Okay, thanks. Good morning, everyone. Thanks for joining us this morning. My name is Peter Arment, Senior Aerospace Defense Analyst here at Baird. We are delighted to have with us this morning Northrop Grumman Corporation, and with us from Northrop Grumman, we have Kathy Warden, who's the Chair, Chief Executive Officer, and President. Northrop Grumman is a $77 billion market cap company, a leading national security company, not only for domestic but also international allied nations. The company's had a terrific 2024 and has continued to show a lot of positive outlook as we think about 2025. Kathy's going to make a forward-looking statement and then some opening comments, and then we're going to get into Q&A, so Kathy, welcome. Thank you, Peter. It's so nice to be back with you again this year, and thank you all for joining us, so I am going to make some forward-looking statements today, and subject to Safe Harbor, I want to remind you that those do contain risks and uncertainties, and you can find a full disclosure of those risks and uncertainties in our SEC filings. As Peter noted, we have had a strong 2024. In third quarter, we once again reported results that showed that our strategy is working. We are growing our top line so far this year, 6% growth year to date, projection to end the year at 5%, which will be our fifth straight year of compound annual growth at 5% annual organic. We also have a record backlog in the company, a reflection of the strong demand that we're seeing both domestically and with our international partners. And we are converting that into sales, as I mentioned, and increasing our segment operating margin. We have been focused on that expansion, and it is taking hold, and you're seeing that show up in our results this year. And we are growing EPS even faster than margins. We have done that as a reflection of our ability to reduce share count at the same time that we are increasing margin rate. And we are generating stronger cash flows, 15% growth projected this year, year over year, and 20% projected for next year. We do expect to continue to grow the top line, 3%-4% next year, expect earnings to continue to expand faster than sales. So the setup for the company is very solid, and we expect to see continued strength of demand both domestically and internationally. Perfect. Great segue into, I'm going to ask you about the current defense landscape. Maybe just give us your thoughts about the global defense landscape. In 2024, I mean, we're post the election. There's been a lot of geopolitical tensions around the world. But with that view towards 2025 and the rest of the decade, maybe, you know, how do you view the important role that Northrop Grumman plays in helping kind of de-escalation potential regional and global conflicts? Very much like the President-elect has said, we believe that strength is generated through power and that the deterrent that the U.S. provides on a worldwide basis through our nuclear triad is an important underpinning of peace and stability, and it has been for decades. And of course, our company plays a vital role in all three legs of the nuclear triad modernization that is underway with the B-21, Sentinel and our contributions to nuclear submarines. We also, though, see that our allies need to build up their own capabilities for defense, and that's happening across Europe and Asia at an unprecedented rate. And as a result, we're seeing our international business expand as well. In the third quarter, our book- to- bill was 2x international, and that expansion is expected to continue into the near term as our allies move toward that 2% of GDP target for national security expenditures. So both domestically and globally, our portfolio lines up well to what the priorities have been and what we believe they will be well into the future. Because what we find is the National Defense Strategy for the U.S. very much is responsive to the global threat environment. It doesn't tend to change administration to administration. As a matter of fact, it's been remarkably consistent over the last two administrations, and we anticipate that that will continue. So staying in kind of like the competitive landscape, you know, we've seen the emergence of a lot of modular systems out there, the use of software, the words that get thrown around are expendable or attritable systems across different airborne platforms and drones, other domains. How are you planning to kind of compete in those markets? Because they are getting a lot of attention, you know, kind of outside of the traditional kind of defense primes. We've seen that with kind of the efforts by the DIU and Silicon Valley efforts. So just your thoughts on that kind of and how Northrop fits into that. Yes. Our portfolio is extremely broad in terms of the technology base that we are able to bring to bear on our customers' hardest challenges. And whether you think of that in the space domain, the air domain, the land domain, or the undersea domain, what we are doing is innovating in technologies that require expertise around hardware and software to be integrated for a mission solution. And the legacy of our company has to be on that leading edge of technology innovation on everything from material sciences to computing and microelectronics and bring those to bear in an integrated fashion. We still believe that that is the strength of support to American military to be able to stay at that leading edge of applying technology to solutions that are necessary but oftentimes bespoke to military