First Quarter 2025 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer May 1, 2025 Important Information Forward–Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates", "believes", "could", " ...

Group 1 - Airbus receives positive analyst attention with Barclays lowering its price target to 185 euros while maintaining an "overweight" rating, and Kepler Cheuvreux upgrading it to "buy" with a 170-euro price target [1] - Airbus stock has declined about 8% over the past month due to macroeconomic recession concerns but has rebounded by approximately 10% in the last three weeks [2] - Boeing has received an upgrade to "outperform" from Bernstein SocGen, indicating a potential recovery as it addresses issues with its 737 MAX program and plans to increase production [3] Group 2 - Airbus reported a profit of $4.4 billion last year, contrasting with Boeing's loss of $11.5 billion, and is projected to grow earnings to $5.8 billion this year, while Boeing may struggle to earn anything [4] - By 2026, Airbus profits could reach $7.3 billion, nearly double Boeing's expected earnings of $4 billion, highlighting Airbus's stronger operational performance [4] - Despite Airbus trading at 26 times earnings, it is considered a stronger investment compared to Boeing, raising questions about why Airbus is not receiving similar upgrades [4]

Core Insights - GE Aerospace's order and profit situation in the first quarter of 2025 appears strong, mirroring the robust performance seen in 2024 [1] Group 1 - The company's first quarter earnings presentation highlighted a solid order and profit situation [1]

Core Viewpoint - Spirit AeroSystems Holdings, Inc. has entered into a definitive agreement with Airbus SE to transfer ownership of certain assets and sites related to the production of Airbus aerostructures, coinciding with Spirit's acquisition by The Boeing Company, both expected to close in the third quarter of 2025, pending regulatory approvals [1][8]. Group 1: Transaction Details - The divestiture includes assets in Subang, Malaysia, and other sites involved in the production of Airbus programs, which will be acquired by Airbus if no suitable buyer is found before the transaction closes [2][7]. - The assets being transferred include production facilities for A350 fuselage sections in Kinston, North Carolina, and St. Nazaire, France, as well as components for A321 and A220 in Casablanca, Morocco, and various other sites [7]. Group 2: Financial Support and Strategic Importance - Airbus will provide Spirit with non-interest-bearing lines of credit totaling $200 million to support Airbus programs, highlighting the strategic collaboration between the two companies [3]. - The agreement is viewed as a significant milestone for Spirit as it progresses towards the closing of the Boeing acquisition, benefiting Spirit and its stakeholders [3]. Group 3: Company Overview - Spirit AeroSystems is a leading manufacturer of aerostructures for commercial airplanes, defense platforms, and business/regional jets, with expertise in aluminum and advanced composite manufacturing [5]. - The company operates facilities in multiple countries, including the U.S., U.K., France, Malaysia, and Morocco, and focuses on innovative and reliable supply solutions for military and commercial aerospace [5].

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive's content includes insights across various sectors such as biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] Group 2 - Proactive is committed to adopting technology to enhance workflows and improve content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Financial Performance - Textron's Q1 2025 revenues increased to $3.3 billion, up from $3.1 billion in Q1 2024[4] - The company's Q1 2025 EPS was $1.13, compared to $1.03 in Q1 2024[4] - Adjusted EPS for Q1 2025 was $1.28, an increase from $1.20 in Q1 2024[4] - Manufacturing cash flow before pension contributions was $(158) million in Q1 2025, compared to $(81) million in Q1 2024[4] - Adjusted EBITDA increased to $386 million in Q1 2025 from $372 million in Q1 2024[8] Segment Performance - Bell experienced significant revenue growth of 35.2% in Q1 2025[6] - Textron Aviation's revenue grew by 2.0% in Q1 2025[6] - Textron Systems' revenue decreased by 3.3% in Q1 2025[6] - Industrial segment revenue decreased by 11.2% in Q1 2025, but after adjusting for foreign exchange impact, the decrease was 10.2%[6]

