Good morning, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings Incorporated's first quarter 2021 earnings conference call. My name is Jamie, and I'll be your coordinator today. After today's prepared remarks, there will be an opportunity to ask questions. At that time, to ask a question, you may press Star and then one. To withdraw yourself from the question queue, you may press Star and two. Please also note today's event is being recorded. At this time, I'd like to turn the presentation over to Aaron Hunt, Director of Investor Relations. Sir, please go ahead. Thank you, Jamie, and good morning, everyone. Welcome to Spirit's first quarter 2021 earnings call. I'm Aaron Hunt, Director of Investor Relations, and with me today are Spirit's President and Chief Executive Officer, Tom Gentile, Spirit's Senior Vice President and Chief Financial Officer, Mark Suchinski, and Spirit's Executive Vice President and Chief Operating Officer, Sam Marnick. After opening comments by Tom, Sam, and Mark regarding our performance and outlook, we will take your questions. Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our earnings release, in our SEC filings, and the forward-looking statement at the end of this web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. As a reminder, you can follow today's broadcast and slide presentation on our website at investor.spiritaero.com. With that, I would like to turn the call over to our Chief Executive Officer, Tom Gentile. Thank you, Aaron, and good morning, everyone. Welcome to Spirit's first quarter results call. A year ago, we were contending with the unprecedented disruption and uncertainty from the continued 737 MAX grounding and COVID-19 pandemic. Since then, the FAA lifted the 737 MAX grounding order, and shortly after that, the aircraft resumed commercial service. Today, the 737 MAX is certified in the U.S., U.K., Europe, and many other parts of the world. Additionally, Boeing has secured several new orders from airlines, including large orders from Southwest, Alaska Air, and Ryanair, who will take delivery of their first newly certified 737 MAX 8-200 aircraft in the near future. The COVID-19 pandemic has had a significant global impact. The aviation industry saw more than 19,000 aircraft grounded and air traffic down more than 95% at the worst point last April. Thanks to the tireless efforts of many to mitigate the severe impact of COVID-19, we believe we are now on the path to recovery. We continue to see encouraging news on the return to commercial air travel with domestic routes, primarily flown by narrow-body aircraft leading the way. In the U.S., the TSA checkpoint travel numbers have been consistently staying above the 1 million mark since early March, and more recently, we have seen many days above 1.5 million travelers, including 1.6 million travelers last Sunday. We have observed a similar domestic recovery in China. We believe Spirit is well-positioned to benefit from this trend of recovering domestic air travel in the largest aviation markets, given that 85% of our backlog is narrow-body aircraft. In line with the improved narrow-body outlook, as we described in our 10-K, Spirit is planning to produce about 160 737 MAX aircraft in 2021. This plan allows for us to burn down the Boeing inventory of 737 MAX ship sets stored in Wichita and Tulsa. With the current outlook, we should be at our targeted number of a permanent buffer to cushion the production system toward the second half of 2022. We have regular conversations with Boeing on the current environment, and we'll work closely with them to make any necessary rate adjustments as the year progresses. As for our Airbus narrow-body programs, we have plans in place to support the A220 and the A320 Airbus schedule increases as the air traffic demand recovery continues. International air traffic demand still remains at relatively low levels versus pre-pandemic times and is expected to take longer to recover. Consequently, we have experienced and believe there will continue to be pressure on our wide-body programs. The wide-body programs have created significant pressure on our overall performance as the OEMs have adjusted production rates on those programs downward. On the A350, schedule changes this year and next year contributed to the forward loss of $29 million that we announced this quarter. The forward loss also included some charges for tooling and build process improvements to improve product quality. We decided to implement the improvements at our Kinston facility during this period of lower production rates. Over the last few months, we have also been working with Boeing on the 787 program. At Boeing's request, we conducted an extensive review and engineering analysis as a result of fit and finish issues that they had identified on other parts of the aircraft. While there were no safety of flight issues, areas of rework were identified. We have started the rework, and Boeing has reinitiated deliveries of the 787. The rework plan that we have put into place supports Boeing's 787 delivery schedule. The engineering analysis and the projected rework will drive a forward loss of $29 million. Mark will provide more detail on the forward losses in his comments. The uneven recovery from the pandemic created challenges during our first quarter. During 2021, we expected to see performance start to normalize as we get into the second half of the year, assuming air traffic recovery remains on track. Overall, our 2021 free cash flow usage is expected to be between $200 million and $300 million after considering the $300 million cash tax benefit.... As we have previously indicated, we expect our cash flow to be positive in 2022 as production rates improve and we realize all the benefits of the cost reduction and productivity actions that we have taken. Now I'd like to turn our focus to the integration process of our recently acquired Belfast, Casablanca, and Dallas sites. Our Chief Operating Officer, Sam Marnick, has joined us today, and I would like to turn the call over to her to give you a few updates on the integration process, as well as progress in our aftermarket business. Sam? Thank you, Tom. The integration of our three newest sites is progressing to plan. To date, we have completed roughly 80% of the 450 tasks we have identified to capture synergies and integrate the operations into Spirit. Some of the remaining tasks, such as exiting the information technology transition services agreement, will take longer by plan design. A large part of our integration focus is capturing the synergies, which we projected to be 6% of revenue. Based on 2021 revenues that are expected to be $700 million, we estimate the synergies to be $42 million. The areas we are focusing on include A320 wing costs, supply chain, infrastructure, and