application. And so we have seen, even as certain architectures for defense have shifted, like in the space domain, to more proliferated assets, that we have been very competitive in that space because we are taking the capabilities that we have had in more exquisite, high-value assets, and we're able to scale that to less expensive solutions. But at the end of the day, working across that entire architecture gives us scale. It gives us innovation and research and development expertise that we can now apply in this marketplace. It does mean that new entrants come into the marketplace. That's been happening also for as long as I can recall. And those companies generally come into the space, and they do make headway. But in areas of specific application, the difference in our company is the breadth and the scale that we have to compete more broadly. Yeah, the strength of Northrop, we can kind of marry your heritage software and hardware capabilities, but some of these other new entrants don't really have both, and I think that's the big difference, right? Absolutely. Yeah, you've seen that. Maybe let's talk about some of your large programs that are ramping. It's part of your diversification still remains, though, key to your Northrop strategy. Your three largest programs make up about 25% of the company revenues with the B-21, the Sentinel programs, and still their ability to ramp and contributing around high single-digit sales contribution, while F-35 contributes another like kind of 10% of annual revenues. So how should we think about, you know, some of these franchise programs today? They're expected top line and margin contribution through the end of this decade. Each of these programs are relevant to the DOD budgets, you know, and kind of supporting the National Defense Strategy. Those are three important pieces of our portfolio. As you know, they make up 25% of our revenue. Again, pointing to the diversification of the portfolio. With B-21 and Sentinel both scaling, we still see them each contributing less than 10% of sales through the decade. That shows the diversity of the growth that we have in the portfolio and the drivers for that growth. In the case of our contribution to nuclear triad recapitalization, as I noted, we see B-21 continuing to scale as it moves into production. It is performing exceptionally well. And the fact that we have gotten as far as we have into flight test and those flight test assets are flying as modeled is a testament to the work that we've done to really digitize our ecosystem and to be able to deliver results on an aircraft development program that are somewhat unprecedented. And we're very proud of the team's accomplishments in that area. We want to bring that same capability to Sentinel, which is a bit earlier in its development life cycle, with a focus on driving down the cost to the taxpayer for the deployment of that system into the field, which would happen in the 2030 timeframe. And of course, on F-35, we are very proud of our contribution not only to the system that is in production today, but the modernization of the F-35 as we move forward. Each of those three programs will be a strong foundation for our nation's defense and also for our allies. Although we don't export B-21 and Sentinel is a U.S.-based system, they provide the backbone of global security for not just the U.S., but our allied partners as well. Yeah. So thinking of allied partners or just talking about international demand, you know, that's a key growth story that's kind of emerging for you. I think this year in the U.S., I think we ended up in September, not your company, but total FMS sales are at a record level of, I think, over $160 billion. So, I mean, it's been a massive demand signal from around the world that they want U.S. technologies. So when we think about Northrop, which has not been traditionally a large international weapons systems, you know, kind of provider to the international markets, but that seems to be changing. You've talked a lot about that, I think, on a lot of different calls. Maybe if you could just talk about the key areas of the portfolio that are exposed to some of that international demand, what's growing faster, and how sustainable you think that trend is? Yes, well, as I've talked about our portfolio, even in this discussion, a lot of it has focused on what we are developing and deploying for the U.S. in the backbone of strategic deterrence, but there is a lot more to our portfolio, and increasingly, we have products that we can export to allies for integrated air and missile defense, munitions and tactical missiles, aircraft that support surveillance of large areas, and these assets are showing their relevance both in the Pacific and the European theater as our allies and the U.S. look at operations in these vast domains, and so what we have seen is that the number of products that our company has to export today is about three times what it was just six years ago. As a result, that demand is coming to fruition, and we are seeing an increase, as I talked about in our book-to-bill for international. But we are just at the tip of the iceberg for that international opportunity set for our company. In every area that I just mentioned, we are just getting started on taking those products and selling them globally. As a result, we expect the real opportunities to materialize toward the end of this decade. We believe that that demand signal will remain strong because these capabilities are the underpinning of what our allies are looking