Northrop Grumman (NOC) 25 Apr 242024 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Northrop Grumman's First Quarter 2024 Conference Call. Today's call is being recorded. My name is Josh, and I will be your operator today. [Operator Instructions]

I would now like to turn the call over to your host, Mr. Investor President, Vice Ernst, Relations. Todd Mr. Ernst, please proceed.

website and Grumman's First Josh, a that our good We'll morning, Northrop to presentation IR on posted welcome and is morning. Quarter to everyone, refer Thanks, this XXXX Call. Conference

securities statements today's provisions time Before and including They of laws. reflect company's this outlooks discussed information of on forward-looking beyond, guidance judgment and call. call, based we pursuant XXXX available is harbor start, the matter federal to on safe for at constitute the

today risks and involve and those results in cause to CFO. statements include call including GAAP Forward-looking and And our SEC results noted are non-GAAP Today's Dave Chair, in company call release. Kathy and today's uncertainties, our CEO Keffer, measures will financial and filings. actual Warden, to materially. press uncertainties are our President; release differ reconciled These our earnings risks the that may on

I'd over like call to the At this time, turn Kathy? Kathy. to

Good so Todd. everyone. you It's have good you us morning, Thank joining today. to

first relentless which to growth morning, you are exceptional we all growth laser So year-over-year earlier to customers' see, can our our of by The Growing released an our priorities capabilities increase off on to leadership driven success. aligned as positioned And of in sales. quarter strong portfolio. team's in and our focus X% for our sectors. year. has we to with led continued a results. across the includes QX start us performance global broad-based technology X for execution strategy, a this our demand

products resulting with segment by and our EPS line growth. been better we've quarter operating measures margin our expectations, XX% an first profit performance are was count our accounts continues drive XXXX program in which for was to along programs growth level budgets or a XX%. our U.S. market that to efficiency the year by the expansion, Operating and over includes rising defense on traction, guidance. quarter our be XXXX the increasing and cost for XXXX. with lower agreement investment reaffirming Global fueled helped gaining reached and company X% productivity Overall, represents The budget, support and in dollars performance pleased we key our robust, was our in defense in share demand than strong, fiscal are We're implementing position.

the defense budget March, and years' the In with were And it. also expectations. our released XXXX or program defense these future administration fight consistent

modernization, space. U.S. robust give outlook our slower in portfolio somewhat We nuclear Together, support short advanced weapons defense environment growth continue a in include appropriations budget for to the for in and the program experience if we see the our microelectronics, areas line site-up even term. longer-term that in top confidence us

to a as beyond This our for government missle they portfolio, portion, represents of see continue Poland avenue is letter additional short-range and currently which quarter, In market, look They signed and first of a profitable we range wide we well. and new sustainable provide growth. additional the domestic opportunities international the span As numerous capabilities across an IBCS deployed. known portion Narav. the for and line, our with of architecture, of Poland's being will an product acceptance air as U.S. defense medium-range the it missile augment implementation the defense

considering to from this billion IBCS addition countries battle approximately an numerous In we $XX system. Poland, of now management pipeline see joint are who

IVUS of the for international for to new address systems. potential Northrop aircraft. selected of modernization also our opportunities sensor international the and U.S. multibillion-dollar autonomous by of emerging X Overall, partners, discussions opportunities other X line a we product to has well with offering, This countries. for program are We're has electronic us. is in record. positioned warfare suite Grumman be international down been which leverages includes important IVUS Another fourth-generation IVUS

The year. this is X aircraft be first later expected to Australia to of delivered Triton

expand NATO to X addition, of meet interoperability providing higher enabling an opportunity these capabilities, aircraft. up Europe. believe requirements, see surveillance amongst Triton degree suited is allied for program a to its our And maritime elsewhere actively to additional well in opportunities Triton looking we is In emerging nations. We

product Systems missile munitions There for to uptrend also U.S. the Congress This procurement And continues and an that has solid support this growth demand for partner includes allies week, which U.S. portfolio funding have further to ammunition significant and be and potential margins. our products aggregate includes in ammunition. expansion. in allied missile capacity several in the supplemental bill, Defense at opportunities

weapon defense in production growing largest motor microelectronics organization. will the further XX% this facility important we their revenue established is which in to from our As been over investing one over and for in our objective, have Grumman we we years, It Center, we recently prior maintain microelectronic Microelectronics together Northrop systems meet led and an Mission been of tactical investing is investments part calls, our by our the where brings capacity lead X To business, of into now past solid tripled to microelectronics. the SRMs. company for enabled applications. be production capability by rocket innovation our across Systems our we've shared business, our demand And business Technology our across strategy. have leadership in our

