Good morning, everyone, and welcome to the Spirit AeroSystems Holdings, Inc. third quarter 2023 Earnings Conference Call. My name is Seb, and I'll be the coordinator today. If you would like to register a question on today's call, you can do so by pressing star one on your telephone keypad, or press star two to withdraw your question. I would now like to turn the presentation over to Ryan Avey, Senior Director of Investor Relations and FP&A. Please proceed. Thank you, Seb, and good morning, everyone. I'm Ryan Avey, and with me today are Spirit's President and Chief Executive Officer, Pat Shanahan, and Senior Vice President, Chief Financial Officer, Mark Suchinski. 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, including those 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. With that, I'd like to turn the call over to our Chief Executive Officer, Pat Shanahan. Great. Thank you, Ryan, and good morning, everyone. Welcome to Spirit's third quarter earnings call. It is a privilege to be here with you today, representing Spirit AeroSystems and our global team. I want to thank the board for entrusting me with this responsibility while we search for a permanent CEO. On behalf of the entire board, we thank Tom Gentile for seven years of dedication and service with Spirit. I'm very familiar with Spirit and its operations from my time at Boeing and as a board member for the past two years. My trips to Wichita go back to the 90s, where we tackled new programs and production rate increases together. Now, I am the supplier, not the customer, but the dynamics are the same. Over the past several years, Spirit has expanded its portfolio of commercial and defense businesses. However, the core of the business, designing and building large-scale aerostructures, has not changed. I've been in the role for about 30 days now. To borrow a military acronym, my approach since the first day has been TACAMO, Take Charge And Move Out, meaning I'm with the Spirit team at all levels, deep into program and production rate plans and engaging with all our major customers. My initial impressions are that we have a strong team and tremendous capabilities, but we need better precision in our plans, better performance, and the right schedule. We are manufacturing a product we've produced in large quantity at high rates before, as opposed to being in the throes of complex commercial development while concurrently ramping up production. My focus is simultaneously stabilizing operations, delivering on our customer commitments, and strengthening Spirit financially. I want 100% alignment with our commercial and defense customers. I'm driving performance every day and, most importantly, building cohesive teams that view working together as the most effective way to perform and win. The recent agreement with Boeing was an important step in the right direction. The strengthened partnership will support our shared goals of both companies to execute the increasing production rates. Also, I'm devoting increased attention to our other major OEM commercial partnership. Let me touch briefly on our strategy. I do not intend to wait for my replacement before moving forward. Regarding diversification, I will narrow the aperture. I don't have an appetite for next square adjacencies. We, Spirit, will build on our core defense and aftermarket success. My principal goal is to be cash flow positive as soon as possible. Executing on programs, increasing deliveries, is the most crucial lever to achieve that goal. However, we have other cash levers to pull to accelerate many of the activities previously developed, along with new ones we are covering every day. Shifting the discussion to market demand, it's incredible what a difference a couple of years make. We're witnessing unprecedented demand. I'm encouraged by the unbelievable organic growth in our course segment with a $42 billion backlog. The demand comes with challenges that we must mitigate as part of a new world that is less stable. I recognize we have disappointed our stakeholders. We want to restore confidence in the company. I'm passionate about this industry, our customers, and Spirit. I'm in Kansas most days because this is where most of the action is. The people here, and quite frankly, at all our operations, have been warm and welcoming. I'd like to provide you guidance for 2024, but I'm not prepared to at this time. My plan is to give guidance at our next earnings call, consistent with previous practices. I will now turn the call over to Mark to review with you our third quarter financial results. Thank you, Pat, and good morning, everyone. As many of you know, I've known Pat as a member of our board for a while now, and I look forward to working closely with him as we navigate the path forward. I can tell you that we are aligned on our priorities and the trajectory of Spirit. Now, turning to recent events, we are pleased to have reached a memorandum of agreement with Boeing in October, which we expect will result in improved cash flow over the next several years. I want to highlight the financial impacts of the agreement, which will be reflected in our financial results beginning in the fourth quarter. First, the MOA established an immediate higher price on the 787 program, with reductions to pricing on the 737 program beginning in 2026. We expect to record a reversal of a forward loss and material right obligations of $350 million-$370 million as a result of the 787 price increase. With this, a