Ladies and gentlemen, thank you for standing by and welcome to the Textron Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you have a question, please press one and then zero on your touch-tone phone. You may remove yourself from queue at any time by repeating that one-zero command. If you're using a speakerphone, we ask that you please pick up your handset before pressing the numbers. As a reminder, if you need assistance from an operator, please press star and then zero. This conference is being recorded, and I would now like to turn the conference over to the Vice President of Investor Relations, Mr. Eric Salander. Please go ahead. Thanks, Gilly, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward-looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, Textron's Chairman and CEO, and Frank Connor, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website. Textron's revenues in the quarter were $3.7 billion, down $368 million from last year. During this year's fourth quarter, we recorded $23 million in pre-tax special charges, largely related to restructuring activities on Industrial and Textron Aviation, or $0.07 per share after tax. We also recognized a one-time favorable tax benefit related to the sale of TRU Canada of $0.04 per share. Excluding special charges and the one-time favorable benefit, adjusted net income was $1.06 per share compared to $1.11 in last year's fourth quarter. Manufacturing cash flow before pension contributions was $467 million, down $183 million from last year's fourth quarter. For the full year, revenues were $11.7 billion, down from $13.6 billion a year ago. Adjusted net income was $2.07 per share compared to $3.74 last year. Manufacturing cash flow before pension contributions was $596 million as compared to $642 million last year. With that, I'll turn the call over to Scott. Thanks, Eric. Good morning, everyone. Our business has closed out the year with a strong operating performance in the fourth quarter, as we saw margin improvement at Systems, Industrial, and Bell that drove an increase in Textron's manufacturing margin to 8.8% on lower revenues. At Bell, margins of 12.6% were up 30 basis points as compared to the prior year, despite lower military revenues and commercial volume. We delivered 57 commercial helicopters, down from 76 in last year's fourth quarter. On the military side, the Japanese officially began V-22 flight operations in November. This continues the growth of the worldwide fleet of operating aircraft, which has amassed over 560,000 flight hours. Looking to future vertical lift, Bell marked the third anniversary of the V-280's first flight in December, with the aircraft having now flown more than 200 hours. Army leadership and Congress have been very supportive of future vertical lift, and we expect this will continue under the new administration. In December, the U.S. Army provided the draft RFP for the FLR program for review and comment. The Army continues to anticipate a down select and FLRAA program award in mid-2022. At Systems, revenues are down primarily on lower volume at the TRU Simulation + Training business. In November, Systems announced the sale of its commercial air transport simulator business to CAE. This transaction closed in January. In the quarter, ATAC won the recompete of the U.S. Navy and Marine Corps Fighter Jet Training Services program. This contract expands the scope of the services we currently provide under the program and is worth up to $440 million over the next five years. Also, in the quarter, Unmanned Systems was awarded a $66 million contract for the U.S. Army for 36 Shadow aircraft. The Shadow platform now has over 1.2 million flight hours globally. Moving to industrial, revenues are down primarily due to reduced demand in the ground support equipment business within specialized vehicles. Kautex, the automotive production outlook, has steadily improved since the low point in May, and demand from our customers continues to ramp in the fourth quarter as revenues approach their prior year levels. Moving to Textron Aviation, revenues were down in the quarter primarily on lower jet deliveries and aftermarket volume. We delivered 61 jets, down from 71 last year, and 61 commercial turboprops, up from 59 in last year's fourth quarter. On the new product front, Aviation began deliveries of the new King Air 360 with eight units in the quarter and announced the new King Air 260. The Cessna SkyCourier program continues to progress with three aircraft flying in the certification program. The flight test program has completed over 400 flight hours, and the aircraft is on track for entry into service in the second half of 2021. In summary, 2020 was a difficult year with many challenges for our operations, and I'm proud of the way our teams responded. Through a focus on working capital management and cost control, the business has generated a strong manufacturing cash flow performance for the year. At our defense businesses, we were able to maintain our operations, meeting our customer commitments and delivering strong results. On the commercial side, we overcame temporary manufacturing shutdowns and disruptions in our end markets to deliver strong fourth quarter results and look forward to carrying that momentum into 2021. With this backdrop, we're projecting revenues of about $12.5 billion for Textron's 2021 financial guidance. At Aviation, we are projecting growth from increased aircraft deliveries on both jets and turboprops, including the entry into service of our new Cessna SkyCourier and higher aftermarket revenues driven by increased fleet utilization. At Systems, we're expecting higher revenues and margin expansion primarily driven by growth in ATAC and Marine and Land Systems. At Bell, we expect solid margin performance despite lower military and commercial revenues while continuing to invest in future vertical lift. At Industrial, we're expecting revenue growth and margin improvement at Kautex as auto demand continues to recover from pre-COVID levels. At Textron Specialized Vehicles, we're