Ken Erbert

Ken Herbert asked about the implications of Northrop Grumman's guidance for international growth in 2026, specifically inquiring about expected contract announcements for IBCS beyond current customers and other areas driving international sales growth.

Answer

Chair, CEO, and President Kathy Warden stated that 2026 is expected to be a strong year for international awards, setting up 2027. She noted 20 countries have expressed interest in IBCS, with 2-3 expected to announce awards this year. She also highlighted widespread international sales growth in munitions, airborne radar programs (awards in 2026, sales in 2027), and increased international content in base businesses like E2D and Triton.

Ken Herbert asked about the international growth implied in Northrop Grumman's 2026 guidance and specifically when contract announcements for IBCS, beyond existing customers, could be expected given accelerating opportunities.

Answer

Kathy Warden, Chair, CEO, and President of Northrop Grumman, expects 2026 to be a strong year for international awards, setting up 2027. For IBCS, with 20 countries interested, she anticipates continued expansion with the U.S. and Poland, and 2-3 new awards this year, with others to follow. She also noted widespread international sales growth in munitions and airborne radar programs, with awards this year impacting sales more in 2027.

Ken Herbert followed up on the USM business, asking if FTI's new aeroderivative IGT offering for the CFM56 engine poses a longer-term risk to engine volumes for AAR's USM segment.

Answer

CEO John Holmes stated he does not see it as a risk. He explained that FTI's high demand for these assets has already significantly reduced AAR's activity with them over the past year, but AAR's USM team has successfully sourced CFM material independently. Holmes expressed confidence in AAR's ability to continue finding material despite this new demand vector.

Ken Erbert asked about AeroVironment's full-year revenue outlook, specifically the $1.9 billion to $2 billion range, and the factors influencing potential upside or downside given strong Q1 results and 82% revenue visibility.

Answer

Wahid Nawabi, Chairman, President, and CEO, expressed satisfaction with Q1 results and BlueHalo integration but noted it's early in the fiscal year. He mentioned potential for a continuing resolution (CR) but doesn't expect it to negatively impact the fiscal year. Contract timing and DoD transformation were cited as key variables. He reaffirmed confidence in achieving record revenues and profitability, positioning AV as a leading defense tech company.