Barbie or something like that. She's crazy. You only knew what he was referring to. Good morning, everyone. My name is Sheila Kayallo with the Jefferies Aerospace and Defense Equity Research Team. So thank you, Haumet, for being here. John Plant, in case you don't know, chairman and CEO. Ken Jacoby, who's over there sitting shyly, who's EVP and CFO and PT who keeps us at bay when we're out of control. So thank you, John, for being here. John, you've done a fabulous job when it comes to Helmet. There's one interesting contrast in the second quarter results where many suppliers, including yourselves, saw an inventory destocking, but Helmet's commercial OE business still grew low single digits unlike many. So in large part because of the actions you've taken over the past year, are you seeing any sense of shift from your OEM customers? And how do you think you're keeping, how are you thinking about supply chain levels and production? Okay. So I think you start off with where did we see the destocking, occur and that really was a continuing theme from the first quarter where I think Boeing were trying to slim their balance sheet, understandably so given the fact that maybe for the last now, maybe two years, they've aspired to build at rate 38 and we're taking part of the I say close to that rate where it was applicable in terms of the ERP system. But if they weren't building, then clearly they'd built up a bank of parts. Post their capital raise, I think they really did want to realize some of that inventory into cash. Think that's where the destocking originates from. Then the question is what's the duration of that relative to the increase in their build because now they seem to be achieving a more consistent picture and indeed seem to be rolling out at their stated rate 38 in the last couple of months. It's good, especially with statements about wanting to see that increase. I guess it's a balancing act between consistent rate production, potentially increasing their rates and more as I see it taking away some of the safety net they've had by way of parts availability from their own inventory, I assume on the assumption that the supply base is in a much stronger position to produce consistently given the comments that have been made over the last couple of years about the supply chain and the supply chain causing them difficulties of building. It's quite an interesting, I'll say, balance between all of that. And my expectation is given the rate aspiration should the FAA agree, any destocking will be over with fairly soon. I think it's safe to call you conservative. You start out these, the guidance for the year with OEM production rates, for the seven thirty seven thirty three for the year, a three fifty a three twenty in the fifties, both a three fifty and seven eighty seven around per month. I think it's safe to say the narrow bodies are doing better than that just given what we've seen in the August delivery numbers. So I guess how do you think about your confidence in the sustainability of those rates and future rates from Boeing and Airbus? And where do you rank your confidence across those four platforms as we head into the second half of this year and into '26? Yes. I think I went quite giddy at the second quarter call and said rate 33. I think I was lower than that in the first quarter. So I feel as though it's easy to get bit by being too optimistic about where rates of production are going to be. And we always have to consider what's the aspirational rate compared to where you think it will land. And then also, are we able to respond by way of our own inventory, the inventory which is at the customer? And also then the capacity we have available both for machine tool capacity and also labor training. And so providing that we've got all of that in good order, then there's been no rate that any of our customers have aspired to achieve that we haven't been able to be able to meet. And so, any claims of shortage, I have been very firm about rejecting, any such statements on that basis. Do you want to give confidence levels, rank, the order of the platforms? Confidence in meeting rate? Meeting rate and growing rate into 26. I feel really positive that rates are more likely to increase now than I have in the recent past. I think the noise about supply chain for the most part is behind us, whether that noise historically was justified or not. But right now, do I think that whether it's Airbus narrow body or Boeing narrow body, I think both of them are more likely to increase in '26 than not. Similarly on wide body, think we've been in this long period of where there's been aspiration to increase wide body build and it hasn't really happened for a variety of reasons, But now I do feel as though we're on the cusp of seeing some rate increases. It's always going to be one off degree, so does Boeing get to rate seven consistently, then does it go up further in the year on the seven eighty seven or on the Airbus A350? Are they, say, fuselage supply issues that they've had from Spirit Aerospace, do those begin to ease given the fact they had had teams of people from Airbus in those operations for some time now. So I I think it does. I think it gets better. So, you know, I I suspect that when we do give some possibly in November, some initial thoughts about 2026 or when we more likely give a more accurate guide in February next year, If you ask me, you