Welcome to the Textron Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] This conference is being recorded for digitized replay and will be available after 10 AM Eastern Time today running through October 24, 2025. You may access the replay by dialing 866-207-1041 and entering the access code of 148-0019. I would now like to turn the conference over to David Rosenberg, Vice President, Investor Relations. Please go ahead.

Thanks, Kiely, 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. Revenues in the quarter were $3.4 billion, up from $3.3 billion in last year's third quarter. During this year's third quarter, adjusted income from continuing operations was $1.40 per share compared to $1.49 per share in last year's third quarter. Manufacturing cash flow before pension contributions totaled $147 million in the quarter compared to $205 million in the third quarter of 2023. With that, I'll turn the call over to Scott.

Thanks, David, and good morning, everyone. During the quarter, Aviation experienced a strike on the expiration of its existing labor agreement with the IAM. Work stoppage caused disruption to our aircraft production and service in our Wichita facilities. On October 20, the IAM ratified a new five-year contract ending a four-week strike. As employees return to work and production and delivery activities recover, resulting disruptions will impact our 2024 financial results. In the quarter, Aviation delivered 41 jets, up from 39 last year, and 25 commercial turboprops, down from 38 in last year's third quarter. Aftermarket revenues grew 5% for the third quarter of 2023 -- versus 2023, and our year-to-date aftermarket revenues were up 8% as compared to prior year. Aviation continued to see strong demand in the quarter, booking over $1 billion in new orders. Backlog grew $162 million, ending the third quarter at $7.6 billion. During the quarter, Aviation delivered the 400th Cessna Citation Latitude. Latitude has been the best-selling aircraft in the midsize jet segment since it was introduced into service in 2015. At NBAA this week, Aviation also announced the Gen3 updates of the Citation M2, CJ3 and CJ4, reflecting continued investments in this product portfolio. At Bell, revenues were $929 million, up $175 million over last year, and segment profit was $98 million, up $21 million as compared to the third quarter last year. During the quarter, the U.S. Army announced approval of Milestone B for the FLRAA program. This significant milestone establishes FLRAA as a program of record and transition the program to the engineering and manufacturing development phase. This phase includes continued digital modeling, detailed hardware and software design, and fabrication of hardware as Bell proceeds to critical design review and the first flight planned for 2026. As a result of Milestone…

Thanks, Scott, and good morning, everyone. Let's review how each of the segments contributed, starting with Textron Aviation. In the third quarter of 2024, delayed aircraft deliveries along with unfavorable performance resulting from the IAM strike lowered Textron Aviation's revenues by about $50 million and segment profit by around $30 million. Revenue at Textron Aviation of $1.3 billion were essentially flat with the third quarter of 2023 with higher pricing of $36 million, mostly offset by lower volume and mix of $35 million. Segment profit was $128 million in the third quarter, down $32 million from a year ago, largely due to lower volume and mix of $29 million. Backlog in the segment ended the quarter at $7.6 billion, up $162 million from the second quarter. Moving to Bell, revenues were $929 million, up $175 million from last year, largely reflecting higher volume and mix of $148 million. Volume and mix included higher military volume of $81 million, primarily related to the FLRAA program and higher commercial volume and mix of $67 million, reflecting an increase in deliveries. Segment profit of $98 million was up $21 million from last year's third quarter, largely due to a favorable impact from performance of $17 million and favorable pricing, net of inflation, of $12 million. Backlog in the segment ended the quarter at $6.5 billion. At Textron Systems, revenues were $301 million, down $8 million from last year's third quarter, largely due to lower volume. Segment profit of $39 million was down $2 million from a year ago. Backlog in this segment ended the quarter at $1.9 billion. Industrial revenues were $840 million, down $82 million from last year's third quarter, mainly due to lower volume and mix of $86 million, principally in the Specialized Vehicles product line. Segment profit of $32 million…

Thank you. [Operator Instructions] And we'll go to the line of David Strauss with Barclays.

Good morning. Thanks, and congrats, Frank and Dave.

Thank you.

Scott, could you just maybe touch on, how things are going at Aviation in terms of restarting production and kind of what have you assumed in the updated forecast for Aviation, I think, and get $5.5 billion in revenue in terms of jet deliveries? Thanks.

