Good day, ladies and gentlemen, and welcome to the Harris Corporation’s second quarter 2017 earnings call. At this time, all participants are in listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, today’s call is being recorded. I would now like to turn the call over to Pamela Padgett, Vice President of Investor Relations. Ma’am, you may begin.

Thank you. Good morning, everyone, and welcome to our second quarter fiscal 2017 earnings call. I’m Pamela Padgett. On the call today is Bill Brown, Chairman and CEO, and Rahul Ghai, Senior Vice President and Chief Financial Officer. So, first, some forward-looking statements. Forward-looking statements made today involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information on the related discussion, please see the press release, presentation and Harris’ SEC filings. In addition, a reconciliation on non-GAAP financial measures discussed today to comparable GAAP measures is included in the quarterly materials on the Investor Relations section of our website, which is www.harris.com where a replay of this call also will be available. And with that, Bill, I’ll turn it over to you.

Okay. Well, thank you, Pam, and good morning, everyone. Earlier today, we reported solid second quarter results as we continue to execute well on our strategy to shape our portfolio, deploy capital in a balanced and shareholder-friendly way, drive operational excellence including strong execution on Exelis integration and position the company for long-term growth through sustained investment in high-return R&D. Last week, we achieved a major milestone with the announced sale of IT services, following closely on the heels of completing the sale of CapRock in early January. The divestitures of these two businesses with combined revenue of $1.4 billion, together with the acquisition of Exelis in mid-2015 and the sale of Aerostructures, commercial healthcare and broadcast, completely reshapes the company and sharpens our focus on core franchises where technology provides differentiation. The new Harris has a more simplified business model with a streamlined portfolio of higher growth, higher-margin businesses. These actions, when combined with the significant R&D investments we’ve made over the last five years to support our key franchises, position our company for growth at a time when government budgets are bottoming and beginning to trend up. The divestitures also provide more than $1 billion in net proceeds that we’ll use to support our capital allocation goals – about 40% for share repurchases, 60% towards deleveraging and pre-funding the pension. $435 million of sale proceeds will be used to buy back shares, which when added to the $150 million we committed to at the beginning of the year, plus an incremental $115 million provided by free cash flow, raises total fiscal 2017 share buyback to now $700 million, the largest single year share repurchase action in our company's history. And since the buyback will fully exhaust the remaining share authorization of $584 million, the Board added a new…

Thank you, Bill; and good morning, everyone. One additional reminder. Discussions today are on a non-GAAP basis and exclude Exelis integration cost. And as Bill just mentioned, second quarter results exclude CapRock, but include IT services. Turning now to segment detail on slide five. Communication Systems segment revenue was $413 million, down 16% compared to prior year. Tactical Communications was down 19%, with higher DoD tactical radio sales more than offset a significantly lower international revenue in both legacy Harris and SINCGARS product line. Public safety revenue was down 5%. Backlog in the legacy tactical business is up $26 million in the quarter, driven by orders from international customers. Operating income was $121 million compared with $138 million in the prior year due to lower volume. Operating margins trended higher from integration savings as a result of the closure of the Fort Wayne factory. Following the close of the quarter, Harris was awarded a five-year, $403 million, single-award ID/IQ contract from US Defense Logistics Agency to provide tactical radio spares to the US Army and federal civilian agencies. Space and Intelligence systems of slide six. Revenue was $458 million and up 5% compared to prior year, primarily driven by higher revenue from intelligence community customers. Operating income was $77 million compared with $68 million in the prior year from continued strong program performance and higher pension income. Electronic Systems on slide seven. Revenue was $384 million and up 6% on an organic basis compared to prior year. Higher revenue from electronic warfare solutions and the continued ramp of an integrated battle management system in the Middle East was partially offset by lower wireless product sales. Operating income $79 million compared with $68 million in the prior year, driven by benefits of higher volume, continued strong program performance, and high pension…

Okay. Well, thank you, Rahul. These two divestitures simplify our business model, leaving us with a more focused portfolio of technology-based, higher-margin and high-growth businesses. As a result, fiscal 2017 guidance on a newco basis now reflects margin expansion over the prior year of 70 basis points to 19.4% and high-single digit EPS growth. Looking to fiscal 2018, the clean slate of core franchises provides a much stronger platform for returning to total company growth and the more than $1 billion in net proceeds supports increased fiscal 2017 share repurchases, offsetting much of the fiscal 2018's dilutive effect of the divestitures. And we’ll continue to drive our operational excellence agenda to find other ways to lower costs and increase earnings power, providing even greater operational leverage as we return to growth in fiscal 2018. And with that, I’d like to ask the operator to open the line for questions.