for and looking for to buy and deploy within their environment. That's important as well. As you think about expendables and weapons, that is what's driving a high level of demand right this instant. But if you think about the end of this decade and what an allied partner wants, they want to be able to have more deterrence so that they don't find themselves in a conflict. They want to be able to, if they do find themselves in a conflict, win in a decisive manner. These are some of the higher-end capabilities that our company offers and are in increasingly high demand. Yeah. One of the ones that I think you've highlighted on many calls is IBCS. Maybe could you talk a little bit about the Poland opportunity and then maybe how that kind of lines up with some other international opportunities for the same system? Yes, so IBCS is the backbone of Northrop's integrated air and missile defense solution. Think of it as an open system architecture that connects sensors like radars to detect incoming missile threats and then brings forward kinetic options, and this can be a whole variety of shooters that the country has, and we can integrate U.S. systems, but we can also integrate a country's systems that are deployed in their battlespace, and that is the beauty of this architecture, that it very rapidly can, through software, integrate hardware that was never meant to work together for that integrated air and missile defense solution. We are deploying it for the U.S. and now deploying it for Poland. We have about a dozen other countries that have expressed interest and are at various stages of the pipeline, and we will sell them the same system, the same hardware and software integrated. But what they will be able to do is, through their local partners and industrial base, integrate their capabilities. And so it will be their own sovereign integrated air and missile defense capability. This is the way our allied partners want to work. They want industrial-based content in their country. They want their systems to be able to integrate into these architectures. But they also want the strength and the benefit of investment that the U.S. has made in these very sophisticated systems. So it's a great example of the win-win between the U.S. and our allied partners. And it makes them more interoperable when they are working together to understand that integrated air and missile defense picture. Yeah. So it's a win-win for your growth story. But it's also, you know, can you talk a little bit about potentially the margin upside of international deliveries? Because, you know, as opposed to the DOD, and, you know, are there opportunities with other systems where there could be even more Direct Commercial Sales? Yes, so when you think about that architecture I just spoke of, that is typically a Foreign Military Sales endeavor because it is highly integrated with a U.S. program of record, and the margins are accretive to our overall margins, so that's a very positive part of our story. In our international portfolio, about half of it is Foreign Military Sales. The other half is Direct Commercial Sales, which Peter was just asking about, and for Direct Commercial Sales, that's things like the weapons themselves would tend to be more of a product line purchase, and we would just do a direct commercial sale in that case. Those margins are also accretive to the company overall, so as we shift to more international sales, it has a tailwind to our company margin rate. Yeah. So just staying on margins in general, overall, you know, when you think about margins, do you think about, you know, is performance or mix the larger driver when you think about the total company? And then, you know, how do we think about more transition to fixed price production work versus kind of the cost plus? Because I know that's been a big, you know, mix driver. Yes. It's a combination of the two and roughly equal weighted performance through productivity enhancements. What I mentioned with our digital transformation that is driving automation into the factory floor and reducing cost, reducing rework, and enhancing worker productivity are all contributions to what I would put in that performance bucket that is a tailwind to our margin rates. Then when you shift to mix, most of our business has seen a boost in development work, new franchises coming in where we are doing the front-end development. And those margins tend to be lower until you shift into production. For our Mission Systems business, for instance, we've gone from about 35% to 45% cost-plus work, development work, if you will. So that's a meaningful shift in a portfolio like that over the last several years. It will shift back as those development programs move into production. And that is a tailwind to margins. And each of our businesses are seeing that kind of shift in mix. So both will contribute. And then, as we just talked about, international sales are the third leg of that stool for margin expansion. Fantastic. Let's talk about some of the individual segments. We'll start with Aeronautics. Hard not to talk about Aeronautics without the B-21, which is hard to talk about, but we'll still ask the questions. It's the highest priority program in the DOD. All accounts, though, Northrop is executing incredibly well based on some of your own commentary and then, I think, the feedback that's been out there from the Air Force leaders. Maybe talk about, I guess, some of the tools and the strategies that you've implemented to keep the program on schedule, and then how