best 3 burner gas grill for the money General Electric's (GE) Presents at J.P. Morgan Aviation, Transportation and Industrials Conference (Transcript)
GE (New York Stock Exchange: GE)P.Morgan aviation, transport and industry conference, 8: 40 a.m. March 12, 2018Vice President and CEO of GEOver the last few years JPMorganOperatorSteve TusaOver and Dave will start with very few comments and he has some slides and then we will go straight into Q &David JoyceYes, so I'll go through these quickly, but you 've seen a lot of these before several updates.First, the picture on the first page.I am proud to say that 9X took off from our Mojave flight test for the first time yesterday.So the world's largest jet engine, which once again sets the world record for the world's highest thrust engine, is also here now.There was a great flight test card yesterday and it was ready.This is the engine on 777X, you can see the size of it, the engine on the right side of it is actually a CS-682, powering the current 747.This is probably the size, not the new one-A74 but 400.So it's a huge engine, and it's a real technological advance for us, and we're very proud of that.At the highest level, 2017 of external reporting revenue was $27.4.Think about the $20 billion in engines and services in the business world, about $4 billion in the military sector, and then commercial and general aviation and integrated systems, avionics, digital and avionics.Of course, in Avio Aero we only look at the external bolts and they do a whole bunch for us as well.You know they are great vertically integrated players and they are our external players as well.There is also a $0.2 billion GE Additive.I talked a little bit about GE additives in November and I won't cover it except for today's Q &.In fact, I want to highlight the business of general aviation.So every time I come to speak, I highlight one of those areas, the smaller ones, the digital, avionics, the Avio Aero.So today, I think as part of that, I'm going to do a little bit about business and general aviation.So 2017 of the performance seems to be in the decade ago, now, but only three months.Our profit is 9% and our revenue is 4%, and we have more than 65,000 engine-mounted segments in all segments.Military, commercial and general aviation.Shipment 459 leap.In addition to the transition of each leap, we exceeded 30,000 CFM engines in 2017.So it's a memorable year for us, it's a good year for cost spending, and I'll show you the numbers.In fact, the actual situation of LEAP in 2017 is several points more than we expected, I will show you the update in November, and we will discuss in more detail that LEAP and R & D are down 16%, this also includes investment in additives, but total R & D fell by 16%.Revenue from military operations continued to be strong to 10%. We believe that this is a strong growth area from now to 2020 and beyond, and Avio Aero's external revenue has increased by another 11%.We made two acquisitions, AirVault, small acquisitions in the digital business, taking into account records of regulatory requirements, and equipment configuration controls for the aviation business required by the FAA.AirVault is the digitization of regulatory control information, allowing for simplified reporting to the FAA.So this is a very good little business and we are glad they are part of the family.We bought a large amount of the remaining shares of Arcam.So we now have 97%, more than 95%, and I think we have 97% ownership of Arcam this morning, removing them by the end of January, and I will pass the staff, sweden's regulatory obligation is to acquire the rest of the shares and then consolidate it with the concept laser acquisition.So these are some of the highlights, the outlook for 2018 is no different than in November, 7% to 10% of our profits and 7% to 10% of our sales.Four items are very important.First, you have heard from me for many years, that is, our profit margin is flat when we go through the leap and the passport ramp.Passport is the engine on Global 7000 and is currently going through the flight test phase for certification and the engine has been certified.Keep the bestin-Cost of class structure.Our SG & A accounts for less than 6 of sales.Last year, when we saw this, we saw another decline in 2018, partly because our income was growing, but also because we really, really controlled our structural costs.Frankly, if you look at the investment in this business, the investment in 2018 is quite high.If you want a transformation from the Mozambican port railway company, this is the time when we have to investigate this transformation in the planned equipment and make sure that our supply chain is able to handle the competition that they have to deal with, so, SG & a naturally gets a little fat when you go through these shifts and make sure you correctly call it a good leadership challenge.The military needs we talk about, make sure we win the next generation in the Army.When you look at the military growth in 2018, you will see the original equipment growing on a good cliff, think about the low doubleKind of like a cliff.Spare parts list-Numbers, then think that development is what we do and get paid by the military for the next generation of products that are currently growing fastest.This is basically the adaptive engine for the next generation of combat, and the next generation helicopter engine that is running on Apache and Blackhawk, and this combination has been decided this year.So it's also a big deal for us.Of course, we continue