Sure, David. So, look, I mean, obviously, we got the ratification last weekend, which was very important. Under the terms of the contract, the workforce has up to five days to come back in. So, we are starting to ramp and get things back in place. I think I talked to Ron yesterday, we probably had about 60% of the workforce was back in yesterday. We expect that to continue to ramp and clearly expect to be at full representation on Monday. So, when we factor in the numbers, we kind of think about that. That's why the $0.5 billion revenue drop, it's not really four weeks, it's more like a five-week strike, and then we've got to get all the ramping and get the line back up and running here as we get into fourth quarter. I guess I'd say, David, the good news is that's what we're focused on, right? We have a five-year deal in place that's good for employees, it's good for us. Our total focus right now is getting things ramped up. We've spent, obviously, a lot of time here over the last four or five weeks continuing to work with our supply chains, make sure that parts are coming in and suppliers who have been late to PO are getting back to current. So, our complete focus right now is getting everybody back in the door and getting the factory up and running and hopefully more efficient than it's been over the past few years as we get better part full.

Okay. Thanks for that, color. And Frank, in terms of the lower forecast for free cash flow for the year, it looks like, maybe you're losing about $125 million from lower earnings. CapEx, I think, is a little bit lower than you had previously forecast. What accounts for -- it looks like, $200 million of -- the additional $200 million hit on the free cash flow side?

Yeah, we're going to have some inventory headwinds associated with kind of the slower kind of ramp up here and the impact of the production. As Scott said, it's kind of a five-week impact. We want to get healthy from a supply chain standpoint. So, we certainly looked at kind of mitigating the cash impact of strike, but we also want to make sure that we were healthy as we come out of this. So that's really the impact and we'll then have that inventory obviously to burn through and sell in '25.

Thanks very much.

We'll go next to the line of Sheila Kahyaoglu with Jefferies.

Good morning, Scott, Frank and Dave, and congratulations, Frank, of course. So, just going back to the EPS cut of $0.80, I think Industrial is about $0.30, that's a headwind, but Bell is the $0.10 offset. How do we think about, I guess, Aviation into 2024 exiting Q4, and then also Industrial, just given a 4% margin to exit the year?

So, on the Industrial front, Sheila, we've been -- we've seen softness all year. We've talked about that each quarter. So, I think as we've revised the guidance, beyond just giving color, we're trying to give you guys some specific in each one of the segments. And so, I think our expectation right now is that those softnesses in that end market are going to continue. As we've talked about in previous quarters, we're just cutting way back on production volume. We don't want to put stuff out in the channel. I don't think deal is one thing is in the channel until we get better perspective and view on where things are going in terms of interest rates and their end market. So, I think this was just -- we're just kind of firming up our view on the total guide on that segment. The bigger issue for us, obviously, is we've got to get the Aviation business ramped back up again here. As Frank talked about, given the sort of delays in some of these deliveries, we're going to certainly carry out more inventory through the end of the year of work in process than we would normally have coming out of the Q4. But I guess, it's important to note these sales aren't lost, right? I mean, these are pushed and we're going to ultimately deliver these aircrafts. So, as we think about 2025, we clearly expect we're going to see revenue progression over what our original 2024 guide was. We're continuing to ramp. And I think now with the contract behind us, we're optimistic about seeing more stability in the workforce, clearly a better position on supplier parts. And it's tough to recover all that in one quarter, but I think we'll have good momentum as we go into 2025.

And just on the contract, how do we think about the headwind in 2025 as we factor in the wage increase?

Well, that was largely baked into our plans. The deal was a little bit more than we expected, but it's -- direct labor is about 10% of our costs. So, I mean our focus at this point will be making sure we can drive the right productivity and efficiency to compensate for that. But I think it's a fair deal. It's good for our employees. And our view is we want these to be the best jobs in town. We think this is a hugely important workforce. We need good people. We need to retain them, and we'd like to be that best job. And I think this makes us the best job in town. So, it's a good trade for us.

Thank you.

We'll go next to the line of Robert Stallard with Vertical Research.

Thanks so much. Good morning.

Good morning.

Good morning.

Just want to follow-up on David's question really and the recovery plan. It sounds like you've taken a fairly proactive approach to managing the supply chain that you haven't turned anyone off. In fact, you just kept things going and you've built up this inventory. Is that a fair analysis?

