Good day, ladies and gentlemen. And welcome to Northrop Grumman's First Quarter 2017 Conference Call. Today's call is being recorded. My name is Bettina, and I will be your operator today. At this time, all operators are in a listen-only mode. I would now like to turn the call over to Steve Movius, Treasurer and Vice President, Investor Relations. Mr. Movius, please proceed.

Thanks, Bettina, and welcome to Northrop Grumman's first quarter 2017 conference call. Before we start, please understand that matters discussed on today's call constitute forward-looking statements pursuant to Safe Harbor provisions of federal securities laws. Forward-looking statements involve risks and uncertainties, which are detailed in today's earnings release and our SEC filings. These risk factors may cause actual company results to differ materially. Matters discussed on today's call may also include non-GAAP financial measures that are reconciled in our earnings release. I would also note that we will be posting an updated company overview on our Investor Relations webpage after today's conference call. On the call today are Wes Bush, our Chairman, CEO and President; and Ken Bedingfield, our CFO. At this time, I'd like to turn the call over to Wes.

Thanks, Steve. Hello, everyone, and thanks for joining us. 2017 is off to a strong start and I want to thank our entire team for maintaining our focus on sustainable performance as we continue to strengthen our company's foundation for the long-term profitable growth. All three of our businesses delivered solid results. Sales grew 5%, our segment operating income increased 4% and segment operating margin rate was solid at 11.6%. Our first quarter results demonstrate that we are growing segment operating income through a combination of sales growth and solid program performance. EPS rose 20% in the quarter driven by strong operational results, improved pension expense, beneficial tax items, and a reduction in share count. Net earnings increased 15% and weighted average share count declined 4%. Based on the strength of this quarter's results, we are increasing our full year 2017 earnings per share guidance to a range of $11.80 to $12.10. First quarter cash from operations was the use of funds, which is our typical pattern. Capital spending during the quarter reflects our continued investment in support of long-term profitable growth and affordability for our customers. We repurchased nearly 1 million shares in the first quarter. In total, we distributed approximately $400 million to our shareholders through share repurchases and dividends. Our capital deployment strategy continues to call for investing in the business, managing the balance sheet and returning cash to shareholders through share repurchases and dividends. We had a number of program highlights at Aerospace Systems during the quarter. Triton completed formal lab testing and a successful first flight of an improved software suite, which should enable Triton's early operational capability deployment in the Pacific next year. These flight tests further demonstrate the value of Triton's ISR capabilities for both the U.S. Navy and international customers. We successfully…

Thanks, Wes, and good afternoon, everyone. I'll add my thanks to our team for the strong start to the year. First, first quarter results included higher sales, higher segment operating income and solid margin rates, as well as improvements in net FAS/CAS pension expense and taxes that altogether drove very strong EPS results for the quarter. First, I'll review the sectors' results and sector guidance and then cover pension, taxes and then allocated corporate expenses and their impact on guidance. Aerospace Systems sales were up 13% for the quarter with Manned Aircraft again being the primary growth driver as we ramp up on restricted activities. Two additional F-35 deliveries also contributed to higher Manned Aircraft volume in the quarter. Autonomous Systems volume was up slightly as sales on Triton and several other programs offset declining NATO AGS volume as aircraft production nears completion. Space volume was comparable to the prior year with an underlying trend of growth and our restricted activities largely being offset by declining sales in non-restricted programs like Advanced EHF and the James Webb Space Telescope. Aerospace Systems' first quarter operating margin rate was 10.8% and reflects the increased amount of development volume for Manned Aircraft. For 2017, we continue to expect AS revenue in the low to mid $11 billion range with an operating margin rate of approximately 11%, no change to prior guidance. Moving to Mission Systems, sales rose 2% in the quarter driven by increased sensors and processing volume. The primary volume drivers included all three F-35 sensors as well as JCREW. First quarter operating income was unchanged, operating margin rate was slightly lower at 12.9% and reflects the timing of risk reductions on Advanced Capabilities programs partially offset by improved performance on Cyber and ISR programs. For 2017, we continue to expect MS…

Thanks, Ken. As we open the line for Q&A, I would like each participant to limit themselves to a single question. If you have additional questions, please re-enter the queue. Bettina?

And your first question comes from the line of Robert Stallard with Vertical Research.

Thank you so much, and good afternoon.

