Greetings, welcome to the L3Harris Technologies First Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Mark Kratz, Vice President, Investor Relations. Thank you. You may now begin. Thank you, Rob. Good morning, and welcome to today's call. Joining me are Chris Kubasik, our CEO, and Michelle Turner, our CFO. During our discussion, we may reference our investor letter that we published on our website yesterday. We're listening to investor feedback and have made some enhancements. Given the detail on this letter, this call will primarily be focused on answering questions. We may also discuss certain matters that constitute forward-looking statements. These statements involve risks, assumptions, and uncertainties that could cause actual results to differ materially. For more information, please reference the safe harbor provision found in the investor letter and our SEC filings. Lastly, we will frequently discuss non-GAAP financial measures, which are reconciled to comparable GAAP measures in the investor letter. Before moving to questions, I'd like to turn it over to Chris for some opening remarks. Okay. Good morning, and thanks, Mark, and welcome aboard. We've been focusing on execution under our Performance First imperative, and I'm pleased with our results. The first quarter was strong in many respects as we continue to build momentum with our trusted disruptor strategy, resulting in record orders and record backlog. Improving macro trends serve as a positive backdrop, including the president's 2024 budget request released to Congress in March. We are well aligned with the priorities in the National Defense Strategy, which is reflected in robust funding in major areas for us, including space and joint force capabilities, as well as missiles and munitions, given our pending acquisition of Aerojet Rocketdyne. Our goal for Q1 was to grow the top line, meet the EPS number, and have positive cash flow. The team rallied and delivered on all counts. For a third consecutive quarter, we had top-line growth, a 9% increase, with each segment growing. Operating income was up in two of the three segments, despite the usual headwinds. However, we came in line with where we thought we would be to begin the year. This resulted in EPS of $2.86, and we anticipate building from there. Free cash flow came in at over $300 million, a significant improvement from a year ago, and we also front-loaded our share repurchase commitment for the year. We received a second request from the FTC in March, which was followed by the Aerojet Rocketdyne shareholder approval vote the following day. Both of these outcomes were expected, and we are responding to the FTC. We still anticipate the deal will close later this year. First quarter results, our differentiated winning strategy, and the overall business environment led us to reaffirm our 2023 guidance with the recognition that record orders and strong revenue growth to date could support a bias towards the higher end of our revenue guidance range should these trends continue. We still have work to do on profitability, with abating macro headwinds, operational improvement initiatives, and accelerating sequential growth in product-centric businesses, we remain committed to our full year EPS guidance. We're off to a strong start, and I'd like to recognize our employees for continuing to prioritize Performance First in everything they do. With that, let's open the lines for questions, Rob. Thank you. We'll now be conducting a question and answer session. In the interest of time, we ask that you please limit yourselves to one single part question. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Thank you. Our first question comes from the line of Matt Akers with Wells Fargo. Please proceed with your question. Yeah, hey, good morning. Thanks for the question. I wanted to put maybe a finer point on the Rocketdyne timing. Have you, I guess, substantially complied with the FTC's second request yet? If not, sort of how much is left there? I think that's what starts the clock for that review. Yeah, Matt, thanks. Thanks for the question. We're gathering the data as you would anticipate. It's usually about a 3- to 4-month process. We got the second request mid-March, so that would kinda suggest a June submission both for us and I know Aerojet Rocketdyne is doing the same thing. I have a feeling they'll probably submit a little earlier than us, given they've already done this once. You know, the reason I'm confident in the 2023 close really comes down to the FTC's evaluation of this transaction. You know, when we look at it, we do not compete with Aerojet Rocketdyne. I mean, plain and simple, they make rocket motors and rocket engines, and we do not. That term is known as horizontal competitiveness, and there is none. We are not a customer of theirs. They are not a customer of ours, which the term of art the FTC and lawyers use is vertical competition. I look at this and say, if there's no vertical competition and no horizontal competition, we'll submit the data, we'll certify the information, and we'll let the process run. You