We're good? Is your phone off, John? All right. Don't have it? Okay. Good morning, everyone. Welcome to the 41st Barclays Industrial Select Conference. We're kicking it off even earlier this morning. You know, demand for the, for the conference in terms of corporates was so strong, we had to insert a new slot at 7:25 A.M. So we wanted to start off with a bang. Howmet's starting off the A&D track for us today, and we're pleased to have John Plant, Chairman and CEO of Howmet, and Ken Giacobbe, CFO, and Paul Luther is also here as well. So thank you for coming down here again. Appreciate it. Good morning. We'll kick it off pretty high level. Wanted to ask about your revenue growth guidance for this year. 7% revenue growth. Can you talk about how that breaks out by end market, so aerospace, defense, industrial, commercial, transportation? Okay. So, on commercial aero, we've assumed mid-teens, so 15% ± the growth there. Defense aerospace, mid-single digits, maybe a little bit higher. General industrial, lower single digits. And then the commercial transportation wheels business, about -10% is the assumption. So we sort of put that in and blend it out at about 7, you know, ±. And on the aerospace aftermarket piece, you talked more about that than I think I've ever heard you speak about that on this last call. So maybe talk about where the aero aftermarket piece is today and, you know, what you see for the go-forward path here in terms of the aftermarket contributing, you know, to the revenue growth. So, I mean, in the last two or three years, the reference point was always the levels in 2019, and for us, that was about a $800 million revenue mark. 400 million of commercial aerospace, let's say, spares and 400 million of defense and, let's say, industrial gas turbine spares. So roughly split equal between them. Clearly, during the COVID years, commercial aerospace spares, I mean, essentially dried up and went to... It's at a run rate somewhere close to a $100 million at one point, but let's say, went down, as I say, to about more than half. And then, during last year, that has now recovered, so if last year was something close to $400 million mark, but rising every quarter. So the exit rate of 2023 was at a higher rate than we had for the average of 2019. The defense and IGT business continued to grow, so that's about $600 million, so about $1 billion last year. We think that has the propensity to grow further because I think our defense spares are gonna grow, IGT is gonna grow, and commercial aerospace is gonna grow further in 2024. Then in what exactly, because, of course, you don't really know, but, you know, I'm thinking positively about it, as an opportunity. And then I was trying to observe that, you know, beyond the immediacy of the thing, which is to say in the press at the moment, which is, you know, time on wing and replacement of parts for the high-pressure turbines on both LEAP and on Geared Turbofan engines. What I was trying to do is to separate out what I call the small bubble effect over the next two or three years of solving some of the time on wing distress issues in some of the harsher climates and where there's significant air pollution. To the fact that it's our view that the newer engines, so I think, again, LEAP and the Geared Turbofan, and compare that to the predecessor engines, let's say, of a CFM or the V2500, is that those are going to experience a higher frequency of shop visits. Essentially because to get that fuel efficiency on any modern jet engine, you're having to run it at hotter temperatures, higher pressures, and that inevitably produces not only a different type of configuration of turbine blade with more sophistication, but the wear is such that it's gonna have a more frequent service interval. So I think that that is a long-term trend for the next decade, where we're gonna see increasingly as those engines that we started, let's say, supplying in 2018, 2019, as they come in for their, you know, initial shop visits, they, they're gonna be at a higher frequency on a permanent basis. So they'll never achieve quite the cycles we saw on the predecessor engines. I was trying to get from that to, there is an inbuilt additional service requirement that Howmet is going to receive and service for these engines, which is good news for us. So I wanted to ask you about, of course, build rates. And, you know, last year, you had given guidance for the low 30s on the MAX, and everyone thought you were conservative. I think you ended up being more, more right than wrong. This year, you're talking about 34 on average for the MAX, and I think 56 for the A320, and 6 for the 787. Where, where are you today relative to those, you know, those rates? Yeah. It's always difficult to be absolutely precise, because if you take where we supply direct to the airframe manufacturers, for example, in our fastener business, we operate on min-max systems and not just straightforward ERP pulls to and in a quantity of aircraft. It more so in our structures business, where obviously, you know, there's so many, only so many, let's say, spars in an aircraft, and therefore, it's more direct correlation according to the share we have. So it always ends up as being a slightly imprecise figure. But we did see, during the second half of last year, Boeing, in particular, raise their build requirement rates on us, that that they had. And I'm gonna say, it's difficult to see this year that we can't say they've it further increased, because that's not the case. But we've also prepared ourselves in case they are slightly reduced. And you heard me talk on the earnings call, a week or so ago, that we made allowance for not only a lower build rate than they're saying, but also should they decide they don't wanna carry some of the inventory they're carrying today, because they underbuilt fundamentally to that rate 38, that could come out of their system, and they could cut us back. And we've had that occur in the past. So if you remember 2022, in the fourth quarter, I think we were cut back significantly. And, you