Good day, ladies and gentlemen, and welcome to the Raytheon Second Quarter 2017 Earnings Conference Call. My name is Jasmine and I'll be your operator for today. As a reminder, this conference is being recorded for replay proposes. I would now like to turn the call over to Mr. Todd Ernst, Vice President of Investor Relations. Please proceed.

Thank you, Jasmine. Good morning, everyone. Thank you for joining us today on our second quarter conference call. The results that we announced this morning, the audio feed of this call and the slides that we'll reference are available on our website at raytheon.com. Following this morning's call, an archive of the audio replay and a printable version of the slides will be available on the Investor Relations section of our website. With me today are Tom Kennedy, our Chairman and Chief Executive Officer; and Toby O'Brien, our Chief Financial Officer. We'll start with some brief remarks by Tom and Toby and then move on to questions. Before I turn the call over to Tom, I'd like to caution you regarding our forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives and expected performance, constitute forward-looking statements. These statements are based on a wide range of assumptions that the company believes are reasonable, but are subject to a range of uncertainties and risks that are summarized at the end of our earnings release and are discussed in detail in our SEC filings. With that, I'll turn the call over to Tom. Tom?

Thank you, Todd. Good morning, everyone. I'm pleased to report that our growth strategy continued to gain traction in the second quarter. Revenue increased by 4.2% and was driven by demand from across our global customer base. Overall operating performance in the quarter was strong and our bookings, sales, EPS and operating cash flow results were all ahead of our expectations. Because of these stronger-than-expected results, we are increasing our sales and EPS guidance for the year. Toby will walk you through the details in a few minutes. As our second quarter results show, we continue to see strong customer demand for many of our franchise programs. With that said, I'd like to take the next couple of minutes to discuss the solid progress we are making toward adding new franchises to our portfolio. During the quarter, we were awarded a highly competitive contract for the engineering and manufacturing development phase of the Three-Dimensional Expeditionary Long-Range Radar program, also known as 3DELRR. This is again based multifunction expeditionary radar for the U.S. Air Force that has been designed for export ability from inception. Over the lifetime of the program, we believe this is a multi-billion-dollar opportunity for the company. Beyond 3DELRR, we were also awarded $116 million contract in the second quarter for the risk reduction phase of the Long Range Precision Fires program for the U.S. Army. Raytheon is one of two competitors selected for this phase. Our solution is called DeepStrike, which doubles the firepower and extends the range over current systems by more than 40% and will replace the current ATACMS system. With DeepStrike, we have an innovative, highly competitive solution that significantly enhances the Army's long-range strike capability. U.S. Navy is also looking to enhance its ability to address threats from longer ranges, including over-the-horizon strike…

Thanks, Tom. I have a few opening remarks, starting with the second quarter highlights. And then, we'll move on to questions. During my remarks, I'll be referring to the web slides that we issued earlier this morning. If everyone would please turn to page three. We are pleased with the strong performance the team delivered in the second quarter with bookings, sales, EPS and operating cash flow all better than our expectations. We had strong bookings in the second quarter of $6.5 billion, resulting in a book-to-bill ratio of 1.04. Sales were $6.3 billion in the quarter, up 4.2%, led by our IDS, Missiles and Space and Airborne Systems businesses. Our EPS from continuing operations was $1.89, which I'll give a little more color on in a few minutes. We generated solid operating cash flow of $782 million in the second quarter which was better than our prior guidance, primarily driven by the timing of collections. During the quarter, the company repurchased 600,000 shares of common stock for $100 million, bringing the year-to-date share repurchase to 3.3 million shares for $500 million. Also, as previously announced, we repurchased $591 million in notes that were due in March and December of 2018. As a result, a non-operating charge of $39 million pre-tax or $0.09 per share associated with this early retirement of debt was recorded in other income and expense in the second quarter of 2017. As a reminder, last year included the ThalesRaytheonSystems transaction that resulted in a tax-free gain of $158 million at IDS or $0.53 per diluted share in our second quarter 2016 financial results. Before moving on, based upon our strong performance to-date, I also want to point out that for the second time this year we're raising the full year 2017 outlook for bookings, sales and…

The first question comes from the line of Jason Gursky with Citi. Please proceed.

