Textron Q3 2021 Earnings Call Transcript

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Provided by Quartr
October 27, 2021

There are 12 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by for the Tektron Third Quarter 2021 Earnings Conference Call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. You may withdraw your question at any time by repeating the 1 then 0 command. As a reminder, today's conference is being recorded.

Operator

I would now like to turn the conference over to your host, Mr. Eric Salander, Vice President of Investor Relations. Please go ahead.

Speaker 1

Thanks, Brad, and good morning, everyone. Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today. These forward looking statements are subject to various risk factors, which are detailed in our SEC filings and also in today's press release. On the call today, we have Scott Donnelly, Textron's Chairman and CEO and Frank Connor, our Chief Financial Officer. Our earnings call presentation can be found in the Investor Relations section of our website.

Speaker 1

Revenues in the quarter were $3,000,000,000 up from $2,700,000,000 in last year's Q3. During this year's Q3, we reported income from continuing operations of $0.82 per share. Adjusted income from continuing operations, a non GAAP measure, was $0.85 per share for the Q3 of 2021 compared to $0.53 per share in the Q3 of 2020. Segment profit in the quarter was $279,000,000 up $90,000,000 from the Q3 of 2020. Manufacturing cash flow before pension contributions $271,000,000 in the quarter $851,000,000 year to date.

Speaker 1

With that, I'll turn the call over to Scott.

Speaker 2

Thanks, Eric, and good morning, everyone. We continue to execute well across the company in the quarter. At Aviation, we continue to see a solid recovery in the general aviation Market with strong commercial demand, increased deliveries in Citation jets and commercial turboprops and higher aftermarket volume. We delivered 49 jets, up from 25 last year and 35 commercial turboprops, up from 21 in last year's Q3. Order activity in the quarter remained very strong, resulting in backlog growth of $721,000,000 bringing us to $3,500,000,000 at the quarter end.

Speaker 2

Also in the Q3, the Beechcraft King Air 360 and 260 achieved the Oss certification and began to deliver customers throughout the region. Continuing with our product strategy of upgrading existing models, at MBAA, we recently announced the Citation M2 Gen 2 and the XLS Gen 2 product upgrades. Also on the new product front, the Sustained Sky Couriers is continuing to progress through certification with over 1600 hours of flight test activity And the Beechcraft Denali successfully completed its initial ground engine runs powered by GE's new catalyst engine. At Bell, revenues were down 3% in the quarter, largely on lower military On the commercial side of Bell, we delivered 33 helicopters down 41 in last year's Q3. Moving to future vertical lift, in September, Bell submitted its proposal for the FLAR program, a down selected award is expected in the Q2 of 2022.

Speaker 2

On FLAR, Bell is about 60 The way through its build of the 360 Invictus prototype remains on schedule. Also in the quarter, Bell inducted the 1st U. S. Air Force CV-twenty 2 for its nacelle improvement modifications. Moving to systems, we saw another strong quarter of execution with operating margins at 15.1%, up 190 basis points from last year's Q3.

Speaker 2

ATAC continued to expand its fleet of certified F-one aircraft with 2 additional aircraft entering service in the quarter, bringing the total fleet to 19 aircraft at the end of the quarter. The fleet continued to support higher customer demand for adversary air services, driving higher revenues in the quarter. At Aerosystems, the team booked $25,000,000 in new orders in the quarter, including both fee for service activities as well as new hardware. Moving to industrial, overall revenues were lower in the quarter as we continue to experience manufacturing disruptions related to supply chain challenges. At Kautex, we again saw order disruptions related to the global auto OEM supply chain shortages, which have directly impacted production scheduling and resulting in intermittent line shutdowns and manufacturing inefficiencies.

Speaker 2

At Specialized Vehicles, we saw continued strong demand in our end markets with higher pricing, which offset production disruptions from part shortages. To wrap up, Textron delivered a solid quarter with increased aviation backlog, improved manufacturing margins and continued strong cash generation, while working to minimize the impact of supply chain disruptions. With that, I'll turn the call over to Frank.

