Noah Poponak: Hi, good morning. Jay, we’ve talked about this dynamic where the outlays are trailing the authorization and the possibility that supply chain is intertwined in that. And that was kind of tough in the first half of the year, look to be getting better in the third quarter, but then exited the year declining. Do you have any insight into incremental insight into what’s going on there when that gets better? And to the extent that supply chain is related, your comments that you expect that to improve through ’23, is that underway? You already see that happening? Or is that still just a logical anticipation of timing?
Jay Malave: Sure. Good question. Let me follow up. And we looked at this and tried to triangulate performance in a number of different ways. We looked at just straight piece part on-time delivery here in the fourth quarter relative to what we saw in the second and the third. We also looked at program performance, so earn value-type metrics, and we really didn’t see a meaningful change in on-time delivery or schedule performance relative to our earned value systems. But what I will say is the fourth quarter had a significant step-up in requirements. And if you adjust for the number of weeks in the fourth quarter relative to the balance of the year and you also adjust for some of these benefits that we saw in terms of award timing, our requirements in the fourth quarter stepped up sequentially by about 5%.
And I would say the entire value chain, whether it’s our internal operations and the supply chain, was able to meet that increased level of requirements. So that, to me, bodes well to the future as well as expecting a gradual improvement in 2023. And I think that just provides a reasonable assumption and a reasonable basis for that assumption
Operator: And we’ll go to George Shapiro with Shapiro Research. Please go ahead.
George Shapiro: Yes, good morning. If you look at the F-35 program, like the incremental profit you reported was about a 16.4% rate, so I assume you stepped up the margin on the F-35. And going forward then, the slight decline that you’re forecasting in the margin probably reflects sustainment growing versus production. And a quick follow-up, the $20 million charge that you took in a classified program in aero, was that the same program that you took large charges a couple of years ago? Thanks.
Jay Malave: Okay. So George, I can probably answer your questions with one yes, but maybe I’ll provide a little bit of color there. I now take the — you’re correct, on the charge we took, that was related to the program. We continue to have some learnings there. But our team, I think, in Skunk Works is doing a great job managing that program. And this is a development program where you see and you continue to have learnings. But in the grand scheme of things, I think we’ve managed that quite well. And it really hasn’t — did not impact our results. And as far as the F-35 program, we did see some benefits there. And you’re right, in the quarter, we were — the results there were augmented not only by the volume but as well as the net profit adjustments at Aeronautics, and it was across the board.
I think next year, as we think about the margin, yes, there’s a little bit of a headwind there. I think mix does play a part in it as well as right now, we’re planning a little bit lower favourable profit adjustments. But for the year, in the grand scheme of Lockheed Martin, this year, we did about 25% of profit in net profit adjustments, and we would expect that to be somewhat similar for the entire company for ’23. Thanks for the question, George.
Operator: And next, we’ll go to Rob Spingarn with Melius Research. Please go ahead.
