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    Douglas Harned • Bernstein & Company

    Douglas Harned's questions to StandardAero, Inc. (SARO) leadership

    Douglas Harned's questions to StandardAero, Inc. (SARO) leadership • Q2 2025

    Question

    Douglas Harned asked about the growth dynamics of the LEAP, CFM56, and CF34 programs and sought details on the company's new engine exchange strategy, including whether it involves building inventory.

    Answer

    CFO Dan Satterfield detailed the unique drivers for each program: LEAP's ramp is focused on process precision, CFM56 leverages existing expertise, and CF34 is benefiting from a wave of engines entering their first major overhauls. He clarified the engine exchange program is an asset-light model that begins with a single engine investment and becomes self-funding, avoiding a large inventory buildup.

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    Douglas Harned's questions to StandardAero, Inc. (SARO) leadership • Q3 2024

    Question

    Douglas Harned questioned if supply chain issues and part shortages have created a bottleneck for the MRO ramp-up. He also asked if the favorable margin impact from lower material pass-through in the quarter was a one-time event or an emerging trend.

    Answer

    CEO Russell Ford acknowledged ongoing supply chain constraints but detailed mitigation strategies, including using serviceable materials and investing in proprietary repair development. CFO Dan Satterfield clarified that the lower material pass-through is not necessarily a trend, as its impact can fluctuate based on the timing of large engine shipments near quarter-end.

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    Douglas Harned's questions to Howmet Aerospace Inc (HWM) leadership

    Douglas Harned's questions to Howmet Aerospace Inc (HWM) leadership • Q2 2025

    Question

    Douglas Harned of AB Bernstein asked about the growth drivers in the industrial gas turbine (IGT) market, the importance of long-term agreements, and how IGT margins compare with commercial aerospace.

    Answer

    Executive Chairman and CEO John Plant confirmed that IGT margins are very comparable to commercial aero margins, causing no dilution from the high growth. He stated that Howmet has secured agreements with three of the four major large gas turbine OEMs and is finalizing the fourth. Plant also highlighted very strong growth in aero-derivatives, driven by demand for data centers, which will be supported by new capacity coming online in 2026 and 2027.

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    Douglas Harned's questions to Howmet Aerospace Inc (HWM) leadership • Q1 2025

    Question

    Douglas Harned of Bernstein asked about the key drivers behind the significant margin improvements in Fastening Systems and Engineered Structures, their sustainability, and the potential upside from a future wide-body production ramp.

    Answer

    Executive Chairman and CEO John Plant explained that the margin gains were driven by a combination of improved process controls leading to higher yields and lower scrap, a positive mix effect from exiting lower-margin businesses, and favorable pricing. He expressed confidence that the high-teens margin for the Structures segment is now 'absolutely solid'.

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    Douglas Harned's questions to Howmet Aerospace Inc (HWM) leadership • Q4 2024

    Question

    Douglas Harned inquired about the significant increase in Fastening Systems' EBITDA margins to nearly 28%, asking if this new level is sustainable or if it was driven by unusual factors in the quarter.

    Answer

    Executive Chairman and CEO John Plant explained that the margin improvement is the result of sustained operational productivity and commercial discipline. He noted that while the positive impact from a richer wide-body aircraft mix has not yet been fully realized, it represents future upside as A350 and 787 production rates increase. Plant concluded that while the pace of margin expansion may slow, further improvements are still expected.

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    Douglas Harned's questions to Howmet Aerospace Inc (HWM) leadership • Q3 2024

    Question

    Douglas Harned questioned the company's production capacity planning and investment profile for both current and new engine airfoil blades.

    Answer

    Executive Chairman and CEO John Plant confirmed that Howmet is increasing investment in its Engine Products segment to meet robust, long-term demand. He explained that modern engines require more frequent shop visits, driving a multi-year need for more spares. The company is working with customers on 5-year demand plans and is committed to adding capacity to meet this uninterrupted growth.

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    Douglas Harned's questions to Huntington Ingalls Industries Inc (HII) leadership

    Douglas Harned's questions to Huntington Ingalls Industries Inc (HII) leadership • Q2 2025

    Question

    Douglas Harned of AB Bernstein questioned the apparent disconnect between HII's significant 20% throughput improvement goal and substantial new funding, versus its more modest 3% shipbuilding revenue growth guidance for the year.