Hey, Rob.

I thought – just checking my notes here. I thought maybe we could start off with the export side of things. You mentioned there were a number of opportunities across the three divisions. What's your expectation for the share of exports could be in the orders in the backlog maybe for this year and going forward?

So broadly we see quite a few opportunities across the international market place. I took your question to be exports, did I hear you correctly?

That's right.

Oh! Good, good. Let me just kind of walk through each of the sectors and say a little bit about some of the opportunities that we see that we're out aggressively addressing. I think everyone is familiar with the growth in the high altitude long endurance opportunity space for Aerospace Systems and that's really been an interesting market evolving over the last number of years with both Japan and Korea and of course with NATO AGS adopting variance of the Global Hawk platform. As I mentioned in my prepared remarks, as we get Triton underway for the Navy, we are seeing increased attention and interest in that platform around the globe really starting with Australia. I think Australia has been at the forefront of engaging with the Navy and thinking broadly about how that type of capability would really support their security missions from Australia. So, I continue to be quite positive on high altitude long endurance as an important capability for our allies. And as we continue to grow the capabilities of that platform, I think that will only continue to be the case. Of course, at AS we're also addressing the fighter aircraft opportunity space that's out there through our partnerships with the Lockheed and with Boeing. F-35 is on the ramp-up on the international side and that represents a really good set of opportunities as well as just continuing opportunity space on F-18. And finally on the Aerospace side, I would also mention the E-2D platform. We have seen so far Japan engage with its – steps forward in that program and reflecting back on our experience with E-2C a number of years ago. We would expect the E-2D to be an attractive international opportunity over the next decade or so. At MS, there are just a…

And I'll just add to that, Wes, and say that, Rob, when we think about international sales, it is an important part, and Wes has gone through the details, of our growth opportunities over the long-term. And I would just say that from a 2017 perspective, we expect it to be relatively flat as a percentage of our sales, but I would point out that reflects growth in the international business as the domestic side of the business is growing as well. And I will say that looking at the international sales quarter-over-quarter, first quarter this year to first quarter last year, we did see growth there. So that reflects we are on the path that we expect. I think you had a question about backlog and international, and how it would impact backlog and I don't have that number in front of me. I would just say that, obviously, international deals take longer to close and I'm not sure we want to commit to a number there is going to – it's a longer term pursuit, it takes more time, it will be a growing part of our business and I'd be happy to discuss our ultimate backlog numbers when we get to the end of the year.

Just one other thing I would add as well in the international side. The Department of Defense is very focused on ensuring that their – that the support to our allies is robust when it comes to these capabilities and as we are continuing the strong focus on affordability, I think there is a broad recognition that the opportunity to export from the U.S. off of the existing product lines here, continues to help with affordability on the U.S. based product line. So, it supports the department's objectives in a number of ways, supporting the allies first and foremost, but also in helping to make the production lines themselves more cost effective and affordable for the U.S. customers. So I am delighted to see that strong focus.

That's great. Thank you very much.

Thanks, Rob.

Your next question comes from the line of Matt McConnell with RBC Capital.

Thank you, good afternoon.

Hi, Matt.

Hey, Matt.

So, you've called out the mix impact on Aerospace Systems margins for the quarter and I wonder if you could share how that changes over the balance of the year, but then more importantly into 2018 and 2019?

Hey, Matt. I would say that our expectations are that the mix that we are seeing in the first quarter is likely to be relatively consistent across the year. AS is a long cycle business and I think that where we see the mix is probably consistent with where it will be for 2017. For 2018 and beyond, I wouldn't want to comment too much about it because we're only guiding for 2017, but I will say if you think about the long-term business at Aerospace it has a growing complement of both development and production work, the development side, I would say, not only on the Manned Aircraft side but also in Space. And from a production perspective, Wes mentioned F-35, Triton now into production, so growing opportunities on the production side. And long-term, that the mix will be driven by what rate the particular programs move at. And the further we get out, the harder it is to predict on a program by program basis. But for 2017 I would say, we're largely on the path that we expected to be on at this point in the year. And with that being said, we think it supports the guidance that we gave and that's why we're holding on the AS guidance for the year.

