Financial Data and Key Metrics Changes - Hexcel generated $456 million in sales and adjusted diluted EPS of $0.37 for Q3 2025, which aligns with expectations despite challenges from slower seasonal sales and continued destocking by commercial OEMs [11][30] - Gross margin decreased to 21.9% from 23.3% in Q3 2024, impacted by tariffs and inventory reduction actions [11][33] - Adjusted operating income was $44.8 million, or 9.8% of sales, compared to $52.9 million, or 11.6% of sales in the prior year [35] Business Line Data and Key Metrics Changes - Commercial Aerospace sales were $274.2 million, a decline of 7.3% year-over-year on a constant currency basis, primarily due to destocking on the A350 program [12][30] - Defense, Space, and Other segment sales totaled $182 million, an increase of 11.7% on a constant currency basis, driven by strong demand across various platforms [13][32] Market Data and Key Metrics Changes - The backlog for commercial aircraft has grown from 13,000 units before the pandemic to over 15,000 today, indicating a recovery in air traffic to pre-pandemic levels [6][7] - The company expects to exit 2025 aligned with commercial aircraft build rates, positioning for growth in 2026 and beyond [7][45] Company Strategy and Development Direction - Hexcel's strategic focus remains on advanced material science, particularly in the aerospace and defense markets, as the company navigates a dynamic environment [5][24] - The company is committed to cost reduction actions and operational streamlining, including the divestiture of non-core assets [18][22] Management's Comments on Operating Environment and Future Outlook - Management expressed growing confidence in a sustained ramp-up in production based on customer discussions and supply chain improvements [6][10] - The company anticipates a multiyear growth cycle for commercial aerospace original equipment production, benefiting from strong positions in major programs [11][24] Other Important Information - The Board of Directors authorized a $600 million share repurchase program, alongside a $350 million accelerated share repurchase program [26][27] - The company has narrowed its sales expectations for 2025 to the lower end of the prior range due to ongoing destocking and tariff impacts [17][40] Q&A Session Summary Question: Can you discuss the implications of the $500 million growth expected from manufacturer production rates? - Management noted that the long-term contract with Airbus for the A350 provides a foundation for capital investments, but inflation has impacted margins, which are expected to be around 16% when production returns to pre-pandemic levels [51][52] Question: What should be expected for debt or interest costs in 2026? - Management indicated that interest costs should be significantly lower than $50 million, with rapid debt reduction expected after the first quarter [54] Question: Can margins be higher in 2026 if commercial aerospace revenue increases? - Management confirmed that margins can improve as production rates increase, although inflation and other costs will need to be managed [67] Question: How is the company managing potential contingencies if destocking continues longer than expected? - The company is managing inventory levels and hiring cautiously, using existing inventory as a buffer against unexpected demand spikes [68] Question: What is the outlook for European defense spending? - Management highlighted a strong growth trend in European defense spending, with commitments to increase from 1% to 5% of GDP, indicating a positive outlook for defense-related sales [100][101]

October 23rd, 2025 The data in this package should be read in conjunction with the Textron earnings release and accompanying tables. Q3 2025 Earnings Call Presentation Key Data – Q3 2025 | | Q3 2025 | Q3 2024 | | --- | --- | --- | | Revenues | $ 3.6B | $ 3.4B | | Segment Profit | $ 357M | $ 284M | | EPS | $ 1.31 | $ 1.18 | | Adjusted EPS | $ 1.55 | $ 1.40 | | Manufacturing Cash Flow Before Pension Contributions | $ 281M | $ 147M | | Pension Contributions | $ 9M | $ 10M | © 2025 TEXTRON INC. 1 Forward-lookin ...