engineering. We are on target to achieve the $42 million and perhaps even exceed it by 2023. In the period beyond 2023, we are identifying additional productivity opportunities. In addition, as part of our integration, we are evaluating the Belfast pension plan and are in formal consultation with the employees and the unions on this matter. The current plan is closed to new participants, and we are evaluating closing the plan to future accruals and replacing it with a defined contribution benefit plan. Another significant part of this acquisition was a strong aftermarket business. Our Belfast and Dallas sites are now key pieces of our aftermarket revenue growth plan. While we've seen some COVID-related headwinds to the aftermarket business in the near term, the combined team is working to transfer repairs between sites and strengthen customer relationships as air traffic recovers. In the first quarter, some of our activities, including moving tooling and rotables to Belfast to support Boeing programs. Our Belfast operations have recently completed their first Boeing 777 thrust reverser repair. To grow the aftermarket business further, we recently announced that we acquired the assets of Dallas-based Applied Aerodynamics, which provides radome and flight control surface repairs. We also announced the signing of a new JV agreement in Asia with EGAT in Taiwan, which enables us to provide our full suite of expanded repairs to that region. All of these actions are contributing to our target of building the Spirit aftermarket business to $500 million in revenue at accretive margins by 2025. Now I'll turn it back over to Tom. Thanks, Sam. In addition to diversifying into aftermarket, we've also been accelerating diversification into defense programs. After growing almost 20% in 2020, we expect our defense business revenue to grow 15% in 2021. The excess commercial capacity we have in our wide-body factories, especially those that produce composite structures, provide us with immediate capacity that we can repurpose to defense programs. We have been fortunate to win positions on several new classified defense projects. We believe we are on track to achieve $1 billion of defense revenue by the mid-2020s with typical defense margins. The programs of record for where we have work content will generate approximately $6 billion of future revenue. In addition to diversifying our business, we've also been focused on delevering to reduce the additional debt we have accumulated during this pandemic period. One step we took was to repay $300 million in floating rate notes in February. Our next debt maturity is $300 million in 2023. We also have other pre-payable debt that could be retired as part of our objective to repay $1 billion in the next three years as production rates recover and we start generating positive cash flow. We believe these debt reduction actions, along with increased production rates, will help us regain our investment-grade credit rating. Our efforts to drive margins are also progressing well. In Wichita, the new automated floor beam assembly line that we discussed in the last call is now operational. At our Prestwick site, we produced the first ship set of A320 spoilers using a resin transfer molding process and will ship those to Airbus in mid-May. Both of these narrow-body manufacturing lines will help drive the margin improvement back to our target of 16.5% as production rates recover. Now I'll turn the call over to Mark to take you through our detailed financial results. Mark? Thank you, Tom, and good morning, everyone. I hope everybody's doing well and staying healthy. We continue to see 2021 as a bridge year for our Spirit and commercial aviation industry. While the wide-body programs will remain a headwind for the next few years, domestic air travel in many regions of the world is trending in the right direction, which is an encouraging sign, especially for narrow-body aircraft. During 2021, we have or are planning to increase production rates on our narrow-body programs in order to support our customer delivery of new aircraft. We expect the first half of the year to be the most challenging to our financial results and expect to see improvement in the back half of the year as the narrow-body production rates increase. Now, let's move to our first quarter 2021 results. Please turn to slide 3. Revenue for the quarter was $901 million, down 16% from the same quarter last year. The revenue decrease was primarily due to lower wide-body rates, which have been under pressure due to the reduced international air traffic resulting from the continued impacts of the COVID-19 pandemic. In addition, our A320 production rate was lower in the first quarter of this year compared to last year. Revenue from our recently acquired Bombardier business jet programs and the A220 wing program helped offset some of the wide-body revenue decrease. Our defense programs continue to be a bright spot, up 41% as compared to the same quarter of last year. Turning to deliveries, wide-body program deliveries were 48, down from 91 in the first quarter of 2020, which is a 47% reduction. The narrow-body program deliveries in the first quarter of 2021 were also lower when compared to 2020, with 171 shipsets in the first quarter of 2021, compared to 221 in 2020. The main driver of the decrease was the A320 program, with 58 less deliveries than the first quarter of 2020. The first quarter, 737 MAX deliveries have gradually increased to 29, compared to 18 shipsets delivered in the first quarter of last year. Overall, deliveries decreased to 269 shipsets, compared to 324 shipsets in the same quarter of last year. Let's now turn to earnings per share on slide 4. We reported earnings per share of negative $1.65, compared to negative $1.57 per share in the same period of 2020. Adjusted EPS was negative $1.22 per share, compared to negative EPS of $0.79 in the first quarter of 2020. Adjusted EPS excludes the impacts of the acquisitions, restructuring costs, the non-cash voluntary retirement plan charges, and the deferred tax valuation allowance. Operating margin for the first quarter was negative 14%, compared to negative 15.5% in the first quarter of 2020. The past actions we have taken have contributed to the improved first quarter of 2021, with lower costs and expenses, including restructuring, excess capacity, abnormal COVID-19, and SG&A. This was partially offset by additional forward losses on the 787 and A350 programs compared to the same period last year. Additionally, the increase in other income primarily reflects the absence of voluntary retirement expenses recognized in the first quarter of 2020, partially offset by a loss on foreign exchange rates. Interest expense and financing fee amortization in the first quarter of 2021 increased $28 million, driven by