Hello. Thank you for standing by. Welcome to Leonardo DRS second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the call over to Steve Vather. Sir, you may begin. Good morning, and welcome, everyone. Thanks for participating on today's quarterly earnings conference call. With me today are Bill Lynn, our Chairman and CEO, and Mike Dippold, our CFO. They will discuss our strategy, operational highlights, financial results, and forward outlook. Today's call is being webcast on the investor relations portion of the website, where you will also find the earnings release and supplemental presentation. Management may also make forward-looking statements during the call regarding future events, anticipated future trends, and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. For a full discussion of these risk factors, please refer to our latest Form 10-K and our other SEC filings. We undertake no obligation to update any of the forward-looking statements made on this call. During this call, management will also discuss non-GAAP financial measures, which we believe provide useful information for investors. These non-GAAP measures should not be evaluated in isolation or as a substitute for GAAP performance measures. You can find the reconciliation of the non-GAAP measures discussed on this call in our earnings release. At this time, I will turn the call over to Bill. Bill? Thanks, Steve, and thank you all for joining us. DRS continues to perform well, as evidenced by the impressive quarterly results we are releasing this morning. We are experiencing steady customer demand across our diverse portfolio of differentiated technologies. As a result, we posted another consecutive quarter of 1.2 book-to-bill. In Q2, there was particular strength for our capabilities in advanced infrared sensing, electric power and propulsion, network computing, and ground systems integration. Additionally, our total backlog ascended to new company records and now stands over $7.9 billion, which is up 82% year-over-year and also up sequentially. The robust demand we continue to experience, coupled with the easing of supply chain constraints, unlocked another quarter of 20% year-over-year organic revenue growth. We also grew our adjusted EBITDA by 32% and delivered margin expansion of 100 basis points in the quarter. Adjusted net earnings and adjusted diluted EPS increased by 21% and 20% compared to last year, thanks to solid operational execution. I want to take a moment to thank the broader DRS team for driving such marvelous results. The team's steadfast focus and our exceptional performance in the first half is prompting us to adjust our outlook for the full year. Mike will walk through the detail of our increased guidance a little bit later on the call. Give you some thoughts on the macro environment. Congress has made preliminary progress on FY 2025 appropriations. However, consistent with prior years, we expect to enter the fiscal year under a continuing resolution. Looking beyond the near term, we believe that the elevated global threat environment will remain as the single most important factor driving defense investment by the U.S. and its allies. Technology advancements are changing the nature of warfare, and our national security strategy remains consistently focused on deterring and, if necessary, contesting near-peer adversaries. Both of these factors reinforce the imperative to modernize. DRS is well positioned to continue supporting our customers as they enhance their capabilities to address new mission complexities. Shifting to supply chain, I made brief mention that improvements on this front are partially responsible for unlocking incremental revenue growth. We have seen a steady and gradual recovery across most, but not all, of our supply chain in year to date, 2024. Additionally, our steadfast and proactive management of the supply chain, coupled with the broader improvement, are resulting in better predictability and delivery timelines, increased component and material availability, as well as improved consistency and quality. Overall, these positive developments are accelerating the pacing of revenue for the year. That said, the revenue step up from the supply chain recovery is expected to be contained to this year, with future growth to be more in line with our previous projections in the mid-single-digit growth range. We believe that we are close to a new steady state with respect to lead times and input pricing, which of course, are both significantly higher than pre-2020. While inflation has been a lessening factor for us in 2024, there are still some stubborn pockets within our business where we are still absorbing higher input pricing. Shifting to our operations, let me highlight a couple of items this quarter. As I mentioned earlier, we are continuing to see strong demand across our broad and differentiated portfolio. In our sensing business, our technologies continue to be well recognized as the go-to standard. This is evident in our outstanding quarterly bookings, as well as the clear long-term opportunity set, bolstered by our customers' modernization push for next-generation technologies. We are also advancing our leading market positions by partnering with commercial players to jointly develop cutting-edge capabilities that meet our emerging customer requirements. As an example, we are actively working to integrate Edge AI processing into sensors. At the same time, our agility and commitment to excellence makes us a partner of choice across the defense ecosystem. We were recently recognized with a Partner2 Win award from our