majority of the existing 787 forward loss liability will be reversed, and we anticipate positive margins on the program beginning in the first half of 2025 as production rates increase. Next, the MOA provided for a broad release of existing claims and liabilities, which will include the reversal of $23 million of anticipated claims previously recorded related to the 737 vertical fin attached fitting issue. In addition, we will receive funding for certain tooling and capital through 2025 on the 737 and 787 programs. We will repay the majority of the capital funded related to the 787 program beginning in 2025. In October, we received an advance on the total expected CapEx funding of $100 million. Between now and 2025, there will be some timing differences between the receipt of funds and the CapEx spending, which will be reflected on the statement of cash flows. And finally, the repayment dates were extended on the previously disclosed $100 million, $180 million advance of customer financing received in the second quarter of this year. We will now make repayments of $90 million in December of 2025, and equal repayments of $45 million in December of 2026 and 2027. The MOA strengthens the relationships with our largest customer and further aligns the parties for future success. Broadly speaking, the agreement provides increased cash over the next several years, which will help support production rate ramps across the different Boeing programs. Now, let me take you through the details of our third quarter financial results, which I remind you, does not reflect any impacts of the recent Boeing MOA. So now let's start on slide two. Revenue for the quarter was $1.4 billion, up 13% from the third quarter of 2022. Year-over-year improvement was primarily due to higher production on almost all of our commercial programs, as well as increased defense and space and aftermarket revenues. Overall deliveries for the quarter increased 5% year-over-year. The third quarter 2023 revenue was impacted by disruption from the IAM work stoppage in early July and the 737 F pressure bulkhead issue and continued supply chain and labor challenges, which resulted in less near-term deliveries, specifically on the 737 program. We now expect full year deliveries on the 737 program of approximately 345-360 units. Now, turning our attention to EPS. We reported earnings per share of -$1.94, compared to -$1.22 in the third quarter of 2022. Excluding certain items, adjusted EPS was -$1.42, compared to -$0.15 in the prior year. Operating margin was -9% compared to breakeven in the same period of 2022, driven by higher changes in estimates and excess capacity costs recognized during the current period. Third quarter forward losses totaled $101 million, and unfavorable cumulative catch-up adjustments were $64 million. This compared to $49 million of forward losses and $5 million of unfavorable cumulative catch-up adjustments in the third quarter of 2022. The current quarter forward losses relate primarily to the 787 and A350 programs and were driven by higher estimates of supply chain, labor, and other related costs. The unfavorable cumulative catch-up adjustments relate primarily to the 737 and A320 programs, reflecting higher factory costs and rework costs related to the quality issue on the 737 F pressure bulkhead. Additionally, excess capacity costs during the third quarter of 2023 were $56 million, up from $31 million in the same period of 2022. Other income in the third quarter of this year was $7 million, compared to other expense of $42 million in the prior year. The variance was primarily due to non-cash pre-tax charges of $73 million recorded in the third quarter of 2022, driven by the termination of our pension value Plan A, as well as lower pension income during the current period. Let's now turn to free cash flow. Free cash flow usage for the quarter was $136 million. Cash usage increased compared to the same period of 2022, largely driven by the negative impacts of working capital and costs associated with factory disruption. Working capital was impacted by the disruption and work stoppage associated with the IAM strike at the beginning of the third quarter, rework and disruption costs related to the 737 forward pressure bulkhead issue, as well as ramping to higher production rates on the 737 program. Third quarter 2023 cash from operations also included $50 million customer advance that was previously disclosed, and the payment of the ratification bonus related to the IAM contract of $23 million. We have updated our full-year free cash flow to reflect the lower 737 deliveries expected for the year and the impacts of the Boeing MOA, and now expect our full-year free cash flow to be in the range of -$275 million to -$325 million. With that, let's now turn to cash and debt balances on slide three. We ended the quarter with $374 million of cash and $3.9 million of debt. Addressing the $1.2 billion of 2025 debt maturities is a near-term priority, and we continue to evaluate all refinancing options to address debt as well as our overall liquidity. Next, let's discuss our segment performance, starting with the commercial segment on Slide four. In the third quarter of 2023, commercial revenue increased 10% over the same period of 2022 due to higher production volumes on almost all of our programs. Quarterly operating margin decreased to -7% compared to +4% in the prior year, driven by higher unfavorable changes in estimates and excess capacity costs recorded