know, I think I'll just take a minute since I'm not sure I'll get any more Aerojet questions today. I just think there's an incredible amount of confusion, mainly in D.C., whether it's the DoD, the FTC, or members of Congress. There are three terms that are used interchangeably that mean completely different things, and that is consolidation, merger, and acquisition. A consolidation, in my opinion, is when two companies with similar capabilities combine. I think back 25 years to McDonnell Douglas and Boeing, and they consolidated. Nobody can dispute that after that transaction closed, there was one less commercial and military aircraft provider. That's not what we're talking about today. A merger, I think a good example is obviously L3 and Harris. Two companies that are complementary came together, which is now why we have capabilities in space, air, land, sea, and cyber domains. Significant revenue synergy, significant cost synergies, over $650 million of cost savings that we shared with our shareholders and the DoD. Resulted in a stronger company, in this case, providing more competition within the defense industrial base. Aerojet Rocketdyne is an acquisition. It's about 10% of our enterprise value. It's all cash. It's putting us into new markets that I mentioned already, that we believe are growth markets, as highlighted in some of the recent budget decisions, and fills in a gap in our portfolio. I just felt I wanted to clarify that point, and that is what gives me confidence that this deal will close in the second half of 2023. Thank you. Our next question is from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question. Thank you. Good morning, Chris and Michelle and Mark. Welcome to the call. Chris, good seeing you on CNBC last night. I know, they let anyone on these days, so nice that they got an upgrade with you. In all seriousness, good quarter, and you called out space in addition to Aerojet on that segment. Your space business, $1.5 billion of new prime space awards. What types of opportunities are you seeing in the market, and has there been a shift in the competitive backdrop given some of the moves to smaller space systems? Where do you think LHX is gaining share? Tied to that, there were a number of international awards within space. Is there a shift in the dynamics that you're seeing just given space has become more open to the U.S. working with allies? Okay. Well, thank you, Sheila. I was actually in Clifton, New Jersey, all day with our electronic warfare team, just a short drive to get on TV. Thank you, thank you for that. You know, let me kind of kick this off, and then I'll ask Michelle to give a little more detail. I really wanna step back and think of space and the space domain and how it aligns with the strategy that we've been talking about since the merger. A few fun facts. At the date of the merger, there were actually zero L3Harris or legacy company satellites in orbit. Today, there are 7 that we have built, obviously as a prime, and we have 33 in backlog, as a prime that will be launched over the next, couple years. When we look back, we saw this as a growth market several years ago, which it is. We invested R&D and capital and facilities and tooling to position ourselves for growth. The discussion aligned with what we've been saying for several years, was to move up the food chain and become a prime by providing disruptive technologies and alternatives to our customers. I think, as we sit here today, we can see that that strategy, that investment is starting to pay off. We're probably best known recently for the work we're doing with the Missile Defense Agency and the Space Development Agency launches that will be coming up in the next year or so. We're also a market leader in weather and ISR and also space exploration. I appreciate you highlighting the fact that we're growing internationally as well. You don't always think of space as a international growth opportunity, but the team has a global reputation of delivering on time and having quality products, and we're seeing that being recognized around the globe. Michelle, do you wanna maybe give more detail? Yes. I'll add some color in terms of our strategy and action and some of the numbers, Sheila, so thanks for highlighting this. Over the last six months, we have submitted over $7 billion in space proposals, booking $1.5 billion within Q1, so we're super excited about this book-to-bill over 2.0 within this sector. Kelly and her team are doing an amazing job in terms of recognizing the current environment within the U.S., but also to your point, Sheila, around expanding the aperture in terms of international exposure as well. Half of the billion and a half in bookings are international in nature. When we think about margins within this space, this is where Kelly and the team are thinking differently in terms of leveraging our domestic footprint to be able to drive shareholder value in a different way across the globe. We're excited about this double-digit growth from a revenue perspective. We expect this to continue to be a tailwind for us within 2023 