increased interest expense on debt and higher interest rates compared to the same period in the prior year. In the first quarter, we recognized forward loss charges of $72 million, primarily driven by engineering analysis and rework to support Boeing's resumption of 787 deliveries and lower A350 production rates, coupled with higher one-time costs for thrust reverser production system and quality improvements. During the first quarter of 2021, an incremental $42 million valuation allowance on deferred income tax assets was recorded. As a reminder, this is a non-cash item. Now turning to free cash flow on slide 5. Free cash flow for the quarter was a use of $198 million, compared to a use of $362 million in the same period of 2020. This year-over-year improvement is primarily due to favorable working capital management and cost reduction efforts, partially offset by the absence of the $215 million received last February as a result of the MOA with Boeing. Excluding the $215 million of Boeing advanced payments received in the first quarter of 2020, free cash flow improved by about $380 million. For the year, we expect free cash flow to be between -$200 million and $300 million. This includes a cash tax benefit of approximately $300 million. As mentioned previously, we believe that the first half of 2021 to be our most challenging, and expect improvements as we progress into the latter half of the year due to planned single-aisle production rate increases. Let's now turn to cash and debt balances on slide 6. We ended the first quarter with approximately $1.4 billion of cash and $3.6 billion of debt. In February, we prepaid $300 million floating rate notes that were due this year. As Tom mentioned, we are planning to repay $1 billion in debt in the next three years, the timing of which will be in line with how air traffic and narrow-body production rates recover from the global pandemic. We believe our cash on hand and cash flows generated from operations, coupled with our ability to vary our cost structure quickly, will provide sufficient liquidity to address the challenges and opportunities of the current market. However, unevenness in the global recovery from the COVID-19 pandemic could result in fluctuations in our cash flows from period to period. Now let's turn to our segment performance on slide 7. In the first quarter, Fuselage segment revenues were $437 million, down approximately $115 million compared to 2020, primarily due to lower production volumes on the wide-body programs, partially offset by an increase in 737 MAX, defense, and the recently acquired Bombardier Business Jet program revenues. Operating margin for the quarter was -14%, compared to -16% in the same period last year. Increased 737 MAX production and higher defense revenues helped contribute to the gross profit improvement. We also recognized lower restructuring expenses, excess capacity costs, and abnormal COVID-19 charges. The Fuselage segment recorded $2 million of favorable cumulative catch-up adjustments and $55 million of net forward losses during the quarter, primarily due to the Airbus A350 and Boeing 787 programs. Propulsion revenue in the quarter improved to $227 million, primarily due to higher revenue from the 737 MAX program and aftermarket revenues. Operating margin for the quarter was positive 7% compared to negative 2% in the same quarter of 2020. Lower restructuring expenses, excess capacity costs, and abnormal COVID-19 charges were the main driver to the improvement in segment profitability. The segment recorded $6 million of unfavorable cumulative catch-up adjustments and $5 million of net forward losses. Lower production volumes on the 787, A320, and A350 programs, partially offset by revenue from the recently acquired A220 wing program, were the main contributors to the reduction in Wing revenue of $224 million. Operating margin for the quarter was -8% compared to 5% in the first quarter of 2020. The decreases in segment profitability and operating margin were primarily a result of forward losses recognized on the 787 and the A350 programs, and lower margin recognized on the A320 and A220 programs due to increased excess capacity costs. The segment recorded $13 million of net forward losses and $2 million of unfavorable cumulative catch-up adjustments. The first quarter of 2021 proved to be a very challenging start to the year. While uncertainty around the precise trajectory of the pandemic recovery remains, we are beginning to see positive signs in domestic air traffic demand. We are pleased to see the progress made over the past few months on our defense growth and aftermarket diversification efforts. Higher narrow- body rates in the back half of the year should create positive momentum into 2022. Cash flow is a focal point this year and is a top priority for our team in our day-to-day activities. Our 2021 cash flow is dependent on the planned delivery of approximately 167 737 MAX shipsets. We are closely monitoring the remaining regulatory approvals needed for the 737 MAX return to service, as well as the recovery from the global pandemic. With that, I'll turn it back over to Tom for some closing comments. Thanks, Mark. First quarter of 2021 was challenging as we managed through the wide-body rate reductions and investments that we have made to improve quality. As a result, in the first quarter, we had a higher rate of cash usage than we expected. With domestic travel recovering faster in the U.S. and China, we expect that narrow-body production rates will continue to improve. Spirit will benefit from this trend since 85% of our backlog is narrow-body aircraft. In 2021, we are planning to deliver about 160 737 MAX shipsets, as Mark just said, which is more than double what we delivered in 2020. We expect our free cash flow usage for the year will be between $200 million and $300 million. We also believe that we are still on course to be cash flow positive in 2022. Our diversification efforts continue with growth in our aftermarket and defense businesses. The acquisition of the assets of Applied Aerodynamics and the establishment of the JV with EGAT in Taiwan will help accelerate the growth of the aftermarket business to $500 million by 2025 at accretive margins. We believe our defense business revenue is on track to grow 15% this year after growing nearly 20% in 2020. We also continue to make good progress on our efforts to delever and to continue driving toward margins of 16.5%. With that, we'll be happy to take your questions. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask you please pick up the handset before pressing the numbers to ensure the best sound quality. Also, in order to give as many analysts the opportunity to pose questions, we do ask yourselves to limit to one question. Once again, that is star and then one to join the question queue. Our first question today comes from Carter Copeland from Melius Research. Please go ahead with your question. Hey, good morning, team. Morning, Carter. Just a question, Tom, or just clarification on this. On the 787, forward loss and these fit and finish issues, you know, do you guys have any potential recourse there longer term? Or, or can you kind of specify, are those your fit and finish quality issues, or are they simply schedule related to, you know, the broader problem? I'm just sort of wondering if, you know, if, you know, you guys don't have, you know, those specific issues, if, you know, if there's any, any way to get, you know, recourse on that as it's a broader problem with Boeing. These are our issues on our section, the Section 41, which is the forward fuselage. So at Boeing's request, we did an audit of the Section 41, all the different areas that we build, and we identified some similar fit and finish issues that they had identified on other sections of the aircraft. And so the rework and the forward loss related to that rework that we reported this quarter is related to us doing the rework on those units, but on our section. Okay, so there's no recourse per se, in that sense. Okay, great. That's, that's clear. Okay, I'll stick to one question. Thanks. All right. Thanks, Carter. Thanks, Carter. Our next question comes from Miles Walton from UBS. Please go ahead with your question. Thanks. I'll pick up where Carter left off. On the A350, the charge you took there, I think you mentioned lower assumed production rate signals from Airbus. I'm just curious what the signal is, and is it about the rate or about the duration of the rate? And also, can you just clarify on the billion-dollar debt paydown over the next three years, is that inclusive of the $300 million you just paid down, or is it $1.3 billion from 2021 onward? All right, well, I'll take the first one. The A350, about half of the forward loss on the A350, about $15 million, was related to schedule changes. And this is kind of an interesting point, is Airbus and even Boeing, when they talk about rates, they might not change the rate, but it doesn't mean that the schedule doesn't change. And in this case, on the A350, the stated rate stayed the same, but Airbus did pull units out of the schedule both this year and next year, 9 or 10 out of our schedule. And because the program was in forward loss, even though some of those units are from next year, it caused the forward loss in this quarter. And so that's just—that's, it's very common, the rates might not change, but because of furloughs or vacation schedules, or it could be any number of things, they end up producing fewer aircraft, and therefore, the production rates change. So that's what happened on the A350. The rate didn't change, but the amount of units that Airbus is asking from us did change this year and next year. And then on the debt question— Just to clarify. Oh. Oh, sorry. Sure. I'm just going to clarify. They're just flowing blanks through, but there's no change to the rate and the duration of that rate. Is that fair? The rate didn't change, but they just are requesting fewer aircraft from us, so they might have a furlough of two or three weeks, spaced in. So it's, yeah, it's essentially blanks. That's exactly right. That's the way to think of it. Thanks. On the debt question, Mark, maybe you could just quickly... Yeah, sure. Yeah, and Miles, just, you know, you historically, at the higher production rates, the monthly production rate, you know, was fairly consistent. With all the volatility with the pandemic and some of the airlines, you're seeing these small adjustments in the schedule that have an impact, and that's really what has been going on, on the A350. I think Tom explained it quite well. As it relates to the debt, the $1 billion, it starts with the $300 million that we just prepaid here in the first quarter. So that means over the next, call it 2.5 years, we've got another $700 million to go as we think about our three-year plan to pay down $1 billion of debt. Thanks so much. And our next question comes from Sheila Kahyaoglu from Jefferies. Please go ahead with your question. Good morning, guys. Thank you. Good morning. Can we talk about free cash flow? You know, in Q1, you used $200 million. Your guidance is $200-$300 for the year. You mentioned in your prepared remarks, narrow-body rates are a lot to do with it. Is there a breakeven when we think about the MAX in terms of production per month, whether it's on the operating income side or free cash flow, that helps you bridge to that free cash flow guidance? Yeah. Good morning, Sheila. We've talked about this a few times on calls in the past, and really, you know, when we look at where our cost structure is today and some of the factory improvements and efficiencies that we've built into the line, you know, we're really thinking about, you know, break even, and obviously 737 is a very helpful component to that, in the high upper 20s, low 30s on the 737 program. If we can get to a rate like that, that will definitely help us on the earnings and the cash flow side of things. Okay, thank you. Okay. Have a good day. Our next question comes from David Strauss from Barclays. Please go ahead with your question. Good morning, everyone. Morning. So on the MAX, Tom, just wanted to kind of reconcile this. So you're saying 160. So if we had perfect visibility into what Boeing was actually producing, that number would be around 220. I guess that's my first question, given you know, given the burn down you're talking to. And because in Q1, it doesn't look like you actually any of the inventory was burned down, it looks like they produced about 30. And then could you also just touch on 787 and, you know, the idea that you can hold rate there, given you know, I think over the course of the last year, Boeing, you know, Boeing's produced some... or you guys have produced something like 125 ship sets, while Boeing's only delivered, like, 50 airplanes. Thanks. Right. So on the MAX, our plan that we have described, including the outlook for free cash flow of $200 million-$300 million, is really based on us producing 160 units this year. Now, we've said in the past, we're going to be producing over time, for the next 18 months or so, fewer units than Boeing as we burn down the inventory that's here in Wichita and in Tulsa. So, Boeing has said that their production rates are going to get up to 31 by early 2022. So we will continue to lag them and burn down the buffer. And as I said in my remarks, we will get that buffer down to the target level of about 20... Units in a permanent buffer that we'll use as a cushion for the production system. So that way, as we go forward, we will avoid disruptions. And so that's the way it lines up. But we just