in the current period. The changes in estimates during the third quarter, which I previously discussed, included forward losses of $87 million and unfavorable cumulative catch-up adjustments of $59 million. In comparison, during the third quarter of 2022, the segment recorded charges of $47 million of forward losses and $7 million of unfavorable cumulative catch-up adjustments. Next, let's turn to the defense and space segment on Slide five. Defense and space revenue grew to $206 million, or 27% higher than the third quarter of last year, due to higher development program activity and increased KC-46 tanker production. Operating margin for the quarter decreased to 5% compared to 11% in 2022, primarily due to higher changes in estimates recorded in the current period. The segment recorded forward loss of $15 million and unfavorable cumulative catch-up adjustments of $5 million, compared to forward losses of $2 million and favorable catch-up adjustments of $2 million in the third quarter of 2022. The forward losses were primarily driven by higher production cost estimates on the Sikorsky CH-53K program and unfavorable cumulative catch-up adjustments that were primarily driven by the P-8 program. For our aftermarket segment results, let's turn to Slide 6. Aftermarket revenues were $97 million, up 21% compared to the third quarter of 2022, primarily due to higher spare part sales. Aftermarket continues to grow along with the global air traffic recovery and is on track to meet the plan for the year. Operating margin for the quarter was 19%, compared to 24% during the same period of 2022, driven by sales and model mix. With that, we'll be happy to take your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad now. If you would like to withdraw your question, please press star two. In the interest of time and fairness to all participants, we ask attendees to limit themselves to one question at a time. Our first question today comes from Seth Seifman from JP Morgan. Please go ahead. Hey, thanks very much. Good morning, everyone, and welcome, Pat. Morning, Seth. Got a bunch of questions here. Morning. A bunch of questions, but maybe I'll just jump. I wanted to ask you specifically, Pat, about two things that you said in your opening remarks. One is, you know, you talked about other cash levers to pull to accelerate. You know, I wonder if you could expand upon that. And you also talked about having the right schedule. And I wonder when we think about 737 production from here, you know, what does the right schedule mean? And, you know, what's really, what are the two or three things that you think are most important to getting to adequate 737 profitability and not having more of these negative cum adjustments? Sure, Seth. Happy Wednesday. Let's maybe take the first one. You know, the biggest, as I mentioned, the biggest lever to get to positive free cash flow is program performance, but that's not a pass for the rest of the team to go after indirect costs. And those range from organizational structure to enforcement of contracts with our suppliers, to a number of the other traditional things you might address in terms of looking at inefficiencies or belt-tightening. In addition to that, there are just things we have to stop doing. So in parallel to the other improvement activity, we've really accelerated our focus on, hey, every dollar matters, and let's bring it to the bottom line more quickly. Your other question, I think, is really the most important issue that we're dealing with right now, and that is the right schedule. What I've learned over my almost 40 years in this business, if you get the right schedule, everything else works. Schedule is a barometer for performance, and if you're on schedule, you're going to realize, you know, the appropriate costs, and if you get the right costs, you'll get the right financial results. When I look at the schedule, and hopefully with the guidance we provided in terms of end-of-quarter deliveries, you did the math, and the math is, let's adjust for holidays and non-working days. Our effective rate when you look at deliveries is we're at about 37-42 a month in the fourth quarter, delivering to Boeing. We have a path to the 50s in 2025, and the reason I say we have a path to the 50s is we've been there before, so it's not something new. It's a question of how do we stabilize in our internal operations so that without the effort we're using today, we can cost-effectively, with high quality, produce the fuselages that Boeing so desperately needs. The path is through rate increases. The biggest, the two biggest levers for us are the supply chain and our own internal productivity. When you just look at producing 737 fuselages at 42 a month, it's, you know, roughly 25,000 parts that go into one. And so at 42, that's 1 million parts we need per month. And when you look at the amount of fasteners that we put in, it's, you know, something on the order of 10 million a month. And so for us to produce, it's really about being synchronized and stable, and there's just a lot of detail that goes into achieving that. I believe that we'll be able to stabilize here and meet Boeing's demands in 2024. I'd like to walk you through the detailed schedule that we're working on. I would just tell you this, is that we're not doing things parametrically. We're down to looking at things by the day, by the train pull, by the supplier. I've been here only a short period of time, but the readiness that we didn't have