Okay, we'll move right along. Next up, we're very pleased to have Textron with us today. Textron is a world leader in business jet, general aviation, helicopter, tiltrotor aircraft. The company operates in four segments: Textron Aviation, Bell Helicopter, Textron Systems, and Industrial. Today we have with us Frank Connor, CFO. Frank joined Textron in 2009. Prior to Textron, Frank was a managing director at Goldman Sachs in investment banking. Textron has 210 million shares, trades around $62 for a $13 billion market cap and $1.7 billion of net debt for its value. Welcome, Frank, and I'll just sit down, and we'll have a nice chat. Be here. Well, it's great to have you here, Frank. Thank you for joining us. Maybe I briefly talked about your company, but maybe you should give us a quick overview of what Textron does, some of the important things that you see with the company. Sure. Look, again, we operate in, well, I guess now five manufacturing segments, not four, because we introduced aviation this past second quarter when we completed the acquisition of Pipistrel, a small aerospace company over in Europe. We have a small finance segment that supports our businesses. Our biggest business is Textron Aviation. That's comprised of Cessna and Beechcraft aircraft. We have Bell, currently Bell Helicopter, but where we have both military and commercial presence. The military side being the right now programs being primary for and the H-1 for the Marines, and a broad-based commercial business. We have a defense business, Textron Systems, which is in both the air, sea, and land domains. A very broad-based set of companies there as well as in the electronic systems area. We have an industrial segment, which is our Kautex and Textron Specialized Vehicles business. E-Z-GO ground support equipment in the TSV business. Lastly, as I mentioned, we now have a segment called eAviation, which the basis of that is Pipistrel, but we formed an effort a couple of years ago to bring together a lot of our efforts across those businesses that I just went through in terms of how do you look at electrification, particularly in the air environment. A lot of work in batteries, in propulsion systems and autonomy in each of those talked about, and the eAviation effort is focused on pulling that all together, leveraging that capability across all of those businesses, and centralizing that to take advantage of our scale, as well as then looking at opportunities such as Pipistrel, which is a leader in aviation electrification technologies and happens to have the only certified electric aircraft in the world. Very, very interesting. Frank, what are you seeing right now with managing the supply chain labor challenges? I mean, we've asked these questions before, but can you just give us a heads-up on what's going on there and then maybe the ramp in production? I know there's a lot of obviously the backlog is getting larger at Aviation. Maybe you could talk about that. Sure. Well, look, I'd say broadly in supply chain, we're seeing what you're hearing from lots of companies. It's a struggle. It's a struggle in terms of the things that we've been reading about for a while in terms of you know kind of chip supply and how that's impacted particularly our auto OEMs, and therefore the impact that it's had on our Kautex business. That type of thing has also impacted our Textron Specialized Vehicles business, our ability to get certain you know kind of circuit boards and things like that for some of the power sports line. But you know it's become more broad-based frankly as time has gone on. I don't think it is getting any worse than how we've talked about it, you know, kinda on our last earnings call, but it's also not getting better. We're fighting through it every day, you know. It's not shutting us down. It's not, you know, kinda creating massive dislocation in our business, but it certainly is impacting our ability to flow product efficiently through our factories across all of our businesses. It's impacting our ability to meet customer demand, and frankly, our expectations in terms of the types of volumes that we were gonna run many of our factories this year. We're fighting it. You know, kinda we've quantified that a little bit at Aviation, for instance, and I'll kinda shift to that, where we indicated that we thought we would be $200 million or so of lower volume relative to our original guide for the year in that business. That is a function of really supply chain. I mean, we have had certainly some challenges on the employment side in terms of bringing labor back into the factory. I think things feel like they're getting a little better. We've done some things, frankly, on the wage side to you know, kinda entice people to get back to work. We've had better, at least near-term momentum in terms hiring front, particularly on the production lines. I think that what we are seeing on the labor side is obviously being broadly felt across that supply. It's not just Ukraine, it's not just China. It is the inability, I think, broadly for manufacturers to find people, and that's impacting. Thank you for that, Frank. You've already alluded to a little bit, but you know the business jet market, very