I would just add as we think about the out-years, there is obviously a dependency on the extent to which we're successful in capturing some of the new development work. We are primarily focused our capture activities around new business work that starts off on a cost plus side which often times has some negative pressure on the mix equation. But there are some very important opportunities on the horizon that I mentioned in my prepared remarks that we are competing for and believe represent really good business propositions for our company as we take on that development, and ultimately translate it into production at higher margin rates. So, that will enter into the actual outcomes and the out-years that you had asked about, Matt, the degree to which we are successful in capturing some of these additional business opportunities.

Okay, great. And maybe just a quick follow-up to that point, what's the latest on the MQ-25? And I think requirements have changed a little bit, but what's your expectation for timing and how you are positioned on that program?

So the Navy, obviously, has to sort its way through its timing in getting to a decision on releasing an RFP and the rest. We, like a few others, are doing the initial study work to support the Navy in that process. So I wouldn't want to get ahead of the Navy's thought process in getting to an RFP on that. But it's one that, as you know, that general class of capability is an area that we've been very proactive in for some time; whether it's been the work we've been doing broadly in Autonomous Systems or with the general class of capability that goes with the intended missions there. So, it's an important one for our focus and we'll simply have to see how the Navy decides to proceed with an actual procurement on it.

Okay, great. Thank you.

Thank you.

Your next question comes from the line of Myles Walton with Deutsche Bank.

Thanks. Good afternoon.

Hi, Myles.

Hey, Myles.

Just wondering if I could ask on the space side within Aerospace Systems. You've got this transition going on right now where the white space is coming down, the classified is going up and the two things are more or less neutralizing. It sounds like Lockheed is seeing more or less the same thing, they – improves their expectation a little bit on the white world as not being not quite as bad, but they're also thinking about inflection into 2018. And I'm just curious as you think about your space transition between the different growth rates of the white space and the classified space, are you similarly seeing this as a one year phenomena and growth after here?

So, Myles, as we look at the unclassified part of our space business, we really see that transition occurring, tipping more in 2019 as we kind of look at the phasing of the programs that the customers have indicated they expect. Whether that might come a little bit earlier is always a possibility depending on what the budgetary profiles turn out to be. But our current thinking is that the unclassified side of our Space business is going to be more like 2019 before we see that inflect. That said, to your point, the other side, the restricted side of our Space business is continuing to do well and is obviously an important part of our overall Space portfolio. And when we look at that total mix, we're quite pleased with what we have in our Space business.

Okay. (27:27)

I would just remind you. I would just remind you as well that we do manage it as a single business. We tend to be able to talk more about the non-restricted space than the restricted, which is why it sometimes sounds like it's two businesses. But it is one business. We manage it as one, share resources across the multiple programs, and definitely a business that has long-term growth prospects. And we're excited about what we bring to the opportunities there.

Absolutely.

Okay. I'll stick to one. Thanks.

Thanks, Myles.

Your next question comes from the line of Noah Poponak with Goldman Sachs. Noah Poponak - Goldman Sachs & Co.: Hey. Good afternoon, everybody.

Hi, Noah.

Hey, Noah. Noah Poponak - Goldman Sachs & Co.: Hey, just as one quick follow-up to Myles' question there. If it's possible to quantify what the classified is growing versus what the unclassified is shrinking there, that would be helpful to think about the longer-term trajectory. But then, I also wanted to ask on cash flow, just decent amount of focus there today given the quarter, even though it's seasonally weak and the year being sub 100% conversion from net income. But it looks like that is entirely the CapEx increase. So, I guess the question is, how long does it look like that? What do 2018 and 2019 free cash-to-net income conversion and CapEx, specifically, look like?

So, now, I don't know that I can put a number on the split on the Space business given the nature of those – the nature of those numbers, I guess, I would say. So, not a piece of information I'm able to share on the call. In terms of the cash flow question, I would just say that it is consistent with our quarterly profile to start-off the year with a relatively slow – slow start to the year from a cash perspective and we start to make it up in the second quarter and then really strong second half. And you're right that that in terms of our ability to convert free cash flow – or net income into free cash flow is largely driven by our CapEx investments as we invest for future growth of the business. And I don't know that I could put a number on it or I would want to put a number on it for you today. But I will say that, we've got a growing cash profile. We will be long-term generators of cash. We're focused on profitable growth in the business. We expect to convert that growth into cash from operations and we've talked about a couple more years of investing in an elevated manner from a CapEx perspective. But as a percentage that should start to decrease as we're on our profitable growth trajectory. That's probably about all I can say on that one. So I hope that answers the question. Noah Poponak - Goldman Sachs & Co.: Do you have visibility into when elevated CapEx ends and – and you're just being cautious in sharing it or is it actually just not certain yet depending on exactly how different programs play out and on exactly what else you win?

