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| Statement |
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| That was up substantially of $150 billion in at the end of 2022, so strong growth there |
| And so in Space, Space had a very strong year last year |
| MFC potentially can surprise to the upside as well |
| And so we think that bodes well for the long-term demand of the program that it's not just a few year never production run to have these capabilities set up in country for a longer run |
| And we got some pretty good performance last year and being able to convert on some of that backlog earlier than we anticipated |
| Also a good foreign order potential at MFC and RMS |
| And so this would boost it by another 40, which we think is good for the program and good for our customers, clearly |
| So demand cycle internationally, F-35 is very strong and the F-16 on Turkey, that's a nice boost for the program, where our backlog before that is around 125, 126 aircraft |
| We expect stronger growth here in 2024 and that will continue to grow, just a great line of sight to growth in 2025 and beyond |
| It used to be very solidly profitable, should do well |
| And so you look at spaces performance last year, and they had a pretty strong profit adjustment year-over-year |
| They had a year growth in the profit adjustments that helped them offset the headwind they dealt with ULA and so the performance there has been pretty good, including fixed price development |
| And we think that we're very well positioned |
| We've made some pretty good progress on that as well |
| And so I think they've done a good job of making sure they can have an expanded supply chain, a supply base there |
| We are below 5% in overall attrition rate in the Company, which I think is pretty strong, not only in the industry but across industrials |
| So incremental capability that was provided in that release as well as improving system stability |
| It is possible that we can do better than 10 to 20 points in 2025 |
| And we're in a good place |
| And so I think that this is what position us well |
| So we're performing better on that program |
| Cai von Rumohr So turning to your opportunities, foreign sales potential looks like it's really terrific |
| Cai von Rumohr Good, strong voice anyway |
| So we saw some better performance there |
| We've got a very good relationship with them |
| We've got opportunities, we've seen some growth in our contract assets and growth in days |
| Cai von Rumohr And RMS? Jay Malave RMS, very successful on battle management systems |
| We are seeing improved stability, particularly system stability for that |
| We've seen some improvement and so it gives us some optimism that we are starting to turn the corner further |
| It was a big win for us |
| Statement |
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| Question-and-Answer Session Q - Cai von Rumohr So supply chain has been a problem for you, problem for the industry |
| And so with the disruption of slow deliveries in the first half, accelerated in the second half, does that put more pressure on the F-35 margins this year? Jay Malave When you look at aerospace guidance from '23 over 2022, there is -- you see there is margin contraction |
| If you go in -- you starting in 2025, we've got some pension headwinds |
| There's still some areas where we're still challenged |
| Again, to the extent that we're not able to do that, that can trigger a contract loss there or contract charge |
| Cai von Rumohr So if I does slip into June, at what point do we have to start to worry that you might have to slow production down despite the fact demand is terrific |
| Our attrition rates also came down pretty substantially in 2023 |
| To the extent that we're not, that could trigger a contract loss there |
| Cai von Rumohr So another issue has been labor availability, both how easy is it to hire new folks |
| And so our productivity has deteriorated over the last three years in contract assets, and there's opportunity to take that down |
| There's always risk for integration because this is going to be a different systems, it's an ISR system, missile tracking warning versus communication, which is what transport layer is |
| So it's just -- that's just a contract mix issue |
| In that is lower total margins on F-35 |
| So that means it will be lower in '24 than in '23, which the overall profitability of the program would be lower |
| I mean at one point, I think Terran was one of your suppliers, it looks like they're kind of in financial -- have financial issues |
| So there's always an integration risk but that's what we do |
| We're not being overly conservative |
| So 2023 profit didn't grow |
| So I think that the commercial -- commercialization is a lag |
| We know that with budget pressure is it possible that could always be an early down select |
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