also expecting revenue growth and margin improvement as we continue to grow our power sports business with Bass Pro Shops. We are projecting adjusted EPS in the range of $2.70-$2.90 per share. Manufacturing cash flow before pension contributions is expected to be in the range of $600 million-$700 million. With that, I'll turn the call over to Frank. Thanks, Scott, and good morning, everyone. Segment profit in the quarter was $324 million, down $16 million from the fourth quarter of 2019, a $368 million decrease in revenues. Let's review how each of the segments contributed, starting with Textron Aviation. Revenues at Textron Aviation of $1.6 billion were down 10%, primarily due to lower Citation jet volume and lower aftermarket volume. Segment profit was $108 million in the fourth quarter, down from $134 million a year ago, primarily due to the impact from lower volume and mix. Backlog in the segment ended the quarter at $1.6 billion. Moving to Bell, revenues were $871 million, down from $961 million last year, primarily on lower military revenues and commercial volume. Segment profit of $110 million was down $8 million, largely on the lower volume, partially offset by a favorable impact from performance, primarily reflecting higher favorable program adjustments. Backlog in the segment ended the quarter at $5.3 billion. At Textron Systems, revenues were $357 million, down from $399 million a year ago, primarily due to lower volume at TRU Simulation and Training. Segment profit of $49 million was up $16 million, primarily due to favorable performance. Backlog in the segment ended the quarter at $2.6 billion. Industrial revenues were $866 million, a decrease of $61 million from last year, primarily due to reduced demand in the ground support equipment business within specialized vehicles. Segment profit was $55 million, up 25% from the fourth quarter of 2019, largely due to a favorable impact from pricing and inflation and favorable performance, partially offset by the impact of lower volume and mix. Finance segment revenues were $13 million, and profit was $2 million. Moving below segment profit, corporate expenses were $50 million, and interest expense was $36 million. We recorded pre-tax special charges of $23 million in the quarter related to restructuring activities. Following the strong cash performance in the quarter, we ended the year with approximately $2.3 billion of cash on the balance sheet. The $2.3 billion represents a higher-than-normal level of cash on hand, reflecting a pre-funding of $500 million of 2021 debt maturities. During the quarter, we repaid $350 million of floating-rate notes that matured in November and $362 million of outstanding borrowings on corporate-owned life insurance policies that were drawn in the first quarter for additional liquidity. In the quarter, we also reactivated our share repurchase program and repurchased approximately $129 million of shares. Turning to our 2021 outlook, I'll begin with our segments on slide nine of the earnings call presentation. At Textron Aviation, we're expecting higher revenues of about $4.5 billion, reflecting higher aircraft deliveries for both jets and turboprops, as well as higher aftermarket revenues. Segment margin is expected to be approximately 5.5%, reflecting the higher volume and increased production. Looking to Bell, we expect slightly lower revenues of about $3.1 billion, reflecting lower military revenues from lower H-1 production and aftermarket volume and lower commercial deliveries. We're forecasting a margin of about 12.5%, largely reflecting the lower military and commercial revenues and increased R&D investments related to FLRAA and FARA. At Systems, we're estimating higher 2021 revenues of about $1.4 billion. Segment margin is expected to be about 12.5%. At Industrial, we're expecting segment revenues of about $3.4 billion, reflecting higher revenues at Kautex and Textron Specialized Vehicles. Segment margin is expected to be about 6%. At Finance, we're forecasting segment profit of about $10 million. Turning to slide 10, we're estimating 2021 pension income of about $30 million versus pension cost of $33 million last year. Our 2021 pension reflects the strong return on our pension assets for 2020 of 17.4% and a change to the amortization period for accumulated actuarial losses for one of our domestic plans, resulting in those losses being amortized over a longer period. Offsetting these favorable changes are a 75 basis point decrease in our discount rate to 2.7% and a decrease in our estimated long-term asset return of 50 basis points to 7.25%. Turning to slide eleven, R&D is expected to be about $600 million, up from $545 million in 2020. We're estimating CapEx will be about $400 million, up from $317 million last year. Moving below the segment line and looking at slide twelve, we're projecting about $120 million of corporate expense, $135 million of interest expense, and a full-year effective tax rate of approximately 18%. Our full-year 2021 adjusted EPS guidance is $2.70-$2.90 per share, which excludes $20 million-$30 million of pre-tax special charges for the completion of our previously announced restructuring plan and a pre-tax gain of about $10 million from the sale of TRU Canada. Our outlook assumes an average share count of about 227 million shares as we continue to deploy the majority of our free cash toward share repurchases in 2021. That concludes our prepared remarks. So, Operator, we can open the line for questions. Thank you and our first question will come from the line of Robert Stallard of Vertical Research. Please go ahead. Thanks so much. Good morning. Morning. First question on the aviation division. In the release, you said that you'd seen a continued good order momentum. I was wondering if you could maybe give us a little bit more clarity on what's going on out there in the market, and in particular, given your forecast for 2021, how the availability of slots is looking. Well, I think, Robert, when we've heard a strong order update, obviously, we've seen