Yeah. Look, I mean, in part shortages, while it has improved over the last few years, has still been problematic, I think, for everybody in the industry. It's gotten to be a smaller number of part numbers that are a problem, but they're still a problem. And that was continuing to drive a lot of out-of-station work and just significant inefficiencies in the factory. So, our view was, look, nobody wins a strike. A strike is not a good thing, but we certainly, during the period of the strike, were committed to go continue to work with those suppliers and try to resolve that problem. So, again, from our perspective, this is all about how you move forward and expecting we'll get the workforce back in, which is now happening, that we would put ourselves in a better situation in terms of parts and back shops and these things so that we can be more efficient going forward. So, yeah, that's going to cost a little bit of inventory, but all that inventory is going to turn into airplanes. So, I'm not particularly worried about that.

Okay. And then, as a follow-up on Industrial, you mentioned that Specialty Vehicles have been having some demand challenges. What about at Kautex? Have you seen any softening on the European auto front?

Well, for sure, we have. I mean, auto is down around the world. European is probably the most challenged market, so the volumes are somewhat below where we would like them to be, but frankly, that team does a really good job of managing through and dealing with that and offsetting with productivity and pricing. And so, I think the Kautex guys actually have been performing quite well.

Okay. That's great. Thank you.

And next, we'll go to the line of Peter Arment with Baird.

Yeah. Thanks. Good morning, Scott. Congrats, Frank and Dave. Hey, Scott, maybe just to talk about, just on the heels of NBAA, you guys obviously saw some nice bookings this quarter. Can you talk maybe just about what you're seeing on the demand environment? It still seems obviously very favorable for a lot of your models.

Yeah, Peter, I think it has. I mean, we had over $1 billion here in Q3. As you know, Q3 is usually historically one of the lighter ones, right? The summer, July, August is kind of usually quieter. I think it was a good quarter of order activity. We're very encouraged, the refreshes that the team is putting out in both M2, CJ3, the new CJ4. Of course, we have the Ascend, which we announced too long. That's coming along very well. So, the number of updates, which are pretty significant in terms of capability of the aircraft and safety, particularly with launching Autoland across all those single pilot jet platforms is driving strong demand. So, I think the end market continues to feel good. Order activity is -- flow is good. So, I think we're still feeling good about where the industry is.

Yeah. And just as a follow-up, on pricing, I guess, net of inflation, you guys have done pretty well all year. What's the latest there, I just -- I assume, given that the demand environment is healthy?

Yeah. Pricing is still good, Peter, in the marketplace, but as we've talked about, I think the price inflation number is compressing, right? I mean, so I would not expect to see big contributions in necessarily price over inflation. What we really got to be doing is driving productivity and efficiency in the factories to continue to maintain that momentum. So, the pricing dynamic is good, that's not a problem, but you had these pretty significant price inflation spreads. And again, that will -- as we talked about before, that will be coming down, but we're not banking on that to drive the kind of margin and performance that we need to see going forward. We've really got to drive good fashion productivity and efficiencies on that volume.

The only thing I'd add on that is for this quarter and next quarter with the lower volume, which is where price comes through and essentially inflation across all aspects of the cost structure, not just the aircraft, but SG&A and other things, that puts pressure on price versus net of inflation. So, for this quarter, it's net zero price, but that is certainly impacted by the lower volume associated with the strike and that will have an impact on the price versus inflation on a net basis in the fourth quarter as well.

Appreciate all the color. Thanks, guys.

We'll go next to the line of Noah Poponak with Goldman Sachs.

Hey. Good morning, everybody.

Good morning.

Good morning, Noah.

Frank, congrats on the retirement. Thanks for all the help and the relationship over the years. And David, congrats on the move to the CFO.

Thanks.

How many Cessna jet deliveries are we expecting in the fourth quarter given the abnormal backdrop with the strike and the recovery?

Well, Noah, I mean, we've never given a number of jets. So, I think we'll probably just stick to revenue at this stage of the game. But I mean, it's $0.5 billion of revenue obviously adjustment, which is pretty significant, but yeah, I think that accounts for what's turning out to be really a kind of a five-week strike duration and then just the inefficiencies and just the time of getting it ramped back up and going.

Okay. And, Scott, I guess, in 2025, should we anticipate that Jan 1, when you're starting a year, you're pretty much recovered and it's a clean run rate production line, or could there be disruption that bleeds into the beginning of the year? And then, should we expect the aircraft that slip out of '24 to add what you previously had planned for '25, or does it kind of smooth out over a longer period of time?