    Answer

    President and CEO Christopher Kastner explained that the revenue guidance already incorporates factors like wage increases, a major ramp-up in outsourcing, and new Charleston operations, most of which will occur in the back half of the year. He stated that while there is potential upside, the guidance is appropriate given the time it takes for these efforts to translate into recognized revenue, and he remains comfortable with the 4% long-term growth outlook.

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    Douglas Harned's questions to Huntington Ingalls Industries Inc (HII) leadership • Q1 2025

    Question

    Douglas Harned asked for specifics on how increased government funding for shipbuilding will translate into a concrete plan to improve production throughput, particularly for the Virginia-class submarine program.

    Answer

    President and CEO Christopher Kastner explained that the FY '24 2-boat contract is the first step, containing targeted investments for workforce, equipment, and facilities to accelerate throughput. He emphasized this is part of a broader, industry-wide effort to build out the industrial base, acknowledging it will take time but expressing confidence that these are the right investments to increase the submarine build rate.

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    Douglas Harned's questions to Huntington Ingalls Industries Inc (HII) leadership • Q4 2024

    Question

    Douglas Harned asked about the key drivers behind the current gap between shipbuilding margins and the historical 9-10% target, questioning the specific impact of inflation versus other operational issues. He also questioned the feasibility of returning to those historical margin levels given the current economic and funding environment.

    Answer

    President and CEO Christopher Kastner explained that inflation's impact is complex and broader than direct costs, affecting supply chain efficiency and workforce experience. He affirmed his belief that returning to a 9% margin is achievable for new contracts, citing the customer's receptiveness to current economic conditions in upcoming negotiations for over $50 billion in awards. He compared the situation to the successful post-Katrina recovery, stressing the importance of negotiating realistic cost and schedule estimates.

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    Douglas Harned's questions to Boeing Co (BA) leadership

    Douglas Harned's questions to Boeing Co (BA) leadership • Q2 2025

    Question

    Douglas Harned of AB Bernstein questioned the feasibility of achieving future 737 MAX rate increases at six-month intervals, asking about potential bottlenecks and the strategic role of the fourth assembly line in Everett.

    Answer

    President & CEO Kelly Ortberg explained the fourth line in Everett will handle the more complex Dash-10 variant, allowing the three Renton lines to flow faster. He expressed confidence that near-term supply is not a bottleneck due to significant buffer inventory. Ortberg stressed that the company will prioritize production stability and will not increase rates if the system 'wobbles.'

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    Douglas Harned's questions to Boeing Co (BA) leadership • Q1 2025

    Question

    Douglas Harned inquired about the impact of tariffs on the aviation industry and Boeing's engagement with Washington to navigate the current tariff environment, seeking insight into how the situation might evolve in the U.S., Europe, and China.

    Answer

    President and CEO Robert Ortberg stated that Boeing is in constant communication with the U.S. administration, emphasizing the aerospace industry's importance to the trade balance. He expressed hope for negotiated settlements but confirmed Boeing is prepared to manage the situation, particularly by remarketing aircraft intended for China to other customers. Ortberg noted that a tariff-free environment is ideal for the entire industry.

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    Douglas Harned's questions to Boeing Co (BA) leadership • Q4 2024

    Question

    Douglas Harned questioned how Boeing is preparing for production rate increases beyond 38 per month on the MAX, focusing on workforce readiness and specific supply chain areas that require attention to avoid future bottlenecks.

    Answer

    CEO Kelly Ortberg stated he is less concerned about internal staffing and more focused on ensuring supply chain readiness, particularly for long-lead items like forgings and castings. He stressed that all rate increases are contingent on meeting stability KPIs and mentioned close collaboration with key suppliers like GE. CFO Brian West added that existing factory facilitization provides flexibility for higher rates.

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    Douglas Harned's questions to Boeing Co (BA) leadership • Q3 2024

    Question

    Douglas Harned from Bernstein questioned how Boeing plans to rebuild its leadership talent and culture, especially with the loss of experienced personnel and an ongoing workforce reduction, and whether this would involve both internal and external hiring.