to verify the two areas of destructive, of course additive and digital business, and I will take you to the story as I have already shown you in the additive sample, compared to the advanced turboprop engine we named a few weeks ago.When we lay out the design, the catalyst is actually the first engine to consider additives from scratch.Another point I would like to mention here is that the technology stack in this business is very simple and has always been very high.When I open the cabinet for a new app, I have a very good technical suite, which is due to all the investments of GEnx, almost all the way to GE90, but GEnx LEAP, passport, advanced Turbo props, new engine for military helicopters, it gives us a very impressive technical kit.So if a new app comes up, we feel very stressed that we can take advantage of it and take advantage of all the investments and technologies we already have.In addition to providing these technologies to power companies and the products we offer for the oil and gas industry.The business environment quickly entered 2018, which was a very, very strong downwind.You can see the numbers for 2017.These are higher order numbers.2018 demand increased again by 6%, load factor81 high time.4%.The departure you see grows again at more than 1 point.8 million people left each year and fuel stabilized again in 2018.I also put forward some estimates here until 2020.So that you can understand what we think about the business market.Now we won't exceed 2020 because the forecast is too far away for us, without any accuracy, but when we look at the Environment at the end of this decade, what we are seeing now is a very strong business environment.As evidenced by the demand growth you have seen, the load factor "fuel stability" is the highest variable cost for most airlines and the number of departures continues to grow.In the bottom chart, demand growth by region, you can see that it is led by Latin America and Africa, but these absolute markets are very small, you can see 445 billion RPKs in Latin America, 140 RPKs are seen in Africa, but growth is strong around the world.I mean, it's important if you look at the growth of demand around the world.If you break China out of AsiaIn the Pacific region alone, China has grown by 13%, so the market demand for equipment is strong and strong, so we are very satisfied with this. In this market, we have a very positive portfolio with a sustainable readership.You know, I 've used this chart before and we're powering some of the world's most utilized aircraft.Last year 69%, two of the world's three takeoffs were driven by our JVs or our engines, and this is the agent for spare parts, you know that every departure is cycled on rotating parts, there are life limits defined by the FAA on these parts, so, when you have so many people leaving, you have to go and buy new parts in the engine.The number of store visits continued to grow.We had a very strong year in 2016 and 2017 were 9% better than 2016.So that's why you'll see that the composite growth rate forecast for the next decade is 5%, compared to 6% that I showed you in November.It's not that we changed our forecast, it's that 2017 is stronger than we expected.The question is, how long is the tail on the existing CFMs 5Bs and-60% ServicesToday's 7 s flight A320s and 737 s are not new, not that MAXs and NEOs do not see a shop visit to let you know how long the tail of the service is on the device we sell.So, based on the increase in store visits after the end of the decade, we have a very strong service franchise.Finally, I installed the base until 2025, and I have been estimating it because sometimes I ask, is the Cliff Aftermath of 2020?The answer is No.Between 2020 and 2025, we predict that in just five years, there will be another 8000 installed engines in our commercial fleet.So, based on the product and order book we are using, a very strong engine forecast for installation, strong departure, which is the agent for the parts and a very good global store access forecast.This is a sustainable leadership position in the market, and we predict it will be so strong at least at the end of the decade.If we look at the investments we make today.The question is whether we can transition past success to the future. these three products are our bets.The first one is LEAP, I have talked more on the next page, but am very satisfied with the position of no and have not approved the transition.You know, these changes are not for the weak heart.I mean, when you make these changes, you have a lot of investment in engineering, a lot of investment in P & E, and a lot of investment in inventory, this is the cycle we are in now, but there are 14500 on the order, and the A320neo alone has a 59% win rate, of course, all of which are derived from the maximum-Boeing and c919GEnx continues to perform well in the field, we are very pleased with its performance in 78 and 748, and finally I show you the 9X-for the first flight-Testing that started in use around 2020.Let's discuss a few pages quickly on LEAP.The first three rounds were clearly positive in the performance of the sack and Boeing, and I am very proud of the flight of the engine, we were just talking to Gus Kelly in other rooms on the stage, how are we doing, Gus? you have three or four of my best clients.Steve Hazi is here today, and Gus is here.So with resources flying somewhere in the world, they're all flying, we have 22 customers in Boeing and 17 customers in Airbus.At present, 253 aircraft have an 18-point advantage