sequentially from the challenges in Q2, Q3 improved, Q4 improved, and we expect to see that momentum continue just based on the dialogues that are going on with our sales teams. So I think people are feeling like things are recovering and demand remains there. Obviously, you see the data around used aircraft for sale is at record lows. If you look at Citations that are less than 10 years old, it's only about 1% of the fleet. So I think the market has been strong, not just as we've seen increased interest and orders on the new side, but also very strong on the used side. Flight activity has rebounded quite strongly. November and December in the U.S. were actually up for our aircraft over a year ago. So I think the demand, and we recognize that's primarily leisure travel at this point. There's still a pretty muted amount of what we think is straight business travel. So as things continue to return to normal, we think we'll see ongoing improvements in utilization as well. So at a macro level, considering the level of interest we're seeing, the momentum that we've seen through the course of the year, and the very low levels of used aircraft that are within that 10-year window in terms of age are all kind of pointing to continued momentum and strength in the order side of the business. Great. Thanks, Scott. And Frank, just a clarification. I missed what you said on the share count for 2021. I wasn't typing quick enough. $227 million. That's great. Okay. Thanks so much, guys. [inaudible] Thank you. Next, we'll go to the line of Carter Copeland of Melius Research. Please go ahead. Hey, good morning, gents. Morning. Scott, I wondered just a clarification on the comment you made on the Bell margin and the continued investment in future vertical lift. Does that mean that the investment sustains at the same level, or is there a headwind related to that as we look at 2021? Oh, yeah. There's a headwind in 2021, Carter, so obviously, we started those programs in the latter part of the year. They've been ramping through the Q4, and we expect to see that continue to ramp through the course of this year as we're obviously working on both FLRAA and FARA, so FLRAA, we talked about a little bit. That's going into phase two of that risk reduction phase, so that's fully ramped, and on the FARA program, we've actually begun component manufacturing and some of the initial assembly work on the flight test aircraft to get it ready for flight late next year. Okay, and so does that peak in 2021, or will we continue to trend upward to 2022? It's probably kind of flattish going into 2022, would be my guess. We're probably not quite ready to guide 2022, but. Yeah. Understood. Okay. Okay. Thanks for that. And then, Frank, just a quick clarification on the pension piece. How much longer did the amortization period get on the losses? Yeah. For the one plan, it went from it would have been in seven years, and it moved out to 20 years. Okay, and was that a large portion of the plan or small? Yeah. It's our largest plan. It's the. Textron Master. Yeah. It's the Textron Master Plan, and the reason for that is that we move below 10% of the participants in that plan being actives versus retired, and so when you do that, you change to the remaining life expectation for remaining life rather than the remaining service period. Yeah. Exactly. All right. Great. Thanks. That's very clear. Thank you. Next, we'll go to the line of Sheila Kahyaoglu of Jefferies. Please go ahead. Hi. Good morning, Scott, Frank, and Eric. Morning. Scott, you'd previously talked about recovering half of the delivery decline in aviation in 2021. That implies deliveries about 165 units. How do we think about that given orders FVLl mid-teens in the quarter? Yeah. I think that's still what we're thinking, Sheila, and that's what we have laid out in terms of our assumptions in the guide that we gave you guys. We're expecting to get about halfway back in terms of both new aircraft as well as our aftermarket volumes. So again, the flight activity has picked up, and we've been seeing steady improvement in the amount of activity that's going on in the aftermarket. So it won't get all the way back to 19 in one year, but we're assuming that's also about a halfway there sort of a step. Okay. Cool. And then on just the Bell revenue guide, I think it's down about 10%. What are the moving pieces to that? I think V-22 should be fairly stable. Is it an H-1 drop, or is it on the military aftermarket? Yeah. On the military side, it's primarily driven by H-1. So we're starting to ramp down a number of H-1 deliveries. And also, we do expect at this point, commercial will be down as well. So I think the end market will start to recover there. But as you know, so much of our commercial helicopter market is international. It's just been tough to get deals closed here in 2020. So I think we'll start to see that pick back up again, but it'll leave a little bit of a decline in 2021 for commercial deliveries as well. Okay. Awesome. Thank you. Good quarter. Sure. Thank you. Thank you. Next, we'll go to the line of George Shapiro of Shapiro Research. Please go ahead. Yes, Scott. I wanted to pursue the book-to-bill was like 0.86 in the quarter. Orders were certainly better than they were in the third quarter, but they're down from last year's fourth quarter. So I was just wondering, did you see any slowing in the quarter as people rushed to try and get deliveries by the end of last year to beat the potential change in the bonus depreciation with the new administration? No, I don't think we saw any change in. As As you know, George, there's always end-of-the-year tax-driven, regardless of administrations or tax policies. It's always best to get that first year of tax regardless of what the depreciation schedules are. So we've always seen that a certain amount of that activity as we get into Q4. And that's why Q4 has always been our strongest delivery quarter. But with respect to the order stuff, I think we saw 2020 was an extraordinary year, obviously, but we did see that incremental