with needed microelectronics and systems design, over year. U.S. sensors. microchips the tailored advanced million support a X to facilities defense our advanced Today, and most fabrication produce packaging

to technology technology work NVIDIA developers national also the solutions. our their like in into We commercial space, leading-edge security with incorporate

this important In addition area. we are capability, to advancement capacity in our expanding in technology

mission we Wattensboro, for our this in ability a and held $XXX facility and investment, we our are manufacture new quarter, to advanced solutions. test the electronics million With increasing Virginia. advanced electronics ceremony groundbreaking In

driving systems business. and I As we our mentioned are productivity on across deploying our in enable business. performance that and earlier, laser-focused This includes tools help cost increased efficiencies

This upgrade, system, of a provides it supports significantly foundation quarter, first significant operations. efficiency financial transformation implementation the and prior new other digital improve completed multiple will And many which a to this our credit role system a ERP our achieve the achieved that we really business. you initiatives. integral strategy. consolidated the In understand, the tirelessly the it massive a our It's disruption expansion as was of would of The entire undertaking margin minimal with to outcome. of that our worked team upgrade, to versions plays was an in who longer-term

priority in direct indirect our our cost in quarter, affordability We of also AS overhead and production first management saw address particularly both Efficiency a drive the programs company. to continues the benefits and at customers. proactively and continue to rates indirect to for this in costs both We across DS. be

be emphasis the our continuing is undertaking and capabilities in delivering The particular Department our progress process are well. support space is generating a We're to delivering that U.S. to advanced made requires as Program complex resources program, in our sector, and with This the so on years, the basis focus, modernize commitments. Sentinel Defense executing area extensive we're the in of design backlog the XXXX. keenly capabilities to of this needed for several well the which the process. of to customers continuing, form review over talent as and world partnering includes bringing part to are providing deterrent, Nunn-McCurdy In as rapid We're the of support strategic those mission, of the in strong after most and returns key on our customers, for solid vital the program. on progress another we equipment the focused to the growth It's facilities in execution missile EMD and activities itself. phase that and the making on deterrent. deliver execute honored we're the we've we development last

to on update an capital Finally, I'd deployment like strategy. provide our

XXXX. the our customers' capital to year, investments we address billion same since we that rapidly $X first that meet in contributed shareholders, efficiently nearly growth performance including $X.X to returning total the our have investment to nearly to billion strong At to billion we'll the quarter. and our These in in foremost, invest we are and of continue evolving This needs investing outlook. $X.X expenditures time, First capital beginning roughly expect capabilities are threats. bringing

So deployment well and opportunities, on and customers portfolio Grumman summary, create for Northrop value broad domestic continued focus international new future. the capital to relentless positioned alike. performance programs for Corporation is a designed in shareholders of with strategy and a well-supported a

Dave, So before outlook with that, he's going the details to cover I'd to and and Dave? of some like the of over your call to questions. performance hand financial we our take

everyone. morning, good and Thanks,

X operating earnings we business. Starting execute results As to year. with income on on and XXXX in of a strong Kathy in drive our efficiencies the first as our from increased Sales, quarter backlog deck. EPS Slide all the and meaningfully our our line off highlighted, we're top to start

were quarter, segments. in were We pleased initial X First to QX of ahead increased quarter at our material deliver billion. due to results sales volume address I of of I'll all X% for segment contributing projections $XX.X through our programs. sales our we the timing first the a this in factors than few to ramp the higher years. sales our that on part to walk certain in expect quarterly With gradual the more in mind, guidance. past to as profile updates These

partially up production sales strong, X%, were the by lower offset business, due multiple as international sales as as volume growth like an Systems mature well expected, driven B-XX in weapons on volume F-XX. program increased AS XX%, As training were Defense higher by and primarily particularly to on programs on programs our program. on