Hey. Good morning, everyone.

Good morning, Jason.

Tom, I was wondering if you could talk a little bit about some bigger picture strategy issues here and talk about the new opportunities that you have in front of you and talk a little bit about the investments that you think you might need to make for these new opportunities, both in CapEx and R&D going forward. And then just kind of your teaming strategy at this point. Have there been any kind of changes to the way that you approach some of these new opportunities and the way that you team with people, given the ever-changing competitive dynamics that are going on out there? Thanks

Okay. So, Jason, we've discussed this before in the past, but we do focus on our four-pillar strategy. Obviously, our first pillar is to focus on where the Department of Defense is putting their emphasis. And then one of the big areas there is Integrated Air and Missile Defense, ballistic missile defense. We're heavily involved in that. And also in C5ISR, heavily involved in working those areas and winning significant contracts in those areas also, along with just pure cyber and also electronic warfare. The second area, which I believe is a new emerging area, is the area of high-energy lasers. I mentioned that a little bit in our script and in the work we've done on a laser pod and put it on a helicopter. Why a helicopter? Well, a helicopter has one of the worst vibration environments that you'd have to be in, in terms of using a high-energy laser system. So we really wanted to stress our systems and its capabilities and show that that capability – the design that we had could withstand the high vibration environment of a helicopter. We're also heavily invested in hypersonics. We recently won a major program from DARPA called the Hawk program and so working on that very hard. In addition to that, also working in the undersea area. So bottom line is pushing those areas significantly. I think the other area, back to our franchises – I did mention one in my script, the Naval Strike weapon. And that is a teaming arrangement with Kongsberg. We have teamed with Kongsberg in the past on major systems, major franchises. The other major franchise is a NASAM system where we team with Kongsberg. And we've been very successful on that in the nation's capital. Another major project is in Oman and in four other countries and have significant opportunities for that system in both the Europe and also in the Middle East. And bottom line is that we're pressing on all fronts, new technologies, existing technologies across – and developing and increasing the franchises we have.

And, Tom, maybe I'll just add, Jason, to your point about the investment related to CapEx. We've talked about how we have seen an increase in our CapEx spending as we look to invest in ourselves to support growth and efficiency initiatives. Looking forward, for 2018, we're not ready to give any outlook for 2018. We're in the early stages of our planning process and we'll give more color on the Q3 call. But what I can tell you is sitting here today, relative to CapEx, we could see some continued growth next year to grow the business and then start to see it come back down and level back down to levels lower than we've seen in the last couple years as well.

And our next question comes from the line of Peter Arment with Baird. Please proceed. Peter J. Arment - Robert W. Baird & Co., Inc.: Yeah. Thanks. Good morning, Tom and Toby.

Good morning, Peter.

Good morning, Peter. Peter J. Arment - Robert W. Baird & Co., Inc.: Could you – on IIS, you mentioned in the press release the classified bookings of $555 million. It really seems like that business is really performing well and we're seeing that on the top line. Can you give us any color like if it's just the mix of business or competitive pricing, like, in regarding kind of the op margins and the opportunity to maybe to increase those? Or just maybe some more color on what's going on behind the scenes there.

Yes. So, Peter, let me start. And then if Tom wants to jump in, he can. So we raised – I'll kind of start at a high level, right. We raised the outlook or the guidance for IIS revenue this year. And this was due to two things. We're seeing some increase to our continued demand, both domestically and international for training in support of the Warfighter program. And the work on that current vehicle we expect to go well into 2018. And additionally, Tom talked about in his script some of the recent competitive wins that you just alluded to as well, in our cyber and C5ISR areas. And we do expect those will be starting to pick up a little bit from a volume point of view in the second half. As it relates to the margins, IIS this year – they're on track on a year-to-date basis. And we see them performing well in the back half of the year. We've got a range of 7.4% to 7.6%. We feel good about that. From a longer-term perspective, you've got to keep in mind that almost definitionally they're a little constrained, right, because they are the business in the company that has the highest amount of cost type work and the lowest amount of international work. And just definitionally around that, you're going to see some constraints. I would say under the current book of business, mix of business, there's opportunity to improve compared to the over time – not year-over-year, but over time. And maybe an optimal margin for them would be 8% to 8.5%, given their current book of business. But we are focused. As Tom talked about, we have a four-pillar strategy. A component of that is international and there are some opportunities that the team at IIS is looking at internationally. If we could get a little bit more traction there that potentially would bode well for margin expansion at IIS.

