General Dynamics (GD) 29 Jan 202019 Q4 Earnings call transcript

Good morning and welcome to the General Dynamics Fourth Quarter 2019, Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. ahead. go Please

company's and Dynamics Alyssa, Any everyone. to uncertainties. regarding Welcome statements to are Thank risks some quarter good and General and the estimates our fourth today call. These full-year the estimates made subject you, represent morning outlook. XXXX forward-looking conference

Additional company's and information is filings. XX-Q the these in factors regarding contained XX-K

Officer, With our Chairman to that call Phebe the Novakovic. over concluded, I turn would Chief like Executive to and

morning and thank Good Howard. you,

$XX.XX This at we billion, $X.XX the today this So, operating in was reported in of The XXXX operations of revenue of a earnings EPS of driver from fourth of was of in part earnings margins. quarter-over-quarter earlier a billion $X.XX Aerospace quarter continuing major per result. XX% against earnings a basis and XX quarter improvement improvement result fully-diluted fourth share. improvement point

comparisons added of in results achieved a and and financial enjoyed I'll XXXX. strong We briefly, for straightforward them and outlook through We and time segments, to solid a rather leave questions. business prior very with our dramatically. The operational your more the and go my cases I'll periods for rather quarter XXXX compelling. our meaningfully our most fourth goals some thoughts in on backlog, are

press I and also our the you'll and find helpful. release website think the highlights fulsome chart on

a the count and per provision offset indicated higher of year, quarter higher by operating the at our somewhat had start $X.XX by cost. were and better, was at for share Earnings As beat share lower borrowing $X.XX, our earnings we strongest. somewhat the final tax consensus was revenue

the XXXX. good quarter with quarter the well ago solid year third as quarter a performance compared as all-in-all, to of So,

$XXX our was or over or were had of of the of continuing over XXXX. from earnings increase up segments. of $XXX operations fully XXXX X.X% billion to $XX.XX continuing million were Operating X.X% operations XXXX. up For $X.X from at $X.X over share $X.X each by billion of reporting an earnings million billion $XX.XX. Revenue billion we per up Earnings full-year, diluted

were Importantly, operations continuing earnings per share above from XXXX. $X.XX

our intake positions Our by of order and aerospace business was to and particularly strong $XX growth a company high in A beyond. billion. backlog well for very marine, significant new the XXXX strengthened in

Let the me to full-year the in review sequential basis third continuing basis, quarter earnings comparisons. of and it earnings, a earnings from without on higher quarters to operating the say year-over-year significantly have than a that On operations reference we and revenue, XXXX. share higher suffice higher per more sequential

discuss where So, provide group, color I'll each some appropriate.

First Aerospace, was aerospace product favorable than mix XX%. revenue attributable increase stable. an were were line. billion year was million, quarter. related ago rest increase of or up of against the of of the million XXX deliveries This earnings up Services the Quarterly $X.X to $XX the and to $XXX X.X% more

we the full-year, $X.X lower billion attributable as continue $X.XX the at aircraft. on GXXXs margins. million to $X.XX of billion of up XX% operating initial operating lower $XX revenue over billion the to XXXX. delivering For earnings or The Gulfstream GXXX were Operating margins were transition was and mix up

sales and negatively margins Pre-owned also profit. impacted

XX.X% sequential strength basis revenue basis a indication the on underlying as that an the the increased operations. versus margins provide Margins of Excluding the Furthermore, on losses pre-owned of reported. were throughout and year. XX.X%

gave earnings XXX the you. our Deliveries to better somewhat finished were margin billion. you forecast expect about told billion year We All-in-all, revenue, about earnings. we year, last with rate higher $X.XXX versus somewhat the a less with of to revenues XXX. very forecast $X.XX and mid-year close At we

than The pipeline the quarter better $Xdenominated alone. that in the in was to the quarter book-to-bill stellar the strong. fourth and $X.X at On was activity order for and front, Gulfstream remains Aerospace

orders, was versus deliveries dollar airplane times For two on Gulfstream basis. it