strengthening and order flow through Q4. And again, just based on dialogues and the level of interest and activity that's out there, we're feeling pretty good towards that revenue guide that we gave you in terms of jet deliveries for the year. So again, as you know, Q4 is always our highest delivery. And so Book-to-Bill is always a challenge in there. But I think order activity certainly supports our view on what the revenue guide is for this year. And just on your projection for aviation implies about a 35% incremental margin, which is a pretty strong incremental. I mean, is that reflecting better pricing that you're seeing, or if you could give a little more color on why it's so strong? Well, we certainly do expect to see better pricing. We have better pricing in Q4 as well. So given the demand environment, we would certainly expect to see some continued price improvement. But it's also when you look at the year-over-year, George, you've got a lot of idle facility costs that was in there in 2020. And so we certainly expect to rebound back to the kind of levels that we had in 2019 with considerably better leverage than you would normally expect to see in that kind of 20% or so range. Okay. Very good. Thank you very much. Sure. Thank you. Thank you. Next, we'll go to the line of David Strauss of Barclays. Please go ahead. Thanks. Good morning. Morning. Morning, David. Scott, just back on the assessment plan, 165 or so deliveries. Could you talk about how, I guess, not in absolute terms, but relative to prior years, kind of how sold you are on that plan entering the year as compared to what you've seen in the past? No, I mean, we don't usually provide, I mean, the backlog number is pretty comparable, right? So I don't think it's a very different situation than we're used to seeing, David. Okay. And then Latitude, Longitude looks like they've been running about 30%-35% of total deliveries. Would you expect a similar mix? And maybe if you could just update us on Longitude, I think for a while it was dilutive. It was seen as dilutive to margins where that sits today relative to kind of the overall aviation average. Well, I don't think I'm going to get into margins on particular aircraft, but look, David, there's no doubt that we had some dilution. Obviously, when you see the initial aircraft builds, those are always more expensive. I think the guys have done a pretty nice job of working through that. Obviously, there was some interruption this year as we shut down the plant and brought it back up, but I think Longitude is on a good track to be a strong gross margin product for us. I think demand has been good. As you know, this thing is we have quite a few retail aircraft out there that's operating in the NetJets fleet and doing really, really well. So I probably won't go into gross margin by aircraft, but we're very happy with where the Longitude is. Okay. And did this mix within deliveries, Latitude, Longitude, you think in a similar kind of range as what we've seen in the past around? Yeah. I would expect so. I mean, it should be about the same. Okay. All right. Thanks very much. Sure. Thank you. Next, we'll go to the line of Pete Skibitski of Alembic Global. Please go ahead. Hey, good morning, guys. Morning. I think I might have missed it if you mentioned what drove the big increase in systems backlog. Was that GBSD primarily? And then if it was, in terms of converting that to revenue, is it just going to be kind of a very slow ramp through kind of 2021, 2022? So the backlog adds at Systems were kind of across most of the segments, Pete. So absolutely, GBSD went in there, which is several hundred million dollars plus kind of business. We just started really to recognize any revenue on that in Q4. And so, yeah, that's kind of a five-year window. So it'll ramp here as we go through 2021 into 2022. We had some nice adds to the backlog. We talked about some of the ATAC wins, both the recompete with the Navy as well as the ongoing CAF CAS task order awards. And we had some, obviously, the Shadow program on block three. So it was across most of the segments, but. Okay. No, that's great. And just the margin there, the guidance of 12.5%, should we be thinking that that's kind of the new kind of steady state for that business or does 2021 kind of benefit from some unusual dynamic? No, I think it's again, this is probably a very defense-oriented business segment. So 10%-12% margins is sort of where we would expect that business to be. Okay. Thanks, guys. Sure. Thank you. Next, we'll go to the line of Jon Raviv of Citi. Please go ahead. Hey, thanks. Hey, good morning, Scott. You just said 12%. I thought I'd ask about Bell margin. Bell margin opportunity understood the guidance for this year and that you still have a lot of FVL. Any sort of thoughts on the opportunity for Bell margin on the other side of FVL versus the normalized rate, so to speak? Look, guys, it's going to depend so much on where volume goes, right? I mean, looking at V-22s and H-1s and FMS opportunities, or so, I mean, I don't think we're ready to guide that. One of our challenges this year, obviously, is these OTA programs, and even the government cost share doesn't come through revenue, right? So, there's, if it swings into a full-blown EMD program, at least you'll start to see some revenue growth associated with the R&D side, which is not going to be very high margin, obviously. So it'll depend a lot on what that mix looks like. So I think until we have a lot more insight into where the contract awards are or where they are on FVL and some FMS opportunities, it's pretty hard to give you that mix out in 2022 and beyond. Sure. Understood. And then just on aviation, fully appreciate you're still looking at getting half of the drop from last year back this year. But just given the conversation with your customers, including the fleet operators, is there still an idea that this could be a structurally larger market going forward? And therefore, when do you feel like you can get back to those 2019 production and delivery