And X% grew growth portfolio, Mission programs on by continue advanced SABR. broad-based portfolio, by in they layer on partially transport microelectronics with sales the as lower by growth ramp. Systems SDA programs rapid X% to led space throughout on at increased offset the sales restricted including by and volume our

generated rate to XX.X%. performance. QX, a XX%. of also year-over-year the remain laser-focused income was segment In line. increase operating of on Margin We we billion, $X.X solid bottom Turning at

fruit. performance, volume productivity generate conditions margin These outlined and over recognized expect earnings across increase operating mix mature rate continue measures XX% adjustments bear AS management we've helped favorably, programs. to increased productivity income margin but our careful production previous adjustments. as shifts indirect for we macro to were of net time calls, favorable portfolio primarily Aeronautics healthy initiatives by As operating rate and driven an the EAC cost benefited Efficient XX%. to of improve on rate a

of the make the units production B-XX, in the phase On our were EACs, progress and of good EMD to and significant in test LRIP program build the no we flow. on there to continue changes

of LRIP of the have and in on negotiations with finalized suppliers We stages phase are the additional the late remaining. negotiations the with program

X% performance, MS' income points At operating to also opportunities operating further income Mission from lower benefited rate segment performance and rate their driven benefited net rate driving basis Systems, margin advanced Systems rate efficiencies XX.X%. mix favorable mix increased EAC higher-margin made at to We Defense OM indirect and factories. grew favorable increased MS, OM improve by from XX%. operational we've and to on offset They investments XX.X%. partially in favorable see by our programs, adjustments. microelectronics XX

its Lastly, income rate space a increased and operating margin solid X% was X.X%.

to by increase was income and increase The on from a in were Moving EPS $X.XX lower performance pension higher share earnings X. Slide Diluted strong well the of as in XX% count. as net QX, year. an prior segment per driven our growth from share

pleased help our flow. cash that efficiencies performance. to significant with our quarter. particularly in will This in the live We're in went our light over conversion to additional was ERP Turning of a time. first drive that business cash undertaking

in consistent expect flow billion, the free half cash in of is QX. generation and free our $X our approximately we of of an cash of was outflow cash profile This a the seasonal of flow year. pattern second the generating majority with strong quarter QX

to Moving guidance.

have reaffirming and guidance XXXX level few are our level. a at We segment updates the company

book-to-bill that in in QX to MS generated given for years flattening ratio our project with Note, company with At to backlog U.S. Xx expansion a level, DS growth close the half. the space we roughly the and and the second segment second and the modest to budgets. a results ratio margin we a all quarter strong sales expect be AS, recent volume at continue line expect and We lower in ratio higher year. at space. has

at expect We additional the profile segment so level, color. to a quarterly vary to provide take moment the some I'll

Weapons year, which DS described, programs margin MS to further prior sales and the half expected year Kathy DS patterns. that consistent business significant Restricted First, generally has dollars the to lead with expand, demand and and ramp MS growth. should second throughout continue in are to

our this and our at on the in to of guidance of materials higher than results latest our to our margin MS, reflect Our lower drove it But timing QX quarterly F-XX to rate and slightly XXXX. QX We was volume, the slightly are adjusted profile at sales performance projections year guidance for different latest billion mid-$XX strong B-XX, projected DS the was the At B-XX for expectations sales aeronautics the additional timing. sales. and sales year. be we reflecting and is increasing QX primarily remainder

we'd So a quarters. remaining the expect flatter profile through

indicates, year adjustments. the guidance to be lower quarters business EAC As our mix margin AS based are full rates in on QX strength of and subsequent expected

the mid-X% expect range. in For margins the full we year, to continue

Below we're Space, company-level low the be we partially at billion, of the and the our continued the reflects our the last space offset now our restricted in reflecting by guidance of quarters strength reaffirming over and mid And portfolio. lowering that guidance line, reflecting XXXX, broad segment to portfolio. X% the Sentinel lower decision contract and volume termination expected annual we roughly noted remaining SDA This growth sales expected $XX Sales which to growth. the are is to trend quarter. to is NGI

to corporate we toward We prior the issuance higher future and project consistent additional continue QX, effective tax to rate to also expect will continue years. in an unallocated around second of weighted the the debt due be with to expense half be costs XX%. quarters in Interest year,

nature, before, noted our and we're our tax by appeals tax that changes As any are we've in guidance. monitoring their in any processes into factored not legislation updates

as notes used which offering And of purchases, repurchases are as after purposes, $X.X $X.X market in $X $X.X will billion retire maturing reminder, were shortly as including we billion attractive in a initiated QX, general accelerated filing complete. billion in part We billion. XX-K. a of share a rates that our nearly January The completed proceeds XXXX for corporate to debt repurchases. be our total, In now well repurchase QX the our share is at open including

for full share year, greater expectations to have billion. $X repurchases we For the increased our than

dividend. We committed also a to remain providing and strong growing

ability deployment and diverse to our enabled are flows and our predictable by plans capital in Our generate durable portfolio. cash strong

project customers value our continue We our excess support that stakeholders. while to in this investments We're will strategy industry-leading business business shareholders. create to for returning to confident all our cash

our the great to year, In to remain outlook. long-term off summary, a we we're start about and upbeat

let's call And with questions. that, open the for

Our first Instructions] Epstein of question with from [Operator comes Ron Bank America.