robust demand. Been Been talking about it on calls for a while now, growing backlog. You talk about in the calls. I mean, just give a little more how you view managing its demand. What is healthy, what's unhealthy, and what is post, you know, 2023 when I guess we'll eventually get back to. I mean, maybe not, but what's sort of the long-term view there? Well, it's pretty simple. The demand in excess of supply is a good thing, right? We like that a lot. For a long time, we were trying to balance supply with demand, as you know, and you know, kinda were selling certainly to some backlog, but we were selling kind of quarter to quarter on the business aviation side, frankly, going into the pandemic. Really changed things in terms of how people thought about the productivity and efficiency of aviation. It certainly changed the mindset around safety. It changed the mindset around convenience. Frankly, you know, kind of from my point of view, I think finally did away with some of the stigma of business aviation coming out of the financial crisis. Now, it also created a demand environment where you had excess, you know, kind of used inventory that we talked about for a long time that was competing too. You know, we just saw a general uplift in activity. Activity up 10%-15% relative to pre-pandemic times. That type of usage increase has created a very significant demand. We've reported obviously strong book-to-bill numbers. Over the past four or five quarters, we've been able to build backlog at Aviation to almost $6 billion. You know, if you look at just our aftermarket. That doesn't include any aftermarket. If that's production activity, that's about two years of manufacturing activity current volumes, and we would expect volumes from here. Anyhow, that gives us really nice visibility on, you know, what we need to produce, what we need to deliver, and creates a lot of opportunity for in the factory. We certainly would like to continue to achieve the right balance in that. That certainly means a plan that would have us ramping production, assuming that demand continues, you know, kind of be at those types of levels. We'll watch that carefully. I think the good news is that we now have very good visibility in terms of our ability to adjust both up and down. I think, you know, kind of we wanna be make sure that we are efficient in our ramp, and we have to bring the supply chain along. We have to bring, you know, labor along. We get a lot of questions about, gee, you know, kinda you've seen it, and why don't you just increase by 50%? Well, that's just not possible, right? A measured growth of or increase in production has us continuing to satisfy customer demand, but certainly we're working on that. That will be dictated by labor. Maybe just digging a little deeper in, you know, talk about strong order activity. Just maybe inside of that, the segments, what segments are seeing specific? You guys have so many- Yeah. Many parts of an aviation. You have so many, you know, different types of- Yeah. Well, the great news is, Tony, it's really very broad-based. You know, as we look at it in terms of jets, we've seen very broad-based demand across our product line for jets. The planning cycle on our product in jets tends to be a little bit, you know, kinda short, shorter for the light jets and longer for the longer jets. Longitude, latitude, you would expect a longer plan with corporate demand. We're seeing good demand from multiple aircraft providers, charter operators, certainly that's who's an important customer of us, has seen a very strong uplift in their demand. Very good demand across the entirety of the jet line, the medium. On the propeller side, that was a little slower to come back because it's a little bit more global than the jet business is. The jet business tends to be 5% North American and the rest global. Propeller is basically that. We've seen propeller come back very nicely, and that again is very broad-based. It's tourism, it's corporations, it's governmental use, paramilitary, military, special missions, all of those segments. We're seeing across all the King Airlines, Caravan lines, and we're very encouraged with the introduction of the SkyCourier also, which is our latest. It feels good across all those. Maybe switching to pricing, how obviously this must be holding up well, but for the commercial demand environment and growing backlogs, you know, how do you, what are the levers you do with pricing? Yeah. With this kind of crazy demand? Yeah. Well, look, as you know, we've been very focused on pricing before we even saw an uptick in market demand, right? We are getting value for our product. I'd say that the really good news for us as we entered this upcycle is we have been investing back in the business significantly in the Latitude platform and then block point changes aircraft. In terms of that dialogue with the customer, we operate in a very competitive marketplace. We have very good product offerings, the productivity and efficiency characteristics to our customer, which has allowed us to have a, you know, an appropriate pricing. I've seen a lot of positive pricing in the environment pre-pandemic, achieve nice increases relative to