And our next question comes from the line of Robert Stallard with Vertical Research. Please proceed.

Thanks so much. Good morning.

Good morning, Rob.

Hi, Rob.

Hi, Tom. I thought maybe we could talk about the cash deployment. You've given yourselves a little bit of flexibility here saying 80% returned to shareholders and 20% presumably not being returned to shareholders. What do you anticipate that money being spent on? I guess, it's M&A, but what are you seeing out there in the pipeline?

Well, as you know, Rob, we have a balanced capital deployment strategy. And in that strategy, number one is to invest in ourselves to grow the business. And we've been on a growth campaign here for over four years. We're very successful on that growth campaign. We are winning quite a few contracts. And these are franchise type contracts moving forward, which is going to significantly help us over the next five years relative to revenue expansion. So we believe we are making those right investments in a balanced way. The other, obviously, big part of our strategy is total shareholder return to our shareholders. And so we are a strong proponent on the dividend and making sure that we support that over the years. And the other area is and we did mention a little bit on the share buyback when appropriate. We do make the shareholder buyback as part of this overall capital deployment plan. But, right now, the focus definitely is on growth and expansion. Right now, the properties out there relative to acquisitions in the defense market are kind of high. So we haven't seen anything attractive. But if there is something out there that makes sense, we always look at them and determine whether it's the best value for us and, obviously, our shareholders.

And, Rob, I'd just add that the 80% is a target. I think if you look back over the last few years, we were on average a little bit higher than that, not the 20% higher that you mentioned, but a little bit higher. And the other thing that we have done more often than not is made discretionary contributions into our pension plan when we think that it makes sense. And as we always do, we'll look at that later this year as well.

And our next question comes from the line of Robert Spingarn with Credit Suisse. Please proceed. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Hi. Good morning.

Hi, Rob.

Hi, Rob. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Hi. So DoD Secretary Mattis has been pretty clear that he wants to accelerate procurement of precision-guided munitions in the 2018 budget. So I wanted to ask you in that vein, Tom, for a little bit more color. You've talked about your various programs, but can you get a little bit more specific on the type of growth in production rates that we're looking at for the various programs, like Tomahawk, SM-6, Paveway, SM-3, et cetera?

Well, number one is we're definitely in support of the Secretary of Defense's position relative to getting the readiness level up of our forces. And one element of getting the readiness up is weapons systems, including missiles and munitions and precision munitions. So we have seen an up-tempo definitely starting several years back, but internationally. We are now starting to see a domestic uptick, obviously in line with the Secretary's request. We are working that. Turns out we do have the production capacity to continue to grow in terms of our missile production. We've been working on that very hard here over the last three years, anticipating this need for a replenishment of missiles and munitions and are prepared to support the Secretary in his strategy to significantly increase the readiness of our forces.

And our next question comes from the line of Sam Pearlstein with Wells Fargo. Please proceed.

Good morning.

Good morning, Sam.

Hi, Sam.

I was wondering if you could talk a little bit more about Missile Systems. Just looking at where you are for the first half – I know you said you're confident that you can still get there for the year, but why will margins step up so much? Are there milestones, risk reduction? Is there a mix change? What's happening to drive those margins up in the second half of the year?

Yes. Sure, Sam. I'll hit that. So starting with Q2 2017, Missiles margin was in line with our expectations. As we talked about, it was lower than last year, primarily due to mix as well as the timing of some net productivity adjustments. And on a year-to-date basis, their margin is in line with year-to-date 2016 as well. We do expect sequential, right, to Q3 to Q4 improvement in the back half. We're going to be ramping up on some of our production programs. There are some major milestones and risk retirement assumptions in the back half of the year that are expected to generate productivity from factory efficiencies. And also, we see some higher operating leverage and the benefit of that flowing through in the back half of the year. So it's a combination of a couple, three things that are driving it. But we're confident in the outlook for the full year.