For sequentially than billion year. higher about for XXXX. a year, is $X the Backlog both dollar the up XX% and and were unit orders basis, on

a major Mid-East perspective, particularly From were experienced qualitative mix including customer All regions demand. we the and Asia-Pacific, demand Europe. greater quite the and product pleased with

we to XXX, aircraft the GXXX. for During year-over-year. the The delivered be year, demand. in continues airplane up were Orders the

to are and six installation continue work We test of on shortly. the an we've AUSA flight GXXX with to begun aircraft. certified GXXX the be of expect and five interior the aircraft All complete,

manufacturing We are we making GXXX quality. toward producing are very and costs continue good decline unit flight. and to progress first GXXX good

GXXX You GXXX and the more should as see deliveries unfolds. year

ago. final $X quarter ahead year Operating Combat, above was of earnings billion of million XX.X% in Next also $XXX XXXX. the of a were well revenue quarter the of

full-year the earnings million, of $XXX $XX $XXX increase. a up $X Operating of up were For XX.X% revenue million billion million. was

the way, provided performance earnings the our of with this is about revenue mid-year. consistent enjoyed By $X guidance reasonably similar We we forecast, at than had and our to outlook. better billion

of business. the We opportunity the growth further continue to see for

we Army our to see particularly and in The supports opportunities, continue fully international FY budget programs Europe. 'XX significant

are with new large with to a Spain We on capabilities. program Spanish provides that continuing Army important the negotiate vehicle

and Army activity. is our very it's short, businesses. of good ammunitions growth, provides group U.S., revenue In had our which Vehicle the this history modernizing customer quite continued had Combat In across order strong margin steady positive demand performance

over $XXX quarter really million $XX XX.X% is of earnings up Marine against the fourth new of million, Next, were quarter compelling ago year billion a XXXX. this was story. revenue down good quarter. fourth strong increase the $XXX in a Marine Operating million $X.XX Systems,

X%, revenue both. $XX in We basis of point was XXXX, $X about midpoint revenue up full-year, expected we operating or million for year margins. $XXX of of Operating the earnings $X.X and or above the million billion, were For in At of the million. XX that drop up $XXX a for earnings million billion despite $XXX X%. by of came

make the are fair V you $XX the affords we to a in December. Block and signed As award opportunity aware, increase provides Navy in Virginia-class capability, billion This contract the return. important its us

EBs invest our yards from payload preparation response modules. customer, additional Block continue the increased increase particularly Ballistic-Missile to In at scope on to for we each to Columbia of EB at work the and the constant V demand for significant facilities build Block to constructed Submarine. we prepare point in our Navy V, In new

So, customers, increase to we this through poised large that it deliver Navy the of backlog. our say, our they we fleet the and size as work suffice support are to to shareholders, value very

attractive delays timing in award XXXX. point, and Information there execution margin margin. in earnings A $X.XXX the now our $XX.X the was case programs to operating was of that operating and mix. with Now at divestitures, to the EBITDA $XX.X XX.X%. X.X% of mature lower in Quarter-over-quarter new Technology, and generated $XXX quarter in IT revenue of an several million, completion revenue billion words, delayed, in ones, in been the are awards of start to billion end billion compared of other has due

integrated well integration schedule terms business, of Our cost an achieving building and ahead to as of unified in both emerge. synergies, beginning our the benefit as of remains both are

revenue year earnings $X.X grows with XXXX and EBITDA million, the $XXX billion margin. in margin a operating were to XXXX. X.X% For was in from XX% XX.X%

are more but to increase our done. backlog to by is work in We the year-over-year be there $X.X billion, encouraged XX.X%

were operating and million. had revenue operating of in we was We touched but predicted. approximately mid-year, would by billion indicated $X.X around earnings be it earnings revenues At about $XXX