in the past is not the readiness you will see in 2024. Great. Thank you very much. You're welcome. Our next question comes from Sheila Kahyaoglu from Jefferies. Please go ahead. Good morning, guys, and happy Wednesday to you too, Pat. So I was wondering if you guys could talk about the free cash flow revision, you know, $275 million-$325 million of usage. How are you thinking about the change there from the prior guide? How much of it is tied to the 737? And just as we think about the step up in Q4, what really changes? And, you know, first 30 days or so on the job, what have you seen that could be an immediate improvement? Well, well, Sheila, let me, let me just take the walk on the headwinds and the tailwinds, and then I think Pat can provide some additional color. You know, the biggest impact to free cash flow from a headwind standpoint is fewer 737 deliveries. And I think that the challenge that we have here is when we were staffed to 42 airplanes per month, we've been bringing in parts to help support 42 airplanes per month. And when we drop our deliveries from the previous forecast of 370-390 to 345-360, a lot of that cost is embedded in, into our system, and so by not delivering the aircraft, we're not collecting the cash on the delivery. So I think the impact is a little bit bigger than you've put in your note as it relates to missing the deliveries. The additional forward losses and the negative cumulative catch-up adjustments that we took is going to add some additional pressure to cash in the fourth quarter. And then we're seeing, you know, a lower A220 deliveries in the fourth quarter, and that's primarily driven by a customer change in their schedule. On the flip side, positiveness from the Boeing MOA, the 787 price increase, and the CapEx funding. So I think if you factor all those things in, the biggest impact, I would say, is the lower 737 deliveries and us being staffed and having the working capital in place, and we're just not going to relieve that inventory and collect the cash. Okay. Got it. Thank you. Thanks, Sheila. Our next question comes from Myles Walton at Wolfe Research. Please go ahead. Thanks. Good morning. One quick clarification- Good morning. And then one question for you, Pat. So on the clarification, are you currently shipping to Boeing conforming fuselages at this point? I realize that you were able to recognize revenue and earnings on sort of non-conforming and then fix, after the fact. But if you can update us, if you're now conforming. And then, Pat, you made comments about diversification in your opening remarks, and just curious, I know, you've been on the board for a few years, and you've only been on the job for a very short period of time, but is diversification necessary to make Spirit a great company? It had 80% concentration to Boeing, you know, just a few years ago, and, obviously, the stock did quite nicely, and the revenue and earnings were actually pretty good. So is diversification required? Sure. Maybe I'll just take the diversification one first. To the degree that Spirit has approached that in the past, I would say no, diversification doesn't make sense at this time. And when you look at the demand for commercial airplanes, having two of the biggest customers in the world and not being able to satisfy the demand, it should command our full attention. On maybe the kind of the next level down, we've built a great defense business here, and you know, it's a more dangerous world, and I think what you would take away from some of that is we have tremendous engineering capability. And when you think about the future of large-scale aerostructures, it's advanced materials. So to that extent, the diversification and probably developing broader capability in advanced materials makes a lot of sense. Aftermarket is, you know, just isn't of the volume that we see in the other businesses. And to your earlier question, I believe they're conforming. We'll make sure to get back to you on a full answer there. Yeah, Myles, you know, the product that we're shipping to Boeing at this point in time is being reworked and is conforming. We've put the fixes in place. So, we're in good shape there. Okay. Thank you. Thank you. Our next question comes from Scott Deuschle from Deutsche Bank. Please go ahead. Hey, good morning. Hey, good morning. Pat, my understanding is that supplier price negotiations with Airbus these days often revolve around moving money from one year to another, but that they often fail to address the underlying long-term unit economics for suppliers. But it, it seems like you need a real structural fix here, rather than a band-aid. So I'm curious if you think it's possible that you get a structural remedy from Airbus, and if not, maybe you can describe what your alternatives might be. Thank you. Well, I won't describe what the alternatives are because I think we can get a remedy. I am spending more and more time with my Airbus counterparts, and this is an item of utmost urgency for me personally, and I will be, you know, if not leading, very deep into these conversations and discussions. I'd. You know, if you would indulge me for a minute, just kind of talking about composites and advanced materials, just as I mentioned before, you know, really is the future. When we think about the situation, we have a near-term financial problem. When I look at the A220 or the C Series, it was produced about the same time as the 787 and the A350, and from a technical standpoint, those