in managing utilization, which is huge.A little advantage in utilization can be as high as $0.5 million of the annual revenue per aircraft.So when you can take advantage of a number like 18 points.In terms of revenue generation capabilities of airline customers, this is a very, very large number, and we are powering 58% of the A320neo that is serving.Of course, there are real challenges to success.So make sure that we are able to climb these ramps with good ability and do that with inventory control, it's not a trivial matter anyway, we are dealing with these production learning curves as fast as we can, of course, I have established weekly communication with all of our clients to make sure they know where we are.So let's go to the left side of this.In the absolute forecast of CFM throughout 2020, our forecast has not changed, you can see the blue transition from the existing CFM product, so the red product is LEAP.So if you just look at the absolute number above, it doesn't look that high.But if you look at this shift, we're going down a supply chain and we're lifting up a supply chain and actually none of the CFM's parts are the same blue-red jump.These are two completely different products, which, frankly, are delivered at night in terms of transition.So it's a challenge for us, to say the least.The bottom shows the cost, we have 20% in the first year, we actually get 25% of the product cost in the second year, and we still expect 21% in the third year.Right-On the one hand, it shows a leap in weekly production this year.So we jump from 12 times a week in the first quarter to 25 times a week, 33, 34 times in the second quarter, I mean 2019 runs around 34 times a week, we will achieve this in the third quarter.As a result, we feel comfortable and we will increase the correct running speed to 2019, which will exceed 1,900 in 2019.Where are we today?Now, I am on average in arrears between Airbus and Boeing for about six weeks of delivery appeals.You 've all heard that, I mean, if you get into the market, you talk to Boeing, or talk to Airbus, that's where we are.We have several quality problems, two rotating parts.One in the low pressure turbine, one in the high pressure turbine.In both cases, we had to go back and pull this from the scene to make sure we didn't have any problems.In High Pressure Turbines, we actually have to assemble hundreds of engines and check them somewhere on site, somewhere on the line, where they are ready for shipment, and somewhere we plan, but we added 100 of the forgings in the process.We closed one supplier until we were able to get the right quality and the other one not only checked hundreds but also surged to the actual handling ramp.So is LP.So in both cases, the manufacturing quality problems are behind us, they are soft, but there is no doubt that they make us fall behind, I mean that's the truth.If you ask me, my study is done throughout the process of this ramp, and that's two things.To be honest, I think the recovery speed is not as fast as I thought when we found a quality problem.You find that you have to face some quality problems with engineers, throw them in and really look at what metallurgy is doing, what's going on, and why we think there's a problem, let the FAA board make sure you understand what you're doing at the same time and you're trying to surge.The second is to say frankly that the yield of the second and third sources has increased.So whenever you start one of them, you go through a learning curve.So in many cases we have three sources to build the same part, you expect a certain increase in production and arrange the whole ramp based on the increase in production.I would say, I am disappointed that our second and third sources have increased production in some cases, which has put more pressure on our supply than I expected, when we started the process, we expected it.So, when I go through this, it's two of my lessons.Now more than 90% of the products are still the source.By the end of the month, we will be in arrears for six weeks, and we will begin to shorten the week per month, so at some point in the third quarter, we will return to PL with Boeing and Airbus.So I think after every month, we go from six to five weeks to four to three weeks to two weeks to a week, and finally on PL, which is the timeline we get and the estimate of our recovery speed.Fast military, no change compared to our military predictions, you all know what the threat of modernization is, and therefore, as we move forward, it looks like a 9% growth market.The only thing I'm going to say is that we looked at the budget for 2018 and 2019 and it fits very well with the results we expected.That is why the forecast did not change between November.In fact, we think this is consistent with the president's budget.It is very beneficial to advanced technology and new products.We talked about this before. I don't look at the chart in detail, but there are actually three market channels in the military. The first one is the huge engine we have built, look for new apps for them.The trainer who will be selected in 2018, two of the three applicants at the aircraft level are driving the F404, so we are confident in the training decisions we have made, and we are very likely to win.In India, there are at least three to five fighters being monitored right now, all of which we have search engines, but we are still sourcing in KFX and South Korea, in Sweden and Turkey, we are already looking for local fighters.Then, just at o we talked about the