Thank you. [Operator Instructions] Our first question comes from Robert Stallard with Vertical Research. You may begin.

Thanks very much. Good morning.

Good morning, Rob. First of all, on the bookings in the quarter, so start with that, it came down a little bit from what you saw in the first quarter. Is this a natural sort of seasonal pattern? What might you expect for the rest of this fiscal year?

Well, we saw bookings to be – the book to bill was a little below 1. It was about 0.83 in the quarter, but we’re about 1 – just over 1 in the first half. As we talked about last time, we still target to hit about 1 for the full year. So, we feel good about where the orders happen to be over the first half of the year.

Do you expect the sort of level of volatility from quarter to quarter to be there in the second half of the year?

Well, quarter two was a little bit lighter. We came out of the gates pretty strong in Q1. We’re operating under CR in Q2. We will see good orders growth in the back half. And I think for the full year, coming in around 1.1, 1.0 level book-to-bill.

Okay, thanks. And then, just a quick follow-up on the pension, I was wondering if you could clarify the prepayment – I think you said that this now means you don't have to have any obligatory payments beyond fiscal 2018. Is that correct? And what’s the impact?

With the $400 million of pension contribution, this pension is now fully funded from an IRS perspective in fiscal 2017. And so, at this point, we don't see any contributions for 2018, 2019, 2020 assuming the rate of return, the discount rates and the mortality tables do not change. So, that's the expectation – there is an expectation that the mortality tables would change over the next couple of years, and that may drive a small contribution in 2020. It won’t be material. And beyond that, it's difficult to understand how it would shape up, given the change in discount rates with the expiration of the Highway Act and the mortality tables rate of return. So, we feel good about 2018 and 2019; and 2020 and beyond that, it's difficult to project.

And if this stuff moves around – it does sound like probably you saved $188 million of free cash flow in 2018, 2019, and 2020, is that correct?

Yes. That’s correct.

Okay, that’s great. Thank you very much.

Thank you. Our next question is from Gautam Khanna with Cowen and Company. You may begin.

Hey. Could you update us on the timing of some of the bigger international awards you’re anticipating, such as the Australian order, Algeria, etc.?

Well, on Australia, we are in negotiations there. We still anticipate a sizable order. We size it around $300 million or $350 million in that range. We still expected in our fiscal 2017, it's going to happen probably at the back end of fiscal 2017, but we’re in negotiations. There’s really not much more to report on that. It's moving along and we still feel very good about that. And regarding Algeria, otherwise known as that country in Northern Africa, we did see some good progress earlier this quarter.

Okay. And what about some of the other bigger international campaigns, Saudi, Iraq, what have you? Are you having any life after a big decline we’ve seen in the Middle East over the last couple of weak quarters?

For Middle East and Africa, we see continued slow pace of awards through the back end of this year. It’s at a relatively low-level now in the Middle East. Saudi is sort of in $10 million, $15 million range, so it’s not very big. Iraq, we saw some progress this quarter. We saw an important booking come through that was delayed from fiscal 2016. Now, we de-risked the back end of the year – even though international tactical is coming up, we’ve de-risked the year. We still see strong support for Iraq. Some of the ITF [ph] funding is a little bit slow to flow through there, so we de-risked that. But Iraq looks very, very positive to us on an ongoing basis. It still remains probably the biggest opportunity that sits in our inner medium-term pipeline, so we feel good there. UK moved out a little bit. The Morpheus program, that’s probably in 2021 time period. But there's some opportunities in the near term on providing some product in waveform enhancements for enhanced ACDR radios in the UK. So, UK is still sitting out there as well. And we continue to see good momentum being built in a number of important countries in Central and Latin America. So, overall, I think that all looks pretty good. I think the big story really is around Europe. And where Europe happens to be, it is substantially stronger today than when we stood three months ago. It is pretty much clearly going to be a record year. A lot of it’s Eastern Europe. And we see a number of sizable opportunities that are moving through the pipeline. They have been – the LOIs have been signed, funding has been allocated; and for them, it’s mostly administrative in nature. And they will book here in the next few months. So, we feel very good about what's happening on the international side here, Gautam.