Let in margins me exchange for never revenue. remind you something lower about us accept we

the ago were almost of Operating $XXX of $X basis revenue the Systems, $X.X year quarter points X.X% in margins was billion Mission quarter. up million, earnings up up to XX.X%. Next, with XX against million

up backlog million X.X%. time For were billion. earnings million with $XXX the $XX million the $X.XX for $X.X one Book-to-bill at or billion of of Operating year year revenue $XXX was or X.X%. up was

revenue Margins our billion a to The revenue growth. of Systems XX.X% business matched touch $XXX expectations. Mission business approximately was the continues mid-year. billion in for steady of expected was at this of show just profitable short $X

This Mission positioned new that consequence and built cyber new into Systems our relay expand to offers market work capabilities platforms they missions them critical, to high and customers on. platforms. systems are as into that well CXISR segments our has and

for call, earnings billion of to of on our revenue billion, a EPS basis $X.X of at $XX.X and operating $XX.XX. On was mid-year, to this expect approximately company-wide forecast XXXX $XX.XX

As you know, up round of we that forecast. ahead

going our Now, of Canada Jason respect address in international items. several few to to near have last with in been large these our key Jason? the issues positive before contract cash specifically and I’m and other respect to guidance, with There resolution ask developments some the very address issues I to positive, weeks.

morning. results and in you I'm provide to good just to context Thank topics and will that Phebe XXXX for some you a XXXX Phebe of our number few guidance with the a minutes. color to give some going respect cover

is First cash.

That obviously in reflecting resulted of the exhibits, of you can we generated XX% approximately lower just of net the than XXX% the striving see income. cash press we full-year, our conversion over free cash for. release quarter, were for fourth flow rate from in $X billion As

from did the we As not end this arrears the program you result, of infer collect combat our international the on large year. before vehicle might outstanding

the through go a re-baselines payment updated on our assurance out and payment year that the we've terms new basis. a including number engagement noted, schedules, with customer, delivery a Phebe of that the that plan going forward forward is good provide the As of in forward revised weeks end news the a contractual laid following principal of path greater program,

newly program progress and to we next payment years. receive progress with additional this, and $XXX on in connection a payments delivered This million product In scheduled continue over balance regular capital working the will established payment year, for and down this beyond, schedule. on that a bring million this payments the we an includes $XXX received in will January, XXXX three

that this peak capital with inventories support our of sizable free Marine and increased is be an that This the gives decade Systems XXXX business point, in as the XX% in the To the our anticipation pension increased of initial of conversion service. test to years. its expectations the program, clarity level contribution well coming a to we the cash reflecting in investments in beyond, XX% articles flows range, to of the flow build assurance and for growth to coming as in around entry expect cash for greater in payments GXXX us free and XXXX our on our respect

shortfall we With capital in we $XX free ended Despite XXX% million, the cash just expect retire these outstanding systems, of working XXXX. and $XXX position liquidation capital XXX% in cash were of starting to We and our the balance cash flow of down the of commercial balance income XXXX, net as debt a a paper year net combat needs winding able the exceed with and billion. to over of anticipated.

$XXX net for million $XXX Our the quarter expense full-year million, for $XXX to interest million. XXXX million the comparable That was for and interest $XXX fourth bringing expense the compares periods.

expect we to Our next is accordingly. expense billion in in maturity $X.X to million for second and drop quarter debt XXXX of year, interest the scheduled this $XXX

balance not that With our last the a have sheet financial level we we now certainty our increased enjoy and year. did strong forecast, around international flexibility cash of

front, in approximately On shy just the for had addition of to of a capital $XXX fourth billion X.X% commercial repaying of total deployment the million revenues. in $X expenditures or paper, our full-year quarter capital we

the our prudently You sales, that of we times may Systems for investments nearly CapEx for CapEx of expect XX% but to XXXX X% working as we closer the recall accounted in depreciation million it the the its situation. for spending be was Marine At while to managed international four came cash $XXX and these resolve lower to capital in XXXX year. slightly