products are performing extremely well. The maturity of the production system when those designs were certified were really immature, and there are inherent cost limitations. The performance that we should be realizing out of the manufacturing system just isn't there, but I think it's inherently not there. Between us and Airbus, we have to come to some resolution to address that discontinuity. I think we'll be able to get to the place that makes sense for both parties, but it is a near-term action that I'm committed to undertaking, and my counterparts at Airbus feel the same sense of urgency. Got it. Thank you so much. Yep. Our next question is from Doug Harned from Bernstein. Please go ahead. Good morning. Thank you. Good morning, Doug. You know, when you look at, and Spirit's been dealing with new quality escapes over the last year that have resulted from manufacturing problems that happened well before this year, such as the tail fittings, the aft bulkhead issue, 787 non-conformities. How do you make sure that there are not more issues like these still to come out? And how are you thinking about changing the way you approach quality from an operational standpoint, so you can prevent this in the future? Well, Doug, that's probably reading my mind in terms of what's really gonna, you know, change the reputation and give customers greater confidence, is that, you know, we really deliver pristine quality products to our customers. Maybe just let me frame it from this standpoint. You know, the tone from the top internally is that my priority is the safety of our teammates, the quality of the product that we build, and productivity. Externally, the focus is quality to our customer and on-time, reliable delivery. The mindset I have is that we can be zero defects. I mean, we can eliminate all defects. We have a very robust quality management system, but every day we have to put time and attention to that. And I... It isn't as though there's a silver bullet out there or a different procedure that we can implement. It's the whole organization being first and foremost focused on how we build the product. And I think you'll see that over time, because that's where my time will be in, is, you know, where you put your time, you know, it gets people's attention, and leadership has a long shadow, and I think you'll see us, improve quite a bit in this area. Okay. Thank you. Our next question comes from David Strauss at Barclays. Please go ahead. Thanks. Good morning. Hi, Pat. Good morning. Morning. Mark, I think, you know, before, you guys had talked about getting to free cash flow positive in 2024. ... Is there anything on the other side of the Boeing MOA as to why that, that still wouldn't be the case? That's my first question. Then second question, just an update. You know, you mentioned the, the urgency around the refinancing. What, what are you looking at in terms of, in terms of timing to come to market? I think previously you talked about maybe going in, in, in two phases. So any update there? Thank you. Well, good morning, David. Good to hear from you. You know, as it relates to, you know, 2024, I think Pat said, you know, he's 30 days into his, his role here. He's making his way through. We're looking at the business holistically and really focused on, you know, completing the year, getting the business stabilized, and then, providing you guys a, a good, robust update in February. But I'll just kind of reiterate what we said previously. You know, we expect 2024 to be a, a positive cash flow year. The Boeing MOA is, is definitely a, a benefit to 2024 and beyond. And, and so, you know, I'll leave it at that at this point in time, and then in February, we'll come back and give you more specifics around our plans. You know, as it relates to the refinancing, you know, it's obviously a big priority for me. You know, the refinancing is a little more than a year out. The goal here is to assess all of our options that we have at this point in time. You know, we've got some good plans in place we're thinking through. We've been successful, as we've gone to the markets in the past, and I think, you know, it's, you know, as Pat talked about his big goal working with Airbus, one of my big goals is getting through the refinancing, getting it behind us, so we can focus on the business in 2024. And so, there's a sense of urgency there. It's a near-term priority, and we're going to be working through that, you know, as I had previously stated, to make sure that we get the refinancing done before the debt becomes short term. Great. Thank you very much. Thank you. Our next question comes from George Shapiro from Shapiro Research. Please go ahead. Good morning. Welcome, Pat. It's been a while, but good to see you back in there. Yeah, thank you. Good to be here. Morning, George. Mark, if I looked at this quarter's free cash flow, I take out the $100 million that you're getting from Boeing, and I don't—I'm not sure whether you got another advance for Airbus, but if you did, I mean, you're still, next year's free cash ought to be a lot better than just looking at this year's implied fourth quarter, which was like $140 million, take out the $100 million from Boeing, so at $40 million. And I don't think there was an Airbus payment there, you can correct me. But why wouldn't next year at least be as good as the annualized rate for this year's fourth quarter? You know, good question, George. You know, I think as I addressed with David, as it relates