Ladies and gentlemen, thank you for standing by. And welcome to the Kratos Defense & Security Solutions Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. . I would now like to hand the conference over to your speaker for today, Marie Mendoza, Senior Vice President and General Counsel. You may begin.

Good afternoon. Thank you for joining us for the Kratos Defense & Security Solutions fourth quarter and fiscal 2021 2021 conference call. With me today is Eric DeMarco, Kratos' President and Chief Executive Officer; and Deanna Lund, Kratos' Executive Vice President and Chief Financial Officer. Before we begin the substance of today's call, I'd like everyone to please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in the forward-looking statements we will make this afternoon. Please keep these uncertainties and risks in mind as we discuss future strategic initiatives, potential market opportunities, operational outlook and financial guidance during today's call. Today's call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, at the end of today's press release, we have provided a reconciliation of these non-GAAP financial measures to the company's financial results prepared in accordance with GAAP. With that, I will now turn the call over to Eric DeMarco.

Thank you, Marie. Good afternoon. As we reported today, Kratos finished fiscal ‘21 with approximately 10.7% organic growth, excluding our training business which legacy LPTA contracts will be completely out of our financials after Q2 of this year. Our 2021 revenue Growth included growth of approximately 24% and 19% respectively, in our largest businesses, unmanned systems, and space satellite communications and cyber. We reported a fourth quarter book-to-bill ratio of 1.5 to 1 that includes 2.4 to 1 in our unmanned systems business and 1.2 to 1 in our KGS segment, positioning the company for continued future organic growth and providing us with confidence in our 2022 forecast that we're providing today. Kratos’ Q4 and fiscal ‘21 financial performance and our 2022 forecast of organic growth are representative of the strength of Kratos’ business model and our team considering the continuing global COVID pandemic and recent Omicron variant impacts which have spiked for Kratos in Q4 and thus far in Q1 ’22. The continued and increasing disruptions in the supply chain and the federal government and our industry also operating without a federal budget and under a CRA since October 1 2021. All of which Deanna is going to discuss in detail. As we begin 2022, we believe Kratos is continues to be uniquely positioned and aligned with the United States and its allies’ national security priorities, including affordability and rapid development, testing and fielding of hardware products and systems. In the tactical drone area, the customer recently communicated its commitment to and continued prioritization, of affordable, loyal wingman force multiplying tactical drones and autonomous systems for the future force structure. These comments include additional new planned for drone program opportunities for the 2023 budget request, and potential envisioned concepts of operations, including drones teeming with multiple manned platforms. For…

Thank you, Eric. Good afternoon. As we have included a detailed summary of the fourth quarter and fiscal year financial performance and financial guidance in the press release we published earlier today, I will limit my comments to the highlight in my remarks today. Kratos’ fourth quarter 2021 revenues of $211.6 million was at the midpoint of our estimated range of $205 million to $215 million. We achieved the midpoint in spite of continued COVID related supply chain and other delays, which impacted revenues by $11.2 million during the quarter with the most significant impacts in our C5ISR and our international commercial SATCOM businesses. Our Q4,’21 consolidated operating income was $9.2 million, up from the fourth quarter of 2020 operating income of $9 million, which includes fourth quarter 2021 increases in R&D of $1.4 million, primarily in our space in satellite and unmanned systems businesses, and increased SG&A costs of $4.8 million, primarily resulting from our increase in revenues as well as due to increased headcount in our unmanned systems business, resulting from the growth in this business. In particular, total headcount in our unmanned systems business has increased 90 heads from 812 in Q4 of ‘20, to 902 in Q4 of ‘21, as this business experienced 24% increase in revenues from 2020 to 2021 with additional future growth expected. Net loss was $2.6 million for the fourth quarter of ’21 and a GAAP loss of $0.02 per share, compared to net income of $78.1 million in the fourth quarter of 2020 and GAAP EPS of $0.62, which included a non-recurring tax credit of $75.3 million. Included in the net income for the fourth quarter was a tax provision of $4.5 million on income tax -- income before taxes of $3 million or an approximate 150% tax provision rate. As…