our to command satisfying capital work systems. Systems a need largest critical Marine expect budget for naval of its in nation's we toward XXXX, share again the as We

the As remain our declining to thereafter. investments level in right, XXXX XXXX expect the XXXX, elevated of investments and we the to a of result to capital some similar pushing

pension also bringing and million dividends to to the We in I $XXX quarter. and paid respect $XXX fourth to plans third expect XXXX, we billion. contributed pension in in $XXX that in our with contributions XXXX, the million of to increase that our of we quarter, approximately majority full-year $X.X million in alluded the earlier, the

than to of XX.X%, of we the primarily quarter a the in taxes, little a tax effective previous better full-year finalization had income XXXX attributable guidance our tax a to rate resulting in rate our XX% return. Turning fourth

Looking a expect ahead full-year of around to XXXX, tax effective rate XX.X%. we

that group. our sales change to Next, in I'd XXXX. This accounting Aerospace pre-owned treatment of relates made like an aircraft starting to alert you and to our we've

are As that is activity or de us an loss. breakeven generally you're at this minimis transactions aware, immaterial with for

perturbations performance. group noneconomic of However, Aerospace forecasting results and that margins for reporting the unnecessary operating and pre-owned in sales in around confusion creates the the revenue group's

closed impact, only line As breakeven. which to is earnings historically no sales a longer pre-owned bottom again, result, has we report been aircraft going will forward, the

When moment, XXXX in Phebe should that level for excluding pre-owned sales. you the consider the million XXXX you revenue a of Aerospace revenues $XXX provide set guidance group just will

would that $X.X billion. for revenue purposes comparative approximately to for So, the XXXX bring group

a at the XX% greater over end our board. the our posted a approximately more the for X increase The and of all-time billion, across mark and ended of at on by of more little is of I'd the last than segments including backlog or contract previous both and strong book-to-bill than prior over X an year. value year activity XXXX. five very $XXX item a ended the result billion, is This And to of color with the provide $XX order the the That’s like four quarter quarter to backlog. high IDIQ year exceeding an We value of $XX potential total options billion. the

the a This noted, result X.X highest was revenue over group its highest of almost times Aerospace X.X full-year a book-to-bill second on brings revenue the of group of had ever, XX%. quarter of years. to very the times and growth order That book-to-bill the quarter strong on in for with X.X%. Phebe growth the As XX

exchange solid the $XXX year, have of XX% the backlog of foreign revenue they though were end versus on rate reduced book-to-bill of the by balance a impacted Systems times growth X.X negatively that for fluctuations, Combat XXXX. million over by

to to GDIT X X.X And had with greater. that for have five book-to-bill to each continued to and book-to-bill quarter. GDIT the of strong a for years Mission fourth order year, to Systems to brings the the activity, in Mission marks full-year. and each of Systems businesses X This these to X X that X have consecutive steady X X or a

respective of or that IDIQ in we the remind their generates would I orders annual half these of roughly backlog, sales. you both And don't which for segments, value, report

contract the end approach less reported GDIT our makes of this almost of some a their the order activity with $X.X Mission $XX somewhat industry value value peers, and was year, excluding For reached Systems, billion for it at this conservative This billion. comparison direct from of meaningful.

finally, times the And over the X year. Systems quarter times a and approximately with outstanding for an year in of X had Marine book-to-bill

this of provide past, group clear revenue the this large a to the As into the point we've each discussed To in visibility through latter the and to the XXXX group top-line that opportunity firm end decade, for it, to future. has at growth has put long-term significant providing in shipyards bottom-line growth. both contracts of finer mid backlog well run the on part of

give and wrap-up remarks, to it to guidance turn my and concludes I'll That back over XXXX Phebe remarks. for you

Thanks, Jason.