wanted to be clear with everybody that we're building our plan this year around a production delivery to Boeing of about 160 units, and that supports the $200 million-$300 million free cash flow. On the 787, you asked about the production rates, and even though there was this engineering analysis and there's some rework, we have held to our schedule. So the schedule was to deliver 15 units in Q1, and that's what we did deliver. And we are also holding to our schedule in Q2. So on the new build schedule, Boeing hasn't changed that schedule, and we are still on track to meet that schedule for this quarter and the remainder of the year. Thanks very much. Thank you. Our next question comes from Seth Seifman from J.P. Morgan. Please go ahead with your question. Thanks very much, and good morning. Morning. Good morning. Just following up on that, last one with the MAX. Is your plan for 160, is that firm? Or to the extent that there were changes at Boeing related to certification, timing, and stuff like that, is that subject to change? Well, you know, typically, and we're not in a typical time, any production schedule changes are relatively rare, and there's significant lead time on those. Now, with the pandemic last year, there were lots of changes on all the programs. And so the schedule could change still because it's a very dynamic environment. There's still uncertainty out there. Air traffic has not completely recovered. But that's the schedule that we have right now. And, you know, we're in May already, and so, you know, that's what we are working with. And Boeing has indicated that that's what they're still planning. But again, with all the uncertainty in terms of air traffic and recovery with the pandemic, it could change. Now, as we said in the opening remarks, we are seeing some encouraging signs of domestic travel in the U.S. and in China, which is good for narrow bodies. On the other hand, Europe still seems to be uneven. So, it could change, but we have, you know, a reasonable degree of confidence at this point in the year that that's gonna be the schedule that we hold to for the remainder of the year. Right. Okay. Thanks. Thanks very much. Our next question comes from Robert Spingarn from Credit Suisse. Please go ahead with your question. Hey, Tom. Just sticking with the 737, if I think about all the numbers you've given us, the 29 in Q1 and the 160 for the year, it would seem to me that if you ramp linearly, you can't really go up more than 2 or 3 aircraft per month, per quarter, and exit at about something less than 20, maybe close to that, or you'd overproduce, you'd build more than 160. Am I thinking about that correctly? Well, I think what you're thinking about absolutely correctly is that a production system like ours has certain limitations about how fast it can go up in rate. And so, you know, typically, these things are all planned out years in advance. And in this case, they are as well. We have, you know, a longer-term schedule with Boeing that we've been working with and planning in terms of scenarios. But our production system is a complicated one. It's. We've got a supply chain. You know, there are, you know, almost 40,000 different parts on a 737 MAX fuselage, for example. So, quite complicated. And so for that reason, we have to plan these schedule breaks well in advance. Now, one good thing, ironically, is that this buffer that we have here in Wichita actually provides a cushion that allows us to move the production schedule a little bit more than we would've been able to in the past. So we have some flexibility, and we will be able to go up and rate a little bit faster than before because of that. Yeah, Rob, I think, you know, math-wise, you're spot on, is how you're thinking about things. Okay. All right. Well, that's helpful. Just one other thing on this. Are you sensitive in your plan to what happens with China recertification on MAX? Or do we think about what Boeing said, which is they can get through this year with or without it, but the problem is after that. In other words, I assume that means they can move others into position for this year, and so this year's plan is relatively protected regardless of China. Yes, we heard the same thing from Boeing on their earnings call, and that's what we believe. Okay. Thank you both. Thanks, Rob. Thank you. Our next question comes from Ken Herbert from Canaccord. Please go ahead with your question. Yeah. Hi, good morning. Morning, Ken. Hey, hey, Tom, I just wanted to follow up on some of your comments on defense. First, as you repurpose some of your capacity, how quickly can that be revenue generating on defense programs as you win those? And is there any risk down the road that as wide-body production eventually comes back, you could be looking at some capacity issues? I'm just trying to get a sense, as part of your defense growth, how much upside could there be from sort of incremental work relative to, you know, what you've established in the programs of record? Right. Well, in terms of the programs that we're winning, the classified programs, they're still in the early stages of their development, and then they'll go into low-rate initial production. So it's probably within about 2 years when they'll be revenue generating. It varies, but that's a good rule of thumb. And the good news is that one of the reasons we're able to win it is we have some of this equipment that's available now. Things like automated fiber placement machines, autoclaves, automated fastening, nondestructive inspection, these kinds of large pieces of capital. So that's in terms of how we're using it to win the defense work, and it'll be revenue generating in, say, the next 2 years. In terms of recovery in the future, we are projecting to the rates that we've committed to the OEMs, and so we're taking that into account. We'll have plenty of lead time to make sure that if we do need to make any adjustments or expand any facilities, that we can do that. But, you know, as you know, with international traffic down and business traffic still down, it's gonna take a while for the international traffic to recover, and therefore, for wide-body production to recover. In some cases, it may not get up to the same levels that it was up at before the pandemic, and so that capacity could be permanently available. But regardless, if it does return to the same levels, we will make sure that we are protected for that, with the commercial OEMs. Great. Thank you. Thank you. Our next question comes from Doug Harned from Bernstein. Please go ahead with your question. Thank you. Good morning. Morning. Hey, Doug. I wanted to think back, if we go back to pre-pandemic, pre-grounding, we were looking at production rates of 57 a month on the MAX, 14 a month on 787, 10 a month on the A350. So, when you talk about going