Good day, and welcome to the Moog third quarter full year 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ann Luhr. Please go ahead. Good morning. Before we begin, we call your attention to the fact that 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 July 29, 2022, our most recent Form 8-K filed on July 29, 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 comments. For those of you who do not already have the document, a copy of today's financial presentation is available on our investor relations webcast page at www.moog.com. John. Thanks, Ann. Good morning. Thanks for joining us. This morning, we report on the third quarter of fiscal 2022 and update our guidance for the remainder of the year. As usual, I'll start with the financial headlines, highlights. Overall, it was another good quarter for the company with adjusted earnings per share of $1.61, up 44% from last year. This quarter, we benefited from some tax specials which added about $0.15 to our EPS. Adjusting for this effect, our underlying operations delivered a $1.46 per share, in line with our guidance from 90 days ago and up 30% from last year. The macroeconomic headwinds of supply chain, inflation, interest rates, and COVID persisted this quarter, but our teams continued to manage well and meet our commitments. Adjusted free cash flow in the quarter was soft but not surprising as we continued to focus on meeting our customer commitments over optimizing inventory levels. Finally, with one quarter left to go, we're increasing our full year EPS guidance by $0.15 - $5.65 ± $0.15. Now let me move to the headlines. First, the macroeconomic influences affecting our business have not changed from last quarter, but they have become more acute. The war in Ukraine is still raging and there is no clear end in sight. Gas supply has become a strategic weapon in the conflict, threatening an energy crisis in Europe over the coming winter. Multi-decade high inflation is driving higher interest rates with more rate hikes expected before inflation is back to acceptable levels. Supply chain bottlenecks are plaguing almost every industry, and COVID spikes continue to drag on productivity. Finally, all of these challenges look set to continue well into 2023. Second, despite these challenges, our business is doing well, and we're optimistic about the future. Our diversity across end markets, long-term customer relationships, deep technical expertise, and conservative balance sheets have served us well through COVID. These same fundamentals will continue to serve us as we navigate an ever-evolving geopolitical and economic environment. We have multi-year tailwinds in our defense, space, and commercial aircraft markets. Our medical market is robust, and our concerns about future industrial softness is balanced by our record backlog, giving us time to react to any downturn in the business. Finally, we're pleased with the results of our third quarter. Our underlying operations are right on plan and the fourth quarter is looking solid. Now let me move to the details, starting with the third quarter results. Sales in the quarter of $773 million were 9% higher than last year. Adjusting for the impact of the stronger dollar, organic sales were up over 11%. We saw organic gains in each of our operating groups. Taking a look at the P&L, our gross margin was up on the higher sales and improving mix, particularly in the aircraft group. R&D was down as engineers spent more time on funded development work. SG&A expenses were up on higher travel and marketing activities as we emerge from the COVID era. Interest expense was up on higher rates. The effective tax rate in the quarter was low at 15.7%, primarily the result of prior year R&D tax credits. The results was GAAP net income of $50 million, up 40%, and GAAP earnings per share of $1.57, up 41% over the same quarter last year. During the quarter, we incurred about $0.03 of restructuring and impairment charges, giving an adjusted EPS of $1.61 after rounding. This compares with adjusted EPS last year of $1.12, a 44% increase. The lower tax rate this quarter resulted in a $0.15 gain relative to our forecast from 90 days ago. Adjusting for this lower rate, the underlying operations delivered a $1.46, in line with our forecast last quarter. Fiscal 2022 outlook. Our full year sales forecast is unchanged from 90 days ago at just over $3 billion, up 6% from last year. We're also keeping our underlying operational forecast unchanged from last quarter. We're adding the $0.15 tax benefit this quarter to our total EPS, resulting in full year adjusted EPS of $5.65 ±$0.15. This results in a fourth quarter of $1.45, in line with the operational performance in the third quarter. Now to the segments. I'd remind our listeners that we provided a supplemental data package posted on our webcast site, which provides all the detailed numbers for your models. We suggest you follow this in parallel with the text. Beginning with aircraft. Last week, our team attended the Farnborough Airshow