Bill, one last one. With the JTRS Manpack award being LPTA, I’m just wondering, what do you expect will happen to pricing on that contract over time? Do you expect it to be fairly aggressively bid on a task order to task order basis, such that the return profile won't match what you do at the segment now? I'm just curious, do you think it will be accretive to the segment average or dilutive? And if so, when and by how much?

Well, I think it’s going to be competitive as it has been. I think the good news is that it has been open to competition and I think the good news is that we want a position on a very, very large ID/IQ contract, $12.7 billion. We feel very good about our product. We've been through qualification testing. We’re now starting into customer testing. We’ve shipped radios. We've got, I think, great position here. And the fact that we've got tremendous scale in Rochester and an incredibly large international business, it does bring us some advantages in that particular offering. It will be competitive and we’ll compete every year for delivery task orders. But I think we feel very strongly about the offering we happen to have in the marketplace. And, of course, as you know, Gautam, we continue to invest in bringing capabilities and feature upgrades to that radio over time, and I think that’s going to pay some strong benefits. So, we feel good. We feel good about where we stand on the Manpack.

Thank you.

You bet.

Thank you. Our next question comes from Noah Poponak with Goldman Sachs. You may begin.

Hi. This is Gavin Parsons on for Noah. Good morning, everyone.

Hey, good morning.

When you look at the Middle East orders that you talked about, some encouraging signs there. Does that look more like it's just the catch-up of the slippage or does it look like you maybe have some visibility into an inflection and better spending in general in the region?

No, most of what we saw in the second quarter was a catch-up of the slippage. I would say the Middle East is sort of continuing apace, maybe even a little bit slower than we thought before. We still see – as I said, we moved out some of the opportunities we were seeing in the back half of the year in Iraq into next year. They’re there. They’re going to happen. They need funding. But we’ve shifted that out. We’ve de-risked a couple of other opportunities. Saudi remains at a very low level. We moved the SINCGARS opportunity, which we had sized before in this call, around $40 million, $50 million, we moved that out of the year, so we’ve de-risked that as well. So, I think the Middle East, I would characterize as not getting any better, maybe incrementally a little bit worse. But the fact is that we’re seeing very, very strong opportunities elsewhere and it’s causing us to get more optimistic and increase our guidance for the year on where the international tactical business is going to land in.

Thanks. And then on US bookings, is there any impact from the continuing resolution?

Yeah. I think we’ve – first of all, we started the year, I think, maybe relatively conservative. We said it would be flat to up at the beginning of the year. Now, it's probably about flat. So, it's not collapsing. So, it's come down a little bit. And I think we’re well calibrated there. We did a pretty careful review of opportunities in the back half. We have a good sense of what has been booked and how much backlog flows into the back half and we pulled out of the back half any opportunities that hinge on – that aren’t mission-critical or hinge on a fiscal 2017 budget. So, the things we have in the back year are mission-critical, can be funded out of a CR or are funded by 2016 budget. I think we’re relatively calibrated. DoD being about flat in the full year. So, we think that's pretty good. So, that came down a little bit, offset by the international business being stronger.

Okay. And lastly, is your free cash flow target for fiscal 2019 still $1 billion post the divestitures?

It is, yeah. We still see a path to get to $1 billion. Keep in mind that we've lost, I’d say, about $100 million more or less in free cash from the divested businesses. But as Rahul pointed out, we will not have to make cash contributions the next couple of years into our pension, mandatory cash contributions. They tend to offset one another. And the same drivers of getting to about $1 billion in several years remain there. Working capital improvements. We see some of the cash integration expenses and restructuring expenses coming down. We see interest expense coming down. And we see earnings continuing to grow. It hinges on some new programs, hinges on a good budget. But that would be the closing item that gets us to about $1 billion as we get into 2019, maybe into early fiscal 2020.

Great, thank you.

You bet.

Thank you. Our next question is from Seth Seifman with JPMorgan. You may begin.

Thanks very much and good morning.

Good morning.

Bill, after the portfolio moves that you made here -- I don’t mean to imply that that’s more to do – because you’ve, obviously, done a ton over the past several months. But is the portfolio kind of where you want it right now or are there other pieces that you might be thinking about moving out of? And then, when you think about sort of how Harris fits in going forward, we’re, obviously, a little bit smaller now and you think about the opportunities for a company in the $5 billion to $6 billion sales range, is this kind of the scale level that you think is sufficient to accomplish the type of things that you want to accomplish?