Well, so first of all, we certainly expect by January 1, we're running at normal productivity and a smooth rate. I mean, we're here in kind of late October, we've got November, December here to get things ramped and operating smoothly. So, I certainly expect by the start of the year, the factory will be stable and doing well. I guess, it will -- I mean, we're kind of probably not ready to guide 2025 yet, but as I said, no, I do think if you look at what we're doing in production ramp and our expectations in terms of where we're going to be in 2025, while the 2024 is obviously an issue and impacted, we certainly expect to see good healthy revenue growth in '25 above what we had originally guided in '24.

Okay. And then, just lastly on the margin, at Aviation, should we all just continue to contemplate the incremental margin framework you've referenced in the past, or is cost now different enough, or is there still a lot of opportunity on the productivity front? How should we be thinking about that over the medium term?

Look, we still think about this business as converting at 20%-plus in terms of revenue given the kind of the mix of gross margin across the business. So that's still, I think, an appropriate long-term guide.

Okay. Thank you.

Next, we'll go to the line of Myles Walton with Wolfe Research.

Thanks. Good morning. I was wondering if you could talk to Systems, and you mentioned the two contracts that are being decided next year, FTUAS and the Robotic Combat Vehicle. Is an outcome on those basically going to dictate whether or not Systems can start a real growth profile? It's been obviously flattish here for a long, long time. And how critical are those two programs?

Yeah, absolutely. Look, I mean, these are programs that we've been investing for a long time to position ourselves. They are key factors of driving growth for the business in the future. There's other programs, obviously. In fact, I think, frankly, if you look at 2024, that business is performing extraordinarily well. We did take a hit at the beginning of the year, which we did not anticipate around Machado getting pulled out of service. Other businesses within systems over the course of the year have grown to help to offset that. And as we said, even with that hit, which was not trivial to us, the businesses are hitting their original guide in terms of revenue, and they're going to be on the high side of their margin. So, I think the Systems team is performing very well. But yeah, absolutely, those programs like FTUAS and like RCV and of course, there's ARV in the year out and such are key drivers of growth in the future.

Okay. And just one quick one. Is the 525 still on track for 4Q cert, or is that slipping into '25?

We're actually just down there yesterday. Look, the flight test program is continuing. I hate to put dates out there because we don't certify that, right? I mean, it's -- I'd say the relationship and the work going on with FAA is good. Flight test program is going well. Whether it gets this year, if I were to guess, I would probably say it would slip into 2025 just because of just the sheer amount of documentation and paperwork and number of approvals that need to flow through -- before the official TC gets put on there. So, we continue to do the work on the flight test and all the work that we have to do on our side. And of course, we're already moving a lot of resource into various kits and capabilities that need to be added on to the aircraft over its life cycle. So -- and that work will go on in parallel with this certification process.

All right. Thanks for the color.

Thank you. And we'll go next to the line of Seth Seifman for -- with JPMorgan.

Hey. Thanks very much, and good morning.

Good morning.

And congratulations, Frank and Dave. Wanted to ask about the margin in Aviation. And so, ex the strike, it looks like it was kind of in the mid-11% range, which was kind of below the guidance range for the year. I know there's variability quarter to quarter and you talked about Q2 being exceptionally strong, but just anything to point out there with regard to why we saw kind of a step down there versus what we've become accustomed to seeing in recent quarters?

Well, look, I mean the strikes are a bit messy, right, when you go back and you look at idle facility and impacts and total year volumes and assumed overhead rates and liquidation rates. So, part of what you're seeing in the quarter and the year is you've got to factor in a lot of significantly lower volume all of a sudden with a lot of cost, which some of which is not variable. And so that's part of why you see that drag in the -- in both Q3 as well as in our updated guidance for the full year.

Okay. Got it. And then, I guess, maybe thinking about the margin at Bell and profitability coming in ahead of expectations this year, as FLRAA continues to grow, is this something where you can kind of continue to maybe see some improvement here, given performance elsewhere, or should we still be thinking about maybe profit dollar growth but margin rate declines?

Yeah, look, we're still trying to drive the profit dollar growth. The FLRAA program is growing and will continue to grow next year fairly significantly, which is great obviously, but that is, as you know, had a lower margin mix. But the commercial market is strong, so that's helpful to us. The win in Nigeria, which is actually going to grow the H1 original equipment volumes here over the next couple of two, three years is obviously helpful. So, there are some things in there mix wise that are helping. But again, I still think given the significant growth of the FLRAA program, our focus really is how do we continue to be accretive and make sure that we're growing the margin dollars in these subsequent years.