in the U.K. It was the first major air show since 2019, and most of the industry turned up despite the record temperatures in London. The major themes from the show mirror the dynamics we're seeing in our aircraft business, including commercial recovery and a positive defense outlook, balanced by supply chain challenges and inflation pressures. It's clear that commercial air travel is back. Demand is no longer an issue for the airlines, and their growth is limited by staffing shortages on both the ground and in the air. Demand and supply for narrow body airplanes is robust, and Boeing is gradually getting the max deliveries flowing. The wide-body recovery is slower, as expected, but Boeing is signaling that they are close to resuming 787 deliveries to customers. For Moog, the recovery in air traffic is playing through in our commercial aftermarket, and we look forward to next year when we should start to see wide-body rates increase. The sentiment on defense is clearly positive, but the impact of world events has yet to translate into significant new contracts. For our military aircraft business, we're not yet seeing any material impact. The next big opportunity for this business is the award of the FLRAA program, which is now anticipated sometime in October. We're teamed with Textron on the V280 and do not have a position on the Sikorsky Defiant. Should Textron win, this program could be as big as our F-35 production next decade. Like every other company, our supply chain teams are working hard to manage an ever-changing landscape, and for the moment, we're more focused on having sufficient inventory and stock to meet our customer commitments rather than optimizing our cash position. The battle with inflation has also intensified, and we're working with our suppliers to minimize cost increases while also working with our customers to adjust prices where possible. Despite the volatility in the external environment, our aircraft business is performing well, and we're pleased with our progress over the last 12 months. Aircraft Q3 sales in the quarter of $318 million were 17% higher than last year. The growth this quarter was dominated by the commercial side of the business, with both OEM and aftermarket sales registering large increases over last year. Commercial OEM sales were up 25%, driven by higher sales across our Boeing book of business and strength in our business jets product line. Sales to Airbus were more or less in line with last year. The commercial aftermarket almost doubled in the quarter. The underlying demand for spares and repairs contributed just over half the growth and continues to run ahead of our forecast. We also had the benefit of acquired sales from our TEAM Accessories acquisition, which closed in February this year. In addition, we benefited this quarter from a one-time retrofit program which contributed about $10 million in sales. Military OEM sales were up slightly in the quarter. Higher funded development and helicopter sales compensated for slightly lower fighter jet sales, while a strong performance at our Genesys acquisition compensated for the loss of sales from our Navigation Aids business, which we divested in the first quarter of this year. Military aftermarket sales were about flat with last year, but down from the run rate of the first two quarters. Despite the war in Ukraine and the global commitments to increase defense spending, we're not yet seeing any uptick in our military aftermarket business. Aircraft margins. GAAP operating margin in the quarter of 10.8 was up over 300 basis points from last year. We incurred about 20 basis points in restructuring and impairment costs, resulting in an adjusted operating margin of 11%. We're seeing the recovery in commercial air travel flow through to the bottom line. The margin performance this quarter was particularly strong as a result of the outsized sales in the commercial aftermarket. Aircraft fiscal two. We're keeping our full-year sales forecast unchanged from ninety days ago, but tweaking the mix slightly. We're lowering our forecast for military OEM by $15 million - $545 million and lowering our military aftermarket forecast by $10 million - $200 million. On the commercial side, we're keeping the OEM total unchanged at $335 million and increasing the aftermarket total by $25 million - $165 million. The net result is total sales of $1.25 billion, up 7% from last year. We're keeping our full-year adjusted margin forecast unchanged at 10.1%. This results in a second-half margin of close to 11%, up from a first-half margin of 9.3%. Turning now to space and defense. It was another good quarter for our space and defense business. We continue to see growth across both portfolios and are optimistic that we have additional growth opportunities as future defense budgets increase. Our products are well aligned with some of the key areas of focus for future defense spending, including hypersonics and space. In addition to higher defense budgets, changes in the way these budgets are being