you $XX been related Northrop for billion a what Kathy, little more if businesses. in you guys in just to potentially have detail those doing could is maybe speak supplemental, there that in given everything

number Well, as align are noted, that pleased portfolio. we did this Yes. it. I are program the are to through looking supplemental pass areas that we a week. our And There of as

needed and Some programs, in programs there several line even of triple that the our talked that I reflects are where funded enabled is largest over expansion solid supplier take production rocket funding that what's would are last motors. there in capacity in additional that capacity, have facility then higher rocket supplemental. we us support to weapons to others motors we for the a for is that years the has those a we additional are And expansion. capacity about where done capacity prime solid

we've through the So to in the we the the can on capacity and over are fulfill bullish demand made opportunity coming that both months that years. we and additional lay investments

I maybe just follow-on, if may. And quick a

Aeronautics the With have have mean impact the strategic that I how FAXX, does business? -- on what like does push that out to

one There business. of we on aeronautics outlook have are a that that them. impact that number really for our of an are opportunities pursuing in doesn't near-term being It

to additive and the one portfolio being we As continue current that business the we're pursue the for will maybe that of strength that's continue today, see we this we that on program growth opportunities there, and of guidance really but them. to raising year, shared sales the

from Harned comes question with next Our Bernstein. Doug

where can was will since talk from? that that's the I about those You talked down at the a on down little you MS, you're book-to-bill units looking some bit backlog But and and in the year, outlook for of was QX. AS business each a for above about this to year of space come QX? in segment in issues. if likely X drive book-to-bill backlog understand What

talked our to this look a expected we well awards Yes. book-to-bill lighter. Doug, as and our longer over at of very we've time. last X, years X so had over can lumpy, be so to And been We first have tend be about stretch before, that. we signaled quarter

But nearly Defense that shorter-cycle As we going our last the that and at strong. businesses, Commission quarter. And Systems been still near loss cancellation incredibly space we Systems look you, full the years, we'll has to and, believe remind book and first the course, the lowest driven as over X by year, NGI think we our X. digest space had I'll will builder largely the be clearly be the be the to in and we it's of doubled has business so

So they're growth business that rates still we're projecting them. that carrying of for a large backlog supports the

then just issues. Sentinel? of quarter over importance space, those Well, breach the on the path talked affect moving the you've schedule the -- back But X on you and Force some your years, that does the at Air how IOC look Sentinel Nunn-McCurdy growth and of about last you mentioned and when by and

true. towards expected the flattening we working schedule delivering discussing. is had on healthy to coming laser-focused we the out we We the to later in years and that 'XX. been about similar well far moved growth into a we of still was that program and with for what that that course, a schedule and profile moved meeting are is And for Sentinel but Force. the really as beyond the was Air phase then That commitments It we that. had decade 'XX the even talked in as timing returning still it in out holds of moving, has, are any projections or wasn't have few growth so Still ramp the program, future, in it is

from question Kristine Stanley. Our with Morgan Liwag next comes

Force does fiscal requested this in change And talked The year on lowered about How they and alter for its production. low negotiated risks prices incremental of Air lower near-term the charges? B-XX 'XX the program of budget funding levels proposal. economics the rate

the was change cost set is the happened the where the as based was budget And first economics we towards move government estimates. is What contract phases the the now of LRIP doesn't reconciling on independent It program. option the There It's value. exercised contract was cost which, our course, an and them contract schedule estimates. to their change of value, off to of of independent moving estimate a intended quantities. reflection price just no than in was moving cost lower our

next Kahyaoglu with Our Sheila question from Jefferies. comes

can obviously, How services Kathy, the about Systems. Maybe I and driver supplementals opportunities given and given as there? as DS. seen some talk chain Missile wanted and such takes potential positive initial and we've defense about ask just as to and you in the IBCS the there well puts just the you think about supply trajectory do movements margin improvement of missiles, of incremental

Yes.