And our next question comes from the line of Myles Walton with Deutsche Bank. Please proceed.

Thanks. Good morning. I was hoping to get back to maybe Rob Stallard's question on capital deployment, but in an inverse way. Forcepoint, you've had it since 2015, and I think the CEO of Forcepoint been talking about, longer term, the optionality of an IPO. Just curious, Tom, your view on what you've been able to do with it inside the firm versus what its potential could be outside the firm. And, conversely, I know it's a couple steps forward, but what would you do with the proceeds of kind of reclaiming the capital that you put into it? Thanks.

First of all, we have no plans at this time in place to do an IPO in the near future. And so I'll take that off the table. This is a longer-term play for the company. And the overall focus and strategy for this was to break out the value we have associated with our deep cyber domain capabilities inside the company. Since 2007, we acquired 14 cybersecurity-related companies to give us the technology to protect ourselves in the cyber domain, to protect our customers and also to protect the weapon systems and solutions that we provide. So we did that just to essentially stay in the business and be a business leader in cyber secured systems that we deliver to the Warfighter. As part of developing that technology, we believe we have some great opportunities to help the commercial sector. And the reason for creating a Forcepoint company was to allow us to break out that value for the commercial world, but at the same time help the commercial world in terms of protecting themselves. And, I think, right now, we're seeing a significant advantage of having Forcepoint not only for ourselves internally. They've helped actually with some of their solutions strengthen our cybersecurity within Raytheon, also with our supply chain, our business partners and now the entire commercial space in terms of the industrial base for the nation.

Tom, and I'll just – relative, Myles, to your question, about if and when there was some type of liquidity event, what will we do with the proceeds. I think the way for investors to think about that, we would consider that under the framework of the balanced capital deployment that Tom mentioned a little while ago and that we've been focused on here for several years. Probably premature to give you anything more than that because it would also depend upon what's happening in the market, in the overall defense environment, where the rest of the company is at, the outlook for the company. But needless to say, what we would do is do and use those proceeds with creating incremental shareholder value, which, if you go back to Tom's comments, that was the whole play in why we created Forcepoint. So that hasn't changed from what our original objective was.

And our next question comes from the line of Cai von Rumohr with Cowen & Company. Please proceed. Cai von Rumohr - Cowen & Co. LLC: Yes. Thank you very much. So yesterday, Northrop talked of JSTARS' decision slipping into the first quarter of next year and yet you have increased your bookings target by $500 million. Maybe give us some color on the key potentials you think both domestic and international that could fall into this year and those potentials that you feel are much more likely next year. For example, Lockheed talks of a potential THAAD order. Is that something that's in your thoughts for this year or is that a next year opportunity? Thanks.

Okay, Cai. Let me address that first and then I'll have Toby jump in. We are – have significant opportunities, both on the domestic front, and I think, which is maybe a little bit different than some of our peers. We have a significant amount of international, also, opportunities. And I mentioned them in my script. Obviously, there's the Poland, the Patriot. There's the Romania Patriot deal. We have – and that's – all those deals are late 2017, early 2018. We have significant other opportunities relative to – in IDS, for example, close to $6 billion of bookings for the year and most of it related in the Middle East. Also have some other opportunities relative to C4I internationally that we'll be bringing in this year. And, obviously, in our Missile business, you saw the significant uptick there in demand, actually a prior question here relative to Secretary Mattis, in increasing the readiness of our forces, needing a strong upside tick in terms of procurement of missiles and precision munitions. So bottom line is that the demand signal has significantly increased here over the last several years, but the increase is both on the international front and also on the domestic front. And on the international front, you can see just through my script it's coming not just from the Middle East, but it's also coming from the Asia Pacific. Remember, I mentioned Taiwan. And also we have uptick from South Korea and Japan, and then also in Europe. I mean, we saw the Poland, Romania and there are several other countries in Europe that are also looking to procure solutions from Raytheon. Bottom line is a very strong pipeline that allowed us to increase the bookings for $1 billion this year over our initial plan. And moving out into 2018, we feel that there's a significant strong pipeline to continue that growth through the next several years.

