Good day, and welcome to the Moog Q1 FY 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the call over to Ann Luhr. Please go ahead. Good morning. Before we begin, we call your attention to the fact we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of January 28, 2022, our most recent Form 8-K, filed on January 28, 2022, and in certain of our other public filings with the SEC. We've provided some financial schedules to help our listeners better follow along with the prepared remarks. For those of you who do not already have a copy of the document, a copy of today's financial presentation is available on our investor relations webcast page via www.moog.com. John? Thanks, Ann Luhr. Good morning. Thanks for joining us. This morning, we report on the Q1 of fiscal 2022 and provide color on what we are thinking for the remainder of the year. Let me start with the key financials. Earnings per share of $1.44 included a $0.33 net gain from our portfolio shaping activities. Adjusted earnings per share of $1.11 were in line with our guidance from last quarter. Omicron made this quarter more challenging than we had projected 90 days ago. It further exacerbated the difficulties associated with labor availability, supply chain constraints, and inflationary pressures. Despite these additional headwinds, we achieved our plan. Adjusted free cash flow in the quarter, excluding the impact of our securitization facility, was $31 million. The conversion ratio of 86% on adjusted net earnings. There's no change to our guidance for the full year. Full year sales will be $3 billion with adjusted earnings per share of $5.50 ± $0.20. Now let me move to the headlines. There were several exciting product announcements since we last reported, including a major production win, a strategic collaboration, and a technology demonstrator. First, we reached agreement on the full order for our RIwP turret for the SHORAD program. Over the last years, we have been working on the initial order for 30 units, including non-recurring developments. The full order for 124 units, including NRE and options, totals almost $250 million in sales and is our largest defense booking ever outside our aircraft business. SHORAD is just the first major win for our reconfigurable turret, and we anticipate further wins in the future. Second, in early January, we formally launched our Moog Construction Initiative with the announcement at the Consumer Electronics Show in Las Vegas of a strategic collaboration with Doosan Bobcat. Moog will supply all the controls and actuation on the world's first all-electric track loader, the T7X. Our controls platform opens the future opportunity to augment the operator's capabilities through automation and eventually full autonomous operation. Bobcat's launch customer is Sunbelt Rentals, who wants to build a fleet of all-electric vehicles. We look forward to getting the first units into the field over the next few months. Converting professional equipment from diesel and hydraulics to electrics is a significant challenge, the type of challenge our company has solved in other industries in the past. The electric construction vehicle market is in its infancy and autonomous vehicle operation is still experimental. However, the longer-term market potential for Moog is enormous. Third, Moog Harbor played a critical role in the DARPA GREMINS program this quarter. In early October, the military ran a successful test to recover an unmanned air vehicle into a conventional airplane. Moog provided flight controls technology for both the air vehicle and the recovery system, demonstrating again our capability to solve our customers' most challenging technical problems. These programs demonstrate our commitment to organic investments that fuel long-term growth. Over the last few years, we've continued to look for strategic acquisitions, but have struggled to justify the price levels that others are paying. We've therefore decided to double down on internal investments that will create significant long-term value. These investments come in two categories. First, investments in new markets, products, and technology to drive the top line. We've already described some of our growth investments, including our RIwP turret, which is now in full production, our space vehicles, which are starting to ramp production, and our construction equipment initiative, which is in the pre-production phase. Second, investments in infrastructure, facilities, advanced manufacturing systems, and portfolio shaping to build a platform for longer term growth at higher margins. Note that our forecast for fiscal 2022 already includes these investments. Now let me move to the details, starting with the Q1 results. Sales in the quarter of $724 million were 6% higher than last year. Sales were up in each of our three operating groups with particular strength in the commercial aircraft and space markets. Taking a look at the P&L, our gross margin was down on operational inefficiencies attributable to the pandemic. R&D is in line with last year. Selling and admin expenses are up on increased customer interactions, but in line with our plan for the year. Interest was slightly lower on lower debt levels. This quarter includes the benefit from the sale of our navigation aids business. The effective tax rate was 24.7%, resulting in net income of $46 million and earnings