Great, thank you Deanna. I want to conclude with a couple of thoughts relative to what the employees of the company have accomplished over the past few years. For the past several years, we've made substantial internally funded investments, including in the development of a suite of affordable high performance jet drone aircraft that are flying today and that we believe are ready now to be the Pentagon's low cost, a credible force multiplier unmanned combat system. We developed the low cost rocket system that has had numerous successful missions including hypersonic, and we are developing a more advanced system and an affordable hypersonic vehicle, Aeronish and ease with initial flight now being planned. We have developed and are the first to market with a truly software based virtual satellite ground operating command and control TT&C based open architecture system open space, which we believe will be market disrupting. And we are working to develop a next generation of turbojet turbofan and other exotic engines for drones, missiles, powered munitions, and other systems with the first of our engines now entering limited production for an aerial vehicle with additional production awards expected. We're working closely with our Pentagon customer set and Congress, including to invigorate the U.S. industrial base, increase competition, foster real innovation drive down costs and secure our country. The same quantity has a quality all of its own is becoming more and more relevant every day. And we are accomplishing all of this, while we continue to organically grow Kratos’ revenue, our profit, or expected cash flows as we reported today, with an unwavering focus on delivering value for the shareholders. Thank you to our employees and all the Kratos stakeholders who are committed to the successful execution of the mission. And with that, I'll turn it over to the moderator for questions.

Thank you. Our first question comes from the line of Mike Crawford with B. Riley Securities. Your line is open.

Thank you, Eric. Is the decision on the OBSS Demogorgon Downselect expected this year or is that a 2023 event?

I believe Mike, the customer announced that it will be Q4 of this year, I believe.

Okay. And then did you say that that the CTT and Cosmic AES acquisition were made in the fourth quarter? Or were some of those acquisitions made in the first quarter? And are there earnouts associated with them that you can discuss?

Yeah. Mike so the CTT acquisition was performed in the fourth quarter. Part of the purchase price was actually paid though in the first quarter. And the Cosmic acquisition was in our first quarter. And there are no earnouts.

And the first one closed right at the end of the quarter. Before the fourth quarter. Right at the end -- like literally like the last day of the quarter, something like that.

And then combined, you paid one for the two?

Of about $60 million.

Okay. $60 million. And then just thank you for giving that guidance. Just final question for me would be what if anything, should we be looking for not only in this forthcoming delayed government fiscal ‘22 budget, but also in the soon to emerge ‘23 budget requests related to Skyborg or anything else that will give us some more clarity on where you might be able to go particularly with tactical unmanned systems?

I believe Mike, probably right now, the most publicly available data point we can talk about relative to that is on the Secretary of the Air Force, where he said that he is looking to put into the 2023 request and the related fighter funding for two new additional unmanned combat drone aircraft. In addition to that, for the ‘23 budget as you I think you're aware in the NDA signed by the president for the ‘22 there are a handful of items in there related to current Kratos programs that we're waiting for that could potentially fall over into 2023. Those are the two.

All right, thank you very much.

Thank you.

Thank you. Our next question comes from the line of Christopher Rieger with Berenberg Capital Markets. Your line is open.

Eric and Deanna, good evening. Thank you very much for the time. So, if the current continuing resolution continues to be pushed out, obviously Kratos isn't the only company impacted. So what sort of lingering effects, particularly on your supply chain would you anticipate to be the most pronounced? And what can you do on your end to sort of mitigate these effects?

Right. I think we talked about in Q2 of last year and we've continued since then. We've routinely been buying ahead where we can critical components critical subsystems for our systems in the past month, relative to our 2022 plan forecast we put out today. We met with all the operating presidents and there are specific areas where we are leaning forward, and we're going to try to buy a significant amount of stock. I think we've already placed the orders to get it under contract and get it in here and fix the pricing. Because pricing is running on us. And we're going -- we're doing this ahead of contract awards. We have visibility on the program. It's a Kratos program, but the contract award may not be made yet where we're leaning forward and making those purchases as well. So those are the key things we have been doing and we're continuing to do to mitigate as much as we can.

Great, thank you helpful. Just one more. I guess, a bigger picture. With regard to Valkyrie and Skyborg, what needs to occur from here on your end with your partners and at the DoD in order for Skyborg to become a program of record?

I am unable to address that, specifically now. I want to, but I can't. If you take a look at the recent Secretary of the Air Force comments that these -- I need to wait for the customer to talk about. Things are things are moving, and we need to let the customer take point.

Okay, fair enough. Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Sheila with Jefferies. Your line is open.

