So getting through IV and then that kind of benefit lifts the Block V, which has higher profit potential. And then it will take the preponderance of the portfolio mix at Newport News. We crossed over the end of last year. So already now the sales proportion between Block IV and V is now more in V and IV. So there’s going to be a natural progression of improvement with learning for boats being accomplished and then that learning and higher profit potential on Block V is going to be affecting the New Port’s portfolio.
Pete Skibitski: Got it. Thanks, guys.
Tom Stiehle: Thanks.
Operator: Thank you. And our next question comes from David Strauss from Barclays. Please go ahead, David. Your line is now open.
David Strauss: Thanks. Good morning.
Chris Kastner: Good morning.
David Strauss: Tom, I have similar question that I have asked in the past around working capital. I mean you obviously had a big improvement in working capital in the fourth quarter. Looks like in your guide for cash, I guess, back into that, it looks like you are assuming relatively neutral working capital for 2024, is that correct or sorry, for 2023. And then could you help bridge us how you go from $400 million and $400 million, $450 million in cash to — in 2023 to the number you are looking at in 2024, I guess, maybe a little bit of CapEx help, but what else gets us there?
Tom Stiehle: Sure. Yes. I will break that down. I have several points I want to hit. I will hit the percentage on working capital last as I walk you through that. So we have updated on slide 11 of the PowerPoint presentation there. So we finished at $494 million, pretty healthy against an expectation of start the year at $300 million to $350 million, we pulled that down to $200 million to $250 million kind of midyear with the re-guide and then Q3 we told you $350 million, we finished $494 million with healthy free cash flow in 2022. Obviously, that pulls ahead a little bit and so we have taken down the 2023 expectation. We hedge our $545 million to $595 million or midpoint of $570 million last time we discussed and because of the pull ahead that we have here right now, we reset expectations of $400 million to $450 million.
You — to your point of working capital, you are right, just a couple of quarters ago, we were at 11.1%, last quarter we were in the 10% range and we finished 2022 up at 6.1% of working capital. As we have been guiding over the last three years or four years, we saw that the workload and just the cadence of the ships, we are going to have more deliveries and launches on the back half of the five-year free cash flow commitment in the front half and that’s exactly what we see here. If you look at the milestone chart, you will see that we are going from three deliveries in 2022 to five deliveries in 2023. We also have three launches in 2023. So that’s a pretty big year. And then kind of it going forward to the following year on that, we take that perspective up and we have two deliveries and three launches in 2024.