customer, BAE Systems, for best-in-class performance in delivering exceptional capability, quality, and on-time delivery. This award, among many others received over the years, embodies our culture and commitment to ensuring our customers have the very best technology to execute their missions. Our innovation continues to be matched with healthy customer interest, which validates the close alignment of our R&D strategy to future mission needs. You may recall that earlier this year, we unveiled a new family of lasers that cover a wider spectrum of light. These lasers were specifically designed for quantum information science applications. I am pleased to report that we have already secured several orders and continue to gather demand for our state-of-the-art capability in this domain. Additionally, we are seeing considerable domestic and international customer appetite for our multi-domain force protection solutions. Counter-UAS and force protection capabilities remain critical to survivability and operating effectively in today's battlefield. Our tactical radars, advanced sensing, and active protection technologies, as well as our systems integration expertise, continue to be key enablers. I want to briefly mention that in this quarter, we also secured a $417 million contract to provide critical electronic combat control and sonar systems across U.S. and allied Navy submarines. We are pleased that we will be continuing to support the Navy on this important network computing contract for many years to come. This win also provides us with increased visibility into the year as it clears our largest recompete for 2024. Moving to a quick update on our facility expansion efforts in Charleston, South Carolina, we continue to make steady progress, as demonstrated by the ramp-up of CapEx in the quarter. As planned, CapEx will continue to tick up in the second half. Lastly, I want to commend our team in Danbury, Connecticut, for their superb commitment to industrial security. This year, DRS was one of 14 recipients of the Cogswell Award, out of more than 12,500 eligible cleared facilities. This honor now marks our 22nd award, which demonstrates our continued and unwavering company-wide commitment to security. Overall, there is a lot to be proud of, and I am pleased with our outstanding year-to-date results. That said, I am most proud of the team's continued focus on delivering the very best technology to our war fighters. Our talented people, sound strategy, and leading market positions are generating spectacular outcomes for both customers and shareholders. We remain focused on driving sustainable growth, execution, consistency, and prudent investment, all of which are critical components to our long-term value creation formula. Let me now turn the call over to Mike, who will walk you through our second quarter results and revised 2024 guidance in greater detail. Thanks, Bill. I'm pleased with our strong continued momentum. I also want to extend my thanks to the team for executing another great quarter. As Bill mentioned earlier, impressive customer demand and a continued supply chain recovery is driving revenue growth well above our prior expectations. Revenue growth in the quarter was 20% and entirely organic. A sizable portion of the growth stemmed from increases in our advanced infrared sensing, electric power and propulsion, as well as our tactical radar programs. Moving to the segment view, ASC segment revenue was up 22% due to growth in programs related to advanced infrared sensing and tactical radars. Our IMS segment revenue was up 18% year-over-year, with solid performance evident across the segment. Now to adjusted EBITDA. Adjusted EBITDA in the quarter was $82 million, representing 32% growth from last year. Increased volume was the primary catalyst for the 100 basis points of margin expansion in the quarter. At the segment level, quarterly adjusted EBITDA and margin performance continued to be fairly lumpy. The trending is clearer when extrapolated to an annual view. That said, for the quarter, ASC segment adjusted EBITDA increased by 53%, with margin up 230 basis points due to favorable program mix, higher volume, and improved program execution. IMS segment adjusted EBITDA was up 4%, but margin contracted by 130 basis points due to unfavorable program mix and less efficient execution related to a ground surveillance integration program. It is important to note that our Columbia class program continues to trend positively with improved year-over-year profitability. This is evident in the first half compare, where segment-adjusted EBITDA is up 47%, with 140 basis points of margin expansion over last year. Moving to the bottom line metrics. Second quarter net earnings were $38 million, and diluted EPS was $0.14 per share, up 9% and 8% respectively. Our adjusted net earnings of $47 million and adjusted diluted EPS of $0.18 per share were up 21% and 20% respectively. Strong operational execution outweighed the headwind from increased taxes and a higher relative tax rate in the year-over-year compare. Moving to free cash flow. Cash collections were slightly better than last year, with a small free cash generation in the quarter. A great outcome driven by higher net profitability and better working capital efficiency, which more than offset the increased year-over-year CapEx investment. Let me shift to a discussion on our updated guidance. Based on the remarkable first half performance, we are increasing our guidance across all key metrics. We are now expecting a higher revenue range between $3.075 billion-$3.175 billion, which