Okay, great. I think we're ready to go here. I'm Doug Harned, Bernstein's Global Aerospace and Defense analyst. I am thrilled to have back with us Chris Kubasik, Chairman and CEO of L3Harris. We also have the new CFO of L3Harris, Ken Sharp, and we have a lot to talk about here. I don't know if you have any forward-looking statements. Yeah, sure. Certain of our statements may contain forward-looking statements and applicable within the applicable security laws. Actual results may differ. We undertake no obligation to update. Would also just suggest that we're in a process with an IPO, and we really can't discuss that process. Would ask you refrain from asking questions about the process. Thank you. The only thing I'll say is, I was looking through my files, and on May 27th, 2004, you and I were at the Waldorf for this same event 22 years ago, and the defense budget was $369 billion. A benchmark? Just a fun fact. You're suggesting there's- You probably don't remember this. You're suggesting I do remember that. It was like your first conference. I remember that because there was a fatwa out on his boss at that time from Al-Qaeda. I didn't do that. You don't remember that? I do. Bob Stevens. That's why he sent me. We actually I'm going, "Do I really want to sit on the stage for this?" They had to go through the facility, heavy-duty screening, everything. That was a different time, and people thought that was a big budget then. They did. So- I feel like I'm setting myself up for a first question. Oh, there's all kinds of things we can go to here. But now, different company, different time. Maybe just can you start us off with just a little context about how you're looking at the environment. You've got a guide now for this year at $23 billion-$23.5 billion in revenues, which is above where your plan had been for 2026. Maybe you can tell us a little bit about how you're seeing the opportunities here and any risks that you're concerned about. All right. Well, thanks. Thank you all for joining. It was back in December of 2023, we had an investor day, and we set out a 2026 framework for both revenue, cash, and margin, and we're going to exceed all of those. Just in February, we had another investor day and set out a 2028 financial framework with 8% top line CAGR on revenue. Just to check that box real quick. We spent a lot of time over the last several years, L3 and Harris merged in 2019, really focused on shaping the portfolio for the future of warfare. Couple acquisitions, bunch of divestitures. When we sit here today, our portfolio is kind of under this overarching thought of we want to be able to sense, we want to be able to communicate, and we want to be able to intercept. When you look at our capabilities in space, which is a growth market and something we're excited about, I'm sure we can talk about Golden Dome. We look at all of our ISR aircraft that, again, are growing for not only the U.S. but international customers. Our resilient communications, we can talk about our software-defined radios, and then the acquisition we made less than three years ago, Aerojet Rocketdyne, for the solid rocket motors. All those are growth markets, and we feel like we're very well positioned. For decades, people like me and others have always come up and said, "Hey, it's a dangerous world. It's a dangerous world. You need a big defense budget." Here I am again saying, "It's a dangerous world." This time, I think it's even more serious than it's ever been. It's obvious what's going on around the world geopolitically, and that's why there's the drive for the significant increase in the defense budget, which I'm sure we can talk about. The base budget, in my opinion, will definitely be over $1 trillion, which is hard to believe. $369 billion 22 years ago. It was only $600 billion and change five years ago. This is a huge budget given all the threats. That environment is positive. The administration, a lot of the players in the administration are successful businessmen and women that bring a different pace of urgency and more of a business cadence to the Pentagon, which I find refreshing. They're challenging a lot of the status quo and trying to fix maybe some of the inefficiencies in the past. Seem to be a lot of tailwinds. The challenges really come down to the supply chain because a lot of these products are doubling, tripling, quadrupling in quantities, and a lot of these, there's only a single source. We're spending a lot of time, depending on the product, setting up a second or third source and making sure the whole ecosystem is, in fact, on a wartime footing. Yeah. Well, in terms of this large budget, so the Trump administration has proposed this $1.5 trillion budget. Although we share the view that it's going to be up, we're not necessarily expecting that. When you look at that budget, there's a lot of things in there, though, that benefit L3Harris. The process to get through that and get settled on a budget is quite complex right now. Can you give us your perspective on how that process might go and how you manage your expectations? I think the $1.5 trillion comes in three buckets. You have what's known as the base budget, which I think in what I've read and what you've maybe suggested, we will probably settle in that $1 trillion-$1.1 trillion range, which again, it is important to get the base up because very rarely does it go backwards. If you can get to a $1.1 trillion, it is only going to stay flat or get higher in the years to come, which I think is still a