Ladies and gentlemen, good day and welcome to the Leonardo DRS Third Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the company's prepared remarks, there will be an opportunity to ask questions, and instructions will be given at that time. As a reminder, this event is being recorded. I would now like to turn the conference over to Steve Vather, Senior Vice President of Investor Relations and Corporate Finance. Please go ahead. Good morning, and thanks for participating on today's Quarterly Earnings Conference Call. Joining 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 a 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. Good morning and welcome, everyone, to the DRS Q3 Earnings Call. We are pleased with our strong third-quarter performance and the continued momentum in the year to date. Our performance exemplifies the entire team's tenacity and dedication. Their steadfast focus in delivering critical technology for our customer is also translating into excellent outcomes for DRS shareholders. I want to express my thanks to the team for their incredible efforts and commend them on their impressive accomplishments to date. Our quarterly results reflect steady customer orders, solid revenue growth, profit expansion exceeding our top line, and improved free cash flow generation. Healthy customer appetite across our differentiated portfolio drove a book-to-bill ratio of 1.3 in the quarter. Demand for our naval network computing, electric power and propulsion, force protection, and advanced infrared sensing technologies were key contributors to our $1.1 billion of bookings for Q3. As a result, backlog marched higher both on a year-over-year and a sequential basis. Quarterly revenue growth was 16% over last year. We also grew our adjusted EBITDA by 22% and delivered margin expansion of 60 basis points in Q3. Lastly, adjusted diluted EPS was similarly propelled by strong operational execution and up 20% year-over-year. Shifting to the macro environment, as we expected, our customers began FY25 under a short-term continuing resolution, which currently lasts through December 20th. We do not foresee much of an impact in 2024 from this CR. That said, we are hopeful that Congress passes appropriations in a timely manner to provide our customers with the necessary funding clarity, which is especially important in light of the increasingly complex and elevated global threat environment. Irrespective of the outcome of the election next week, we believe that the robust threat environment will require higher and prolonged U.S. and allied defense investment. Our diverse and platform-agnostic portfolio remains well-positioned to meet our customers' most challenging mission needs. Shifting to operations, our business continues to enjoy broad-based success, as evidenced by the healthy customer demand and innovation milestones achieved this quarter. Let me review a couple of noteworthy items. First, our strategic rationale for acquiring RADA nearly two years ago continues to be validated, and the business has performed well. The urgency and imperative to protect people and platforms from proliferated airborne threats has only increased. Today, effective air defense is being achieved through a greater quantity of capable and distributed tactical radars versus the traditional, more centralized model. This is similar to what is happening in space with the shift to low Earth orbit satellites for missile tracking and detection missions. Our tactical radars are being deployed for a diversity of close-in and short-range air defense applications against drones, missiles, and other airborne threats. The global threat environment has reinforced domestic and international interest for our multi-mission tactical radars, which is reflected in our bookings and growth. We are also experiencing robust customer demand, which is reflected across our portfolio. In the quarter, we continued to build on our multi-domain positions in the advanced infrared sensing and network computing markets, with several sole-source contract awards for follow-on work. One of these contracts includes a $235 million production contract award for naval radars deployed on U.S. surface combatants. In addition to fortifying our leading market positions, we are successfully penetrating logical market adjacencies. I am pleased to report that we secured new contract awards to provide customers with our cutting-edge over-the-horizon radar technology. This marks an expansion of our radar portfolio into new sensing modalities for more long-range and sophisticated threats. Additionally, we are seeing our infrared sensing capability expand into small tactical drone applications. We look forward to further building on these initial footholds and others in the years to come. Across our business, we are working with strategic partners that share our spirit of innovation and agility. Just a few weeks ago at AUSA, we unveiled a directed-energy counter-drone capability. This Stryker-based solution adds to our suite of Force Protection solutions and integrates a new threat defeat mechanism to our proven portfolio. I am incredibly proud to note that in as few as eight months, DRS and its team designed, developed, and tested this capability to successfully down Class I, II, and III drone threats at a distance. Our ability to address challenging customer mission requirements and go from concept to operational and production-ready capabilities in a rapid manner sets us apart from the competition. Sticking with innovation, we are advancing the integration of AI into our sensing solutions. In close collaboration with our partners and customers, we recently developed and tested an AI-aided target recognition capability on multiple platforms. Lastly, in our electric power and propulsion