Core Viewpoint - Wizz Air Holdings Plc is planning to defer approximately 100 Airbus aircraft deliveries into the next decade as part of a strategy to reduce costs and stabilize investor confidence after a period of rapid expansion [1][3]. Delivery and Fleet Plans - The aircraft deliveries originally scheduled between now and 2030 are being pushed into the next decade, with the potential deferrals representing over a third of the airline's planned deliveries [2][5]. - As of September 30, Wizz Air has 281 A321neos on order [5]. - The airline anticipates a fleet of 500 planes by fiscal year 2032, which is two years later than previously planned [6]. Operational Adjustments - Wizz Air is scaling back its operations in the Middle East and South Asia, and has grounded some Airbus A320 family jets due to maintenance issues with engines from RTX Corp.'s Pratt & Whitney unit [3][4]. - The airline closed its Abu Dhabi unit in September due to engine troubles and geopolitical challenges, and plans to close its Vienna base by March [4]. Capacity Growth Projections - If the deferrals occur, Wizz Air's capacity growth could be reduced to 10% instead of the planned 14%, with as many as 50 planes potentially deferred in 2027 [6]. - The airline aims to grow its fleet annually at a rate of 15% through 2030 [6].

Core Viewpoint - Boeing is experiencing a turnaround under CEO Kelly Ortberg, with operational improvements and a significant backlog of $619 billion as of the end of Q2 [1] Group 1: Stock Performance and Investment Case - Boeing stock shows potential for near- to medium-term attractiveness if operational improvements are sustained [2] - The defense segment, known as Defense, Space & Security (BDS), has recently shown profitability after years of issues, which is a positive sign for the stock [2] - The majority of losses in BDS come from fixed-price development programs, which only make up 15% of the portfolio, indicating potential for margin improvement [4] Group 2: Management Changes and Operational Improvements - Management believes that BDS margins will improve as key milestones are achieved, with new BDS CEO Steve Parker focusing on better cost estimations [5][6] - The swift management changes under Ortberg are aimed at addressing past issues and improving operational efficiency [5] Group 3: Production and Delivery Rates - Boeing has over 4,800 unfilled orders for the 737 MAX, and the FAA has approved an increase in the production rate to 42 per month, enhancing delivery capabilities [8][9] - The increase in production rate is expected to positively impact delivery rates over time, contributing to the company's momentum [9][11] Group 4: Long-term Considerations - There are concerns about Boeing's financial feasibility to compete in the next generation of aircraft, with an estimated investment of $50 billion needed over a decade [12] - Boeing's current net debt stands at $30.3 billion, raising questions about cash generation cycles from the 737 MAX [12] - Competitive pressures are increasing, particularly with Airbus advancing its RISE program, which may put Boeing at a disadvantage if it does not adapt to new technologies [14][15]

Core Insights - Discussion around buying the post-earnings dip in GE Aerospace and Netflix shares after their Q3 reports is gaining traction, especially given their impressive stock gains of around +300% over the last three years [1] GE Aerospace - GE Aerospace's Q3 sales surged 26% to $11.3 billion from $8.94 billion year-over-year, driven by LEAP engine sales [2] - Earnings for GE Aerospace soared 44% to $1.66 per share, exceeding the Zacks EPS Consensus of $1.46 by 14% [2] - The company raised its full-year 2025 guidance, now expecting adjusted EPS between $6.00-$6.20, up from a previous forecast of $5.90, and projecting mid-teens revenue growth [4] Netflix - Netflix's Q3 sales increased 17% to $11.51 billion from $9.82 billion year-over-year, but slightly missed estimates of $11.52 billion [3] - The company faced a $400 million non-recurring tax expense due to a dispute in Brazil, resulting in Q3 EPS of $5.87, which was 15% below expectations of $6.89 [3] - Netflix raised its full-year revenue growth forecast to approximately 16% from a previous estimate of 14% and increased its operating margin forecast from 21% to 22% [4] Valuation Metrics - GE Aerospace and Netflix are trading at notable premiums to the broader market, with forward P/E ratios of 52X and 47X, respectively [6] - Netflix has a high cash flow per share ratio of 59X, while GE Aerospace's ratio of 8X is above the S&P 500 average of 6X [7] Market Sentiment - Both GE Aerospace and Netflix currently hold a Zacks Rank 3 (Hold), indicating a cautious outlook despite their strong performance and raised guidance [8] - The trend of earnings estimate revisions following their Q3 reports is expected to be positive, particularly for GE Aerospace [9]

