Sheila Kahyaoglu: Okay, and then if I could ask one more on the defense side of the business, just given a lot of what your peers are talking about as well, and you have pretty robust demand in Marine and combat, but earnings growth tends to be below revenue growth. So just given inflation and mix, how do you think about GD’s ability to continue to grow defense profits? It seems like combat is seeing some of that.
Phebe Novakovic: Combat is seeing some of it, but I tried to give you some perspective earlier on the impacts of what happened to the industrial base in the Marine group, and it also impacted Gulfstream as a result of COVID. So for us, it’s really a question of operating excellence, operating excellence, operating excellence. We’re going to focus on that very heavily. So we drive increased profitable growth. That’s the value proposition that we’re looking at right now.
Operator: We’ll move next to Seth Seifman at JP Morgan.
Seth Seifman: Okay, thank you very much, and good morning, everyone. I wanted to start off asking about combat and just the 3% growth guide. I guess even if we adjust for some seasonality, I might have thought that the activity levels that we’re seeing here in the earlier, what we saw in the second half of ’23 would lead to some really quite robust growth in the first half, perhaps even double digit, and then being at 3% would imply something like flat or down in the second half. Am I not thinking about that cadence properly, or is there some reason for the growth to really step off or come down in the second half?
Phebe Novakovic: No, I wouldn’t look at anything macro with respect to that. In a quickly growing environment, contracts tend to come in a little bit more lumpier, and so this is simply a question of timing. I think we see mid to upper single digits over and toward the higher upper single digits over our planned period, but we’ve given you the plan that given the faster execution of contracting that we saw last year, we may have a bit of a slowdown in the first couple quarters and then acceleration as the year goes on, but the demand is there.
Seth Seifman: Sure, sure. Okay, excellent. And then on aerospace, I guess it’s probably about two years ago that you gave us a multi-year look at the aerospace business and the expectations there as the demand started to gather. Since that bunch of stuff has happened, I think demand has probably been a little stronger than expected. We’ve also seen some supply chain issues, some certification pushouts. As we think about a multi-year outlook for aerospace in terms of deliveries and profitability, is that something you can update at this time?
Phebe Novakovic: Yes, so we’re going to deliver 160 airplanes that’s in our plan this year. I will say that ’25 will be more deliveries and ’26 even more deliveries, but at this point given the issues that you mentioned, we’re not going to be any more granular than that. We owe you additional fidelity as time goes on.
Operator: Our next question comes from Noah Poponak at Goldman Sachs.
Noah Poponak: Hey, good morning, everyone. Phebe, maybe just following on that, but a little bit bigger picture, I was curious to hear you talk about how you’re managing supply versus demand in this pretty unique business jet market because if you go to $12 billion in revenue, that’s run rating $3 billion a quarter and based on the change in backlog, I know that’s imperfect, but directionally, the order rate had made it to $3 billion a quarter, but it’s now slowed a little bit and we’re trying to figure out where this market settles out. And so you want to get customers airplanes and you want to grow, but I know you also want to maintain backlog and that you’re more focused on pricing and margins than units and so if you’re going to $12 billion and then as you just said to Seth, you’re going to go higher, I guess you’d be burning backlog. So how do you think about managing that multi-year supply versus demand in that market?
Phebe Novakovic: Well, look, I don’t see us particularly burning through backlog given the robust backlog we have and given the robust pipeline that we have. We’re off to a good start this year. So I don’t see anything that particularly drives an unhealthy burn through the backlog. We have believed for some time and it is turning out to be the case that new clean sheet airplanes drive incremental demand and we’re certainly seeing that and we don’t see much of an abatement in that.
Noah Poponak: Okay. So it sounds like you potentially expect the quarterly order rate to pick back up moving forward as your new airplanes are more entrenched in the market?
Phebe Novakovic: Well, look, our order rate has been quite healthy and quite wholesome and we would expect additional orders supported by the pipeline to come in this year. So we’re not going to give you any real granularity around orders per quarter, but we see nice demand, continuing interest, and a very solid pipeline. To me, those are the sort of foundational elements that we rely on for looking on a going forward basis, looking at what production can ultimately be.