Hi, this is actually Ellen on for Sheila. I'm just looking at the 2022 margin guide. It's implied down about 50 bps at the midpoint. How much of that is mixed versus supply chain and the CR and all the other onetime items you called out? And can you give us any color across KGS versus unmanned?

Yep. So as you know in 2021 similar to 2019, we continue to win a significant number of new tactical drone development programs. So for example, at the end of ’21 we were awarded OBSS. That's just under a $20 million contract that's going to be substantially burnt in 2022. It's a development program, and development programs typically carry lower margins. Also, very importantly, GBSD where we are teamed underneath Northrop Grumman. GBSD is based on our schedule is going to start significantly ramping in Q3, very significantly. And that's going to continue to ramp Q3-Q4, and then it's ’22 and beyond. As you know, this is the development phase with Northrop Grumman, before production is awarded. Those margins and development programs, we will typically record at a lower revenue rate until we get more comfortable as we head toward production. And then in addition to that, we have won a number of classified programs, okay, including in the space satellite communication in the drone area that are development, that are carrying lower margins. So these are all what are forming the foundation why I am saying with such confidence. Our future year growth trajectory is up and to the right. Because we've been winning these programs, which means we're getting designed in on big potential production programs. That's what's causing the margins coming down a little bit thus far in ‘22.

And just to add to that -- and when really related to the supply chain and COVID impact for estimated for fiscal ’22, that's $20 million to $25 million on the top-line and $5 million to $8 million on the EBITDA line. That's having a pretty significant impact on some of our higher margin business, especially in our microwave products business. So that is impacting clearly impacting the margins there. And in a couple of other areas, but the most pronounced one is in our microwave products business there. And that is impacting the overall rate.

Thanks, helpful. That's it for me.

Great. Thank you.

Thank you. Our next question comes from the line of Peter Arment with Baird. Your line is open.

Yes. Good evening, Eric and Deanna.

Hi, Peter.

Hi, good afternoon.

Hey. Eric, can you talk a little bit about the further outlook. If we think beyond 2022, I know the target business -- target drone business he had always thought would ramp to $250 million plus. How do you think about that business now outside of just the tactical?

Yep. We’re making slow, methodical progress toward that. The SSAT getting full rate production and now receiving that most recent production award is going to be an important step for us. That confidential program that is in LRIP. I wish I could give you more information on it, I cannot. That is heading toward full rate production probably next year. The international contract that I talked about today, if you recall, I mentioned that about I think a year ago and then I said this one has been tied up because of the change in administration with Department of State we just got it. We have several others that we're expecting to get. So those are all trending in the upward direction. In the other direction, we received about three years ago, a sole source $100 million -- just under $100 million contract with the government agency for target drones. My opinion, I believe for funding reasons with this service, it has rolled out thus far, much slower than I had originally expected. So that's kind of been going the other direction. Those are the details at the forest over the tree level. The more and more new weapon systems that are being sold, they need to be exercised against target drones. And so the business I think, is just going to continue to move up and toward to do the right.

Yeah, just to add to that international contract that Eric's mentioning, that has been delayed by about a year. And now that we are -- we've received that award, though because of the revenue recognition standards, we won't see any contribution in 2022, because there's certain terms in our international contracts that typically are on revenue as it shipped rather than on a percentage of completion basis. So there will be no contribution ’22, but we'll see that contribution in ‘23 as we deliver.

Okay, that's helpful. Thank you. And then just quickly on space growth. I'm sorry, if I missed this earlier. How are you looking at the growth there just given all the activity and how well you're positioned on the kind of redoing a lot of the ground stations? And should we expect to see the margins continue to grind higher from the software perspective?

Yep. So as we reported today, we just came off 19%. And so, I was truckling, because we do a 1.1 book-to-bill ratio, but that's on a 19% growth rate. If you see what I mean so we're growing and we're booking a lot of work. I believe, this year and I believe in the next several months, certain customers are going to make some announcements relative to Kratos. And what Kratos is doing with those customers that are going to tie directly into where we see this business going over the next several years. We being first to market as you know, was a key differentiator for us. Against the primes in particular, we need to be first to market to win. Our space team and our satellite team, they're incredible. And being first to market with the software defined open space virtualization, TT&C and C2 system, this could be as significant as what we're going to pull off in the in the unmanned drone area. So I see continue up into the right. As I said in my remarks, it's not going to be as smooth as it used to be because these aren't multiyear hardware programs anymore. We're getting designed in and we're shipping more and more software. So overtime margins are going to continue to increase. And the revenue trajectory is going to continue to be up and to the right. And all of that is being supported by those statistics I gave, which are just some the space and satellite market right now is ripping. And our number one operational challenge is getting the number of people to support it.