Systems over transformation been undergoing Defense past our years. portfolio the a several has So

As divested the business. in have And an business program. modernization still sustainment a associated we a year, headwind talked we that growth and business, training That you business know, about to international and we services with this has flattish.

those about where our some That's of toward shifts time, expect in bit and that both portfolio. DS weapons that quarter a of growth I as battle in weighing on opportunities, domestically the business the more that other sits. and more see on growth portions reflect portfolios. X and You internationally the and we today's weapons X%. rate spoke mix to IBCS call management being first Over

higher are expect and than business. to so they our those growth, And to sustainment we contribute also margin

mix margins so that So improve. as will shifts,

Seifman Our with question next Seth from JPMorgan. comes

autonomous autonomous the General program, Kathy, a about I was capture we -- CCA Atomics. with news, saw [indiscernible] maybe the update with strategy you Northrop's new along aircraft last selection and if space. night on news And work that on to I wondering in us can the to wanted ask

Yes.

and that on as already they're as selected continuous -- program. So outlining described phases. acquisition competition weren't the disappointed Force of The to a this learn we has we're this future obviously Air CCA phase strategy

in presents terms future So of we'll see what entry point. that

the as international in look I services We U.S., the also about to talked other autonomous their see vehicle and well, fleet. continuing to to partners add

opportunities. are we so pursuing those And

it in point phase have haven't We incorporate for anything CCA ask, didn't the us, this our we'll future We was assumed those of relatively that into changes plan. how at will you program any learned our but this fundamentally but small. And monitor we autonomy. opportunities. the and in have learnings progresses program strategy that didn't

the for impact no there's shared sector. morning to that this the we So AS guidance

Okay.

about will the is then you in on autonomy. of you want to I there requires exquisite And those of exquisite more for that it. a follow-up affordability. company be Great. plan some When demand maybe the and that, where demand more or be focus legacy the kind think of side, you on -- both focused Okay. opportunities Do for piece the guess but also really of and quantity to submarkets in which legacy on pursue market? probably

be We do want viewed and exquisite offering technology. expensive affordability are to line, only obviously not our working toward as so product in we

working been can I quite our in the down drive and that offering compelling marketplace. compete and we've of we So CCA cost think offerings, a had to

to however, That's we commoditized not very We compete are just solutions and customer part low provide are more business that. cost know our model, not of looking systems. the in high-end needs threat, positioned a really not our a the survivable that we market against that's best and to

that in we we'll market but pursue, we So still remain we provide pieces think of the we relevant. disciplined what invest highly is where that the in

Strauss next with David Our question Barclays. comes from

Kathy, ask we years the they margins. to bit [ of a A level, little down ago, in running last wanted were about stepped I XX ] couple MS year.

of that driving MS? kind just Is lower margins? about driving that's mix it solely just you lower in the the Can there. guide talk margin a down took You what's margin

shift scale They over we've have of bit still but now to they higher than the supply ramped story. about productivity that have are as And that mix we to are plus a disruption cost mix they business. watermark. been of there at It's time, have about. as also talking increasing historically, a chain We've and a expect is element we also the and talked we a high

Mission mid-single-digit with the in Systems. see sales business. price of actually total ramp much a than But higher growth reflected it's in You on the down growth coming volume a is microelectronics, level

as of But a we you said, team the a a doing. And based see expect of as this we're achieve a throughout this levels dip. for bit taken that as but our why has that's is margin So and and we focused start have year. see reflected getting productivity profile MS, ramp we improvements now this that capable back very slower that on volume always the see to productivity little again at higher on through you'll year level, it that we year to something is climbed ramp those performance

it. question similar side. Got then on Space Okay. And the over

-- I little ], So the you bit side that margin you unchanged I in down was reflect little margin but NGI better loss a top that that got help took itself growth, profile? see The enhance bit there, could guess assume I should the the the potentially the we [ X line slower actually partially a guidance things. know NGI. just growth, margin of slower help at and

Yes.

the company margin development dilutive As we and slower at largely rate. to rate that both growth, programs the is space the margin look it are