know, what's my expectation? I I feel as though we're going to be seeing a growth picture for next year. Now will it be as much as you want, Sheila? I want a lot, so The problem is you always want so much. It's insatiable demand and expectations are very high. As you say, I tend to want to walk on this earth first before being in the clouds with you. Okay. Sounds good. Let's talk spheres. So total aero defense, IGT spheres represented about 11% of your sales back in 2019. Now you're up to 20% of sales. That's because the business has grown, I think, 40% in the first half. So how do you think about the growth for the remainder of the year and what's driving it? I think the conditions underlying for spares are healthy for HAMET. I'd start with the, let's say, generation of aircraft using the CFM56 engines or the VM2500 engines. It's no secret that the fleet is working harder and that's really a function of the inability for the airframe manufacturers to produce the I'll say the production levels they really wanted to produce over the last few years. And so we've had sustained underbuilding and therefore an extraordinary backlog has now developed, but the existing fleet has to work harder. And so I think the overhauls which are being done for those aircraft and engines when come in to the MRO shops is being done at a deeper level because I think the expectation is they're going to have to continue to work harder over the next few years than they previously anticipated. I think it's a longer and deeper overhaul because of the expected duration of those aircraft into the future because I think the aircraft production achievement next year and the year after, we're still going to be below the demand input. When you've got that condition, it's really healthy for the spares business. If you use CFM as a proxy for that discussion, previously people used to talk about it peaking in 2024 or 2025 and a year or so or maybe two years ago saying, I think it's more likely could be 2028. And I think now everybody is coalescing around volumes are going to continue to increase through 2028 and then degrade very slowly from that point. But meanwhile, all the, I'll say, more modern engines, given the achieved duty cycles of those engines, those are coming in more frequently for spares and turbine blade replacements. So the LEAP engines or the Geared Turbofan engines, we're all familiar with both the longer term outlook providing fundamental secular growth because of the temperatures and pressures those engines are facing. And then beyond all of that is that we're in this, call it the bubble for the next two or three years whereby the amount of change from the generation one turbine blades is going to be very high because of the lower duty cycles that had been achieved compared to that which had been I think, anticipated. I think at its most egregious in some of the countries where the pollution levels are high, those frequency of shop visits have caused one airline that ceased to exist because there's so many airplanes on the ground. Demand is going to be high and the replacement of the fleet, when, for example, the geared turbofan advantage engine, parts become, I'll say, available next year, then it's gonna be an interesting few years between that which is supplied to OE and that which goes to service and the retrofit of the fleet. You know what? I just realized that when I first started covering Helmet, I thought about the aerospace spares business as somewhat random, but we really should have been modeling it like we do for a CFM shop visit, and the content increases as you get into the leaps. Is that a fair comment to make? I think it is because the story isn't just about the backlog of, say, of aircraft. It isn't just about I the, will say, lesser duty cycles that have been achieved. It's also the story of content increase as you improve those turbo blades for additional durability and then the retrofit of the fleet. Then you'd play it all again in the defense area as well, so you'd look after look at f 35. It looks as though the statement I made a couple of years ago that I thought 2025 was going to be the crossover year when we'd actually produce and supply more spare parts than the OE production. Indeed in the first half, that's we can see it's just occurring right now. And so with the increase in the, I'll say, fleet of aircraft, say if there's, I don't know, a 75 or 1,100 f 30 fives out now, they're now by 2,000 and by 2,035, two and forty it's gonna be 3,000 of those aircraft out there, then the spares market will indeed continue to increase and it doesn't increase in linear way because of additional flying hours those aircraft are doing in the shop visits. I'm looking at PT because I'm gonna sneak another question in. Of these three spares businesses you have, IGT included, in commercial and defense, what how do you think about the fastest grower from here? Sorry, PT. I I didn't know that you were restricted on man to follow ups on a single topic. But On the earnings call only, not here. Okay. No. I think it's it's free form here. Anything goes. Definitely, IGT has seen a really strong start to the year because of the the existing fleet running harder just because of the fundamental electricity demand that's and requirements are going on. Meanwhile, there's not been sufficient ability to build new turbines because they they you can't just materialize