and beyond. Our next question is from the line of Kristine Liwag with Morgan Stanley. Please proceed with your question. Hey, good morning, Chris, Michelle, and Mark. Chris, in the supply chain, it's encouraging to see that the market conditions for electronic components are improving, your critical part shortage is declining, and alternative parts are increasing. Is this tracking better or worse or as you expected? If we continue to see the supply chain improvement accelerate, could we see upside to your full year guide beyond the upper end? Yeah. Thanks, Christine. I believe the worst is behind us relative to all the macro headwinds we've talked about, supply chain attrition and inflation. To your question specifically on supply chain, you know, I'm proud of the team because these alternative parts just don't happen. We took a fair amount of talent and expense to redesign our products, if you will, design for availability, and the team has done an amazing job. As we highlighted in our letter, we now have 1,300 alternative parts that weren't originally designed into our products. That's been able to allow us to grow as you saw in the quarter and maybe position us for continued growth for the rest of the year. I think after the last few years, I hate to predict anything 'cause it's hard to predict what's gonna happen day to day or month to month, but I feel real good about the opportunities and the positioning. We referenced, you know, we've signed a strategic agreement with a major microelectronic chip providing company. The benefit for us is it gives us assured availability and kind of moves us up and out of the allocation process which is always an uncertainty kinda day by day. In exchange for that, you know, we're sitting down and sharing with them our technology roadmap and working collaboratively as we design new products, taking advantage of some of their more advanced technologies. Long way of saying, we're happy with the first quarter. We have good visibility for Q2 and beyond. You know, if we continue with this momentum, it's possible we could see outperformance. Thank you. Our next question is from the line of Scott Deuschle with Credit Suisse. Please proceed with your question. Hey, good morning, Michelle. Can you lay out what drove the softer margins with IMS? Yeah, absolutely, Scott. Good morning. How are you? IMS and CS this quarter, and then walk through the factors that unlock the implied margin improvement in the second half. If you can touch on the dynamics with backlog repricing, that would also be very helpful. Thank you. We're getting a little bit of a garbled feedback, Scott, but I think what you're asking about is IMS margins and back half improvements for overall enterprise. Yeah, that's right. Backlog repricing. Thank you. Absolutely. Before I jump into the margins, I just wanna set the stage in terms of how we set the expectations for our team within Q1. We really had 3 objectives. One was to grow top line, the second was to meet our EPS, and the third was to improve on our cash position from last year. We met all 3 of those. To your point, Q1 margins did come in light. They were aligned with expectations, however. I think it's important to go back to what we talked about in our last earnings call, where we talked about having a more balanced plan this year. In terms of revenue and EBIT, the expectations was revenue would be balanced with our first half margins being lower and accelerating in the second half, really driven by 2 things. One is around our higher margin product deliveries. As we see the supply chain constraints continue to ease, we expect that our product deliveries are gonna continue to improve, which is gonna drive margins in the second half of the year. The second is related to our fixed price backlog, and we talked about this a little bit in Q4. Aligned with our the macro headwinds that have been experienced across the industry and the higher inflationary environment, we experienced this particularly acutely within 3 of our sectors, which we talked about within the letter EW, IVS and ISR. We expect that this is gonna continue to dissipate as we start to see some of the actions that we took at the end of last year start to pay dividends in the second half of this year. We have a path to getting to the margins in the second half. One other thing I would note in terms of Q1 is our Q1 margins were a bit deflated by lumpy aircraft revenue recognition within our ISR business. When you look at this, it's about a 40-50 basis point impact within the quarter. We expect as this normalizes, that's also going to help our EBIT in the second half, EBIT margins in the second half of the year. To your question specifically, Scott, on IMS, there's two pieces there. One is the mix, and for those that have been on this journey with us, you're familiar with our lumpy aircraft revenue recognition. As I talked about, from an enterprise perspective, in Q1, this had this dynamic played out for us. We did recognize a C3D order from the Air Force. As a result, that aircraft revenue had an impact in terms of lower margins