03 -jun -2021 spirit aerosystems holdings, inc....2021/06/03 · 60% from 2019 to 2020. max dropped...
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Spirit AeroSystems Holdings, Inc. (SPR)
Bernstein Strategic Decisions Conference
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CORPORATE PARTICIPANTS
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.
......................................................................................................................................................................................................................................................
OTHER PARTICIPANTS
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC
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MANAGEMENT DISCUSSION SECTION
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC
Okay. I think we are ready here. I'm Doug Harned, Bernstein's Aerospace & Defense analyst and I'm really happy
to have with us again, Tom Gentile, the CEO of Spirit AeroSystems. And, Tom, I think you may have a forward-
looking statement message there first. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.
Yeah. Thank you, Doug. I just need to remind everyone that any projections or goals that we may include in our
discussion today are likely to involve risks, which are detailed in our SEC reports. So, that's the only statement I
had to make on that.
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QUESTION AND ANSWER SECTION
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. Great. Well, Tom, to start, obviously, the last year has been an unusual one. Maybe can start by you taking
us through how you've navigated this last year through the pandemic and where you see Spirit right now as we
move into a recovery? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, the last 18 months has really been a very challenging one for Spirit, really the whole commercial
aerospace sector. We had two crises that we were dealing with. The MAX grounding was something that was
impacting us all of 2019 and as we got to the end of 2019, Boeing suspended production. So, we already knew
we were going to be in the crisis and then, of course, the pandemic hit. So, we saw our deliveries dropped by
60% from 2019 to 2020. MAX dropped 90%. And as you may know, we make 90% or 70% of the structure on the
MAX and it represented 50% of our revenues in 2019. So, we produced 606 units of MAX in 2019.
In 2020, we produced just 71. So, almost a 90% drop. Our revenue in 2019 was almost $8 billion. And in 2020, it
was $3.4 billion. So, we had a number of things that we had to do. First and foremost, we had to keep our
employees safe because we had to continue producing not only for our commercial customers but also for our
defense customers. But we then had to align our cost to lower levels of production. We reduced our commercial
head count by 8,000 and we cut $1 billion of cost in 2020, which was about 40% of our total on an annualized
basis.
We also had a stronger liquidity, so we raised $2.1 billion in the bond market. That really helped give us a
cushion. But we cut our capital expenditures. We've suspended our dividend to just $0.01. We also had to cancel
our acquisition of Asco. That saved us $420 million. We negotiated in advance with Boeing, delayed an advanced
repayment to Boeing, and then we also renegotiated our acquisition of Bombardier's aerostructure assets from
$500 million to $275 million. So, in total, about $3.2 billion of cash actions. And we ended 2020 with about $2
billion in cash, so a nice cushion.
We continued to invest in productivity innovation, particularly on our factory floor, so that we can emerge from this
crisis stronger and achieve our historic margin targets of 16.5%. And we continued to diversify. The Bombardier
acquisition gave us more Airbus content. We did the entire integrated composite link for the [ph] A229 (00:03:20)
in Belfast. We also more than doubled our aftermarket business, and we even got some business jet business.
So, that helped our diversification.
So, coming into 2021, things are starting to get better. Some very good news was when the FAA recertified the
MAX and [indiscernible] (00:03:38) recertified it. So, Boeing is delivering that again. In 2021, we're going to deliver
160 or so units of the MAX, so more than double what we did in 2020. And we also are seeing the Airbus content
on the narrowbodies continuing to grow. We're at 40 now and Airbus came out last week with some projections
about where they're going.
So, narrowbody looks like it's recovering faster, with domestic air traffic recovering faster in China and in the US,
and that's having a very good impact on the narrowbodies. And, for Spirit, that's good because 85% of our
backlog is narrowbodies and those are more mature programs for us, so better margins.
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And we are still seeing softness in widebodies. The Boeing 787 is down to about five units right now and the
Airbus A350 is down to about three units right now. And we expect that to remain soft, but one thing that we are
doing with the excess widebody capacity that we have is repurposing it to defense, and that will help us grow our
defense programs.
We've won some classified programs on defense, and that's positioning us well. Last year, we grew 20% on
defense. This year, we're going to grow 15%. It'll be $1 billion business in the mid-20s at typical defense margins.
And then, in terms of diversification, our aftermarket is also growing. As I've said, the Bombardier assets doubled
our activity in the aftermarket. By 2025, we think that'll be a $500 million business at accretive margins, and we've
done a couple of other deals, even this year, to help grow the business.