spent are opening up new opportunities for growth. Some funds are being redirected from the traditional large programs of record to finding agile solutions that solve specific problems in the field. The services are valuing speed of response, flexibility, smaller quantities, and lower costs as they tackle ever-changing mission requirements around the globe. Our Agility Prime strategy is designed to meet these emerging requirements. This strategy is built on the success of our reconfigurable turret system. It will take a few years to build a broader Agility Prime business, but we're already seeing significant interest from the market in what Moog can offer. Based on defense Q3, sales in the quarter of $224 million were 9% higher than last year, a combination of 3% growth in space and 14% growth in defense. Similar to last quarter, strong growth on our RIwP SHORAD program drove the defense increase. We also enjoyed some higher sales into missile applications and for various defense components, which compensated for lower sales into international vehicle programs. On the space side, we enjoyed growth in our propulsion and avionics product lines, as well as in our integrated space vehicles business. On the downside, our work on hypersonic development programs continue to wind down. Our hypersonic activity is in a temporary lull as we wait for the government to decide which technologies and programs to move forward towards production. Given the broad range of demonstration programs we've participated on, we're confident that there will be significant additional business on hypersonics in the future. Based on defense margins, GAAP margin in the quarter of 11.3% included some minor restructuring charges. The adjusted margin of 11.4% was up 100 basis points from last year and in line with our forecast for the full year. Space and defense fiscal 2022, there's no change to our sales forecast for the full year. Full year space sales of $350 million assume a fourth quarter in line with the third. Similarly, full-year defense sales of $530 million also assume a fourth quarter more or less in line with the third. For the full year, we're also keeping our adjusted margin forecast unchanged at 11.5%. This assumes a slight pickup in margin in the fourth quarter. Moving on to industrial systems. The underlying macro themes in our industrial business are similar to last quarter, although even more challenging than three months ago. Demand has remained strong over the last quarter with a continued positive book-to-bill. The drive to expand factory capacity in every industry to meet supply constraints is fueling orders for our industrial automation products. Higher oil prices and the continued recovery in commercial air travel are positive for our energy and simulation businesses. However, supply chain challenges have not abated, and if anything, have become more severe in the last 90 days. In addition, we're seeing the impact of inflation coming through in higher material and freight costs. We're compensating with price increases, but sometimes experience a lag of several months before these price increases take effect. The war in Ukraine continues to cast a large shadow over Europe, and worries about a winter energy crisis have increased the risks of a downturn over the next 12 months. The strength of the dollar has little effect on our operations since our supply chain, facilities, and sales tend to be co-located in region. However, it does have an impact on the translation of both sales and operating profits back to U.S. dollars. Finally, COVID continues to pop up at various spots around our global footprint and drag on our efficiencies. All in all, a very positive order book, but a difficult supply chain situation. Industrial systems Q3. Sales in the quarter of $231 million were in line with last year. However, the flat top line masks a very positive underlying story of growth. Excluding the impact of foreign exchange movements and lost sales from portfolio shaping activities, underlying organic sales were up 8% in the quarter. On a rate-adjusted basis, all four of our sub-markets were up over last year. Industrial automation was up 11%, both energy and simulation and tests were up close to 8%, and medical was about 3% higher. The strength in our industrial automation business is driven by the demand for factory automation equipment, particularly in Europe. Constraints in global supply chains is driving this investment in capital, and through our third quarter, our bookings continued to be very strong. Our sales into this market are constrained by challenges in our supply chain rather than underlying demand for our products. In the energy market, we had higher sales into both exploration and generation applications. A year ago, oil was averaging about $60 a barrel. Today, it's over $100 a barrel. If the outlook for oil prices remains high, we should see further growth in our exploration business in the future. Test and simulation is up on increased sales of our flight