represents a 9%-12% year-over-year growth, all of which is still organic. We have solid visibility for the year as we recently secured re-competes and continued to execute from our sizable backlog position. However, our revenue output will largely depend on the timing of material receipts, progress of labor input, as well as the level and pacing of customer orders. For adjusted EBITDA, the range has also increased and is now between $375 million-$395 million. We are still expecting healthy margin improvement year-over-year, primarily from the Columbia class transition to production, as well as some operational leveraging from higher volume. The implied margin improvement is a little lower than our prior guide, due to less favorable program composition from the increased revenue output, some discrete, less efficient program execution, as well as the lingering impact of inflation in pockets of the business. Overall, we expect both our ASC and IMS segments to contribute to our revenue growth and annual margin improvement. The adjusted diluted EPS range was increased to between $0.82 and $0.88 a share. Embedded in this range are lower expected tax rate of 20.5%, but our fully diluted share count remains consistent with our prior guide at 268 million shares. Lastly, we are still targeting 80% free cash flow conversion of adjusted net earnings for the year. When we think about the likely cadence of the second half, consistent with prior years, it is our expectation that the fourth quarter will contribute strongly to the financial performance of the year. Obviously, a significant portion of the guidance increase is coming from the outperformance in the second quarter. The balance of the increase will manifest primarily in the fourth quarter. As a result, we are anticipating a small step-up in Q3 from Q2, translating to revenue around $775 million, with adjusted EBITDA margin in the low-to-mid 11% range. Our revised 2024 guidance does not change our three-year financial targets. We remain committed to driving mid-single-digit revenue growth annually, albeit from a higher revenue base, while driving towards approximately 14% adjusted EBITDA margin by 2026. Let me wrap up with a few quick closing thoughts. We are pleased with our performance to date and applaud the broader team in achieving these results. That said, we are maintaining a steadfast focus on driving execution to meet our commitments to our customers and shareholders. With that, we are ready to take your questions. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone and then wait to hear your name announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Robert Stallard with Vertical Research. Your line is open. Thanks so much. Good morning. Morning, Rob. I've got a couple for you. First of all, I was wondering if you could elaborate on these, what I think you call them, efficiency issues, in the IMS division, in the quarter, and whether you're expecting them to continue going forward. Mike, why don't you go ahead? Sure, yeah. So, Rob, this is a program; it's a land integration program that we have within the IMS segment. It's a program that's a handful of years old, and we had anticipated kind of closing it out this year. We've had some delays that we've had in the program testing and completion of the program, which has extended it out a bit. And that's really what the headwind is. We believe that this is, you know, at the 10-yard line; we can see the light at the end of the tunnel here. It's just taking us a little longer and a little more cost to complete than we had previously anticipated. So, I believe it's contained to 2024. I don't think it'll impact anything in the long term, but it is a headwind we're dealing with for the current year. Okay. That is a follow-up. It sounds like the overall supply chain situation is getting better, but I was wondering if you could sort of contrast, you know, where it's got better than most perhaps, and where there is still some work to do. Yeah, yeah, as I said in the opening comments, Rob, we are seeing a better environment, both in terms of the supply chain, the market itself. The lead times have come down. Availabilities are up. We are not, though, back to or anywhere close, really, particularly in things like electronic components to the, you know, pre-2020, pre-COVID timeframe. The other factor in this is we are much more heavily managing the supply chain than we did in the past. Obviously, like everyone else, we've moved away from just-in-time delivery and are looking at resilience in the supply chain. And I think part of the improvement we saw this year was that proactive management. Okay. And then just a final one for me, one for Bill, probably. Looking on the sort of funding outlook for the DoD, and obviously the political uncertainty we have later on this year, I was wondering on what sort of risk DRS might have if the Ukrainian supplemental were to be zeroed, and what sort of offset perhaps there could be from European demand? Thank you. Yeah, I mean, I think, Rob, overall, I think the change in administration, either to Harris or Trump led is gonna have a modest impact on the defense budget because the threat they're dealing with is the same. You know, the pacing threat is still China in the Pacific, the immediate threat is still Putin in Ukraine. I do think you highlight the biggest difference between a Democratic and Republican White House would be how they've talked about Ukraine. I wouldn't. I'd be a little surprised if you saw an abrupt ending of Ukraine spending. Most of it's backfill for U.S. equipment at this point, rather