business, we remain on track and are making steady progress on the new facility down in Charleston, South Carolina. I also want to highlight that we are performing well on our portion of the Columbia Class program. We are delivering to our customers with quality and on schedule. From a financial perspective, we are also seeing the incremental benefit of shifting further into production and executing out of the more attractively priced shipsets. Overall, we are pleased with the strong momentum evident in our year-to-date results, which lays a strong foundation to close out the year. Disciplined adherence to our strategy and rigorous operational execution are fundamental to our long-term success. As I look forward, I'm excited that our agility, innovation, and talented people are sharpening our market-leading positions. With that, let me turn the call over to Mike, who will walk you through our financials in greater detail. Thanks, Bill. Let me also offer my congratulations to the broader team in delivering another solid quarter. Revenue growth in the quarter was 16% and completely organic. Impressive customer demand and favorable timing and material receipts pushed revenue above our expectations. Our programs related to advanced infrared sensing, force protection, and tactical radars were key tailwinds to growth in the quarter. From a segment perspective, ASC revenue was up 24% year-over-year, bolstered by growth from programs in advanced infrared sensing and tactical radars. IMS revenue was up modestly at 3%, aided by increases to our force protection programs. Now to adjusted EBITDA. Adjusted EBITDA in the quarter was $100 million, representing 22% growth from last year. Increased volume was the primary driver for the 60 basis points of margin expansion generated in the quarter. Shifting to the segment view, ASC adjusted EBITDA increased 33% with a margin of 90 basis points due to favorable program mix, more efficient program execution, and higher volume. IMS adjusted EBITDA was up 6%, and margin expanded by 30 basis points on higher volume and slightly improved net program execution across the segment. Onto the bottom-line metrics. Third-quarter net earnings were $57 million, and diluted EPS was $0.21 a share, up 21% and 17%, respectively. Our adjusted net earnings of $64 million and adjusted diluted EPS of $0.24 a share were up 21% and 20%, respectively. Crisp operational execution eclipsed the higher tax rate and expense in the year-over-year compare. Moving to free cash flow, cash collections were significantly higher than last year, fueled by increased net profitability and more efficient working capital. Next, let me review our increased 2024 guidance. Our remarkable year-to-date performance has unlocked a path for higher annual growth across all of our key metrics. Starting with revenue, we are now anticipating 11%-13% year-over-year growth, which is reflected in the revised $3.15-$3.20 billion range. With one quarter remaining in the year, we have fairly clear visibility on the drivers and sources of revenue. The variability in the range will largely rest on the timing of material receipts and, to some extent, the progress of labor inputs. The implied fourth-quarter revenue is a tough compare due to the fact that we anniversary the benefits from discrete improvements from our supply chain that began in Q4 2023. Our increased adjusted EBITDA range is now $387-$397 million. The revised range maintains healthy year-over-year margin expansion driven by the Columbia Class transition to production, as well as operational leverage from higher volume. Additionally, we still anticipate both ASC and IMS segments to contribute to annual revenue growth and margin improvement. Next, our adjusted diluted EPS is now anticipated to be meaningfully higher with a revised range between $0.88 and $0.91 a share. The new range reflects a lower forecasted tax rate of 19%. However, our fully diluted share count is static from our prior guide at $268 million. Lastly, we are still targeting approximately 80% free cash flow conversion of our adjusted net earnings for the year. Moving briefly to 2025, I want to offer a preliminary guidance framework to calibrate your thoughts with what we are seeing materialize in our internal forecast. Currently, we are projecting 5% to 8% revenue growth off of our revised 2024 midpoint, with adjusted EBITDA margin at approximately 13%. Consistent with past practice, we plan to establish more formal guidance in conjunction with our fourth quarter and fiscal year 2024 call in February. Let me wrap up with some closing thoughts. As we quickly approach two years of being back in the public markets, we are pleased with the way the business has performed and our positioning for the future. The well-earned success we have enjoyed over the past few years is a direct result of the team's unwavering commitment in delivering excellence for customers and shareholders. We look forward to continuing executing on our strategy to unlock incremental value. With that, we are ready to take your questions. Thank you. At this time, we will begin the question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Peter Arment of Baird. Please proceed with your question. Yeah, good morning, Bill, Mike, Steve. Nice results. Hey, Bill, maybe if you could just start, we could start with kind of the force protection demand, how that has changed. It seems like it's materially ramping up in whether that's going to require more CapEx in the future or whether you can handle it within your existing facilities. Yeah, thanks. Thanks, Peter. I think force protection is something that was driven as the U.S. changed its strategy in the latter part of the last decade to focus more on peer competitors. So we're now going against