huge addressable market for the defense industrial base. I would think that would probably get passed sometime in the lame duck session after the election, just based on past history. Which is actually a few months earlier than most years when the CR continues into March or April. The next discussion is this Reconciliation Act, $350 billion. I think that is pretty political. Hard to say how that thing's going to settle down. There's a lot of munitions and funding in the Reconciliation Act. There was one passed last year. I think that money has been slowed to be spent. There's probably some reluctance to pass that entire amount. The third bucket, which we're confident if the reconciliation doesn't pass, they'll have what's called a supplemental. These are just different terms that we have in D.C. for funding these budgets. Somehow when the dust settles, it's probably going to be between $1.1 billion and $1.5 billion, and as I mentioned, our portfolio is well-aligned with what the needs are. A lot of our products, it's such a complicated process, depending on who's in the White House, who's in Congress, who's in the administration. At the end of the day, our team wakes up every day trying to support the warfighter. We're focused on national security, and the men and women out there want and prefer our products. Software-defined radios gets a lot of discussion, should be more in a positive light. There's over a million deployed. If you have family out there, I guarantee they want an L3Harris radio because it's resilient, it works. When you put all the politics and all the budgets, I look at our portfolio, we talk to the end users, they want our capabilities. I think that plays well for the long run. Just one thing. When you divide up that budget, let's say we don't get reconciliation or supplemental in the next few months. We would go into a CR that would have to be based off the prior appropriations bill. Actually, unlike prior years, when you stay up at least level, this would drop. Do you find anybody worried about that possibility? Not really. In the past couple of years, they've had anomalies and different types of CRs. They probably have some plan where certain increases will be allowed or new starts for national security reasons. A lot of the portfolio is just a continuation, especially in the munitions of existing products. It's not getting a lot of focus, to be honest with you. Okay. Yeah, we've been doing reprogramming on these CRs, which allows you to do those things. It is just this would be somewhat unique in that Reconciliation would not, that portion of the budget wouldn't move forward. Yeah. From a planning, I guess I didn't answer that question. We have over $40 billion of backlog, with $23 billion of revenue planned. The impact on the timing and the budget's important, but there's no 2026 revenue- Yeah -tied to anything we just talked about. That's more 2027 and 2028. Okay. Now, the war in Iran, following the war in Ukraine, we've used a lot of tactical missiles, interceptors. Other assets have been highly utilized. When you look at the impact of these conflicts on your business, it clearly affects you on the solid rocket motor side, but my guess is there are other things on more the sustainment side that also are likely to go up. Is that a correct assumption? How do you think about it? Well, I think about two things. Number one, how our products actually work in conflict, some classified, some not. Generally, I would say everything works as well or better than expected. We all do a lot of demos and war games and everything, but sometimes, unfortunately, a real conflict puts to test the entire defense industrial base and how these products perform. They are performing very well, and we talk about these software-defined radios, and it really heightened the importance of having resilient communications, which means you cannot be jammed, and people can't intercept your calls. Communications is the key to succeeding in a war. I think that played well with our communication capabilities, just not only on the ground, but air and space as well. Yes, I think some of these products last decades, some last seconds, and some last a couple of years, so there is a need to replenish. One of the other things that's been important in both these conflicts, we've seen a lot of asymmetric warfare, the use of low-cost drones, the importance of counter-UAS, a lot of things that this administration has been heavily encouraging new entrants to come into. I know you're involved in these areas. How do you think about your position vis-à-vis others? Sort of in this growth area. Okay. Well, I might be unusual in that we actually love the new entrants and try to embrace them. We own parts of 70 different venture capital-backed companies to pull their technology into our solutions to get them through the valley of death. We obviously would like to make a few bucks, but more importantly, it's to increase the probability of win, and we look at it as accelerated R&D. A couple of these companies have gone public and been a nice little windfall for us. We're excited about that. We tend to partner and work with these companies, especially AI companies, who realize you can have this great AI technology, but you actually have to put it on something, like hardware. That's where we have these partnerships with companies like Palantir and others. To answer your question on counter-UAS, which gets a lot of press, we have two products. One we call the VAMPIRE System, which