Good morning and welcome to the General Dynamics Second Quarter 2025 Earnings Conference C all. All participants will be in listen-only mode. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please note this event is being recorded. I would now like to turn the conference over to Nicole Shelton, Vice President of Investor Relations. Please go ahead. Thank you, Operator, and good morning, everyone. Welcome to the General Dynamics Second Quarter 2025 Conference C all. Any forward-looking statements made today represent our estimates regarding today's outlook. These estimates are subject to some risks and uncertainties. Additional information regarding these factors is contained in the company's 10-K, 10-Q, and 8-K filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to comparable GAAP measures, please see the slides that accompany this webcast, which are available on the Investor Relations page of our website, investorrelations.gd.com. On the call today are Phebe Novakovic, Chairman and Chief Executive Officer; Kim Kuryea, Chief Financial Officer; Danny Deep, Executive Vice President, Global Operations; Jason Aiken, Executive Vice President, Combat and Mission Systems; and Amy Gilliland, Executive Vice President and President, GDIT. I will now turn the call over to Phebe. Thank you, Nicole. Good morning, everyone, and thanks for being with us. Earlier today, we reported earnings of $3.74 per diluted share on revenue of $13 billion, operating earnings of $1.3 billion, and net income slightly over $1 billion. We enjoyed revenue increases at three of our four business segments compared to the year-ago quarter. Across the company, revenue increased over $1 billion, an 8.9% increase. Importantly, operating earnings of $1.3 billion are up almost 13%, once again demonstrating strong operating leverage. Similarly, net earnings are up 12%, and earnings per share are up 14.7% over the year-ago quarter. You will note we beat street EPS consensus by $0.19. On a year-to-date basis, revenue of $25.3 billion is up 11.3%. Operating earnings of nearly $2.6 billion are up 17.4%, and earnings per share are up $1.26, or 20.5%. In my view, this was a wonderful quarter that exceeded our expectations and led to a very good first half of the year. Let me ask our CFO, Kim Kuryea, to provide detail on our strong order activity, growing backlog, and superb cash generation, as well as other relevant financial information. Thank you, Phebe, and good morning. I'll start with orders. We had a huge quarter with over $28 billion of orders, yielding an overall book-to-bill ratio of 2.2 to 1 for the company. The largest driver was the marine systems segment, which received several contracts for further construction of submarines. The large awards in marine almost overshadow the fact that aerospace had a tremendous quarter with a book-to-bill ratio of 1.3x. This is the strongest first half for orders since 2022 and reflected strong demand across the entire Gulfstream product line. Combat systems and technologies also had solid quarters with book-to-bill ratios of 1x and 0.9x, respectively. We ended the quarter with a record level of backlog of $103.7 billion, up 14% from a year ago. Our total estimated contract value, which includes options and IDIQ contracts, ended the quarter at over $160 billion, also an all-time high. Turning to our cash performance for the quarter, we generated $1.6 billion of operating cash flow, with all four segments contributing to our efforts to drive cash earlier in the year. After capital expenditures, our free cash flow was $1.4 billion for the quarter, yielding a cash conversion rate of 138%. Through the first half of 2025, we have free cash flow of $1.1 billion, which is well ahead of what we had planned. However, there is still work to be done as we have working capital to unwind from the balance sheet. We expect a strong second half with the majority of cash generated in the fourth quarter, which should push us towards a cash conversion rate around 90% for the year, an improvement from what we were originally forecasting. Our full-year cash estimate excludes the impact of the recent tax legislation. As you know, reversing the prior law's requirement to capitalize R&D expenses will provide us a cash benefit. We are still working to develop an estimate of the exact timing and amounts associated with how that will all unfold. Now, turning to capital deployment, capital expenditures were $198 million, or 1.5% of sales, in the quarter. Similar to last year, you should expect capital expenditures to be somewhat higher in the second half of the year, spending a little over 2% of sales for the year. We paid $402 million in dividends in the quarter, but we made no share repurchases, largely due to our cash profile. Also, in the quarter, we refinanced $750 million of notes that matured in May. We have no further debt maturities until next year. We ended the quarter with a cash balance of approximately $1.5 billion and a net debt position of $7.2 billion, down $1.2 billion from last quarter. Our