I would say we have pretty good visibility into what we expect the CapEx numbers to be. And I would just say that about as precise as we want to get is it stays elevated for a couple more years. Noah Poponak - Goldman Sachs & Co.: Okay. And on that Space piece, can you just – forgetting about the classified business? Can you just quantify the decline – pace of decline you're seeing in the unclassified business?

In the unclassified business, I believe that we're looking somewhere between $100 million and $200 million for the year in terms of a decrease. And I think in the first quarter, the unclassified was probably down in the range of $50 million. Noah Poponak - Goldman Sachs & Co.: Got it. Thank you.

Your next question comes from the line of Seth Seifman with JPMorgan.

Thanks very much and good afternoon. Can you tell us where things stand between you and Lockheed on LRIP 11? And they mentioned yesterday, looking to be under a definitized contract by the third quarter. You've got in the past a few LRIPs ahead of them, do you expect that to be the case again or do you expect it to be later on?

Seth, I would just say that we generally don't comment on negotiations that are ongoing with our customers. In terms of any questions on F-35, I'd refer you to Lockheed Martin, but you're right, we continue to work through getting on contract for our pieces of the LRIP 11 of the F-35 program.

Okay. Thanks, very much.

Your next question comes from the line of Hunter Keay with Wolf Research.

Hi, thank you.

Hi, Hunter.

Hey.

How are you? Yeah, good thanks. So if you think about Aerospace margins, you mentioned obviously some of the mix impact in the quarter. But as you think about some of the classified work and obviously some other major aircraft programs, is there a scenario where we think we could see these margins kind of staying above the 11% number as you look out maybe over a four, five year planning horizon? Or do you expect a little pressure to drop below that, as just we look out over the next couple of years? Thank you very much.

So, I would say that – I continue to believe that mix is going to be the driver of the margin rates at Aerospace that assumes that we continue our stretch of successful performance and program execution at the sector. And as we look ahead, we do have a growing piece of development work, ultimately that development will transition into production and we have, I think a long run of production work in front of us in terms of F-35, in terms of E-2D, in terms of Triton and other Autonomous Systems. So, I would expect that the mix would start to move back to a more evenly-weighted or more historical level of production versus development. And therefore, I think in the longer term, there probably is some margin upside from the 11% as we see the move to more production in the out-years. But the question is when as well as the level of development content that we continue to bring in, thinking about MQ-25, thinking about GBSD, thinking about next-gen JSTARS. So, a lot to play out between now and 2019, 2020, 2021, and a lot of moving parts, a lot of it is exciting. We'd love to bring in that additional development content and work on that in the coming years as well. So, I wouldn't want to commit to a number, but there is certainly the potential for upside with the amount of production and the run that we see in front of us, and just a question of how well that mix plays out.

Okay. And then, Hunter, let me add. Just let me add from a broader perspective. The thing that we're – we're measuring as we're moving our way along the curve here is how we're really growing segment operating income. And as we demonstrated this quarter, even with a little bit of downward pressure on rate due to mix, we're seeing a nice translation of the top line into the operating income. So, as we think about value creation for the long-term, we're going to make sure that we are looking at it in an integrated manner, not just on individual unique rate metrics in one year. As we think about the ability to bring on these new programs and manage this mix, our test for ourselves will be are we really growing the income with it. And so far, so good.

All right. Thank you both.

Thank you, Hunter.

Your next question comes from the line of Carter Copeland with Barclays.

Good afternoon, gentlemen.

Hi, Carter.

Hey, Carter.

I just – I want to stick to this whole margin topic again and just sort of get right to the point if I can. I think there is at least some sort of a debate around – as the business, especially in AS, has become more classified, I think it's harder for the market to get a sense of what the underlying risk profile of the programs are. So without kind of asking the margin directionality, maybe Wes, you could tell us about, when you rack and stack the portfolio and the level of maybe risk and opportunity on the flip side, the way we typically think of it in red programs or green programs or whatever. Maybe give us a sense in that kind of qualitative sense of how you think that the portfolio is positioned today maybe versus a year ago if that's a way to get at it.