basically it's all about hit to kill. How much does it cost? This one is about $30,000 per kill, and it's a vehicle-based system that's been deployed with great success in Ukraine. Think of this as not the last layer, but the next to last layer. I don't know what we can say, dozens of kilometers in. It's not the big multimillion-dollar interceptors. You need those. Yeah. This is a little closer in. We're working with the DoD here in the U.S. to look at a multi-year award of that. A lot of interest internationally. Breaking news that we have on our website that's coming out, we now have, I mentioned, over a million software-defined radios. On some of our current models, we have now software that the soldier can load onto their phone or their radio. This is very complicated, right? Within the last mile or two, they can scan the frequency spectrum to identify the frequency on an incoming drone and hit a button and jam that frequency and watch the drone fall to the ground, or I guess sometimes it goes back to where it was launched from. This is a huge deal. No impact on the battery, no impact on the performance of the radio. It's just a matter of a software download. We've tested this with great success. We're rolling it out through different models. You think about being innovative. Some days people think we're a prime. Sometimes they think we're a new entrant. I don't even know what we are, but we're working hard at just trying to support the war fighter and give you all a decent return on your investments. This is the kind of thing we're doing. You already have a million of these radios. We're making hundreds of thousands a year. With the software, this is a game changer. To counter drones specifically, those are two products that we have, both with our own money, both invested without a contract, and now our job is to go out and sell these. Obviously the software will have a 95% margin because it's software, and the other one is a little more traditional, but it's pretty exciting. Let's continue on that topic of radios because your radio business, developed with your own IP, commercially structured contracts, is a great margin business as we compare it across all defense companies. I guess, at first we saw it looked like they were going to take the budget down for the current gen radios. There's been some money. It's been upped a little bit. How should we think about it? I view these radios, the whole purpose of it is basically to have commonality across the force. How far out are you in terms of outfitting the Army, the Marines, until we get to where we want to be? Yeah. Well, there's two pieces to that, and I'll let Ken chime in maybe here in a minute. The international piece is growing. Our diversification, we have international and domestic customers, and depending on the budget and continuing resolution and such, one or the other tends to be the majority. This year it's been the international. We've had great success in Europe selling internationally. These are hundreds of millions, billion-dollar deals over decades in countries that we've disclosed, Germany, Netherlands, and several others in Europe. You get the commonality within NATO. If you think about how difficult the environment is to sell internationally, which you can figure out what that means, we have been quite successful. I think it's because there's a real threat, and at the end of the day, when there's a threat, you want the best technology. Politics and all that stuff is interesting, but you want to have the best technology to protect your country and your warfighter. That's been going quite well. To the domestic side, these modernizations are about a decade long. I'd say we're about five, six years through. Most people will say, "Oh my gosh, by 2031 you'll be out of business with the Army or the U.S." Well, actually in 2031, the men and women that got their radios in 2020 would appear to have 11-year-old radios. When was the last time anyone in this room had an 11-year-old iPhone, right? What do you need? Is this just a continual modernization? I got to be honest, from a business side, I'd rather have a 10-year modernization than someone say, "Give me a million radios." And then nine years later, they call for another one. It's a continuous thing. Now, are there going to be peaks and valleys? Yes, but the general trend has been upward for well over a decade. Again, these conflicts you referenced, gave further credence to the importance of having these communications. This is a tough market for people to break into with what they think are low-cost commercial products because they're easily jammed and then people die. At the end of the day, we have, because of hundreds of millions or billions of dollars of investments, the commercial business model. We love fixed price, we love commercial. I've been a big advocate of saying, "Let's have more commercial in the DoD." You want to go fast, if you've got more than one competitor, do away with all this Cost Accounting Standards crap, to call it what it is, and let's streamline. Nobody does that. You have GAAP financials, put out a bid, low price wins, best capability, move. We have a proven case where we've done it, 25% of our business for 20 years. It's a huge success. Customers happy, shareholders are happy. Guess I'm almost happy. Let's do more. Let's do more. Well- -It's all talk. Let's go do it. So- I guess you don't want to- Un- Yeah, we let Ken chime in. Yeah. You used to carry a radio. Yeah, well- Okay. I think this- He's a