net interest expense in the quarter was $88 million, compared to $84 million last year. That brings the interest expense for the first half of the year to $177 million, up from $166 million for the same period in 2024 due to our utilization of commercial paper. At this point, our expectation for interest expense for the year is approximately $330 million. Finally, the effective tax rate in the quarter was 17.7%, bringing the tax rate for the first half to 17.4%. This rate is a little lower than our outlook for the full year, which remains around 17.5%. Phebe, that concludes my remarks. I'll turn it back over to you. Thanks, Kim. Now, let me review the quarter in the context of the business segments and provide detailed color as appropriate. I have asked some of our group executives to participate and provide color from their perspective as well. First, aerospace. Aerospace performed well in the quarter. It had a revenue of $3.06 billion, a 4.1% increase. Operating earnings of $403 million, or 26.3%, better than the year-ago quarter. Operating margin is 230 basis points, better than the year-ago quarter. To give you a little perspective here, Gulfstream had 38 deliveries in the quarter, including 15 G700s, which is four more than the year-ago quarter and two more sequentially. This was offset in part by fewer G650s as we made the final deliveries of this high-margin product. As I indicated previously, the supply chain continues to improve and is performing better to both schedule and quality. We are finding fewer faults, and those we are finding are becoming easier to fix. In short, I'm increasingly confident that we can meet this year's delivery plan, and in fact, we are delivering G700s on a much more predictable cadence. I am pleased that all of our G700 retrofit airplanes have been delivered. Also, all of the G700s that were completed before engines were installed have also been delivered. You may recall that both of these things have negatively impacted cost and delayed deliveries. We are in the process of completing the G700 flight test aircraft, and a number of them will be delivered in the second half. These are lower-margin aircraft and will be diluted to margin, but will reduce inventory and increase operating cash by a large amount. The initial deliveries of the G800 will be made in the third quarter. We expect to deliver about 13 G800s for the year, which is about three less than the G650s we delivered in the second half of last year. The initial G800s will not carry the operating margins of the G650s. This will obviously put some pressure on operating margin in the second half, but we still expect the margins in the third quarter to be very similar to the second quarter, coupled with a stronger fourth quarter. In summary, the aerospace team had a solid quarter. G800 deliveries are about to commence, and G700 delivery cadence and operating margin are both improving. Anecdotally, as you may recall, the G800 was designed to replace the G650. Interestingly, the first 20 of the G800s will be the G650 owners. There is significant interest in this plane from Fortune 500 companies. Before I discuss demand, I am frequently asked questions about aerospace operating margin and when it will move into the high teens, that is, above 15%. The simple answer is maybe 2026, but for sure in 2027, with degradation again in 2028 with the delivery of a significant number of G400s. The simple answer is made with some trepidation. Nothing is more complex to forecast than the operating margin for aerospace. First, let me focus on what you all think about operating margin on aircraft deliveries. This is almost always driven by mix. The G700 has the highest margins. The G800 should ultimately enjoy similar margins, but it is early in its delivery cycle. The G600 enjoys the next highest margin, followed by the G500 and G280. Let us not forget the very strong margin contribution earlier in the year from the Sunset G650 program. Aircraft margins, while important because of their size, are only part of the story. Aerospace also has over $3.5 billion of sales in what we generally refer to as aircraft services business. At Gulfstream, we have a large maintenance business impacted by the amount of warranty work in a given period. Over-the-counter part sales and special mission aircraft, each with different operating margins and varying from quarter- to- quarter, are impacted by both volume and mix. At Jet Aviation, we have a large MRO business impacted by mix, particularly the number of large maintenance checks in a given quarter. They also have an aircraft completions business that is influenced by the mix of aircraft in-house, i.e., narrow body, wide body, or completions for Gulfstream. Jet also has a high-margin FBO business impacted by volume in any particular quarter. FBO volume, happiness, have been down in the second quarter. Finally, Jet has a significant aircraft management and services business that has over 300 aircraft under management. The mix of these things impacts margin