than direct transfers to Ukraine. So I think you'd probably see, you know, less of that under a Republican White House than you would under a Democratic. But I think it would be a gradual change. That's great. Thanks so much. Thank you. Please stand by for our next question. Our next question comes from the line of Seth Seifman with JP Morgan. Your line is open. Hi. Yes, good morning, Bill, Mike, and Steve. This is actually Alex Ladd on for Seth today. First, kind of wanted to dig more into, you know, the change in the outlook that we saw for adjusted EBITDA margins. You know, I think if you take the midpoint of the sales and adjusted EBITDA guides, it implies a step down to 12.3 margins for the year. You know, certainly get that there's a stronger sales outlook, but, you know, it seems like the release and kind of your prepared remarks earlier imply that, you know, there's a bit of a less, a bit of less drop through and a less favorable mix and some program execution headwinds are kind of driving this. So, you know, I was wondering if you could kind of provide more color on this. You know, I'd assume, given the margin improvement that you're expecting from Columbia in the second half, you know, it's not related to that, but maybe if you could kind of, you know, highlight more specifically, you know, what types of programs we should be driving this. Yeah, let me open and then turn to Mike for some more detail. You're right. We're now projecting about an 80 basis point improvement year-over-year from 2023- 2024. That's still a substantial improvement. It is strongly driven by the Columbia program, and the contract transition is each year we get a better contract mix and with better profit margins, and that continues to happen. The headwinds that we identified are the program, the surveillance program that we're closing out this year more slowly than we had expected. In addition, the revenue increase, the mix of the revenue increase is towards the lower end of our margin portfolio, so there's a mix issue. And then we are still seeing some pockets of inflation. Still about a third of our contracts are priced under overinflation assumptions, and so we're still carrying some of that. We expect this to be the last year of that. Mike, why don't you add on to that? I think you covered it pretty well. I'll just answer the latter part of your question, which was on the kind of H2 outlook. So we do expect to see a little tick up in the profitability in the second half to drive us to the guide range that we just put out, and that's gonna be driven by the Columbia. And as Bill mentioned, as we start to execute on the later ship sets, they will come with a higher margin, and you're gonna see even an in-year shift as we execute that program in the second half of the year. Great. Thanks. That's helpful. And then, you know, maybe as a follow-up, you know, obviously, you know, sales growth was pretty strong in the first half at about 20%. Appreciate, you know, the sales guide being up more towards the double digits. But I think, you know, and I think you also pointed to Q3 being up a little bit year-over-year, so that kind of implies, you know, a pretty decent decline in the fourth quarter. You know, just thinking about the company, you know, having a book-to-bill above one, you know, the growth you guys are seeing in the backlog and the general strength we're seeing in the demand environment, you know, it seems like there could be some opportunity for upside. So curious if you kind of, you know, level set us on this, and you know, how we should think about that progression maybe in Q4 a little bit more too? Yeah, I think the one factor you missed there, Alex, is the improved linearity that we're experiencing this year. This has been a drive we've had. So when you're looking at year-over-year comps, the easier ones are in the front end of the year, and the tougher ones are in the back end because of the math of the increased linearity of 2024 versus 2023. It is still driving to that 9%-12% year-over-year increase, which we do think is a strong year. Okay. Thank you. That's very helpful. That's all from me. Thank you. Please stand by for our next question. Our next question comes from the line of Andre Madrid with BTIG. Your line is open. Bill, Mike, Steve, good morning. Thanks for the question. I, I wanted to start off talking a bit more about the, South Carolina facility. I mean, have you guys already started thinking... I mean, when you look more broadly just at the naval supply chain, skilled labor's been really hard to come by. You see this across some of your small cap peers as well. I mean, have you guys started to consider what recruiting will look like, for this eventual facility once it's actually, rolled out? Yes, we have. And in fact, the placement in South Carolina was intentional in that we think we have a strong pool of potential employees there, and importantly, it's out of the catchment area of the two big yards, the two nuclear yards, Newport News and Electric Boat. In terms of broadening the submarine industrial base, that is one of the things we wanted to do, the Navy is supportive of this, is to broaden the geography of that submarine industrial base. So we think we have a strong pool of employees, and we are starting where we've obviously broken ground, and we're about, I think, a quarter of the way through the build cycle for Charleston. And as we ramp up, and we get closer, we'll start even stronger recruiting efforts to bring in a talented workforce. Understood. Understood. Thank you. And, if I could follow that up, still