Speaker 3

Thanks, Scott, and good morning, everyone. Let's review how each of the segments contributed starting with Textron Aviation. Revenues at Textron Aviation of $1,200,000,000 We're up $386,000,000 from a year ago, largely due to higher Citation Jet volume of $290,000,000 aftermarket volume of $62,000,000 and commercial turboprop volume of $48,000,000 Segment profit was $90,000,000 in the 3rd quarter, up $127,000,000 from a year ago, largely due to the higher volume and mix of $96,000,000 and favorable pricing net of inflation of 22,000,000 Backlog in this segment ended the quarter at $3,500,000,000 Moving to Bell. Revenues were 769,000,000 down $24,000,000 from last year, largely reflecting lower military revenues. Segment profit of $105,000,000 Down $14,000,000 primarily due to lower military revenues.

Speaker 3

Backlog in this segment ended the quarter at 4,100,000,000 At Textron Systems, revenues were $299,000,000 down $3,000,000 from last year's Q3 due to lower volume of $39,000,000 at Air Systems, which primarily reflected the impact from the U. S. Army's withdrawal from Afghanistan on its fee for service contracts, partially offset by higher volume primarily at ATAC and Electronic Systems. Segment profit of $45,000,000 was up 5,000,000 due to a favorable impact from performance and other. Backlog in this segment ended the quarter at 2,200,000,000 Industrial revenues were $730,000,000 down $102,000,000 from last year, reflecting lower volume and mix of $156,000,000 primarily at Fuel Systems and Functional Components, reflecting order disruptions related to the global auto OEM supply shortages, partially offset by favorable impact of $44,000,000 from pricing, largely at specialized vehicles.

Speaker 3

Segment profit of $23,000,000 was down $35,000,000 from Q3 of 2020, primarily due to the lower volume and mix described above, partially offset by higher pricing, net of inflation at specialized vehicles. Finance segment revenues of $11,000,000 were $11,000,000 and profit was $8,000,000 Moving below segment profit, corporate expenses $23,000,000 and interest expense was $28,000,000 With respect to our 2020 restructuring plan, we recorded pre tax charges of $10,000,000 on special charges line. Our manufacturing cash flow before pension contributions was $271,000,000 in the quarter $851,000,000 year to date as compared to $129,000,000 for the corresponding 9 month period in 2020. Year to date, our cash generation reflects improved working capital management, which includes more linearity in quarterly aircraft deliveries and higher customer deposits in aviation from an increased backlog. In the quarter, we repurchased approximately 4,200,000 shares, returning $299,000,000 in cash to shareholders.

Speaker 3

We're raising our expected full year guidance for adjusted EPS to a range of $3.20 to $3.30 per share. This includes revised tax guidance and effective rate of 15.5% for the full year. We're also raising our outlook Manufacturing cash flow before pension contributions to a range of $1,000,000,000 to $1,100,000,000 up $200,000,000 from our prior outlook with planned pension contributions of $50,000,000 That concludes our prepared remarks. So we can open the line for questions.

Operator

And our first question goes to the line of Sheila Kahyaoglu with Jefferies. Please go ahead.

Speaker 4

Hi. Thank you. Good morning, Scott, Frank, Eric. Backlog at Aviation was at 3.5%, I think, an all time high since 2010. So maybe can you guys talk about who these customers are?

Speaker 4

Are they new? What's their rationale for buying a new jet? I'm sure $20,000,000 jet buyers Disclose all this info. So if you could share that with us a little bit. Sure.

Speaker 2

I think the backlog It's fairly broad in terms of the makeup of those customers. It still remains more U. S. Centric. I think when we look at order activity In the quarter on the jet side, it's probably roughly 70% or so domestic versus 30% international.

Speaker 2

So I think we'll Continue to see the shift. It's a little bit more international as Europe is starting to pick up and South America is starting to pick up, but it is still More North America centric, it's probably closer to fifty-fifty on the turboprops. That's usually been a market where it's the turboprops can use and such caravans are usually going to be more International, again, I think it will continue to shift that way, but right now it's closer to fifty-fifty. Like obviously, there's a mix of The next year or so deliveries of what we have coming up with NetJets, but we have very strong retail individual customers in there. If I looked at the number of new customers, folks that are coming in buying a jet who have not owned a jet before, that number probably is somewhere around the 20 Percent or so kind of a range, so which is encouraging.

Speaker 2

We do see a lot of people, as you know, buying a jet when you've not had an aircraft before is A little bit of a daunting task. One of the things we do in our business is we have a whole dedicated team that helps someone who's not owned an aircraft like that before, but wants To do that, we help them with the complex issues of pilots and hangars and insurance and all the things that you have to look at To do that, to successfully place that aircraft with a brand new customer, but for sure we're seeing a lot more interest and demand from those first time buyers than we would historically see.

