Todd Ernst: Josh, we have time for one more question.
Operator: Thank you. One moment for our final question. Our final question comes from Jason Gursky with Citi. You may proceed.
Jason Gursky: Hey good morning everybody. Dave, just a clarification question for you to start. You mentioned in your prepared remarks that there were some shifting priorities from the government and the space business that was leading to a deceleration in growth. I was wondering if you could provide a little bit more color on what those shifting priorities might be? And then Kathy, I just wanted to provide you maybe a bit of an open-ended question to kind of wrap all this together here. Just broadly talk about all the risks and opportunities that you see in front of you on the execution side of things. You’ve obviously got record backlog here and we know about the B-21 risk. But I’m wondering if you could just maybe highlight and wrap this all together, do we have a balanced risk and opportunities portfolio here, we a little bit more overweight risk than we are opportunity?
And maybe just kind of dive into a little bit of the details of what you’re seeing and maybe what you’re all doing to address those issues. Thanks.
David Keffer: Sure. Great questions, Jason. Let me go ahead and start with your original question on the national security space portfolio. As we mentioned, our guidance captures growth and declines in various programs across all of our portfolios, very much including space. In the case of space, as we’ve noted, there are some shifts in budget priorities. A lot of our customers are having to address budget prioritization, particularly as it relates to 2025 and beyond. With that said, in this particular case, given that it’s in the restricted domain, there’s not much more we can say about the mission or the program or anything like that. What’s important there is that our space sector, and therefore, company guidance accounts for our latest understanding of all the programs in that portfolio and the likely path forward for them.
And I think when you look at the space guidance, you see a lot of value creation as they continue to grow the top line. And in this case, now grow margin rates alongside that with lower capital intensity starting in 2025, in particular, you see a lot of improvement in returns on invested capital in the space business, given how much growth they’ve built in their foundation over the last few years.
Jason Gursky: Kathy?
Kathy Warden: And Jason, I really appreciate the question. I wish I had another hour to discuss it with you, but being respectful of everybody’s time, let me just simply say that I see our portfolio and the set of opportunities and risks we have as balanced and consistent with what I have seen in recent years since I stepped into this role. We have a team who has stepped up and provided top line growth, which I believe is industry leading at about 5% on a compound annual basis each of the last four years. We’re projecting that again this year. We see the opportunity space is rich, both domestically and internationally. And to the risks that we have in executing this portfolio, while the pandemic certainly made that more challenging for the last couple of years.
We’re turning the corner. Our overall program performance has not been stronger since I’ve been at the company, and that’s 15 years and going. So I really feel good about how this team is positioned. We now have fully disclosed and taken into the P&L the B-21 risk, which we’ve been talking about and feel confident that we can now go execute this program. And I am proud of what the team collectively has accomplished across 2023 and look forward to the outlook we have in place for 2024. So with that, I just want to again thank my colleagues at Northrop Grumman for their dedication, both to our country and our company. I also want to thank you for joining us today, and we look forward to speaking with you on our next earnings call in April. So Josh, that concludes the call.
Thank you.
Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation.