quarter- over- quarter at Jet. Jet also has about $1.6 billion of annual revenue, and that is sufficient to impact margins in the group. I hope this, to some extent, helps you understand the mosaic that makes forecasts in this area so complex and the impact of both volume and mix on the result. However, do not let this discussion distract you from the main aerospace theme, a steady increasing sales and earnings. Turning to demand, aerospace enjoyed very strong market demand in the quarter. As Kim noted, we had a 1.3 book-to-bill in the quarter, even as aircraft deliveries increased the denominator. As I said last quarter, we fully expect the certification of the G800. Its better than planned performance characteristics and early deliveries to customers will stimulate demand. We continue to see very strong interest across all models in the U.S., across Europe, the Middle East, and other parts of the world. Let us move on to the defense businesses. First, marine. The growth story at marine continues. Revenue of $4.22 billion is up 22.2% from the year-ago quarter and 17.6% sequentially. Similarly, operating earnings of $291 million are up 18.8% quarter- over- quarter and 16.4% sequentially. Operating margin of 6.9% leaves plenty of room for improvement, but let us not lose sight of the fact that operating earnings continue to grow along with sales. This particular quarter's growth was driven by Columbia-class and Virginia-class construction, as well as a slight increase in DDG-51 construction. On a sequential basis, the 10-point decline in operating margin was driven by an unfavorable EAC adjustment at NASSCO. Backlog increased in the quarter by $14.6 billion, or 38%, to almost $53 billion, largely the result of a contract for two Block 5 Virginia-class ships, including a one-of-a-kind special mission ship with considerable content. The contract also included important investment funds to support shipyard productivity, wage increases, and additional training programs. These funds complement the funding that the Navy and Congress have provided over the last several years to help stabilize and improve the submarine industrial base. Taken together, these will help further improve EB throughput and productivity. As I said last quarter, Electric Boat, we continue to experience delays and quality problems in the supply chain. Material and parts are late and sometimes exhibit quality escapes. This obviously disrupts workflow, but we are developing good workarounds. We have more work to do here, but we are making progress. We are working closely with the Navy and the new administration to continue to address the problems in the supply chain and to work diligently to improve throughput and performance of Electric Boat. Our job remains to continuously improve to help the industrial base get stronger and to improve the cadence of ship delivery to the Navy. Next, combat systems. I'm going to summarize the group's results for the quarter and first half of the year and then ask Jason, their new Executive Vice President, to give you some color on the quarter from his perspective. Revenue in the quarter of $2.28 billion is essentially flat versus the year-ago quarter. Operating earnings of $324 million are up 3.5% on a 50 basis point increase in operating margin to 14.2%. Year-to-date, the comparison is not dissimilar, with modest revenue growth of 1.6% to $4.46 billion, stronger earnings growth of 3.4% to $615 million, and a 20 basis point expansion of operating margin to 13.8%. Sequentially, even stronger revenue growth, 4.9% to $2.28 billion, and impressive increase of 11.3% in operating earnings to $324 million on an 80 basis point improvement in operating margin. Order activity was solid with a book-to-bill of 1x for the quarter. Solid performance all around for combat systems. Jason? Thank you, Phebe, and good morning. As you can see from the numbers Phebe detailed for you, the group continues to demonstrate strong operating leverage irrespective of the top-line trajectory: flat versus the prior year quarter, up modestly year-to-date, and up more significantly on a sequential basis. That is a testament to the operating discipline of this group. Growth in the quarter in Europe was offset by lower volume in our U.S. combat vehicle business, driven largely by the cancellation of the Booker program. While the Booker cancellation represents a headwind, we have stayed very close to the Army and are supporting their efforts as they work through budget and program prioritization activities. To that point, we have invested ahead of need to make sure we are well-positioned to support priorities such as the rapid development and fielding of the next-generation main battle tank. The growth in Europe is particularly encouraging and is representative of significant potential in that business as defense spending in Europe is poised to accelerate. To that point, the book-to-bill in our European business was 1.5x in the first half, and they have got solid opportunities as we look ahead. Our munitions business continues