Look, I feel very good about some of the portfolio shaping that we’ve done, not just recently, really over the last four or five years. And I referenced some of that in my prepared works. We’re much leaner, more focused, more streamlined, more strategically focused, I should say, higher margin business. And I think we’re really well-positioned in a number of important areas at our defense electronics, mission-critical communications, high-capacity networks that are well-positioned given where the budgets happen to be going. But as you know, portfolio management is not a start and stop sort of a game. We always take a look at the portfolio businesses that we happen to be in and making sure that we’re optimizing businesses that we’re in and where we’re investing to drive shareholder value. The fact is that, at about $6 billion in revenue, I wouldn't consider us to be subscale. I would consider us to be focused. And now, we can take our management team and focus them on those businesses that really can truly drive shareholder value going forward.

Great, thanks. That’s helpful. And just as a follow-up, maybe if you can talk a little bit more about the piece of Critical Networks that you’re keeping, the FAA work, and I believe – although maybe you can confirm – there’s some NASA work there as well and that'll include the Florida work that you want as well and sort of how that business fits in? I think we always knew it was relatively high margin, but I think it’s – actually the statements you put out this morning show it is quite profitable actually. And how you see that profitability profile going forward and the growth outlook going forward? Because it seems like this is something where maybe there are no one or two big chunky opportunities from time to time rather than a consistent pipeline.

Yeah. That business that we’ve called mission networks is primarily FAA air traffic management businesses and related business, so also international opportunities that fall into there. It’s mostly there. It’s very little NASA. We’ll, obviously, report that Pacific missile range facility in that segment, but that's very small. But it’s primarily air traffic management related. It's about roughly $700 million last year. It's growing sort of mid-single digits. It’s rolling into the Electronics System segment at about that segment margin level. It's helped this year, at least a little bit by a contract settlement we had in the quarter. Call that business a mid to high teens margin business, with, I think, good growth outlook both within the FAA as well as importantly international opportunities, like we’ve seen in the UK, like we've recently won some opportunities in Turkey and Taiwan, we’ll see some opportunities in India and Brazil over time. So, that business has, I think, a good positive growth outlook and, again, the margins on sort of a normalized basis rolling in between mid-teens and high-teens.

Thanks very much.

Sure.

Thank you. Our next question comes from Carter Copeland with Barclays. You may begin.

Hey, good morning, guys.

Hey, good morning.

Just a couple of clarifications on the pension. Rahul, I just want to make sure, the $188 million, you mentioned, was, I thought, a gross contribution on the pension, so the addition to cash flow of no contribution needs to be a net, I would assume, unless I was wrong. And then, I wondered if you could tell us how much of the gross liability moved with the divestitures as well.

Sure, Carter. You’re right that the net contribution – and that’s what Bill was talking about earlier when he was projecting kind of giving color on the cash flow for 2019. He was talking about the divested – cash flow from divested businesses at about $100 million and the net pension benefit kind of offsetting that. So, you’re right. $188 million is the gross. And then, you take the tax rate off that. So, they kind of offset each other. So, that's the pension piece. None of the pension liabilities really moved with that divested businesses. We are retaining both the liability and the associated income. Right now, our deficit – we started the year at about $2.3 billion. And with the movement in interest rates and the additional contribution that we’re going to make – assuming interest rates kind of stay constant – it will be about $1.5 billion, $1.6 billion at the end of fiscal…

So, the liability that you're keeping – or that portion of the plan has FAS income. Does it have a CAS expense? Does it have a billable expense associated with that?

So, we will keep both, Carter. We will keep the CAS recovery and the FAS income.

And how much is the CAS? Can you disclose that?

It’s in low tens of millions. It’s not a significant piece of what we recover because a lot of that – it was on the legacy Harris side, so it’s not big. Most of it is coming through – most of the recovery is coming through Space and ES segments.

Okay. And then, just a clarification on the international softness. I don’t know if you can kind of give us some color around, regionally, what that would like, though. It would seem that if it were isolated to the Middle East, it would sort of imply that the Middle East was down quite sharply. So, I just wondered if you could give us some color about that and I know you mentioned that Saudi was at a very low level. Is it a nearly no level waiting to recover or any color you could provide is helpful.