Excellent. Thanks very much.

And we'll go next to the line of Doug Harned with Bernstein.

Good morning. Thank you. And also congrats to Frank and Dave. If you look forward from here, say over the next five years, and thinking about what you're going to be investing in on the Aviation side with respect to R&D and CapEx, how do you see that profile evolving? And are there specific areas where you really intend to be focusing there?

Well, look, I mean, I think that I don't see us making a big change. I think what we've been doing for the last number of years and I would expect we continue to do in the future is a nice mix of upgrade programs to our existing portfolio, which, as we talked about earlier, drives healthy growth and is very well received, I'd say, on the customer front, with an occasional new product clean sheet that drops in. So that piece of formula that has worked for us, and I think we'll continue to make that. From an R&D perspective, we've talked about kind of making this at or a slight tailwind in terms of on a percent of sales basis. Part of our margin challenge towards the end of the year is we've -- you assume that you're -- what you're doing on the R&D front is fairly fixed over the course of the year. So, if you lose a big chunk of revenue, obviously, on a strike, that kind of hurts you a little bit, but I mean, that's an unusual circumstance, obviously. So, I think we'll see fairly stable R&D, and we'll raise appropriately when we have the right programs to invest, but I'd say, generally speaking, we view that it should be a tailwind in terms of percent of sales for the business while making the right investments to keep growing the business.

And then separately, when we go into 2025 and if we put the strike aside for the moment, you said that during the strike you've been able to make some progress with respect to the supply chain. It seemed that really the limiting factor for you in Aviation is not demand, it is really -- it may be really just the supply chain. So, if you've been able to narrow some -- the issues within the supply chain, can you describe where the bottlenecks are now, the principal bottlenecks? And if there's a point you see where you think you can get back to a world where the limiting factor is no longer dealing with the supplier issues?

Well, I think the limiting factor -- I mean, there has been some critical supply things. It's been our own resourcing and staffing and the ramp, but as I said, I think when I think about how you look at 2025, despite the interruptions that we've had here in 2024, I think our plans in terms of expanding capacity and delivering more product, increasing our revenue that, that thesis is still on track. You'll see that in 2025 despite the fact that we have an interruption in production here in 2024. So, we have had a ramp plan that was coordinated with suppliers and our own internal resourcing and staffing. And I think that's still in place and that's why you should expect that we'll see revenue growth in '25 above the '24 original guidance.

Very good. Thank you.

We'll go next to the line of Jason Gursky with Citi.

Hey, good morning. Frank, congrats on -- and good luck with the next phase. And, Dave, congratulations. Well deserved. I look forward to working with you more closely in that role. Scott, couple of quick questions for you. You mentioned labor productivity earlier as a way to offset maybe some of the higher costs associated with the strike. I'm just curious if you can make some bigger picture generalized comments about labor productivity maybe now versus where we were prior to the pandemic and kind of the things that you are doing to drive labor productivity back to maybe where we were if it was better back then, and how much longer do you think it takes for labor productivity to kind of return to historic levels?

Well, look, there were two major contributors to the inefficiencies, which certainly manifest themselves largely in productivity in the factory. Part of it was certainly supplier parts. When you're looking at running a production line, you've got lots of holes in your part bin, you start doing stuff that's out of sequence and having to rework things and swap things between aircraft and there's a lot of disruption that comes from that. As I said, I think while it won't be perfect, what we did work through the strike period to try to get the on time to PO and supplier delivery to where we have many, many, many fewer of these instances where we don't have the part available at the time that we need to consume that part in the various stages of the production line. The other, frankly, is just sheer labor, right? I mean, like most companies, coming out of COVID, we saw a lot of turnover. We have a lot of hiring of new people, so there's been a lot of training, and clearly that drives a lot of inefficiencies. It's not just that new person, it's our senior people who participate in helping to train and develop these new people. So, I do think that the labor contract and getting that behind us, and yeah, it's a significant GWI, but it makes these jobs even more attractive in that market, which we think is -- makes us as an employer more attractive and hopefully stronger on the retention side. So, stabilizing that, not just adding the numbers of people, but getting it towards a stable number, and it's the same people that are coming in, is a huge part of that. So, I think the parts thing, I feel much better about. We worked out really hard over the last month or so to get that in a much healthier place. And again, I think with the GWIs that are out there, these are the best jobs in town. And I think that will help us not just attract, but also retain that hourly workforce that builds these aircraft, which is critical to driving that efficiency and productivity in our factory.