to focus on facility expansion and increasing production rates in all areas related to artillery, including projectiles, load assembly and pack, and propellant. We are making progress and working closely with the Army in support of their artillery production goals. Thanks, Jason. Finally, technologies. As with combat, I'm going to summarize the group's results for the quarter and first half of the year and then ask Amy and Jason to give you some color on the quarter from the perspective of GDIT and mission systems respectively. The group had another strong quarter with revenue and earnings up quarter over quarter sequentially and year-to-date. Revenue of $3.5 billion was up 5.5% from the year-ago quarter, while earnings of $332 million were up 3.8%. Operating margin for the group was 9.6%, down 10 basis points from a year ago on a shift in mix as GDIT grew faster than mission systems in the quarter. On a sequential basis, revenue and earnings were up by 1.3% and 1.2% respectively on a steady margin rate of 9.6%. For the first half, revenue of $6.9 billion was up 6.1%, and operating earnings of $660 million were up 7.3% on a 20 basis point expansion in operating margins to 9.6%. The group continues to have solid order activity with a book-to-bill of just under one times for the quarter and just over one times for the first six months. As a result, the group's backlog is up 7.5% from this time a year ago, and their total estimated contract value is up more than 11% over the same period. With that, I'll turn it over to Amy first to talk about GDIT's quarter. Thank you and good morning, everyone. As Phebe noted, GDIT delivered a solid quarter and first half with growth in all of our customer-facing divisions. This performance highlights the discipline and agility of a business focused on mission execution and cost control in a particularly dynamic environment. The pace of contract award activity was slower than normal in the first half, albeit somewhat improved in the second quarter. Despite significantly lower first-half customer adjudications, GDIT enjoyed six wins over $100 million, including one over $1 billion. The business delivered a first-half book-to-bill of essentially 1x on a growing business. First-half book-to-bill would have been even stronger, but for the protest by a competitor of a significant new second-quarter win in the defense business. We are pleased with the results we are seeing from the investments we've made in our portfolio of digital accelerators, capabilities that enable customers to quickly leverage AI, cyber, and mission software technologies, and our deepening relationships with strategic and emerging technology partners. We reliably deliver and integrate the best technology has to offer day in and day out, and that has helped us navigate the changes in administration priorities throughout the first half. With that, I'll turn it over to Jason to talk about mission systems. Thanks, Amy. Mission systems also had a great quarter with revenue, earnings, and margins up on every comparator basis, quarter- over- quarter, sequentially, and year- over- year. As we've been discussing for some time, mission systems has been transitioning from legacy lower margin programs to new franchises for several years now. The top line has been relatively flat, even as the margin profile is improving steadily. We've said this is the final year of that transition, and we are starting to see an inflection to growth. That is very encouraging. Like GDIT, mission systems has been investing ahead of need in areas like unmanned platforms, smart munitions, high-speed encryption, strategic deterrence, and contested space. As a result, they are seeing increasing opportunities across the portfolio. To that point, their total backlog is up 15% from a year ago, and total potential contract value is up 23% over the same period. All in all, a very strong first half of the year. I'll now turn it back over to Phebe. Before getting into guidance, I wanted you to hear from Danny Deep about his new responsibilities and what we are up to here with the new Executive VP for Operations. Thank you, Phebe, and good morning. As you are all aware, General Dynamics takes great pride in being an outstanding operating company focused on cash generation, earnings, and dependable delivery of highly differentiated and critical capabilities to our customers. As the portfolio has grown, and in some cases quite rapidly, we see opportunity across each of our business units to further optimize our operating leverage. Along with the senior corporate leadership team and the operating unit presidents, we will focus on driving continuous improvement across the entire value chain, from competing to winning while maintaining discipline in our contracts to ensuring a robust supply chain and efficient manufacturing footprint to execute on our commitments. We'll place particular attention on programs where we have challenges to ensure we get them up the learning curve and performing to the high standards that have been the