We started the year with the legacy international tactical business down mid-teens. And now, it's sort of down high-single digits. So, it has improved over last 90 days. And as I said, Europe has gotten quite a bit better. I said before it was about one-third of the international business. Now, it’s probably 40% to 45%. We see that being up strongly. It will be another record. And you saw a pretty important order come through in Q2 in Eastern Europe, about $75 million. We noted it my remarks and in the press release. So, that’s pretty good. The Central America, Latin America business is still about 10% to 15% of the business. That’s up. It’s firming. It’s firming to the upside. We took an order from US SOUTHCOM for counternarcotics, and that’s starting to bring some orders through. So, the CALA region looks pretty good. And in the three other regions, the Middle East/Africa is going to be a little bit softer. The Asia-Pac/Australia business is going to be a little bit softer. That’s probably more like flat to down a little bit as opposed to flat to up. And then, Central Asia is about the same, maybe a little bit weaker. It’s about 5% to 10% of the total business. We’re seeing some significant headwind Central Asia as I reported last time because of the transition that’s going on in Afghanistan from radio buildout to sustainment. That's not a change. That’s still what’s happening today. But that businesses is going to be down pretty much in Central Asia. So, Carter, those are the basic pieces. Overall, international, we’re now down high-single-digits versus down mid-teens.

Great. Thank you for the color, Bill.

You bet.

Thank you. Our next question comes from Peter Skibitski with Drexel Hamilton. You may begin.

Hey, good morning, guys. I’ll just start by saying great use of cash proceeds. Bill, on the CR going to April or May, your domestic radio sales are up through the first half of the year. What do you attribute that to because I think there’s a lot of expectation that the CR going so long was going to be a lot of headwind for you, but it hasn’t turned out to be that way, what do you attribute that to?

Well, I think we’re bumping around at a relatively low-level, Pete, on the DoD tactical side. The size of the business in the $300 million to $350 million, I think, in many ways, it’s like base sustainment. So, it's not a lot of modernization, sort of tens of millions of dollars in modernization business that’s flowing through. That’s pretty much fully booked and being realized. So, it’s really just a base business. I really attribute it to that. We started the year – and I think the first half was pretty decent on the DoD side. A little bit softer in the year. With the CR shifting from December to April, if it moves out beyond April, could be a little bit incrementally worse than that. But we’re optimistic about a budget by then and a good Q4. So, that's how we see it shaping up. Again, DOD about flat for the year.

Okay. And I just wanted to get your thoughts on some of the emerging initiatives out there in DoD. I imagine it is a positive for you if the Army forestructures increase. And there's 350 shipped Navy. I wouldn’t think that’s big impact to you, but I was interested in your thoughts.

Look, every indication I've seen, including recent correspondence from the new Defense Secretary Mattis, is encouraging for us. It's making sure the force is prepared, is ready, is sized appropriately, it has mission-critical capabilities, which I’d also include in that the ability to communicate amongst themselves and with coalition partners. Some of the things that we've seen recently in the last year-and-a-half in Eastern Europe, which is very strong for us, really comes from this ability to communicate with our US war fighters. So, I feel good about where we happen to be. Every indication is that there remains strong support going into our fiscal 2018 for modernization. SOCOM is moving along well both on the handheld radio as well as on Manpack. And every indication has been that the Army Manpack program is going to stay on track through the summer, into next year. We’ve all shipped – all three parties have shipped CT radios, customer-tested radios. They’re on track for testing that in the next few months, with a delivery order coming towards the end of the summer and shipments starting in the fall. So, all of that feels, I think, Pete, pretty good for the outlook for that DoD tactical radio business.

Great, thank you.

You bet.

Thank you. Our next question comes from Jason Gursky with Citi. You may begin.

Good morning, everyone.

Good morning, Jason.

I’m wondering if we could start with Space and Intelligence Systems and talk a little bit more about the classified, the adjacency. Two fronts here. Maybe just talk a little bit about how you got here. And then secondly, perhaps define for us what you view to be a franchise program.