simulation products. With the recovery in air travel, the increasing demand for pilot training translates into a strong outlook for this business. Finally, medical sales were up marginally from last year, driven by growth in our enteral feeding product line. Industrial systems margins. GAAP margin in the quarter of 8.4% includes 30 basis points of restructuring charges. The adjusted margin of 8.7% was down from last year and below our target for the full year. Margin pressure this quarter came from a combination of inflation on our input costs and lower operational efficiency. We're adjusting prices to our customers to compensate for inflation. Also, this quarter, we had a six-week shutdown of our facility in Shanghai, which impacted our operational efficiency. This shutdown was the result of the Zero-COVID policy in China. Industrial systems fiscal 2022, we're keeping our full year sales forecast unchanged from last quarter, despite the shifts in exchange rates. For the full year, we anticipate sales of $910 million. This assumes a fourth quarter in line with the third. Our forecast for full year adjusted margin is also unchanged at 9.5%, with our fourth quarter recovering nicely from some of the challenges in the third to over 10%. Summary guidance. It was another good quarter for our business, with our operational performance in line with our forecast and a tax benefit driving outsized EPS growth. The second half of our fiscal year is playing out as we anticipated. Our sales forecast for Q4 is in line with Q3, and our EPS forecast for Q4 is unchanged from 90 days ago. Demand for our products is strong across all our major markets, and we're managing well through the challenges posed by supply chain constraints, inflation, and labor availability. As we look beyond this fiscal year, we're seeing opportunities for further growth. The recovery in commercial air travel has already driven our aftermarket sales higher than pre-COVID levels. As wide-body rates recover, we should see our OEM sales expand. Defense spending is in a multiyear upswing, and the growth we enjoyed in our funded R&D portfolio over the last few years should gradually convert to production programs. Examples of this include the FLRAA program, various classified aircraft opportunities, and hypersonic programs. Our industrial market is where we're perhaps most cautious, as higher interest rates and concerns about energy availability in Europe increase the chances of a slowdown. However, for the moment, we have record backlogs and are focused on increasing output. As in past downturns, should we see a slowing in our business, we will react accordingly. In summary, in the short term, our business remains very healthy, and longer term, we're bullish about our prospects to grow both sales and margins. Finally, we're anticipating Q4 sales in line with the third and Q4 earnings of $1.45 per share ±$0.15. Now let me pass it to Jennifer, who'll provide more color on our cash flow and balance sheet. Thank you, John. Good morning, everyone. Increasing constraints in the supply chain are impacting our cash flow generation, and we're adjusting our free cash flow outlook for the year accordingly. We're seeing a couple situations arise. First, the bulk of materials are coming in on time. However, certain components are being delayed, causing us to build up inventories or unbilled receivables. Second, we're selectively purchasing certain materials in advance that we're concerned might otherwise slow us from getting product out the door. In the current environment, we are prioritizing meeting customer commitments over reducing inventories. We expect pressures on receivables and inventories to continue into the next quarter, but also expect strong customer advances to offset these pressures. We're moderating our full-year adjusted free cash flow guidance to 20% conversion, excluding the benefit from the securitization facility. As a reminder, we amended our securitization facility in the first quarter. This facility provides us with lower interest costs compared to those we would incur with borrowings under our revolving credit facility. Under the amended securitization facility, a receivables financing subsidiary may sell receivables to a financial institution up to $100 million. Our balance under this facility was $89 million at the end of our third quarter, $100 million at the end of our second quarter, and $90 million as of the end of the first quarter. Due to the structure of this facility, the associated receivables are not recognized on our balance sheet. The new structure reduces our working capital levels. To provide a comparable look at our cash generation and financial position, I'll first share adjusted free cash flow and net working capital metrics without the effects of the new facility. I'll also include metrics as calculated off our financial statements near the end of my comments for your reference. Adjusted free cash flow in the quarter was -$18 million. We saw pressures this quarter on working