that capacity out of thin air. So everybody's building the capacity for new turbines, but the fleet's working harder, so spares have also been really strong there. It's so difficult to handicap. At the moment, I'd give it in terms of percentages, I'd still give commercial aero over the next two years the edge on the spares growth. So I suppose the only thing you can take from that is 2026, I think the spares growth will be continued to be high and positive. Great. Let's turn to the, on the high pressure engine products. You can't ship them fast enough, and there was some talk last year that you were the bottleneck. But you went out of your way, made some charts, showed us your output, and squared that away. So how do you think about how much how much additional volume can you squeeze out of your existing footprint versus the engine production ramps that we have seen from GE and Pratt and what their goals are? So I think one of the best meetings we had in 2024 was when I wanted to blow away some public statement which had been made explicitly stating that Hamet was a bottleneck because I didn't like it because it wasn't true. I wanted to have Safran, GE, and Airbus in the same room so we'd have one set of data to look at. We could all stare at it and indeed demonstrate that our output was up 40%, 50% in the year. And of course, then how that's allocated by our customer that which goes to spares compared to OE build is their decision and not ours. We were very clear there was enough parts to make any deep amount of OE engines last year. And then I went further in November and said for the new generation of parts, we'd put 500 engine sets, not 500 blades, but engine sets of blades into inventory to to make sure that the position in 2025 was good. So all of that's occurred. Most important has been us building one and a half new plants, a whole new plant in Michigan and I'll call it half of one by way of extension in Kentucky to expand our capacity. And that capacity comes on stream really at the back end of this year and going into 2026. And before then, any increases that we're wringing out of the system in terms of high pressure turbine blades has been more a function this year of yield improvements and also bringing together to the system new tools where if existing tools have been running so hard that they were, I'll say, beginning to decay in terms of performance and to replace them with brand new tools. And so we've put in place some higher degree of new tooling this year to give us the improved yields, which are getting us through this period at the moment before the capacity comes online at the end of the year. A few years ago, you talked about having increased market share by roughly one point per year over four to five years to around 50% of the industry's high pressure blades. If I think back to your technology day back in 2022, there was a case to be made that your quality and tolerance were industry leading. So how do we think about the couple hundreds of millions of aero engine CapEx? And if you could talk about where they are and as you look to improve the industry's durability issues. Okay. I mean, capacity is one part of it of the equation. Technology is another part of the equation and indeed the tools to produce it is another part. So It starts off with think the fundamental position is one where we use proprietary materials to create the cores which allow us to finely tolerance the air passageways inside a turbine blade. We try to move the air going through them at differential speeds such that at certain points there's a higher degree of airflow and other points there's a low degree of airflow. And it's just trying to maintain a consistent temperature profile for the turbine blades and increasingly keep trying to advance that technology. So next thing we're doing is now to be able to profile whole shapes such that we allow the molecules of air to follow curvatures in the surfaces. And so it's getting pretty advanced to be able to do that and to be able to bring those developments to market, then the materials control has to be done at an extreme level. And to enable that to happen, we have to have a degree of automation because it is not really possible for human beings to consistently be able to operate at those levels of fine tolerances and positions or even to assemble the parts which consistently produce the yields that we need to make the industry be able to work. And so there's a lot that goes into that. And clearly, we're trying to move the goalpost at each point. So when we bring this new plant on stream later this year, I think the degree of technology and automation that we have will be at another level than we did in the last generation, generation, which was only five years ago in 2020 when we brought that to existence, which again was I think at an industry leading level. We're sort of moving it again with a level of ability, which means that some of the parts that we'll be making in 2026 really taking the levels of sophistication from some of the military technologies and making them at, at the sort of volumes that we have in commercial aerospace, which I think will be an extraordinary achievement. Can we talk about engine expansion a little bit? This is one of my favorite topics. So you have two facilities that I think first, aerospace comes on by year end, the second one, six months later, and then to IGT in