Yeah. Well, first of all, how we got here is by, I would say, number one, really strong execution on the programs that we've had with this community for really decades. It goes back a long time. So, the team does a very good job and we’ve been investing in IRAD in this segment. We've talked before about the amount of IRAD we’re spending at Harris Corporation. Just on a normalized basis, if you pull out services and CapRock, we’ll be about 5% of revenue this year in IRAD and it's been remaining at a relatively high level even with sequestration and some of the budget pressure. So, we’re investing in IRAD in lots of places, including in the Space and Intel segment. And the third part is the additional capabilities that we have acquired with Exelis that allows us to offer more end-to-end solutions than we’ve been able to provide in the past. So, all of those things together, with really good execution by the team, I think allows us to step up and provide a different mission solution to our customers. And, obviously, it’s classified, so we’re not really able to talk a whole lot about it, but that's really what puts us in a great position. The budgets are strong here and we happen to be in areas in satisfying needs that are important, like space resiliency and protecting our space assets. So, those kinds of things are very, very important. So, what is a franchise? A franchise to us is something that has the potential to be sort of hundreds of millions of dollars, not tens, and sustainable over a period of time and lead to broader opportunities. And this new ground adjacency – it’s adjacent because it does evolve from a capability that we have been providing on a component basis and allows us to take on a much bigger role at this particular – in this particular community. So, really – unfortunately, it’s really all that I can say here, Jason, but I think we feel great about the developments and trajectory that Space and Intel happen to be on over the last year, into this year, and going into next year as well.

No, that’s very helpful. I appreciate that. And then, just secondarily, on the 2017 guidance, you talked a little about the potential impacts of the CR. So, my question is going to be away from that, I suppose. I was just wondering if you could comment, outside of CR, what the risks and opportunities here are to your fiscal 2017 guidance? If we end up higher, what do you think drove that? And if we end up being lower, where do you think we may go up?

I think we’ve done a pretty decent job of calibrating the year, Jason. We, obviously, look very hard at – given where the new administration is and what we’re hearing coming out of the Defense Department, there is a lot of uncertainty in funding. So, we have tried to de-risk our business to the best extent that we can and look at including in guidance opportunities that are funded by fiscal 2016 dollars, so already appropriated and where there’s support for that. Or mission-critical requirements that can be funded under a CR. And that’s where we happen to stand today. We have, as Rahul mentioned, the international tactical business. And tactical, in general, will be stronger in the fourth quarter than in the third quarter. And we’ve got to make sure that we execute those opportunities, so they do happen in our fourth-quarter, and that’s what we’re really focused on.

That’s great. Thank you very much.

Sure.

Thank you. Our next question comes from Howard Rubel with Jefferies. You may begin.

Good morning, Howard.

Howard, your line is open. Please check your mute button. Our next question is from Josh Sullivan with Seaport Global. You may begin.

Good morning.

Good morning, Josh.

I just had one, digging into the public safety, how do you see public safety operating as the FirstNet contract comes into play here.

Well, FirstNet has been – it was anticipated to be awarded towards the end of last year, on November/December time frame. That has been delayed. There’s no hard date now as to when that will be awarded, but that is intended to be a very large investment in a national, dedicated public safety broadband network, so LTE across the country, driving interoperability across all state agencies and with federal agencies, high-capacity bandwidth to provide video and other things and tied directly into the existing LMR system. So, that is the intention of FirstNet. Again, there's no awardee yet. We don't have any insight as to what the timing of the award is going to be at this point. But I would say, regardless of who ends up building out this network – which by the way is going to take probably five years, it's a very large investment to build out this dedicated network. Regardless of who wins, we will be in a position to provide products, devices, applications to whoever happens to be the winner of that particular program. So, we are –we have developed and launched an important radio that the – XL-200P which has LMR and LTE capable – it’s a capable radio. There’s mobile radio we've done, there’s a mobile router, all of which positions our devices and applications such that when LTE does happen, when this public safety broadband network does happen, we’ll be in a great position to provide products and devices to whoever wins that.

Okay, thank you.

Sure.

Operator, I think we have one more on the line.

Our next question is from Noah Poponak with Goldman Sachs. You may begin.

Thanks, guys. Thanks for the timing on Manpack. Thanks for the update. When should we expect that to start contribute to bookings? Is that not until calendar 2018?

Yeah, that will be probably calendar 2018. We expect the first delivery order – at least what the Army is telling us – sometime in the fall of this year. So, the production award around August/September; delivery starting, maybe after October. So, maybe a little bit towards the back end of 2017, but more likely it starts to ramp into early 2018.

And then, for your expectation for revenue growth in fiscal 2018, should we also think of higher margins?

I think what I would comment on here is that we do expect higher revenue in fiscal 2018 fiscally from fiscal 2017 because, this year, modernization revenue is in the tens of millions. So, it’s going to be more than that into fiscal 2018. And frankly, all of our programs in this area, we expect to come in at attractive margins. I don’t think I’d comment any more than that.

Thank you.

Sure.

Okay. Thank you, everyone, for joining us today.

Ladies and gentlemen, this concludes today’s conference. Thank you…