capital, most notably related to the growth in unbilled receivables. We also worked down customer advances that we received in the first quarter. We had a couple tough quarters for cash, but over the past 10 quarters, our adjusted free cash flow conversion on adjusted net earnings has been solid at 100%. The -$18 million of adjusted free cash flow in Q3 compares with an increase in our net debt, adding in debt related to the securitization of $40 million. We had cash outlays of $8 million for the quarterly dividend payment, $4 million for share repurchases, and $3 million for divestiture activities. In addition, the strengthening of the U.S. dollar reduced our cash balance by $5 million. Adjusted net working capital, excluding cash and debt, as a percentage of trailing twelve-month sales at the end of Q3 was 30.2%, up from 29.0% a quarter ago. The increase during the quarter largely resulted from the expected reduction of customer advances on military programs that we received in the first quarter. We also saw a modest growth in unbilled receivables. In particular, we experienced growth in receivables on the 787 program, where our production level is higher than the rate at which Boeing is taking deliveries. We're maintaining steady production levels to ensure a healthy supply chain and efficiencies in our facilities. Supply chain disruptions also impacted our business as material receipts drove progress on long-term contracts, while delays in some specific items necessary to complete a product prevented us from shipping and invoicing. Timing of invoicing from strong sales late in the quarter also drove higher levels of billed receivables. As a percentage of sales, the growth in receivables was offset by lower inventories. On the inventory front, this quarter marks our sixth straight quarter of decreasing inventories as a percentage of sales. We are, however, starting to see pressures build in inventories as we ensure that we have sufficient inventory of critical components in a supply chain constrained environment. Capital expenditures in the third quarter were $33 million, down slightly from the past few quarters. Our capital expenditures this year include our investment in facilities to support growth and investment in next-generation manufacturing capabilities to drive efficiencies. At quarter end, our net debt was $761 million of cash. The major components of our debt were $500 million of senior notes and $344 million of borrowing on our U.S. revolving credit facilities. In addition, we had $89 million associated with the securitization facility that does not show up on our balance sheet. At quarter end, we had $736 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 4.0x on a net debt basis. Based on our leverage, we could have incurred an additional $591 million of net debt as of the end of our third quarter. We are confident that our existing facilities provide us with the flexibility to invest in our future. Our leverage ratio, calculated on a net debt basis, was 2.4 times as of the end of the third quarter of 2022, as well as the same point a year ago. Our leverage ratio continues to be within our target range of 2.25-2.75 times. Cash contributions to our global retirement plan totaled $16 million in the quarter, compared to $15 million in the third quarter of 2021. Global retirement plan expense in the third quarter was $20 million, up from $19 million in the same quarter a year ago. The increases in both global retirement plan contributions and expense relate to increased participation in our defined contribution plan. Our effective tax rate was 15.7% in the third quarter, compared to 25.7% in the same period a year ago. The relatively low tax rate this quarter reflects favorable adjustments for tax credits associated with last year's tax return. Excluding the benefit of these adjustments, our effective tax rate in the third quarter was 23.9%. Last year's tax rate included charges associated with the revaluation of deferred tax liabilities in the U.K., mostly offset by adjustments to the previous year's provision to return adjustment in the U.S. For all of FY 2022, including the benefit associated with the provision to return adjustments, we expect the effective tax rate to be 22.2%. Our base rate without these specials is 24.4%. As a result of the supply chain situation, we're reducing our forecast for free cash flow from 90 days ago. We expect adjusted free cash flow generation to be $36 million in 2022 or 20% on adjusted net earnings. Customer advances are expected to be strong in the fourth quarter and will partially offset the consumption of cash by receivables and inventories. We expect capital expenditures in 2022 to be $140 million, reflecting a fourth quarter similar to the third. Depreciation and amortization are expected to be $90 million. I'd also like to share some of the metrics and amounts you'll be able to calculate from our financial statements. These reflect GAAP accounting for the securitization facility. Free cash flow in the quarter was -$29 million, and free cash flow generation for the year is projected to be $127 million, which is about 75% conversion on adjusted net earnings. Net working capital was 27.2% of sales at the end of the quarter. Our financial situation continues to be strong despite the current pressures we and others are experiencing from the supply chain environment. We've got plenty of liquidity and are positioned nicely to fund organic growth and make investments in our operations that will make us even stronger. With that, we'll turn it back to John for any questions you may have. Thanks, Jennifer. Elaine, can we pass it back to you, and perhaps you can line up the questions for us, please? Thank you, John. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Cai von Rumohr from Cowen. Please go ahead. Yes. Thank you very much. John, you mentioned strong demand in industrial and strong book-to-bill. What was the book-to-bill in constant currency in the quarter, roughly? It was roughly 120%, Cai, roughly. Okay. In theory. For instance, our medical business is typically 100% because we ship, we book and ship in the same, you know, we don't have the big backlog there by nature. Mm-hmm. It's well north of 100% and has been now for, oh, I don't know, six, eght quarters. It's very strong. Mm-hmm. How much sales did you lose as a result of the six-week Shanghai shutdown? I assume that's in automation, correct? Yeah. Our sales in China, Cai von Rumohr, are about $60 million, give or take. If you call it $7-$8 million for half a quarter. Got it. Okay, good. I assume that's back up and running now? Oh, yes. Yeah. Although, you know, given the situation there, it's hard to predict. Yes, it's back up. It had a complete shutdown for six weeks. I mean, there was partial people in and out and stuff, you know, challenges around the rest of the quarter, but it actually completely shut for six weeks. We're hoping that's passed, but again, who knows? really, you know, your estimate of flat sales assumes, you know, a normal kind of summer lull. Is that number low, conservative given the vigor in demand? It's really a function of our ability to get stuff out, Cai. That's really what's driving it. That's why we're thinking it's flat. It's actually versus a quarter ago, it's an increase because of course, rates have changed and the translation back to dollars is lower. But it, you know, when we report in 90 days time, I'm gonna be explaining either we got supply chain eased and we had more out or the supply chain was as tough or tougher and that was really what drove the headline. As you know, supply chain has been kind of an issue across the space. Can you give us some color on like, does it look about the same now? Also the issue of labor availability, is it about the same now as it's been? Is it getting better? Is it getting worse? How would you characterize it? I would say, Cai, it's worse than we anticipated. Ninety days ago, you know, we had kind of a mental model of what it would be that perhaps it would start to ease and that didn't happen. I would say on balance it's got worse rather than better. On a kind of a relative basis, it was a lot worse than we were anticipating. On an absolute basis, it's probably worse, but it's definitely not getting better yet. I don't see any significant improvement coming out depending on what you read. You know, Intel is saying that their sales are down as that starts to free up electronics capacity. I think all of that's gonna take quite a while to play through. No significant improvement, if anything, a deterioration. I would say on labor availability, COVID continues to be more of a challenge than, you know, it's not back to business as normal. We talked about the shutdown in China, but in our operations in Germany, you know, we had outbreaks in various parts of their production and they, you know, that would, we'd be missing four or five people out of a cast of maybe six arrays in a particular test area. All of which just is a drag on operational efficiency that to some extent we've kinda put in the rear view mirror, but that's clearly still there. Underlying labor availability, I'd say that hasn't got worse. That's probably got a little bit better. I mean, if you're again reading what the tech guys are starting to slow hiring, the auto guys are starting to, you know, potentially lay off people. I think that will get better. It's not that we felt it getting a lot better yet. I feel like that the labor market is easing a little bit and the reports back from our operating groups in the quarter were not saying, "I just can't get the people." That wasn't the kind of the primary thing. It was supply chain, inflation and, you know, COVID driven efficiencies. That was. They were the key themes. One for you, Jennifer. It looks like, you know, the receivables were up, the advances were down a fair bunch. Looking forward, you know, what are we looking for? Are the advances gonna continue down? You know, can you start to turn those receivables a little