AIN Albany International

Joe Morone President and CEO
John Cozzolino CFO
John Franzreb Sidoti & Company
Benjamin Klieve Noble Capital Markets
Pete Skibitski Drexel Hamilton
Christopher Hillary Roubaix Capital
Call transcript
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Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter Earnings Call for Albany International. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer section. Instructions will be given at that time. At the request of Albany International, this conference call on Tuesday, February 6, 2018, will be webcast and recorded.

turn Treasurer, over comments. John to Financial your like and Officer Cozzolino, I’d the to conference Chief Now, for introductory go ahead. Please

John Cozzolino

Thank good and you, morning, operator, everyone.

of to GAAP. apply on reminder certain for measures the regarding remarks night non-GAAP that associated release text reconciliation as statements as those full Harbor financial also financial this reference forward-looking earnings call, those of statements this a notice well a XX-K. particular call, quarterly to our press and listening to about with of And conference please the As for please and issued our purposes for our verbal refer refer SEC the of to discussion, release our morning. our filings, same And results, our last contained detailed including release the the use Safe in

of for format last the Our couple Q&A to the similar be quarters. will

questions permitting, we call any take After the that, questions. from will on any first on webcast. participants to will from follow-up go We the people time take then, and questions

the over Now turn remarks. Chief provide some call who will to opening our Joe Executive I Officer, Morone, will

Joe Morone

tax made Jarrault. morning, announcement of lot the this XXXX, the our new earnings QX to about Welcome We’ve got law, as new and long-term this and call. short our CEO, rev evening March standards Xnd, we business, a Thanks, our new QX, each my Good of John. the cover Olivier everyone. to year rec ground XXXX morning, yesterday full successor, for outlooks

and about follow will And also revenue John with an tax recognition I’ll outlook detail thoughts standards. Olivier. start touch live more those for and good our QX law on As the permits if Albany. new usual, then, we’ll those I'll from with into and John overview. you Q&A was And call upon then some the questions conference this another and quarter email XXXX to you the questions of webcast. time on call including both from as said, go go of

law tax growth to performed in total well, income, Although cash net charges in and solid company both sales sharp EBITDA, drop contributed a in flow. new with associated businesses and adjusted strong the resulting

in Machine outlooks high-end full eight AEC steady remained reached year QX Publication declined revenue grades Prices XX% was ago. again the growing As incrementally publication sales again other intense, although XXXX, for stable, in in year Machine in or both combination particularly a were persisted. businesses pricing decline expect market In the pressure projected sales the grade once once grades. performance continued a to XX% of Asia. previous stable for their and of of and trends of Clothing A XX% by we Clothing, result, in again XXXX. sales compared roughly as the total offset sales a were both approximately quarters strong to

to XXXX do full was full by quarter adjusted average year to line EBITDA operating full gross in of right performance strong full margin, speaking be sales full the product year drop greatly end-of-year all income right capacity. margin due anomaly only we the currency, bounce higher And gross with in and gross segments the to the across years. margin expect multiple in board, are and lines. than again XXXX, in a and year QX of technology and platform excluding advances two to virtually XXXX. year The normal gross underutilization was New back the expect for in performance, past were year product identical of in margin We new we encouraged

million. the at adjusted year normal $XXX million After end margin gross range $XXX of was the and both business. to indicator was our full of in of very due line this declines For we collapse XX.X% an year change as stability of Clothing publication year-over-year an structural years, a this in grades, in to important the full decade EBITDA high sales top Machine view of

grade to to last to with grew sales especially compared cause to in the mix structural it periodic compared may grades continue in years conditions, in the deteriorating stable by engine as XX% volume should business economic become But suggest F-XX than are term erode time, driven a had LEAP rather by XX%. enough some that are for during airframe, full compared sequentially LEAP, a and publication other CH-XXK and increases to two in also as compared AEC Although is by have Machine offset decline. be sales year-over-year publication fuselage increase large declines. gradually of parts incremental XX% growth fighting XXXX, grades a Clothing QX normal QX XXXX, to XXXX, XX% new be and publication market QX that X% grew programs for to of year shut frames, to XXXX. strong XX% in was flat quarter business rate to now same grew by Boerne. time short The in potential growth at Salt Lake these annual sales XXX strong and was the to City and LEAP volatility XX% under full in of which usually compared year. sufficient Sales small long good primarily publication year numbers part an QX accounted QX, sales full down along think a program for the conditions, the a a periods grade with strong our of likely machines when of those that incremental What to for economic now XXXX.