levels? And what should the margin opportunity be around that? I mean, should we still feel that double digit is in the cards in the, we'll call it, medium term? Yeah. I would say that we still feel like from a macro standpoint and a structural standpoint, however you want to refer to it, that the business jets, particularly that light-mid size, is going to very much be in favor. We're seeing a lot of new customers coming to the market. We certainly have dialogues with new customers on new aircraft sales. We know that's happening in charter and fractional and club. It's really across the board. I think that's part of why you see the reflection of so much used aircraft activity is the demand out there supports Part 135 operators, charter operators. All these guys are seeing very strong demand, and that's just really driven by leisure because we haven't seen much rebound yet on the business side of travel, but we certainly expect to see that same dynamic as businesses start to travel again. So I think structurally at a macro level, it will drive a larger end market, which is good for everyone that is a participant in the Biz-Jet world. And that's why we feel like we'll get there. There's still an overhang, obviously, of the COVID impacts and not seeing a lot of business demand yet, which is why we think we'll see half that recovery back to 2019 this year. And I think we feel pretty good about that. And then we would certainly expect to see back to that 2019 level when you get into the 2022 timeframe. Just on the margin opportunity, is it still a double-digit margin business when you get back to those levels? Yeah. And again, I think we'll see very strong conversion leverage as we get back to those levels that we were and then back to probably our more normalized 20%-25% on the growth beyond that. Many thanks. Sure. Thank you. Next, we'll go to the line of Ron Epstein of Bank of America. Please go ahead. Yeah. Good morning, guys. Thanks for the question. Scott, what's your sense on the support for future vertical lift with the change in administration and the possibility of a flattening budget environment? I mean, I know there's a lot of components, but how are you thinking about FARA versus FLRAA, that kind of thing? Well, look, Ron, everything we have heard, and I think the Army has been very, very public about this, is that modernization remains a very, very, very important part of their strategy. And they continue to be committed to putting these things forward. Obviously, the focus on modernizing versus spending a lot of money on their legacy platforms is what they've talked about now for several years. And they continue to talk about that as their primary funding source. And they even talk about end strength. I n a challenging budget environment, they know that they need to modernize a lot of these important platforms. And obviously, FVL is one of those, and that remains one of their top priorities. I think General McConville has been very clear. General Milley has been very clear. They are going full speed ahead. The fact that the draft RFP came out when they said on FLRAA and their expectations to have an RFP out here in the not-too-distant future and are still committing to a down select that's out in that middle of 2022, everything we see is still 100% full commitment and full speed ahead. Okay. Great. And then maybe a topic that nobody brings up anymore, but just curious what's going on with it, if anything, if it's parked in a garage collecting dust, or what's up with the Scorpion? Is it just over, or are you guys still trying to market it, or? Look, we still fly the aircraft on occasion and do certain things with it. The government still has some interest. But I'll tell you, for the last year or so, our primary focus on the military side of that business has been getting the AT-6 through its certification. As you know, the Air Force did do a program only for a small number of aircraft, obviously, but it did give us a certification pathway. We've delivered the first aircraft to them. We hope to get the type cert here wrapped up pretty soon. We have international customers that have already inquired and proposals that are going on for that aircraft. I think we'll get through that first and then see where we go from there. Okay. Great. Thank you very much, Scott. Sure. Thank you. Next, we'll go to the line of Seth Seifman of JP Morgan. Please go ahead. Sir, your line is open. Please unmute your phone if it's muted or pick up your handset if you're on a speakerphone. Mr. Seifman? We'll move on. We'll go next to the line of Peter Arment of Baird. Please go ahead. Yes. Good morning, Scott and Frank. Scott, question regarding liquidity. You guys have continued to generate a lot of cash, and it looks like you're going to continue to generate a lot of cash going forward. Do you guys have a target liquidity ratio or when do you start to be more aggressive in terms of deploying it? Look, Peter, we're still being a little bit conservative around the cash side. But recall, part of what the cash that's sitting on the balance sheet right now is that we've pre-funded this year's maturities, which is about $500 million. So that cash will come out of our balance sheet to pay off the debt. There's two tranches that are due this year. After that, we don't have another one until 2024. So I think we're in a very good position on cash. As we said, we have reinitiated our buyback program. And so certainly, we will allocate capital to doing that. And I think we'll be a little conservative maybe here at the beginning just to make sure we understand where the end markets and what's going on with the economy. But I think it gives us plenty of degrees of flexibility going forward. Yeah. And just a clarification on kind of the aviation plan for deliveries, just kind of first half versus second half, I assume it's kind of your normal second half weighted when we think about the delivery cadence? Yeah. I would say that. I mean, I think it'll look like kind of a normal year for us. That's great for me. I'll