let our a and business So, roll-up. XXXX, companywide provide by me then operating group for initially forecast

XX% ending quarter. sales much margin range In be similar revenue well will by about Revenue starting Aerospace, year billion, the the the to we up about XX% XX.X% second-half from in the be around XXXX in without be to accelerate pre-owned and margin will through Operating $XX to stronger expect Operating rate. XXXX, XX.X%. XXXX. margin as will fourth

to seeing million earnings. growth in in improved are million of revenue between XXXX $XX $XX X% We

$X.X we billion Combat, increase over million approximately about In revenues $XXX and expect XXXX.

margins be expect to We about XX.X%. operating

rate look again, revenue particularly fourth Here the quarter. both strong grow during earnings margin with year, for to and quarter-over-quarter a

international continue business. solid and demand growth the faster we ammunitions. volumes year, our rising We with see the than a to business orders last seek Stryker Like for our for domestic Abrams vehicles for solid

tip few a Although international bound. that opportunities could

at approximately which anticipate billion, million XXXX expanding Marine is is Operating have our driver to submarine growth a to anticipated about The of each of the be of growth of exponentially. work in almost group $X.XX yards We expected XXXX. revenue X.X%. here margin is over $XXX is increase long-term an

outperform group margin to is the forecasted this rate. Our biggest opportunity in

revenue With billion X.X% range, earnings. expect with $X.XX the approximately results operating the in in consistent of We IT a margins increase XXXX. in modest

$X.X Systems expect We building approximately about anticipate billion, increase Mission revenue of margins of XX.X%, operating in We throughout year. $XXX an million. the about XXXX again

$XX.X $XX.XX X% we XX.X%. expect basis, EPS quarters billion see up stronger to a to to operating more of On share. $X.XX, out it thereafter. with companywide, diluted over slightly per XXXX, progressively rolls QX did about revenue, margin in fully forecasted This much XXXX, all to for quarterly expect we like XXXX than and So, of play and $XX.XX

Let hold we XX.X% assumes provision to assumes plan It yearend exercises. to operation. that from me enough constant the from a share tax emphasize purely as with buy this and shares so is only avoid dilution count figures, option

effective come outperforming achieving plan, and effective So a rate from much the lower tax beating like must guidance deployment capital. our operating last of EPS year, the

This for near enormous large and receipt liability I us including sheet, to had with our the current provides cash of issues, final should of capital utilize this with greater contract our intend We in we've coupled value of resolution with leaves leave the international the deployment the it create thought, attendant you imminent our shareholders. funds. strong clarity than to past. for balance recent flexibility in funds

Thanks, Phebe.

reminder, ask a we participants one As one follow-up. question and ask to

now, you Alyssa, the the please? So, remind to please participants queue how would enter

thank Yes, you.

will answer [Operator of Instructions] today the And America Merrill first question begin comes We Lynch. Epstein now of Ronald Bank from question session. and go Please the ahead.

Good morning.

Ron. Hi

following-up a teaser. deployment. more there mean, thinking? Just what you I of I thinking your mean, flexibility final about what, capital shares? buying on What have are That that? that back are a was you you bit comment around

our with and term we will buy short back So, we'll deal appropriately. debt then shares

other I the flurry else? seen are thinking the things you do of to we've space. Meaning, portfolio? M&A mean, mean, a in about in anything But, I

-- I is there anything So mean,

We don't try, comment Ron. on M&A. Nice

you, Alright, guys. Alright. Okay. thank

Barclays. question go Strauss of David from comes ahead. The next Please

morning. Good Thanks.