Marine, they're used to trying to shout. Oh, okay. All right. Well, I think. It's harder. This job's more dangerous. Yeah, this job may be more dangerous, but I do think this, you asked earlier about the new entrants, and I think this trusted disruptor strategy or culture we have in the business comes really through in the radios, right? We call them radios, I wish we could call them something else because they're something far more. To have our engineers off developing RayShield, which I think you guys can Google and see the videos, it's pretty neat stuff. Thinking about having a war fighter on the other end with a drone flying around them, and they can down it and save themselves and their colleagues I think is pretty important. Really, it's a great business. We looked at NGC2, we had some awards in Q1. That's where the budget got a little confusing. The clarity around it, the Marines buying more radios, so the numbers clearly went up. I think we're pretty excited that business grew 3% in the Q1. We expect it to accelerate as the year goes on, but it's certainly a great business. That's where I wanted to go next was NGC2. I think many of us have thought about this as you deliver 10 years of radios, and then you go to the next gen, which is NGC2. NGC2, I go through the budget and try and understand what on earth this is. It's very difficult. There are all these different elements in there. Do I have it right in saying that what you're talking about is, rather than a break point to go to NGC2, what you're talking about is taking a platform and continuing to evolve that platform without a break? That would be our understanding and our strategy, and I'll admit the budget's confusing to find all these lines, but if you take the couple NG next gen communication line items, the old HMS, handheld, manpack, you add them all up, there's more money than there was a year ago. That's the most complicated. One of the complicated parts of this industry is trying to figure out where the money is. There's more money for this. There's an infrastructure layer, which helps establish the network, which won't be a big market for us, but these devices, radios, will clearly be a piece of it, or a big piece of it. We've already got a couple wins, so it's our job to go win, and we think we're well-positioned and our past performance is paying off. As long as we have, which we've been advocating for, and the customer's been understandably very supportive, let's have live demos in contested environments and see whose products win. We can simulate darn near anything. Jamming is the number one issue for comms, everybody bring what they have. Let's go to an environment, let's jam them. Some will work, buy them. The ones that don't, send them home. Well, and that's essentially- It's that simple. Essentially what happened in the original JTRS program when Harris won this whole platform, right? If you look forward, a concern we've had, and you all have addressed it. You have addressed this some, but was that you could have a break point. You have this phenomenally profitable program today that extends out for a decade, and that you might end up in something that contractually is not structured the same way. In other words, you could end up with something that's not a commercial contract long-term. Is that a risk at all? I don't think it's a risk. People have been saying that for decades. The trend and the tailwind is for more and more commercial. I think ideally, we're going to see more and more of that. Okay. That's the beauty of having the new entrants, people coming in and challenging the status quo, having people in the Pentagon who've never been in the Pentagon saying, "What the heck is this? Can't we just put out an RFP and pick a winner?" I'm like, "Please do." That's what they're trying to do, and they've had some success. It goes back to November 7th, Hegseth gave a speech about all the acquisition reform. There's a lot of activity having been accomplished in a relatively short period of time, and several more years to go. I'm optimistic. Staying in communication systems and spectrum dominance business, can you talk about how your TDL acquisition has impacted your business? It seems like that's one where you've expanded your opportunity significantly. TDL is the Tactical Data Links business of Viasat that we bought in January of 2023. This is probably best known for Link 16 as the access point we got. It's all about real estate to some degree. It's on 20,000 different platforms, airplane, ships, vehicles, and that gave us the avenue to be able to insert and upgrade different technologies on those platforms while continuing to deploy Link 16. We're able to get Link 16 in space. Never done before, so now we've opened up the entire space domain. That, we look at annually, the returns on our investments. We've only made two, because the merger is one. We made that and Aerojet, three acquisitions or mergers in six years. By all accounts, these have more than beat the business case and more than paid off. Again, a good example of capital deployment and the team knowing how to make an acquisition, integrate, take out the cost, and get the revenue synergies even more so than the cost. It's been a good acquisition. Now, this business, great margins, 25 percentile margins. Because of the commercial structure, it's one where I would expect all the work you've done on cost reductions to flow through to higher margins. How should we think about that trajectory going forward? Seems like the