So, as we look forward, last year was a tough one in terms of cash usage. We used $870 million last year. This
year, things will be better. We have projected between $200 million and $300 million of cash usage this year, net
of the $300 million cash tax benefit that we expect from our net operating losses last year.
And then, we still think that we're on track next year, if production rates hold, to be cash flow positive next year.
And so, that's what the current projections are. So, we feel that we're very well positioned coming out of the
pandemic, but it was definitely a difficult 18 months. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, maybe to start, we could start a little bit on the narrowbodies. You mentioned on the Airbus A320neo, the
fact that Airbus did come out and say they want suppliers be ready to produce 64 a month at the end of 2023 and
maybe 75 a month at the end of 2025. Those are big numbers. Was this a surprise? I mean, what do you think
about Spirit having to respond to those kind of rate increases? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Those are definitely challenging. But we were already capacitized for those rates before the pandemic. We had all
the infrastructure in place, all the capital, all the tooling, even trained workforce, and we had done great studies
even higher than that. And these were not inconsistent with the scenarios that we were working with Airbus. They
hadn't committed that to a formal schedule per se. But they've said they want us to be ready for that.
And what that means is because we have the infrastructure, the capital and the tooling what it means is we have
to be prepared with the labor to recall the people, to get them recertified, retrained and ready. And then also but
on the material, not only the raw materials and the [ph] foregames (00:07:03) but also what we get from our
supply chain. And so, there's a lot of work for us to do to make sure our supply chain is ready to deliver at those
numbers. And we have a very rigorous readiness program in place with them to ensure that they are. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, on the Boeing side and Dave Calhoun was with us an hour or so ago and we were talking about rates there
and they've talked about 31 a month in early 2022 for their production rate. But as he's characterized it, the rate
going higher, a lot of that depends on what happens with China and US relations with China, have a big effect on
where their rate would go. So, on the Spirit standpoint, if you look at – Airbus, big rate increase planned. Boeing,
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we don't know exactly. It may depend on other things. What is the lead time that you need in these situations to
respond if rate's taken up? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, we have a scenario that's already in place both with Boeing and Airbus, so we know what the current
trajectory is and that can change, of course. And, as Boeing said, what happens in China could impact future
rates for the MAX. But, technically speaking, we've always worked with Boeing and Airbus. We need about six
months lead time to go up in rate between 5 and 10 on the narrow-body programs.
And now that's in a typical time. This is anything but a typical time. It's been a very dynamic environment. But that
would be normally what we would work with Boeing and Airbus is about a six-month lead time to go up in rate. But
we have a scenario with both of them that takes us out through 2023 in terms of what their current thinking is.
That can change, but that's what we're planning to today. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, if we think back to when the world was very different, back 2018, the time, back when you were going first
from 47 to 52 on the MAX and planning to go up to 57, you had a lot of challenges in there from 47 to 52. When
you look at where Spirit is today, and presumably Boeing will get back to 52 and 57 even if we don't know exactly
when, how do you see Spirit prepared to respond to that? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, we're in much better shape, Doug, this time around. First of all, all the infrastructure is in place, all the
capital is in place, all the tooling is in place. Last time, we were literally installing it as we were going up in rate.
The other really big difference now versus 2018 is we were still shifting back then between the NG and the MAX.
So, if you recall, we were 100% NG until June of 2017 is when we delivered the first MAX. And we were rolling up
the MAX rate during that whole period of time as we were increasing rate overall. So, we didn't shift to 100%
MAXs until January of 2019. So, there was not only increase in rate, installation of tooling and capital, but we
were also switching the models, which was quite disruptive at the time. We're 100% MAX now. Except for PH. PH
are still NG, but those are only a couple of months.
And so, with all the capital in place, with all the tooling in place, being 100% MAX, and with the workforce already
being trained, now, in some cases, when we recall people, we'll have to retrain them but they've already been
through it once. We're in much better shape. The other thing that's different is we've done a lot during this slow
period to completely redesign our factories. So, for example, plant 2, which is where we build the fuselage, it's
been growing up over a period of time and as rates went up, things got put where they fit at that time. What we've
done now is we've completely reimagined the plant and we've redesigned it. So, for example, we took the entire
forward fuselage we call it Section 41. We've taken that out of plant 2 and moved it across the street into what
was our 767 building. And it's now completely in linear flow. So, it's much more efficient.