Operator

And we do have a question from the line of David Strauss with Barclays. Please go ahead.

Speaker 5

Thanks. Good morning.

Speaker 3

Sure.

Speaker 5

Scott, with the backlog at Aviation Now and your deliveries year to date, I want to see if you Could offer an update on how you're thinking about the production plan. I think you had said recovering half of the 2020 drop. It looks You're tracking well ahead of that and then your thoughts about going above 2019 levels just given how extended your backlog is becoming. Thanks.

Speaker 2

Sure. Well, David, I mean, I think as we've been given color all year long, our was that we would get kind of halfway there this year and get back to the 2019 levels in 2022. I think that's still good color to have on it. Obviously, we won't guide until we get into the January timeframe. But for sure, the order activity, which has been getting stronger as we've worked our way through the year and remain Wrong supports that number and we'll be looking hard at that backlog and that order rate as we Finalize our production ramps in aviation.

Speaker 2

I mean, clearly, right now, we are in the process of ramping up production with the goal is, As we stated to get up to that 2019 level and there's probably room for a little bit beyond that, but we'll give you the final guidance when we get into January.

Operator

And we do have a question from the line of Robert Stallard with Vertical Research. Please go ahead.

Speaker 6

Thanks so much. Good morning.

Speaker 2

Thanks, Paul.

Speaker 6

Scott, on the aviation side, maybe following up from Sheila's question. Have you seen any Differences in the order intake between the various aircraft models you have? And also on the aircraft, What's the sort of lead time looking at? Are you getting to the point where some of these planes, you have to wait more than 12 months to get them?

Speaker 2

So the strength is really across

Speaker 3

the whole segment, Robert.

Speaker 2

I mean every model is, I would say, doing very well right now. Order activity and interest in all of them It's quite strong and part of that is we've been putting updates and upgrades. I mean, as I said at NWEA, we put the M2 Gen 2 version of that, the Gen 2 version is XLS, which has been a fabulous aircraft for us for a long time and it's a really nice update that I think This is sparking even greater new interest in that aircraft as well. So it's really across the board. And look, we're not going to get into details on the Model by model on the backlog, but as we've said before, I think this business, this industry, frankly, Operates better if it's sort of looking at a 9 to 12 month sort of backlog and that gives you It gives a customer who has an aircraft time to sell the aircraft.

Speaker 2

It gives them time to specify the interiors and colors and paints. Obviously, it makes it much easier for us in In terms of our production forecasting and then through the production line flow and as you know that historically that's how this industry works. This last Decade has been unusual where you're actually having to try to build to a forecast instead. So I do think one of the things that we certainly keep in mind as we look at production rates We want this business to be out there as sort of a 9 to 12 month kind of a backlog business. So it's a much healthier way to run the business.

Speaker 2

I think it's better for the customers again for their planning perspective and marketing of a used aircraft if they already have an aircraft, which is the majority of our customers. So I think that that's a healthy place for the business to be in and that's kind of where I feel like we are right now.

Operator

And we do have a question from the line of Ronald Epstein with Bank of America. Please go ahead. Yes. Good morning. Good morning, guys.

Speaker 7

One more.

Speaker 3

So Scott, what are you

Operator

seeing on the pricing front? Meaning, I mean, there's demand, Right. That's clear. But are your competitors behaving themselves? I mean, how is the broader pricing environment right now?

Speaker 2

It's always a competitive market, Ron, but for sure, I think we're seeing a positive pricing environment as you would expect, right? You have very strong demand. All of the dynamics that we look at in terms of the macro level of the market are extremely favorable, right? You've got used aircraft available At record low numbers, particularly if you look at something that's sort of less than a 10 year old aircraft. As you know, that was an issue in this business for a long time and that's down to kind of below 1% of the fleet and we're seeing the used aircraft valuations Going up, right?

Speaker 2

So the dynamic overall in pricing is much better than it's been for a very long time. Flight activity is obviously very strong. So we just we see the demand from everything from charter to memberships, to fractionals, to whole aircraft. So I think you have a very strong demand environment and you would expect to see better pricing in that

Operator

And we do have a question from the line of George Shapiro with Shapiro Research. Please go ahead.

Speaker 8

Good morning. Scott, on that, you mentioned you had a $22,000,000 And benefit in the quarter from pricing, the incremental margin was 33%, which is a very high number. Do you expect that kind of trend to continue?