optimal place for cost reduction wins. There's other guys that have been up here making 11% or 12%, and you ask them can they get to 14% or 15%. To summarize, I'm at 25%, and you want to know what I'm getting to. That's ab- 28. Okay. That's absolutely right. I understand the question. Yeah. That's the question. Exactly. Yeah. That's a fair question. Yeah. It's a fair one, Chris. We're improving each and every year. At that rate, we're investing a lot as a commercial model. It's a growth market in my mind, and we're a growth company. We're growing 8% CAGR over the next three years. We will prioritize growth over margin every day of the week. It's a generational opportunity here with a $1 trillion budget and our portfolio to really grow the backlog, grow the revenue, and position us long term for sustained growth. I mentioned the radio with the drone. We didn't get an RFP. Nobody asked us to do it. It's a threat. We spent tens of millions of dollars developing this capability, and I believe we're going to sell tens or hundreds of thousands of licenses for software to people with radios, new radios or existing radios, to knock down a drone. Which will have- If they don't want it, I'll be shocked. Which will have great margin in that work, right? Once we make the sale. Yeah. I feel like I'm making a pitch today if anyone's listening. Absolutely. It's that type of cycle. We're investing in the business beyond the radios, the VAMPIRE product Chris mentioned earlier, things like that are also in there. You saw our R&D's up actually year-over-year. We're going to continue looking at the portfolio and make sure we have the next set of products for the warfighter. Yeah. In this portfolio is Next Generation Jammer, which is a huge win. Yeah -for the F/A-18. That's initially because it's developmental, is a cost-plus job. You should think high single-digit margins for hundreds of millions, close to $1 billion. The biggest flaw I see in this industry that we try not to make is we look at both, not only the margins are important, but the return on invested capital. If you can get a billion-dollar cost-plus job at 9% margin, which is dilute of the 25%, even I can figure that out, you take it every day of the week. You got to take it. It's like infinite ROIC, it opens up a market to get into low rate production, full rate production, and ultimately export. There are people in this industry, sometimes even in my own company, who say, "Well, I don't want to bid this 9% job." It's like, why not? I don't want to say you can't lose money on a cost-plus job, but trust me, you've really, really got to screw up. Yeah to lose money on a cost-plus job. billion dollars, 9%, infinite ROIC. Not exactly, because you got a two-week billing lag. You take it. Someone's trying to hand you $90 million. Why do you not take it? Let's switch over- That's also depressing, a little bit of the 28. It's really- I could go on all day. I'm happy with the portfolio. Yeah. No, no. If I go back to, when was it, December 23, your investor day, when you laid out the framework for 2026, you said the best opportunity for margin expansion would be right there in the communication systems business. Margins are good, but I'm just. I said all sectors would grow 100 basis points in three years. They've all done it. They've all done it. So. Yeah. More. Okay. Let's go over to Missile Solutions. Demand is really high for solid rocket motors. If we go back to the beginning of the year, you all were already planning expansion of capacity. We saw the frameworks come out for Lockheed Martin, for Raytheon to triple or quadruple, depending on the program. You all are focused on a lot of those programs with your solid rocket motors. The war in Iran starts. Well, we were already talking about those large rate increases, and given all of the activity in Iran, that only heightens the need. There was the meeting that I know you were at the White House, to talk about what we can do here. First, what can you do? Is it possible in the next three years to take rates up even higher than you were thinking from these frameworks originally? We are absolutely focused on accelerating the rates. The industry, as you all know, has consolidated over the years, so it's a capacity issue. We are working our solid rocket motor teams, mainly in Canoga Park, California, Camden, Arkansas, Huntsville, Alabama, and Orange, Virginia, no kidding, 24/7. We're working non-stop around the clock to be on this wartime footing. The question is, do we have, and the answer is we don't, have enough capacity. You need a certain number of mixers, which we've ordered. You need ovens. Those have to go into buildings. The building goes on the land. We have thousands of acres. Land's not a problem. We're building buildings. We've committed to build 60 buildings. We've designed 50, broken ground on 30. We just announced, I guess not publicly, but I guess I am, a new PAC-3 Patriot building that should be open in July of 2027 in Camden, Arkansas. Get the equipment in. That will allow us to double production. We're doing a couple of things, and the Department of War has these BOND executives. They've used consultants, kind of a PE model. They're at our facilities, and everyone's facilities, trying to figure out, working with our teams, how to increase with what we have. Can you get another 10% or 15% or 20% by improving yields, by challenging certain processes, streamlining things? That will get us some of it. At the end of the day, we just need more buildings, more