on the, naval front. I mean, we look at Columbia class, the ramp there is pretty well underway. I mean, what other opportunities for power and propulsion do you think are available moving forward? I know DDG(X) was supposed to see supplier down selection, earlier this year, but I think that got pushed out. Is there any other color there? Yeah, I mean, I think the, Andre, you ought to think of over kind of the mid- to long-term, think of three buckets of opportunities for DRS in the propulsion area. One is DDG(X), you mentioned, but even more broadly, other classes of ships, DDG(X), SSN(X) are the two most prominent. We do think there's a very strong case to put the electric power technology on those new classes of ships, both because operationally, it's quieter, which is important in a war-fighting sense. It is cheaper in terms of the operating costs because of the lower fuel costs. And probably most importantly, the power demands of ships going forward are gonna increase by several multiples. And it'll be very difficult. And that's driven by not just the propulsion system, but by the sensor suites, which are taking increasing amounts of power. And ultimately, when you're looking at 30- 50 year lives for these ships, you're looking at directed energy being part of the equation, and the power requirements for directed energy are substantial. All of that drives you towards electric power as the choice here on power propulsion. So we think that there's a strong case in the mid to long term for those. The second basket is international opportunities. We've talked about the Korean one. No, we don't have a decision on that yet, but we do think that that's just the leading edge of international opportunities. International navies, just like the U.S. Navy, is looking strongly towards electric power. And then the third basket of opportunities is for us to get increased content on existing programs as we look at expanding the submarine industrial base and realigning the work between the yards, who will be dedicated to producing more submarines faster, and the supplier base, which will be looking to do more of the content on each submarine to allow that increase throughput. So we think there's strong potential in this market area coming from those three baskets. That's very helpful color. If I could just squeeze in one more. Sure. What would some of that increased content look like? I mean, are you able to break that down, or, or is that a little too granular? It's probably a little too granular at this point because we're, you know, under negotiation. We've talked about the way we've set the Charleston facility up is that it's the initial phase, is the business case is justified just based on the contracts we now have for Columbia that go all the way through the 2030s. That visibility gave us the business case to invest in greater efficiency and capacity to execute that work in a better way. But there's a second phase that we could bring work in, in a number of types, as you into that facility with investment from the Navy, in this case, to expand that submarine industrial base. But the... I can't really give you much of specifics in terms of the exact content of that expansion. That's what we're discussing now with both the shipyards and the Navy. Very helpful. I'll, I'll jump back into the queue. Thanks. Thank you. Thanks, Andre. Please stand by for our next question. Our next question comes from the line of Mariana Pérez Mora with Bank of America. Your line is open. Thank you. Good morning, everyone. Morning. Morning. So you mentioned in the prepared remarks, a lot of developments to actually implement AI, quantum, and cybersecurity to the edge. Could you please describe how are your investments there? How much of those are, kind of like customer R&D versus your own R&D? And which specific arenas you're seeing the opportunities for this? It's like the traditional Navy and Army, or you actually have the way to get into unmanned air or space? Yeah, it, there's a lot there, Mariana. On the AI front, the focus of the investment is, how do you bring better processing to the edge and then basically improve the capability of our sensors? And by sensors here, I mean both our ground-based vehicle sensors as well as our space-based sensors. We use AI processing, and you push it to the edge, and that, we think, will improve performance. And the investment there is a mix of us. It's teaming with some commercial companies. As you know, a lot of the AI expertise lies on the commercial side of the industrial base, and we found some partners there. With quantum, our entry point into quantum is really through lasers. You need a photonics engine to be able to do quantum computing and sensing. And we have some of the best laser capability in the world at Daylight Solutions. And so we've been doing some IRAD to develop that capability, and now we're getting some co-investment from customers, and we're getting some initial orders and contracts that are starting to help finance. We're still in the early stages of quantum, but we're also in the early stages of our participation in quantum. But we think that photonics engine has enormous potential. Thank you. And the other one is about Columbia. In their earnings call, General Dynamics mentioned that they are seeing some progress in the shipyards. I'm curious if you're seeing something of that progress to spill over your work, or, and then, what are the key milestones that we should be looking at as outsiders to see if the progress towards production? Yeah, I think the important thing for us to realize with