leave it there. Thanks. Okay. Sure. Thank you. And we'll revisit Mr. Seifman's line with JP Morgan. Please go ahead. Great. Thanks very much. Good morning. I think I figured out how to work my phone now. So just real quick, I apologize if I missed it at the beginning, but if you talk about the expectations for the industrial business this year and sort of fairly nice profitability, where that stacks up between sort of Kautex and vehicles, even if it's not a number, but kind of qualitatively, and then sort of where you are on the path of where you think profitability can be in vehicles? Sure. So I think we'll see nice rebounds in both businesses as we go into 2021. The trajectory on the Kautex side, and again, guys, we use IHS data and kind of like everybody does. So I think expectations for continued recovery in the automotive market is what we're expecting. We certainly saw that volume driving into Q4. There's always, as all the other guys have been ramping back up, some supply chain issues and shortages here and there, but I think largely they're working through those. And I think our deliveries will be much improved here in 2021. A lot of hybrid, which is a good mix for us. We have a really good position in that segment of the market. So I think we feel pretty good about the trajectory that Kautex is on. And frankly, back at their sort of strong margins. On the vehicle side, except the ground support equipment business, because I think that's going to continue to be challenged here until we start to see the commercial aviation business coming back, but we certainly expect to see another solid year in golf. The PTV business, which was very strong for us in the back half of last year, we expect to see that continued momentum, and power sports, when you look at everything from the ATVs and side-by-sides and even through the snowmobiles, retail has been very strong. To be honest, we've been struggling to keep up just because we've got our own supply chain challenges based on smaller suppliers and COVID and whatnot, so I think that business will see growth in part by continued growth on the demand on the retail side, and in part, we know we have restocking to do. I think the inventory, I'd rather see the inventory on a very low level than a high level, obviously. I think we're in a good place. We definitely feel like we'll see growth based on both end market retail demand as well as our need to restock dealers out there. Okay, and then longer-term thoughts on profitability in that business? Yeah. I think we'll continue to see that business growing. The margins in historical businesses are good on the off-road side. We need to see more volume in that business. Obviously, the capability and manufacturing capacity is considerably greater than what we've been seeing in the last couple of years here in terms of our manufacturing rates. And as we continue to grow those, which includes 2021, there's no question we'll see improved profitability in that segment of the business. Okay, and then just one follow-up on aviation. You mentioned the strength in usage of fractional and charter aircraft. Do you think about that mix in terms of your customer base evolving significantly in that direction as we look out over the course of the next couple of years? Oh, I think that we've always seen that mix, right? The issue is usually a balance where companies or, I mean, again, most of our customers, they own their own companies, and they have the asset. They use the asset for both business and leisure travel. So I think the only dynamic right now in the marketplace is you're seeing so many using it more for leisure than business just because of the lack of number of business trips. But when we see new customers coming into the market, those customers are going to come in. And I think those assets will be deployed much like our historical customer base has. They'll use it for both business and leisure travel. Right. And so you see that mix between sort of retail and fractional charter looking fairly similar over the next few years as it has in the past in terms of your deliveries? Oh, yeah. I'm sorry. So you're talking about how many are being sold in kind of what we would call retail versus through the NetJets of the world? Yeah. I think that the mix is going to look much like it has. It's funny going through these cycles. It stays in about that same ratio. Obviously, with Latitude and Longitude out there, that has helped us get back to our more normal share in the fractional world. But no, I don't think you're going to see any structural change between those who choose to operate by owning a fraction of an aircraft versus flying a charter versus owning a whole aircraft. Great. Thanks very much. Sure. Thank you. We'll go next to the line of Noah Poponak of Goldman Sachs. Please go ahead. Hey. Good morning, everybody. Morning. Scott, what's happening with Shadow replacement? Is that happening? When is it happening, and how big is that in annual revenue for you at this point? So the Shadow replacement, which is the FTUAS program, is ongoing. As you probably know, there were several different platforms which were deployed to different Army bases to do their own soldier evaluations. There's another step in that process here coming up in a few months, which the Army refers to as a rodeo where they'll bring each of the platforms, all to one base, and the soldiers will operate those different systems. And that will help them to inform them in terms of what are the requirements. So I think the Army current plan on FTUAS is they'll go through all those evaluations this year, including that rodeo, and by the end of the year, have come up with what they have as their requirements document, which they would then turn around and issue as an RFP. So I would expect that would probably be sometime early in 2022. Okay, and can you give us a sense for how much annual revenue that contributes to systems at this point? No, I don't think so. We don't break out revenue within the individual segment line. But as you saw, we