Market Overview - Pre-market futures are showing a downward bias, with the Dow down -9 points, S&P 500 up +3, Nasdaq down -38, and Russell 2000 down -9 points [1] - The Dow recently reached a record closing high, but Q3 earnings reports have not been as positive as expected [1] Federal Reserve Insights - Fed Governor Michael Barr is scheduled to make appearances ahead of the upcoming monetary policy decision, with nearly 100% of analysts anticipating a 25 basis-point rate cut [2] Q3 Earnings Reports - **AT&T (T)**: Reported Q3 earnings of 54 cents per share, missing estimates by a penny, with revenues of $30.71 billion, down -0.81% from estimates; shares down -1.6% [3] - **Thermo Fisher (TMO)**: Reported earnings of $5.79 per share, beating estimates of $5.50, with revenues of $11.12 billion, exceeding expectations by +2%; shares up +2% [4] - **GE Vernova (GEV)**: Reported earnings of $1.64 per share, missing estimates of $1.78 by -7.87%, but revenues of $9.97 billion were +8.62% higher than anticipated; shares up +3.8% [5] - **Teck Resources (TECK)**: Reported earnings of 55 cents per share, surpassing estimates of 39 cents by +41%, with revenues of $2.46 billion, exceeding consensus by +14.3% [6] Upcoming Earnings Expectations - **Tesla (TSLA)**: Expected to report negative earnings per share down -26.4% year over year, but +5% on revenues; shares are flat ahead of the report [7] - **IBM (IBM)**: Anticipated to report earnings +6% higher and revenues +7.57% higher, with shares up +28% year to date [8] - **Southwest Airlines (LUV)**: Facing a tough year-over-year comparison with expected earnings growth down -93% and revenues up +1.44% [8]

Market Overview - Pre-market futures are showing a flat trend with a slight downward bias following a record closing high for the Dow on Tuesday [1] - The Dow is down 9 points, S&P 500 is up 3 points, Nasdaq is down 38 points, and Russell 2000 is down 9 points at this hour [1] Federal Reserve Insights - Fed Governor Michael Barr is scheduled to make appearances ahead of the upcoming monetary policy decision from the FOMC [2] - Analysts are nearly unanimous in expecting a 25 basis-point rate cut next Wednesday, which would lower the Fed funds rate to a range of 3.75-4.00% [2] Q3 Earnings Reports - **AT&T (T)**: Reported Q3 earnings of 54 cents per share, missing estimates by 1 cent, with revenues of $30.71 billion, down 0.81% from estimates. Shares are down 1.6% [3] - **Thermo Fisher (TMO)**: Reported earnings of $5.79 per share, beating estimates of $5.50, with revenues of $11.12 billion, exceeding expectations by 2%. Shares are up 2% [4] - **GE Vernova (GEV)**: Reported earnings of $1.64 per share, missing the consensus of $1.78 by 7.87%, but revenues of $9.97 billion were 8.62% higher than anticipated. Shares are up 3.8% [5] - **Teck Resources (TECK)**: Reported earnings of 55 cents per share, surpassing projections by 41%, with revenues of $2.46 billion, exceeding consensus by 14.3%. This company may gain relevance due to rare earth negotiations with China [6] Upcoming Earnings Expectations - **Tesla (TSLA)**: Expected to report negative earnings per share, down 26.4% year over year, but with a 5% increase in revenues. Shares are up 9.6% year to date [7] - **IBM**: Anticipated to report earnings 6% higher and revenues up 7.57% for the quarter, with shares having gained 28% since the start of the year [9] - **Southwest Airlines (LUV)**: Facing a tough year-over-year comparison with expected earnings growth down 93% but a slight revenue increase of 1.44% [9]

Core Insights - Airbus is set to open a second assembly line in China this week, indicating a strategic expansion in the Asian market [1] - This expansion follows a similar move in the United States, highlighting Airbus's commitment to increasing production capacity globally [1] Company Developments - The new assembly line in China represents Airbus's ongoing efforts to enhance its manufacturing footprint in key markets [1] - The timing of this expansion suggests a response to growing demand for aircraft in the region [1] Industry Trends - The establishment of additional assembly lines reflects a broader trend in the aerospace industry towards localized production to meet regional demand [1] - This move may also indicate increased competition in the global aerospace market, particularly in Asia [1]