equipment, and we're rolling those out, opening facilities, and we've opened some already and some in 2027, 2028, 2029. That's our $3 billion investment that we've talked about to, as you say, double, triple, or quadruple production. It's a once in a generation opportunity. We're all in. We've been spending money going back at least six months. We've placed purchase orders with our supply chain. We've talked about Missile segment growing 20% between now and the 2028 framework. It's very optimistic as to. There, you need the whole ecosystem to line up. If we quadruple a missile, we got to quadruple the cases, we got to quadruple the igniters, the valves, the throttles. A lot of this industry has been single source. We're getting second sources, third sources. It's a great opportunity. As I tell everyone, open a company and make nozzles, make cases, make valves, make igniters. I guarantee you're not going to lose money. Some of this stuff we're investing our own money, and we're going to build ourselves, not to replace these other companies, but to supplement them. It's just, we were on a several-hour call last night. I don't know which chime in Ken, but I've never seen anything like this in my career, just huge opportunities, and it's a great market to be in. I think there's some new entrants coming in, which is great. There's more demand than there is supply by a mile. I would've said, Doug, I thought your margin question was going to be about missiles. That was a lead in the missiles. I think we're very excited, right? You look at the acquisition we made. I think it was a great time to acquisition. It's great capability. I worked at a company that did some solid rocket motors. Just looking at the portfolio, we have the ability to accelerate should be really good, and I think the team's completely focused on it. I think at some point, Chris is probably going to have a hotel in Arkansas, and everybody's going to be living right next to the plant. That's okay because that's what we need to do to get the capacity up. Well, Chris has talked to me the last two years about his trips to Arkansas. I love Arkansas. Yeah, I know you're all over that so- I think last year we hired 500 people. We've hired, already this year, a couple hundred people. It's a growth market in Camden. East Camden, Arkansas. We've met, myself and the team, with Governor Sanders, and they're investing in the area because it's a growth market. They need schools. They need shopping centers. They need apartments. This is a whole- Yeah -ecosystem. There are two other companies. Oh, General Dynamics is down there. Lockheed Martin's down there. It really is. We all kind of work collaboratively, but yet we compete. This whole state has to step forward and make this. We have hourly employees driving 90 minutes each way to and from work. That's not sustainable. They are happy to have a job. It's very patriotic. Secretary Hegseth was down there in February and gave a nice rah-rah speech to 1,500 employees. It's exciting stuff. We just have to get the infrastructure there to support. Well, as you look at this growth, all you have to do is look at budget numbers. You can look at a lot of the commentary coming out from the Pentagon, that all stress the demand for this segment. In a talk with Jim Taiclet about it this morning and about the frameworks there for the PAC-3 for THAAD and in how the process to get these under contract and to get this established in a way where you can have confidence that five, six years from now, that that actual volume will be there. As a solid rocket motor provider, how do you get comfortable that this is going to stay in place if we have a new administration, new geopolitics? Yep. Great question. I should clarify, I was not in the White House. I sent Ken Bedingfield. Oh, okay. He was in the White House. All right. If he really matters, but You can look at the picture. I was in Australia and couldn't get back in time. Okay. You don't get a lot of notice for some of these meetings, I'll just leave it at that. Okay. Maybe going to D.C. tonight, anything's possible. No, as we're structuring, the good thing is we're all aligned as an industry as to the need to have these seven-year, five-year, multi-year contracts and be protected in such a way. The big focus is going to be on the termination liability. We're all investing, as an industry, I'm guessing well over $20 billion. Where we get the money is different ways. We're doing an IPO, some people are borrowing, some have free cash. Doesn't really matter. We're investing with the understanding that there's this incredible demand at least over seven years, and that will be contractually protected, and I think the way we get there is through some sort of termination liability. If we invest $3 billion, assuming this rate of production over seven years, and someone changes the rate to a lower amount, at least find a way to recover some of that $3 billion. If a certain program is truncated, you get that back. What we've done differently and, not that anyone did anything wrong in the past, it's always been way too siloed. Each program, each service had its own building, its own mixer, its own oven. Some of our new facilities we're building are more common. If someone says, "I need more Standard Missiles," we can use the, I mean, different propellant, but the same mixers and say, "All right." Everybody, let's go make a ton of Standard Missiles. Six months later, I need more THAADs. We don't have to go get a THAAD building