the margin, which is what you saw occur in the 300 basis points improvement in the structures business. At this point, I don't think it goes anywhere at all in the Q4, and that's a combination of, you know, still needs to stabilize its operations. But also, at the moment, I see customers laying in additional demand, particularly laying in the additional urgent demand on the titanium side. I'm not yet prepared to add heads nor working capital in inventory, nor input materials, until I'm satisfied with the economics and, you know, to pay those premium costs. And so, if anything, I'm going to hold back on that. And because I've got better places to deploy capital, which is what I told you last quarter, and, generally in the business of analysts, is that, you know, I'm very disciplined of where we allocate capital. And so at the moment, you know, I'm not trying to drive working capital, particularly in that business, but that'll come next year as that business begins to smooth out and improve its production and gain more responsiveness in terms of, I'll say people paying for the, you know, the premiums. So if they want the demand and drop in, then they pay for it. Otherwise, they don't get it. It's that simple. So that deals with working capital pretty comprehensively, David, and now I'll pass to Ken. Yeah. Hi, David. So, as John articulated there, days are really the key on working capital, and then also depending on where we are in the cycle by business segment. So, as we exit this year, I think we've given everybody the walk and the assumptions tab of the decks, to kind of walk through it. But that would indicate a working capital burn this year, roughly, about $190 million, plus or minus. And it's really driven by, you know, we've increased the revenue guide once again, so you have more AR that goes with that. Plus, we're keeping inventory in the business to make sure that we're not the bottleneck for our customers, right? Delivering on time, in full, at the right spec is really important for us, so we've got a little bit more inventory. Next year, we've got another growth projection here. So I anticipate there'll be working capital burn again next year in 2024. Probably be better than this year, as we work down inventory in the business, but it's again gonna be dependent on where we are in the cycle. So I get, I believe it's in really good order here, driven by the growth of the business. On the pension expense side, you know, as John mentioned, you know, I'll start at the top of the house. We've taken gross liabilities down by 45% since separation. That's a pretty big decline. Big, significant part of that is the actions that we've taken to reduce gross liability. You also get a bit of a help from the increase in discount rates, but there's a lot of action around that gross liability. John mentioned cash, right? It'll be up next year. We remeasure at the end of the year, so that's pretty much of a volatile line. So we'll give you more guidance on the next call in terms of what the cash contributions would be. The expense side, that's a little bit more visible. Right now, again, we strike it at the end of the year. You know, if you look at our pension and OPEB expense right now, it's $35 million on an annual basis. So next year, based on asset returns, so the market's been a little tough here. I'd say probably another $15 million, ±$5 million on either side of that. So really not not material, but I think that's all in good order as well. Great. Thanks. Thanks for all the detail. The next question comes from Scott Deuschle with Deutsche Bank. Please go ahead. Hey, good morning. Hey, Scott. Two very quick questions, both for John. First, did price realizations accelerate again in the Q3? I think they had accelerated last quarter. And then on fasteners, can you say whether you're shipping at five a month on 787 at this point, or are you still tracking a bit below that? Thank you. ... Okay, I don't think we've given the Q3 detail on the commercial side. I think that'll be in our 10-Q later, when we file it. That's correct. Well, I'll say that it's in good order and in line with what we previously said both for the quarter and for the year. And you know, I stand behind my comments regarding 2024, which I made on the last call. 787, at the moment, we're a little bit below rate five. And you know, but fully expecting that to move up to rate seven next year. And I've commented before, we see very strong underlying demand for that aircraft, and I can see the need to go above rate seven as well. It's only a question of when. Okay, great. Thank you. Thank you. The next question comes from Myles Walton with Wolfe Research. Please go ahead. Thanks. John, I was hoping you could dig a little bit deeper into the fastening margin performance, and obviously, you know, sort of troughed at the beginning of the year, and has been showing some signs of resiliency and improvement. I think at the beginning of the year, you told me to not expect much for a couple of years. Are we at a point where, you know, new management plus the rate increases on the wide bodies, we should start to think about getting back to, you know, 2018, 2019 fastener performance? Well, I think it's a bit premature to go back there because, I mean, I think the conditions then when, and why the wide body market in particular were quite different to what they are now. So basically, in the Q1, which is probably our low point in fastener margins, reflected essentially just a total metallic build of aircraft. And let's, you can call it zero, in terms of any real volume on the composite side. So that's one factor. Of course, that's begun to change. The business itself has also begun to improve, and I see very much improved signs of operating efficiency improvements, but with, you know, a ways to go. You know, I see additional discipline in the business, commercially, and there's still a ways to go. Going forward into next year, what I see is a volume increase for commercial aircraft production, and also a fractional improvement in mix because of the wide body going to next year. You can pick your own, you know, assumptions