Ken Herbert: And just a quick clarification on the 700 certification this summer. As obviously, you commented you’re working with the FAA closely and a lot of this is — or some of this is out of your control. How would you characterize your visibility or sort of the ongoing risks around I guess, FAA capacity to support that? I mean do you feel like you’re well through that risk retirement or is there still substantial uncertainty and risk associated with that summer time frame?
Phebe Novakovic: I think the FAA has done a good job managing its portfolio and a series of complex and multifaceted requirements. And so far, we are sticking to what we believe is a reasonable expectation for the certification.
Operator: Our next question comes from Robert Stallard with Vertical Research.
Robert Stallard: Just a couple of quick ones from me, Phebe. First of all, on Ukraine, it looks like they’re going to get Abrams tanks. At what point does capacity in some form or other particularly staffing become an issue? And then secondly, just for Jason, what sort of book-to-bill have you assumed in aerospace for 2023 in your cash flow guidance?
Phebe Novakovic: Staffing is not an issue here. There is plenty of capacity on the combat vehicle side, both tracked and wheeled. So to the extent that the US government intends to execute any contracts with respect to some of these bilateral agreements that they are developing, we can — it’s well within the capacity of the industrial base to accommodate.
Jason Aiken: And then, Rob, with respect to your second question, as it relates to aerospace book-to-bill, much like going into 2022, we’ve assumed a return to a 1:1 book-to-bill and that is one of the predicates for our cash flow forecast. So to the extent they outperform, obviously, that could provide some upside.
Operator: Our next question comes from Scott Deuschle with Credit Suisse.
Scott Deuschle: Phebe, you touched on it a bit in your prepared remarks. I was curious if you could comment a bit more in depth on the sales pipeline at Gulfstream and the latest trends you’re seeing there, both from individual buyers and the corporate buyers. And then for Jason, I was just wondering if you could identify what the unbilled receivable balance was on Ajax at the end of the year and how much of that you expect to burn down this year?
Phebe Novakovic: With respect to our pipeline, I noted that it remains strong. I would also say that corporate America has been very active, both public and private companies, high net worth individuals. Europe remains slow. Mid East just picked up. Southeast Asia, let’s say, not China, has been increasingly active. So we’ve got a good demand across all of our offerings in all of our aircraft.
Jason Aiken: And then on your second question, as it relates to the Ajax unbilled, that’s at the end of the year, roughly $1.7 billion is where we stand right now. I don’t want to get into the specifics of how much we expect to collect this year, that’s part of ongoing discussions with that customer. But needless to say, as I mentioned in my remarks, we do have good reason to expect those cash receipts to resume before the end of this quarter. And so we’ll start to see that unbilled balance come down.
Howard Rubel: Operator, this is Mr. Rubel. We’ll take one more question, please and then we’ll wrap the call up.
Operator: Our final question comes from Robert Spingarn with Melius Research.
Robert Spingarn: Phebe, going back to an earlier question on entry into service for 700 and 800. When would might we expect the R&D to decline, I don’t know how much the 400 would use, and what would the incremental margins at Gulfstream look like once that happens? I imagine that’s 24 or is it 25?
Phebe Novakovic: So I think we expect R&D to begin to go down at the end of next year. And look, we have Gulfstream is an extremely high performing operationally strong company. And so I think we have demonstrated incremental improvement in margins as our operating efficiency and discipline in our supply chain, engineering. And really on the shop floor, all of that has improved. So I think there’s upward over time, margin opportunity, but we’re not going to get into parsing specifics until we have good clarity. But we’re very comfortable that we will improve steadily and repeatedly.
Robert Spingarn: And just a clarification on the FAA, you talked about it earlier. Are they still in the discovery process as they evolve their system after what’s happened at peers over the past couple of years, or is there a set process that is in stone at this point?
Phebe Novakovic: Yes, I think that that’s a broader question than I’m able to answer. What I can tell you is that our relationship and working relationship with the FAA has matured significantly. And we think we all have a very clear understanding of what the new requirements are and how to execute them.
Robert Spingarn: Okay, thank you very much.
Howard Rubel: And thank you all for joining us today on this call. As a reminder, please refer to the General Dynamics Web site for the fourth quarter earnings release, highlights presentation and outlook. If you have any additional questions, I can be reached later today on my office at (703) 876-3117. Operator?
Operator: There are no further questions at this time, which concludes today’s conference. Thank you for attending today’s presentation. You may now disconnect.