technology that we have implemented a lot of upgrades, this is a new technology that I showed last time, believe it or not you are B-52 engine.They put in a budget of $1 billion over the next five years.engine the B-52 we have two great engines, both of which can be mounted on any plane wing we are working on.Finally, the next generation of products that is where the action is, and you have provided the next generation of helicopter engines for Apaches and Blackhawk.You have advanced combat engines.We have a billion-dollar contract, and it's CH-As we said, 53 K is our two 408 engines and is now in production with very low productivity.I want to introduce a few things quickly, this is the catalyst is the advanced turbo propeller, I just want to tell you that there is an obvious reason why we changed the name of this thing, it is the catalyst, this is the first turbine propeller in the market in 35 years.It is designed from numbers and it has a digital control with full permissions.It has more advanced data analysis monitoring than any engine in the turbine propeller, and surprisingly, we have obtained such detailed data in this regard, and how we can help this in diagnosisFinally, this is the biggest shift in additives, anyone on the market is using additive technology, we have produced 855 parts on this engine, reduced to 12 parts.This is for production, we produced the first engine in December.This is indeed a step-by-step change, which gives us great confidence in additives and numbers as we look at the market.We like the advanced market for turboprop, we like the positioning of the engine, we think the number of applications.I will announce the app on what I want, and so will my ex, because this engine is really a killer product for us.All in all, a business that has definitely been delivered.As you are now Steve, but also understand the investment cycle that needs to be maintained.This is a long period of business and you have to choose the right product when you make an investment decision.Growth is unprecedented in terms of service and installation infrastructure.Technology is the key to development here, you know, as long as our technology stack applies this technology well, new products really determine whether we like the market for new products or not.Finally, a comprehensive investment, including numbers and additives, and maintaining a very good competitive cost structure so that we are not affected.That's it. well, it's starting soon...Question-and-Answer session q-Steve tusano is fine, we have 20 minutes and I will make sure to use it every second.So it's like a simple level, so you guys are doing a little better in the fourth quarter from November.There is $6.6 billion in EBIT, the impact of the accounting change is $0.8 billion, and then you will basically grow by 7% to 10%.This is the correct number we set about 20 levels.Will you keep 5% profit this year?Yes, David.There is absolutely no guidance for any change.I don't think we have seen any substantial changes from November to 3.Steve is trying to keep growing, but I mean it's just a base that hasn't changed from an accounting standpoint.David JoyceNone.I think at the end, we will give you an update on the new accounting standardsThis is the case for the whole company.I don't want to go out early, but you'll get updates from everyone, but you know it's close to where we end up.Steve tusaok, and then in terms of quarterly rhythm, you guys come up with this leap chart, which is very, very helpful every week.So it's a bit lower than I thought you 'd expect at the beginning of the year, but it sounds like you still need to put more resources into solving the problem.So, what is the impact of this on the quarterly growth rhythm of 7% to 10%? You know, it's hard to judge the impact of this leap, maybe it's hard to judge more ......I will tell you, in terms of whether it is linear or not.I would say, as you can see, its weight is 2Q to 4Q, 1Q, we ship 12 ships per week in Q1, which is less than what we want to ship away, no doubt, like I said, it's about six weeks behind PL.Then recover in two, three and four.So I will tell you that the linearity of 7% to 10% may be more focused on the second half of the time than it was in the first half of the time, when I looked at it, I am [invisible] I am looking for a node from you because I am doing this based on the numbers in my mind.Steve tusand believes that the right profile base from low to fast is better for your profit, but you have to put in more resources to work.So, from a profit margin perspective, the first quarter ended up having little impact.Is this the right way to think about it?I will say that.What I want to say is that, as we said before, we will make a profit leap by the end of 2018, so we will make some leaps by the end of this year, we will begin to see positive profit margins.This is because this is after all the beginning of the second batch of orders, with the release.There won't be all orders right now, as we have a very dynamic combination between accepting release orders and fulfilling orders and new orders.So what I want to say is that if we can make some minor leaps early this year, you would think that is a positive factor in first-quarter profit.But in all the effort, Steve, I don't think that's important in terms of how we look at the quarterly split or how we look at what we have to do this year.Steve TusaBut you will grow every quarter, I mean will there be growth?for-Like the first quarter?David Josie.over-year, yes.From the