DRS is that we did get the entirety of the contract let to us last year for all 12 ships, as to maintain the continuous production. So we're a little disconnected from any comments that GD makes there, 'cause we are executing on the existing standalone contract. We continue to progress well there. I think maybe because of my financial seat, I think the indicator is gonna be the continued margin expansion, as you see that we're continuing to hit those milestones and execute effectively. Thank you very much. Thank you. Thanks. Please stand by for our next question. Our next question comes from the line of Sam Struhsaker with Truist Securities. Your line is open. Hi, good morning. Can you guys hear me all right? Yep. We can. Sam from Truist this morning. Thanks for taking the question. I was wondering if you guys could maybe give a little bit more detail on the upper revision for revenue. Could you potentially break that out, kind of maybe if the drivers, where the drivers are between the two segments, IMS and ACS? And then in addition to that, looking at the mild margin pressure for the year, how should we think about kind of the trajectory of margins in the second half? Mike, why don't you take that? Yeah. So let me start with the first half on, on the revenue, side, and on the top line side. We are seeing a, a pretty holistic, demand push across both segments. So we're, we're feeling good, about our backlog position and therefore, our ability to deliver revenue growth, out of both segments. And I think you're gonna see, you know, a similar, trend as we end up, that both, segments will contribute fairly equally to the, to the revenue growth, for DRS for the year. On the margin side, I would also say that, that both segments are, are executing in a similar fashion in which they will both contribute to our margin expansion year-over-year. And that's kind of the expectation we walked into the year with, and it's still kind of what we're holding, even with the higher revenue output. Okay, that's great. And then, so I guess it's just that one program really that you guys are seeing kind of some pressure on. Is there anywhere else that you're seeing any issues, or is that really just kind of isolated to that one program? Yeah, we're 85% firm fixed price, so there's always some opportunities that there may be some risk. I think what we've done well as a management team is to make sure that we're identifying risks early, understanding the mitigation of those risks, and maybe equally as important, identifying opportunities. So as we look forward, yes, we have some fixed price development efforts, but we also have an incredible balance between our risks and our opportunities. And that's really what underpins our confidence that we're gonna be able to execute effectively and then deliver on our EBITDA margin commitments all the way through 2026. Okay, great. And then just one final follow-up, if I could. On the CapEx for the South Carolina facility, should we expect a pretty steady increase or ramp on that, or is there kind of a peak and then ramp back down with that trajectory that we could think about? For the remainder of the year, I would expect to see, you know, kind of the CapEx commitments looking pretty similar to Q2, with a slight ramp up, as we get into the latter Q3 and into Q4. So I think you'd see a gradual step up, and that's the expectation that we have in terms of the cadence of the execution of the South Carolina facility for the remainder of the year. Great. Thank you very much, guys. Thank you. Thanks. Please stand by for our next question. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Your line is open. Hi, good morning. Thanks for the questions, and great, great quarter and outlook. I was wondering if you could talk a little bit more about the long-term expectations for defense spending, maybe split between domestic and international, and kind of ex the Ukraine supplementals. It seems like there's been a push to, to, you know, grow defense spending at the DoD, you know, at a, at a higher percentage than it's been in the past. Broadly, you're seeing that among allied nations as well. How does that factor into your long-term growth expectations, if it's any different from what you've presented at the Investor Day or before? Thanks, Jon. I don't think it's different than what we presented at the Investor Day, but there we did talk about that at this point, the international environment, broadly speaking, is growing faster than the U.S. defense budget. And we are seeing that in our revenue mix. You know, we've doubled to about 10% our international revenue over the last 3 or 4 years, and we're still on that trajectory of increase. We do think we'll see an increase this year in our international and it and projecting forward. So we think that environment that you talked about where, you know, Europe is increasing and going for that two, and now, you know, U.K. is talking about 2.5% of GDP. And similarly, in Asia, you're seeing, you know, strong increases in Australia and Japan, and that gives us, I think, opportunity to further increase the international content of our revenue base. Okay, great. Thank you. Any updates on capital allocation, and specifically M&A? We've seen some really attractive assets go for, you know, reasonable to high multiples, and I'm wondering if, if that, you know, if you're getting a look at those deals or if you're seeing more opportunities. We have been seeing more opportunities. We've been quite active in diligence over the past six months. We don't have anything to announce, but we continue to