Yeah. And, Cai, I would just add, and Tom just mentioned, the $1 billion that we increased this year, the $500 million you referred to, $500 million in Q1. That increase is 50%/50% domestic/international, which plays along with what Tom just said. The other thing that's interesting this year we've already recorded in the first half of the year, from a dollar value perspective, our two largest bookings with the Qatar EWR back in Q1 and the Paveway orders that we talked about here in Q2. So in the back half of the year, we don't have any big binary billion, $2 billion type of orders. And I think what that speaks to is the strength of the portfolio across the businesses. We do have maybe a dozen or so different opportunities, again, spread across the businesses in the $200 million, $300 million, $400 million or $500 million range. But that's one thing that's a little different, I think, in a positive way, around the complexion of the bookings this year perhaps compared to past years.

And, Cai, I'd' just like to jump on Toby's last statement about the diversity of the pipeline that we have. That's one of the things that we've been working on very hard here over the last four years, to increase the diversity of our pipeline. So we're not reliant on any one or two or three awards to go make our plan or to grow the company. And we think we have the most diverse opportunity pipeline that we've ever had in the history of the company today.

And our next question comes from the line of David Strauss with UBS. Please proceed.

Hi. Good morning. It's actually Matt on for David. Thanks for taking the question.

Hi, Matt.

Hi, Matt.

I was wondering – I think you've talked in the past about Patriot modernization opportunities. I don't know. I think you've kind of sized what that opportunities that's out there. Maybe you could just refresh us and list all of that.

Yeah. Let me jump on that. I mean there's something called Configuration 3+ that we've been working through and upgrading the 14 nations that have decided to procure the Patriot system. And so we're working through those. We have about 41 fire units to be upgraded from there. And that is kind of about greater than $4 billion of opportunities out there, just on that. And that's just the upgrades. That's not buying new fire units. I think the thing that we're seeing a little different than we saw in the past we're having these countries that have Patriot today actually buying brand-new fire units. So over and above the, we call it, the configuration upgrade, they're buying brand-new systems. That's one. And the other one is we are moving forward and have developed a new radar for the Patriot system that allows us to see much further, to track multiple targets simultaneously in a way we haven't been able to do before. But the bottom line is to significantly upgrade the capability of the Patriot system. And all the countries that have Patriot today – this will be a radar that they'll want to upgrade their system to, to provide enhanced capability against the evolved threat. So we see significant opportunity here over the next decade relative to Patriot in configuration updates, the buying of brand-new fire units, and now with the opportunity to upgrade with a GaN-based 360-degree AESA radar to significantly upgrade the overall capability of the Patriot systems they have today.

And our next question comes from the line of Doug Harned with Bernstein. Please proceed. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: Good morning. Thank you.

Good morning, Doug. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: It's been a little more than a month now that we've – the Saudi-led blockade of Qatar has been in place. A while back, we saw the F-15 orders still take place in Qatar. Given the importance of the Gulf to you all, what do see right now as the risks there, politically? Any effect it's having on your business? And what do you watch to see if it could be an issue?

I'll take that on. As I have talked to, actually, the majority of the stakeholders or parties involved in the situation, as you probably know, the administration has voiced its opinion relative to getting this issue resolved within the GCC and is actually helping negotiate a settlement on the issue. Relative to Raytheon, we don't believe this has any impact on our 2017 guidance. We believe that everything we have in play in all of our outlook here is fine relative to any issue there. We have been awarded contracts from these countries during this period. And so we, right now, do not see any issue.

And our next question comes from the line of Richard Safran with Buckingham Research. Please proceed.

Tom, Toby, Todd, good morning.

Good morning.

Good morning.