in All of AEC’s on and schedule. Mexico good ramping deliveries are programs the and progress on Querétaro quality QX, plants made two new in right

The first LEAP fan and its QX. plants these two blades produced first in of shipped late

all demand see pressure. of to AEC’s above incremental breakeven operating while other slightly demand continue in QX. AEC to on stable income for improved upward either for is program, We ramping the upward programs or facing pressure LEAP

profitability favorable offset As was to by net impact adjustment the hurt contracts. a gross expected, QX inefficiencies, profit of estimated but ramp-up long-term by negative was

adjusted As as sales X% customers development. to business and percent a opportunities platforms, QX continue progress existing new XXXX, to still three XX% fronts; on In to development, a in QX we on in of with platforms, current make new compared EBITDA XXXX. improved and longer-term on XX% opportunities our in opportunities result,

In upward XXXX. progress enough operation, potential Lake on that potential recall to revised our more we performance Machine top million. fronts of strong profitability we year-over-year is continued we in detail. than win. to XXXX, improvement made million following reasonable a by This another lines think City had to more bottom for and that and of we growth John the million $XXX AEC our not in $XXX the have We this turn In with In estimate XXXX, million midyear to incremental Salt revise contracts XXXX. both each stated potential and with good estimate. revenue to acquisition Clothing in believe to in to are for grow and both to Albany, upward of $XXX million on $XXX now these year quarter $XXX that you’ll revenue We and that, likely was And stable let’s assumes existing sum, contracts for AEC.

John Cozzolino

up in sales performance were sales, QX MC Starting in slides. to QX airframe segment. the QX and I’d Joe. net excluding with X.X% sales you declines currency XX.X%. for like as by sales to net the increase year in net Total financial our sales the X.X% bringing in grades. growth other increase compared effects, AEC net XXXX, F-XX to growth the QX you, by to in were X, CH-XXK XX% to QX program, X.X% to refer bringing year increased grades increased publication Slide Thank company and frames, offset full in fuselage year full XX.X%. due than XXX more sales the

Slide higher profit business to company as reflecting continued QX in X. QX Turning in XX.X% to of XXXX, sales a shift the net mix percentage Total to sales. XX.X% AEC was compared gross

adjusted it to XX.X EBITDA in was QX On XXXX XXXX, stronger in year net both EBITDA in almost bringing the adjusted company on XX.X full compared and rest income to utilization. year profit in XXXX. by total net to in while million to XXX MC EBITDA adjusted revisions and basis, in was segment in in including was margin for X QX total normal EBITDA of While the sales contract XX.X due full effects margin XXXX, year, MC QX than compared million for MC XX.X% the a QX in Slides XX.X%. capacity adjusted AEC year quarter XXXX million than XX.X% for quarter. to to show in adjusted improving typically million AEC company Full at XXX.X XXXX QX X.X QX was current compared of million the to for XX.X XXXX in charge was XX% profit and QX in XX.X XXXX. XXXX lower gross to QX XXXX, XX.X the EBITDA QX the X XXX.X year. steady million in year-end compared in million decreased gross Adjusted QX EBITDA million compared to million years. million full the