on what the final wide body production will be in composite aircraft. But essentially, even on wide body, you're transitioning from metallic to composite aircraft during the course of the year, hopefully with some delivery of 777X parts as well, which has got a composite wing. So I'll say general improvement in conditions for the business, but still with a big thrust on improving its productivity and throughput efficiency, which needs to occur. Basically, some ways to go yet. You know, I have optimism will continue the good trend of the last couple of quarters, but too soon to call out any specifics on it, and I don't think we have a guide by segment anyway. But and I haven't guided or have met margins for next year, just giving you the fact that revenue increases. So that gives you a picture for that business. Thanks, John. Thank you. The next question comes from Ronald Epstein with Bank of America. Please go ahead. Hey, John. How are you? Hey, Ron. Yeah, the topic that doesn't tend to come up much is the forged wheels. And it appears that it's been running ahead of expectations. I mean, how should we think about that? And, you know, what are your expectations around it? And when we think about modeling it, what would be a prudent way to do so? Well, essentially, the play on forged wheels for aluminum is that you start off with what's the big picture in terms of truck and trailer production, essentially in North America and Europe, albeit, you know, we do play in some of the Asian markets at a significant share position as well. And then you factor in, basically, so whatever percentage change that is, and then you factor in as a positive against what I think will be a, you know, worse macro position next year. There'll be some penetration achieved against steel wheels, particularly as fuel efficiency requirements that is step up. A fractional contribution, but nothing of great note in terms of adoption of the different, I'll say powertrains seem to get their moves towards electrification or whatever, but no big moves next year. But that's a positive vector as well. And then a fractional share improvement on top of that. So basically, you know, we see secular growth in the segment, you know, offsetting some macro decline in the assumed markets. And that's why Guy has, you know, commented and idea about, you know, high single digit reduction for the business is our assumption. Trying to be fairly cautious at this point in time until we've got a better read on what's the general economy gonna do? Although I do see freight rates beginning to stabilize and improve recently. So, you know, there's a lot of factors yet to bring to bear in terms of what the final outlook for next year is. But I want to take a fairly cautious assumption. This year, I'd already commented, I saw a, you know, a more difficult H2. As it is, we've still been able to burn off backlog. And let's say even despite today, we know we have, is it, Mack Trucks, which is subject to the UAW strike? Our arrears are such that that's not going to affect us in the Q4, and our assumption is that by Q1 next year, by another couple of months, that UAW dispute at the Mack Trucks will be resolved, and therefore they'll be back. So that's about it really. It's, you know, it's been pretty strong this year, and, ideally, you know, giving you the general in years- Yeah. Into next year. And then maybe just one follow on, if I may, just a little change of subject. When we think about the Pratt & Whitney situation with the GTF and all the disks that need to be reworked, is that good, bad, neutral for you guys? I mean, how should we think about the impact on you, I mean, the company, vis-a-vis the GTF situation? Yeah. Well, I'll start off with having to separate two issues, I think, on the GTF. Because I think while it gets all enmeshed together, I, I see them as quite separate. And then the, you know, they can some intertwining for convenience. So the disk contamination issue, you know, clearly that requires inspection, and that might take, you know, I don't know, so many days, let's call it 20, 30, 40 days, you know, on and off wing to achieve that inspection. And then I guess longer if those disks turn out, they require to be replaced or not. And I guess it's, you know, it's a small fraction of those that will require to be replaced. That's one item or, you know, separate item. Over, let's say, previously in center field, but now I'll call it left field, there is the discussion about the time on wing issues that have been publicized by everybody regarding the GTF, where, particularly in harsh climate countries or pollution countries, that the time on wing is a fraction of the predecessor engine and also what was originally thought for the GTF. So the question then becomes for the problems around the combustor, the filling of holes, the higher temperatures, and then those temperatures and pollutants hitting the few blades in the high pressure turbine, you know, those clearly require replacement. And the question is: What is the replacement interval for them? And so that stands alone as an issue. And, you know, Pratt & Whitney will determine, you know, at what frequency they want to replace those blades at. Again, more of a question for Pratt than for myself. You know, we're able to stand behind them and supply what needs to be supplied, you know, within degrees. The question is, you know, what's the requirement? Then, of course, you can entwine them together. So maybe when those engines are off wing for the powder metal contamination issue, maybe the opportunity will be taken to replace some of those high pressure turbine blades and other components on the engine, or maybe it won't. That's a Pratt decision. The question I have in my mind is: Do they go for, you know, full replacements for them as they really look at, inspect, and take the engines off the wing for the first time? Or do they stick them back on just because the airlines will want the engines back on wing and only seek to replace those in harsh climates at that time? And so maybe that's, you know, the more of the what I read from MTU, of the 300 days turnaround time. So I just don't know, Ron, what it'll finally turn out to be. 