Hi, David.

moving in high-level aircraft terms deliveries expecting the the the bit Phebe, there? at of forecast. of help some Can revenue on Gulfstream, down I kind you XXX? guess, total you're the ramp a What of on pieces maybe a for us

consistent this and our you aircraft expect expressed to year, we all ago. sometime deliveries about So, plan with XXX

We will the and the XXX we deliveries. XXX ramp down increase XXX deliveries as

is as that So, anticipated. that cadence anticipating, around is out mix playing and mix

do 'XX in expect versus 'XX? of you've think you 'XX of more been in before And coming that ramp more about talking to occur the down 'XX? or XXX I hit

in the Largely will continue 'XX, demand. really ramp but to we according to

anticipated ramping that where comfortable very we'll in a me are we have in there. pretty an and and to decrease. it's get I'm clear to XXX demand clear We that deliveries will was quite equilibrium, as point it delivery But, XXXX, that

Robert comes ahead. The next from Please question today of go Research. Stallard Vertical

Thank Good much. you morning. so

Good morning.

now Phebe, below organic little of growth XXXX. revenue some a it to looks me peers has that's to other On been the and the been the continue able GDIT achieve, in why they bit what industry in

or something is delays, a when it else? pick consequence to you or it to revenue Now, would growth this this just rate something award integrate with these expect to CSRA the do time up? is of takes And

three So, fundamental I just There reiterate. in my was pretty around factors. but were remarks that, explicit to

we increased caught significant and of considerably, in awards. First, dramatically. of slowed potential purgatory delays the experienced execution and execution of set The this number of the velocity awards

we lost last we new that be mature and forget lines one or replaced will had time programs And two our and this, exited both several business we don't by year. Second, reduced of limbs. which third, volume of two near-term over recompetes,

as mix So of and latter this think category timing.

safe it is say… to So

awards. from we're growth, the execution question, expecting second XXXX. And that your driven the show had and anticipated would to growth again has So, mid-single now digit moved right velocity contract XXXX in growth, of by the to we some XXXX

much. so Thanks Okay.

Harned from Please question go ahead. Doug Bernstein. next of comes The

you. morning. Thank Good

Hi, Doug.

bigger And Block Can between and next performance the are over to that obviously through that IV? should a because years? see a is it's this expect Block to differences very we you several how What flow on through financial us Virginia-class, bit you the take little Block important? V boat, V

the represents point you executed So, the is a in and considerable workload, that V the accurately addition new increase for entirely increase capability of quite in U.S. given by considerable capabilities our Navy, Block us. out a the

which about of sequencing come are to from at this we IV now delivery we to Block so, Columbia, of work first curves. V, continue builds around And And of start we year. these Block we’ll down think all learning end the the our as

capabilities. to execute as margin our So, our I increasing really is V respect I Block key ship think improving is to here with simply V, just the over remarks, that effectively. our And my ship Block said job in and

begun So, in the Block and to for Navy continue on next we will we've that years. got and execution along with good shape it, V very several work our customer, we've

but work the planning and about And then think when about it's when this, just for having the investment both talked But, that at And not trajectory here? for investment you to for CapEx to customers, make for Columbia trajectory the costs you how by labor. and V you you're up do see also for class. the for build Block you it's in facilities look reimbursement your you

two So, let's fold. take that in

years. we partnerships have That ago, the so the our our customers and Rhode four large on now we with for in last return, to and the to imperatives the workers needed, training they us about coupled of begin worked everyone. aware internal that with eight up closely investment in have this over growth match Connecticut program, and trend demonstrated public-private working ramping of in with we the essence, And First, Island that respect the to your wholesome face. numbers. workforce, kinds well started that With our we question to with better is which years

new have initial continue into And We then brought the at a they higher capabilities. yard shipbuilders learn. to

United had rebuilding our supported world those to had efforts our So, workforce expanding up that with the and very and a the into the this welders of and England, think the a in training atrophied bit. programs have are at rate. our States to And are electricians pipe fully When you about up Navy in in fitting and atrophied. capability. critical training respect key frankly plumbing New number rapid those and to skills bring in country welders, U.S. has A throughout need we

for we growth. we're So, that meet very can our expectations comfortable

Thank you.