late twenty six and early twenty seven. You've hired 4,000 people since 2022 in engines. They're making scrap right now and learning on some of them are. I love the way you give head I I I love the way you give headcount per per quarter. So I guess how do you think about how much more hiring is needed? And can you talk about the CapEx that's coming online and how we think about the profitability associated with that? Yes. I think the rates of increase of headcount, I'm hoping to slow it in the second half of this year to allow the labor we have hired to, I'll say, to achieve maturity and to get ready for real production. I mean but then if things work out to the way I like, and of course, what the way I'd like and what they actually do is gonna be quite different, then my my thought is that next year, we'll be have to start hiring again and at a higher rate than we have in second half of this year just because of the build out of all that we're doing at the moment. So it actually it's between new plants and extensions. It's actually five building envelopes that we're doing at the moment, which is a lot to do that in addition to all the facilitation and equipment installation. So, you know, we're under a lot of, I'll say, you know, maybe it's stress, although I I don't You don't feel stressed. I don't I don't I don't particularly feel stressed, but it you know, I guess somewhere between us or we're all just a little bit stressed, overworked. I didn't say underpaid just in case you went there. No worries. But it's it's just what we need to do, and and the the exciting part about it really is among I I see the level of capital that we need to deploy in '26 to be a a similar level to 2025. And if you think about it, given that's well above depreciation, while still trying to keep face with the metric we said over the long term, we would like to achieve a 90% conversion of net income into cash flow. And so far, we've done it for the last five years, but we're slightly ahead. And for me, the opportunity to invest in the business is really good because organic growth is by far better in terms of the return on capital that we get for it. It's better than buying our own stock back. It's better than acquisitive growth. At the same time, we are and we do buy our own stock back because, again, it is return positive for us. And then we also look at the opportunity for expanding acquisitively as as well. So it's an exciting time for Hamet with all of this going on. But right now, '26 is looking to be a significant investment year, and, you know, I'm not able to frame 2027 yet. And I suppose to some degree it's gonna depend upon successful or not. I don't know. I think that the demand appears to be there and it's increasingly solidifying. We saw one of our customers this week in Mitsubishi reference a higher growth rate for their IGT turbines. But this is not just a game for the large gas turbines for utilities. It's also the mid range turbines for a lot of freestanding energy provision in data centers. The traditional aero derivatives seeing increased demand and the new, I'll say, mid sized turbines up to 40 megawatts are also seeing extraordinary demand and new technologies being brought to bear, which again is helpful to us because we're moving from to more sophisticated aero style turbine blades, which again plays to our strength of technology and tolerance control. On the engine expansion, the two new facilities that you have coming online, are they expansions of existing ones? And I think you missed the profitability part of my question. As they come online, do we If I missed it, it's probably deliberate. Yeah. But You went right to IGT. Did I? You know? Yeah. That was smooth, wasn't it? But but you you gotta remember, Sheila bites your legs so she never misses when I tried tried to skate. So first of all, the the one plant, which is a whole new plant, is is is on a campus that we have where we had the existing land and we we sort of built a new large 100,000 square foot plus facility there. And they they they want an expansion in Kentucky. Those really go to the aerospace parts, I'll say, increases. We also just facilitated a whole new tooling plant as well. So we've just doubled our capacity for because we produce all of our own tools for all of this as well, and we've had to basically just double the capacity. So that's also been facilitated. It's coming on stream now in toolmakers hired, etcetera, etcetera. So we're doing a lot. And did you forget about profitability by now? Nope. No. So I thought maybe I talked so long that you you forgotten that point. So do I expect you to be profitable? Yes. No. I know you would. But how do you think about it relative to the segment, I guess? The gas turbine segment, whether it's for the large gas turbines or for the midsize and the midsize being much closer to an aerospace type of turbine, they're all very similar in terms of profitability. We're agnostic in terms of deployment of capital to the opportunity. It all comes down to the security of the backlog, the duration of it and what do we see disturbing that and also come to the right commercial arrangements that as we capacitize that we feel as though we're not going to be left holding the bag should the expectation for volume not materialize. Okay. I'll let you off the hook. Out you Did I not answer the question that You sort of did, but turns out you're not