Okay. Great. That's helpful. And then, the second question was, just more of a maybe a philosophical one. If you could waive a magic wand, and always have this be the case, I know this is difficult to control, but kind of months of backlog in the Aviation business, what is the North Star for you all? What do you -- where would you like to try to manage the business to on a pretty consistent basis over the longer term?

Well, look, if you look at, it's a little bit different across different products in our product portfolio, but I would say, generally speaking, being out there 18, 24 months is a very healthy place for us to be for a couple of reasons. One, many of our customers already own aircraft and their ability to remarket their aircraft and manage and have a -- know what their timeline is and when a window of time to go sell their aircraft is important. And it also gives us the right amount of time to specify aircraft and interiors and go through a very smooth process where we know when that aircraft hit the line, what is that aircraft, right? What's the configuration? A lot of stuff is standard, obviously, but there are customizations that happen towards the latter part of the process. And having that all set and well understood, being able to signal and have a consistent volume and delivery dates with our suppliers, I mean, it really helps to make a business where it can run smoothly when you can see out that 18 to 24 months on volumes and product mix and product configuration.

Great. That's helpful. Appreciate it, guys.

And we'll go next to the line of Gavin Parsons with UBS.

Thanks. Good morning. And Frank and Dave, congrats.

Thanks.

Just wanted to ask a couple of margin questions. On Industrial, are you still seeing some benefit of the restructuring, or is that largely already in place at this point?

Well, I mean, I think, clearly, we've been restructuring through the course of the year, but I'd say there's more restructuring to come, for sure. I think the end markets, and particularly in a couple of segments of the business, are continuing to be soft, and I think they're going to be soft for a little while. So, we'll continue to do what we think is appropriate to restructure and maximize our performance in each of those business segments.

Got it. And on Aviation, can you just remind us how the performance accounting line works? If you have cost on aircraft this year that deliver next year, do we expect some margin headwind there?

The performance line is -- there's a lot of stuff in performance line. I don't know if I could walk through it. I mean, clearly, this quarter and for the full year, you've got unusual things in there, right? I mean, factory inefficiency, period expensing, idle factory costs, which is not a normal thing for us, obviously, manufacturing variances go through that, there's a lot of moving parts in that so-called performance line.

Understood. Thank you.

And we'll go next to the line of Pete Skibitski of Alembic. Please go ahead.

Hey, good morning, guys.

Good morning.

I was wondering if we go back to FLRAA now that you had the Milestone B approval, I just wonder if you could put a finer point on the revenue line since it's so substantial. I think last I recall, you were thinking about $900 million in revenue this year. And Scott, you're talking about substantial increase next year. Is there any way to put a finer point on that?

Pete, I think $900 million is probably around the right number this year. It's probably going to be $100 million to $200 million higher than that next year, just based on what's in the budget. So, I mean, I'm a little bit -- I always try to be a little careful here, Pete. I mean, these things are appropriated, right? They're not appropriated yet. I mean, we don't actually have a budget. So -- but I -- if you look at what's in the appropriations process, I guess, once they pass the budget, I would expect that we'll see some additional ramp as we go into next year. So -- and I think there's talk to the Army, there's full support for this. I mean, obviously, the criticality of getting through CDR is huge. And so, I think the customer is just as committed as we are to keep driving this thing forward, and that will -- that only happens with some increased funding next year, and I think everybody is on board with that.

Okay. No, I appreciate it. And then just the decision to in-source the cabin from Spirit, what's the right way to think about sort of the technical and the schedule risk there? Obviously, it's probably easier than if you were kind of midstream in production, but can you give us a sense of how you guys are viewing that decision?

Well, look, I think that the -- as you kind of know, Peter, given the status of where that was, right, kind of just starting EMD, made it a fairly low risk, easy process to execute. The Spirit team was highly collaborative and worked very, very closely with us in that process, and it's done. So, we're focused on going forward. We're executing to that. And so far, so good.

Thank you.

Thank you. We have no further questions in queue at this time. And today's conference is being recorded for digitized replay and will be available after 10 AM Easter Time today through October 24, 2025. You may access the replay by dialing 866-207-1041 and entering the access code of 148-0019. This does conclude the conference for today. Thank you for your participation. You may now disconnect.