better? Yeah. As we look into the next quarter, we will see some benefit from customer advances. We've got some military customer advances that we're expecting to come into the quarter, be offset a little bit by activity of current work down. However, overall, we should see a benefit in customer advances. As we look in some of the other types of areas, I think we're gonna continue to see pressures in both receivables and inventories. That's largely gonna be due just to the same pressures that we're seeing right now in the supply chain and the production rates that we've got. Got it. Thank you very much. Thanks, Cai. We will take our next question from Michael Ciarmoli from Truist Securities. Please go ahead. Hey, good morning guys. Thanks for taking my questions here. Maybe, Jennifer, just to kind of stay on the free cash flow and what Kai was asking. I mean, as we look into 2023, I mean, what are you guys planning for in terms of supply chain? You know, do you think you need to carry higher inventory levels, you know, deeper into 2023? I guess, you know, just thinking about the level of unbilled and, you know, I guess maybe timing your thoughts on timing of collecting there and maybe how this could impact the free cash flow dynamic. I mean, should we still think about conversion being a little bit depressed in 2023 given that these factors are gonna be lingering, I'm assuming? We'll go into the 2023 next quarter when we give those results, but I can characterize some general trends. A lot of it's gonna be dependent on what is going on in the supply chain environment. If that environment loosens up, we'll certainly see some relief from that. Our contractual arrangements as we're doing production, we will continue to see pressure and a buildup of unbilled receivables there, though not to the level that we have experienced this year. There are some benefits that we see from that. I would say it's largely gonna be the supply chain dependency that, you know, how the situation unfolds is gonna drive how we will see that. Just overall stepping back when we look at cash flow and, you know, the level of sales increase, and you can just do like last year to this year, you know, we've got close to $200 million worth of an increase in our sales and our working capital rate of 30%. That just puts $60 million expected working capital growth on the table. And as you know, we're in a period where we're doing high investment in capital expenditures. It's $50 million over our depreciation amortization right now. Just putting those types of things on the table, in our current situation gets us into conversion that would be in the 40% type of neighborhood. For this year, we're at that 20% right now, as I've shared, and that's with the supply constrained environment. I think we're doing okay from that perspective, but the supply chain will be the factor that has a lot of significance as we move forward. We'll have to just monitor that and see how that goes, and we'll share more detail on that next quarter. Got it. I mean, safe to assume, I mean, you guys aren't anticipating supply. I mean, this seems like it's gonna last at least to mid-next year supply chain. I mean, are you guys seeing any, you know, can you give any tangible signs in terms of material availability or lead times? I mean, it seems like this is gonna be with us for quite some time. I mean, I'm assuming that that's how you guys are planning for the business. There's nothing that suggests that there would be instant relief that comes in just a quarter or two. Yep. Okay. Maybe just shifting to the aircraft margins and even the implied margin for next quarter. I know, obviously you're getting aftermarket and mix is helping, and you've got this, maybe I'll call it a floor here of 11%, these kind of the second half here. Should we think about that going forward? I mean, obviously, mix might go against you as wide-body starts to come back on the OEM side, but just any directional color you can give on sort of the margins there. We do that next quarter, Mike. We just don't wanna get drawn into a fiscal 2023 outlook, even on the soft side. You know that, I apologize, but we'll punt until next quarter when we can give you a lot more detail around that. Okay. Maybe just the last one. What changed so much? Well, not so much, but what really changed between your last report and this report on the military OEM and aftermarket side? Is that more supply chain, some of the bigger programs that we're hearing about out there, or what was the driver of the downward revision? Yeah. I mean, you know, you saw the Lockheed stuff. They obviously came up short on what they were hoping to do on the F-35. We've had a bit of the same. You know, we're just not getting as much material in as we thought. On the aftermarket side, Mike, it's really puzzling. Normally, you know, when you get into a situation with those conflicts, the aftermarket picks up almost immediately, and it's just not picking up. It's just slow. It's not, it's across all of the