Yeah. Carter, I think that's a really good question and well framed, and it goes really to the heart of the way that we think about the business pursuits that we elect to go after and then of course, the way we think about executing on the opportunities as we are successful in capturing them. We have a very disciplined process in the company for evaluating each of the business capture opportunities that are out there. And you've seen us over the years and even just recently with the T-X program, make decisions to not go after certain opportunities because of the way we assess that balance of risk and opportunity. And as we have been doing now, over the years, what it has allowed us to do is to move into a place where we feel that we're able to effectively manage that right balance of mitigating risk and realizing opportunities. Each year, as we think about setting our guidance at the beginning of the year, we go through a very thoughtful approach of weighing those for the current portfolio, that factors in the way that we guide at the beginning of each year. And also looking at what we anticipate to be that mix for the opportunities that we're pursuing. So, when I stand back and look at it at kind of an integrated manner, which I think was the thrust of your question. And I think about the mix of the programs that we have today, I think our risk and opportunity balance is kind of where we've been and kind of where we want it to be. And as we are proactively pursuing a number of these other activities, we continue that evaluation process on each and every one of them. And if the final RFP doesn't quite add up to the way we had hoped it might, we don't get too stuck on the idea that we were going to bid something. If it really doesn't add-up, we tend to not pursue it. And I think that's going to continue to be our way of looking at things, so that we can effectively manage this risk and opportunity space. So that we can do, as I mentioned in response to Hunter's question, we can ensure that as we're growing the top line, that we're really achieving what we're after, which is not top line growth, that we're growing the bottom line. That's the focus of the enterprise and you'll only get there if you're effectively managing those risks and realizing the opportunities. So, I feel good about that balance point and it is something that we work hard to manage proactively.

And if you thought about it in terms of the traditional red program framework. Is there any difference in what you see in the portfolio today versus a year ago or two years ago or any color there?

Yeah. No, over last few years, I think we've kept that in the place that we want it to be. If you turn the clock back on us a decade ago, we were not in a good balance place. We had more red than any of those like to have and it really led us to do what we've done over the last number of years of rebalance the portfolio and be a bit more thoughtful, particularly on the capture side of things. So, I think, we've, over the last number of years, been in a very similar position in terms of that risk and performance profile, the red, yellow, green kind of the assessment. And it's our intention to stay that way.

Awesome. Thanks, Wes.

Thank you, Carter.

Your next question comes from the line of Doug Harned with Bernstein Research. Douglas S. Harned - Sanford C. Bernstein & Co. LLC: Yes. Thank you. Good afternoon.

Hi, Doug. Douglas S. Harned - Sanford C. Bernstein & Co. LLC: One of the things you mentioned earlier about the – sort of budget processes. There has been a big emphasis this year on readiness and we've heard service chiefs talk about the need to deal with readiness before we really deal with end strength, in a sense. If we would have see some moves that way where additions to the budget tended to be more oriented toward readiness than acquisition, what would that look like for Northrop Grumman? In other words, how would you participate in that if that a scenario that's attractive to you, could you address that?

Yeah. I'll start and then I suspect Ken would have some commentary to add as well. We do participate on the readiness side of things, about a quarter of our revenue is through the O&M accounts and it's probably not the type of work that gets the big headlines like our platforms or our big center systems. But every time there is a concern about readiness that concern typically flows to things like spares and repairs and all other things that keep the force active and operating. So, it is an important part of the way that we support our customers and we see directly the concerns that our customers are expressing with respect to readiness and their messaging, I think, is very, very appropriate given the concerns of the state of much of the equipment and the overall force structure that's out there. So, I do anticipate that that is the first priority; I think that's very appropriate. And on its heels of course is the continued focus on the recapitalization which we obviously – I think it's more clear in looking at our portfolio that we play very directly in the modernization of the forces. But the readiness part of it is something that we are very supportive of in terms of the customer's need and also directly support them in achieving that readiness. Ken, is there anything else you'd want to?

I think you hit it on that one. Thanks, Wes.

Okay. All right. Douglas S. Harned - Sanford C. Bernstein & Co. LLC: So if you saw a move in that direction and we saw more readiness spend, is that also something that would hit you in terms of funding and revenues more quickly than you would see somewhat with the longer-term projects?