within the quarter. We expect that that's gonna continue to improve throughout the year as we work on the missionization of those aircraft. The second piece is related to the fixed price backlog that I talked about. This was an acute impact within our ISR business. You may remember we talked about attrition concerns that we had in Q4 along with the macro headwinds. Where we sit today within Q1, we are seeing improvement, we have seen our attrition stabilize, and this is good news in terms of seeing the light at the end of the tunnel. We expect that the attrition and the performance is gonna stabilize, and we'll see less of those negative EAC impacts as we make our way through the year. Yeah, I think I'll just chime on Scott a little bit more. Look, none of us are happy where we are in Q1 with the margins, it's exactly what we had planned, we clearly have a ramp to get to 15.5% by the end of the year, which we will. You know, we kind of teased out in the letter a little bit about our enterprise transformation, just wanted to talk briefly about that. You know, it's actually been less than 4 years ago that we had the merger. What I call phase 1 was our 3-year integration, which I highlighted as very, very successful with over $650 million of savings. That was really just phase 1, right? That was harmonizing the benefits, closing down headquarters, consolidating segments, taking advantage, you know, of the enterprise relative to supply chain, rebidding contracts, and, you know, it's water under the bridge, but still proud of what the team was able to accomplish, especially during COVID. The natural evolution under our continuous improvement mindset is to move into phase 2. We've really looked at the success of our Trusted Disruptor Strategy and how it's being embraced by our customers and suppliers, and we're applying it to ourselves. How do we disrupt ourselves, and how do we get better and more efficient? We just completed about a 10-week sprint to highlight and confirm that there are opportunities for us. We're trying to figure out how we're gonna function differently and really rethink every function and everything we do. Easy example would be on real estate, especially as we've supported and embraced the remote and hybrid world. We don't need nearly as much office space as we used to, and there's a clear opportunity for savings. We're looking at functional costs. We're looking at what we do. We started using, as everybody has, I'm sure, bots to remove some of the manual labor and actually provide some savings. Also our indirect procurement strategy, just to name a few of the things. Now that the sprint is complete, we're in the design phase of the program, and on our next call, we plan to give you some actual tangible numbers and tangible timeframe to show how this is going to make L3Harris an even better company and contribute it to our already industry-leading margins. The entire leadership team is excited about this project, and I think we're off to a good start and more to come in, you know, 90 days. Thank you. Our next question is from the line of Peter Arment with Baird. Please proceed with your question. Yeah, thanks. Good morning, Chris, Michelle, and Mark. This morning I wanted to ask on working capital, I'm sure Michelle would wanna weigh in. I know you've kind of focused on driving the metrics lower over the last few years, and last year, you obviously built up some inventory. Maybe you could just update us. I know working capital was less of a use this quarter. Maybe, you know, whether you think the 53 days that you kind of ended in 2021, is that still something you can target this year? Ultimately, do you think we can get into the 40s more? Thanks so much. Peter, the short answer is we expect to get back to the 53, 54 levels by the end of this year. What you saw in Q1, we're really proud of the teams. We saw working capital improve by about $300 million year-on-year. That's about an 8-day improvement from where we were at this point at the end of Q1 2022, really driven by receivables. I just wanna highlight, this is a great example of our Performance First initiative in action. Many thanks to our finance, program management, and contracts teams for implementing what we affectionately call Money Mondays, which is really focused on truncating our billing and invoicing processes to drive a more efficient use of our working capital. As a result, we were able to improve our DSO by 2 days from the same period last year. To your point about getting to the 53, 54 by the end of this year, we have to drive about $300 million of improvement between Q1 and the end of the year. This is predominantly gonna come from inventory, almost equally split between our product inventory, which is gonna be driven by the easing of supply chain constraints, being able to ramp our deliveries in the second half of the year. Also around our performance-based milestones on some of the new program wins that we have. The space business is a great example of that, where we're negotiating and getting cash up front as a result of some of these new orders, also