are you thinking about the procurement levels of B-21? Because there are a lot of different thoughts out there that maybe there could be more. We have focused on delivering on time and at our cost targets or below. And we are achieving on both dimensions. And we've done that by investing in the program in a variety of ways. I just talked about what we're doing enterprise-wide with our digital transformation to drive productivity and automation into the factory floor. But we've also invested in training so that as our workers show up on the factory floor, they have the skill sets to be productive on day one. We have invested in test assets that have allowed us to de-risk the integration of the aircraft and its Mission Systems before we get into flight test. We have created digital models of the aircraft that have gone to our suppliers so that when they build parts, they are building them to a spec that we know is going to integrate when they show up on the factory floor. I mean, these are just a few examples. And you may be sitting there thinking, well, this is how every aircraft program works, right? No. This is not. This is a new way of doing business. And we are pioneering in that regard, not just what we're building, because the aircraft itself is a phenomenal step functioning capability, but the way we have gone about developing and producing. And I will also say that it is very uncommon, but it is the case in B-21 that we built the test aircraft exactly to the production spec by the same technicians on the same factory floor. We did not build a prototype or a first of a kind to get through test and then have to figure out how to meet requirements as we transition into production. It is the test aircraft that's flying is the production aircraft, and they're coming off of the same factory floor. All of this has helped to both de-risk the program, but also achieve the results that I just mentioned in terms of meeting schedule and being below the original cost target for the platform. That is what enables options now for the government to contemplate buying more, because it's an aircraft that is performing to specification, that is in production, and that is below what they had originally expected the aircraft to cost. We believe that that should make the business case clear for the government to look at buying more if indeed that fits into their force structure. Right. Terrific. And there are other parts of the portfolio, though, within Aeronautics that are allowing you to keep margins kind of very stable. Maybe just highlight that briefly. Yes. The rest of our Aeronautics portfolio is performing exceptionally well. All of what I just mentioned that is supporting B-21, where possible, we bring that even into our mature production program. So the training, the factory floor automation, the digital transformation. And that is allowing us to perform better on those programs as well. And as they are generating higher margins year over year, it's offsetting some of the pressure of B-21, which is a lower margin program as it grows. So about two years ago, I projected that we would be able to keep Aeronautics margins in that 9.5%-10% range. And this year, we're even exceeding that target as B-21 scales. And it is a testament to the team that they delivered on what we said we would do because we saw that that was possible through good execution on those mature production programs. Terrific. Let's move over to Defense Systems. Defense systems could be your fastest growing segment, I think, within Northrop. Can you highlight some of the main drivers, top line, and then margin perspective on the outlook, given that international demand that's within that segment? Yes. We do believe Defense will be our fastest growing segment. It has been performing well, about 9% growth last year, targeted again for mid-single digits this year. About a third of that portfolio is the Sentinel program, so strategic missiles in support of the ICBM recapitalization. About a third of the portfolio, a little more, is the rest of our weapons business, think tactical missiles, ammunition, guns, cannons, and bullets. And then finally, our Integrated Air and Missile Defense business is the third component and roughly a third as well. Each of those are growing for the reasons that I have just talked about, particularly that weapons segment and our Integrated Air and Missile Defense are where our international growth is concentrated within the company. So international will be a big supporter to the growth in the Defense Systems segment. And domestic will continue to grow as well. So for them, it is about laying in the capacity necessary to meet that demand signal. That is our gate at the moment. And yet we have been ahead of the curve in investing in capacity in areas like solid rocket motors, our production capability for IBCS, which positions us well now to capture that demand as it materializes. So you mentioned Sentinel. So it remains a critical program for Northrop and the nation, hopefully for multiple decades. What are your takeaways on the potential program restructure and potential impact on Northrop? Yes. So we are working with the Air Force in their restructure of the program to identify ways to drive down the cost of the system that will be deployed once we get through this design phase. And there are three major components of the program: the missile itself, which is largely on track and not the focus of the restructure. The test and support equipment on track, not the focus of the restructure. The