Jeremy Jason

Jeremy Jason of Citi, on behalf of Jason Gursky, asked for a breakdown of the Q4 margin decline in the Structural Systems segment between product mix and temporary costs, and inquired about the relative profitability of Boeing versus Airbus programs.

Answer

Executive Suman Mookerji clarified that the Q4 margin decline in Structures was split evenly between unfavorable product mix and onetime expenses, both of which are not expected to persist, with a full recovery anticipated in Q1. He declined to compare customer profitability directly but affirmed that the company is actively pursuing value-pricing initiatives with all customers to ensure adequate margins.

Jeremy Jason, on behalf of Jason Gursky, requested an update on trends in the Tactical Data Links (TDL) business, Link 16, and the Proliferated Warfighter Space Architecture programs, noting recent investments in facilities.

Answer

CEO Christopher Kubasik reported that the TDL business is performing ahead of its acquisition business case. The operations were successfully moved and streamlined in Salt Lake City, improving efficiency and leading to significant orders for products like the BATS-D handheld Link 16. He confirmed that Link 16 demos in space are proceeding well, highlighting the acquisition as a perfect example of their strategy to invest in resilient communications, which he sees as the future and a 'sweet spot' for the company.