So, Tom, I'd like to follow up here a little bit more on your remarks you were talking about a minute ago on international, the President, Saudi, and that every time you speak, things are getting better on international markets. Now some of your competitors have noted the Trump administration acting as chief salesperson for U.S. defense exports, also significant improvements in attitudes at State and also an improved regulatory environment for defense. So I'm trying to get at the underlying causes for the enormous success you're having on international markets and the strong pipeline. I mean, are you already benefiting from an improvement in the regulatory environment? Is that causing you to be more competitive internationally? Because of the administration's actions and based on your ongoing discussions with customers, are you expecting more of these bundled deals going forward? And I guess you've already stated that you believe that international growth is sustainable long-term.

Rich, thanks for the questions. Great questions. So let me start with this comment first. When we compete internationally, when Raytheon competes internationally, we do not compete against companies. We compete against countries. So, having an administration that supports industry in going after international business changes the game. And we have an administration now that is significantly supporting international work for domestic – actually U.S. industry. And that has opened several doors for us. Now we've been very successful before those doors were opened. So it's bottom line just accelerating our ability to grow internationally. And so that's why we're very positive about the future of the company, especially relative to the international business. And we're also seeing, as was mentioned on another question before, a significant push by the Secretary of Defense to significantly increase the capabilities of our military in terms of readiness, which puts a significant demand signal on our missile systems, our sensors, precision munitions across the board. So Raytheon has a very healthy outlook for the future and we're just building on the international foundation we put in place before and are able to accelerate now with the support from an administration that does support international sales.

And our next question comes from the line of George Shapiro with Shapiro Research. Please proceed.

Yes, Toby. I wanted to ask, the corporate and eliminations line, which is usually like negative $20 million, it's plus $3 million. And I know it was plus last year, too, but it was one of the keys to your guidance increase, lowering that number. So just wondering if you could explain that. And then just a quick comment, since – why don't you provide, like, a net book-to-bill number to eliminate the issue that the bookings less sales never gets added to the backlog? It always gets something else added. Or just provide some reconciliation of it. Thanks.

Thanks, George. I'll take care of your second question first and I'll maybe help you with the reconciliation. We did have backlog adjustments in the quarter. They were about $135 million. So that hopefully should explain the gap there between the bookings and the sales. Relative to the first part of your question on the corporate-related expenses, there's nothing individually driving that, but we do see some lower expenses for this year compared to when we started the year. But from a total year perspective, still maybe a tad higher, a little bit higher than they were last year in 2016.

And our next question comes from the line of Seth Seifman with JPMorgan. Please proceed.

Thanks very much and good morning.

Good morning, Seth.

Good morning. Toby, maybe could you talk a little bit more. You mentioned the potential for pension contributions, the degree to which that is dependent on tax reform and how you think about that in two scenarios, one, where we have tax reform and, one, where we don't? And also, given the strength of the balance sheet, in a tax reform scenario to get the benefit of the deduction, is there an opportunity, maybe, to make a much more significant contribution to the pension that would affect the longer-term cash flow profile of the company?

Yeah. So, Seth, I think, one thing, tax reform or no tax reform aside, right, we always wait towards the end of the year to make a decision on what we're going to do with pension, right. We have a better idea of where we think returns are going to end up, what's happened with rates going forward, et cetera. So that will continue on. Tax reform is a variable, but I'd also say after a lot of potential momentum earlier in the year, maybe not so much, I think, as everybody has seen lately. But we will take tax reform into account when we make our decision and where tax reform is and whether or not that has a favorable or unfavorable impact on what we do. Obviously, we don't know what tax reform would look like exactly, so it's a little hard to specifically answer that question. Obviously, sustainable tax reform that continues to support investments and high-tech jobs here in the states, we're all for that. And that would improve – something meaningful would improve the cash flow outlook for the corporation compared to everything else being equal. And if that happens, we'll update you guys. But, again, maybe a little bit of a broken record, but we'll think about that under our balanced framework approach to capital deployment.

And our next question comes from the line of Howard Rubel with Jefferies. Please proceed. Howard A. Rubel - Jefferies & Co.: Thank you very much. Tom, I want to go back to Forcepoint. I know it's the smallest business unit, but it looks like revenues are a little bit on the light side. And could you talk about some of the challenges you're facing in the market?

