Noah Poponak: Jay, I guess I also wanted to ask about margins, and you sort of did there, but I don’t know if you would just state where you expect the MFC margin to shake out for the year next year or what it looks like in the quarters with the more concentrated losses? And then I just wondered if you could talk about how – a little bit more about how this got here. I know you’ve talked about having the fixed price LRIPs here with prices fixed a little while ago. Was – is that something that’s been going on longer than I realized? I know you – my understanding is you also no bid missile program that was awarded recently because it had fixed price development. Is the customer shifting the risk a little bit towards the contractor? Or am I overreading what I’m seeing out there?
Jay Malave: Well, let me maybe take the second part of it and then circle back. There are really two different programs. I think you’re referring to the standard Stand-in Attack Weapon award, and that was a fixed price development program that we decided not to pursue because of the risk posture over there. And each program and pursuit really stands on its own, and we review those individually. In this case, we thought the risk profile was just too much. And so we backed off. On this particular program, on the classified program, that was a cost-plus development program. So there really was not much risk associated what the development cycle. There are these production low rate initial production lots that were priced pretty aggressively.
And hence, we’re starting – we’re going to start to see the headwinds associated with that. As Jim mentioned, these are – this would be a long-term program. And we know what it takes to make sure that we provide accretive NPV on these types of programs. And so we track that and monitoring that, and we’re confident over the long term, we’ll be able to deliver that. So again, these are case-by-case type of situations that we pursue. On the – we’ll probably have to get back to you on the specific MFC margins for next year. I think we can back into 25 to 50 on the total company, you can back into what that impact is for MFC. But I just don’t have it in front of me.
Jim Taiclet: And Noah, just to give you context here, the approach we’re taking no matter what the customer’s initiative is on risk balancing or imbalancing, the approach that Jay and I are taking here, as we look at programs going forward and opportunities is really a holistic one where we do take the long-term total program value into account, but we also take – we’ll take into account seriously short and midterm risk management. And especially when it comes to fixed price either development or initial rate production because if you look at the concept of fixed price initial rate production on a program, this technology is not settled in the first place yet because the development hasn’t been done. We would ascribe a higher risk factor to that I think, going forward here based on both experience and just our own perspectives on these kinds of things.
Maria Ricciardone Lee: Okay. And Lois, I think we have time for one more as we approach the top of the hour.
Operator: Thank you so much. And that question comes from the line of Jason Gursky from Citi. Please go ahead.
Jason Gursky: Yes. Good morning, everybody. Jim, you mentioned in your prepared remarks, the idea of a supplemental for Taiwan. I’m wondering if you would do us a favor, just kind of remind us of what you’re shipping into Taiwan today. And in the context of a supplemental, what kinds of things do you think are going to be in high demand and would lead to more revenue for you all? And then Jay, related to international here, I was wondering if you could just give us a quick update on the margin profile of your international business, kind of writ large today outside the F-35 program. If international is growing faster, is the expectation here that we would, all else be equal, see margin expansion in light of international historically being higher margin than domestic business? Thanks.
Jim Taiclet: Jason, on Taiwan, I think the signature program that everybody is aware of is F-16 in both production and modernization. So that’s ongoing. But we also provided a kind of comprehensive defensive Taiwan, like Defense of Guam award we won last year, approach to integrating these digital technologies with the aircraft available that we provide and others, the missile systems that we provide and others and integrate them into sort of this porcupine approach to defending Taiwan just like we’re designing for Guam. So there could be a wide range of digital and physical products that would come with this over time. The U.S. government will help define with the Taiwanese government, what, when if any of those will be procured and released for export to Taiwan to the FMS program and other vehicles.
So I can’t speak for the government as to what that will look like. But I think it’s, again, a possibility that given the rising tensions there could be supplementals for Taiwan in addition to, as we said, Israel and Ukraine.
Jay Malave: And on the international margins, historically, the margins have been higher than they are for U.S. government customers. But in this case, it’s so what I would expect the base business to continue this higher margin. But a lot of the incremental opportunities that we’ve been talking about are really going through foreign military sales contracting which are more like U.S. DoD-type margins. And so while we will see kind of a net blended margin profile that’s probably higher than the kind of base U.S. DoD, it will be limited – at least the incremental business is going to be limited because they are FMS.
Maria Ricciardone Lee: All right. Great. Thanks, everybody. So I think we’re at the top of the hour. I’ll turn the call back over to Jim for some final thoughts.
Jim Taiclet: Sure. Thanks, Maria. I think before we conclude today, I do want to thank all of our employees around the world and across the country for their continued dedication. They’re supporting our signature programs. They’re going after new pursuits, advancing these digital technologies. And all that together will really enhance deterrents globally, especially in the more sort of dangerous world we live in. I want to really congratulate and thank our teams for everything they’re doing. We also want to make sure that the shareholders are reminded yet again that everything we’re doing here is designed to deliver a compelling value to you all for many years to come. Jay and I really focus on free cash flow per share, along with the dividend to make sure that you’re getting an interesting return over time, and we’re trying to expand the business as we go as well.
So thank you again for joining us today. We look forward to speaking with all of you on our next earnings call in January. And Lois, that concludes the call for this morning. Bye-bye.
Operator: Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Event Conference, and you may now disconnect.