Speaker 2

Well, look, I think we're going to continue to see Good pricing in the industry based on all the dynamics that I just talked about. Incremental leverage on volume in this business has Typically been sort of in that 25% kind of range. So I think that's a reasonable expectation.

Operator

And we do have a question from the line of Noah Poponak with Goldman Sachs. Please go ahead.

Speaker 9

Hi, good morning, everybody.

Speaker 3

Good

Speaker 9

morning. Scott, I guess, what is in Aviation, what is the Absolute dollar backlog level or backlog to production ratio that you feel you want to maintain sustainably in the Where do you want to keep that?

Speaker 2

Well, as I said, I think that the place we'd like to see this is kind of out in that 9 to 12 months. I think if you get beyond 12 you get too much beyond 12 months. I mean, customers are interested in new aircraft, right? I mean, so I think there There's a limit to how far out someone's willing to say, okay, I'm going to wait for a year. It's probably on that shorter side on maybe a smaller Aircraft where there's not as much customization, it's a little quick return, but I think on the larger aircraft, you see it move out of that in more than 12 months or so.

Speaker 2

There's not an excellent dollar number we look at, but we do look at demand model by model and where we think that backlog, that cycle time It is reasonable in terms of where how it fits with our production planning, how it fits with our customers' expectations. And as I said, I think that sits ideally somewhere in that 9 to 12 months Again, some variability on the models, largely smaller aircraft, probably being on the shorter side of that and things like a Longitude being in that More than 12 months or so kind of timeline.

Operator

And we do have a question from the line of Seth Seifman with JPMorgan. Please go ahead.

Speaker 7

Hey, good morning. It's Tyler on for Seth.

Speaker 3

Good morning. Good morning.

Speaker 7

Just on Fluorra, can you just provide an update just maybe where things stand today, what Peixant is doing in the meantime and when we could expect the decision?

Speaker 2

Sure. So the SAR program, the proposal went in back at the beginning of September, which was consistent with the Army schedules, What they're announced is that they expect to have an announcement to decision and contract with that by the Q2 of next year, so by the end of next June is kind of our expectations. Remember that the FLAR program, I feel it's a little unique in that we've obviously put an enormous amount of work into getting the proposal submitted, but in parallel with that, We still are under contract on an OTA. So we are continuing the design development Activity towards PDR and that of course that work is going on in parallel with the Army doing their proposal valuation. So the team obviously We kind of worked out on the proposal and now they're all back hard at work at working towards our next milestone for the program, which will then dovetail into

Speaker 3

Hopefully, a program of record.

Operator

And we do have a question from the line of Cai von Rumohr with Cowen. Please go ahead.

Speaker 10

Yes. Thanks so much. So Scott, Obviously, demand is strong in aviation. What are you seeing in terms of commodity price hikes and supplier disruptions That might limit your ability to kind of boost production next year.

Speaker 2

Well, we're not Look, there's always a pop up problem even in the best of times, right, with managing a supply chain. I would say we're not seeing big issues right now in our in the Supply chain associated with the A and D businesses. My view is most of these suppliers also do defense work, much like our company. And so most of them didn't go through an entirely hard shutdown as you saw a lot of the commercial world doing. Also, as you know, a lot of these Suppliers also have a lot of business that goes into the commercial aviation space with the airbuses and the Boeings of the world, and those guys are not back anywhere near The demand that they used to have, so there's capacity available in the supply chain.

Speaker 2

So as we work Our way through this thing, most of our critical suppliers in the A and D space are able to meet our demand. I'm not Justin, there's never an issue or a problem, but those things pop up here and there. It's also a longer cycle supply chain. So if you do have a problem or a You've got more time to work on it and go manage it and look for alternatives and work with the supplier around that, whereas in the industrial and commercial world, You tend to find out about a problem that's going to hurt you on Tuesday, the previous Friday. So we don't see as much of that in the A and D side.

Speaker 2

So I don't think when we look at this that we feel like we're going to be supplier constrained at this stage of the game. It's more around managing and making We're doing the right thing here in terms of production rates versus long term demand and again managing to a backlog that works for us and works for our customers.

Operator

And we do have a question from the line of Peter Arment with Baird. Please go ahead.

Speaker 7

Thanks. Good morning, Scott and Frank. Hey, Scott, just a quick one on, I guess, Aviation. Just you've always kind of talked about This is eventually getting back to crossing over on the double digit margin front. It seems like you've got everything in place in terms of The overall demand and potentially higher production, what's key for us to see margins kind of cross over that 10% level?