inflation. I think we were very focused early on inflation not being transitory and likely to be, you know, stickier. As we built the backlog that we have, we were very focused on making sure we were maintaining price increases that we believe are in excess of inflation. I think that we have a backlog that reflects that. Our recent results would suggest, you know, would show that we've gotten about 1.5 points of price in excess of inflation last number of quarters, and we've been pretty focused on that. Our expectation is that we Switching to Pipistrel, that acquisition which, you know, seemed very, very interesting. You know, you talked about it a little bit, but just maybe go a little more about what opportunities are you seeing in sustainable flight in electric aircraft, you know, and how does Pipistrel, where do they play in into that? As I said in my opening remarks, we had a lot of things going on in terms of looking at propulsion, battery, looking at battery technologies, looking at various aircraft designs. Bell was working on Nexus. Bell was working on APT in terms of the cargo market that Ian just described. We had efforts at Textron Aviation looking at electric aircraft. And then we have our Textron Systems, which has been doing, you know, kind of autonomous flight and has millions of hours, you know, kind of flying unmanned air vehicles, doing a lot of work also on hybrid and battery-operated. We brought that all together under one of our very strong leaders, Rob Scholl, who used to run sales at Aviation, and then went out and looked at you know, what could complement that effort. Pipistrel fit in really well. Pipistrel's lineage is around producing airframes. It came from gliders, but they really understand aerodynamic design. They really understand, you know, kind of just, and they had been working for quite a period of time on the electrification. In the fixed-wing side, they've already electrified a small single engine. They have gone through EASA certification of an electric engine, the first to certify an electric aircraft that's certified under EASA. It's certified under EASA. They've been working also on a commercial cargo carrier that would be a hybrid carrier. They had a lot of good technical expertise and regulatory expertise in the area of electrification. We looked at it and said, we get all of that. Frankly, we get a business in Europe that is able to now potentially certify those platforms under EASA. You know, the FAA is dealing with how do you certify. EASA is dealing with how do you certify, you know, kind of where do you certify something? It may make sense to EASA rather than the FAA, and then look to EASA to get certified. It allowed us a different path to a lot of the regulatory things. We were also able to tap into an existing strong engineering base, but also look at the European market where we haven't had a lot of engineering ability in the past, as another area of electrification and talent across the EU, you know, a base of engineering there on our electrification. We're thrilled with, you know, kind of- Like it's gonna be a big area. Yeah, I think it's gonna be a home run for us. Especially the things you just talked about. Maybe let's switch to Bell. Yep. Talk of the town. All right. I'll just ask the question. FLRAA, could you just give us an update and just, you know, walk us through what timelines you're thinking and, you know, how, just tell us how you think it matches up versus competition. Yeah. Again, you know, kind of for those of you who aren't as familiar with this, FLRAA is the transport version of Future Vertical Lift. It's the replacement for the Black Hawk. It's arguably a $100 billion-plus program between the Army program, foreign military sales opportunity platform. We had developed the V-280 tiltrotor aircraft for that offering. We believe it is by far the superior offering for that competition. We are competing against Lockheed Martin and Boeing, who have their coaxial, you know, kind of competitive offering. We believe in terms of what the Army is looking for, which is speed, range, ability, flexibility, everything that we have the superior offering. We went through a long, you know, development program for that. We continue to work at further development activity under an OTA with the Army, while they have simultaneous and separately gone through a very long down-select RFP and selection. We submitted our proposal back earlier in the year. We believe that the timeframe right now is sometime in October when we will hear a decision, but that is based on statements that have been made by various levels of leadership across the DOD. They have everything that they need. They are in their decision-making process, and we are waiting on that process while, again, we continue to work on further maturing the platform and continue, you know, kind of dialogue with a completely separate group from the decision group of maturing, you know, that platform, ultimately, hopefully, a contract award and getting on with things. Maybe to the other program, the FARA. Mm-hmm. Maybe just explain that and how is that going and where do you think you look like in that race? Yeah. FARA, again, another priority for