per share of $1.44. Excluding the impact of our portfolio actions in the quarter, adjusted net income was $36 million and adjusted earnings per share were $1.11. FY 2022 outlook. Our Q1 was in line with our guidance from 90 days ago. We anticipated a slow start to the year with increasing sales and earnings as we move through the quarters. Our outlook remains unchanged and therefore we are affirming our full-year guidance of $3 billion in sales, up 6% from last year, and adjusted earnings per share of $5.50 ± $0.20. Now to the segments. I'd remind our listeners that we provided a supplemental data package hosted on our webcast site, which provides all the detailed numbers for your models. We suggest you follow this in parallel with the text. Starting with our Aircraft Group. The underlying market dynamics in our aircraft business were somewhat mixed this last quarter. Global political tensions with Russia and China continue to mount and there's strong support for defense spending across both sides of the aisle. On the other hand, the continuing resolution and a slower level of activity in the military aftermarket are causes for caution. The recovery in the commercial aircraft markets was partially interrupted this quarter by the Omicron variant, but should resume as the virus wanes. China flew the 737 MAX, which hopefully means a return to full service sometime in the near future. However, less positive is the fact that the 787 continues to have challenges and deliveries to airlines are not forecasted to resume for several more months. Aircraft Q1 sales in the quarter of $303 million were 6% higher than last year. This quarter, the commercial sales were way up with military sales down from a year ago. We saw strong growth in both the commercial OEM and commercial aftermarket portfolios. On the OEM side, we experienced higher sales across most of our portfolio of programs. We had particular strength on the A350 and in business jets. The 787 was also up from a year ago. We had $3 million of additional sales from our Genesys Aerosystems acquisition, which we completed in the last month of Q1 last year. Growth in the commercial aftermarket was driven primarily by the 787, with more modest sales increases on the A350 and in our business jets portfolio. On the military side, we saw decreases in both the OEM book and in the aftermarket. OEM sales on the F-35 were down over 20% as a result of supply chain challenges. In addition, we saw sharply lower sales on some foreign military programs as a result of timing issues. Partially compensating for these reductions were increases in our helicopter product line, higher funded development and additional sales from Genesys Aerosystems. In the military aftermarket, we saw decreases across much of the portfolio, with the exception of the V-22. As part of our wider portfolio shaping program, we completed the divestiture of our NAVAIDS business in the Q1. We received $39 million in cash and booked a gain of $16 million on the sale. This gain contributed over 500 basis points of operating margin to the aircraft business in the quarter. Sales of our NAVAIDS business in fiscal 2021 were $25 million. Aircraft margins, excluding the gain from the sale of the NAVAIDS business, adjusted margins in the quarter were 8.5%. These margins were ahead of our average for fiscal 2021. However, they were down from the same quarter a year ago. Last year, you may remember we had a particularly positive mix in the Q1 as a result of unusually strong sales on some of our foreign military programs. Aircraft fiscal 2022. We're keeping our full year sales forecast unchanged from 90 days ago at $1.25 billion, up 7% from fiscal 2021. We're also keeping the mix between military and commercial unchanged. Our full year forecast assumes some acceleration on the military side from the run rate of the Q1. Easing supply chain bottlenecks on the F-35 and a modest pickup in the military aftermarket will drive the growth. On the commercial side, we're already slightly ahead of our projected run rates coming out of the Q1. We had some favorable timing of material receipts in Q1 which drove the beat. We anticipate this will level out over the coming three quarters. As we go through the remainder of the year, we anticipate margins will strengthen to yield full year adjusted margins of 10.1%, unchanged from our forecast of 90 days ago. Turning now to Space and Defense. Underlying demand for our legacy components across both the Space and Defense markets remains strong. Global investment in space, both commercial and military, continues to create opportunities for growth in our business. In particular, our growth is being fueled by our newer, more integrated product offerings in both markets, the vehicles for space and the reconfigurable turrets in Defense. Sales in the Q1 of $208 million were 10% higher than last year. This quarter, we enjoyed nice growth in both the Space and Defense portfolios. On the space side, sales were up over 10% on continued growth in our space vehicles product line. Sales in this product line more than doubled to over $20 million in the Q1 this year. Increases in our avionics and legacy valves business made up for lower sales on hypersonic development programs. Several of our hypersonic development programs are winding down. We will now have to wait to see which move to the next stage