Yeah. Let me just start off. When we talked about this earlier in the year, that this was a year that we were going to restructure some of the – maybe you can call it the backroom for Forcepoint. We've grown that from $250 million a year in revenue to $600 million. So we were stressing the backroom quite a bit relative to being able to support a business of that size. So we did make a decision this year to take kind of a timeout to get their backroom up and make the investments in the backroom to get them ready to go and accelerate here in 2018. And so that was one of the things that we talked about earlier. Relative to their product line, they are updating several of their product lines and integration. One of the big areas that they're pushing heavily and getting a lot of demand signal for is in the area of data leakage prevention, DLP, combined with the insider threat capability and working on that to get that product in an enhanced position for the marketplace. So we're also doing that to help accelerate revenue in 2018.

And I think, Howard, you didn't get into the numbers, but in my comments, I mentioned how sales in the quarter at Forcepoint were in line with last year. That was lower than we were looking at going into the quarter by about $10 million. I think if there's any good news there, that variance is really driven by timing of awards. The thing, we had some, dozen or so, awards that moved from Q2 into Q3. We didn't lose those, so there's some good news there. And think about half of those we've already closed on here in the first couple, three weeks of July as well. So, a little bit of timing that the team's dealing with there and on top of what Tom said.

And our next question comes from the line of Matt McConnell with RBC Capital Markets. Please proceed.

Thank you. Good morning.

Hi, Matt.

Good morning, Matt.

Just a quick follow-up on that point. How about the pace of investments at Forcepoint? And could you just update us on kind of an expected margin trajectory in that business?

Yeah. So we talked about back in our year-end call and in the first quarter call that this year Forcepoint has about $25 million of expense included in their margin outlook related to investment, about 40% of that in the first half of the year and about 60% in the second half, kind of, sort of, split 50%/50% between Q3 and Q4 in the back half of the year. And then from a longer-term point of view, and consistent with this, that we expect continued double-digit growth and double-digit margins from Forcepoint.

And our next question comes from the line of Noah Poponak with Goldman Sachs. Please proceed. Noah Poponak - Goldman Sachs & Co. LLC: Hi. Good morning, everyone.

Hi, Noah.

Good morning, Noah. Noah Poponak - Goldman Sachs & Co. LLC: Back to Missile and the discussion of the inventory depletion and, I guess, drivers of that business. So with the growth rate going into the low-double-digits in the quarter and then, I guess, the guidance for the year implies that kind of stays there in the back half, should we be – I guess, how sustainable is that? Should we be thinking about that as the growth rate into 2018? And then bigger picture, when you guys talk about a lot of the funding there recently having been from inventory depletion and now moving to actual funding, the driver there being readiness, are you actually able to quantify how far below normal levels, both the U.S. and our allies, are compared to where they want to be?

Let me start on that last question. Number one is we actually cannot provide you an answer on how low they are. That would be an issue we'd have with those customers. But I can tell you there is significant demand signal being driven by the up-tempo that is going on around the world today. And so that's driving, number one, the overall replenishment for the United States and its coalition partners around the world. And so we're off driving that. One thing I would like you to also bring to bear here is that missiles does not just do precision munitions. They also do missiles for ballistic missile defense. They also do air-to-air missiles, air-to-ground missiles, surface-to-surface missiles. And so they have – the demand signal is across their entire portfolio. The precision munition is one aspect of it, but we're also seeing strong demand. I think we just mentioned it. We just opened the Standard Missile-2 line again, driven by four international customers' demands. And then we're seeing additional demands now from other international customers for Standard Missile-2s around the world. So the bottom line is Missiles has a very healthy pipeline that is increasing. So we're very, I'd say, up on Missiles over the next five years.

And, Noah, just to touch a little bit on your comment about 2018 growth and all. So we're not going to get into any details here on 2018, but I can tell you, we do expect continued growth for Missiles. And maybe what I could point you to that help support that is if you were to go back and look over the last couple of years at the Missiles book-to-bill, last year, it was about 1.13. It was almost 1.3 in 2015. Here in the second quarter, they had 1.48. And we expect for the total year this year, they'll be well over 1, which, again, supports the continued growth for the Missiles business.

All right. Well, I think, we're out of time here for today. With that, I'll turn the call back over to Jasmine.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. So you all have a great day.