And then, what will happen is that forward fuselage will come into plant 2 as a finished unit and go right into
integration. We've done the same thing with the wingbox. We've taken the wingbox out of plant 2 and moved it
down to Tulsa and also to one of our suppliers and put them in completely linear plants so that they're much more
balanced. And the finished wingbox will now come in ready for integration. And we're moving around several other
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of the toolings, so that plant 2 flows in a much more lean, consistent fashion. And that has added a lot of
productivity. In addition, we've invested a lot in digitization, automation, and robotics to improve productivity. So,
with all those changes, the increase in rate will go much smoother this time than it did last time. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well – but I do remember the last time around, you had about a half a dozen suppliers that had some challenges
as well. So, how does the supply chain fit into this? My sense was in the Airbus announcement that some of that
was directed at some suppliers that – smaller suppliers than you that had to make some capital investments in
order to be able to take rate up. Do you – what do you see in terms of the supply chain challenge? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A The suppliers – it's going to be challenging, but we've done a lot of work on the supply chain as well. So, first of
all, we've provided a lot of support to the suppliers during this period. So, we've provided close to $2 billion of
support to almost 600 suppliers through inventory purchases, raw material purchases, contract extensions,
vendor financing. So, we've done a lot. In some cases where suppliers were weak, we've either moved the work
to other suppliers that are stronger or we dual-sourced it or we've insourced it. So, we've taken those kinds of
actions.
But as we go forward, we're working very closely with our suppliers, as I mentioned, on these rate readiness
methodology. So, we're looking at not only to make sure that their infrastructure and capital and tooling is in place,
but that they're hiring labor in advance and on time and that they place their long lead orders for material far
enough in advance so that they're ready when the rates go up. So, we're working very closely with the supply
chain to ensure that they're ready. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, if we switch over to widebodies, as you said, I mean, the widebody recovery is slower, that it is what it is. At
this stage the Boeing 787 and the Airbus A350 for you are in forward-loss positions. With the slow recovery, how
do you think about when you can get now to cash positive positions on these programs either in terms of the... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q ...rate you need or just time? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, so, first of all, there's a little bit of a silver lining in the fact that widebodies are going to take longer to
recover because as you mentioned our two big widebody programs, Airbus 350 and Boeing 787, are forward-loss
positions. But they're going to be a smaller percent of our overall production because narrowbodies are going to
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be going up and are going to be disproportionately larger, and those have better margins. So from that standpoint,
the mix shift between narrowbodies and widebodies is going to be a positive one for us. So that's one thing.
In terms of the programs themselves though of the six Boeing 787, we have said that the plan was by lining at
1405 we have a price increase agreed with Boeing at that time to bring the price up to where the cost was
expected to be.
Now with lower rates it, obviously, is going to be a little bit more challenging. But because the rate is lower, we
also have more time. We don't expect to hit lining at 1405 now until 2025 at this point. So we have more time to
drive the cost reduction savings.
Now, we do have excess capacity right now because the rates are lower and they're probably going to stay low
for longer. And that's what we are repurposing some of that excess capacity to defense work to absorb the fixed
cost. And that will also help the profitability of the Boeing 787 program. So we're still planning for Boeing 787 to be
positive cash flow and positive margin after lining at 1405.
On Airbus A350, it's a similar story, slightly different numbers. It's also on a forward loss because the rates are
lower, but same thing. We are not only looking at defense work, but we won some business jet work that we're
putting in for our Kinston facility and we're also insourcing some of the sub details that we used to do in the supply
chain. We're putting those into Kinston to again absorb some of the fixed costs. So, we expect that that program
will return to profitability probably in the 2023 to 2025 timeframe. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Now you've said that you're targeting about $1 billion in revenue from defense in the mid-2020s. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Can you give us a sense of what the key components of that are? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, first of all, we have a couple of military derivatives of Boeing commercial program. So, you've got the
PA, which is essentially a submarine chaser. That's a Boeing 737. So, we have a very significant [indiscernible]
(00:16:33) on that, of course. We make 70% of the structure. And then the KC-46 is a version of the Boeing 767.
And we do the forward fuselage to fix lineage of the wing, the pylon and in the cell for that. So, those are two very
good base programs.
In addition, we've got the CH-53K, we built the entire forward fuselage for that and we integrate the entire
fuselage for Sikorsky. That's a heavy-lift helicopter for the Marines. And then we want to fix the flyers on the B21
program, which is the new bomber. And we've also won a few classified programs with some of this excess
capacity that I mentioned before. So, it's really just those programs getting further into their development and
production phases, which will deliver the $1 billion by the mid-2020s at normal defense rates.
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But we also see a lot of opportunity to continue to grow. We've made an acquisition of a company called FMI at
the beginning of 2020 that specializes in 3D carbon – 3D woven carbon-carbon composites, which is used in
high-temperature applications for things like hypersonic missiles.