'Cause it's a choice by Raytheon or Pratt & Whitney to determine to what extent do they make improvements for the time on wing issue, including the high pressure turbine parts, as they take those engines off. So, you know, what it's written about is almost one issue of powder metal. I see them as two distinct issues which may come together, but just depending upon the pressure to get those engines back on wing. And, you know, we are still in discussions with Pratt & Whitney regarding all of that, and they determine how many of our parts go to OE production and how many go to the spares market. And that's up to them and the aircraft manufacturers to decide that. Got it. Thank you very much. Thank you. The next question comes from Noah Poponak with Goldman Sachs. Please go ahead. Hey, good morning, everyone. Noah. John, I was hoping to get a little more color from you on your perspective on the broader aerospace new build ramp up. You've had good perspective and, you know, as you mentioned, you've been cautious, and that's been correct. It felt like in the middle of the year and kind of around the air show and into the summer, you sounded more optimistic, and sounded like the supply chain was kind of finally ready to go. And then we've had these incremental engine and aerostructures issues. Did Boeing especially, and I guess Boeing and Airbus, keep the underlying broader supply chain going towards the planned higher rates? And, you know, is everything kind of ready to ramp once aft fuselage and the like are fixed? And you mentioned them giving you plans for next year. Are they incrementally more firm on that now with the master schedule than they've been recovery to date? Are things firmer, or is that wishful thinking? You know, I think Boeing, in particular, have had firm plans throughout the year. It's been, you know, the realization of those plans, which has been, you know, more of the issue. And I guess it's from a combination of reasons, there's always gonna be somewhere in the supply chain, among all the parts and difficulties, there's always gonna be the degree of experience in Boeing's own plants with all of the change of people in and out or out and in we got post-COVID. And then, of course, you know, we read in the press about the difficulties of, say, was it strike at Spirit AeroSystems, and then some other production issues of some failed parts and holes and all the rest of it. And yet there's, you know, there seems to have been some management change there, which may prove to be positive, because that's TBD, and hopefully there, and I guess you listen carefully to the commentary from Spirit yesterday. You know, we're optimistic that those fuselage and other component problems do get resolved, but it's not something in our control. But should those begin to improve, I think that's a major step forward in Boeing realizing its own plans for production rate increases, and also getting behind it, the retrofit of those tails, which were, you know, subject to fasteners fitted wrongly or, and the holes built too big and bigger fasteners put in. So I think they're coping, you know, with Herculean efforts to try to achieve all of that. But, you know, as you know, these herculean efforts by themselves don't necessarily produce the output, and, and we've still got to see that improve. So hopefully, during October, November, December, we will begin to see rate pickup at Spirit, other suppliers, and then obviously Boeing itself to get to their required or stated rate 42 next year. In terms of then on the engine side, you know, you, you've read commentary, I think from... I think anyone I've seen was the GE commentary instead of, let's say, 1,700 engines, 1,600 engines. You know, that isn't really impactful for us at this point in time, because for us, it's just, you know, us meeting their rate requirements, and then there's a choice, as I said, rather than the previous question, what goes to OE compared to what goes to service requirements? You know, you know, we're dealing with, you know, very robust demand on both sides, and we see that demand increasing again next year, plus some blended in changes potentially for the technology chain yet to come. Okay, I appreciate it. Thank you. Thank you. The next question comes from Sheila Kahyaoglu with Jefferies. Please go ahead. Hi, John. Hi, Ken. Thank you, guys. Thank you. Hey, I have two questions, if that's okay. John, don't skip the second one. Well, I've been pretty lenient today in answering, you know, two part, three parters, so yeah, sure. Go for it, Sheila. You are, but I want some good nuggets here. So, Uh. You know, the OE, OEs are calling out castings and forgings in terms of supply chain, you know, kind of falling down the supply chain. I know you've been clear that Howmet isn't a bottleneck, and you aren't in the large structural casting business anyway. So maybe could you characterize your output today and what you're capable of in terms of demand? And then, this is more of like a larger opportunity in terms of pricing and volume, how do you think about that trade-off going forward? Okay, well, generally, you know, forging and castings have been a bit of a whipping boy for a couple of years, with commentary, I think made even before there was any basis for it. Albeit, you know, subsequently, I think there has been a basis for commentary where, you know, to replace the skill levels to produce some of these, in particular, the castings, is really at a very high order. So the training, the recruitment and then training time to produce effective production workers in some of this, certainly strained, I think, all of the companies in that regard, including Howmet. I mean, we did choose to start recruitment a bit earlier. I know that I've cost the company, probably at 20 basis points of margin by being slightly ahead of the curve, on recruitment, but at the same time, I think it's paid dividends for us in the fact that we've been in position to produce generally, you know, on time, at rate, and with generally good quality. So I think it's