Financial Data and Key Metrics Changes - Revenues for the quarter were $3.3 billion, an increase of $171 million or 5% from the previous year's first quarter [4][6] - Adjusted income from continuing operations was $1.28 per share, compared to $1.20 per share in the same quarter last year [5] - Manufacturing cash flow before pension contributions reflected a use of cash of $158 million, compared to a use of cash of $81 million in the previous year [5] Business Line Data and Key Metrics Changes - Textron Aviation revenues were $1.2 billion, up $24 million, with a profit of $127 million, down $16 million from a year ago [15] - Bell revenues increased by $256 million or 35%, driven by strong growth in military and commercial product lines, with a segment profit of $90 million, up $10 million [9][17] - Textron Systems revenues were $290 million, down $10 million, with a segment profit of $40 million, up $2 million [18] - Industrial revenues decreased by $100 million to $792 million, with segment profit unchanged at $30 million [19] Market Data and Key Metrics Changes - Aviation delivered 31 jets and 30 commercial turboprops, compared to 36 jets and 20 turboprops in the previous year [6] - Bell delivered 29 helicopters, up from 18 in the previous year [10] - Backlog for Textron Aviation ended at $7.9 billion, while Bell's backlog was $7.1 billion, and Textron Systems' backlog was $2.3 billion [16][18] Company Strategy and Development Direction - The company is focusing on ramping production in aviation to recover from previous disruptions and is optimistic about future growth [6][55] - The successful sale of the Arctic Cat brand is part of a strategic review to streamline operations [13][25] - The company is actively monitoring the impact of tariffs and trade issues, noting that most manufacturing is based in North America, which mitigates tariff risks [28][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment for aviation, despite some macroeconomic uncertainties [49][122] - The company expects continued growth in the Bell segment, particularly from military contracts and commercial helicopter deliveries [39][120] - Management reaffirmed guidance for full-year adjusted earnings per share in the range of $6 to $6.20 [23] Other Important Information - The company repurchased approximately 2.9 million shares, returning $215 million in cash to shareholders [23] - The adjusted effective tax rate for the quarter was 15.3%, with an expected full-year rate of 18% [22] Q&A Session Summary Question: Any further portfolio actions after Arctic Cat disposal? - Management stated there are no new announcements regarding portfolio actions but continues to evaluate the portfolio [26] Question: Impact of tariffs and trade war on business? - Management indicated that the company has not seen a material impact from tariffs due to USMCA compliance and localized production [28][31] Question: Demand environment in the private jet market? - Management noted that while some customers may pause due to uncertainty, overall order activity remains strong [49][50] Question: Updates on the Denali program? - Management confirmed that the Denali program is progressing well following the certification of the GE Aerospace Catalyst engine [64][66] Question: Demand environment for Kautex? - Management expressed uncertainty regarding global automotive demand but noted that Q1 numbers were consistent with expectations [72][73] Question: Updates on unmanned systems and R&D? - Management highlighted ongoing investments in unmanned systems and the importance of adapting to new demand vectors in defense [106][110] Question: Future of electric aviation technology? - Management acknowledged the potential for electrification in aircraft like the Caravan and is supportive of companies working in that space [134][139] Question: Current M&A environment? - Management continues to look for accretive M&A opportunities but noted that current market multiples are high [141][143]

Core Viewpoint - BofA Securities analyst Ronald J. Epstein maintains a Neutral rating on Boeing Company with a price target of $185, following stronger-than-expected first-quarter 2025 results [1] Financial Performance - Boeing reported a revenue increase of 18% year over year, reaching $19.496 billion, surpassing the consensus estimate of $19.43 billion [1] - The adjusted loss per share improved to 49 cents from $1.13 in the same quarter of 2024, beating the consensus estimate of a $1.27 loss per share [1] Delivery and Production Challenges - Boeing's 737 deliveries in April fell short of expectations, with only 16 units delivered compared to 22 units in the same period last month, which was already below projections [2] - Ongoing uncertainty regarding deliveries to China due to tariff-related issues has led Boeing to reposition aircraft, with two jets returning to Boeing Field and three moved to Moses Lake [3] - Despite these challenges, Boeing is expected to reallocate jets to markets with strong airline capacity demand, particularly in India [4] Production Outlook - Aero Analysis Partners anticipates Boeing will average 28 737 rollouts per month in the second quarter, a slight increase due to first-quarter output being boosted by previously completed aircraft [5] - The firm believes Boeing may reach a monthly production rate of 38 later this year, although maintaining that pace could be challenging [5] Stock Performance - Boeing shares increased by 5.9% to $172.27 on Wednesday [5]