So, in terms of defense growth, we see not only new generation aircraft like CH-53K, the B-21, but we also see
hypersonics and even space. And then the other thing is attritable drones. The group that we bought in Belfast
from Bombardier, they won a program with the UK Defense, Ministry of Defense, called MOSQUITO which is to
develop an attritable drone, a loyal wingman. So, similar to Skyborg in the US. And we're actually going to be the
prime on that. So, those are some of the things that are going to help us achieve the $1 billion by the mid-2020s.
We think we can actually even do better than that. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q And so I was thinking over that time, I mean, P-8A, I would expect to come down some. And then so these other
programs, this CH-53K and certainly we'd grow and then... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Anyway, that's how I was trying to figure out where the growth...
[indiscernible] (00:18:37) ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yes, the program is around B-21. And then, there's a few that we're competing for like the V-280 we're working
with Bell which will be for the Army's Future Vertical Lift, the FLRAA program, Future Long-Range Assault Aircraft.
So, those are also there.
I mean one thing I mentioned in our last earnings call is the programs that we're on, if just by virtue of them
getting further into their production base, that'll get us to the $1 billion by the mid-2020s. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A But it represents, if you look at the program of record, of those programs that we've already won, there are $6
billion over time in terms of their program of record. That's how much sales they represent for Spirit. So... ......................................................................................................................................................................................................................................................
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Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A ...we're already on very good programs and we think there's an opportunity for us to continue to expand and get
on new programs as well. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Now you've talked about that these would be accretive to margins, which I would expect right now. But if you get
back to your goal of 16.5%, I would assume that, at that stage, these would not be accretive but... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yeah. That's correct. I mean, defense programs are solid. They're more consistent. They're a little bit less volatile
sometimes than a commercial program. But the margins, typically for a defense program, are more like 12% to
14%. So, that wouldn't be where we are in terms of our target overall for the company of 16.5%, but aftermarket
would be accretive to the 16.5%.
The new work that we're doing on business jets will be accretive to the 16.5%. So... ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A ...those things will help to offset the fact that the defense programs will be a little bit less, but very solid and very
consistent going forward. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q And so, then on the aftermarket, I mean, you've got – there is Applied Aerodynamics, you've got Bombardier, and
you have these acquisitions that have added to the aftermarket. Can you talk a little bit about what you're trying to
achieve there and what kind of margin lift you might be able to get from those are? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, before we did the Bombardier acquisition, our aftermarket consisted mostly of spare parts sales to
Boeing, and we did a little bit of MRO, and the MRO focused on repairs to Boeing products mostly, and it was
things like inlets, fan cowls, nacelles and thrust reversers, so very specialty.
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When we bought Bombardier, they were flipped. They did much more MRO, much less spare parts sales, and
their MRO focused on Airbus, so flight control surfaces, nacelles and thrust reversers, so similar to us, but Airbus
and mostly in Europe. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A So, what we did immediately, as we started cross-pollinate, is we put the Boeing repairs in Europe and we also
brought the Airbus repairs more to the US. And then, the acquisition, as you mentioned, of Applied Aerodynamics,
which was in Dallas, they do radome repairs, so very similar to the type of things that we did with nacelles, and
we were able to move that into US in Dallas and then also to Europe. And then the third thing we did is we
expanded with the joint venture in Taiwan with EGAT, and that gave us now kind of an Asian base that we could
do Boeing repairs, Airbus repairs, and radome repairs.
And so, what we'll look for now as we go forward is we can expand more geographically. We will be looking for a
base in China, perhaps one in the Middle East. And we'll also be looking to expand the types of repairs that we do
that are consistent with radomes and the cells and other structures like that. So that's the growth plan. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. So when you described this, I mean, I think of this universe is having there's the repair business, which is
more of a service-type business. And then there's the spare parts business, which often can carry with it very high
margins. I mean, how would you characterize the mix of these businesses? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, we're going to be about half and half as we go forward, half spare parts and half repair. Now the repairs that
we do though, you're right. Repairs are often lower margins than spare parts. But the repairs we do what I would
call specialty repairs, so they tend to have better margins. And our overall aftermarket business, as we said, is
going to be accretive to our overall margins for Spirit. And when we said is by 2025, it should be about $500
million at accretive margins. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. And when you look at that, I would expect because some of this – maybe you can describe what the mix is,
but to the extent it's not large commercial aircraft. You may see a faster recovery than you would on the
aftermarket for a lot of large commercial aircraft work. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yeah. That's true. And some of the aftermarket that we have and that we acquired with Bombardier is business
jets, but there is still a lot of commercial aftermarket. And while the commercial aftermarket has been softer, as
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this year started, you are starting to see now the airlines bring their fleets back into service and you've seen
cycles go up. So, and we expect the aftermarket activity will pick up.