the Army, is really for the scout mission. Bell used to make the OH-58 aircraft, which were for a long time was the Army Scout. That was retired a number of years ago. The Army wanted to team Apaches with unmanned air vehicles. They, you know, kind of changed that strategy after a while of looking at how that worked and decided that the FARA program, a new scout helicopter was one of their key strategic priorities. Again, we are competing. We were down selected to compete against Lockheed for that. We have the 360 Invictus as our competitor there, which is a conventional helicopter, but it is certainly next generation in design. It takes advantage, frankly, of a lot of our learnings from the 525 program. It is fly-by-wire. It is highly efficient. It is highly agile, and we think it's going to be a very strong competitor for that program. The status of that is that we are about 95% built on that. I actually was in Amarillo, Texas, earlier this week, and saw that platform, where we're continuing to go through systems checks. We are waiting for an engine, a government-furnished engine, from GE that will power both our offering and the competitive offering, is the gating item for us right now. The expectation is that we will have that in time to fly sometime in late 2023. Ultimately, where things go from there remains to be seen. You know, kind of generally, there's a discussion about a 25, 26 type of downselect for that program. Right now, I'd say the gating end item is the engine and getting our aircraft into the air so that we can demonstrate. Very helpful. For the military business at Bell, again, you alluded to the V-22 and H-1. Mm-hmm you know, transition phasing out. Could you sort of, you know, just talk about those two programs and, you know, what's the next phase of that? Yeah. Let me start with H-1. H-1 is the Marines, both we make the attack version and the utility version of the Marines helicopters. The program of record for the H-1 is coming to an end. We are actually that the last of those will come off the line along with some military sales in 2023. We're seeing a wind down of activity on that program. The V-22 production right now is booked through 2025. There is the latest large quantities of V-22 are for what's called the carrier onboard delivery mission. Historically, the V-22 used by the Marines, that's the largest volume, and Air Force Special Operations. It was not used by the blue-water navy, if you. We were able to win a replacement for the Greyhound, which had Bell platform to the carrier groups to bring out supplies and things like that a number of years ago. There are, I believe it's 44 V-22s going on into that carrier onboard delivery. There is clearly a need for, we believe, more of those aircraft for that mission. We are working, you know, continue to work a dialogue with various constituents about, you know, kind of continuing to place orders and have that line continue from a production standpoint by end in 2025. Now, there's also then the aftermarket for each. Continuing to sustain those platforms, we are, you know, we have a large aftermarket business for the H-1. There will be, you know, kind of upgrades to the H-1. We are in the process, for instance, on the V-22 of doing a Nacelle Improvement program to upgrade the V-22. We will continue to see activity on both of those programs for a long period of time. My brother, the Huey pilot, was very happy. I'm sorry to hear that. Go ahead, Brian. Sorry. Yeah. Thanks, Frank. I wanna talk a little bit or hear from you about this electrification market within aerospace and how much is pull from customer, how much is push from government, and how do you see this really kind of evolving from a demand perspective? What's leading the charge here? Yeah, well, look, I think it's both. I think that, you know, as you look at what's going on in the world and the focus on, the environmental impact of, you know, kind of combustion engines and jet engines and things like that, there will be pressure on, the aviation activity to move to lower carbon footprint, capabilities or platforms. Certainly as you look at larger airframes, electrification is going to be a real challenge. People there are talking about hydrogen, you know, kinda, and other ways of creating more sustainable, type of activity. The industry right now is working on just aviation fuel, cleaner fuel to meet the near-term challenges of that. I think when you look at smaller platforms, then electrification, is a viable technology right now for certain applications. Certainly in the training market, to go up and train new pilots and go around the pattern and accumulate hours, our Velis platform at Pipistrel proves that technology is relevant. For training academies, for people who are doing that, right now they have the ability to field an electric fleet. We don't right now. How we get there, frankly, with the FAA, that's a challenge. Certainly from a technology standpoint, that is viable. Aerodynamics, though, of electrification and, you know, kinda the mass versus power needs and everything, that do create challenges in terms. Like for the cargo platform, that's a 300-kilogram carrying platform, so. We're designing that as a