know, it was overnight, it was really starting in the, you know, September, October time, and we felt as though we got left holding the bag, and, you know, it, it's possible again. On the other hand, should things smooth out, rate 38's achieved later this year, and then it goes to 42, and think good things in 2025, then they'll need all the parts themselves, so that there won't be that problem of us having that inventory allowance in our working capital and in the way we've done it. And so again, we've tried to take, I think, cautious assumptions to what we've talked about, such that we feel comfortable that we're not reliant upon, you know, somebody else's perturbations around within a, within a degree or two, and cause us to just to say, "Oh, you know, you know, have an excuse me moment." We don't really want that. So, fair to think about, you're above, best you can tell, you're above on MAX specifically, you're above 34 a month now, but Boeing's producing below that, and so as a result, you're cautious in terms of- Yes, absolutely. Okay. Yeah. Wanted to ask you about, you know, you talked about on the call some share gain on the, on the engine side that's committed. You're gonna spend additional CapEx, I think, here this year and next year, related to that. So could you tell us a little bit more, expand a little bit more on what exactly that share gain relates to? Is that, is that related to producing upgraded airfoils for LEAP and GTF? It's essentially focused on turbine blades. And that doesn't give you much, 'cause it's- ..both engines have them. And we're seeing elevated requirements for, let's say, some of the time on wing issues for both, but it's more things which are going to come rather than we're experiencing it today, because it takes a while for the engine manufacturers to respond. But we're pretty clear about the need, for increased requirements to service the industry going forward. And it's a combination of today's turbine blades are rather more sophisticated than the predecessor ones, in terms of the quantity of different cores that are in them, and then with the increased long-term service requirements that I've already talked about. Never mind, the obviously, the time on wing issue, then those increased requirements are gonna put a significant load into the, to the engine space, going back, you know, a lot of spares and... We're just trying to make sure that we are ready for that. I was trying to make sure that when I went out and said, "We're gonna spend elevated CapEx," it wasn't like just on a management whim. It's one where, I mean, for me to be willing to part with that cash, there has to be a very solid business case. We have a high returning business, so I called out, not just, you can see what the EBITDA margins are, but in terms of our return on capital. So here we are investing in a very high return on capital business, but with making more of the same, and in particular, then drawing your attention to the fact that it is contracted additional share and not just, you know, like, floating in case the build increases or not. So, assuming, let's say, Airbus would like to make a few more aircraft and so on, plus the spares requirement, you know, we've got that sorted. Been willing to commit the capital, and in exchange, we wanted to have the additional share. This will manifest itself in your numbers in terms of the upside related to this. This is a 2026 benefit? Yes, it is. I mean, we might get a little bit of production out in the back end of the fourth quarter of 2025, but it does involve increasing our building footprint, a lot of capital equipment. We are going to make sure that it's to the latest levels of automation that we do. We've begun to employ some aspects of, you know, the fashionable word, AI, in some of our testing routines, and so it's gonna be the latest and greatest of what we do. And I think, David, you had the opportunity of seeing some of that in your visit to our Whitehall plant in September, which you were able to write about. So we're taking the very best of what we do in the latest manufacturing hall there, and then trying to take it to another level. So I think it'll be pretty impressive when we do it. Structures, how's that business doing in your view? You know, last, I think it was in Q2, you had the issue there. You had a good term for it, but what do you expect- Yeah, I did. out of that business this year? And then maybe if you could also touch on titanium, the market share you've picked up. Yeah. Is that, is that behind us at this point? Is there more to go? Do you want additional titanium share? So I think our previous peak of earnings in that business was 14.2%. So it's a pretty precise number. I think last year we exited, let's call it 12.9%-13%, give or take. So I wouldn't say we're particularly pleased at where we were. On the other hand, given where the markets that we principally serve, which was wide body market for titanium, because obviously narrow bodies are really more aluminum and metallic, other metal-based. It wasn't terrible. We've also been facing, for some time, in the case of Lockheed, that they've been burning off inventory now for almost two years, where they had higher amounts of titanium bulkheads in particular, and that continues into 2024, but hopefully by the back end of the year, that will be over. We had that, and then we had the spike of requirements because we had contracted to take up some of the VSMPO or former VSMPO share from Russia as a result of the sanctions. We had a difficult time during 2023, and I did call it out after the Q2 earnings that we'd face planted, and it wasn't pretty. It wasn't a disaster, but it wasn't pretty. So it's been getting better. I think our exit rate was in the 13.5% range, so getting back close to our prior peak, but that doesn't necessarily satisfy me. I do think there's the opportunity to take that business to a higher margin rate in the future. And I'm hopeful that as we go through 2024, as wide body comes back, as the burn off of the remaining F-35 