And, by the way, there will be a lot of aftermarket to get the airplanes ready to fly after coming out of their
retirement. And so, that's something, particularly on the structures, that we're seeing, as the planes come back
into service, there's a fair amount of work to get them back ready to flying condition. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, when you look at your long-term targets, so you've talked about, the targets kind of like they used to be, the
16.5% operating margin, a free cash flow margin like 79% of sales. Can you walk through how you see getting to
those margins and then kind of the timeframe of the path to get there? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, as production rates start to increase, particularly on the narrowbodies, that helps because that helps
absorb a lot of our fixed costs. At the same time, we took out $1 billion worth of costs and about 3% to 5% of that,
I would say is permanently taken out fixed cost reduction, that won't come back. So, that gives us a bit of a
tailwind. We've made a lot of improvements in the supply chain as we go up in rate and that will be a benefit.
And so – then, all of the changes that I was talking about in our factory, we've automated things, we've automated
our warehousing, we've automated things like our floor beam assembly. We've changed the flow of the plant, not
only in our fuselage plant, but in many of the other facilities as well. We've automated quite a few things and
digitized. So, all of those things will make us more productive as the rates go up. So, what we've said is, when we
get back up to about 42 aircraft per month on the MAX, that's a fairly stable level for us. And at that point, that will
be sometime in 2023. We think according to the current plans that we have, that would be a time when we could
achieve the 60.5% margins. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. And... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Okay. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Go ahead. Go ahead. Sorry. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, I was just going to say, the other thing that we've said is, we do have a focus on de-levering. And, you know,
during the pandemic, I mentioned that we took out $2.1 billion of additional debt. Our goal is, over the next three
years to pay down $1 billion on that. We paid down $300 million in February. We have another maturity in 2023
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and we have a term loan that is about $400 million that we can pay down without penalty. So, as we start to get
cash flow positive, we'll start to pay down that debt as well so that we can return to investment grade. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q I guess, one thing, when you talk about reducing costs and those costs won't come back, this is something that, I
mean, I don't know if I can think of a company that hasn't made that argument. Everybody's saying we'll take that
cost and then we're going to be much more efficient on the other end. Yet, a lot of times when we look at – we
look at the past two downturns before, we had heard that as well, but the cost ultimately either did come back or
pricing kept the margins down. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yes. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q So, we didn't really ever see that. And so, how do you get comfortable in projecting perhaps higher margins in this
recovery? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yeah. Well, first of all, pricing, we did a lot of work in 2018 and 2019 with Boeing and Airbus to really solidify all of
our programs with them, not only – we always had sole source like a program when we had agreed to pricing. [ph]
And we did do that (00:27:35). So, in other words... ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Tom, I don't know if you're there [indiscernible] (00:28:02). Okay. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Oh. Hey, Doug. Sorry about that. Can you hear me now? ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yes. Yes. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yeah. Sorry. We're back. So, just to reiterate, you said how can we be sure of the margins. And the one thing is
just pricing is set. On all of our programs with Boeing and Airbus, we have pricing that goes out [ph] for many
years (00:28:52). On the MAX, for example, it goes out to 2033 and it's indexed great. On the Boeing 787, it goes
out to [ph] aligning at 1,805. We're aligning (00:29:00) at 1,115 right now. On the Airbus A350, it goes out to [ph]
aligning at (00:20:08) 1,600 and so forth. So, we've got the pricing set.