or a Standard Missile building. Some of these are Navy, and some are Army and some are-m akes your head hurt. We're going with a common facilities that allows the flexibility to flex based on the needs. We haven't even talked about the international demand for these products, which is on top of everything. Yeah I'm sure Jim Taiclet talked to you about, and I'm talking to you about. Yeah. I think everybody's aligned, and we all want to help the government go fast, but we also got to protect our own company and our shareholders' interest. I think it's going to all work. I would just add, too, it's a lot of bipartisan support. These tend to be defensive interceptors, so at the end of the day, the inventories are down. They need to be filled. They need to be brought back up. We talk about capacity is the new capability, and I think that's the big focus. Well, and- I think that's an important point on it. The National Defense Strategy kind of goes back to the Reagan era of peace through strength, which was always meant we have more weapons than anybody else, so don't mess with us. It's also what Ken said, is capacity, which we don't have, which we're all building, is not only do we have enough in our stockpile and enough whatever product it is, we actually have the capacity, the facilities where we, as a nation, can ramp up and make more quickly. That doesn't exist today, as evidenced by everything you read, as a result of the consolidation, defense budget's going down or not growing. Missiles was always kind of the plug when you have a defense budget and someone whacks your budget, "I'll get 500 instead of 800." You need one airplane, you need a whole ship, but when you're buying thousands of missiles and your budget's not as big, you just buy 500 like I said, instead of 800. You do that for a decade, then you're like, "Damn, I could use more. Well, without going into the IPO process or anything like that, you do have a truly unique thing here, which is the $1 billion equity investment into this business by the Pentagon. We haven't seen that before. How should we look at that in terms of the department's commitment to what you're doing and how you manage your capital investments? I think they are a passive investor in preferred stock that upon an IPO, will convert to common stock, at which point, after a couple of years, they have the ability to do whatever they want with it. Hopefully book a gain, sell it, keep it, whatever. It was just a way to creatively finance. We look at this IPO as a financing or a capital raise to get us the $3 billion so that we could actually meet these demands. The $1 billion arrived in April. We had already been spending, so this kind of helps us with our cash flow. We won't see it in free cash flow. It's an equity investment. You get the point. I think it shows the importance to allow us to invest as we continue to negotiate the frameworks and the contracts. I think it's nothing but positive. I think it's unique based on the company and their capital structure. As we've talked about, we've made several acquisitions lever it up for that and going and buying another, borrowing $3 billion more, $4 billion just didn't seem like a smart move based on our leverage and our credit rating. This seemed to be a creative way to raise the capital. We'll control it. We'll own 80% plus, and it'll be treated like another segment, and excited to see how this plays out. If we jump over to space, I want to get your sense of what your space growth outlook would be. You've got wins on every tranche of the tracking layer. You've got HBTSS. How should we look at growth there? Yeah, I'll give it a little bit and then ask Ken to talk more specific on the number. Just give you situational awareness, as you get into these new markets, which was a new market for us six years ago, priming these space satellites. We've always had great payload capability, and we'd be a supplier to somebody who would be the prime. You kind of get in this catch-22 is how are we going to give you guys or any of these companies, new entrants, generically, business if you can't make it? You end up investing, in our case, two facilities, 100,000 sq ft, in advance of award, one in Fort Wayne, Indiana, one in Florida. You actually build-- We had some business, but you take a little bit of risk and say, "I'm going to build the factory of the future in anticipation of winning these programs." It actually gets a little tricky because you're not going to win without a building, and you need the building to win. You hear a lot from the customer. They want to reward companies that are investing, leaning forward, all those buzzwords. There's an example where we did it. We obviously already had a space business, and once you have the facilities, they have the confidence to give you the work, versus, "Give me this contract and I'll build a building." They want it in three years, it takes you two to build a building. I'm just laying that out. That's a little different than it has been in the past. You have to be strategic as to where you've done it. We've done it in munitions, we've done it in space, and it's paying off. You want to talk about the actual growth rates? Yeah. Sure. Top line, we're talking about 8% growth- Yeah -this year. When we think about the guidance, this is the one we're probably thinking about, could we do better on the revenue side? You saw Q1. Is this Space? The whole sector. The whole sector. The whole segment, sorry. Space and Mission Systems. Yeah. Yes. And we did