to free cash flow, again, we'll stick with the fact that it's going to be positive next year. We'll provide you more specifics around that when we come back and chat with you in the first week of February, when we disclose our results. We don't want to get ahead of things. You know, Pat's got a lot of work to do here, and we're all here supporting him. We'll pull together a good plan, and we'll provide you guys an update in February. Okay, then one quick one for you, Mark. The higher than expected excess costs, can you give some color with that and kind of what the thinking might be when we get to the fourth quarter? Sure, George. You know, I, I would just say this, you know, the, the third quarter was, was highly disrupted. When you think about our production, the, the number of units, our position in the factory, starting the quarter, not gearing back the production line back up until around, call it July tenth, because of the IAM work stoppage and then the, the vertic- or the Aft bulkhead issue. So I would say, for the most part, it's, it's the IAM strike, it was a quality issue, and then just some of our own performance in the factory that, you know, ultimately added to the excess costs. And so, you know, what I would say is it's a little bit of an anomaly because of that. And as we move into 2024, you know, I would expect us to continue to see that those excess costs go down, as we go up in rate and absorb more of the fixed cost overhead here. So, again, I think we'll continue to see things improve in the fourth quarter and then get better in 2024 as compared to 2023. Okay, thanks very much. Okay. See you, George. See you. Our next question is from Noah Poponak from Goldman Sachs. Please go ahead. Hey, good morning, everybody. Good morning. Pat, is it at least in the scenario analysis that you stay in the CEO seat long term, rather than, it being an interim solution? Well, I'll tell you, Noah, my commitment to Adrienne, my wife, and the board was that I would do this for a year, stand up the operations so that we could put a strong replacement in place, and that remains the commitment, and no change at this time. Okay. Appreciate that. And then just as a follow-up on the Aft pressure bulkhead challenge on the MAX, I heard you that you're now shipping conforming clean new off the line. I guess what about the inventory rework and just overall, you know, what's the timeframe in which that is behind you completely? I don't have a timeframe specifically right now. In the work that we've been doing, I mean, if we had this call another week, I could probably give you a precise answer. The analysis continues to improve, and so I can't really tell you what the final work scope is there, but it's trending towards sooner rather than later. Okay. Fair enough. Thank you. Yep. Thanks, Noah. Our next question comes from Robert Stallard from Vertical Research. Please go ahead. Thanks so much. Good morning. Good morning. Good morning. Pat, this is probably one for you, actually. On the Airbus negotiations, I was wondering if you could give us some idea of how this differs versus the discussions you've been having with Boeing. And in conjunction with Airbus, the A220 program didn't take a charge this quarter. So I was wondering if you could give us an update on how that's going. Thank you. Yeah. Maybe Mark can talk about the charge, and I can talk about the negotiation. You wanna take that first? Sure. Yeah. Rob, you're right. No, no forward loss charge in the A220 program. It was a pretty good quarter. I think the team is doing well. We're meeting our delivery commitments to our customer. And so a pretty quiet quarter on the A220 side. Yeah, maybe just to comment on the, you know, differences or similarities between the Boeing and the Airbus negotiations, I'd, I'd say they're very similar. I mean, the nature, you know, this is really kind of concentrated on the A220. I mean, at the end of the day, it's really about the A220. And, you know, like my earlier comment about the maturity of the production system and expectations of performance were, were not aligned. And until we can get that alignment, it makes, you know, producing at the higher rates more difficult. And I think that we will come to a reasonable outcome because it's important for... It's important for Airbus, it's important for Spirit, it's important for the airplane. There's strong demand for that airplane, and we're committed to Airbus, and I think they're committed to us, and it's just something here in the short term. But I'm encouraged, based on the Boeing agreement, that we'll get there with Airbus. Okay. Just a quick follow-up, Pat. Hard to put a- Yeah ... timeframe on this. Do you think you, you'll get this done before February? Oh, I think so. Okay. Thank you very much. Our next question comes from Robert Spingarn from Melius Research. Please go ahead. Just got my mic on for Rob Spingarn. Pat, I did wanna ask you, if you pursue a financial remedy on the A220 or A350, is there any concern that Spirit could potentially see a reduced role later on the A220 or A320neo if Airbus re-wings those programs? Yeah, no, to—I mean, I spend half my time on that question and half my time on the negotiating, not, not so much the negotiating strategy, but the strategy process. And I think with our advanced engineering capability and the things that we do with resin transfer molding, we're a critical part. It's not so much the wing of tomorrow, it's just Airbus's long-term composite