Kevin McDonnell: I’ll start and then Wahid you can fill in. Well, basically, they’re getting a large order from Ukraine. As we’ve been talking about over the last several quarters, they’re shifting more to a product business that was anticipated with — also with FUAS potential coming online here. So, we see their gross margins improving as they become more of a product business over time. So, you should see gradual improvement in the contribution.
Ken Herbert: Okay.
Wahid Nawabi: Yeah. And again, Ken, that business, as you know, it’s primarily a COCO service today. Our strategy when we acquired that business was to transition it more to product sales. There are several sort of pathways that we’re pursuing to achieve that. One was that we’re relying less and less on the COCO operations. Two is to increase international sales and the potential Ukraine order that was announced by the presidential latest aid package is a significant potential for JUMP 20. And then this will be a — the first of its kind that the U.S. has given to Ukraine other than our Puma 3s and Puma LE systems. And by far our UAVs are the workhorse of the Ukraine conflict today. And then lastly, we have several additional international customers that are interested in JUMP 20 systems for product sales.
What I forgot to also mention is that the Army FTUAS selection that we just received, a small incremental contract, is a potentially $1 billion program. After that there’s several other programs within the U.S. Marine Corps and the U.S. Navy that we’re considering, although those are a little longer term than this next year. The U.S. Army announcement was now, and the selection should probably take place sometimes by the end of our next fiscal year. And so, all of those events, Ken, will help improve the margins and the profile of that business, which was exactly the plan that we had when we purchased the company to begin with.
Ken Herbert: Yeah. Thanks Wahid. And as we — and apologize if you went through this, but as we look at the aircraft you delivered as part of Increment 1 on the FTUAS contract, can you comment on how those are performing and any maybe lessons learned, and how you think specifically the results of Increment 1 are positioning or helping you is obviously you moved into Increment 2 opportunities?
Wahid Nawabi: Sure. So, that’s a really important point that you bring up is just that we are the only one who has been selected sole source for Increment 0 and Increment 1. And we’re the only one that has been selected for three phases. Increment 1 is still early. The reason I’m saying early is because we’ve delivered the hardware. We’re in the process of training the U.S. Army personnel both in Germany and in United States and Huntsville, Alabama. The Army is taken as slower — it’s not going as fast as we expected it to go, meaning that they now have to deploy it out there and goes to an extensive set of testing. From our perspective, and based on our experience and based on our engagement with the customer, so far their experience with us has been extremely good.
We believe that we have the advantage in that competition so far based on our track record of performance and our quite considerably more compelling and differentiated solution. The requirements that the U.S. Army has for FTUAS on Increment 2 and the final selection are things that we can deliver now. Most other vendors are not even close to that yet, and we’re at least a few steps ahead of those folks in terms of delivering the capabilities and the reliability that the U.S. Army’s looking for on Army FTUAS. So, overall, we feel good about it, but we also remind ourselves every day that we’re competing with multiple serious players and we take nothing for granted and we’re going to keep, continue to work and execute as we have done in the past.