GE Aerospace - GE Aerospace's stock reached a record high of over $308 per share following strong quarterly results, driven by booming air travel demand and robust jet engine sales [2][5] - The company reported earnings of $1.66 per share, exceeding expectations, with revenue surpassing $12 billion, which was over $1 billion more than anticipated [3] - Profit increased by more than 30% year-over-year, and free cash flow also jumped 30%, indicating strong operational performance and improving margins [3][4] 3M - 3M's adjusted EPS was reported at $2.19, better than expected and up 10% year-over-year, with revenue reaching $6.3 billion, also exceeding forecasts [7] - The company experienced a 4% increase in revenue, supported by improved operating margins of over 22%, reflecting better efficiency and cost-cutting measures [7][8] - Product innovation played a significant role, with dozens of new products launched in the recent quarter [8] Housing Market (PI) - The housing market remains challenged, with high mortgage rates and inflation impacting buyer activity, leading to a 16% decline in profits for PI in the third quarter [10] - Earnings for PI were reported at $2.96 per share, which, despite being a beat, reflects a significant year-over-year drop [10] - Revenue was slightly better than expected at $4.4 billion but still down year-over-year, indicating ongoing difficulties in the housing sector [10][11]

Financial Data and Key Metrics Changes - Adjusted sales for Q3 were $22.5 billion, up 12% on an adjusted basis and 13% organically year over year [14] - Adjusted segment operating profit increased by 19% year over year to $2.8 billion, with a consolidated segment margin expansion of 70 basis points [14] - Free cash flow was robust at $4 billion for the quarter, contributing to a full-year outlook of $7 to $7.5 billion [15][18] Business Line Data and Key Metrics Changes - Collins Aerospace reported sales of $7.6 billion, up 8% adjusted and 11% organically, driven by commercial OE sales up 16% and aftermarket sales up 13% [20] - Pratt & Whitney's sales reached $8.4 billion, up 16% on both an adjusted and organic basis, with commercial OE sales up 5% and military engine sales up 15% [22][24] - Raytheon achieved sales of $7 billion, up 10% on both an adjusted and organic basis, with a book to bill ratio of 2.27 and a record backlog of $72 billion [25][26] Market Data and Key Metrics Changes - Global demand for commercial aerospace products remains strong, with passenger air travel projected to grow approximately 5% this year [3] - The defense sector is experiencing increased demand, particularly for munitions and integrated air and missile defense systems [4] Company Strategy and Development Direction - The company is focused on executing commitments and driving performance improvements through its core operating system, resulting in six consecutive quarters of year-over-year adjusted segment margin expansion [7] - Investments of over $600 million in capacity expansion projects are planned to support growth, including a $300 million investment at Raytheon [10] - The company is innovating for future growth, with initiatives such as a hybrid-electric propulsion demonstrator for regional aircraft and advancements in braking systems for the A321XLR [11] Management's Comments on Operating Environment and Future Outlook - Management raised the full-year adjusted sales outlook to a range of $86.5 billion to $87 billion, reflecting strong operational performance and end market strength [16] - The company expects continued top-line growth, margin expansion, and solid free cash flow conversion beyond this year [19] - Management remains confident in meeting the growing needs of U.S. and international customers in the defense sector [4] Other Important Information - The company completed the sale of its actuation business and the Collins Simmons Precision Products business for $765 million [15] - The backlog now stands at $251 billion, up 13% year over year, indicating exceptional demand for products and technologies [5][29] Q&A Session Summary Question: Confidence in delivering LEAP engines to Airbus - Management expressed confidence in executing deliveries and supporting production ramps for Airbus, with a focus on balancing material allocation [34][39] Question: Limitations to growth in Raytheon segment - Management highlighted strong demand and a focus on capacity investments, with ongoing efforts to ensure supply chain health to meet production needs [51][52] Question: Margins in Collins and tariff impacts - Management noted that Collins faced about $90 million in headwinds from tariffs, impacting margins, but efforts are underway to mitigate these effects [96] Question: Expectations for GTF compensation payments - Management confirmed that the financial outlook for GTF compensation payments remains consistent, with no changes to the timing of expected reductions in AOG levels [93] Question: Incremental margins in Collins - Management acknowledged that incremental margins were impacted by tariffs, but the team is working to improve productivity and mitigate these headwinds [96]