supply chain, I think we're a vital piece of that. The issue we have is just here in the near term, how do we solve this financial disconnect? But I would bet on the team in Belfast to be a critical part of Airbus's future. We just have the overhang of some agreements that go back a long, a long time pre-COVID that we have to kind of work our way through. You know, it's just, you know, the earlier remark I made about this company and advanced materials. The things that we're doing are really going to be the basis of the next generation of product out there in the defense world and commercially, because we can do it at scale, and we get reps every single day. And to go replicate some of these assets in a greenfield at scale is cost prohibitive. So, I think it's just, you get trapped in these situations of managing quarter to quarter or that somebody should get better performance than they're actually realizing. And I think, just like with the Boeing agreement, we're gonna get to a place that makes sense for both parties. Thanks. I'll just stick to one. Thank you. Our next question comes from Cai von Rumohr, from TD Cowen. Please go ahead. Yes, thanks so much, and Pat, welcome. Thank you. ... The Boeing MOA basically, you know, you basically have to take a lower price on the 737, you know, as you get out to 2026, and you get a much higher price on the 787 near term. But then, around the middle of 2008, you have the renegotiation of the price on the 787. And I mean, as I read what I've read of the MOA, it looks like basically barring any change in the negotiation, that the 787 price at that point goes back to where it currently is or relatively close. Should I be concerned that that's a real liability or, you know, as you get out there, that the 787 could revert to going back into modest, you know, basically break even or a loss? Hey, Cai, it's Mark. Let me jump in there. You know, I would say that we came to a good conclusion on the appropriate pricing on the 787 program. Essentially out through the order book, we have a commitment between the two parties to negotiate a fair and reasonable price beyond 16-05, one year in advance of that delivery date. And just like we came to an appropriate conclusion, which allows Spirit to make an appropriate margin on that airplane program here shortly, that's what our expectations will be long term. Okay. And a separate—if I may—one more on the Airbus talks. You know, clearly, you know, it's going to be difficult to do a refi unless that is behind you. Does that—do you feel that puts increased pressure on you to kind of come to the table more quickly? Or, you know, how do you deal with that timing issue of having to get that done before a refi? Cai, I don't think we're in a position where we're pressured to negotiate. I mean, Mark, you might comment just on the financial situation, but I think we have time to get it right, but there's no point in wasting time. No, I agree with Pat. You know, I'd just say this, Cai. I I think the Boeing MOA provides a nice boost to liquidity here over the next several years. And I think we have some momentum here on that front. And so again, when it comes to the refinancing, we're going to do what's best for us, for our company, and for our shareholders, and work through that accordingly. And as Pat said, no pressure on the Airbus side. That will happen in its due course. Thank you very much. Our next question comes from Gavin Parsons at UBS. Please go ahead. Thanks. Good morning. Good morning. Morning. Pat, you suggested you'll be delivering, I think, around 37-42 a month in the fourth quarter. Just to clarify, is your plan still that you'll be cycling and delivering at 42, starting in 2024, or is there a spread? And then could you update us on the current MAX inventory buffer? Let's see. No guidance on 2024. In terms of the buffer, I don't have- I've got that, Pat. We've got, as you know, a mix of, Yeah ... units in there. Yeah, so we, Gavin, we have about 80 units in buffer. We like to categorize them in two components, units that are on hold, and then units that are available to ship. So there's around 50 units, you know, that have that are in Boeing's in the buffer. Boeing owns title to those, and Boeing can pull them whenever they're ready to pull. So buffer's increased a bit. At the end of the second quarter, it was low as we prepared for the work stoppage issue, but we've been able to build up that buffer to a certain degree. And as Pat said, you know, the goal here is as we move forward here, to sync up our production schedules. But that's an update on the buffer. Okay. Thank you. Yep. Our next question comes from Peter Ament from Baird. Please go ahead. Yeah, and good morning, Pat, Mark. Hey, the- Good morning ... the hundred million you're getting for tooling-related equipment, you know, for the 737 and the 787, can you kind of give us a little more color on what the real benefit is there? I mean, obviously, it's nice to see the cash infusion, but, you know, you've—as Pat, you said, you've been at these higher rates before, so what is actually, you know, the benefit that you're seeing here? Thanks. Yeah, sure, Peter. A couple of things. Number one, with most OEMs, and it, you know, if you have production rate increases or model mix or new derivatives, the OEMs always own the tooling, right? And so that's unchanged from our previous agreements. But, in this current environment, when we look at the model mixes, and we have the dash 7s, the 