Appreciate it. I'll jump back in queue. Thanks.

Yeah. Thank you.

Thank you. Our next question comes from the line of Ken Herbert with RBC. Your line is open.

Hi, good afternoon, Eric and Deanna.

Hi, Ken.

Hey, Eric. I just wanted to start off with a bit of a higher level question. You were obviously in another CR, you've got a number of significant opportunities, as you think about sort of your crossing this the valley of death. As you think about not only on the tactical drone side, but engines in space and other markets. How would you characterize or maybe rank the opportunity of some of your markets from a timing standpoint? I mean, should we still think about as drones as obviously the next maybe significant catalyst? Or it sounds like maybe there's more opportunity near term on the space side, I'm just looking for you to maybe sort of recalibrate the expectations here of the different parts of the business.

Yes. I personally, continue to believe that on the drone side, we're going to continue to go significantly up into the -- up into the right. I mean, the growth numbers that Deanna gave for our tactical drone business, we've gone from $30 million to $55 million to $75 million. Ken, these are all development programs. These development programs are going to turn into production programs. Some of them might be a single or a double, but some are going to be in my opinion, a home run. And in the flurry of public information that just one service, the Air Force, starting in my opinion last year in Q4 at the Reagan Institute, and it's been accelerating since then is -- and with additional new programs. We’re clearly in the right place at the right time with the right products. And we're going to do it here. This is going to happen. And as I said, my prepared remarks, when the customer is ready to begin cereal production will be ready for them. And I'm not going to get ahead of myself on when that will be. I hope it's sooner rather than later. And I believe it will be. Our space and satellite business. We are in solicitation on a number of programs right now. Very large, multiple tens of millions for Kratos if not more. As I talked about on previous calls, the open architecture approach that we've taken now and the non-program of record centric approach we've taken on ground systems for the entire market, not a particular program it's enabling us to address an entire different aspect of the satellite industry, we were never able to address before. Those bids are in. And if possible, we'll be sitting here this time next year. And you're going to ask me that question. And I'm going to say space and satellites and drones now are equal because they're bolted in and out of the park. So space and satellite is right there. What we're doing in the hypersonic area, you haven't heard me talk about it much before. I'm not going to talk about it much more than what I said today. But we've been working on our own hypersonic vehicles systems. And if we're successful, that could be coming up in the next couple years or so. And then I see the engines are going to be a slow steady build, we received our first production contract. I think by the end of the year, we're going to get another production contract. And then a funding holds in the ‘23 budget request that's coming as I understand it's going to, ‘23 and ‘24 could be breakout years for that business. That's kind of how I see it playing out for us. We've got a handful of horses in the race. And we're going to win some of these races.

Great. I appreciate that. Eric. Thanks. And if I could, apologize if you mentioned this earlier. But Deanna, as we think about the CapEx investment in ‘22, can you just break that out by maybe either the segment's or how we should think about some of the key -- sort of key initiatives on the capital side this year?

Sure. So the guidance we gave is 55 to 65. The normal maintenance CapEx is about $25 million to $30 million. What I wouldn't say the one-offs or the non-recurring or special items would be there's approximately $18 million to $20 million related Valkyrie, so that's the continued build of the original 12 lot. And then there's build out to SCFs or Secured Compartmentalized Facilities for our space business, as well as our unmanned systems business. And that's about $11 million to $13 million. So those are kind of more non-recurring, and then there's about $5 million to $6 million related to the GBSD program. So that should bridge you to what the normal recurring the 25-30 and then to get to the midpoint of our 55 to 65 CapEx guidance.

Perfect. Appreciate that. Thanks, Deanna. Thanks, Eric.

Thank you, you too.

Thank you.

Thank you. Our next question comes from the line of Austin Moeller with Canaccord. Your line is open.

Good evening. My first question is for Deanna. I think we've previously talked about, we have --we know what the contract value is that it's expected for the development stage GBSD, which is expected to ramp up in the second half of this year. I was just wondering if you guys could put any ballpark around what we should expect in terms of revenues or the ramp up in the second half of this year for Hypersonix.