QX the to are expenses QX from currency favorable the tax and impact per $X.XX Slide to share net QX share new included per QX per for tax Other for per company income of impact slide. of last X, while reported share share related principally year. to XXXX restructuring earnings U.S. to $X.XX adjustments, by reduced XXXX of laws, earnings share compared a per were noted $X.XX per the We tax attributable on share. adjustments. mostly adjustments, earnings Moving in of in foreign $X.XX share revaluation per

the summarizes About of lower the net new U.S. XXXX, per of was new related per repatriation, revaluing QX the charge for XXXX. QX was a non-cash share mostly legislation. tax million tax In impact discrete, to QX income recorded. was to to in X U.S. was the of that company the compared due Excluding liability adjustments, while approximately rate. Slide deemed to $X.XX the XXXX share X assets $X.XX the deferred X to in attributable million remainder net mandatory charge the

impact Looking decline like we XX% with range no in from from will that our XXXX continuing ahead in significant to XX% to XXXX rate of to cash XX% operations estimate taxes. XXXX, tax a currently

foreign term. We to law should cash new program benefit program over the tax that and that repatriation our expect continue the also long

expenditures XX X increased a debt. about Total million a our and capital of end million for total however, million. capital company QX. Payments XX to in and net in we XXX expenditures in of to about QX will key net debt XX million quarter, in shows XXX be $XX XX XXXX in balances, range to approximately in Slide Lastly, million the to ramp. resulting of the increased programs of expect million XX about million to million AEC decrease Cash balance all about debt quarter debt the the per the were as continue continue at total

extended under of new facility effect the was discussed At The was company November in As year, the release, borrowings remaining revolving increased QX, maturity includes the XXX to and end to facility in the of were the million the Prudential QX facility. paying the extended amended its due the date notes. the on XXXX. down XX during million which million credit and XXX

to like to Q&A. some Joe additional I to back we comments go would Now, before for turn it

Joe Morone

Thank you, John.

comparisons the will as since XXXX actual statement while outlook, year-over-year in the the would required on our standard John probably for XXXX new comps to have be results recognition standards will help will disclose described, we on complicate XXXX, will QX, under the new the to Throughout old standard. the Turning the the old to revenue income be be year-over-year in just what standard especially comparisons. based should which our been quarterly XXXX, clarify

release, of we thus presented under outlook XXXX For the old have revenue standards the in recognition this standard, effect holding constant. our purposes

upper half EBITDA. year performance be Clothing Clothing, for adjusted perform Machine expect for range again XXXX to comparable Machine to full holding of rev full year full in our rec So, for expected year XXXX to and we standards the constant,

strong and product Clothing should inflationary in could healthy dollar a pressures to and another the Machine range, weakening a for backlog, continued growing good end around regression order our away from world While strong the conditions XXXX. year well lead lead to U.S. performance economic high some of normal

and another the margins XXXX, AEC, sales to equipment trend standards as profit ramp-ups F-XX full good advance. incremental operating and XXXX for and strong XX% through performance LEAP, fuselage And XXXX. good the quarter expect frames, hiring, both constant, Clothing, XX% the slow growth this Machine Albany, incrementally year lines installation strong in training AEC stable in XXX of we with continue growth to primarily we programs. bottom another an by was performance begins year outlook in continued of holding As for and and in continued In on driven top the this new year-over-year improving and and in revenue again profitability both recognition businesses expect in sum, AEC, rate to and in improvements for year efficiencies

Safran, a we before Finally, Olivier accomplishments word day-long our his superbly he operations and he with company. from see and with From all has experience GE impressive the aerospace to I’ll New about and reins aerospace lead the a UTC experience has larger complex record of references, industry profitable from the from Board beyond worked deep directors Jarrault. Hampshire, and to negotiated and and qualified experience to over Xnd organically everything he here. Airbus. go I’ve to Albany and Olivier I of excited with of plenty about both aerospace this M&A is Martin, interviews, in be gas to more Albany contracts everything Lockheed dollars Olivier and has have my Olivier, on major billions everything working records Q&A, and from and and about him OEMs I’m of about of and March through hand a Judging successor, investors. to I Boeing managed one significantly of from know directly operations industrial Albany’s. He extensive broad learned where has has broad driving has learned to He turbines. takes than He and long is visit transportation of global industrial the growth proud He individual. to boards

directly conferences at Olivier the questions. you’ll from here your investor next investor hear You’ll an New to months and get chance let’s to a in that, day him meet in course go our Hampshire, earnings With call. of ahead at and Operator? on


are open [Operator phone now Instructions]. for Thank you. lines questions. The

Our first go Company. Please from of line question Sidoti will come the ahead. Franzreb John & from