see opportunities in the four core markets that are our strategic framework and where we would wanna do any kind of M&A. We continue to have the strict financial criteria, and we evaluate them against this. But as I said, we are seeing opportunities. We're prudent, but we do think we will be able to execute on an M&A strategy over the near to midterm. Okay. And if I could squeeze one more in: Any update on just what your parent, Leonardo's, Leonardo is doing? You know, they've been active in M&A markets as well. You know, on our M&A, we have a shareholder agreement where we consult closely with them, and we're aligned in that, you know, they're a 70% shareholder, so any increase in value drops directly into their share price. So, we're aligned on what we're looking for, and we participate with them. Okay, thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Jan-Frans Engelbrecht with Baird. Your line is open. Good morning, Bill, Mike, and Steve. I just had a question on, on force protection. It's clearly seeing significant demand headwinds, especially, I would imagine, in the Middle East. I was wondering if you could just highlight the 2024 growth outlook for that specific end market, and then if there's any milestones or programs that we should look out for late in 2024, heading into 2025 in force protection specifically. Yeah. No, I think you've got the underlying market dynamics right. The conflicts in Ukraine and Israel have highlighted the importance of organic force protection, that, you know, we've returned to a world where there are air threats, and that those air threats have been exacerbated by the advent of drone technology, which extends even to the, you know, the lower end of military capabilities, they're still able to put drone threats in the air. That all has made our decision to invest in the Army Short Range Air Defense, the counter-UAS, the active protection. We're seeing growth in all of those. I think we mentioned it on an earlier call, but the Army has doubled the force structure that they've this year that they dedicate to short-range air defense. They went from 4- 9 battalions. That's even as they shrunk the force structure. So they have fewer assets, but they're devoting a higher proportion to the mission of short-range air defense. And we are also starting to see international demand. We were able, I think, to enable help that demand by developing a single vehicle solution for the counter-UAS, which makes it more operationally efficient and lowers the price point, make it more competitive in the international markets. So, I mean, overall, I think in this area, the trends are very positive. Thanks, Bill. That's really helpful. Just a quick follow-up, I guess, also sort of high level, but we've seen this growing trend or call, I guess, from the industry for the need for interoperability between, the U.S., you know, NATO, allied nations, in terms of weapon platforms. Is there any opportunity that you guys are targeting? I know it's early days, but maybe, I would think top of mind would be sensors or anything like that. Anything that you can comment, maybe on the longer term there? Yeah, I mean, you know, frankly, that's always been there. I mean, obviously, you know, NATO alliance is just celebrated 75th anniversary. So, then we have close alliances in, you know, in Asia as well. So that's always been there. I think you're right. It's been, you know, re-emphasized with some of the conflicts we face and with the threat of China. Where we see it, yes, sensing is one area where we see people. I would say even more, you see it on computing and communications. And we do the battlefield computing for the U.S. military, and we do see international opportunities for that. We already sell it to the U.K. It is part of some of the foreign military sales of vehicles to Eastern Europe. So there's a dynamic there that, you know, basically, if you're, particularly if you're buying U.S.-sourced vehicles, there's certainly an incentive to put the same network computing, one, because it's integral to the vehicle, but two, that does give you that interoperability that you suggested. Great. Thanks, Bill. Congrats on a good quarter. I'll jump back in the queue. Thanks. Thank you. Please stand by for our next question. Our next question comes from the line of Kristine Liwag with Morgan Stanley. Your line is open. Hi, this is Justin on for Kristine. Thanks for taking the question. Hey, Justin. I think, I think, you know, a lot's been covered already, but maybe just a quick one on ASC. I think last quarter you mentioned mix was shifting from development to production over the course of the year. I guess how much of that shift manifested here in Q2 results? And is it still fair expectations for further tilt towards production-type work in the back half, for the segment? Thanks. Yeah, I think you're spot on with your assessment. We are starting to see some of those development programs move into production, and the production efficiency is improving on those programs, which has certainly helped in both the revenue growth as well as the margin. So, I would expect to see that trend continue into the second half of the year. Okay. I'll stick to one. Thanks. Thank you. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Steve for closing remarks. Thank you all for your time this morning and your interest in the company. Of course, if you have follow-up questions, please don't hesitate to call or email me. Look forward to speaking with all of you again soon. Enjoy the rest of your day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.