longer term and getting back to 16.5% type margins, what kind of a rate is that predicated on for these programs? Yeah, that's a very good question, Doug. And one of the things that we see. And MAX is our biggest program, and so that's the biggest driver. And, you know, who knows what the future holds in terms of how high Boeing ends up going with that. But in terms of getting to the 16.5% margin, as Mark said, you know, the break-even point's a little bit lower in terms of what MAX production would be. And so, you know, if we get it up back up to 42, which is where we were in 2016, we think that would be a rate that would be high enough, and we could achieve some stability, that would put us in a position to get back to those 16.5% margins overall. Now, that takes into account the fact that there's headwinds on things like the 777. So back in 2016, 777 rate, as you might recall, was 8.3 aircraft per month. And 787 rate back then was 12 per month, and A350 was 9 per month. Now, on the wide-body programs, you know, you mentioned that 787 was at 14, A350 was at 10, and that's right. So today, 787 is at 5, and A350 is at about 5, or, or effectively a little bit less with some of the schedule changes. And so if those don't get back up to the same rates, one of the things that we are doing is using some of that capacity for defense work to offset the fixed cost absorption. So again, even if they don't get back up to those previous levels, we still think we'll, we'll be in a position to deliver that 16.5% margin, with the narrowbody rates on the MAX, as an example, being at the 42 range. Well, if I can- Doug- Go ahead. Yeah. Yeah, Doug, just real quick. I think the other difference that's really, you know, although the widebodies are gonna be a bit of a challenge over the next couple of years, the size of the defense and aftermarket business by the time we get to 2023, 2024, is substantially more significant than it was back in 2016. And so, you know, aftermarket is definitely gonna be accretive to the margins above the target of 16.5%. Defense revenues will be very solid, significantly higher than it was back in 2016, and, you know, the normal defense margins will help as well. So although the widebodies and the 777 will be a bit of a headwind and not contribute as much as it did back in 2016, I think the defense and aftermarket diversification and growth, along with stronger 737 production rates and the A320 continuing to go up, gives us a really good shot to hit those 16.5% margins. Sorry for interrupting. If I-- No, that's, that's okay. It's very helpful. 'Cause if I can just to clarify one thing, back in normal times, you would... Spirit would share operating leverage, both the benefits, both sides of it, with the customer. And, and, you know, now we're obviously in very different times, where rates are way down. And back then, you probably would have gotten a benefit on pricing, when rates came down. Now, when you look at these lower rates as you go forward, do you see pricing as being different, for the widebodies, for the MAX, than you, than you might have before? In other words, can there be benefits at these lower rates for you? Right. Well, the pricing on all the programs for Boeing and Airbus is more or less set out into the future based on some of the negotiations that we did. So but on the MAX, you know, one of the things that we did with Boeing is pricing goes out to 2033, but it is indexed to rate. So at the lower rates, the price is higher for Spirit, and then when the rates go up, then the rates get lower for Boeing. But at lower rates, obviously, there would be a pricing benefit. That's just the way the pricing is tiered on the 737 MAX. On the other programs, it's more or less fixed, and it's set out on the—for example, on the 787 program, pricing goes out to line unit 1805. And But we do get a step up at 1405. We do get a step up at 1405, correct. And on A350, the pricing goes out to line unit 1600.... So, so those programs are all very well far out into the future, and the MAX pricing goes out to 2033, but it's indexed to rate. Okay, thank you very much. Welcome. Our next question comes from Hunter Keay from Wolfe Research. Please go ahead with your question. Hey, thanks. Just to follow up on that question, have you ever, Tom, you know, renegotiated or opened up existing contracts as part of a broader negotiation when negotiating work on future contracts before? Is that something you expect might happen again, if it has in the past? Oh. Yeah, I mean, I would say negotiations in our industry are dynamic and kind of continuous. And so there's always you know discussions on them. But you know as I said on all of our programs, and this was a big accomplishment in 2017 and 2018, is we negotiated very long-term contracts with Boeing and Airbus on all the programs going out either to line units far into the future or to a specific time period, like 2033 for the MAX. So you know those are locked in, and we are now driving all of our productivity and improvements, things that I've talked about in the past about digitizing our factories driving you know world-class competitiveness in our supply chain continuing to lower our overhead and optimize our fixed costs. So all those things are things that we're working on to improve our productivity, now that we have our pricing locked in place with Boeing and Airbus on all the programs far out into the future. Thank you. Our next question comes from George Shapiro from Shapiro Research. Please go ahead with your question. Yes, I wanted to know, in the next several quarters, how do you get effectively close to breakeven cash flow when you got -$200 million in the first quarter here? I think you still have, like, a $130 million pension payment to Bombardier. I think the Boeing advance is actually deferred to 2022. Can you just kind of walk through a little bit of that? Sure, George. You know, I think, as we said, you know, we're forecasting cash flow usage in the year of somewhere between $200 million-$300 million, and that includes the cash tax benefit. So if you exclude the cash tax benefit, that would suggest our cash flow usage from the year would be somewhere between $500 million-$600 million. You know, the first quarter was a tough quarter for us, came off of lower deliveries in the fourth quarter, so some of our receipts were a tad bit lower than we're projecting for the rest of the year. We're seeing narrow-body rates start to recover or increase, you know, here in the second quarter and into the back half of the year. And that will provide us some receipts lift, as well as kind of managing and destocking our inventory over the course of the next nine months here. So, you know, we think that the first quarter is gonna be our toughest quarter as it relates to cash flow usage. Second