hybrid because all electric will not satisfy that mission right now with. You look at, you know, kind of urban air mobility. We are working that. It will take further developments in electrification and power density. We need to invest in those areas. You know, it's going to be a consumer pull. It's going to be a regulatory pull. It wouldn't happen without regulation. All of this is challenging and less efficient alternatives and going to be a higher cost than the alternative. It's the world we live in, and so we are investing in it to be there as those technologies continue to develop, and frankly, you know, be at the leading edge of developing some of those tech. Our capabilities in fixed-wing lift, in tiltrotor, in autonomous systems and everything. I mean, what is clear is that you are going to or any types of applications like this helicopter market to put these air vehicles on a wing in order to have the efficiency of mission, you know, duration in a non-jet combustion environment. Underlying missions are not going. Maybe onto the commercial side of Bell. Yeah. You know, what are you seeing there? I know it's been through a lot. What are you seeing with orders in production right now? Strong demand, you know, really across the product line. Similar with aviation, it's very broad-based from a customer standpoint. It's very broad-based geographically. You know, kind of the Bell customer base is very broad-based. You've got all kinds of, you know, tourism, paramilitary, commodity-based activities. It's not surprising given that there's reasonable growth and certainly inflation that is leading a strong company performance in a lot of areas where verticals are utilized. We're seeing very good demand. On the production side and the supply side, it's the same as I mentioned on aviation. We're battling it every day. It's disruptive. Again, I was, you know, kinda at our Mirabel operations the other day. You've got, you know, kinda stuff that we're building what we can, and we're putting it aside, and we're coming back to it when we get the final piece, and then we're shipping it out the door. Unfortunately for all of our products, we need 100% of the pieces in order to ship it, right? It only takes one piece, and it sits there until it's complete. We're battling through that. Frank, oh, I mean, one more. Frank, in three years, you and Scott are 15 years plus or minus. Assuming that you either get a contract for the helicopter or not, what do we expect next from the company? Your balance sheet will be significantly liquid. You've been nibbling at some stock. I don't know why you wanna buy it. What kind of an acquisition do you wanna make? You know, assuming we're in January. Yeah. you get the contract, that's something else, or you don't get the contract. Well, look, I think that'll be a big, you know, kinda toggle in terms of the level of investment in the business and, you know, kinda what Bell looks like. I mean, tiltrotor will still be a really important technology in the future. You know, kinda that contract will certainly be a defining moment for Bell. There's a lot of focus on that. Look, Mark, it's not that we haven't been looking. We're only gonna do something that's smart. You know, we had our Arctic Cat moment, and that was, you know, that didn't work out well. You know, we wanna do more Beechcraft. We think Pipistrel is, you know, kinda a really smart deal. It's small. We're looking. I mean, we're very focused on, you know, kinda driving top line, driving ultimately, earnings per share growth. That's been a lot of investment back into the business. You know, kinda in R&D and expenditures. We continue to do it at a, you know, a reasonable. In terms of growth, you know, a lot of investment, if you will, has been in these FLRAA and FARA programs, where we believe we are very well positioned now to, you know, see very strong growth out of Bell, very strong growth out of Aviation. We'll, you know, continue to look for opportunities that are out there, but we think we've got a lot of growth coming just from the, on the organic side of things. How does Textron Systems fit in? I think it's a great platform, where I think Lisa Atherton, who's the leader of that, has done a lot of things to position that. You know, when you look at the types of things that we're talking about in terms of things like that, you know, Textron Systems is kind of the point and economy, folks. Battle platform. It's the only platform out there that is largely deployed where, you know, kinda non-pilots are operating that. They're operating it with a control station, you know, kinda for GPS denied environments where a non-pilot can sit there and say, "These are the coordinates, this is where you go." We have a lot of capability around those areas. It hasn't shown growth in top-line growth in a number of years. We're trying to turn that around. You know, we look at the portfolio regularly. If there were other opportunities, we'd take advantage Frank, thank you so much. Seems like you have a bright future, and hopefully coming back next year to tell some good news. Yep. All right, we'll take a 15-minute break. Be back in our seats at 12:15 P.M. for the afternoon presentations.