of Cowen & Company. go Cai Rumohr von ahead. next comes Our question from Please

very thank much. Yes, you

curve, Phoebe, I should XXX. becoming about the at as time. and you the think away XXX trend were the mix Is and margin from directionally that in up we as one move talking learning still GXXX down And XXXX, profitable in for? point, be that coming ways that out more plus a the you shift So you suggested look

for are a that we experiencing. we look that trend Yes, and it's

expect As to each line from in the to discipline, these cost you we nice on XXX the operating as down of and would discipline coming we offset and price and that in every the continue part, reduction see and one deliveries. aircrafts learning have, discipline learning offset the reduction the

clearly have sequence ago it. We several on we've right and this articulated been plan on years

So, I strategy. strategy think around there terms and the there's execution new in the nothing that of

And Jason, for Terrific. quickly then you.

to XXX conversion does pension XXX? a XXXX. the talked XXX% if us color some inventory what down You CapEx how down? come benefit kind going contribution in Thanks. does on get all? And come you and at much in give terms do Can liquidation from much of How you of of

Sure.

about had think I about ended capital investment, of at X.X%. said XXXX, up about sales you we when X% So, I expected earlier, and the think, in

down to more XXXX a should X.X% in right. we've we it range call that be similar been to that see of the to that that the in. typical, starting call the X% by That'll it so You we of typical back expect that range, in XXXX, historic pushed in elements because will XXXX, step

or and down maybe million It back in year elevated stay $XXX plus Pension XXXX. other year come then I a there. mentioned, will another from on contributions, the so as elevated for hand,

surge to down So, then contribution in bit a a little and returning of level. a lower pension back

XXXX the of you liquidated the with receivables we you close year program. to in with of down then, working the terms on that will, capital process vehicle those contracting in call billion the is respectively. XXXX. the large expect of working sold unbilled to the of end And biggest think thing That combat essentially XXXX, I somewhere should step capital, neighborhood XXX and is it will ended the you that international mentioned single by as That articles here if the that test XXX be point and will along $X.X

will cash expect of aggregate that And flow of actually 'XX, XXXX, free 'XX those in in So, the income. we and a net as a as it 'XX actually excess benefit. result, of call outcome even beyond, see be XXX% to

So, we that of shortfall we've couple had that recapture will start this over of some years. past the

Joseph go ahead. Stifel. The comes next Please question from DeNardi of

five good go that see any to to does debate Phebe, to whether a or four to fill political think revisited decision and or have this morning. was actually placement if point? they on Do locked gets get that When afford I Thank in? how years, Virginia that simultaneously. in as Navy there decided back going Colombian that Hey, we and the would both a you at risk risk Virginia, feather is a Colombian you.

classes real by Virginia. that Columbia, on of demand is the So, And demand wait. program think then And is there our war can't on needs. national about respect to driven submarines war fighter's it as with and long-term for a line given a product fighter

you pretty in and surety, backlog a in And executive the as imperative those both sees the surety stability sit of branch we nation capital decision-makers some good the wholesomely programs. reliability on forward both going very here come. to and submarine fund will So today, see of good the time see on basis. of the to that fund we and for increasing The backlog quite

is building the the about demand, very in over are they future predictability of These offset That demand. there complexity certain in They demand platforms, are backlog. they in submarine. given nuclear particular, slowly are submarine as business time time imperatives. of will because terms submarine in in of business, building be ship Think the relatively secure executing over are slowly and a general, bur in current

comes Poponak go Noah from ahead. Sachs. question next Goldman of Please The

Hi, everyone. good morning

Noah. Hi,

one Gulfstream you and your the in in just of set strong the on you're indicator looked Phebe, what environment, leading quarter. the the have hand on I bookings chat tougher, some you've new wondered if but there data expand in got demand overall product really business obviously could little the seeing has because a

seeing. we're here And was to above the book-to-bill also one curious GXXX of the excluding kind just So quarter? in the

your the question to latter yes. is question, So, answer the

been product following that us where truly business in for that and time, you now, mind. surprisingly, new some my If drive and that basic And that you predicate have our demand. new new is predicate have sheet for know is all not airplanes clean this you'll product,