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The other thing we've done is, we've made a massive effort on supply chain to get our pricing set, in many cases,
all the way up to 2033 as well and back to that contracts. And so, we've really solidified a lot of the costs and
driven a lot of supply chain productivity. And then, I talked about all the changes that we've made to our factory to
not only automate and digitize, but also to change flow. And then, on top of that, we took out the fixed cost of the
3% to 5% of the $1 billion. So, those are the reasons why I have a fair degree of confidence that we're going to hit
the margin targets [ph] that I've articulated (00:29:50). ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, then that would also suggest, when you get to 42 a month on the MAX because, I think, anybody that
expects the world to get normal again would believe that that's going to go up to 52 to 57, that would suggest that
you could even do better beyond that point of 42 a month. [ph] Is that fair (00:30:11)? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, as you know, there's always some headwinds that you have to overcome. And, as I've said, the pricing on
the MAX is tiered to volumes. So, as the volume goes up on the MAX, the price goes down, as you would expect,
because we're spreading [ph] that out those (00:30:23) fixed costs over more units and that's perfectly
appropriate. But those are some of the headwinds that we have to offset. So, 16.5%, we think is a good margin
target. Of course, as rates go up, the total dollars of cash that we generate will go up. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah, yeah. Well, you know, if we go to some of your acquisitions and, particularly, the Bombardier one, you
know, in this announcement [ph] of 16 a (00:30:55) month Airbus also said that they want to be at 14 a month on
the A220. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q I mean, that seems like a pretty aggressive number from where things are. How do you think about that rate
increase? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, that's what we were targeting. And so, that was – is consistent and the 2025 timeframe is also consistent
with what they have... ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
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Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A ...been talking about and we're excited about that. I mean, it's a very good program. I think that – it's a smaller
gauge aircraft coming out of the pandemic. That's going to be in demand. We see a lot of airlines continuing to
order it, to evaluate it. It's a very efficient aircraft. It's got an aluminum lithium fuselage which is lighter. It's got
completely composite wings. It's got the Euro turbo fan engines. So it's very, very efficient aircraft. And it's the
right size for the market coming out. So it does look good. It's going to be very strong.
And, as you know, we announced that we had a [ph] forward loss on it (00:31:52) immediately after the
acquisition. But if the rates go up to the 14 level in 2025, it'll be back to breakeven and then profitable again for
us. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, in that, one of the things this made me think of is, Airbus has described this program as, I mean, before that,
they did not see it reaching breakeven for them until 2025. And then, once the pandemic hit, they had said it's
going to be longer than that. And so, they've also said that it's important to get supplier cost [ph] hit (00:32:26).
So, if I think across the supplier base, the two biggest suppliers are Spirit and Raytheon. So, are you set in terms
of, what your pricing is with Airbus on this program? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A We are. We are. I mean, the negotiation with Bombardier was essentially a three-way negotiation including
Airbus, because that was obviously such an important thing. And so, not only were they in the negotiations of the
original deal, they were in the negotiations of the revised deal that we get. It was very important that we agreed
with Airbus and we're very clear what the pricing would be that they were satisfied and we were satisfied. And so,
we've already set the pricing on the Airbus A320 wing with Airbus going out [ph] quite a long wins (00:33:15). ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. That's good to know. And... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A And that was built into all of our numbers for the deal. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A And so, we're very comfortable with it. And... ......................................................................................................................................................................................................................................................
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Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. So, you don't expect any new pressure and in fact the operating leverage you'll get when you get up to 14 a
month should get you into a positive situation then. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. I'm sure Airbus always reserves the right to continue asking for more productivity. But we did set the pricing
going out to that time period. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q I would be shocked if they didn't at least ask, you know? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q So, when you look at these – the two acquisitions, where do you stand now on the integration process? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Well, with FMI, that was completely done in 2020. The two recent ones with the Bombardier acquisition, that's
about 80% done. We had 450 tasks and we're done with all the basic ones. The ones that are remaining are
things like – and these are important ones, but getting the final TSA on the IT, the Transition Services Agreement,
finalizing some of the pension actions. We've already announced the closure of the pension plan to new entrants
and to new acquisition. And then, also, some of the facilities. We're consolidating some of the facilities in Belfast
to be more efficient. So, those are some of the actions that are remaining. But it's going very well. It's 80% done.
The Applied Aerodynamics acquisition is also – well, that's much smaller, much easier. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A And so, that's largely done at this point. We were a couple of months into it and we've done all the basics on it. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q And on – particularly on the Bombardier one is, what do you see there in terms of supply chain opportunities? I
mean, it's a longer-term benefit, but I would expect that there should be some opportunities there between your –
the broader Spirit supply chain and theirs.
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Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Absolutely. I mean, if you think about it, we're in the structures business. Bombardier really wasn't. And they were
mostly focused on business steps and we're just getting into the Airbus A220. So, they just didn't have the scale
or the supplier relationships to do much better than they were doing. Whereas with Spirit, we bring much more
scale. We're in this business. Structures is what we do. And we also have much stronger relationships with the
suppliers. We have more to trade off.
So, when you look at some of the big suppliers that are on the A220, the contracts are set for a longer period of
time. They might be – Bombardier had very little, I would say, leverage to change them. And what we can do is
offer the suppliers many other opportunities to work with us on other programs, so we can make more trade-offs
and we can get the better solutions for the Airbus A220 program. And we've already started to do that.