Yes. Yeah. Doug, you're right. It's a shorter cycle impact than the modernization activities which are longer cycle. That's correct. Douglas S. Harned - Sanford C. Bernstein & Co. LLC: Okay. Great. Thank you.

Your next question comes from the line of Cai von Rumohr with Cowen and Company.

Yes, thank you very much. So could you tell us approximately when you expect decisions on the major domestic opportunities you've mentioned JSTARS, MQ-25, GBSD, and perhaps also [Technical Difficulty] (44:25). And then just from a broader perspective, are you seeing any of these dates slip to the right because of the administration transition? Thank you very much.

Yeah, Cai, I do believe that as we – it's not so much administration transition, it's the budget uncertainty. We've been in a CR now for a while. Hopefully we'll navigate our way through that here in the relative near term. But as we look at 2018, I think there is some concern about how long it will take to actually get a 2018 budget in place. And the reality is those types of uncertainties do impact our customers in terms of their ability to move out with some of their newer acquisition. So, if it's a transition of a study phase, that's not such a big number and internally can be sorted through and figured out. But if it's a launch of a major new program, that sometimes does have a delay that results from these budgetary uncertainties. We've observed this over the last number of years. CR is nothing new. Unfortunately, we've seen a, typically no more than about a quarter of CR. We're in, at this point, one of the longest running CRs that I can remember, which is unfortunate. But it certainly does impact the timing of the customer's ability to get out there and actually make source selection decisions. Most of the – you asked generally about the timing, many of the award dates for the things that we're looking at now are into the 2018 timeframe. It – in many cases, that is just a reflection of the cycle time that it takes to go from an RFP through a whole source selection evaluation process, and then, of course, to get modulated by the budget realities. But most of the primary decision points with the exception of IRIS, which appears to still be holding in the second quarter at...

So, it's about mid-year.

Mid-year, yeah. But the others are primarily 2018.

Thank you.

Thanks, Cai.

Your next question comes from Howard Rubel with Jefferies.

Thank you very much. Excuse me.

Hi, Howard.

Thank you. Ken, I know you point out the seasonality of working capital is always tough in the first quarter and some of it is for obvious reasons, comp benefit payments and so on. But, have you looked at trying to solve that, so that is either more level loaded or adjusted it in some other fashion?

Thanks for the question, Howard. Yeah, we do look at that and we certainly look at how we can generate our cash on a more consistent, and probably as importantly, on a predictable basis. And I would say we've generally done pretty well from a predictable perspective, but we'll probably leave a little more meat on the bone into the second half of the year than we would like. So we've worked – I'd say we've worked hard to try to pull as much to the left as we can from a cash perspective. You are right that there are some structural challenges in terms of the timing of certain outflows and things like that. But we work hard to make sure that we commit to what we can deliver. We deliver on those commitments, and we try to be as predictable on doing that as we can because we recognize that we're making significant investments in the company, and we've got to generate the cash in order to be able to do that. So, predictability is important and I would say that's probably focus number one. And then focus number two is trying to pull it to the left as much as possible. And some years we do better than that and others, last year was a particularly, I wouldn't say strong start to the year, but it was not as slow as this year, certainly. But we know how to get to where we need to get to. We're comfortable with our $1.8 billion to $2 billion guidance for the year. And certainly, something as we put the first quarter behind us, we'll look at rack and stack of all the receivables and inventory, and figure out how we maximize our working capital between now and the end of the second quarter, and then from there to the end of the year.

Yeah. I wasn't questioning whether you're going to make the $1.8 billion to $2 billion, it's more of a – is there some process changes or customer factors. But – and then also you pointed out or Wes pointed out that SABR had a notable order and urgent need. And this has been a big challenge for you to get the Air Force to buy it for the F-16, could you talk about how this opens up the aperture for that opportunity, and where do you go from there with it?

Yeah, Howard, it's Wes. I'll touch that one. SABR has a great capability; it is an incredibly affordable upgrade opportunity on F-16, and the Air Force has, over the years, struggled with the total budget picture of all the things they've had on their plate. Trying to fit it in, and make sure that they're doing the right things for the F-16, not just with the radar but with the rest of the capability on F-16. And the time has come, and they're moving forward with it from a due-on perspective. And I think, it is important as you suggested that this really demonstrates the capability in a broader way, it helps drive the affordability in a broader way. And it is our expectation that we'll see quite a bit of additional international interest on this as a result. So, we're delighted to be working with the Air Force and with Lockheed on this, it's a good partnership all around.