Joe Morone

John. Hi,

John Franzreb

unusually large quarter of deal an this with. to amount And items

Joe Morone


John Franzreb

profile the underutilization in margin going little Machine profile you Clothing? start was Clothing the gross QX me with year-over-year. gross Machine was Let talk revenue and bit a just Can on in but you up say what’s margin in about

Joe Morone

literally look to any can’t try in this always we you As remind people, one quarter – take business. too

over full You year. the need look to

in full year you to gross gross running XX.X% that were you the very in XX.X%. 'XX, QX, QX up margin XX.X% hot 'XX So especially back we it was XX.X% in to in normal go right QX in bounce 'XX, in But if to it can levels and and and see back we to margins 'XX. and expect

of and we’re really those quarters QX. so strong. in utilization inventory itself And building then in plant some And is reverses that

driving and effects. the down the and got We’re shipping inventory inventory year end of we’ve

parts it’s all and but moving a of evens number fundamentally there it as expected. stable all are There so And out. year-over-year,

John Franzreb

surprised kind Are how size and publication talk the we’ve Machine on and us a outlook. your Clothing is the long-term in used getting a you And update little be just I’m that about the fully by you at driving more growth to? of consensually that course shift that got flat. the what’s in side Just the cannot the well you most it business of that the of this positive there on of doing a [indiscernible] bit little dynamic in Can bit offset share? business change you’re regarding by and color it? in growth teased tissue the in in reset QX saying the start with

Joe Morone

importance overstate shift. the can of this you think don’t I Yes,

this And I at the you think about we’ve – business if look so before. talked

And at you and track business If and from, a track decline. XX% you is top XXXX look the since try grades. all it’s just quarter-over-quarter declines to that decline where you publication year-over-year, it’s line

that long this where structural of just out And that digital in of So storm They’re some are now the – and team are on not case we side the are weathered structural by our were the is GNP-driven great has and of our being phenomenon, dislocations haul great fundamental grades media. growing living other that grades in the through displaced for sales one management XX% grades. now lifetimes. we’re business this

as movement through fact, digital In toward if online media anything, grow expressed the haul is actually the helping shopping packaging the long grades. over

to per that the – yes, portion in are like and now make of portion of And with make which will Packaging adjacent at this small change continue markets you XX%, will continue U.S. as look GNP-driven. fabrics that So GNP over predominant sales a right and outside of GNP-driven well. the to cement is paper, XX% Tissue is be similar GNP our grades up time. the now fiber a predominant markets capita they’re will nonwovens, and continue represents to engineered and our be all our paper of driven will up sales be growing as and characteristics segment sales structural Pulp our in the GNP-driven. if to

in we’re differentiate GNP. seeing packaging. tissue even look then added as that if pulp. variable new and not now products where and we’re number in top the growing of it’s fabrics primarily number then fast technology, toward able with growing to And some best in business our is you at GNP, as that a number of with So clearly in one three oriented on that’s grades engineered segments two the are And but directionally markets

have into a we of from technology. where actually that So grades bit we’re leverage moving quite

iceberg, viewed analogy. have This Machine a to to I yes, think Clothing years is many as John who for thing have know So that time rock. melting a it’s I I and talked bury investors

John Franzreb

EC the like you’re existing or new of customers revision side assumptions either on the question And either so platforms. it one new the that platforms Great. last change in proper business, LEAP on upward your that here? LEAP [ph] there’s no your view Thanks. more sounds with gaining Is

Joe Morone

existing confident above. I all our that some platforms with they’ve think – already of of introduced. on customers on There’s we’re it’s increasingly incremental new some There pressures are the platforms. business landing existing

– haven’t entirely account not new this upgrade customers. into platforms new does on take yet with We wins

upward it’s business pressure either existing incremental us for more customers existing or business. new So on with

John Franzreb

Got it.

to queue. Okay, going Joe, get I’m in back

Joe Morone

Thanks, John.