of early production. On the defense side, the growth was driven by our RIwP turret on the SHORAD program. As I mentioned in my opening, this quarter we agreed the remaining stages of our contract with DRS and celebrated a total program value over several years of almost $250 million. We saw some slowdown in our tactical missile business this quarter, but this was compensated by higher component sales. Over the last few years in both the space and defense markets, we followed a strategy of combining our components into more integrated solutions to address the needs of the end customer, primarily the defense departments. We call this strategy Agile Prime. Our major growth drivers this year, space vehicles and our turret offering, are examples of the success of this strategy. Going forward, we will continue to offer world-class components as a sub-tier supplier to all the major primes. In parallel, we will look to partner with the primes to offer more cost-effective and flexible solutions that address some of the challenges of their customers. Similar to our aircraft business, our portfolio shaping continued in space and defense this quarter. We took a $2 million charge associated with exiting a product line in our security business. Space and defense margins, adjusting for the portfolio shaping charge, were 11% in the quarter. These margins were down from a few years ago for a combination of reasons. First, as in all our businesses, COVID is putting operational pressure on our facilities, both in terms of labor efficiencies as well as supply chain disruption. Second, our new growth sectors of turrets and space vehicles are in the early stages of production and are at lower margins than our more mature businesses. We expect the margins on these new businesses to improve over the coming years. Space and Defense fiscal 2022. There's no change to our forecasted sales for the year. Full year space sales will be $350 million in line with the run rate of the Q1. Full year defense sales will be $530 million, an acceleration from the Q1 as the SHORAD program continues to grow. For the full year, we're keeping our adjusted margin forecast unchanged at 11.5%. Now to industrial systems. The major global economies are showing real strength despite the ongoing pandemic. We see this strength reflected in our industrial bookings. Across every market from cars to materials to electronics, demand is buoyant while the supply chain is struggling to keep up. Capital spending is up, driving strong demand for our automation components. With oil prices firming and flight training on the increase, we're feeling positive about the remainder of our fiscal year. It's too early to tell if the present high level of demand is transitory as a result of constrained supply chains or whether it is stable longer term. Sales in the quarter of $213 million were marginally higher than last year. Sales were up in three of our sub-markets, energy, industrial automation, and sim and test. Sales into medical applications were down from a year ago. Energy sales were up across much of the portfolio as oil prices continued to edge upwards. Industrial automation sales were up, reflecting increasing confidence in the global recovery. Sales into sim and test applications were up as we delivered on some large test programs in China. Sales of flight simulation systems remain muted again this quarter, actually down from a year ago. However, on a more positive note, we are starting to see stronger demand for flight simulation systems as the airline market recovers. Finally, sales into medical applications were down in the quarter as the underlying business continues to settle after the COVID surge. Industrial systems margins in the quarter of 8.1% were down from a year ago, but in line with expectations. This quarter, we incurred moving expenses and production disruption as we continue to refine our footprint and consolidate facilities in both Europe and the U.S. We also increased our investments in future growth sectors, in particular our electric construction vehicle initiative. We're confident that these investments will pay off on both the top line and the bottom line over the coming years. In the shorter term, our strong backlog gives us confidence that the remainder of this fiscal year will see a pickup in both sales and margins. Industrial Systems fiscal 2022. There's no change to our sales forecast from last quarter. For the full year, we anticipate sales of $910 million with an acceleration as we move through the quarters. The risk to meeting this plan will not be on the demand side. We already have the backlog. Our primary concern remains the supply chain's ability to meet this increased level of activity. We're forecasting full-year margins of 9.5%. Summary guidance. Overall, it was a solid quarter in line with our guidance despite the unexpected arrival of the Omicron variant. Business sentiment remains positive across all our markets, while supply challenges are tempering our growth on both the top and bottom lines. It was an exciting quarter for product announcements with the SHORAD production program, the Bobcat strategic collaboration, and the Gremlins technology demonstrator. We continued to generate healthy free cash flow and returned some of that cash to our investors through our dividend and share buyback programs. Growth on the top and