So part as significant. as no longer business of is that -- the

investments also CapEx will now in either. not programs was will and You tailwinds both there that see we planned be those because that extend margin cash

with Cowen. von comes from Rumohr TD Cai question next Our

Kathy. performance, Good

I've following on up got focus I So Dave's space, two think questions. on

And Is secondly, might there's canceled, small the future? function a in restricted FDA Because there in another new that the there a rumor have bid supplier issue. is contracts? First, price program any that, business, every program Is or you a we any chance decided and profitable been it all chance on they're heard that was contract. those look, fixed again time supplier related contracts. that not might that group, I reappear to the coming to basically as that are

except with prioritization, program start to canceled me can Force your but There's let that largely the due question still very on that Air of requirement So the and exist. to first little program. the concerns that the say, restricted program, say nature given budgetary likely does I

win, will we that at simply And variety We positioned and win we see think fee we've we're out so more we we're programs broader are can -- compete quite pursue, of we FDA, FDA on successful opportunities But time. choosing portfolio, the question can best and can remaining that selective also over a those answer we're to best in the that where look we so a with your whole disciplined we which I because how been we'll that's plays see competitively. where And of profitable. reasonable ones and as with space probability success. generally.

that you did But know bid one program.

as As the party? join pricing we move more competitive forward, more is the here bit getting little people a

you is to strategy area a way you if I about is accordingly. where value, able be this to going have an then differentiated there think are The price

you you won't. don't, If

execute. be both both bid value we a successful we on it's well commit And It's we we we decision bid the fundamental capture differentiated we every the so feel we price make need way and really the to win a like that's returns have to and don't that don't to when execute going expect. as with as to deliver

our change no than states no parts of is portfolio. it in difference and there other in So

next comes with Robert from Stallard Our question Vertical Research.

leveling I request on payers 'XX the any wanted in comments spending think wondering you and talked just you Northrop about could where your scenario in the to there's be DoD the the Grumman whether up off. bill I the at vulnerability or was who call follow FY of portfolio? start budget Kathy, that

very much 'XX expectations. the budget is president's We our FY looked at line in with

restricted have largely my surprises was where course, portfolio. the and, of outlook, to talked in we Obviously, 'XX And comments we budget two those to no our NGI down early only now factor about and select of but we that FY space not the our but reflected mentioned, program budget. about then, digested on course, was So a due no constraints. in [indiscernible] budgetary about concerns things

I investment for So there also is nothing year we being that. accounts on top 'XX else ended of the concerning. have as growth that a we And And strong up that with X% the in see supplemental noted, 'XX. over

So that's keep a at also seen looking up I 'XX the the the end in environment it's early U.S. international pointing in in to will demand, long and time. strongest that budget where I've just But back actually

at global And just so look we not the marketplace. U.S. demand,

you Which to what I follow-on And on exports I've and could you quick was as exports of well. moment mention actually a is of future. the update if -- on could did what because sort the scale that wondering revenues, as grow that a in at an percentage give got are us

They're while right segment term pipeline. don't expect while faster significantly a next will And the the to turn there's and than several the our the of into pipeline near years, that because do about now. I opportunities We do in sales. that prosecute moving take in be growth business domestic over noted just see we XX% of richness the a

comes with Global. Our from next Skibitski Pete question Alembic

of And concerns of good turn that and how outlook chain that about to unit scenarios? any swage shipbuilding just performing doesn't Maybe I unit we Northrop's has you you could fire there? talk about in maybe smoke roll Kathy, unit guess talked so is the kind shipbuilding. are chain, of kind in just of MS just of the guys which because feel how kind some supply in growth that marine into challenges Navy supply a is in terms the can have you the just the managing

to for Columbia first XX our have Absolutely. we those submarines. delivering that's very years. delivering propulsion in deliver development a we portfolio. working It's class testimony on referring of own. that And function in for the been in was a critically been generators. secretary on program near And customers of what that amazing are And there We're portfolio. for the improvement the our an the to care Navy It's turbine focused going Hill. his nearly challenges We've important part of on

is challenges, address consistent entire that. you supply across We heard are are long to cycle. working These experience enterprise, shipbuilding the our as chain programs very have with

think period for multi-decade efforts these able of future doesn't But and are a small, on largely a that not there's being through something capability. this go in you impact, and this learning development don't path to relatively and should . From only asked we seriously. take we a very in that ahead that perspective as optimistic that you financial of so this case, think so I And it a learning financial we're delivery, over the but through happens. material we once that having is deliver about, mean

from Our with Scott next Bank. comes question Deuschle Deutsche

off on so or this Dave, what's year? the message reaccelerate space just beyond this to this X% it Does clarify, year? growth

Yes, I question. the appreciate

as As traditional our you call at guidance provide of October we'll our later and on indications year some level businesses specific provide for is and more enterprise the know, all the this approach.