    Answer

    President and CEO Kelly Ortberg emphasized that culture change starts at the top and is a continuous process. While he believes Boeing has great internal talent, he is open to supplementing the team with external resources to bring in outside perspectives. He clarified that the workforce reduction targets overhead inefficiencies to streamline the organization, not core engineering or production roles.

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    Douglas Harned's questions to Textron Inc (TXT) leadership

    Douglas Harned's questions to Textron Inc (TXT) leadership • Q2 2025

    Question

    Douglas Harned from Bernstein asked about the demand from corporate customers, balancing economic uncertainty against incentives like bonus depreciation. He also inquired about the direction of R&D spending at Bell.

    Answer

    Scott C. Donnelly, Chairman, CEO & President, stated that the net effect on corporate demand is positive, with healthy activity and strong flight hours. Regarding Bell's R&D, he explained that spending is focused on completing the commercial 525 program and supporting the development of the high-speed VTOL program, particularly following the DARPA SPRINT selection.

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    Douglas Harned's questions to Textron Inc (TXT) leadership • Q3 2024

    Question

    Douglas Harned asked about the five-year R&D and CapEx investment profile for Textron Aviation and inquired about the primary supply chain bottlenecks following recent improvement efforts.

    Answer

    CEO Scott Donnelly outlined a strategy of continued investment in a mix of product upgrades and new aircraft, with R&D expected to be stable or a slight tailwind as a percentage of sales. He noted that while parts and labor were key constraints, the company's production ramp plan remains on track for revenue growth in 2025 above original 2024 guidance.

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    Douglas Harned's questions to Northrop Grumman Corp (NOC) leadership

    Douglas Harned's questions to Northrop Grumman Corp (NOC) leadership • Q2 2025

    Question

    Douglas Harned from AB Bernstein questioned why the full-year guidance increase was modest despite strong Q2 margin performance and asked how increased FY26 funding for B-21 and Sentinel would impact future revenue and earnings.

    Answer

    CFO Kenneth Crews explained that the strong operational performance was partially offset by a non-operational item: a higher effective tax rate resulting from changes to R&D tax credit treatment in the new tax reform. Chair, CEO & President Kathy Warden added that the increased funding for B-21 and Sentinel provides a tailwind for 2026, with expenditures expected to be front-loaded and begin as early as the current year.

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    Douglas Harned's questions to Northrop Grumman Corp (NOC) leadership • Q1 2025

    Question

    Douglas Harned asked if the B-21 cost changes would impact the profitability of the next block of aircraft and questioned the source of discussions about increasing the program of record. He also inquired about the international demand pipeline for the IBCS program.

    Answer

    CEO Kathy Warden stated that the next block of B-21s is still expected to be profitable, as the process changes should help, though material costs could be a headwind. She cited congressional testimony for discussions on increasing B-21 quantities and noted strong IBCS interest from about a dozen countries.

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    Douglas Harned's questions to Northrop Grumman Corp (NOC) leadership • Q4 2024

    Question

    Douglas Harned from Bernstein asked for clarification on the new strategic theme for the reorganized Defense Systems segment and inquired about the growth outlook and potential constraints for the rocket motor business.

    Answer

    CEO Kathy Warden explained that the reorganized Defense Systems segment is now focused on strategic missiles, tactical weapons, and command and control, creating synergy across the missile defense life cycle. She added that the solid rocket motor business is growing capacity to meet strong demand from both stockpile replenishment and new weapons programs, with new capacity expected online in late 2026.

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    Douglas Harned's questions to Northrop Grumman Corp (NOC) leadership • Q3 2024

    Question

    Douglas Harned of Bernstein sought an apples-to-apples comparison of the Space segment's backlog change, excluding program shifts, and asked to identify key future growth drivers. He also asked for the expected international sales percentage for the Defense Systems segment.

    Answer

    Chair, CEO and President Kathy Warden explained that the Sentinel program's move to Defense Systems accounts for the major backlog shift. She described the remaining Space backlog as large, diversified, and containing many early-stage programs with significant growth potential. She deferred providing a specific international sales percentage for Defense Systems until the January guidance call, citing the rapidly expanding nature of that business.