bottom lines remains our focus. Our search for strategic acquisitions is ongoing, but the last few years have taught us to be wary of overpaying. In addition, our portfolio review has shown that internal investments have often created more long-term value than some of our acquisitions. As a result, we're accelerating the pace of internal investments this year, both in terms of capital expenditures as well as investments in new market opportunities. We're very excited at the long-term opportunities for our business. Climate change is opening opportunities for us in construction vehicles, and demographic shifts are creating the need for additional automation. The availability of ever lower cost sensors and advanced computing platforms is enabling transformational change. At our core, we are an engineering and technology company. Our greatest strength is working with our customers to solve their most difficult technical challenges. We have both the components technology and the systems integration capability to make things work. Our collaboration with Bobcat came from demonstrating this capability. Within six months of our first conversation, we had a fully operational vehicle. For the Q2, we anticipate earnings per share of $1.30 ± $0.15. Our range is relatively wide again as we remain unsure about the evolution of the virus and the potential impact of vaccine mandates and further supply chain issues on our business. However, these are transitory issues and they will resolve, we believe, over the coming quarters. Our underlying business remains strong and we're very optimistic about the longer term. Now let me pass you to Jennifer, who'll provide more color on our cash flow and balance sheet. Thank you, John. Good morning, everyone. Inflation and interest rates are getting a lot of attention these days. We're feeling the effects of inflation now. We're seeing the economic growth that comes with inflation. It's also impacting the cost of labor and purchased materials. With the Fed likely to hike interest rates soon, when we see the tapering effects of inflation, we can expect higher interest costs. Since we're not highly levered, we are well positioned to take advantage of acquisition opportunities should prices moderate. Workforce mobility and labor shortages are also affecting us both directly and through the supply chain. It's an interesting backdrop for everyone these days. Moving to Moog-specific activity, we just announced a 4% increase in our dividend to $0.26 per share for our upcoming quarterly dividend payment. This quarter, we also amended our securitization facility. This facility provides us with lower interest costs compared to those that we would incur with borrowings under our revolving credit facility. We essentially sell receivables of up to $100 million on the amended securitization facility, such that those receivables are derecognized from our balance sheet. This new structure reduces our working capital and debt levels. To provide a comparable look at our cash generation and financial position with previous periods, I'll first share free cash flow, net working capital metrics, and debt balances without the benefit of the new securitization facility. I'll also include the metrics as calculated off of our financial statements near the end of my comments for your reference. Free cash flow continues to be a good story. We average 100% free cash flow conversion since the beginning of last year. In our Q1 this year, free cash flow was $31 million, or 86% conversion on adjusted net earnings. Customer advances were particularly strong driven by large advances on military programs. In addition, we continue to see inventories as a source of cash. The $31 million of free cash flow in Q1 compares with a $44 million decrease in our net debt. During the Q1, we received $39 million of proceeds from the sale of the navigation aids business. Partially offsetting these proceeds were $13 million of share repurchases and $8 million for the quarterly dividend payment. Net working capital, excluding cash and debt, also showed nice improvement this quarter. As a percentage of sales, net working capital was 27.6% at the end of the Q1, down from 29.1% a quarter ago. Cash advances from defense customers were very strong and drove this improvement. Partially offsetting this was the growth in receivables. Capital expenditures in the Q1 were $37 million, in line with our spend over the past couple of quarters. We're recapitalizing for next-generation manufacturing capabilities that will provide us with a strong platform for growth. We're also consolidating some of our operations into new facilities. We're in a solid financial position to comfortably be making these investments. At quarter end, our net debt was $759 million, including $107 million of cash. The major components of our debt were $500 million of senior notes and $272 million of borrowings on our U.S. revolving credit facilities, as well as $90 million associated with the securitization facility that does not show up on our balance sheet. We have $797 million of unused borrowing capacity on our U.S. revolving credit facility. Our ability to draw on the unused balance is limited by our leverage covenant, which is a maximum of 4.0 times on a net debt basis. Based on our leverage, we could have incurred an additional $635 million of net debt as of the end