a one trick pony. It's not all about engines. You got fasteners and structures that are also doing well. See, I know. I tried to get it in, ponies, horses. Fasteners are running at about 30% margins despite the lack of wide bodies coming in. So and you've had, new leadership in both segments. So can you unpack the drivers within fasteners and structures? I think volume, of course, is always beneficial and innately volume can always cover up a lot of rocks. But volume has been helpful to us in certainly in our faster business, probably more so than in our structures business. But with a combination of volume and operations improvements, commercial improvements not really mix at this point, then I feel as though all of those things have come together. Just to peel the onion off a little bit more, it isn't also just mix between narrow body and wide body. In the last year or two, it's also been mixed inside the narrow body segments. So where we're doing fitments of more one-sided fasteners and now we're introducing to the market automated assembly of those into aircraft, then that has also been helpful because, again, we're trying to move the technology in our fastener business as well. So lots of things coming to bear. If anything, the improvements in profitability have exceeded my expectations. I think it's been a very solid, strong performance from our fastener team. The only other strand which probably hasn't been talked about enough is that four years ago, we also created our own distribution arm and created a management team around it. And the growth of that has been really strong. And there, we're making the full manufacturing margin plus the distribution margin on top. And so that's also been very helpful as that business has grown. So that which started out as a concept in 2021 has really blossomed into a strong segment of the Faster business. Terms of structures, it's a little bit different flavor because it wasn't just the growth of the business. There has been a little bit. But because that business faces off to more defense, which you're suffering under the over inventory position at Lockheed for the F-thirty five, plus the, I'll say, dearth of wide body build. So it wasn't going to see the same volume strength behind it, but it's one more of thrifting out the less good operations. So we took the opportunity to close down a manufacturing plant in Europe. We sold one in Europe and we rationalized another one in The U. S. And so there's been a little bit more restructuring in our segments to, I'll say, to take away the bad bits. Maybe when we took away and sold off seven businesses in 2019, we missed a couple of small ones we should have really stepped up to. Or we thought we could, but we didn't. And so the answer was we stepped up and said, that's it. It doesn't it's not going to earn its place in the Hammett portfolio, so we dealt with it. And so cutting off some of the bad can be also beneficial to the performance and growth of the the of the whole entity. And that makes sense. I got two minutes to go and 10 questions. So I think I have to pick one. Gotta give Ken credit for the balance sheet and the free cash flow conversion. So what I really wanna ask, I'll ask after this webcast ends. But so I wanna ask about margins because I think people just think you get margins naturally. But what inning do you think you are in terms of labor productivity, the automation? Because Whitehall was the best facility I've ever seen, and you didn't let us take pictures or take notes really. So thanks, PT, for that. But I I I remember it. So where do you think you are in automation and pricing strategy? Well, certainly, I I I never really talk to margins because, what's our job? Our job is to obviously try to make more, whether it's more product or gain more market share or to be able to step up to instant demand. But we don't control so much in the industry. It's always, I think, foolish to give margin predictions. I think all the vectors we can talk to. What degree of capacitization are we short or where's the technology leading us? Think all of those things are positive for us, which we've already touched on. Try to steer away from that margin question and just to say, where are we? We're still working at it, still trying to improve. And the only thing which I know we're not doing sufficient of now compared to where we were a couple of years ago is on the automation front. While we're facilitating these five new entities, clearly what we're bringing in is at a new level. Therefore, it will raise the overall average for the company, but there are still opportunities which we know we're not addressing because our first priority, job one is to try to meet market demand. And meeting that is going to be far and more important than having the market share is more important. And then there's there's nothing wrong with us in 2027 or 2028 going back and sweeping up anything we know we've left on the table by of automation opportunities. But at the same time, you know, would I like to do both? Well, of course. But, again, I wanna prioritize because doing everything sometimes means you're not successful. I always try to pick the few and try to make sure we're successful with a few. And if we do that, then we're gonna have a good company. Great. Well, thanks, John. I think you have a good company. Thank you. Sounds good. Nice to see you all. Thanks, everybody.