quarter, you know, we're at this stage of the game, we're seeing some good trends. We expect to continue to see improvement as we move into the third and fourth quarter. You know, there's still, with the pandemic, some choppiness that are going out there, but we should see incremental improvements in our cash flow usage over the course of the next three months. And then, you know, as we talk about, you know, how do you get to cash flow positive? A lot of that is gonna be highly dependent on, you know, the commitments by the OEMs, specifically on 737, getting to 31 aircraft per month next year, and Airbus, you know, meeting their targets of 43 ship sets per month, 45 ship sets per month in the fourth quarter. And so the narrow- body recovery, as we move into 2022, we believe provides us the path to cash flow positive. And I would add one other thing, George, which is on working capital, specifically inventory. You know, last year, there were so many production rate changes, and they happened so suddenly, we ended up accumulating a lot more inventory. Now, the positive to that, of course, is that it helped the supply chain. They had cash flowing into them last year. But this year, we've seen some destocking starting, so we're not placing orders as rapidly this year because we're able to burn down that inventory. And so our working capital efforts are very significant, very rigorous, and that will also help us achieve cash flow improvements over the course of this year into next year. Hope that helps, George. Yeah, I thought you had said... On that working capital number, Tom, I thought on the fourth quarter, Mark had said somewhere you would expect $400-$500 million of working capital liquidation. Is that a correct number yet? I'm not quite sure we, we were that specific. I think what we said in 2020, that working capital consumed about $500 million of cash in 2020, and we expect that, from a working capital standpoint, as Tom just indicated, we're gonna get some benefits from destocking the inventory. You know, we're gonna consume the inventory. We're not gonna have to restock. We're managing our min-maxes very tightly. Our very deterministic PO placement is all in alignment. We provided a lot of support to our suppliers last year. ... This year, you know, we're really gonna get focused on days on hand, inventory turns, and a lot of that benefit will happen in the back half of the year as the single- aisle production rates increase. That will help accelerate the destocking. You know, obviously, you saw that we delivered 29 units on the MAX in the first quarter. We expect to deliver higher than that in the second, third, and fourth quarter, and that will help us as we consume some of that extra inventory, which will free up some cash as we move forward through the balance of the year. Okay, thanks a lot. Okay. Sure, George. Our next question comes from Kristine Liwag from Morgan Stanley. Please go ahead with your question. Hey, good morning, guys. Morning, Kristine. Tom, can you provide more details on the size of potential earnings upside through your joint venture agreement with Evergreen? And also, how should we think about priorities for cash usage regarding debt paydown versus pursuing more aftermarket, either through partnerships like this or through M&A? Right. Well, let me, let me turn it over to Sam to talk about the EGAT JV, and then I'll address the issue on capital allocation for M&A and debt. Right. In terms of the EGAT JV, we haven't talked about or disclosed expectations regarding revenue. Really what it's about at this point, Kristine, is building our scope and our bandwidth across regions. It's about taking our repair portfolio across to the Asia region, and that's what this JV primarily is about right now. And we're in the initial stages of forming the JV as well. Yeah, but as Sam said, what it gives us now is the third leg to the stool: we have Boeing repairs, we have Airbus repairs. Now, with Applied Aerodynamics, we have radome repairs and cargo door repairs, as well as flight control surfaces. And we have those in Europe, we have them in the US, and now with EGAT JV, we have them in Asia. And so it gives us a very nice balanced overall program. Now, with regard to our capital allocation in terms of debt versus inorganic growth, you know, the primary focus, as we have discussed, is to delever and to use cash flow over the next couple of years, and cash on hand, to pay down our debt on the schedule that Mark talked about, so another $700 million over the next couple of years. That said, you know, we continue to look opportunistically at opportunities that arise in aftermarket or in defense that could be interesting. And if we see opportunities like we did with Applied Aerodynamics, we'll take advantage of those, and we'll allocate the capital. But to do that, it would have to be obviously strategically fit with what we're looking for and have a good return profile. But we'll make those decisions on an opportunistic basis. But the primary goal and priority will be the debt delevering over the next couple of years. Great. And then also, when you look out a few years on aftermarket, do you have a target, size that you want it to be as a percent of your overall portfolio? Well, we've said we want it to be the $500 million by 2025. But, you know, if we think about our vision for Spirit in the future, as we think about diversifying into defense and aftermarket, you know, in an ideal world, we'd be 40% commercial, 40% defense, and 20% aftermarket. That would be a nice balanced portfolio for the future. Thanks. Our next question comes from Robert Stallard from Vertical Research Partners. Please go with your question. Thanks so much. Good morning. Good morning. Good morning, Robert. Morning. Tom, on the Airbus call last week, the CEO was talking about their plans for a steep ramp-up in the narrow- body production next year and potentially the year after that. And I was just wondering how well prepared is Spirit and your supply chain for such a steep ramp if it does occur, especially when you're talking about sort of destocking some of your suppliers this year. It's gonna be a pretty radical switch in trajectory for your supply chain. Well, we feel very well prepared. We've been working closely with Airbus. We very well understand what their plans are for rate increases this year and next year and beyond, and we are lined up with that. Now, of course, that means we have to work with our supply chain, and have to work very closely. 