hallmark of General Dynamics. In summary, we see a wealth of value creation opportunities across the portfolio. With that, I'll turn it back to Phebe. Let me provide you our operating forecast for 2025 with some specifics around our outlook for each business group and then the company-wide roll-up. For 2025, we now expect aerospace revenue of around $12.9 billion, up around $250 million over prior estimate. Gulfstream deliveries will be 150-155, up a little over our previous estimate. We anticipate a 13.5% operating margin for the year, 20 basis points lower than our earlier estimate. The third quarter operating margin will be about the same as this quarter, with a somewhat better fourth quarter. In short, revenue is up on more deliveries. Margin is down a little due to mix and airplane deliveries and at the service businesses. In combat, we expect revenue about $9.2 billion, coupled with a 14.5% operating margin. This should lead to somewhat improved earnings over our last estimate. As noted earlier, the Marine Group has been on a remarkable but difficult growth journey. It will continue during the rest of 2025, albeit at slightly lower growth rate. Our outlook for this year now anticipates revenue around $15.6 billion, with operating margin of 7%, which should provide better earnings than previously estimated. In technologies, we are making no change to the 2025 revenue and earnings estimate provided at the beginning of the year. For 2025, company-wide, we expect to see revenue of approximately $51.2 billion and an operating margin of 10.3%. The revenue estimate is increased by $900 million, and the overall operating margin held constant. You have already heard Kim's commentary about our estimate for increased cash for the year. All of this rolls up to an increased EPS forecast of $15.05-$15.15. To wrap up, as we go into the second half, coming off a very strong first half, we feel very good about the potential for the year. Nicole, back to you. Thank you, Phebe. As a reminder, we ask participants to ask one question and one follow-up so that everyone has a chance to participate. Operator, could you please remind participants how to enter the queue? If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Your first question comes from the line of Gautam Khanna with Cowen. You may go ahead. Thanks. Good morning and nice results. Good morning. Thank you. Phebe, I was wondering if you could elaborate on the G800 delivery cadence. You mentioned 13 in the second half. Do you have a sense for when the first one might deliver and what the skew will be Q3 to Q4? Relatedly, you've given color on the lots and the G700 margins, if you will. Any sort of guidance you can give us on how to think about G800 profitability by lots over time? Thanks. The first G800 should deliver very soon. I actually am not—I do not really know the distribution of each by quarter, but we will be pretty much on what I noted in my remarks. As you know, as we talked about before, the G700. Lot one carried lower margins for all the developmental cost reasons. Lot two is better. Lot three is going to be better yet or is better yet. I expect the same from lot four. The G800 comes out of the box at a higher—lot one at a higher incremental margin than the G700 that did not bear as much of the developmental cost. It will too have margin expansion as we come both down our learning curves and move from one lot to the next. Thank you. Your next question comes from the line of Seth Seifman with JPMorgan. You may go ahead. Thanks very much. Good morning. Good morning. I wanted to ask, first of all, I thought it was helpful to have the breakdown of aerospace and thinking about the different ingredients in margin. It seems like in services, after a strong couple of years, things seem to have slowed down a little bit here in the first half. Maybe if you could talk a little bit about kind of why that's happening. While I realize that there's a lot of unpredictability around the different dynamics there in terms of the contributors and the mix, what's sort of a good algorithm for services going forward? Does it grow at kind of a pace with flight hours or, I guess, or deliveries or kind of how to think about it and how it fits into the margin mix going forward as well? Sure. The theory of the case behind our services was that if we build additional service centers at or near the location of Gulfstream airplanes, then, in fact, that would drive additional incremental revenue. In fact, that's been the case. As I tried to walk you through in my remarks, the margins are varied principally by mix, but also by volume. In any given quarter, it depends heavily, both at Jet Aviation and Gulfstream, on what the mix is of both MRO and then, in the case of Jet, a lot of other services. Lines of business also accrue to the margin story. I do not know that there's a given algorithm for thinking about margin in the service world, but we expect it to continue to grow with the fleet. We are very pleased with how we have done there. Okay. Great. And