threats, Russia and China, that have obviously significant air forces. At the same time, the drone threat across the threat spectrum has grown. I think all of that started a move up in force protection. And frankly, we got ahead of that with SHORAD and counter-UAS. And then you had Ukraine, which highlighted on some dramatic YouTube videos just exactly what that need for organic force protection was, that you couldn't go with the old system of defending at the perimeter. Each unit, even sometimes each vehicle, needs force protection. So I think those overall trends have driven now the Army to expand its force protection, expand its SHORAD and short-range air defense and counter-drone, the numbers of units, the number of troops devoted, even as they've shrunk the force structure overall. In terms of facilitation, we built a new facility in St. Louis a couple of years ago as part of this force protection expansion. So we're not seeing right now a need for more CapEx in that area. Got it. I appreciate that. And then just on the naval shipyards, what are you seeing in terms of the supply chain there? I know you're obviously going to benefit from setting up a facility in Charleston, but what's the latest on kind of the outsourcing or the efforts that are going on there? Our efforts on Columbia really have more to do with insourcing than outsourcing. Part of the reason to build Columbia is to pull, since we now have a contract that goes out more than a decade, it lets us develop a more efficient delivery mechanism of that revenue, which involves pulling some of the work inside. That was the whole reason to build that South Carolina facility. That's going to drive a more efficient production line and higher margins. Yeah. And just lastly, just your commentary about 5%-8% kind of top-line growth in 2025, just that assumes a CR gets resolved. And any other kind of key points that you want to highlight that underwrites the growth there? Yeah, I'll take that, Peter. I think, as we've discussed in the past, a CR has become kind of commonplace here for the industry. That is pretty much baked into our guide. We have a lot of the revenue coming through in 2025 that's coming out of backlog. And the majority of the remainder that's not coming out of backlog is on program continuation. So not too much in terms of a headwind from an extended CR, but that's how we're viewing the 2025 guide, Peter. Appreciate all the details. Thanks, guys. I'll jump back in the queue. Thank you. Our next question comes from the line of Robert Stallard of Vertical Research. Please proceed with your question. Thanks so much. Good morning. Morning. Morning, Rob. Bill, I'll start with you. First of all, on the Columbia Class program, General Dynamics had some pretty conservative comments about submarines as a whole the other day. And I was wondering if you see any sort of indirect risk to your schedule and financials on the program due to problems elsewhere? Not at this point, Rob. I mean, they've segregated out the contract we have for the propulsion system. And frankly, we now have a contract that goes out a decade. We're actually ahead of the yard, the shipyard, in terms of the contracts they're getting from the Navy. And the intent there was to insulate that critical component from schedule variability based on other components. And I think that is proving out at this point. Good. And then to follow up on Peter's question about your 2025 framework, the 5%-8% range is fairly big. What might put you at the low end or the high end of that revenue growth range next year? Yeah, our range is always going to be moderated by the supply chain and the availability of material, and when the material becomes kind of in our pocket in order to execute the program, so that's always the biggest driver of variability. The other will be some pacing of the timing of the awards that we receive on the portion that is a book-to-bill, but those are the two things that typically will swing us within the range, Rob. Okay, and then just a final one from me again for Bill. On capital deployment, nothing to report since three months ago, I suppose, but I was wondering if you are seeing anything of interest on the M&A front out there. We are, Rob. M&A remains our priority, and we have seen an uptick in volume. We are seeing actionable opportunities in those four core markets that we've talked about: advanced sensing, naval power, force protection, and network computing. We're very active in terms of diligence. As you said, nothing yet to announce, but we are seeing that uptick in volume and actionability. That's great. Thank you very much. Thank you. Our next question comes from the line of Michael Ciarmoli of Truist Securities. Please proceed with your question. Hey, good morning, guys. Thanks for taking the question. Really nice results here. Maybe just to kind of stay on Rob's line of questioning, I guess, Bill or Mike, on the 2025, 5%-8% growth, you've obviously got this 2026 framework calling for 4%-7%. You're going to outgrow that two years in a row. I mean, it seems like there's definitely some upward pressure to that 2026 kind of implied target you put out there. But I guess, is there any reason we should think about any kind of material deceleration? Can you kind of, we're obviously seeing a lot of force protection demand. Can you frame up if any of this is a little bit shorter-term in nature, maybe up tempo driven from the Middle East or from Ukraine? I know you kind of went through the puts and takes on 25, but if these wars come to a close, does that have any implications on sort of this longer-term view? Ukraine has not been, in terms of direct sales to Ukraine, it hasn't been an overwhelming impact to us. So you're sitting there in 2024, think about 2%-3% of our sales