inventory sitting in, I'll say Fort Worth, comes about, and then us getting more efficient, and maybe making some additional titanium requirements that are there, is that it gets better. I'm not willing to invest in that business in terms of fundamental new capital to take on the titanium share. And it's a matter of where we allocate, and we're firm believers in how we allocate capital to those areas of the high returns. And for me, while I've said that the increasing investments that we would make, which would take our CapEx in 2024 to above depreciation, and it would be elevated, you know, again in 2025, but we're still not gonna cause us to miss, you know, ±90% conversion of net income. I don't intend to invest in the titanium business because of geopolitical risk, essentially. And I mean, it's difficult to know what the shape of, let's say, the future American administration might be, but it could also be possible that we could be friends with Russia again, and therefore, sanctions fall away. And with the low-cost production that they have, it would render useless any investments that we would make. So I would not do it on a risk basis, and also, we've got better choices of where we deploy capital. So I'm willing to invest, and we've taken some business on, but I'm also not rushing out to even over-invest. It takes a lot of working capital, this titanium, more so than fixed capital. I'm not necessarily willing to go out there and rush and try to gain, you know, huge swaths of market share because, like, why would I do that, you know, when I can earn a, you know, double that level of return on profitability elsewhere in, in the business, which is far more defensible, far more taken protected by a technology moat, and, we just don't need to. So fill up what we've got... try to make it better than we do today, but don't go out of our way to, to chase the market. Okay. Pricing, the opportunity there, both this year and maybe in 2025. I think last year, your price, you know, your net price, came in, you know, the upside was the highest we've seen thus far. Yeah. Talk about, you know, the opportunity from here, how far you're through everything with regard to 2024 and 2025. Okay. So 2024 was a fairly healthy year for us. It was, you know, we saw that we were striding along well during the course of the year. I mean, it's, it's always easy to look at year buckets rather than quarters, because if you take our first quarter, it's always our lowest one. Some of which is down to, we haven't necessarily finished off all the negotiations for the 1st January, and sometimes there are a few which are not on the calendar year. And then thirdly, in certain cases where if we are in arrears and the things have been ordered in the previous year, in certain cases, and when we conclude our revised commercial arrangements on the LTA, then our customer is saying, you know, we really should supply those at the pre, you know, price increase condition. So that's why it's not even throughout the year, for all of those different reasons. Having said that, it was a very healthy year. It was the first time we broke the $100 million barrier, and it wasn't the largest book of renewal compared to, for example, 2021, the predecessor, I'll say, biggest year. At the moment, I commented on the earnings call that we saw 2024 to be of a similar order as 2023, you know, plus or minus. It could be a little bit below, could be a little bit above, so it's in that zip code. And we were actually slightly further ahead of completion, about 90% complete, of what we thought for 2024. So we feel in good order there in terms of being able to, you know, stand up to the approximate guide I've given, and beginning to turn our minds now to 2025. 2025 and 2026 for those renewals. Wanted to ask about Fastener profitability in the Fastener business. You know, the margin trajectory has improved there. You replaced leadership, I think it was close to a year ago. Whereas Engine, you know, the Engines business is well above pre-pandemic levels, despite revenue still being below. Fastener margins are, yeah, the revenue, of course, is below, but the margins are still well below. What is going on with that business? Are you pleased with the progress that we've seen recently? Do you still think that business has—you know, is capable of generating margins above prior peak levels? I think prior peak was 27%-28%. Yeah. So that gives you the mark there. 2019, it also had a different mix. I mean, that was the years where we were seeing 787s at 13 or 14 a month, and, use that as a proxy for, other composite-based widebody aircraft. And, you know, we've came all the way down because of the cessation of build when Boeing stopped production of the 787 after their quality difficulties on that aircraft. And so just over a year ago, essentially, we were just at, I think, the low point, because it was all essentially metallic-based fasteners, which don't have the value-added content in the same way that, they, they are for the, a composite-based aircraft. Where you're creating, as I've said in the past, the Faraday cage for, let's say, the lightning transmission around the aircraft. So nothing is exactly comparable, but certainly as widebody begins to improve, we will see the mix benefit of that as it comes back. So that's a good vector. But even when we're running around that, I'll say 20% range plus or minus, I didn't feel as though we were making the progress that we should in terms of, let's call it manufacturing excellence, productivity. Nor were we necessarily behaving as well as we could in terms of our commercial arrangements. Maybe we were a bit getting a bit. We weren't focused enough, so that made me wanna change the leadership. So 20% isn't shabby, shouldn't be, it's not too shabby, but at the same time, I think it left a lot of money on the table, and we did change management. And I've been really pleased with the step up and the focus and the momentum that we've seen in recent quarters there. And so today, I think it comes of getting, let's say, those