of our Q1. We are confident that our existing facilities provide us with the flexibility to invest in our future. We're in good shape from a leverage perspective. Our leverage ratio was 2.2 times on a net debt basis as of the end of the Q1, compared to 2.6 times a year ago. Strong cash generation drove this improvement. Our target zone is between 2.25x and 2.75x, so we're just below that. We're comfortable with our leverage falling below that range for a few quarters or even a year. We have the full spectrum of options available to us for capital deployment. Currently, we're very focused on internal investments that will serve to provide growth opportunities as well as efficiency gains. We continue to explore acquisition targets while remaining disciplined on pricing that's still generally quite high. In addition, we may return capital to shareholders by buying back shares. We also have our dividend policy in place. Shifting to global retirement plan, cash contributions totaled $16 million in the quarter, compared to $13 million in the Q1 of 2021. Contributions have increased for our defined contribution plan as participation grows in our U.S. plan. Global retirement plan expense in the Q1 was $21 million, up from $18 million in the Q1 of 2021, also driven by our defined contribution plan. Our effective tax rate was 24.7% in the Q1 compared to 24.9% in the same period a year ago. Adjusting for divestiture activities, our effective tax rate was 24.0% in the Q1. The lower effective tax rate this quarter was largely the result of a more favorable earnings mix. We expect free cash flow conversion in 2022 to be about 45% on adjusted net earnings. Customer advances and inventories will be sources of cash, while receivables and payables will be uses of cash. We expect $160 million of capital expenditures in 2022, with a slight uptick in spend from our Q1 spending level. Capital expenditures reflect investments in facilities and infrastructure to support future growth and operational improvements in the business. Depreciation and amortization are forecast to be $97 million. While free cash flow moderates this year, we're also generating cash through our portfolio reshaping activities such as cash generated from the sale of the NAVAIDS business this past quarter. Before I wrap up, I'd like to share some of the metrics and amounts you'll be able to calculate from our financial statements. These reflect US GAAP accounting for the securitization facility. Free cash flow in the quarter was $120 million and is projected to be $179 million for the year, which is about 100% conversion on adjusted net earnings. Net working capital was 24.5% of sales at the end of the quarter, and net debt was $669 million. In summary, our financial position is strong. We're generating cash to fund investment that will provide for our long-term sales growth and margin objective. We remain optimistic in our future. With that, we'll turn it back to John for any questions you may have. Thanks, Jennifer. Genevieve, we would be happy to take questions now from some of our listeners, please. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will take our first question from Kristine Liwag with Morgan Stanley. Please go ahead. Morning, Kristine. Good morning, everyone. Hey, how are you guys doing? We were doing better last week before the Bills lost at a toss of a coin, but we're doing okay. I think Morgan was doing better yesterday too. Just wanted to touch base with you about the F-35. I mean, we've heard some of the primes struggle with the F-35 program with labor constraints. What's the pace of slowdown you're seeing from the program, and how has that affected you, if any, at all? In the quarter, Kristine, we had what I'd call. There is clearly COVID this quarter, you know, with the Omicron variant, also the vaccine mandates, which created quite a lot of disruption, not that they went through yet, but just unrest. That really put pressure on, I'd say, labor productivity in the quarter, which would've affected the F-35. The bigger issue was we had some idiosyncratic supply chain issues, some specific component-related issues that we were struggling with this quarter that we anticipate will recover as we go through the next few quarters. For the full year though, our sales on the F-35 will be down about 10% from what we saw in 2021 and kind of in line with what we saw in 2020. That's kind of, you know, we saw that ramp up into 2021, and we're back down a little bit about 10% from what we saw in 2021 in 2022. That's what, you know, we haven't changed that forecast for the year. We were just a little bit slow out of the gate in the Q1 because of well, obviously the labor issue, but more particularly some particular issues on the supply chain. Thanks. You did that supply chain point, John. Can you elaborate more on exactly what you're experiencing? What actions you've taken to mitigate the risk? And also going forward, are these things starting to get better or worse? I mean, the problem with the supply chain, Kristine, is it's like it's all over the place. You know, on the F-35, we had some specific issues with a couple of components. Some of our suppliers had some challenges. Keep in mind that our supply chain issue could be reflected as labor availability issue at some of our sub-suppliers. It all kind of ripples through. But it's across a