executing on those programs are gonna deliver cash for us in the second half as well. Yeah. Peter, clearly working capital is a top priority. It's something we brief our board at each and every meeting. As we have our monthly reviews, it's something that Michelle, I, and the team look at. You know, and I don't think it was surprising to see it, the working capital days grow in the last couple years. You know, we were taking the approach, you know, to get all the parts we could pretty much at any cost, and that resulted in a buildup of inventory. We're much more confident in our ability now to plan and have alternatives to parts. You'll see that contribute as we bring down the working capital days. If you recall, we were very aggressive and continue to be in negotiating performance-based payments versus progress payments and tying the receipt of cash to specific performance milestones. You know, I view that as an opportunity. I think it's fair to say there's certain programs that are behind schedule, either due to our performance or our suppliers' performance. You know, that's fine. We've identified it and we're working it. That gives me even further confidence that we'll be able to hit our numbers as we continue to perform and tie the cash to those milestones. Thanks for the question, Peter. The next question is from the line of Doug Harned with Bernstein. Please proceed with your question. Good morning. Thank you. You know, as you work through the process on Aerojet Rocketdyne, you know, how are you thinking about divestitures at this point? You know, things stand out that, you know, like commercial aircraft simulation and training, public safety. How are you thinking about kind of the timing of when you might do a divestiture, what the size might be, and how do you decide what fits? Well, good morning, Doug. We've talked about the need to divest to generate cash to help fund the Aerojet Rocketdyne acquisition. We're not gonna actually disclose what we've decided is non-core, but we have a regular process to review our portfolio and see as the company evolves, we're becoming more and more of a government or defense contractor. You know, we want things that align with the rest of the portfolio, where we have synergies and the ability to share technologies and processes. You know, we closed a real small one for $70 million. But for the larger ones, there's a process going on. We wanted to get through the first quarter, right, to update with current financial results and show that these are good, if not great businesses. It's, it's a usual analysis is, you know, we have good businesses and are there better owners for those businesses. We're not at all in a fire sale situation. We're gonna take our time, we're gonna get the maximum value for those properties. You know, I'd hope we could probably sign and announce something this year, maybe close one in Q4 or early 2024. We'll run a process. We get a lot of inbound calls, especially after something like this, where I say what I just said. There's interest in our portfolio. I'll just leave it at that. I'm confident we'll be able to get some proceeds. I think I previously said about $1 billion of proceeds from this process, meaning 2 or 3 divestitures. I'll stay committed to that number. Our next question is from the line of Richard Safran with Seaport Global Research. Please proceed with your question. Chris, Michelle, Mark, good morning. How are you? If it's okay, I'd like to return to the subject of bookings, and the 1.3 book-to-bill you did in the quarter. I thought you might talk about full year bookings expectations, and then, you know, if we start to think longer term, period of growth and the opportunity set, I was kind of wondering if you what you're thinking about, if book-to-bill, you know, should be better than 1.0, you know, in this growth period. Thanks. Yeah. Thanks, Rich. I mean, we always set our internal goals and aspirations to be more than 1.0 on book-to-bill. It's kind of hard to grow if you're not booking more orders than the revenue you're recognizing. You know, I think the 1.3 was absolutely a great way to start the year. You know, when we talked last time, you know, this is the impact of a continuing resolution, right? You know, until the CR gets broken loose, which it did, we start to see the money flow. As I've said before, the only one who dislikes the CR more than industry is this is the Department of Defense. I think we're off to a really good start. You know, the president's budget request of $842 billion, you know, is 3% growth, as you know, Rich. When you peel it back 4% on the investment accounts, you couple that with what we've been able to do internationally the last several years, the interest in TACOM, the Space International, you know, you would clearly expect that we'll be over 1.0 for book-to-bill for the year. Aspirationally, I'd like to be at least at 1.05 and maybe even 1.1. It's somewhat lumpy, right, as you know, and it depends on, we only talk and record the funded backlog, so that always has a little bit of a difference maybe relative to other