performance characteristics right in the business. Plus, I think we're beginning to see a little bit of benefit on the mix side, so it comes together. You know, maybe a bit of hard work and a bit of luck does a lot for you. And so it's nice to have got back to just above 22% returns in the last quarter. So you roll it all together from a, from a margin perspective. You- sounds like you're still talking about, you know, there's some upside on structures, there's upside on fasteners, engines performing very well. I think, you know, you've kind of framed the business as a 30%, you know, incremental margin business, ±5%. I guess, you know, margins for the company have kind of been in this, you know, similar range for a couple of years now. You still see the potential for this to, you know, the business as a whole, to kind of break out and maybe generate better than, you know, 30% incremental margins on a go-forward basis? I've never used the word breakout. I do know that we've done a lot of really good things in the last couple of years. And optically, that's been masked by the subjective inflation. And, you know, we saw, let's say, I think 2022, just after the Ukraine war started, metals cost us probably $250 million, give or take, in that year. Add on to that, a lot of non-metals inflation. So, I think freight rates, utilities, everything you can imagine, and you saw inflation spike in Europe, points up to 12% and maybe 8% or 9% in the US. And so if you add it all together, you know, it's $300 million-$400 million of inflation. And it's really hard to go out there, not only fully recover it, but you can't really make inflation a profit center. You know, if you—the best you can do is a dollar for a dollar, as I say. And that cost us 100 basis points of drag. We didn't go down, but I'm also clear that without inflation, is that would have been up significantly. And we saw the drag again in 2023, and it's only probably 30 or 40 basis points, but so nothing like that. I'm hopeful that in 2024, is that with—I mean, we're seeing the latest metals prices have come down a little bit- Yeah So that's good. Inflation's clearly abating back to, I'll say, the, not the 2% level yet, but getting back at least to the 4% level. So there's a lot of, let's say, some of those headwinds falling away. So that gives me optimism, means I'm not fighting with one hand tied behind our back in terms of margin rates. So, and I might be a little bit more optimistic today, but it's one of those things we've got to wait and see. Yeah. On, cash and what you do with it. Is that you? Well, it's some umbrella for some kidnapped child. I mean, Ken, is it, is it, any of us? I don't think so. Probably can't say. Something else- Now everything's gonna go off. In terms of cash, so you gave a, you know, healthy forecast for cash generation, even with the additional CapEx. You know, last year, you returned about 50% of cash, you know, between dividend and buyback, but you had a lot to do with, with on, on the debt side of things. You don't have that this year. So does that cash return step up materially this year, or do you have a target in mind? Do you target, you know- Yeah ... returning 70, 80%, 100% of- I'm very clear that there's nothing else we absolutely need to do on the debt side. Let me just say, we won't do something. So for us, it's unlikely that we would refinance the remaining $200 million stub of the 2024 bonds. You can't really do an effective bond offering for that modest amount of money. So unless we were to wrap that in with refinancing 2025's, it's more likely we'll pay it off. Unless we see the Fed moves well and the 10-year yield curve comes down, and we have an opportunity. But more likely than not, I'm sensing that, you know, that would be more like towards the end of the year, but you never know. And so at the most, we'd pay that off. That'd be a couple of 100 million. Last year, I think, the blend was, like, $70 million of dividends, plus maybe $250 million of share buyback and $475 million-$500 million of debt pay down. So it's a lot of money, you know, for $800 million, I think. But this year, I do see it flipping around, so the worst case, it would be a couple of 100 million for debt, and you could assume that the share buyback and the debt would flip over, so closer to, you know, $400-$500 million maybe of share buyback. And it's possible we may tick the dividend up. That's a decision we've got to make later in the year. But all of those things, I think are more likely the way that 2024 shapes out. I think we return, my view, all the money to shareholders, because whether it's us paying down debt or buying shares back, you know, the effect is an earnings per share increase, and, you know, shareholders benefit. So I don't know if I would differentiate quite the same way that you do. I think we, you know, generated $680 million of cash last year, and we paid back or paid out to our shareholders through debt repayment or buyback and dividends, $800 million. Yeah. So it's more than 100%. I'm a generous sort of guy. And there's nothing in your EPS guidance for what you do with the cash. That's kind of all to come. Yeah, more or less. I mean, I think we anticipated one move on something, but it's not, you know, it's not worth a lot- Yeah. - to talk about it. Do we have the audience response system that we can pull up? All right. It's your chance to weigh in here. So do you currently own the stock? We'll run through these pretty quickly here. My answer is number one, showing my answer. I've heard you own a little bit. All right, next question. What is your general bias towards the stock right now? Yeah, you got that one right. Yeah, no wonder. I was a one as well. Next question, please. Through-cycle EPS growth for Howmet? Well, that's easy. Yeah, I know the, I know the answer to this. We've been, I think we've done, like, five years of compounding at about over 30%. 34, yeah. And that's gonna accelerate on all the share gains, right? I don't know about that, but yeah. All right, next question, please.