X important. the the space talked in down think speaking, about today of on doubling backlog well that. the in last the restricted for that that opportunity the I sales broader last success in top are over in continued margin expansion that cancellation We've is But X rate in the we've broadly years, touched and And themes business NGI position of really business. CAGR on us years, margin the there dollar select that program over both XX% news. business's

the on and we items programs. of go more about tailwinds provide mentioned specifics we'll from from as the we continued So headwinds other the combination growth

continue confident long-term outlook of year, So more business. to be in the specific but the Space later we in the

bit regions I at Okay. understand Great. operating allies, generate something Kathy, you're to least a maybe margins that that like opportunities the flagged off specific Northrop? you're revenue. So ammunition I for wondering one products supplier talk increased for more U.S. you allies if that which And ammunition to that then, you was demand so about purchase from European could looking there's specific demand percolate? XX% And seeing from of in ammunition

So curious Northrop. understand that just opportunity could to mean for what

course. of Yes.

both we by supplemental has also our it's to growth X% question, growing the So A double X% that digit, portfolio today, supported opening we part to but demand revenue Ron's that of spoke European will response I in in as weapons and to comments the that about look be about at of my continue. strengthen. expect good

grew and business So replenishing opportunities, munitions. those do is basic we the thing we Europe for our are AMO And that countries looking in stockpiles nonstandard year. across same the have doing exact nicely to have, contracts U.S. a number last of

there's that's programs to that proposition as expect international they products We And longer-term where we to continue F-XX. this allies, also European those provide demand, a AARGM, like we as particularly look have year. our to feel the

PAC-X, So many programs second to a peer [indiscernible] like mix course, X, And then, solid ranging opportunities ammunition a the be GMLRS, tactical set from wide for of our of support are to motor rocket source our all those supports in missiles. expansion way the us. looking of up facility all to

question Walton Our with Myles from Research. Wolfe comes next

Rob's disclosures, of of opening international pretty a $X you when at Kathy, and to it's the also both revenue. a locked provided billion for sales absolute follow-up in I been at years remarks in question. But ton color look X dollar your

not that there opportunity on you backlog, working that into us least coming a year? is can color this So backlog sales give shows international at its if the is way in the

Yes.

signed the the are not areas be terms awards. toward what the we deals countries to in with in are awards while in in see the for that countries that today. in sign These with Australians mentioned that that highlighted would of had have we would like Japan. France are look growth Triton and we international underway F-XX early all in two as see the new franchise views to stages as additional that the past, the continue backlog, or the call contracts with So I Triton progressing that the IBCS portfolio just franchises and already you we I standard

and for still morning to the those franchises new highlighted opportunities add then are this I us. in that, backlog the So you'd that that are

Okay.

has you're the that, think, the So of what that's percent been saying? is backlog expanding I international

see now in is backlog It were has, our the years. we of what really although not over X last lines a set product for opportunities whole that

the difference. that's So

how I to And time, exports capabilities has that whole really for new these franchises evolved company. Our largely countries of over for getting aren't Triton more that our franchises high-end portfolio like look exportable. the up portfolio has at opportunities as you new opening now been a spoke set is about permissibility or today

with Our from comes Parsons Gavin UBS. next question

the And of you those Can Kathy, in? suppliers finalized then all suppliers are negotiations expectations? expect you now fully B-XX. additional locked Were your be in you line to when that share with percentage on mentioned with what you've finalized?

reflected So they fact no the had is were EAC with quarter. which largely expectations, line our that we in change the in in

along making with those of suppliers, that those that are we closing expect We we be on and negotiations we're have scale shortly all in sure best that negotiations to the and our far work diligently. we possible

for suppliers investment of at not able program us. a time they I'm are to the key doing that those in sure make are against and to want team they're outcome objectives So this an to And our well We barrier more them, expectations. so necessary. obviously to that's quite set support

line And so interest as we're their taking well. in

Or Okay. as Great. the than guide? Was on just in XQ quarter? you And think strength the the That's year. you will lighter then, that little would maybe the expected? Aeronautics rest mentioned first did perform thought through helpful. in in I be of margin, was Dave, better XQ you But you a

of we've gate productivity that slightly year quarters and expect baked rate mentioned. opportunity as we gains right the was than anticipated be as The the was that rate-driven margin at out was the that such in of this came to XX%. our margin the that and first first an lower timing had We quarter, a particularly we for in, well the guidance. enhancement indirect noted lot strong, why in quarter it into which subsequent is to was

first no a start quarter, so strong for single and great there's particularly kick And AS. the year a item way while was in it onetime the to off