8s, the 9s, and the 10s, you know, Boeing is selling more 7s, more 10s, and that has an impact on our production system. And so therefore, it's going to require us to make some capital investment. And so one of the benefits of the agreement, and we appreciate this from Boeing, is they're going to pay for some capital.... that normally Spirit would have to pay. Normally what would happen is, as we built those units, we'd absorb more overhead, and that would help profitability. But the big benefit here is it's a combination of tooling and capital that Boeing is gonna pay for. They've given us an advance in the fourth quarter and some funding in 2024 and a little bit in 2025, and that's gonna result in us spending higher CapEx in 2024 and 2025 to reflect the new models and the adjustments we need to make in the production system. So there is a benefit to Spirit. It's gonna be a little lumpy when the receipts come in and when the funds go out, but we thank our Boeing customer. They're making the actual capital investment themselves, and so we appreciate that. So really, that's in a nutshell. It's a nice little benefit. Although it's cash neutral, it is a benefit to Spirit. Appreciate the call. Thanks, Mark. Sure thing. Our next question comes from Michael Ciarmoli from Truist. Please go ahead. Hey, good morning, guys. Thanks for taking the question. Good morning. Pat or Mark, good morning. Just on the MOA, can you maybe help us out or give us a little bit more detail? Obviously, you kind of can triangulate where the 787 deliveries are gonna be this year. You got the $60 million revenue increase. I mean, was that all pricing, and should we assume that's kind of maybe rough $2 million per unit pricing? And then, you kind of said not gonna be margin positive till 2025. I guess the reversal of the amortization, you know, looks to be an additive, but I think you're still paying back, you know, from the existing MOU, the $450,000. Is... Can you just help us bridge some of those moving pieces so we can get a better expectation on 787? Yeah, sure, Michael. You know, I'm not gonna comment specifically on what the price increase is per unit. But I think what you should take from the agreement is, we're reversing forward losses, where previously in the future, our cost was higher than our price. So when you reduce a forward loss, right, and the cost, or cost forecast is unchanged, it's a pricing benefit. So, you know, those losses or those cash losses that we would book in the future, we're reversing those because those no longer exist. And then when we talk about, you know, when we get to positive margins on that program, you know, we're at 4 or 5 a month, moving to 7 a month. So it's gonna take us a little time to absorb some of that overhead and get the full benefits of the pricing agreement. And so, you know, when we look at the early part of 2025, you know, we're gonna be at a higher rate than we are right now. And based on the price we're getting paid per unit and what our cost projections are, we talked about being positive margins, and we expect that to be a benefit on an ongoing basis. So again, I don't wanna get into specifics about how much we got paid, but it's a big, big deal to Spirit. We're at the point now where we were in a loss position since essentially the inception of the program. Here in short order, you know, our cash and the revenue will be higher than our cost, and it'll be a cash positive program for us. So, good thing for us, as that program starts to go up in rate here over the next 12-18 months. Got it. I'll keep it to one. Thanks, guys. Thank you. Our last question today comes from Kristine Liwag from Morgan Stanley. Please go ahead. Hey, Pat and Mark, the MOA with Boeing clearly signaled to Spirit equity and bondholders, Spirit's strategic importance to Boeing. I mean, that said, operations continue to get worse with the forward losses and the negative cumulative catch-ups, even in defense. So, from your conversations with Boeing, to what degree does Boeing's financial support extend? And can Boeing step in to explicitly help underwrite the refinancing of the 2025 maturities? Hey, good morning, Kristine. You know, interesting question. We do thank our big customer for the agreement that we have in place, and we think it's a win-win. They deemed it as a win-win. You know, I wouldn't view it as charity. I think we perform a great service to our customers. I think we do a great job performing on their programs. And so overall, it's a win-win, they describe it as a win-win, and we view it as a win-win. As it relates to refinancing strategies, as I've said before, we have access to the capital markets. We don't need Boeing to underwrite us as we think about our strategies around upcoming maturities. And I would just kind of leave it at that. Great, and if I could do a follow-up. You know, when we factor in the current inflation environment, the higher labor cost, and the pricing step-down for the 737 come, you know, 2026, what should margins for the program be, for the 737 at that point? And how would that compare to where we were, you know, around the 2019 levels? Yeah. Hey, Kristine, I'd just say this: Hey, before we jump to 2026, let us get through 2023, and, and have a good, robust discussion with you in February about 2024. We'll, we'll have those discussions in good time. Great. Thank you. Thank you. This concludes today's conference call. Thank you all very much for dialing in, and have a wonderful day.