is being delivered to Ukraine. So I would say that that has a limited impact. I think more importantly, as you look at, is one, we are increasing the growth from 2025, from that 4 to 7 to 5 to 8 that we came out with. It is going to be on a higher base from the 2024 result as we've picked up 2024 as well. So we feel good about that growth. I think the mid-single is still where we're going to be prospectively. But we feel good about that growth given the budget backdrop and where we are. Got it. Okay. And then just on the Counter-UAS systems, it sounds like I think you called out the Stryker option. Is there a potential opportunity for you guys to participate in the Replicator 2 initiative? Is that sort of a target program for what you guys are working on? Replicator 2 hasn't quite gotten to our Counter-UAS efforts. Yeah, I guess it's a big DoD initiative. It could move in different directions. But right now, it was the drive, the need driven by Ukraine and the force structure increases that the Army has been making, plus the technology development. We did just show the directed-energy version that we developed, I think, as I said, in about eight months for the Army. I think it's those technological developments as well as the force structure increases and the threat that's driving it less than a specific department initiative through Replicator. Got it. Got it. And last one, just on Columbia Class, I think the plan was to start ship set three. Are you guys on to ship set three now? Yeah. Yes, we are, and we're proceeding pretty much along that schedule that we laid out, so everything's going on time and on schedule. Perfect. Thanks, guys. I'll jump back in the queue here. Thank you. Our next question comes from the line of Seth Seifman of J.P. Morgan. Please proceed with your question. Yeah. Thanks very much, and good morning. Good morning. Morning. So just wanted to ask the margin, EBITDA margin rate step up that's embedded in Q4. I guess we'll see some of that, I assume, on leverage on sales and Advanced Sensing and Computing, just given the kind of seasonal strength in the fourth quarter. And then first, so I guess that's the first part of the question. And then the second part for IMS, it seems like is there anything about Columbia, a step up or a milestone that's anticipated in the fourth quarter that kind of drives up the profitability? Yeah. So I'll take this. If you're talking from a profitability perspective, sequentially, if you look from Q3 to Q4 based on the kind of math from the revised guidance, you're right. We period expense G&A, the volume is going to drive the drop-through. And that's what gives us confidence in the margin. If you're comparing to the prior year where we had a similar revenue output, you're seeing about 100 basis points of tick up from a marginality perspective. That's really driven from two aspects. The first is mix. And when I say mix here on the ASC side, you're talking predominantly the tactical radars. And then maybe more importantly, on the IMS side, it is the Columbia where we're seeing not necessarily a milestone, but you're seeing the revenue moving towards the later ship sets and having a higher proportionality of the revenue coming from those higher-priced ship sets. And that's what's driving the profit expansion. Right. And so to the extent that that's not like a milestone, but just a mix change, does that become something that's kind of ongoing? I guess we won't see that fourth quarter level of volume as we go into the first quarter of 2025. That's correct. That's exactly correct. So you won't get the volume benefit, but the margin should be there. And that's what's going to bridge us to our multi-year target of driving to that 14% marginality. Right. Okay, and then maybe to follow up a little earlier about the M&A question and just a lot of cash coming in in the fourth quarter, obviously, to the extent that there are opportunities out there, does it become time at some point to think about other options for the balance sheet? Yeah. I mean, so our priority remains M&A, but that's our highest priority, but it's not our only one. So we will look at other ways of returning cash to shareholders as well as M&A. Okay. Very good. Thanks very much. Thank you. Our next question comes from the line of Jon Tanwanteng of CJS Securities. Please proceed with your question. Hi. This is Justin on for Jon. Good morning. Morning. Morning. Are you seeing more relative strength in international or domestic end markets right now? I mean, right now, internationally, overall, the international markets are growing faster than the U.S. defense budget. And that's true in Europe. It's true in the Middle East and Asia as well. It's, I think, driven by the near-term and geographically near threats with Putin crossing borders in Europe, Iran in the Middle East, and then the threats that China is posing by its increasingly aggressive behavior. All that's driving our allies to higher defense budgets. And we've seen that long-term trend in our revenue base. We've doubled our international revenue from about 5% to 10% over the last three or four years. And we expect to see that outpacing of international revenue to continue over the next couple of years at least. That's helpful. Thanks, and then one more, if I could. Can you talk about the duration and time to revenue for new orders? So has that remained the same, gotten longer, contracted? Just any more color on that, that'd be helpful. Yeah. So the way we look at that is if you were rewinding the clock to a pre-COVID environment, our version of that booking and that backlog to revenue was much quicker than it is today. I think when Bill made the comments on some of the supply chain in the past quarters, it has stabilized, but the lead times are