65% of our cost base is with the supply chain, and they are absolutely critical partners. We have a very detailed methodology for rate readiness that we are working with our suppliers. It's gated, there are dashboards, we have regular operating mechanisms to monitor it, but it looks at things like material orders. You know, for the most part, infrastructure, capital, that's all in place. We have to make sure that they didn't mothball anything during this pandemic period, but those things, for the most part, are in place. The keys are the raw material orders and then also rehiring some of the labor to make sure that that's in place. And so we have a pretty rigorous mechanism in place with the suppliers. The other thing we've been doing is working closely with the suppliers to provide assistance. We've, you know, reached out and helped, in a variety of ways, almost 600 suppliers with close to $1.9 billion of support. And that support includes contract extensions, inventory purchases, vendor financing programs, a variety of different mechanisms to provide support to them. We are prepared for the Airbus rate increases, and we believe our suppliers are prepared as well, based on our rate readiness efforts. That's great. Thank you very much. Our next question comes from Noah Poponak from Goldman Sachs. Please go ahead with your question. Hi, good morning, everyone. Morning, Noah. Morning. How many MAX ship sets does your current plan have you deliver to Boeing in 2022? Well, at this point, it's too early really to project that. There's a lot of uncertainty in the market. We'll follow Boeing's lead and determine after we get through this year, what next year is. But we'll wait to see what happens. It's still a very dynamic environment. 2022 seems like a long way out. Yep. Okay. And does the news that FAA is asking for more analysis, documentation, on the electrical issues, does that change your pace of MAX ship set to Boeing in the near term here, or is Boeing's latest affirmation of schedule to you, you know, with the knowledge of needing to do that? Well, of course, anything the FAA does could impact the MAX situation, but we're not expecting it to change the current outlook. Boeing hasn't made any indication that it would, but it's a dynamic situation. It could change it, but at this point, we have no reason to believe that it will. Okay. Thank you. Thank you. Our next question comes from Michael Ciarmoli from SunTrust. Please go ahead with your question. Hey, morning, guys. Thanks for taking the questions. Morning, Michael. Just one—how are you guys? Just on the topic of excess capacity costs, looked like there was a reasonable sequential step up from the fourth quarter, and I think you guys had been targeting to get those down 30% from that $280 million level last year. What are the puts and takes there? I mean, I'm imagining fewer A350s, you know, contributed to that, but how should we think about these excess capacity costs? Yeah, Michael, let me walk you through that. You're exactly right. Our excess capacity costs were a tad bit higher here in the first quarter compared to the fourth quarter. I would say a couple of things contributed to that. With the recent acquisition of the Belfast site, the A220 program will have excess capacity costs in addition to the A320 and the 737. And one of the items that drove a little bit of pressure on the excess costs, specific to the 737 program is, we went through a bit of a rate break here in the first quarter, higher rate break, and we had to bring on resources ahead of the higher delivery profile. And that caused some additional excess costs to unload here in the first quarter. We are still committed to the 30% reduction year-over-year. We've got a line of sight to that. We expect excess costs to continue to trend lower in the third quarter or in the second quarter, third and fourth quarter. Excess costs came really right on to what our projection was for the first quarter, and we will expect to see significant improvement as we step up in rate on the 737 over the course of the next nine months here. Got it. Perfect. Thanks, guys. I'll keep it to one. Sure. Thank you. Our next question comes from Peter Arment from Baird. Please go ahead with your question. Yep. Good morning, Tom and Mark. Hey, Mark, just a quick one first. If you have it, do you have the acquired revenues for the first quarter? And then just, Tom, related to employment levels, I mean, outside of the Bombardier acquisition, how are you, what kind of levels do you think you'll be adding back to this year? Any color you could give us on that and what you're seeing there? Thanks. Okay. Peter, let me just jump on the revenue side of things. You know, we're not gonna specifically disclose the acquisition revenue, but the revenues for the year continue to hold at roughly $700 million. I would say that probably slightly on a run rate basis, slightly higher in the back half of the year. But I think that's you know, pretty much how we see the acquired assets as we think about the business jet programs, the A220 wing, and the aftermarket revenues that we acquired. Great. I'll take the employment question. Yeah, I'll take the employment question. You know, last year was difficult year for Spirit, with the dual crises of the MAX grounding and then the pandemic. We ended up having to reduce our commercial headcount by 8,000 workers across the world. Very difficult. Now, a little bit of an offset on defense. We shifted about 800 people to defense, including a lot of engineers, as the defense program started to grow. As you may recall, we built ventilators last year. We built over 20,000 ventilators, and that kept about 1,000 people employed during the course of last year. But overall, the commercial programs lost 8,000 people. Now, this year, as we got into the year, you saw that the A320 numbers actually went down from 188 to 130, and wide-body programs went down in the first quarter as well. But that was offset by the narrow-body programs on the MAX increasing. So we started to increase the production. So last year, we were at 18. This year, we were at 29, and we're continuing to increase. So we've actually started to call back workers in Wichita. So, so far to date, between hourly and some salaried employees, we've recalled about 600 employees back in Wichita, and we expect to recall probably double that over the course of the year. The other thing is on 787, because production rates went down. Last year we were at 14, this year we were at 5. We were expecting initially to have to reduce that workforce, but you know, ironically, and good for the workforce, the rework has required us to keep that workforce in place on the 787, and we'll keep that in place for some time. So, some good news in terms of the recall of workers, particularly in the Wichita area, as the MAX production rates start to recover. Good to hear. Thanks, Tom. Thank you. Ladies and gentlemen, with that, we're going to conclude today's question and answer session and conference call. We do thank you for attending today's presentation. You may now disconnect your lines.