Unfortunately, we are limited in what we can say due to the NDA that we're under. So I can't comment. I'm sorry, Austin.

Okay. My next question is for Eric. So if we think about the current environment here with AirWolf. We've just discussed that several dozen AirWolf are currently being constructed. The army, of course has announced that they have it under contract. So would it be appropriate to think that one of the several drone -- new drone programs of records that Secretary Kendall has implied would be in the fiscal year ’23 budget requests might include AirWolf?

Austin, I'm sorry, but you're going to be over two. I cannot talk about that. I'm sorry. I apologize. I can't talk about this at all.

Okay, thank you.

Okay.

Thank you. Our next question comes from the line of Joe Gomes with NOBLE Capital. Your line is open.

Good evening. We talked a lot here on the continuing resolution. Obviously, that has to deal with the federal government. And just thinking, some of these programs that don't relate to the federal government and one that popped out about a year ago, you guys were talking about your autonomous truck was in eight locations. Eric, you seem to have been very excited about it at the time. And I just wonder if you could give us a little bit more of update or some color on the status of that program?

Absolutely, I'm glad you asked. We have continued to make very important progress here. As you know -- as a reminder, our competitive differentiator here is we developed a technology in conjunction with the DoD to convert previously manned systems, like a manned tank, or a manned combat vehicle, or a manned truck into an unmanned system or an unmanned robot, a kit. And for competitive reasons, I'm not going to give you the exact precise what we're doing. But I believe in the next three, four or five months, we are going to make an announcement or two in conjunction with companies that are affiliated say with agriculture, or with mining. And think of lots and lots of vehicles, that are not crowded like on a highway. So there's not certain types of approvals that we need, where we are going to be converting these entities vehicles to robots to perform their work in an agricultural environment, or a mining environment. With the wind at our tail here being, these are very low cost systems, but also the trucking short -- the driver shortage. The driver shortage, I’ve read about it in The Wall Street Journal, but it's very acute. In particular, in the agricultural areas, where you need a bunch of drivers for a certain harvest period of time, which is a perfect application for our kits. So I believe we're going to be talking about that, if not when we announce Q1, I believe hopefully, when we announced Q2. And this is going to be exciting for us in our own little way.

Great, thanks for that. And then, in the release you talked about how expected revenues of about $11.2 million were being deferred into future periods. Last quarter, it was about 8.3. Maybe just give us a little color on the timing of how long those you think those are going -- those revenues are being deferred for.

Yup. So I'll give you an example of an area, aluminum. I have come to understand there are five aluminum smelters in the United States, and they are booked out two, three years. And so certain of these programs need aluminum. We've placed our order. And we've gone internationally too, I don't think I'm allowed to say where we've gone. Same thing can't get it in for these applications. Those are probably pushed out, I'm going to say to ’23, that's one. Another area in the satellite business and in the microwave business is in Field Programmable Gate Arrays FPGAs specialized ones for certain applications we have. We're getting quoted beyond 12 month lead times now. And here's something that we've been dealing with that there's really nothing we can do about, will have a committed delivery date. And not a month before, not two weeks before the week that we're supposed to get the delivery, we'll get a phone call. Can't get it to you, we'll get it to in six months. So I'm going to say, I don't think we're going to see much of this stuff until late second half this year, probably 2023, just because we can't get it.

Okay, great. Thanks for that. I'll get back in queue.

Good. Thank you.

Thank you. Our next question comes from the line of Pete Skibitski with Alembic Global. Your line is open.

Good afternoon, Eric and Deanna.

Good afternoon, sir.

Hey, guys. Just on the same page with regard to the CR. If we do get a full year CR, is it -- does the bottom end of your guidance kind of contain that scenario? Or is it likely we'd go below the bottom end of your guidance in that kind of scenario no one wants to contemplate?

I don't even want to think about this. When I don't know something I'm going to tell you. I don't know. I don't know if some of our programs, especially in the classified area would be part of reprogramming buckets. You know what I mean, that in the CR, they can do some reprogramming for mission critical national security, many of which we’re on that could help us? I don't know. But our target drone business, where we've won programs, we've won contracts that they need to be funded with ‘22 money, those would probably move to the right. Certainly the tactical drone ones where we're transitioning from, say development, phase one to development, phase two or otherwise, those would probably move to the right. I've read what Northrop has said relative to GBSD that in summary, not good. So that would probably not be good for the whole team on GBSD. So not good. And I'll just leave it at that.