just got an order for $66 million, which is building more aircraft in the Block III configuration. So Shadow operations obviously continue, upgrades continue, and I expect we'll see that sort of activity up until the Army decides what they're going to do in terms of their next-generation platform. Okay. And then following up on the Bell margin discussion, I guess any way to size the future vertical lift investment, incremental investment you're making? And I guess you've started the year forecasting that segment's margin to be about 12.5% as you've done for this year and then have exceeded that. And I guess I'm wondering if maybe there's just less upside this year as you're definitively making an investment or if you still have some of the mature program upside drivers that you normally have. We definitely have headwind on the increased R&D on the FLRAA program. As I said, we've got both FLRAA and FARA going on at the same time. FLRAA or FARA, I'm sorry, is reaching a point here where we're incurring a fair bit of cost around building flight test articles. I think it largely reflects, first of all, we are going to see somewhat lower revenue in the year driven by those lower deliveries around H-1s and commercial offset with some higher R&D on the FLRAA program. That's why we're guiding somewhat lower revenue and fairly modest margin compression based on that additional R&D. Can you size how much higher the R&D is? No. Okay. And then just one last one on the question of the quarterly progression through the year at aviation. I know it's always seasonally heavier in the back half versus the first half, but is it correct to assume that it will be significantly less back half loaded than it was in 2020 given the pressures that were there in the first half of the year? I would say that it's going to be characteristically heavier. Q4 is always our biggest quarter. Q1 wasn't hurt that badly, frankly, in Q1 last year as things kind of just happened in March. I think that the Q1 on a year-over-year basis won't look very different than Q1 in 2020 as 2020 was fine. The real big difference is going to be that our deliveries in Q2 and Q3 are going to be more normal, whereas Q2 and Q3 of 2020 were extraordinarily low. Okay. Okay. That's helpful. Okay. Thanks so much. Sure. Thank you. We'll go next to the line of Kristine Liwag of Morgan Stanley. Please go ahead. Hey. Good morning. Scott, with fewer commercial flights and city pairs available as commercial airlines still recover, one would think that demand for business jets should recover at a steeper rate than overall return of business travel. Are there other items or dynamics that we should consider in why that may not be the case? Because I would just think that with fewer options in commercial flights, especially when you get to the smaller hubs and U.S. manufacturing, that your business should really be recovering at a faster rate than the overall market. Yeah. And I do think we're seeing that. So the dynamic is business aviation flight hours have recovered much faster than commercial, obviously. I mean, they were up over to about 85%. And again, in November and December in the U.S., they were actually up above what they had been in prior years. But the dynamic that I think you have to moderate that a little bit is that all that recovery really is driven by leisure travel. So in a normal world, we probably, and again, the data is not collected exactly this way, so it's hard to get the exact numbers around it. But I mean, you'd certainly say that most business jet flying are business trips, and then there's an augmentation of utilization of those aircraft for leisure travel. I think what we're seeing right now is almost exclusively leisure travel. So you've got almost back to where you were on a more normalized basis in terms of flight hours, but all of the flying, almost all the flying, is leisure. So as you start to see the economy recover, as you see travel restrictions come down, you see more business flying, again, you start to see conferences coming back and business trips and meetings, these sorts of things, that when you add that on top of what we're already seeing in strong demand on the leisure side, that you will see very strong demand on the business side dramatically over what we've seen in the past. And it is because of the dynamic that you're talking about, which is with the fewer flights, for someone to go from a small airport area to a trip that's going to land them in another small airport area with fewer flights to get through hubs, it's a day. I mean, it's very challenging with those lower schedules. And I think health is also part of it. People feel more comfortable in getting into an aircraft with just themselves or family versus getting on a commercial aircraft. So the issue is that this rebound, which has been much more pronounced than what we've seen in commercial, is all leisure. And so our belief is when you add business travel back on top of that, that you will see this in a very strong recovery. But again, today, even though we're seeing and feeling very good about the rebound in travel, it really is only on the leisure side because you still have very little business travel. And that's what's muting it a little bit. But I expect that will change, again, as the economy starts to come back and people start to travel on business trips. Great. Thank you, and if I could add another question on a separate topic. We're seeing a lot of new entrants in the urban air mobility market. How are you thinking about this? Do you think the air taxi industry could really gain traction, and also, what's your progress on your Nexus aircraft? So look, I think that we've, as you know, we've made investments in our Nexus platform. We continue to work on that program, but we are being a little cautious here to gate how much we spend and where we invest, understand what the regulatory environment's going to look like because there are two issues here. One is these are aircraft that are going to have human beings in them, and therefore