Speaker 7

Is it just volume or is there other things Thanks.

Speaker 2

Well, and look, Peter, obviously, volume is a huge contributor to that. We talked about that for a very long time. And I think we'll see, as you remember, we were getting close to that level Pre pandemic and I think as our volumes are recovering back on track to where we were in 2019 And moving on that, we clearly have been working to drive to get double digit margins, and I think we're on track to be doing that. We'll obviously give you more specifics in January, but I feel

Operator

And we do have a question from the line of Pete Skibitski with Alembic Global. Please go ahead.

Speaker 11

Hey, good morning guys. Nice quarter. Maybe to piggyback off Cai's question a little bit. Scott, can you talk about kind of how you manage Kind of the 2 businesses at Industrial in this environment, do you have much visibility at Kautex? Would you guide us in any way, Cowtay, over the next couple of quarters?

Speaker 11

And that is a kind of It seems like the market is very strong in specialized vehicles, but there is, as you mentioned, some supply chain issues there as well. So I just wondered if you could give us more color on how to think about that segment over the next couple of quarters.

Speaker 2

Sure. It will obviously be a third bit different, right? In the case Caltex, we're a Tier 1 guy. We're sort of following the OEM path, right? So we don't independently set that.

Speaker 2

It's one of the challenges frankly this year is there's been a lot of disruption that the OEMs have felt in changing model types and volumes Through the course of the year as a result of other supply chain issues. Fortunately, the Kautex guys have done a nice job in not being the problem, right? I mean, We've been able to fulfill whatever demand is placed on us and certainly we don't want to be the reason they can't run a line. So I think our guys have done a really nice job of that. But We look really at the IHS data peak in terms of how it how we forecast.

Speaker 2

I mean, we obviously have to go down model by model. But I think when you listen to what the OEMs are saying, they're starting to indicate that a lot of their other issues in their supply chain, which Semiconductor is the one that's obviously talked about the most. That's going to start to abate. I think if you look at IHS data right now, they're talking about probably A 10%, 11% increase in global auto volumes as you go from 2021 to 2022. So that's how we think about our business, We look at that IHS data.

Speaker 2

We don't really have an independent view, I suppose, of what's going on in that market. In the case of Our vehicle business, we're the OEM, we're the end market guy, so we are a lot closer in having to make that call. And as you indicated, the good news is demand is very strong. I mean, everything we can build Going out in the channel and selling inventory levels are at frankly unhealthy low levels. We're working hard with our suppliers to get Everything we can build, we can get out there and it tends to be selling through strongly.

Speaker 2

So, I think our guys In the vehicle business, frankly, look, we would love to have seen revenue growth in the quarter from year over year. We couldn't get that just because we can't get the parts to do it, but I think the team has managed price inflation disruption and all that sort of stuff, so that at least we've been able to hold on to the margin rates And obviously, as we can get the supply chain flowing better and get the revenue top line growing, we think the margins will improve with it. But Our dynamics in that business in terms of pricing and the performance of the business was able to, at least at a margin level, overcome a lot of interruptions and inefficiencies that we've seen in the factory. So I think the business is being well run. It just needs to be able to start to generate More top line and that's a supply issue.

Speaker 2

I mean demand is quite strong. We've got great products out there. And as a result, we're getting good pricing for them. But we would Love to get higher revenues and I think we will. We just got to work through this far, James.

Operator

And we do have a question from the line of Kristin Huwag from Morgan Stanley. Please go ahead.

Speaker 4

Hey, good morning guys.

Speaker 8

Good morning. Good morning.

Speaker 4

Scott, you mentioned how longer lead time nature in aviation provides More visibility for the supply chain. And right, that makes sense in a normal environment. The vaccine executive order effective December 8 It's a little different than what we've seen before. How are you anticipating this executive order to affect labor, your supply chain And ability to raise production in aviation and what mitigating actions can you take?

Speaker 2

Well, look, it's a good question and all of our business As well as obviously all of our key suppliers are tend to have that defense component and therefore are subject to the mandate. It's a frankly, it's a curveball we wish we didn't have, but we're managing our way through it. I think we and all of our Peers and suppliers are all sort of in the same place here. I feel like it's created a lot of noise. It's not been terribly well received by a Pretty sizable portion of our employees, but people are working their way through it.