programs. It's not one program. It's not anything in particular. We're optimistic with defense spending, you know, that will start to recover. Right now, it's kinda just been slower than we had anticipated, and I don't have any really good answer for it because it's just too broad-based across every platform we're on. Got it. No, that's fair. Perfect. Thanks, guys. I'll jump back in the queue. Thanks, Mike. Once again, if you would like to ask an audio question, please press the star followed by the one on your telephone. To cancel this request, please press the star followed by the two. We will take our next question from Kristine Liwag from Morgan Stanley. Please go ahead. Hey, good morning, Jennifer, John. Morning, Kristine. Hello. Last quarter, you took some actions to right-size the asset base and the labor force. With the continued supply chain headwinds, do you feel that you're now properly situated given the planned OEM production rates, or do you need to make more changes? No, we believe we're properly positioned, Kristine. If you remember last quarter, what happened was there was kind of new news from, you know, Airbus and some of the other OEMs, and we adjusted based on their new forecast of what their pickup was gonna be, particularly on some of the wide-body, but on the big programs that we're on, and that was what drove it. There hasn't really been any change of significance in the OEM outlook this quarter, and therefore, we don't see any of that. Now, if the OEMs were to just, you know, take extreme example, Boeing and Airbus decided to stop making A350s and 787s for the next two years, absolutely we would be taking an asset impairment charge on that. If we knew it, we'd, of course, also have to take it. We believe we're properly positioned. Definitely on the labor front, we're in good shape. We don't see that. It was an asset impairment thing associated with changes in the projected volumes over the remaining asset lives that caused that. At the moment, we're feeling like we're in good shape based on everything that we know. Great. Maybe following up the 787, John. You know, last quarter you also said that you guys are producing at three-four per month for the 787. If we don't see the program get approved by the FAA till, let's say, you know, I don't know, starting at 4Q or maybe end of the year, how large of an inventory are you comfortable holding before you would then cut rates? We are building, as we described, we are building ahead of what Boeing is producing at the moment. However, it's in agreement with Boeing. This is not something that we're doing in isolation, and we have an agreement with Boeing as well on shipping more than they're necessarily manufacturing. We're holding a little bit of inventory. They're holding some inventory. It's an agreed upon plan in order to secure the supply chain and to make sure that our operations run you know, effectively. I think it's a sensible thing to do. They're talking about ramping to five at the end of 2023 and into six and seven after that. Their worry is that the supply chain won't be able to keep up. I think we will be very well positioned for that. We have orders for all of this. I also have to be very clear. We have orders from Boeing for all of this stuff, so it's not as if we are making and it's going into inventory. It's going into unbilled receivables. We are covered from a contractual basis on everything that we're building. The only thing is from receivables and billing it, as I said, we have an agreement with Boeing, but that does involve us holding some inventory. If there were to be a fundamental shift in Boeing's strategy, you know, if it gets delayed by a week or two or a month or two or even a quarter or two, does that fundamentally shift? I don't think so. If there was a fundamental shift in Boeing's strategy, we would of course reevaluate the levels, you know, should we be dropping that down by a ship set a month or something? We would do that again in collaboration with Boeing. Right now, we don't see that. Right now, what Boeing's projection is would, you know, it supports what we're doing. Hopefully, they keep hinting that they're very close with the FAA. Hopefully that happens, Kristine. You know, if the world suddenly changes in a quarter or two, we of course will adjust accordingly. Very helpful color. Thanks, John. Thank you to, Kristine. As a reminder, to ask a question at this time, please press star one. If you're using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. It appears there are no further questions at this time. I would like to turn the conference back over to you for any additional or closing remarks. Thank you, Elaine. To all our listeners, thank you for your questions and your interest. We look forward to coming back to you again in 90 days' time when we'll close out our fiscal year and provide our initial guidance for fiscal 2023. Thank you very much, and I hope you all have a wonderful summer. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.