Wells Fargo. question next Our comes from Matt with Akers

ask on Sentinel. I wanted to

supporting the you're Nunn-McCurdy mentioned review. You

there's that outcomes And think program sort you given not what think be? criticality? do curious to if that any just the or case of Just risk health you of could the that's

been Well, the program. strong there has bipartisan for support

that have of strategic policy reviewed review will of It, in to deterrent. nation's the as expect continue. legs posture nuclear course, We is the X

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Yes. Dave. Got for it. And one I guess

ago, quite on were a here, thoughts where progress years EACs the where of on go Just couple good it some like you from bit but running had at level below company EACs, just AS thoughts sounds kind from of a the here. you're still

your detailed macroeconomic XX-Q we that good further as disclosures and you'll see the substantially prior characterization agree well. in had years before was progress I in XXXX in of that And with running Sure. XXXX there the above the our quarter. disruptions. been levels first

program margin macroeconomic on our with the seeing of that expansion, the that And you But cost history as to we of X in normalize we business, mix so the for you're towards mentioned, we and the performance enhancement, over decline business time, particularly that like first we our saw drivers focus progress will the heavy quarter, really AS. pressures. results anticipate and along X efficiency. anticipate It's levels gradual across in more and of

opportunity anticipate you next see And so was the an continue see over QX there. years, across margins and several to can dimensions, good those X a example what normalize we to of

comes with Our from Gursky next Citi. question Jason

kind seeing opportunity of the I letter you most of dive with type I Kathy, thing. on sensors was the of about patent optical you sensor, two there. like maybe where And RF, interest a business wondering a little ask that you're could bit communications, SAAR, if the kind of little areas, to deep loads. and space pipeline in starting business that talk have

kind you've payload today? that about talk Just bit of about ecosystem sensors excited the you're and and of going got kind the general what's a in business little what on and there

with the missile So payloads been talking we coverage capability broadening and the in a surveillance whether and And space. but both upgraded, while, for architecture. advancing modernizing architecture is in entire the tracking, sensors and of are also the architecture those interest space I've it's reconnaissance, the seeing terms of of being about warning entire space this intelligence the communications, really so

involved all so in areas. those And selectively we're of

very informed warning. missile you play ISR a and key role of As in both and missile know, tracking we communications,

on few years. focus that we is have areas to those backlog one space portfolio see many really, over contributed across modernization well really, of growth a has and the don't equally that and and and ways, in So is we last other, the strong all very stretches what broad our in underway we them attractive over the

whether And looks are that's Okay. things competitive the systems business, discussion of ground there? environment sensor the the driving ground similar all of a maybe like side kind space you and for just of launching kind system we're the what on that open payloads

strength They the and more solution participate we're on is I'd in and government look go often to support do asked integrated in and payloads ground we the are them say our development sensors fielding. that a segment. Yes. by ground that systems are, with full the we at the satellites the

be a absolutely we compete. there, And more so We we differentiated. see again, as choose can a where marketplace where back selective that to to just bit we're

And our Peter last Baird. from comes Arment question with

CapEx domestically bit of signals, think just when had and you just and you both a a what kind internationally. we staying elevated profile last year, can tremendous up results. on little things also step about here, about you expect Kathy, you big but are demand your talk Nice maybe have

but of Just how on like CapEx thinking the investment. broadly? Have you and It about just thinking rocket have how the solid microelectronics, side enough you more made sounds trend? should about you're

Yes.

those company. Some will made see term. that support statements long CapEx of some a part growth normalized in this that see down robust gradually that we're to reflect more as peak environment. we've Still today the those come to we a revenue starting our towards of see of is year why level we highlighted do then over that investments growth X% the the those and being making expenditures

that and committed investments and investments will thank -- see to that for will on last We're our you we've be to our joining see, the the to all on We several. Well, that. the to you But years as today. over technology off focuses quarters. value do team we're advantage there year, the we're demand those start seen shareholders. making. And the following do we several carry our not a for that call over we the as for same us so strong next customers into momentum relentlessly delivering that

us. next So look joining in July. I our for to thanks with speaking call on again forward you

Thank you. Ladies you your concludes gentlemen, for today's this and participation. Thank conference call.