still elongated. So from our historical norms, the conversion is a little longer than we had seen. But from a comparison to kind of recent, it should be pretty stable if you're comparing to kind of the 2023, 2024 timeframe. All right. Thanks so much for taking the questions. Thank you. Our next question comes from the line of Ron Epstein with Bank of America. Please proceed with your question. Yeah. Hey, good morning, guys. Bill, can you kind of walk through what's your M&A sourcing strategy? How are you finding deals? Are you guys doing it? You're just looking at what bankers bring in. Just kind of broadly, how are you finding M&A? Yeah. Ron, we have a dedicated team that reviews. It does what you just said. We get teasers from all of the investment banks as they bring properties out. And we review those, particularly focused on those four core mission areas. We also reach out to both financial and strategics where we think there might be, as strategics have consolidated, there's been some moves to think about shaping that portfolio. I mean, financial buyers or financial owners are ultimately always going to be sellers over the long term. So sometimes we investigate what the timing is. And we pull all that together. And as I say, what we're looking for is actionable properties in our four core areas that meet our financial criteria in terms of accretive and supporting our growth and margin and the ROIC targets we have. And, Ron, I'll just add one thing to Bill's comments. Also, if you think about particularly on our IMS segment, we are bringing a coalition of the best-in-breed capabilities for different solutions. That gives us a nice insight to up-and-coming technologies. And we've had a lot of success in the past of cultivating that relationship and ultimately partnering or using that for an acquisition incubator, if you will. Got it. Got it. And then, I mean, you probably can't answer this, but I'll ask it anyway. Is there anything in the Boeing defense portfolio that could be core to you guys that isn't necessarily core to them? It's always possible. I mean, I read the news too, but we don't have anything actionable at this point with Boeing. Yeah. Got it. Got it. And then maybe just one more, if I may. With Replicator 2, I mean, just kind of going back on maybe some of the earlier questions, how are you thinking about demand for counter-UAS and directed energy? I mean, ultimately, how big could that market be? Well, I mean, I think we're still at the early stage of filling out the Army portfolio of, I think it's nine battalions of short-range air defense and a similar number in the counter-drone. I think that that'll take several years. I think beyond that, international sales, I think, are just at the launch point. It's once you've developed the system, which is where we are at this point, and you're moving into production, that's where international sales become possible. And our initiative to take the counter-drone system from a two-vehicle system down to a one-vehicle, we did that really on our own R&D dime. And then the Army was favorably enough exposed to it to cut that in early in terms of the deployed units. But that moving from two to a single-vehicle solution makes it more affordable and easier to operate. And both those things make it more attractive to international buyers. So I think that's kind of the next opening. Got it. Thank you very much. Thank you. Our next question comes from the line of Kristine Liwag of Morgan Stanley. Please proceed with your question. Hey, this is Justin on for Kristine. Thanks for taking the question. Just going back on the 2025 outlook, and I know we'll get more detail on the Q4 call. With the 5% to 8% growth guide, I was curious at this point if the growth profile looks similar across ASC and IMS next year, or are there factors we should consider that might drive some variation in 2025? Thanks. Yeah. I would say you can almost see it in the book-to-bill in the year-to-date period. We're getting pretty consistent demand across both segments. So I think from a trend perspective of where we're at, we would expect both of the segments to contribute to the growth rates that we're projecting out through 2025. I'll put the little asterisk where you get a little bit of an extra tailwind on the IMS side from the Columbia pricing that we talked about, which is also assisting in the margin expansion. Okay. Great. That's helpful. And then maybe just one quick one on CapEx. You just provide a little more color on the pace of the South Carolina facility build-out from here and how we should think about the investment profile over the next few quarters. Thanks. Yeah. I would say that you'll likely see a little tick up in the CapEx into Q4. We do expect to land somewhere in the mid- to high 3s from a CapEx as a percentage of revenue. I think we initially had said that would be close to 4%. Obviously, the revenue guide has changed since then, kind of pushing that percentage down. But the project remains. It was a little slower in the first half. We've started to catch up here. That's why I think you'll see the ramp in Q4. And nothing has really changed on the pacing for 2025. Got it. Thanks. Thank you. And as a reminder, if you have a question, please press star 11. And our next question comes from the line of Ned Morgan of BTIG. Please proceed with your question. At this time, I will turn the floor back to Steve Vather for closing remarks. Thank you all for your time this morning and your interest in DRS. Of course, if you have follow-up questions, please don't hesitate to call or email me. We look forward to speaking with all of you again soon. Enjoy the rest of your day. Thank you. This concludes today's conference. You may disconnect now and thank you for your participation.