then just as a follow-up, it seems like based on the new guidance with technologies. Unchanged, there's step down in terms of both margin and sales in the second half. And so maybe if you could talk a little bit about what's driving that and then kind of where it goes from here. Yeah. So we were given the fluidity in that market. So far this year. We thought it prudent to keep our earnings and our revenue estimates about where they are. But I'll ask both first, Amy, and then Jason to give you a little bit of color. Good morning. From a GDIT perspective, we did navigate the first half very well. That was not without some impact from contract scope changes, from cancellations of some of our contracts. As we look at the second half, the thing that will most impact our positioning is really the cadence of award activity. As commented in my remarks, adjudications were down significantly in the first half of 2025 compared to the first half of 2024. We are running out of days of the year to be able to win that work and deliver on it. From a revenue expectation, it is the pace of adjudications that we are watching for the second half of the year. I feel very good about where we are from an earnings perspective. Jason? Yeah. From a mission systems perspective, a good bit of the strength that we saw in the first half came from activity in their high-speed encryption product business, which is a—it's really a transactional business. While we still see incredible demand on that side of the business, the timing of that is somewhat less predictable given the transactional nature. I would tell you there's opportunity for them in the second half, depending on how that demand goes. As Phebe said, just given the uncertainty overall in the market for the group as a whole, that's the reason we're holding to the full year guidance. Your next question comes from the line of Doug Harned with Bernstein. You may go ahead. Good morning. Thank you. Morning. On m arine, the big increase you saw in revenues in Q2. That's unusual to see that large of a jump there. Can you talk about what happened specifically related to Virginia class, Columbia class that really took it up so much? Virginia was about 60% of the volume, Columbia about 40%. It really just was the construction volume. I'd say we'll give you a little bit of perspective here. We've been growing on average about 9% year over year for the last couple of years. Some quarters we've hit high teens, but I'd say the 22% growth in this quarter is really just a question of largely both timing, but also continued increasing performance at the shipyard. You have gotten this early in the quarter, you got the award for the last two Block 5 boats, which was certainly very good news with support for labor. Can you talk about the increased funding, both that and what we may see in the 2026 budget, and how you can get that to translate into higher throughput, which it looks like you're already getting some of, and ultimately higher margin as well? Okay. Let me answer that kind of in the inverse order. As we've been telling you for some time, the margin improvement at the Marine Group, and particularly within the submarine industrial base, improves at Electric Boat when we get additional stabilization in that industrial base and in our supply chain. That has been a key driver of really the productivity at the shipyard. As you know, part of our strategy is really dependent on controlling what we can control and on the deck plates, getting better and better and better, maximizing or optimizing the work we have in-house with workarounds on late deliveries from major suppliers, as well as any quality escapes. If you think about our big strategy, it's that. We are seeing productivity improvements in a number of key places on the deck plates and at Electric Boat, frankly. In our other businesses as well. It's across the board. I would say that with respect to the supply chain, we've seen some stabilization and improvement in some important areas. The Navy and the Congress have been allocating funding for the industrial base to undergird their performance, and some of that is beginning to improve, but we've got a ways to go there. With respect to the fiscal year 2026 funding levels, we're still working out with our Navy customer what the exact funding levels are by program. There's a fair amount of complexity as we unpack the 2026 budget and the reconciliation bill, but our programs are fully supported. With respect to the anomaly, we were glad to get that under contract. One of those boats is a particularly complicated boat. As we gear up on that, I think that this is important—that contract was important in that it provided the type of funding for the shipyards that we've seen going into the supply chain over the last few years. That kind of funding support on training and wage increases as well as productivity, Navy funding, productivity improvements at each one of those, at each of the yards, that'll be very, very helpful as we go forward. Your next question comes from