So you guys see these investments, which are, frankly, not dependent or tied to the revenue within that segment. So the two big moving pieces in there in terms of the investment side are the Nuuva on the unmanned cargo and the Nexus on the sort of the EV tall side, which, again, I don’t think that has to be necessarily dependent to urban air mobility, but just GA in general. Both of those teams are making great shape. I think we’ll see first flight of the Nuuva in 2024. We’ve also begun the assembly and wings and fuselage build on the Nexus program in Wichita. So both programs are making very good progress, but they’re both technology investment programs.
Jason Gursky: Okay, great. Thanks.
Scott Donnelly: Sure.
Operator: Next, we go to the line of Noah Poponak with Goldman Sachs. Please go ahead.
Noah Poponak: Hey, good morning, everyone.
Scott Donnelly: Good morning, Noah.
Noah Poponak: Scott, we’ve heard some discussion in the business jet end market that even though 2023 was a decent order year that there’s actually maybe some pent-up demand because it was so consensus that there was going to be a recession or something like it. And that in 2024 if we’re having an inflation decel and rate cuts and some version of a soft landing that you could have your normal underlying demand plus anybody that deferred from ’23. And so I’m curious if you hear that from your customers or your sales force and there’s an upside case for bookings? Or is that too aggressive and just stick with book to bill of 1?
Scott Donnelly: Well, look, no, I think as I said at the beginning, we feel good about the end market. Customer dialogues are robust. Frankly, the only headwind that I see would run to is just on availability, right? People would like to get aircraft sooner. So we’re — I think our sales folks are out there working hard. There’s no doubt there’s demand. I think that’s, as I said earlier, helped by the fact that we’ve got some new models that are coming out that are going to be really well received in the market. So, look, all in all, as we talked about, the book-to-bill number can change a little bit quarter to quarter, but I think we feel very good about the end market. I think we’ll stick at this point with our kind of one-to-one in our base assumption as we did in 2023. And if the market remains that robust, we can exceed that number, which would be great. So look, I think the market remains strong. It’s — we feel good about it.
Noah Poponak: Okay. And I wondered if you could just maybe discuss a little more just how much better is supply chain, labor, your ability to get airplanes out the door. The delivery number was down in ’23 despite all the demand, kind of to your point there on availability. Whatever the ’24 delivery plan is, it’s got to be up a lot to get to that revenue guidance. Do you feel like you really have that hitting the ground running in January here? And then as that pertains to the margin, why would price net of inflation not be better if that — if pricing is still good, I know the rate of change matters, but if that — if the cost inflation and disruption piece settles down significantly for you?
Scott Donnelly: Well, look, I’d say I don’t know how to quantify the exact number for you, Noah, but there’s a couple of dynamics here that make us feel good about it. Again, we saw better labor productivity, all the metrics we track in terms of training hours, direct charging to [interact] (ph), all those sorts of things, applied hours, were positive in the quarter. We do track a number of parts that are late to PO. These numbers are getting better. Also, I think as you look at the ’23 to ’24, we have net less hiring we need to do to hit the ramp. Last year was a big year in terms of onboarding new people. As you can imagine, that’s very disruptive. It’s a lot of training that takes not just the new people, but it takes a lot of our capable people to help train and develop them.
We made a lot of investments in 2023 around new training facilities. So — but the absolute number, we still need to onboard new people, for sure. But on — the number of them is less than what it was in 2023, and that should be helpful. The supply chain thing, as I said, look, it is getting better, but it’s still susceptible to the wrong part not being available, right? I mean I think it’s going to help us do less out of station work but we still have suppliers we’re keeping a close eye on because a lack of delivery on their part could hold up an aircraft. So we’re still being cautious about how we work through that, but it has improved. And like I said, there is less hiring. I think most of our lines are flowing better as a result of all the things I just talked about.
So we do factor that into our ability to hit that larger number of aircraft deliveries in ’24. And I think we’ll get there.
Noah Poponak: Okay. That’s good. I’m just going to ask one more. The Bell margin, pretty strong in the quarter, close to ’23, well ahead of the initial plan. This ’24 guide, 9.5% to 10.5%. Kind of flat year-over-year. There was a view that this was going to 7%, 8% as you ramped FLRAA, you’re ramping FLRAA, that’s not happening. Can you talk about how you’re outperforming there and absorbing the FLRAA ramp? Is ’24 the trough or does that still need to go down some number of hundreds of basis points before then going back up?
Scott Donnelly: No, look, Noah, I think, look, the team is doing everything they can to manage costs, control — do the right cost actions here as we see the ramp down on some of these military production programs, and we continue to do that. Those were certainly better mix than a big cost-plus EMD program. So we still will have some pressure around the margin rate. But as we talked about that, the growth benefit of seeing this program ramp up, we believe will still generate accretive not dollars. So even if we see some pressure on the margin rate, the business will still be contributing positively to the overall dollars and therefore EPS for the business.