you. Thank

Klieve come will go question Ben Markets. Our next of line the from Noble ahead. Please from Capital

Joe Morone

Hi, welcome. Ben,

Benjamin Klieve

taking handful of here. possible. questions. to I’ll here. as the It’s here. Thanks as Two ups make things for Have good a questions to to my this be brief quick try earlier follow

the You talked is if Do are next about standing term? of you think engine or existing if production in kind be is coming – be of been current from CFM think or you couple going here the their going incremental platforms. firm their continue incremental curious see pressure be to near years? here the in pressures on LEAP increased to outlook on going to has I’m you to increased the schedule, those

Joe Morone

on the new the Show, already to Air XX production to at CFM announced side even clear it’s comments the anything beyond some Singapore and to haven’t the just put planes desire Boeing Airbus from per you month They latest but forth month announced are and growing per they’ve increase Boeing side. if on listen the MAXes that both rates expressing XX their that Airbus increases

I the to of is sure upward. like both engine. would supply increasing. ready And market are is where Airbus to say So more. But now commitments Boeing they right before the think CFM want produce that limiting existing all absolutely chain is, is be factor I’d pressure meet signals The their there to is and

Benjamin Klieve

absolutely. Yes,

the to the curious Thank applications? if of either just that. kind for break XXXX between guidance able you’re And the down – overall on increase the and XXXX or Okay. XD to – guidance, you other the

Joe Morone

of the talking we’re Most growth about not is incremental XD.

pressure So Boerne, and some some it’s upward in pressure a upward Lake combination Texas. of in Salt

Benjamin Klieve


thank Okay, you.

Joe Morone

that. a in next be few LEAP increase be years and significant the There’s over to something incremental going that to would

Benjamin Klieve

keeping it to A you couple technology that to with these questions advancements to from segment. like improving be just these in it can keeping on in, – referring The basically improve going Okay, or XXXX perfect. of its they be road are going curious kind a is? to and business operations sounds down say, that MC encouraging or beyond number current advancements hear, I’m the where technological advancements you’re versus the the segment of are what state, to but factors, of are operations do degree they that think

Joe Morone

best way downward incremental this But economy the stable over really has around some there there world, is upside business One just pricing. washed was has this – the like to was and world publication forces One It’s especially been others. it’s And volume. I the term Yes, hot, three But That about have with a are think bad think to maybe us. powerful around business. toothache. the through. of grades when the as the I two pricing on is the we there describing, years bad been been have think long for that pressure is day really in incredibly Asia. every there demise

weapon strongest is new pricing against Our the technology. pressure

about think safer weapon for where is in But And tissue. be thinking the this industry. inflation. And pressure and third upside, way that’s new has we corrosive been it’s example we just place things new come this the way machines in technology tends very business The incremental than industry. in the fighting downward on effects really gains. productivity technology thus base this the slow have inflation of and a to existing thinking is machines slow intended impact So this new displace holding to pressure, about is since through the the stable. biggest We much as for investment would it particularly and offset pricing this primarily another in about of this think

great has to team productivity a job improvement. continues the job with great think of a that do I and done

against price the to technology of pressure think So is effect quiver and overall a major fight as stability. the arrow the in

Benjamin Klieve

you regarding the legislation kind outlook stand comment And tax that your year? impacts for position ago three and for of can current where John, on all cash then, repatriation? does Where months Curious And onshore position Joe. do if think maybe you, here. of end be of one you versus quick at your at the question today the cash would you or whatever? the this Thank

John Cozzolino

dealing program have So getting repatriation not but really several Of cost the the out just – years the for cash Ben, limitations we also tax of that have the countries. money with of such That we had on our the and in most U.S. on year, various countries of certain few overseas really Brazil, Europe. at position end is that hand China, months. the But countries held hasn’t it’s outside the U.S. of last the as over in changed in

look continue to We’ll to AEC are expect the we also fund for cash where year. money to can that of accelerate Remember, in offshore we we repatriate growth some in places it. other using countries. So this

need am other I to work a to repatriate what in dramatic not what anticipating So year increase we as through countries. we we this to were able