So, supply chain is one of the big areas of synergy for us with the Belfast operations and we're seeing it. They've
got some excellent suppliers right now. We can help make those suppliers better and we can also leverage the
relationships that we've had historically and make the overall supply chain function much more productively and
much more effectively. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Also, I would think you've got some fairly low-cost facilities, too. Are there opportunities there across the broader
Spirit footprint? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yes. One thing that the Bombardier acquisition brought us was a facility in Morocco. Very low cost, excellent
quality, good facility with capital there, and a trained workforce, and it's right on the doorstep of Europe. It's
French-speaking, so it offers a lot of advantages. And we're already seeing that opportunity to move some things
out of the supply chain to Morocco to take advantage of that low-cost facility. It's very similar to what we had in
Malaysia with Subang where we can service the Asian market. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q [indiscernible] (00:37:21). Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yeah. And so, two – those two facilities are really showing that they can offer a lot of opportunity to [ph] impress
(00:37:29) and go forward. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q So, well, now you've done these acquisitions. Are you still looking at other opportunities at this stage? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A
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Well, the answer is, I said we want to delever and we want to pay down $1 billion of debt over these three years
and we've already done $300 million of that, but we're continuing to look for opportunities. The market is in a very
disrupted state right now and there could be some opportunities for us in – or Airbus content or defense work or
aftermarket, we're looking. And we have capacity on our balance sheet if the right deal came up. It would have to
be strategically fitting our criteria, good returns, and trading at a multiple that's below where Spirit is historically.
But if that kind of opportunity came up, we would take advantage of it and just delay our delevering process. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A But we certainly are looking to diversify and grow. And we are keeping a very active review of a deal pipeline if
the right sort of opportunity surfaces. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q And then one of the topics that comes up a lot is the potential for a new Boeing airplane. And the discussion with
Dave Calhoun earlier we talked a little bit about the thinking on that, basically, looking at new manufacturing
techniques, structure being a very important part of what would play into that. So, have you been involved in this
in terms of just the thinking and working with Boeing [ph] and (00:39:17) thinking around what a new airplane
might look like? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right. Well, we have lots of discussions with Boeing on the future programs and future developments and things
like that. We're working with them, for example, on a big NASA program, looking at different airframe
architectures.
And, I'm biased but, I think, we're the best aerospace – aerostructures business in the world. We're the most
advanced in terms of our engineering of our industrialization and we can certainly bring value to any new program
for one of our customers. Boeing is our biggest customer and if we can help them out, we would and we would
absolutely value that opportunity. But, at the same time, with resources being limited, we're also mindful that we
need to continue to diversify and spend our limited resources on growing our Airbus content, our defense content,
and our aftermarket content. But if Boeing needed help, then we could help them. We think we could bring a lot of
value [ph] to any new (00:40:11) program. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, my assumption would be that on the composite manufacturing side, you all would be very well positioned
from that side of Boeing. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A
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Right. Well, we have capacity that we can immediately apply if needed. So, I think we can bring us a very strong
value proposition, not only economically, but also in terms of our design experience and capabilities of what we
can bring to the design of a new aircraft program as well, on the airframe side. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Well, if we were to then kind of wrap all of this up, I mean, one of the most important things is going to be – and
I'm thinking about how the cash progresses and you've talked about how being cash flow positive next year –
obviously, you would hope that would have been earlier, but the pandemic obviously changed a lot. So, right now,
can you sort of just update us on how you're thinking about deliveries on the MAX, kind of this year going – and, I
know, you've talked about this before – but kind of what that looks like now. Obviously, Boeing had some pickups
they had to stop deliveries for a little due to electrical issue. I mean, what does it look like for Spirit this year on the
MAX. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Great. Well, for this year, we've said our plan is to deliver 160 new MAX units to [ph] Boeing (00:41:35). And that's
more than double what we did last year. The last year, we did 71. Now, as you know, Boeing kept delivering in
2019 after they stopped or they kept producing after they stopped delivering and so did we. They produced at 42.
We stayed at [ph] 50 (00:41:50). So, they ended up with about 450 aircraft that they built and didn't deliver. And
we ended up with 130 or so shipsets including the fuselages which were built and stored in Wichita.