Speaker 2

It's the nature of I think people have accepted it's a fact of what they've got to go do. And in the end, there's no question that we're going to lose some employees because of this, but we're trying to ramp up our hiring and expectations of that and we'll manage our way through it. It's not the first challenge we've ever seen.

Operator

And we do have a question from the line of David Strauss with Barclays. Please go ahead.

Speaker 5

Great. Thanks for taking the follow-up. I guess, Frank, question for you. On working capital, it looks like you're assuming for the full year a couple of $100,000,000 benefit from working capital. I assume mainly or predominantly aviation advances.

Speaker 5

How should we think about working capital as we move into next year. That's my first question. And then any initial thoughts on pension income for next this year as compared to I think you're doing like $30,000,000 or so in pension income this year? Thanks.

Speaker 3

Yes. So on the outlook, on the working capital front, I think as We've had a strong year from an inventory management standpoint and the Aviation business being far more linear obviously There's a really good thing there. So we've had kind of better seasonality of cash flow and good customer deposits. The cash flow for the Q4 implied in the Guy continues to be in the area of 1 to 1 or a little over 1 of kind of net relative to net income. So we saw a lot of benefit this year, kind of that we'll continue, I think, to see very Strong working capital management next year.

Speaker 3

I'm not ready to guide on it. A lot of it will depend on order activity. I think that on the inventory side and the linearity of the business, We'll continue to see strong performance. It will depend on kind of customer deposit activity to some degree to how that ultimately works out. Look, on the pension side, we're not ready to kind of lay out numbers there.

Speaker 3

We've had a good year so far on return on assets. Interest rates are up a little bit. So as you sit here today, I don't think that we would expect to be we would expect Pensions to continue to be a benefit as we go into 2022, but we're not ready to quantify things.

Operator

And We do have a question from the line of Robert Stallard with Vertical Research. Please go ahead.

Speaker 6

Yes, thanks. Just a follow-up from me. I was wondering if there's any changes on the divisional guidance for 2021 with 1 quarter to go?

Speaker 2

I don't think, Robert, that we're doing a formal update to the guides at the segment level, but clearly Aviation And Bell are strong performers and I think you'll see that versus the original guide. Obviously, industrial with particularly with the auto OEMs Volume down and challenges in supply chain, that will be the sort of a bit of a mix shift, I suppose, between what we originally guided and and where we'll end the year.

Operator

And our last question comes from the line of Noah Poponak with Goldman Sachs. Please go ahead.

Speaker 9

Hey, Frank, do you expect to be able to grow free cash flow from the manufacturing group next year versus the good performance this year. And then, if you could just maybe touch on the systems margin since that It seems to have just kind of stepped up to a new level with all the programmatic and mix changes you've had there. I mean, is that just now a sustainably high 14%, low 15% Business? Thank you.

Speaker 3

Yes. Look, we're not going to guide 2022. As I said, I believe we'll continue to see Solid and strong working capital management. Next year, we had a lot of benefit this year of particularly at Aviation, again, of getting the business kind of running the way Scott described, which is kind of with some visibility on delivery and order activity and run it far more linear. So I would expect that to Continue, as I said, into 2022, but I'm not going to start kind of guiding cash flow and profitability here For 22.

Speaker 3

Well, I'm sorry, Noah, the second piece

Speaker 2

of that was Margins and margins.

Speaker 3

Systems margins. Look, on systems, we've talked about this. Kind of systems Has had a very strong year. Defense Businesses generally kind of consistent with how we've talked about Bell are kind of 10% to 12%. We have made some investments in systems where we're seeing solid return on those investments.

Speaker 3

There are a number of businesses there where We have invested in assets to drive higher margin like the ATAC business. So we expect to see good You should on a go forward basis out of the systems business, but kind of these levels of performance this year are kind of Strong relative to the general mix of those businesses. So we expect solid execution on a go forward basis, but we've had a very good year this year.

Operator

And with that, ladies and gentlemen, today's conference will be available for replay after 10 am Eastern through January 29, 2022. You may access the AT and T replay system at any time By dialing 1-eight sixty six-two zero seven-ten forty one and entering the access code 6,190, 396. International participants may dial 402-nine70-eight 47. And those numbers again are 1-eight sixty six-two zero seven-ten forty one and 402970 847, and again entering the access code 6,190,396. That does conclude your conference for today.

Operator

Thank you for your participation and for using AT and T conferencing service. You may now disconnect.

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