overall engine point of view, what is the goal of delver this year?David JoyceOh gosh, I think you should consider our percentage increase.I have no absolute figures;I have absolute numbers, but think about where we were in the absolute total engine in 2018, about 15%...Steve Tasa, so the mix is interesting because it's clear that your competitors have some issues that benefit the CFM 56.I think starting with talking to your partner, where the backlog is in some way 1000 of the engine range, looking at this chart, you might be a little less 56 56 s than LEAPs about thousand CFM 56 is not the correct number of 2017.David Joy caseI mean the A320 Classic continues to pop, you know what I mean, we are very surprised that the demand is so strong, we didn't expect to ship any CFMs by 2019 at some point, now that we're in 2019, we're in 2020 with the existing classic cf, which is good for us.I mean, what was our last win?Last year, the winning rate of COs's new order was 88%, just to give you a perspective.So people are still buying it and they are certainly in the camp of the CFM as the product they want to buy.Steve tasabbit will continue execution on CFM 56 if you wish.Right?David JoyceStay is doing well.I mean, the level of Steve tasawell is obviously low, and the leap was correct in 2020.David JoyceIt is a slower transition figure.The transition is slow.When you investigate 2019, will this go to the low pointI'm staring at the 200 chart, 300 types of 2019 numbers.David JoyceMid-200, I think there is 1900 on LEAP side and mid200 CFM side.Steve TusaOkay.Great color and GE-90 just finished the OE discussion so 777 I think it's going to drop very dramatically this year and it's because of your GE-Volume 90, you already saw ...... What is David JoyceWe, I mean we are the last step for Boeing and what speed they are taking.So there's a bridge project that, as you can imagine, makes us go from 777 today to 777X, which is 2020, and I think Boeing has announced a change in rates, but we are their last step in the interest rate change, which is in the plan.But you have to mix correctly, so think about the mix in businessbody GE-90 probably GP-The 700 on the A380 and even the CSXs are shipped today, for example, the 767 s is still running.So think about these engines that are actually reducing shipments, and then think about the rise of the LEAP and the decline of the CFM, but the total number of CFM products between the current product and the LEAP has risen.I mean, if you look at the top of the chart.Right.Yes, Steve.15% is clearly a considerable number.David joyceextly, so you see that the total amount is becoming positive, and you see a mixed shift, like you're on the width-Body engine and narrowNow the body engine.When 9X started producing 9X in 2019, they were ready for 2020.So now it's clear that you'll start to see 9X expected to come out as production for the 777X kit they delivered for 2020.Steve Tasso is a hybrid influence from GE.90 to 9X is already in the base, or did you have to manage in the 2020 issue of 2019, because, I 've seen a lot of [invisible] this year, so I think GEThis year is a big year of decline.Yes, so how do you make up for that in the next few years?You know, is this another engine shift that we have to focus on, or is it something that is already running the base?David JoyceWell, of course, as we understand now, there is another transition that will happen, which is far from dramatic with the CFM's leap in volume.Thank God.So this is totally planned for us, we had a productivity in 2019 and obviously we are testing all the engines in order to be certified before them.So it's going through a very traditional cycle, like everyone in our engine program, the supply is already making the engine, and we 've got everyone of them on the PL, they know what the 2019 schedule is.You know we are starting to receive the materials for the construction of 2019, then we will build 2020 of the materials, and then we will board the ramp.So there will be a less dramatic transition between 90 s and 9Xs, like CF-6 and GEnx.You know what I mean, so we went through it on CF6 and GEnx, we are now going through it in LEAP and CFM and we will be going through it again in 9X and 90.So the whole idea is to turn this fleet into the next generation of products, to maintain the business in the next few decades, but these investment cycles are not only necessary, but you know the key is to choose the right product.You know what I mean if you pick the wrong product you can put a lot of money into these things and then the market won't be as fast as it should be, you will find yourself in a situation where you cannot recover your investment.So I'll tell you, for me, the lessons I 've learned from working in this industry for 10 years may be the most important skill in any business that works in this industry is product selection, actuallyIn this regard, Steve Tasso, maybe we're going to turn to the question of the intermediate market aircraft, you know, there are more rumors about that.You know what you think about the business proposition of that aircraft, you are willing to compete for it, and if you move on here, what impact it will have on your R & D.David JoyceYes, let me start with the obvious comment.You know there's nothing more to look forward to the industry than the new aircraft, right.So the engineers said, "Yes, there's a new one. we're gone. we can't wait .""Then the rest of us went into the room to see what that meant.In terms of product evaluation, we are the