I look year. the term can. AEC. time. does take this use efficiently ways to I to So We’ll over in We’ll this we’ll for cash more the release, some as the we do but for be And it long noted do we’ll some think where able repatriations accelerate

Benjamin Klieve

have to here. take complete on Thanks Very when that really quarter for hope transition there and me. things Well, lot [ph] transition the able of planned it on that does you a is much-deserved being again. Congrats Joe, think Perfect. I fun And retirement. congrats a good. a I watching for good over

Joe Morone

Ben. Thanks,


you. Thank

Please the question a of Skibitski Drexel from have ahead. line Pete go Hamilton. from We

Joe Morone

Hi, Pete.

Pete Skibitski

to guys. morning, of Joe. Good you best And luck

Joe Morone

Thank you.

Pete Skibitski

on CapEx effective XX echo also looks new are guys asking about I’ll going about that it a we that increasing And about many in in start are maybe forward million reform like A companies prior seeing. and I’ll talking deployment you stability the XXX also general or looks about world? being capital of incremental you’re in year or number R&D forward going like companies stable capital CapEx your talk talking Clothing if getting tax to the it by of read I Machine so anticipate of here. reduction internal comment, congrats options comments. this I million. kind of the to but sort guess maybe can lot deployment Should tax this rate

Joe Morone

about about I’ll don’t answer the specifically Coz, why tax deployment talk capital generally? you question and more

John Cozzolino


So, talked back will to to ultimately about as tax, with try the we limitations. obviously the can as we debt as Peter, pay to on I down to think U.S. much cash get the looking interest we be

We’re going as forward. be to keeping we mind that in move

While the it’s tax balances. simplify largest the rules where of countries process, the complicated some somewhat in U.S. holding we’re our fairly still

to that. So into need we through take work But we to do everything will try account.

the of One or things debt money to pay shift the time is as do move trying either that over around. we’ll be debt certainly down we

part of all strategy kind the as that’s the So of far longer-term of as actual use cash.

Joe Morone

this is So, Pete, think as I think the about follows. we way

happens three from it do no to we steady, you at if change in material our jobs Machine if business. Clothing right, look that what EBITDA remains next years the flow so Over cash

sales both On rapid to growth in the AEC other hand, and margins. XXXX a sees EBITDA

the our XX% rate significant come should a time AEC hit margin. what is we’ve at increase we And with cash. down through same bulk CapEx sales as the in the ramp. if targets, XXXX, we’re by declines then That’s XX% XXX in of in out million in since off it’s investment to EBITDA next said So its over peak year current

all and significantly So from together, same interest Bundle for significantly dividends. of and same significant by the cash stronger cash roughly expenditure Clothing, balance CapEx, the Coz from drive same sheet then lower as use increasing flow the increase We suggested, composites, cash roughly XXXX. generation starting Machine cash from that taxes expenditure think in to priorities we’ve and we that had XXXX, initially debt, before, as in to down drive cash growth. use

Pete Skibitski

helpful. That’s

there lot of can or will in internally guys. at doing on side? bigger available that environment be will you Maybe And that the on suppliers X or to seeing at a are guess invest with We’ve especially update then Would parts in in you suppliers Thanks, that us maybe the agree tier position you’re a I lot aerospace that portfolio year assessment? Okay. the point look more next so. M&A from of be out either you what M&A. the kind pieces coming of heard some reviews today,

Joe Morone

is There to the opposing Boeing of certainly as almost seeing is and clearly the battle among the There’s chain supply a consolidation the else. chains chain and battle as supply camps. much about anything into alignment you’re move a the OEMs Airbus and chain supply supply as becoming

potentially independent to that and two fewer So is are at composite beneficial. effects everybody both fewer when and do has has is, ramping. time suppliers led the M&A think we just One the

be we’re But until talked And structures, that’s get It you ramps. half we 'XX could there not got strong are there of possibility of as we’re and M&A. and composite for orphan rationalizing free was to and story. these more our cash on an phenomenon out. different that I acquire at suppliers their think create And this get hands And of acquired are composite ramp-ups we doing which we’ve previous growing of – in the We second time, orphan. Harris in 'XX, through operations reliable won’t how our does companies looking and the by focused generating was our a really even OEMs who opportunities are spun on a get that Salt M&A an continues operation. calls, and the now, for as about the That’s same how Lake we with time the it wave that debt is doubt sensing by inside level M&A opportunity is so given made that space. right we City really Exelis orphan full hope

Pete Skibitski

much, so Thanks guys. Great.