companies. We're feeling really good. I think the key message here is, you know, this just confirms that our strategy is working and the customers appreciate and recognize what we're trying to do. Sometimes, you know, we have more innovative solutions. The focus is on speed and schedule and cost. We've kind of mixed those in, and they've been pretty aggressive in pursuing different markets and different technologies. I will also say that Michelle and I and the team spend a lot of time focused on risk management, and we had two opportunities in the quarter that were pretty exciting to us. When the final RFP came out, you know, there were fixed price development with fixed priced options, and we chose not to bid those for obvious reasons. It's very hard to commit to a fixed price development program when you don't know the spec. I think, we all look back at all the write-offs and losses, and more times than not, they're tied to that. We will not be playing that game. I've elevated it to what I think is the highest levels within the Pentagon, and the RFPs come out, we're not gonna bid. I would think over time, others aren't gonna bid, and ultimately, we'll go back to the appropriate contracting vehicle for the appropriate opportunity. Kind of a roundabout answer there, Rich, but I wanted to cover a few of those, a few of those points. I guess I'll just maybe throw in the pending acquisition of Aerojet Rocketdyne. I mean, by all accounts, and it's not always easy to look and compare apples to apples, but the munitions line in 2024 appears to be at least 20% higher than 2023. I think we all know the need and the desire for these munitions for not only current threats, but future threats, in addition to re fill in the stockpile. You know, I think the acquisition in December made a heck of a lot of sense, and I think when you look at a budget, makes even more sense. I'll just leave it at that. Rich, just to add the international part of this. 30% of our $5.8 billion of record orders within the quarter were international, and the book-to-bill was over 1.5 for international. It really speaks to what Chris was alluding to in terms of the strategies working. Our next question is from the line of Michael Ciarmoli with Truist Securities. Please proceed with your question. Hey, good morning, guys. Thanks for taking the questions. Maybe kind of a number of things, Chris, but maybe just to go back to Aerojet, pretty well-publicized about, you know, some of the capacity challenges and production challenges they're having. You know, they just got this award from the DoD for $250 million to enhance their capabilities in production. I guess one of the overhangs or concerns out there was how much cash you guys were gonna have to invest in that business. Clearly this potentially alleviates your CapEx. I guess I'm trying to figure out when can you guys start working together? Do you have to wait for this to close? 'Cause I would imagine you guys would wanna have some strategic input in terms of how they're building out or investing into the facilities to ramp up production. I guess, you know, just also staying on Aerojet, you mentioned divestitures, you know, and I just wonder, do the big lower stage space engines fit in your portfolio? Or when you talk about these divestitures, is, can something fall out of Aerojet? Questions there. Let me try to address them. Yeah, relative to working together, you know, there's some pretty clear rules that are called gun jumping, and we're very conscious, as is Aerojet Rocketdyne, not to trip over those thresholds. We can not actually work together and help them relative to the DPA money. We're aware of it. You know, we have the ability to review the documents, but you know, Eileen is running her company, I'm running my company, and until we close, you know, we can't really change that. That's been around for forever with all acquisitions, mergers, and consolidations. You know, all the more reason to get this transaction approved in a timely manner so that we can start working on that. You know, the Defense Production Act, DPA, it's actually been around since the 50s. This is a pile of money, a bucket of money that the DoD has, and it's really there to help strengthen the resiliency of the defense industrial base. With the focus on manufacturing and capability of these key technologies, I was pleased to see that they received this money. I know the team had been working on this for probably a year at Aerojet Rocketdyne. It's unrelated to the to the acquisition, but it is in support of their growth. It highlights to me the critical nature of these technologies and the DoD need for this company to be successful. This money, you know, I view as maybe a little more tactical relative to increasing both the physical and the digital infrastructure of Aerojet Rocketdyne. Our acquisition being more, you know, less tactical and more strategic will assure, you know, a strong industrial base, a more viable competitor. you know, I, I think it's great news for Aerojet Rocketdyne, great news for the Department of Defense. I'm pretty sure they have