a little bit better in Q1. I think it was 24% growth, so that means the remaining three quarters would be, call it six. I think we're set up for a good year in the SMS sector. How should we think about the space portion relative to Mission Systems in terms of growth? Yeah, I would argue they're both well-positioned. The HBTSS award coming up, that's probably a big driver for us. We're looking forward to that being announced and being successful on that. I'll say there's a lot of classified work in there, too. Yeah. The space piece, the actual satellite piece, is a solid mid-single digit growth business. Okay. Well, as you grow that, though, if we go back 10 to 15 years ago, and you look at what military space looked like. It was mostly sort of these large, exquisite platforms. Ones that we talked about 20 years ago here. It probably just got launched last week. Those were lower margin. I view them as almost when you go into the facilities, they're like job shop facilities, sort of building each one of these billion-dollar satellites. Today, this is much more about a production line. Exactly. Not only is it a production line to put lots of these up, but you are going to have to replace them, right, like five, six years. Yep. How does that change the economics of space? That's a great question. Yeah. In the old days, these were multi-billion dollar satellites that were geosynchronous orbit, and they would last 15 years. Now we're going with the low Earth orbit satellites, as Doug said, that have more to three to five-year life, depending on how they're designed or the requirements. You get more of a constellation, 18, 20, 24 satellites instead of one big one, and they have a certain life to them. I think early on, the economics, it's all competitive, right? There's lots of new entrants. There's usually two or three winners, especially for the SDA. Their constellations are 54 satellites. They have the specs, so there's usually three winners of 18. I think early on, it's decent business, but not great margins, probably compared to our 16%, dilutive to our consolidated, but consistent with what you'd call a prime margin, to be honest. Over time, the question will be how many entrants will be in there and when does your performance pay off, and when do you get the ability maybe to have a premium on pricing based on your performance? I think that's kind of how the model works. It's not a service model. There'll always be a contract. I want 18 satellites. How much? $800 million. We'll launch them in two years. Build them, launch them, that kind of cycle. We're not going to build ahead of need because the requirements are so specific, you don't know what they're going to want. I guess where I was going with this is the exquisite multi-billion dollar satellite programs tended to be I think, 9%, 10% type margins. Yeah. I see where you're going. This one looks potentially more like an assembly line situation. You could operate this fixed price, do higher volumes, and look more like an aircraft or missile program. That's fair. Yeah, no, I missed the point. With mid-teens margin, or at least low double digits. I think when you get into production, it's absolutely, and who can, in our case, or who can insert AI or digital engineering and who can build, not necessarily what you charge the customer, who can build the cheapest satellite? Time is of the essence, right? It starts with the design. We're spending a lot of focus on design for manufacturing, design for supply chain. I go through my career way back when everybody wanted the best product, regardless of what it cost, right? You kind of went to the cycle where we need to have the cheapest product, because affordability matters. My assessment is speed matters. Who can get me satellites in 18 months, right? How do you get that system working so that my material, my labor, my design, my ability to make these things is quicker than my competitor's, mine will be cheaper, which will then allow me to charge a higher margin, because it's all competitive, not cost and pricing data. That's a fair point. It's all about optimizing. Again, this is where the whole ecosystem has to be on a wartime footing, because if you're cranking out, whatever, 20 a year, and then there's a continuing resolution, then you shut everything down, and then they say, "Start again." I think this administration gets it. You got to have the flow. Yeah. If you want 20 satellites a year, give me a five-year contract for 100, and I guarantee they'll be cheaper than five- Yeah -20 year, with six-month breaks in between, because we can't seem to pass a budget. We're at a time of just one last thing, just to wrap this up. You've guided to $3 billion in free cash flow this year. How should we think about the opportunities potentially to take that higher or if there are any risks around that number? Sounds like a CFO. Well, that's our guide, right? Give us some time to work our way through it. Certainly, our pattern of cash, we were slightly negative in Q1. We'll work the next three quarters, look for positive cash generation and certainly close the gap to the $3 billion and see what we can do beyond that. I think our focus, though, candidly, is as much around investing in the business and getting the capacity. I think if there was a trade on the say $3.1 billion to $3 billion, we'd probably spend another $100 million to drive more growth at the end of the day. Yeah keep it to $3 billion. That's the focus. Great. Well, Chris and Ken, thank you very much.