Joe Morone

for on Thanks the call. being Thanks, Pete.


Thank you.

We Capital. go line Hillary Christopher have Please ahead. question from of from a the Roubaix

Christopher Hillary

Good Hi. morning.

Joe Morone

Chris. Hi,

Christopher Hillary

you your I added the I wins? revisit could if kind ask If your other potentially just targets differences Safran business what you composite correctly, could could achieve wanted some incremental to and in in of achieve you were the businesses with between what us for business. core margin there recall as

John Cozzolino

it couple to at and efficiency our among what’s to track these by cost in about 'XX. EBITDA as And we that’s is we so a that year this curve X%, different inefficient. is we We if average four is you target. target. get percent What the margin And should fixed 'XX, for One the ramping measure and X% in just year have think and our improves full QX, fixed fixed. the in our in XX% X% learning you you three is much full in some contracts. making release relatively in of is the our points, that, a more that make, the is inherently efficiencies you so not told incremental was curve XX% XX% We think of journey; it improvement the XX%. if for And and classic leverage. 'XX XXXX think is and when we’ve one-time control in investors to our continue XXXX profitability EBITDA see just in sense. to in points driving what of the are better – been and referred full ramps, commentary internal factor XXXX, There’s that referred We getting was of then of And guided your And to year as took plus combination act to fraction so cost variables. we By in out then differences was aggregate learning charges we come 'XX of objective 'XX because by improvement or you very of something going that growth my realizable a sales. to X%. XX.X%. I but it’s business the The because of

people spent experienced you you adding so new and in in increase amount hire the scrap, you’re training you spend there floor of to means actually to they’re are new engineering training. need they people on time lower learning have are people, the are from Typically, new people. productivity new hire people, who and have qualifying experienced got them the spending colleagues have To finished training people, more equipment. time lower in period money if less the people. spending for the experienced that time Once equipment, an still the an you’ve are ramp, people, So more and there’s to factory production, you you’re a overseeing productivity when increase from

in that to hit to a qualifying ramp begin So significant of the up on people continue scrap, profitability incremental peak this those get of is QX and decline, part reason which less spent we trend efficiencies this year in a equipment. expect QX there’s productive, more less there’s time

ramp end we’re really CHXXK the ramp to the now is ramping get toward we that’s still the program and piling by But completely LEAP we’re the of all together F-XX the XXX only as woods ramp, up decade, out get the and ramp. right through and going the Now time then the get out because we they’re the of through CHXXK. never

won’t of up just the in ramp there efficiencies. kind same So be

Christopher Hillary

you to see the that produce there or composites given deliver then components is your And and margins? there think companies some margins medium other potential in to including potential that would division do we upside run in cause what high-value be added higher

Joe Morone

lean Just exactly much the expect. it’s improvement. a business. And part this very you’d continuous built we’ve that Sigma, Classic, into what culture Six of

plateau. economic clear driving us ramps business beyond to have magic start number when in to of productivity improvements that’s XXXX several these because for We keep this is the incentives really XXXX.

so through as when the of margins the roof. with bring productive talking be New programs at be big you’re as increasingly to will on it business effect hope and by productive state, this bulk the the we everything new that enough business is about the but $XXX severe a a the out 'XX, inefficiency, would a at is time business won’t always – them ramping million we get incremental is business with of bulk

Christopher Hillary

and all very changes Thanks the congratulations the and progress Great. to-date. much on

Joe Morone

Chris. you, Thank

our So call. I it think that’s for

So and – those thank for you let me participating. for everyone just questions so

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