pretty thorough plans and a competent leadership team on how best to spend this money to optimize both capacity, digital engineering, and moving a couple production lines for the growth that we talked about. relative to the divestitures, yeah, we're not, everything I was talking about would be legacy L3Harris. Clearly the space propulsion stays once the deal closes. Thank you. Our next question is from the line of Pete Skibitski with Alembic Global. Please proceed with your question. Hey, good morning, everyone. Hey, hey, guys, maybe Michelle, on capital allocation, as Chris alluded to in his remarks, you guys went pretty heavy on repurchases to start the year, pretty close to your half a billion dollar target for the full year. How are you thinking about allocation now the balance of the year? 'Cause I know you do have some debt maturing this summer, I think. Do you look to address that, or are you looking at other options? Thanks. Good morning, Pete. We don't anticipate any changes to our previous commentary in terms of capital allocation. Longer term, we expect to have a fairly balanced approach. We've added some color to this within our investor letter in terms of buybacks, dividends, and acquisitions. To your point about the Aerojet acquisition, we do anticipate that still closing this year. As a result, our leverage ratio will get close to 4, with about $14 billion of debt. We are targeting over the next couple years to bring that back down to below 3. For this year, we're anticipating still the $500 million of share buybacks. Another $100 million to go based on the $400 million that we did within Q1. Along with the dividends being consistent with what we previously communicated. In terms of the debt, we do expect to pay that down within June. You should see that play out consistent with what we shared before. The next question is from the line of Robert Stallard with Vertical Research Partners. Please proceed with your question. Thanks so much. Good morning. Hello? Hello. Can you hear us? We can hear you. Okay, sorry. Good morning, guys. Just to, maybe wrap things up on the whole Aerojet topic. Let's assume things do get done, the deal is completed in the second half of this year. Do you anticipate any further significant M&A in the medium-term timeframe? Yeah, I think that's an easy one, Rob. Just picking up where Michelle left off, the answer would be no. You know, we'll have close to $13 billion-$14 billion of debt and, as we've said previously, we'll be using our free cash flow to reduce that debt to maintain our investment credit rating. No. No is the answer and, you know, a couple of years down the road, we can re-look at that. We wanna keep a strong balance sheet, focus on execution. You know, we really, going back to December, you know, there were three things that were a challenge, whether reality or perceived. That was how could you integrate Viasat, you know, fix your operational issues and buy Aerojet Rocketdyne at the same time. I'm pleased to report on Viasat that the integration is going well. Looks like both the revenue and the cost synergies will meet or exceed our business case. That is exciting. We're about six months ahead of schedule relative to consolidating facilities. We have a four-phase process. The risk of moving is reasonably low. We're in the middle of the first phase, so we'll basically take the four major product lines one by one, and that could be done by the end of this calendar year, which again, is ahead of schedule. you know, the customer feedback and the interactions has been real exciting relative to these new capabilities. we talked briefly about, you know, Link 16 in space. I'm pleased to say for the first time ever, Link 16 is in space based on some recent payloads that were launched. you know, it's probably a little early to say that the Viasat is done, but it's on a really good track, and I would think we kinda have that behind us. I think on the operational challenges, you know, again, really proud of this team in this quarter. It feels like we've turned the corner. A lot of this, and I know it was, nobody wanted to keep hearing about the products and 25% and revenue recognition and such, but it was unique compared to the rest of the industry. Now that we're getting the supplies in, we're redesigning products, you know, you're seeing that in the top line and you'll see that in the bottom line as well. Then by the time the deal closes, you know, the focus for my team and others will be on Aerojet Rocketdyne. January 1, a lot of questions, a lot of uncertainty, and I think we're knocking these issues out one by one over a 12-month period. By the time we get to 2024, we're gonna have a lot of momentum behind us. Hope that helps. Maybe we have time for, looks like, one last question or. That was it. All right. No other questions in the queue. Look, I appreciate everybody participating and calling in and asking the questions, and we'll look forward to engaging with you in the months ahead. Have a great weekend. Thanks. Thank you, everyone. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.