last step for Boeing and they have given us a series of milestones they want us to achieve in choosing engines for their aircraft, we followed the demands of each of them.When we go, it will be a very, very high probability of a CFM engine.This is correct in that thrust rating and I don't see any reason why we don't cross the bottom line.It will be bigger, but it will be a progress, not a whole generation, but a leap from today to half a generation of technology.Isn't this a clean sheet?David JoyceWell this is a clean sheet, just if you look at when the engine starts, as long as we feel mature enough, advanced technology, brand new, we can invest as much technology as possible, but we have a good accumulation.So the point is, technically, from an engine perspective, I feel very comfortable with where we are.The question now is whether we can adapt to the industry.We're trying-in-Working with Boeing and ourselves to ensure that we are confident in the success of our business case, as we are in terms of technology and engine.It takes a lot of things, how many engines are running, how big the market is, how fast the growth is, how does the competitor react to it, who is under the wings of the competitor, and what happens after that?You know what I mean.Steve tasar are you willing to use dual sources on the engine?David JoyceYou knew it would be a very difficult discussion because if you look at the total amount we see in this market, three are completely impossible330 having done so, it turned out that, as an engine manufacturer, all three of us had a very frank head on the wall until service revenue began to grow.Second, there needs to be a big enough market to offset those costs, and you know, I know, these are big shifts, big dollars and big bets.I'm not saying we won't, I think we have to grind our pencils a little in the market before we say we will or won't.Steve tasar, will you go and buy a product for you?David JoyceNo, absolutely not, we will not provide your product in the market, I can guarantee now that Steve TusaI thinks your comment is that you don't need to put a Swiss observer in it, you don't need to sign it.In the after-sales market, the store business you are talking about has grown by 5% in the next few years, and you have a high orderLast year's figures, but in the past few years, your average daily order price has briefly increased by 25%, and they are just barn burners there.David JoyceYes.I don't think you'll see Steve in a row.I think you should look at the high list you know.digit -to spares.There are also a lot of repairs to these engines in terms of spare parts, but I think that's what we're guiding, isn't it, I'll look at Shane on one node.Yes.Thank you.Steve Tasso highThe numbers on the spare parts, then the middle sheet-The number of core service types, more maintenance of future business types.David JoyceYes.I think it's a good combination.Steve TusaOkay.It's just the numbers, and as a company, you guys are obviously pushing hard there, probably just talking on highlight for a few minutes.I mentioned this so we have a new leader [invisible] our new leader in digital, who has been working for over a year so he is not new here.We did a good job and we were very, very happy.We will increase our income.On digital alone, we are 5 times to 2x2018 from 2017.Have some very good knowledge of what we do in the digital space and think about some of the real key factors our customers are looking for in our digital space, frankly, data on one of the factors.So think about the security data like the black box, all of this stuff has to be reported to the FAA, and there is a lot of manual reporting and manual recording and the costs associated with it.Digital is perfect in this market, we started our digital journey at a company called Austin Digital in Austin, Texas, a very small company, it is called FOQA data, reporting security data as required by regulators.Now that we're making progress on [Airva] (Ph), it's now the configuration control tuning data for your flight.You know what I mean, you have to keep a record of what we say, and if you have rotating parts in a jet engine, you have to know how many times they take off, cycle, you look at the counting cycle, when it is over 20 or 25, the engine must fall off according to the life limit of the part, and you must replace the part as specified.You know what I mean, so you can't be wrong.This is a very manual and timely event.Therefore, in addition to diagnostics and health monitoring, we use these functions to improve the efficiency of our customers.This world that digitizes regulatory data and helps them build a reporting structure already has a real opportunity, which is why we went after the Airva deal...Steve TusaYes, obviously, is a great place to take advantage of and observe anything in the future.In November, one of GE's top priorities was apparently free cash.You talked about the 90% conversion, and last year you did more in this than I thought, and when I looked at your capital expenditure to DNA, plus the drag on contractual assets, it was allSo what is it in 2017 that gives you 80%, 90% or even better performance.I have the following if this is the correct baselineAbout this question.David JoyceSure.What I want to say is that we accounted for about 90% of our income last year, and we performed slightly better than that.I mean, I'm not going to say that we score all the way through the touchdown, just like we do all the way through.Okay.I mean, most of them are deposits.In general, you