been a good trade-off for us. I wanna correct you on the structural casting side. We're probably the number two in the market behind Precision Castparts, but they're still the big dog on the block, in terms of production of structural castings. You know, we do produce them, and we're at a good rate for, let's say, 98% of all of our structural castings. I mean, early on, we had a few moments, but things like fairings are now just like shelling peas and coming off at good rates and no problems whatsoever. And so, you know, should there be increased demand for structural castings, obviously we're tooled, and if not, you know, the availability is set to tool us for the next few years, should engine manufacturers want to. Is that, you know, we're in a position to supply because we still have some available capacity and indeed are willing to invest there, you know, commensurate with it being a good return of capital. And generally, you know, I've been quite positive about investing in our engine business and contrasting that to our structures business, just based upon returns. So it's one way of saying, you know, we're in a good state. We're in structural castings, you know, we are the significant supplier to the industry on turbine blades, and I hope I've given you enough nuggets. How do you think about, you know, pricing and, you know, your contract structures going forward, given the constraints in the supply chain and you're hiring ahead of the curve? You know, pricing has been positive for us, and I think it reflects the value that we bring. You know, when I look at some of the requirements for the increased temperature performance in the, let's say, narrow body engines, you know, we are bringing to bear some of the, not all, but some of the technologies that we've deployed for the F-35 engine, in terms of the ability to manage both pressure and thermal performance, in the high pressure turbine. And we're able to produce parts. You know, we obviously, you know, work with the customer to engineer into specification, but if they're specified at 2,500 degrees and operate higher, you know, we can take it higher, because as you know, for the F-35, we're up at 3,500 degrees, and indeed, the only company in the world that can provide the turbine parts with that thermal performance, you know, in that environment. You know, we've already commented previously that we are working on the improvements for the currently 2028 upgrade to that engine to improve its thrust and time and air. And so again, we are able to take the temperature performance of those parts and elevate it further. And we've talked a little bit, but only a little bit in our technology day, about some of the technologies that we, we'd be able to deploy for that. And so, you know, we're in position to bring a degree of performance and scalability at scale, which I think, you know, needs to be reflected in value, because in truth, you know, the turbine blade is a pretty small part of the value of the engine. And to achieve the requirements for, let's say, lower carbon footprint, you know, continually taking up the pressure inside the engine to improve the atomization of the jet fuel, and then for its burn characteristics, the lower pollution, and the, you know, the whole, I'll say, fuel efficiency and carbon footprint, you know, presents great value to the industry. Great. Thank you. Thank you. The last question today comes from Seth Seifman with JP Morgan. Please go ahead. Hey, thanks very much. Good morning, everyone. Thanks, Seth. So John, I know you've said you wouldn't say this or haven't said this, and so I'm not necessarily expecting a number in terms of the margin outlook for next year. But if we think about that sort of baseline incremental of, you know, 30% ±5%, you know, how do we think about the puts and takes for where next year can come in relative to that 30%? Does the addition of headcount and the need for, you know, the learning to develop among your employees, you know, does that keep things sort of below that 30% range as it's been in recent years, or are there other opportunities to be above it? What's the best way to think about that at this point? Yeah, I mean, we were able to that last quarter to about 19% operating profit on 23% EBITDA rate. You know, I don't have any commentary regarding margin rates for next year. What I still see at the moment is potentially, I don't know this, but potentially a few more months of choppy production, particularly on the airframe manufacturing side. You know, it's just, it's just an assumption. Maybe we get lucky towards the H2 of next year or the back end of next year, and we see things begin to smooth out. You know, we have seen some things begin to move in our favor and smooth out, as I commented when on the inventory side, when I was talking about our engine business. But in terms of, you know, at what point do we reach what I call, what I previously referred to as state of grace, where things smooth out and, you know, margins, you know, become stable and better, and cash just eases out of the industry and, hopefully out of Howmet. You know, I've always said that's, you know, that's a year away, and I still think it's a, you know, it's a year away. It could be the back end of 2024, but more likely going into 2025. And that hopefully combines with if the 2025 external, I'll say, views of what the end, the, aircraft production will be, including its wide body mix, then that begins to get, I say, you know, into a good state. So, you know, I have generally medium to long, long-term optimism and feel as though we're in a really great place, with great backlog and good things to come. Albeit, you know, still, you know, having to face up to shorter-term challenges of all the things we've talked about in terms of, you know, build rate changes and assumptions change, you know, in many parts of the markets, in particular, the commercial aerospace part of the market. I think that's a better best picture I can give, sir. Excellent. Thanks very much. Helpful. Thank you very much. This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation. You may now disconnect.