Now, Boeing owns those, those are [ph] Boeing's (00:42:08) inventory, but it's still a buffer. And so, what we
agreed with Boeing is, we will lag them about 5 units a month sometimes maybe 10 in a month. But we'll lag them
between now and the end of next year to burn off that buffer of 130. And then so, by the kind of the late part of
next year, we'll get down to a permanent buffer of about 20 units and we'll keep that as a permanent buffer to
cushion the production system. But that's how it will unfold. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q So, you're going to lag – so whatever Boeing goes to the next year, which, as they've said, depending on China
things like that, your plan is to be 5 less than that per month and so, you get to the point where that you're at this
buffer level of, say, 20... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Right, 20. And then we will go – we'll get back [ph] and lag step (00:43:00) with them at that point. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q And is that just the fuselage or is [indiscernible] (00:43:06)? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Not at all, it's basically all the shipsets. Yeah. It's all the different packages that we have. So, it includes the thrust
reversers, the pylons, the flaps and the slats on the wings.
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Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. Yeah. And so, when you think of – clearly, this all feeds into your view of being cash flow positive next year. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Yes. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q What – I mean, what are the other moving parts of that? I would think this would be the most important thing given
the scale of the MAX compared to your other efforts. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Absolutely. I mean, production rates are the key for us. And the MAX production rate is, of course, most important
for Spirit because we make 70% of that structure. And, in the pre-pandemic period, it was 50% of our revenue.
But all the production rates matter. So, I think if you're looking at what are the keys to our cash, first and foremost
is production rates and production rates on the MAX.
The second thing is, for this year, we've got this cash tax benefit that we've applied for based on the net operating
losses that we had last year. That's going to be about $300 million. Obviously, that's important. The other critical
factor for us on a cash is working capital, particularly inventory. So, last year, those production rate changes came
so quickly we didn't really have time to react and we kept buying inventory. Now [indiscernible] (00:44:30) could
be good for the suppliers, because it gave them a bit of a lifeline and it generated cash for them last year and into
the early part of this year. But it was definitely a headwind for us, probably $500 million last year of additional
inventory.
But now, it turns around. We get into a destocking period. As we go forward, even as rates increase, we won't be
buying as much inventory. We'll be destocking and that will become a bit of a tailwind. So, that's one of the things
you'll see in terms of cash flow for this year and into next year is the destocking that happens on inventory. So,
those are the... ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Okay. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A ...three things that'll help drive cash... ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. ......................................................................................................................................................................................................................................................
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Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A ...it is rate, cash tax benefit, and then destocking of inventory. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Now, that's very helpful because, it sounds like some of these other things like the volumes on the Boeing 787
and the Airbus A350, those are small enough that those aren't your big drivers at this point. And it's really... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Those are [ph] only big drivers (00:45:28). ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC Q Yeah. So we're going to have to wrap up, but I wanted to – in order to wrap up, perhaps, if you could just kind of
layout, as you look at the next two to three years what are your priorities for that timeframe? And when should we
watch to be – gain confidence that you're really on the track that you're laying out? ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc. A Great. Well, certainly execution on rates, particularly for the narrowbodies, the MAX and the Airbus A320. The
second thing is execution on our working capital initiatives that we've talked about and driving the productivity in
the factories in order to achieve the margin of 16.5% margin.
So when you want [indiscernible] (00:46:15) Spirit is, can we get to that 16.5% margin? And will we be generating
cash again? We've generated $723 million of cash in 2019 and that was about 9% of our total sales and that's
where we want to get back to. But, I think the thing about Spirit is, we feel that we're very well-positioned going
forward, and I'll reiterate it. We have a lot of exposure in narrowbodies. If you look at for air traffic as it recovers in
China, in the US, and Europe, it's domestic traffic that's recovering first, and that is going to favor narrowbodies.
85% of Spirit's backlog is narrowbodies and as this recovery takes place, that's where you're going to see the
production rates go fastest.
And so, while we went down the fastest because of that exposure to narrowbodies, we're going to go up the
fastest on this side of things and that's going to be very exciting. And all the things I mentioned we're very well-
positioned to do that.
We've made the conversion to the MAX and to the NEO, so we're not doing that this time. All the capital and the
infrastructure is in place. The people are in place. And we're making a lot of changes to our productivity in the
factories, digitization, automation, so that we can go up and write faster. And we've got a very strong supply chain
now that's also ready to go up [indiscernible] (00:47:27). So we're heavily-levered exposure to the narrowbody
recovery over the next five years and we think that's a good place to be. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC
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Yeah. Yeah, definitely. Definitely where the recovery is coming first so – well, Tom, thank you very much for
joining us. It's been great. Hopefully, we can do it in person next time. But... ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.
Well, I look forward to that, Doug. ......................................................................................................................................................................................................................................................
Douglas S. Harned Analyst, Sanford C. Bernstein & Co. LLC
Yeah. Thanks a lot. All right. ......................................................................................................................................................................................................................................................
Thomas C. Gentile III President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.
Thank you very much. Appreciate it.
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