know what I mean, not just progress, but the other thing is to have a cash file that our clients are associated with some of our CSA contracts, some of them actually like to smooth this out when they see a huge hump coming inIn fact, we'll talk to them and say, "Well, if you have a huge hump in 2019 and you want to flatten this thing a little bit, we're happy with that."So we have a lot of discussions about it, too.So that's two reasons I want to say.With regard to the 2018 material, I would say that there is no change in your guidance now, which is about 80% of the annual income of 2018.From November to 3, when I sit here and look at all the inputs and expenses, including one year --I think we are right there and I will say we are there...Steve TusaSo which active parts, because it is clear that 90% is more and more on some EBITDA reports that are $0.8 billion higher and 80%, but at that low base.Therefore, the absolute change in free cash flow is relatively significant.If you look at this, what kind of change it is.I know you are speeding up the leap so there will be more drag on the contract assets.David JoyceSo think about inventory from 12, 25 to 33 a week, right.If you want to get the right price in the third quarter, you know what I mean, so it's almost three to one.So first, when we get to the ramps of 33 and 34, you will see more inventory in the business and then have the opportunity to flatten it and increase the inventory utilization.On the good side, you see that our engineering spending is down, and even with the addition of additives, our NPI is down 16%.As I told you last year, we moved from the company-funded 700 engineers to the externally funded engineering work last year, and because of the acceleration of military development, we will also be 200 engineers this year, 200 next year and 200 the following year.This is all the ramps.It's great in the military because these are very confident engineers we can move, so it's a good guy in the market, then consider the plant and equipment from the perspective of cash utilization, as well as the inventory, so that we are ready to get these ramps readyWe talk about the second and third sources, but we also have to make sure that we have the ability to do this, the ability to do so to check and any infrastructure that can handle these ramps in our own stores.So there are bad guys with factory equipment, bad guys with inventory.Good guy with MPI.There is a good service, you know what I mean about business growth, when you go onlineNet all of this, and finally let's have only about 80% revenue at this point.Steve TusaOkay.So the last question is the relationship with GECAS. There has been some discussion about how to deal with your portfolio, and GECAS has emerged as a potential value asset.Talk about the relationships there and how important they are then in your 10-K. you guys disclose the date of the lease with them and they basically buy the engine from you and lease it back.What is the purpose of doing so?Let's start with that and then we go to the other one.So the engine rental business, so companies like me, if I don't have the GECAS, I will have the engine and I will use it during the warranty period.You know what I mean.There will be some requirements when we pull the warranty engine and install another engine on the wing.All these assets are in GECAS today because they actually have an engine rental company and when we need an engine rental company we just rent it from them to do the same thingSo, when they entered the engine rental that is now back to the post-90 s, we used to have a big fleet, and we pushed our fleet forward to their fleet, and then when we didn't use it, they will lease these engines in a short time.Term lease or other.So now these people are earning assets on our balance sheet.That's the piece.Now, as far as the relationship with GECAS is concerned, the relationship between Decklin and [is illegible] our ability to triangulate market trends is second to none.You know what I mean is that I have someone in my family who is actually very, very focused on what we think is the overall market trend in terms of their ability to actually place assets.So when we go into the three-year planning process, or want to call [or] really look at where the market is going, I think, our strategic ability to do closed-door triangulation with GECAS is a fundamental advantage for us.We have very good information about where we think the world of commercial aviation is going.Thanks to our triangle measurements with GEAS.Can you function effectively without GECAS?So let's talk about how big GECAS is.So my rental channel represents a rough figure of 18% based on the sales of my business engine, total rental.In this segment, the number of GECAS accounts for about 14% of that segment, meaning that 86% of my rental channels go to GECAS competitors throughout the rental channel.So we can perform very well because I should talk about this below and I know Steve Hassey will be here and I discussed it with him via text this morning.Therefore, these are very, very close relationships with those rental personnel.I will meet Robert Martin, head of Asia, over the weekend, and I will have dinner with Robert in Singapore and talk to him about a deal.Therefore, this rental market is an important market for our independent GECAS, and we feel very strong about our position.Steve TusaGreat.Thank you very much Dave.Congratulate you on running so amazing.You do goodThank you. congratulate you.David JoyceOkay.Thanks.