Yeah, fair enough. Fair enough. I also had a question on a program I'm going to mispronounce many times, Aeronish. The $10 million to $12 million engineering costs for that program. So it's being capitalized, it sounds like. So it's going to flow through cash flow this year. But it won't be much of an EBIT impact this year to spend on is that correct? Am I understanding that?

Right, that so that -- that -- go ahead Deanna.

Yeah. So that is not the same program that was referring to the non-recurring engineering. That's a different program.

Within the same hypersonic bucket, is that right?

Yeah. In the same rocket system. Propulsion --

Okay. Same question. It's being capitalized, but we won't see much of an even impact this year, correct?

Correct. Correct.

Because we own the systems, we own the technology. They're ours. That's correct.

Okay. Okay. And then how are you guys thinking about whether it be this unnamed system or Aeronish. How do you think about the market size there? Do you need to win a competitive award or are you up have something that, government customer has really kind of targeted before? Can you give us a sense for how big and how near term those opportunities could be?

The hypersonic area is one of the best funded highest priority national security areas of the United States today and for the foreseeable future, as a result of what the Russia and China are doing. There are hypersonic offensive systems, there are hypersonic defensive systems, there are hypersonic test and evaluation systems, all of these systems are needed now. As you may have seen the Secretary of Defense called the summit of certain key team members to the -- I think to the Pentagon, it turned out to be a virtualized meeting relative to hypersonics. This -- I don't believe that this will be the opportunity size, the TAM Total Addressable Market for us that the drone business is and is going to be that space and satellite business is going to be I don't believe that. I do believe it could be a $10 million to $50 million a year high margin business for us because of the nature of what we're doing, which I can't talk about.

Okay. That's great. I appreciate it. Last one for me. The International target contract you guys just finally got. Can you size that? How big that is? And over how many years are you expected to be?

It's approximately $25 million and it's over a few years. And that's all I can say.

Okay, thanks, guys.

But similar to the other -- the important -- I want to emphasize this. Every chance I get, I want to emphasize this on these target drone programs, part of the initial buy is the launch equipment, the flight control equipment, the recovery equipment, that's the razor. And the target drones get shot down. And that's the blades. And that's why these are all so important and tie into that $250 million ultimate target, had the pun-intended objective that we're driving towards. So that every one of these are critically important similar to the new Saudi and Japan, target drone wins we got with the United States Navy.

Perfect, thank you.

Thank you.

Thank you. Our next question comes from the line of Sam Struhsaker with Truist Securities. Your line is open.

Hey, guys. On for Mike Ciarmoli here. Thanks for the time. I was just wondering, apologies if I missed this earlier. If you guys can provide any additional details on the revenue contributions for the two acquisitions? And maybe a little bit additional detail on -- I know, you said the margins would improve moving forward at least a more accurate timeline or just detail that you could provide around that as well. Thanks.

Sure, Sam. So for the full year, the acquisitions are expected to contribute about $45 million in revenues and $1.5 million to $2 million of EBITDA. And then for the first quarter $10 million to $12 million in revenue.

And on the second part of the question, Sam. On Cosmic, we expect to start seeing margins increase in 2023.

Great, thank you. And then one additional question that I could sneak it in is regarding labor. I know you guys said that the absenteeism was an issue. I'm assuming just related to Omicron people being not sick. But do you guys see any additional issues with that moving forward past first quarter of this year? Or do you feel pretty confident where you sit with that?

Based on the way things are trending for us right now? They're getting better. All right. So if things don't go sideways on us, we should be in pretty good shape beginning of Q2, April-ish. We should be in pretty good shape. As I indicated, when I was talking about the space business, our number one operational challenge is hiring people for the programs we're winning. And I know it's not just Kratos, it's an industry wide issue. But in the unmanned area in our space and satellite area, in our hypersonic area, our rocket system area, we're really putting our best foot forward to obtain the right people, in many cases that have the right clearances or can get the right clearance to execute these programs.

Great, thank you.

Thank you.

Thank you. I'm showing no further questions in the queue. I will now like to turn the call back over to Eric for closing remarks.

Right. Thank you all for joining us. And we will speak to you when we report Q1. Have a good afternoon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.