focus of the restructure is around the facilities themselves for launching and doing the command and control of the system. And as cost estimates were updated along the way on this program, a major part of that command and launch structure is construction and drove significant cost increases. So we are working with the government on how can we define trades and designs that would drive those costs down. And that's the focus of the restructure. We don't expect that to have a significant impact on this phase of the program, which we call EMD. This is the design phase of the program where we would make those choices. They impact production, which is what will we actually do in the field in those missile silos and what will that design, how will it be employed. So that is the focus of the restructure. And regardless, we do expect the cost of that production phase to be more than was originally envisioned, but we're working to drive it down so that our taxpayers get the most efficient deployment as possible and still preserve this very important capability for our nation. Yeah. Terrific. I'm going to combine the last two just because we're running short on time. So on Mission Systems and Space, so on Mission Systems, you modestly revised down segment margins for 2024. Kind of what gives you the confidence that profitability can improve in 2025? And then the same thing, you had a little bit of, you're going to have a little bit of a wind down in Space Systems, mid-single digit decline in 2025 from a revenue perspective. But a lot of that is just affected by the wind down of NGI and a classified program. Kind of what is the expectation for the underlying growth of space? So if you could hit those two, that would be great. Absolutely. So let me start with Space. If you take away the programs that Peter just mentioned, NGI and a restricted program, that business would be growing at mid-single digits, consistent with what we saw last year as well. And that's coming off of an almost doubling of our Space business in the last five years. So just phenomenal growth there and the growth in the underlying portfolio continues, driven by a number of things: support to space launch with our propulsion business. Our restricted portfolio continues to grow in space for everything from communications to surveillance satellites and missile tracking. And we also see growth in our NASA business over this time horizon as well. So really that team is firing on all cylinders, top line, minus the two programs that we mentioned. And we expect that trend to continue. And they are generating stronger returns this year, having a really solid year in that regard. In Mission Systems, the growth has remained solid in that mid-single digit range. And we expect that to continue. As they have been scaling that business, they have in electronics been particularly impacted by some supply chain disruption to productivity on the factory floor. They also are laying in some new capacity. And they have had some mixed shift to cost plus that I talked about earlier, all of which have had a dampening effect on their margin rate. Those trends are temporal. They will reverse. And so that's why we have confidence that they will be back to the higher margins that we have come to enjoy from that business. Terrific. And this all rolls up, which is not temporal, is your ability to generate a lot of cash. Yes. I'm looking at [Kenneth] smiling. So you do expect free cash flow to double to $4 billion by 2028. And then if you want to combine that with kind of your capital deployment philosophy and strategy, which you guys have been obviously very aggressive on share repurchases and supporting, turning a lot of cash back to shareholders, maybe let's wrap up with kind of all of that. I think it's the main driver and why we're all excited. I agree. I think it's the main driver for value creation opportunity in the company. It obviously starts with the top line growth that I talked about and the expanding margins to generate operating cash. But we also structurally have a reduction in CapEx that we are anticipating based on the heavier level of investment we've been doing and getting to a more normalized rate. We are seeing CAS pension cash increase where it had been decreasing substantially based on a very strong pension-funded status for our company. And of course, some of the regulatory headwinds around R&D tax are tailing off as well. So put all of that together, and that's what's generating the 15% free cash flow growth this year, expected 20% next year, and a nearly doubling in 2028. What are we going to do with that cash? Well, the capital deployment strategy hasn't really changed. It's first and foremost to invest in the company. We still see continued growth and demand for our products. So we are investing in the capability and capacity to be competitive and to be able to supply that demand. But as I noted, our CapEx is expected to come down as a percentage of sales based on the profile of business that we see. We also have always paid a competitive dividend. We've got a long history of dividend increases averaging 10% annually for 20 years. And so as we look forward, we expect to be able to continue to pay a healthy dividend. And that is a priority for our company. We also have been returning cash to shareholders in the last two years. We have returned 100% of free cash to shareholders through a combination of dividends and share repurchase. We expect share repurchase will stay an important part of that strategy as well. Terrific.