range of components. It's not just electronic components. It can be mechanical components. It can be a whole variety of stuff. One of the things that we're you know struggling with right now is Loctite. Nothing to do with our aircraft business, in one of our other businesses, but we can't get Loctite, you know, glue. It's across the board, Kristine, and it's almost impossible to predict what's gonna be the next issue that comes up. In terms of mitigating against it, I mean, you know, when you're in the storm, all you can do is batten down the hatches and do the very best you can to maneuver. What it is, it's putting a significant amount of additional effort into chasing down alternative sources of supply. We can't, of course, and much of the aerospace stuff, you can't get alternative sources of supply, so we're spending a lot of time with our suppliers, working with them directly, trying to solve whatever problems that they may have, looking for, if it's commodity stuff, is there another supplier that we can get that Loctite from? Is there a vendor or a trader that you can get it from? Same as every other company, just spending a lot more time and a lot more efforts doing what a year or two ago would be just placing the PO. It's a drag in terms of efficiency, but there's no you know solving it in the short term. You know, building inventory, which is you know one of the concerns I mentioned on the industrial side, is you get this huge spurt pickup in demand because you know supply is constrained. The question then always remains, is that just, will that unwind as we go forward because people are over-ordering because they can't get the stuff or not? There's no simple solution because if we don't know tomorrow what the new issue will be on the supply chain. It's a continuous fight. You asked the third piece, and I'm trying to remember what your third piece was. I mean, are there any parts that are actually getting better in that work? I mean, well, what happens is, you know, you have an issue with the part, you work it really hard, and that part gets better, and then something else comes up. Is the supply chain entirely getting better? I don't think it's getting better yet. I know on the F-35, you know, the team there would say, "Well, we had these three or four components that were real issues, and we think we've pretty much solved those," so that will get better in the next quarter. That's not to say that something new is not gonna turn up in a different part of the business. I wouldn't say at this stage that it's getting better yet in aggregate. I think that's still to play out. If you think of China's, you know, zero COVID policy and the spread of Omicron, the potential for China to shut down large parts of their supply chain for weeks at a time could further make for difficulties in the future. So it's still a mixed bag, Kristine. We're still in the middle of the storm. It's not better yet. That's one of the cautions I would say about, you know, Q2 and Q3 is these things are very hard to estimate and, you know, they can have a significant impact, which is why we have a much wider range on the quarters at the moment than we would normally have if we had more stable conditions. Thank you, John. Thank you for all the color, and best of luck. Thank you. We will take our next question from Michael Ciarmoli with Truist Securities. Please go ahead. Morning, Michael. Hey, good morning, guys. Morning, guys. Thanks for taking the questions here. Hey, John, just to, you know, not to pick on the margins, I guess. I know obviously, commercial aerospace, everyone's, you know, had a tough go of it. You know, we're certainly seeing some, you know, good expansion across the sector as we come out of this. Can you just give us an update? You know, I guess it was, right, a couple years ago, you kinda, you know, uncovered all the inefficiencies in the aircraft control segment. I think there were, you know, a lot of sort of changes and process improvements and, you know, just a broader kind of operational improvement plan put in place. Can you give us a sense of what's happening there? You know, I mean, obviously, some of the Omicron supply chain inflation probably impacting those potential gains. Maybe just an update on what's kind of been happening in aircraft, sort of under the hood with the overall operations. Yeah. You know, we have continued down that path, Michael. You know, we talked about investing. We're investing more in CapEx, we're investing in more modern equipment, we're investing in new facilities. We continue to invest in improving our operational capability, staffing, talent, et cetera. All of that has continued. But it's completely masked by a 50% or 60% drop in the demand for the commercial side, which, you know, devastated our facility in the Philippines in terms of hourly throughput. We're on a recovery this year, and yet the hours through that facility are down by 50% from what they were in fiscal 2019. You get that type of impact, which is enormous. As you say, you got the labor availability because of COVID, you got the supply chain issues. All of those mask what I would say is underlying improvement. Having said that, we're forecasting margins in the aircraft business to go from 8.3% last year to 10.1% this year. If, you know, commercially continues to strengthen, we should see that increase over the