Financial Performance and Key Metrics - Revenue for Q1 2025 was $19.5 billion, an increase of 18% primarily driven by higher commercial delivery volume [31] - Core loss per share improved to $0.49, reflecting higher commercial deliveries and improved operational performance [31] - Free cash flow usage was $2.3 billion, better than expectations due to higher commercial deliveries and improved working capital [31][32] Business Line Performance Boeing Commercial Airplanes (BCA) - BCA delivered 130 airplanes in the quarter, with revenue of $8.1 billion and an operating margin of -6.6% [32] - The backlog for BCA increased to $460 billion, up more than $25 billion sequentially, including over 5,600 airplanes [33] - The 737 program delivered 105 airplanes, with production expected to ramp up to 38 per month in the coming months [34][12] - The 787 program stabilized production at five per month, with plans to increase to seven per month [14][38] Boeing Defense, Space & Security (BDS) - BDS booked $4 billion in orders, with a backlog of $62 billion [40] - Revenue was $6.3 billion, down 9% due to planned lower volume [41] - Operating margin improved to 2.5%, reflecting stabilizing operational performance [42] Boeing Global Services (BGS) - BGS received $5 billion in orders, with revenue stable at $5.1 billion and an operating margin of 18.6% [46][47] - BGS delivered the 100th 767-300 Boeing converted freighter [47] Market Data and Key Metrics - Approximately 70% of commercial deliveries are planned for customers outside the U.S., with a backlog of over $0.5 trillion [51] - China represents about 10% of the commercial backlog, with 50 deliveries planned for the year, but potential issues due to tariffs [52][27] Company Strategy and Industry Competition - The company is focused on stabilizing its business, improving development program execution, changing its culture, and building a new future [9][21] - The planned divestiture of portions of the digital aviation solutions business is part of a strategy to streamline the portfolio and strengthen the balance sheet [50] - Winning the F-47 program is seen as a transformational accomplishment for the defense business [8] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the recovery plan and noted that the operational KPIs are showing improvement [6][28] - The company is actively engaging with the administration regarding tariffs and their impact on the business [60] - Management remains optimistic about demand for aircraft despite challenges in the China market [92] Other Important Information - The company has a cash balance of $23.7 billion and a debt balance of $53.6 billion, with access to $10 billion in revolving credit facilities [48][49] - The company is committed to maintaining an investment-grade rating and managing its balance sheet prudently [49] Q&A Session Summary Question: Interaction with Washington on Tariffs - Management is actively engaged with the administration regarding tariffs and their implications for the aviation industry [58][60] Question: Delivery Expectations for 737 and 787 - The company expects to deliver around 400 737s and approximately 80 787s this year, with adjustments for the China situation [66][67] Question: Impact of Tariffs on Costs - The net annual impact of higher tariffs on input costs is manageable, estimated to be less than $500 million [77][78] Question: Free Cash Flow Outlook - The company expects free cash flow usage in Q2 to be in line with Q1, with a positive turnaround anticipated in the second half of the year [86][88] Question: Production Rate Increases - The company plans to increase production rates for both the 737 and 787, with stability in KPIs being a key factor [92][94] Question: F-47 Contract Structure - Details on the F-47 contract structure are limited, but management is focused on appropriate contract types to mitigate risks [100] Question: Status of Key Performance Indicators (KPIs) - Management reported improvements in KPIs for both the 737 and 787 programs, with ongoing efforts to stabilize production [105][106]

Core Insights - Boeing reported Q1 2025 earnings that exceeded analyst expectations, with revenue reaching $19.5 billion, driven by increased commercial airplane deliveries [2][3] - The company experienced a significant recovery in its Commercial Airplanes segment, with a 57% increase in aircraft deliveries from 83 to 130 airplanes [6] - Ongoing challenges persist in the Defense, Space & Security segment, which saw a 9% decline in revenue to $6.3 billion [7] Financial Performance - Q1 2025 Non-GAAP EPS improved to a loss of $0.49, better than the anticipated loss of $1.18 [2][3] - Revenue for Q1 2025 increased by 17.7% compared to Q1 2024, which had revenue of $16.57 billion [3] - Operating cash flow was negative at $1.6 billion, while free cash flow also remained negative at $2.3 billion [3][9] Business Overview - Boeing focuses on enhancing production capabilities and stabilizing its supply chain to meet growing global demand for aircraft [4] - The Commercial Airplanes segment is crucial for Boeing's financial health, contributing significantly to revenue streams [4] - The company is developing innovative aircraft like the 777X to remain competitive against rivals such as Airbus [4] Operational Highlights - The 737 program is set to ramp up production to 38 planes per month within the year [6][11] - The Defense segment is facing challenges, including pre-tax charges related to fixed-price contracts, despite securing a contract for next-generation fighter jets [7] - The Global Services segment reported a marginal increase in margins to 18.6%, affirming its role as a reliable revenue stream [8] Future Outlook - Boeing aims to increase commercial aircraft production and enhance supply chain resilience, with plans to reach a production rate of 38 per month [11] - Management is focused on navigating regulatory frameworks and managing defense contracts to align with customer specifications [12] - Robust demand for commercial airplanes provides optimism, despite uncertainties in the defense sector [12]