Operator: Our next question comes from Jan-Frans Engelbrecht.
Jan-Frans Engelbrecht : I just want to quickly return to Colombia. I think you’ve delivered about 2 ships to the Navy today. And I was just wondering if you could highlight some initial lessons that you’ve learned on the program from both just a technical perspective as well as labor and then sort of when you expect to achieve sort of steady-state profitability on that program? Or would it be sort of a gradual improvement over the 12 but lifetime?
William Lynn : Yes. I’ll let Mike take the financial question. Let me — what we’ve been able to do is develop through the first contract, which was the first ship set as well as the development of the system. I think we’ve been able to develop a scaled-up electric propulsion system, which was unavailable to the Navy before. We’ve delivered that. We’re now working on the production ship sets. I think we are seeing the lessons that we — the hard one lessons that we learned in the development show up in the production, we’re not seeing surprises. I think we’ve worked through — it was a very thorough development program of 5 years with an enormous amount of testing. And we’re feeling very good about the predictability of the production capacity. And we think that where this leads this is — we’re going to be able to transfer this technology to new classes of ships, both foreign and domestic. And that’s really an enormous opportunity over the next several years.
Michael Dippold : And I’ll take the from the financial side, I think what Bill hit is also why we’re confident in this new proposal that we’re going to be able to drive the margin expansion. And that is it’s — yes, we’ve built the prototypes. We’ve tested it. We built the first production ship set, but I’ll just remind you about the rigor that goes through in the testing and evaluation for the submarine community. So we have learned a lot of lessons through those efforts. We are very confident in our ability to execute. And it’s — obviously, it’s mandated and demanded by the customer. So we feel good there. We also did this program in today’s economic environment. So we’re derisked from that aspect. And we do believe that this gives us some opportunity to move from that development program, which is where you had a little drag on margins — and as the content of our revenue begins to become more and more from the production side and the margins associated with that production, that’s where you’re going to see the margin lift.
You’re going to see it as we become less dependent on the revenue contribution from the development and first production shipset and moving into these newly negotiated contracts that will afford us the opportunity for additional marginality.
Jan-Frans Engelbrecht : Perfect. That’s really helpful. And then just a quick follow-up. Are there any specific areas where you’re seeing sort of elevated foreign demand just given the geopolitical backdrop, Ukraine, Middle East, Europe in general. I’d imagine it would show up in DRS Land Systems. But if you could just give some additional color there?
William Lynn : Yes. I mean land systems, certainly — I mean, what we’re seeing on a mission area is force protection has been highlighted by the Russian experience in Ukraine and the vulnerability of their platforms, their vehicles to both attack from the ground, rocket propel grenades and anti tank weapons as well as attack from drones. Obviously, the Ukrainians are experiencing partially that attack from drones. So that’s really highlighted the force protection capabilities, which really had atrophy in the post-cold war era, and this has really highlighted the importance of that set of systems. We’re also seeing kind of more generally a demand in Europe, particularly those states that border Russia, for increases in ground systems and force protection systems.
And so you’re seeing an acceleration of things that you look like they were several years out in Poland and Romania are now being pulled into the current time frame. So that’s an upward push on demand as well.
Operator: Robert Stallard from Vertical Research, if you have another question your line is now open.