the line of Scott Deuschle with Deutsche Bank. You may go ahead. Hey, good morning. Phebe, does getting to high teens margins at aerospace require meaningfully higher Gulfstream deliveries than the 150-155 you're planning for 2025? Or is that bridge to high teens primarily driven by coming down the learning curve and optimizing the mix? Oh, I think it's a combination of all of that. I tried to spend some considerable time in my remarks driving you all through the knot hole that is aerospace margin. I'm not quite sure what other clarification I can give you. It will be mixed and it will be volume. In simple terms. Okay. That's fair. Sorry if I missed this, but was the order strength at Gulfstream this quarter pretty well spread across aircraft types, or was it concentrated in any particular pockets of the Gulfstream portfolio, particularly in the context of the G800? It was across all of our airplanes. First was the G700, G600 right behind it. We had nice geographic distribution as well. It was good solid demand. We continue to see that in the third quarter with particular interest in the G800, I might add. Your next question comes from the line of Robert Stallard with VER TICAL RESEARCH. You may go ahead. Thanks so much. Good morning. Good morning. Phebe, I was wondering if you could comment on the management reorganization that you announced this quarter and how this could affect the way that the business is run going forward. Thank you. It was one of the reasons I asked Danny to give you some clarity on how we see his role in particular playing out. We'll continue to manage the business as we have been managing it and really driving for value creation across each and every one of our portfolios. As we grow, we have believed as a leadership team, and we've talked on this call, and I've talked with many of you individually and in groups about our desired increase in our operating leverage. You'll note in almost every single one of our calls, we stress and point out and then stress where we are on our operating leverage. One of Danny's missions is to really focus on the operating performance of each and every one of our businesses. We will manage the business in the same way. Okay. Quick follow-up. Are you also looking to combine combat and mission going forward, or are they going to remain standalone businesses? No, we'll keep them as they are. Okay. Thanks so much. Your next question comes from the line of David Strauss with Barclays. You may go ahead. Thanks. Good morning. Good morning, David. Phebe, following up on Rob's question. The portfolio as a whole, I think, used to run in the range of 12%-13% margins, more recently running in the low 10s. I know there are a lot of moving pieces. Any thoughts you might have in terms of where the margin potential is for the portfolio as we move forward? Look. As Danny noted, we pride ourselves on our operating performance, and I think we can improve. Particularly, sort of the one that jumps out at you is in the Marine Group. Those margins over time need to improve. I'll ask Danny if he has any particular insights. He's not that far into his new position, but he's been a senior operating executive with the company for some time. Okay. Thank you. Yeah. I mean, I think Phebe hit it. We're going to look across each of the operating units and program by program. Where we've had some challenges in getting up the learning curve, I think that's where our focus is going to be. Not to point any one particular operating unit out, but if you look at where the largest operating pieces of the business are and where we've historically had our margins, that's where we see our best opportunities. This company has been focused on operations and has been very disciplined from an operating perspective for a long time. We're just going to put a finer point on that. Your next question comes from the lines of Myles Walton with Wolfe Research. You may go ahead. Thanks. Good morning. Phebe, the strength of bookings at aerospace in the first half, are you feeling more confident in seeing a book-to-bill at or above one for 2025 at this point? We're keeping it at about one That's sort of been our cadence and our thought pattern and our observations, frankly. The demand has been quite good, and as I noted in one of the previous answers to one of the questions, we see that demand carrying through into the third quarter. Okay. And then I think in your prepared remarks, you mentioned margin pressure in 2028 from the G280. Because I had my notes of certification in 2026. G400. Sorry. Sorry. The G400. I had in my notes that that certification was in 2026. Has that slipped to the right? I don't think so. Uh-uh. I will tell you, we've slowed down the G400 a bit because we've got our hands full. That's not about the FAA. It's simply we've got an awful lot as we continue to grow and really work on our operating leverage at Gulfstream. The G400 is doing quite well. I think we've—I don't know that we've ever actually given you—I don't recall that we've given you an entry into