Thank you.

Thanks, Howard.

Your next question comes from the line of Jason Gursky with Citi.

Good afternoon everyone. Thanks for taking...

Hi, Jason.

...the question here.

Hey, Jason.

Hey, I just wanted to go back to cash flows and the multi-year outlook and maybe ask the question a little bit different way. Ken I knew, and Wes, you both have talked about an elevated CapEx levels going forward. I was wondering though if you could dive into how customer mix might affect working capital going forward. I know that in the international realm advanced payments can be a bit lumpy. And I know you guys are pretty successful in growing international here over the last few years. Just maybe comment on how that's going to impact cash conversion going forward. And then anything you're seeing here on the domestic front with regard to payment terms and negotiations with the DoD customers at here or other agencies inside the federal government? Just anything that would – can change the trajectory, so to speak, of free cash flow conversion would be helpful. Thanks.

Sure. Thanks for the question. I would say first of all let me just address the international piece of the question first. Because as we look at the international growth that we have as a company, it's largely going to be through foreign military sale, those contracts are through the U.S. government and generally do not have significant advance payments on the FMS side. I think that generally when you're dealing with international contracts, if there are concerns and additional risks you try to get more advance payments, from an FMS perspective, the ultimate customer for us is the U.S. government who contracts with the foreign customer and therefore it tends to be a lower cash risk for us, therefore lower advance payment profile. But I think it's a good trade in today's environment. And so I don't see a big slug of international advances as I look out to our international growth opportunities. In terms of customer mix, I wouldn't necessarily say that customer is particularly a driver of the cash flow, contract, lifecycle certainly can be – cost plus contracts tend to be where you collect your cost and bill on them and you get a little bit of a lag depending on how often you bill and how quickly those billings are paid. But there have been some changes to DFAR terms and things like that that can impact some longer cycle programs like aircraft programs and things like that. So, we've got to make sure that we negotiate appropriate terms for those types of programs and that those – that change in costs cut in 2013 or so. And so, we're figuring out a deal with that and working hard to make sure that we manage our receivables and networking capital. And I wouldn't want to put a number on it for the long-term, but I will say just as an indicator, we are seeing a growth profile for 2017. We are projecting that we will have a top line growth; certainly we're projecting to be able to have profitable growth over the long-term as well. And we don't see any significant increase in our networking capital balances between now and in the end of 2017. So, hopefully that's an indicator for you of where we can deliver as we move forward.

Great. Thank you.

Bettina, I think we're going to do one more question.

Okay. And your final question comes from the line of Peter Arment with Baird. Peter J. Arment - Robert W. Baird & Co., Inc.: Yeah, good afternoon, Wes and Ken. Thanks for sneaking me in.

Hi, Peter.

Hey, Peter. Peter J. Arment - Robert W. Baird & Co., Inc.: Hey. Just kind of a clarification, you called out in Mission Systems on the service side that you had a little bit of lower volume on a couple of different programs within SABR and ISR. Is this just timing related, I know there is no change to the annual guidance for Mission Systems, but anymore color on what was impacting this, whether it was just program sunsetting or just timing?

As I look at the mix on that, I would say, Peter that we're largely looking at timing issues. I'm not aware of anything structurally or programmatically or any programs that are sunsetting that are driving volume. I would say most of our services volume tends to be in the Technology Services sector. We are seeing some headwinds there in terms of KC-10 volume and things like that. But I don't think there is anything structural from a Mission Systems perspective that would say there is a particular headwind and anything that's there and nothing jumping to my mind in terms of a pressure, but anything that's there I think is just timing. Peter J. Arment - Robert W. Baird & Co., Inc.: Got it. I appreciate it. Thanks, guys.

All right.

Thank you for your time. I'm going to turn the call over to Wes for final comments.

All right. Thanks, Steve. Well, as I said early in the call, this is a good start to 2017. Our team is focused on supporting our customers and creating value. We're very excited about the opportunities that are in front of us. So we really appreciate all of you joining our call today and thanks for your continuing interest in our company. Thank you.

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