So, demand. demand our new expected XXX in the are new products and product generating are is generating

So, think market product of staff. to idiosyncratic in this OEMs as about the offerings really experience the

are into market and enter demanded So, nice, we enjoyed our service. year-over-year, is demand that steady in have experience this increased announced new is the products that as

in of is ability predictability and selling And delivery addition, the much of of airplanes and the airplane so service. to the reliability

demand drives factors. with of the to and questions, all I are, best-in-class that of think, respect key we arguably, All without those

are we quarter fourth and good was active. with comfortable and pipeline is our So, positioning the the quite

just margins the segments. then in on And the

of should still expansion, I rate of of you've right? 'XX think I high-teens terms 'XX. said has the that back getting that, into the the rate in the the I Does from and think 'XX trajectory have even company faster here? XXXX said that expansion be hold maybe than Do

moving this complex The is this of margin. year in parts. high-teens hold business trajectory end does lots the a of and so will But then,

the around mix. basic thesis and was. airplanes of So, today, quarter-over-quarter that remains margins and by tend the these again, But it be the largely of same profitability introduction variable to the as somewhat driven the realization profitability

go Shapiro The Research. comes Please ahead. George from next Shapiro question of

much down XXX doesn't 'XX. really good Maybe, like if came it anything look in Yes, the deliveries morning.

in really year reflecting today, what's or a driving declines the lower decline? So, backlog ago are than XXX XXX in the 'XX just

driven not has increase. backlog We've of a deliveries is quarter-over-quarter these declined. XXX often by airplanes the Look, seen customers. nice

this move took three regulatory that And issues, expected we'll earlier, United delivery XXXs customers for this about few XXXs is delayed, those So so satisfy we we're wanted of those. to or for that various some outside have And the and needs. quarter. execute we customers' into had, States a we able

catalysts XXX extremely XXX as demand and And as the of XXX. you, frankly, significantly, There a done has what not XXX about in told for demand. are quarter. talked has introduction it. the in third clarified The increased So, demand call to signals well, lot this we we and

them natural service, warranty there's of of in airplane, replacement and this way, a them and the some coming by cycle. XXX got are So, out we've of

nice see So, the XXX. for to we continue demand

down must something here? the I backlog So up, the if missing why is bring deliveries be

and estimates. That's this and XXX you backlog And ultimately regular order this time, period want time want significantly see, with we'll And deliveries. is recall, supports our long if period. enough that we've equalized extraordinarily to look, to really book to if long entered match forward got to fully to order back XXX that book, time with wait you an the order argued Because, I too the to cadence. the backlog transition wait what transition a wait your in overtime have time. going XXX that our get production we what But during fully And you deliveries. we satisfy

will our question Operator, this upcoming last. be

from The Morgan. last question today Seth comes Please ahead. JP Seifman go of

very Thanks much. morning. Good

Good morning.

so, if up Phebe, year? this what you to mentioned was there in Are in margin. opportunity coming they? operating specific are that would that And when potentially there Marine milestones you and point Systems

our So, any year, internal are number But drives. they multiple to of customer. the that given that's there in to tied Navy are and and not milestones milestones only large thing exceedingly milestones

really we both. very ability a is hard see will year. given high some any control as we This on to in do we the our always is all margins about and cost performance, shipyard performance So, to continue But drive of those, drive and

Thank you very much.

you much. joining thank for Thank today. very you all our And call

will conclusion General at release As quarter Dynamics which of website for call. and be a presentation, the the earnings reminder, fourth highlights the available our this

have you questions any can I at additional Alyssa? XXX-XXX-XXXX. reached If be

Thank concluded. now presentation. for is attending conference you today's The

disconnect. You may now