service estimate. The word is estimate. I was just trying to give you some kind of color about year-over-year progression without getting into next year's guidance, which, of course, you know we won't do. Okay. Very good. Thank you. Your next question comes from the line of Sheila Kahyaoglu with Jefferies. You may go ahead. Good morning, everyone. Thank you, Phebe. I really appreciate the color on Aero. I might follow up a little bit on Myles's question. I think the point on aerospace is it's a stable, growing business, both on revenues and operating profits. Maybe if you could talk about just the capacity of volume Gulfstream could produce, is it growing off this 150 base annually? To Myles's question, why the dip in 2028? If G400 comes in there, I thought it would be maybe a year after the G800. If you could just provide that dip timing. As the G400 comes on, it'll be a lower margin airplane than the very large cabin. I think— Remind me what the first part of your question was? Just on the capacity, production capacity. Oh, right. Yeah. On the capacity question, we've got the plant and equipment, jigs, and fixtures, as well as the workforce to support a capacity of G200 airplanes. We'll continue to work to increase our production according to the market. Maybe one more if I could ask. Was services down in the quarter? Yes. Your next question comes from the line of Jason Gursky with Citi. You may go ahead. Hey, good morning, everybody. Phebe, you mentioned— You made some comments about NASSCO. Maybe a small negative EAC there. I was wondering if you could just talk a little bit generally about what's going on out at NASSCO and the priorities of the new administration and the impact that that might have on that yard out there. And then just provide a little color on that EAC. Yeah. So let me talk about sort of what we see as the market environment. Then I'll turn it over to Danny to talk a little bit about this particular EAC impact, which, by the way, at NASSCO is extremely unusual. Let's just set the table here and remind ourselves that NASSCO produces primarily auxiliary ships for the U.S. Navy. The demand for those has been increasing over the last few years, and we continue to see that need as warships all need support ships in order to function at sea. We've seen nice increases in demand, and we expect that to continue. We're working on the Oiler program, and we've got several other programs in place as well. I'll turn it over to Danny to talk about this quarter's EAC. Okay. Yeah. At NASSCO, it really started with the flood and the impact the flood had on our prime line. It took us down from two lines to one, and then we had a subsequent issue. After that issue, it created a fair bit of rework in the system. That is what is reflected in the EAC as we speak. We think we will largely be through that by the end of the year and have both of those prime lines up and running, and this issue will be behind us. Okay, Lacey, I think we have time for just one more question. Final question comes from the line of Scott Mikus with Melius Research. You may go ahead. Morning. Phebe, the S ecretary of the Navy commented that it might be preferable to have Huntington Ingalls and Electric Boat each build Virginia-class submarines separately rather than in a teaming arrangement. If the Navy were to actually pursue that route, how much capital would you need to invest to make that happen? Is there enough skilled labor for Electric Boat to handle one Virginia by itself while also continuing to work on Columbia? Skilled labor has not been an issue for Electric Boat for some time now. We do not see a capacity problem in the region with the availability of our touch labor. We can support additional growth. We would need some additional capital if, in fact, the Navy opts on that strategy, but not an enormous amount. I will defer to the Navy on any future discussions about that. Okay. And then a quick question on aerospace. The book-to-bill in the quarter was very good despite the stock market's perturbations around Liberation Day. Have you seen any uptick in the pipeline since the One Big Beautiful Bill Act was signed into law and reinstated bonus depreciation? I wouldn't cite one macroeconomic factor. I think that there were a lot of them here. There wasn't one in particular. From my perspective that drove the demand. Bonus depreciation helps quite a bit. Always has. Okay. Thank you, everyone, for joining our call today. As a reminder, please refer to the General Dynamics website for the S econd Q uarter E arnings R elease and H ighlights presentation. Finally, we want to let you know that we expect to hold our Q3 E arnings C all on Friday, October 24th, at 9:00 A.M. That's a slight change from our normal practice of announcing earnings on Wednesday, so we want to advise you of that early for planning purposes. We will resume our normal schedule for the fourth quarter call. If you have additional questions, I can be reached at 703-876-3152. This concludes today's conference call. You may now disconnect.