coming years. We are seeing that margin improvement. But it's, as I say, it took a real hit when COVID, you know, came on us. Yeah. I think, I mean, assuming we continue to get, you know, volume recoveries on narrow bodies, you know, certainly wide bodies, I guess, will be challenged. You know, I mean, you guys have been kinda bouncing around at 10% for the past seven or eight years. After you see the volumes come back, you think there's runway to finally kinda- Yep. Break out of that channel, if you would? Absolutely. Although I would caution, Mike, the narrow bodies are a very small part of our business. It really is the wide bodies that drives our business, so. Yes. Yeah, the 737, you know, if they start taking them again at 30 or 40 a month, it'll be a bit of a pickup for us, but it's not like the 787 getting back to 10 a month. Yep. Gotcha. What, just quickly on that 787, I think you said the revenues were up year-over-year. You know, which may be a bit surprising, I guess, just given you know, production's been kinda stalled. What drove the revenues up on the 787 in the quarter? What we've been doing, Michael, you know, a year ago, as you know, 18 months ago, Boeing and Airbus were oscillating up and down dramatically on their production rates. It was kinda month to month, there was a new production schedule, which was typically dropping further and further, you know, with an outlook in six months' time, we're gonna get it back up. Eventually, we got to the point where we said, "Look, we have to just stabilize our production rates at a level that we think will be in line with Boeing's kinda demand over the next 12 months, and then we'd be prepared to move up from there." Our supply chain, we can't go from no deliveries to four deliveries to no deliveries to six deliveries. We can't do that. I mean, it will shut down all of our supply chain. Several quarters ago, we said, "We're just gonna level those in that kinda low to mid single digits for both the A350 and the 787, that we'll make sure that we will absolutely meet Boeing's requirements and Airbus's requirements." It may mean in the short term, as you can imagine, we'll have a little bit of an inventory build and as we go, that will be receivables, and that will be pressure on cash. In terms of keeping the supply chain going, making sure it remains efficient, it's much better to continue at two, three, four every month and have that stable than go from zero to four to zero to five to zero. You know, it's just a much more sensible thing. We settled that down over the last six-nine months. As a result, our 787 sales are reasonably constant on a run rate basis now, and that just happens to be a little bit off from what we did a year ago. It'll oscillate up and down a little bit based on material receipts and stuff, but it should be reasonably stable as we go through the next year. Then hopefully, as Boeing starts to get back into shipping and inching up, we'll inch it up kind of gradually with them, you know, over the following 12 months. Got it. That's helpful. Last one I had, just on the kind of inflationary environment. Can you give us a sense of what you can pass through? You know, if it is, you know, aircraft content to Boeing and Airbus, you know, obviously there's a lot tied up under their master contract agreements. Can you pass through pricing, you know, to, you know, if it is directly to Boeing or if it's up to, you know, you're delivering product to other tier ones? I'm sure you have to eat, you know, some of the costs, whether it might be labor or just consumables or other types of materials you need, you know, around shop floors. What's the general sense on the ability to pass through pricing and you know, what percent, you know, do you think you guys have to eat that might weigh on margins? On the commercial side, there's relatively little opportunity to pass through pricing. Typically, you're engaged in long-term contracts with the OEMs. There is sometimes a CPI clause, but it's not. It's limited at much, much lower levels than, you know, what we're running right now. If you say we're now running 7%. There is- Yeah. Very little opportunity on the commercial side. On the military side, of course, there is an opportunity, but it probably takes 12 months before it filters through. Take the F-35 as an example. You know, the next our contracts for this year were already set, so it's kind of the next negotiation that you have that opportunity to reflect prices. There is clearly longer term, the opportunity on the military side of the business to readjust pricing based on inflationary impacts. As I say, it doesn't happen one quarter to the next. It typically happens over a probably 12 or longer period of time. Then on the industrial side, there is more opportunity there. We have more opportunity to adjust prices there based on inflationary costs. Okay. What about on the aero aftermarket? Is there opportunity to drive price higher? No. Typically, the aero aftermarket is governed by a contract that's based off of the OE prices. It's obviously different pricings, but it's based on the OE pricing levels. It's not independently adjusted. Okay. Got it. I'll jump back in the queue. Thanks, guys. Thanks, Michael. Once again, if you would like to ask your question, please signal by pressing star one. We will take our next question from Cai von Rumohr