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    Douglas Harned's questions to RTX Corp (RTX) leadership

    Douglas Harned's questions to RTX Corp (RTX) leadership • Q2 2025

    Question

    Douglas Harned of Bernstein inquired about the trajectory for Raytheon's operating margins to reach the company's 12%+ goal, considering the mix of fixed-price development programs and growing international demand for mature products.

    Answer

    CFO Neil Mitchill attributed the strong Q2 margin performance to a favorable program mix, with a nearly $500 million year-over-year increase in higher-margin FMS and DCS sales. He stated that new orders are being booked at higher margins that reflect the current cost environment and that the increasing foreign composition of the backlog provides a clear tailwind on the journey toward the 12%+ margin target.

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    Douglas Harned's questions to RTX Corp (RTX) leadership • Q1 2025

    Question

    Douglas Harned questioned why Raytheon's mid-single-digit growth outlook appears low relative to its significant backlog growth, asking about the timing of backlog conversion to revenue and the impact of the 'buy European' movement.

    Answer

    CEO Christopher Calio stated that RTX's strong European partnerships and co-production agreements position it well to capture increased European defense spending. CFO Neil Mitchill added that while the overall segment growth is mid-single-digits, the land and air defense systems business is growing at a strong double-digit rate, offset by expected timing-related headwinds in development programs.

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    Douglas Harned's questions to RTX Corp (RTX) leadership • Q3 2024

    Question

    Douglas Harned of Bernstein & Company noted the strength in Raytheon's missile defense business and asked about the strategy for its more challenged airborne and space systems segments.

    Answer

    Executive Christopher Calio acknowledged that these areas have been more challenged. He stated that RTX is conducting a portfolio evaluation to determine where to invest or potentially divest. He emphasized a strategic focus on playing to the company's strengths, such as space protection and ISR, while avoiding unprofitable business like fixed-price development contracts in difficult domains. He noted that pivoting strategy in these long-cycle businesses will be a thoughtful, multi-year process.

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    Douglas Harned's questions to Lockheed Martin Corp (LMT) leadership

    Douglas Harned's questions to Lockheed Martin Corp (LMT) leadership • Q1 2025

    Question

    Douglas Harned asked about production increase plans for major programs within Missiles and Fire Control (MFC) given its strong backlog growth, and whether the segment could achieve sustained high single-digit growth.

    Answer

    Evan Scott, CFO, confirmed strong demand and production ramps for JASSM/LRASM, PAC-3, and GMLRS. James Taiclet, CEO, added that programs like PrSM, Fleet Ballistic Missile (FBM), and NGI also have strong, long-term growth outlooks, with FBM potentially seeing double-digit CAGR. He emphasized that these advanced missile systems are difficult for competitors to replicate.

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    Douglas Harned's questions to Lockheed Martin Corp (LMT) leadership • Q4 2024

    Question

    Douglas Harned of Bernstein questioned the company's confidence in maintaining the F-35 production rate of 156 aircraft per year, considering potential U.S. budget pressures versus strong international demand.

    Answer

    CEO James Taiclet expressed high confidence in the 156 rate, citing strong U.S. and international demand. He emphasized the F-35's critical role in deterrence against adversaries like China and its unique networking capabilities enabled by TR-3. CFO Jesus Malave added that the aging U.S. fighter fleet, with an average age over 25 years, necessitates recapitalization with the F-35.

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    Douglas Harned's questions to Lockheed Martin Corp (LMT) leadership • Q3 2024

    Question

    Douglas Harned asked for an assessment of the confidence in completing F-35 Tech Refresh 3 (TR-3) in Q4, its interplay with Lot 18/19 negotiations, and the resulting cash flow implications for 2025.

    Answer

    CEO James Taiclet detailed that TR-3 is being managed via software releases, with full combat capability being certified through 2025, making it a timing issue. He described the Lot 18/19 negotiation delay as a separate cash flow timing issue. CFO Jesus Malave quantified the 2024 cash headwind at ~$600 million, which was offset by other working capital efficiencies, and projected a positive cash impact of $300-$400 million in 2025 from higher deliveries and released withholds.

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