they will have to go through a full regulatory approval process. Those standards are evolving and trying to understand with certainty what it will take to certify such an aircraft. And the other is the air taxi model. And again, we don't operate the air taxi model, but obviously, the business case of how much you invest and what the volume looks like will depend on how are these businesses going to operate. And again, there is, I believe, a lot of regulatory uncertainty as to getting approval for the routings and where are these things going to fly and at what altitudes and what kind of controlled airspace. For For the sort of the vision that people have around air taxi, there's still a lot of uncertainty around what that regulatory environment looks like. So I would say that I think when you think about the technology that's involved and the ability to design and certify an aircraft that can meet that mission, our team and Bell are absolutely qualified and capable to do that. I would say far much more so than a lot of the other hype that you hear out there. But I do think we have to be cautious here in terms of not getting too far out front of a regulatory environment that's very uncertain in order to allow that business model to be successful. Great. Thank you. Thank you. And we'll go next to the line of Cai von Rumohr. Please go ahead. Yes. Thanks so much. So if you haven't said it already, roughly where is the tax rate guidance for 2021? And on the pension, you've got a swing of $63 million. That adds, it looks like, 50 basis points to your margin, $0.18 to earnings. Is that mostly centered at Bell and at Aviation? Thanks. The tax rate is 18%. We had mentioned that. On the pension side, the impact does not impact Bell because Bell has a separate plan. So the impact is otherwise spread across the rest of the businesses as well as any corporate employees. Got it. And then R&D at Bell, I assume you mentioned that's the big lift in R&D. How long does that continue into next year? Because I would assume on V-280, your R&D is at a lower level, predominantly at FARA. And how far in the future does that level of R&D continue, roughly? Well, that's absolutely right, Cai. So on the FLRAA activity, which is the lesser activity right now, really, because remember, you're sort of in a phase here where you're finishing the phase II of the CRR program on FLRAA. That goes until March of 2022, right? So that level of activity is in that timeframe a nd it becomes the lesser of the two. The one that's really going to drive a lot of the R&D here for the next two years is the FARA program because right now you're in the middle of all of the detailed design. You're starting component manufacturing and assembly. As you go into 2022, first flight is at the end of 2022. So you have all of the cost in 2022 is really driven by the FARA program and completing all the design and getting ready for a flight test program. Then you go into 2023. That's really the flight test program through the course of that year. So that's the program schedule. And so the relative level of R&D is highly driven by FARA, particularly as you get into 2022, 2023. This year, it's a little more balanced, but a significant increase in FARA spending as you go through this year. Terrific. And then one last one, cash deployment. You've basically taken care of your near-term maturities. It looks like you're focused totally on share repurchase. To what extent do you think of M&A and/or dividend? Well, I don't think we're in a point right now where we're going to have a lot of dialogue around the dividend. I think that strategy served us well as we went through a challenging year this year. M&A would have to be opportunistic, Cai, if something came along that we thought made a lot of sense. But for the time being, our view is it is primarily going to be focused around share buyback. And again, we'll kind of gate that as you see what's going on with the economy and how the businesses are performing. Got it. I mean, if you look at your business, you've got lots of different businesses and systems. Any thought about rationalizing your portfolio so that it's more concentrated? Obviously, aviation and Bell are concentrated, but if you look at systems, it really isn't. Any thoughts about that? Well, you're right. Systems has been a series of smaller businesses, again, primarily defense-oriented. And our strategy in that area has been largely to invest through primarily organic activity. And if you look, I think, at where we are today on things like Ship-to-Shore, which is going to turn into a very nice program for us. We did make a small investment, obviously, on the Kautex side, and that has then been augmented by investments in bringing new aircraft on. And the last year was a huge year for us in terms of winning that Air Force CAF CAS program, some of the important task orders, which was our strategy, as well as, obviously, winning the recompete on the Navy side, the weapons business to be a major player on the GBSD program. You look at some of the things we're doing around the land vehicle side. We'll start the first deliveries of the RCV Medium here in the quarter. So those are very nice businesses. I think they can generate very nice margins, and they're frankly going to be benefiting here from the end of last year and going through this year from a lot of investment that we made and a lot of new programs that we've won. So I think it's going to be a nice, growing, and very successful business for us. Terrific. Thanks so much. Sure. Thank you. And that does conclude our Q&A session for today's call. This conference will be available for replay today after 10:00 A.M. Eastern Time, running through May 1st at midnight. You may access the AT&T teleconference replay system by dialing 1-866-207-1041 and entering the access code of 4600749. International participants may dial 402-970-0847. Those numbers again are 1-866-207-1041 and 402-970-0847 with the access code of 4600749. That does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.