with Cowen. Please go ahead. Yes, thanks so much. Portfolio shaping, John, maybe walk us through, you know, kind of quickly, you know, any sort of hits you had, where you had them from moving facilities, because you mentioned that was a factor. How much longer is this process? Is this process now done or is there more to do? We took a charge that I mentioned in the text, Cai. It was about a $2 million charge associated with an inventory write-down as we get out of a product line. Right. In our security business. We did not include anything in terms of what I call inefficiency, disruption charges associated with moving. We didn't put in any number for that. But that clearly, you know, impacted us in terms of production output and some margin headwind in the quarter. But we didn't call it out separately because that, we didn't feel that that was appropriate to do that. It is an ongoing process, Cai. I mean, I guess to some extent you'd say, you know, you wanna be doing this all the time. It'll be an ongoing process, I would say, that we, you know, that we've already identified over this year and next year, where we continue to look at pieces of the business. From the time, if you decide that there's a piece of business that we've decided, look, we've exhausted the internal opportunities, we just don't think that fits. Until you've actually sold it's a 12-month process. If I take the NAVAIDS business from the time we said, "It doesn't seem like it's got a long-term fit," to actually closing it's typically 12-18 months. It's an ongoing process that then has quite a long lead time before it goes out. That's the moves and the consolidations we've been doing. We've been doing those step by step as well. Again, building a new facility, you know, consolidating facilities is a 12- to 18-month program, and we're trying to make sure as we do it, there's not major disruptions to the supply chain. Of course, COVID has, you know, made it more difficult to do some of those types of things. I would describe this as ongoing. I don't know that it'll ever end, but I think we are in a more intense period over last couple of years and probably the next year or two, and then I would hope we would settle down after that. There'll always be some amount of our business, I think that at any time we'll invest more and more and perhaps decide that, you know, we want to get out of a different one. Got it. On the balance sheet, the customer advances were up substantially. I guess you mentioned defense. Are those gonna burn down? Because that's the biggest step up I think I've seen in a long time. Yeah. It was a huge step up. It was on defense programs that we had, particularly in our Space and Defense segment, were the largest ones that we've got. I'd probably say, you know, 75% or so of that will burn down net this year. Mix in aircraft, you know, was the margin impacted by the fact, I mean, my understanding is you make more money on your military business than on your commercial business. You know, the FMS business was down, the F-35 business was down. Mix was really going against you even though commercial aftermarket was up on a net basis in the Q1. Is that correct or not? Yes. Yes. If you go back to the Q1 of last year, Cai, you may remember that we specifically said it was a pretty good quarter, you know, particularly coming off of COVID and the lower levels on the commercial side. It was because we had an unusually strong mix, particularly in the military OEM side, and that wouldn't repeat, which it didn't. It, Mm-hmm. That really was the difference. Got it. If you look at your commercial aftermarket sales, this is the fourth sequential quarter in which it's been up. Your full year guide of, I think, $120 basically assumes that it's gonna sort of slow down. Is there any evidence that it will, or is this basically, you know, a number that could continue to move up as traffic comes back? It could continue to move up, Cai. I mean, as you say, as traffic comes back, it could do. However, I... You know, maybe we're just being a little bit cautious. We're $31-$32 million in the quarter, so we're a little bit ahead of, you know, the run rate for the year, but not much. Last year we did it for the full year on the commercial aftermarket. We did, you know, $105 million. So it's still a, you know, 12% increase from last year. I guess maybe we're just being a little bit cautious. You're right, it has been ticking up nicely over the last quarters and perhaps there's a little bit of upside there, as we look through the end of the year. Omicron, I mean, 737 getting back into production. Now, not that that affects it so much because of course they're in warranty for a few years. International travel is not yet roaring back, as you know, so maybe we're just being a little bit cautious. Terrific. Thank you very much. Thanks, Cai. That concludes today's question and answer session. Genevieve, thank you very much indeed for your help. Thank you to all our listeners for your interest. Unfortunately, I wanted to say go Bills, but we can't say that. We do look forward to next year. It's always a new year for the Bills. In the meantime, we will continue to do our very best, and we look forward to talking to you again in 90 days. Thank you for your time. Bye-bye. This concludes today's call. Thank you for your participation. You may now disconnect.