Good day, ladies and gentlemen, and welcome to Northrop Grumman's First Quarter 2019 Conference Call. Today's call is being recorded. My name is Shelby, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to your host, Mr. Steve Movius, Treasurer and Vice President, Investor Relations. Mr. Movius, please proceed.

Thanks, Shelby, and welcome to Northrop Grumman's First Quarter 2019 Conference Call. Before we start, please understand that matters discussed on today's call constitute forward-looking statements pursuant to Safe Harbor provisions of Federal Securities laws. Forward-looking statements involve risks and uncertainties which are noted in today's press release and our SEC filings. These risks and uncertainties may cause actual company results differ materially. Matters discussed on today's call will also include non-GAAP financial measures that are reconciled in our earnings release and supplemental PowerPoint presentation. And also note a couple of additions to the earnings release. Schedule 4 provides backlog trend information by sector and Schedule 5 provides supplemental per share information to help the quarter-over-quarter comparison of pension and purchased intangible impacts. On the call today are Kathy Warden, our CEO and President; and Ken Bedingfield, our CFO. At this time, I'd like to turn the call over to Kathy.

Thank you, Steve, and hello, everyone. Thanks for joining us today. First quarter results represent a good start to the year as the Northrop Grumman team continues to deliver excellent outcome for our customers and our shareholders. I want to thank our employees for their relentless focus on performance, agility, and profitable growth. Top line growth, strong segment performance as well continued effective capital deployment drove a 6% increase in first quarter earnings per share. As a result, the first quarter performance and our full-year expectation, we are affirming sales guidance of approximately $34 billion and raising our 2019 EPS guidance. First quarter sales grew 22%, reflecting the addition of Innovation Systems and a 7% top line growth in Aerospace Systems. Strong performance at all four sectors generated a 27% increase in segment operating income and a 50 basis point increase in our segment margin rate. The strong margin rates at all four sectors also reflect the cost synergy we are achieving through the Orbital ATK integration which is benefiting all the sectors. The realignment of the TS business areas continue to improve their cost structure and competitiveness as reflected in this quarter's margin rate and our TS guidance increase for the full year. As is our typical quarterly pattern, we were a user of cash in the first quarter. We continue to expect 2019 free cash flow of $2.6 billion to $3 billion. Regarding capital deployment, our strategy continues to call for value creation through thoughtful allocation across our priority of investing in our business, managing the balance sheet, and distributing cash to shareholders through a competitive dividend and share repurchases. Looking ahead, we are on a solid growth trajectory supported by first quarter net awards of $12.3 billion or about 1.5 times book-to-bill ratio. Total backlog increased 7%…

Thanks, Kathy, and good afternoon everyone. I also want to thank our team for a solid first quarter results. I'd note that our presentation includes an EPS bridge from first quarter 2018 to first quarter 2019, a bridge to our updated 2019 EPS guidance as well as a slide highlighting backlog trends. As you can see from the bridge on slide six, approximately $0.15 to $0.25 of the EPS increase is driven by a strong first quarter operational performance and full-year expectations with the remaining $0.15 primarily reflecting lower expected interest expense. Let's turn to the sectors, Aerospace Systems sales rose 7% reflecting higher volume in all three business areas. Operating income increased 12% and margin rate increased 50 basis points to 10.9%. Manned aircraft and autonomous systems programs were the primary drivers of higher sales and operating income as well as margin rate expansion. Restricted F35 and E-2D programs drove higher manned aircraft volume. Higher autonomous sales reflect higher volume across several programs including Triton as that program moves towards full rate production. We continue to expect AS sales to increase to the high $13 billion range with a mid to high 10% operating margin rate. No change to the prior guidance. At innovation systems, based on pro forma sales comparisons, first quarter sales rose 10% due to higher volume in all three business areas as we see the benefits of revenue synergy begin to kick in. In space, higher volume on national security satellite systems drove the increase. Defense systems had higher volume in tactical missiles including the AARGM program as well as higher volume for precision munitions and armaments. And at flight systems, higher sales reflect increased volume on launch vehicles principally ground based Midcourse Defense as well as higher volume on aerospace structures. IS operating income…

Thanks, Ken. In the interest of time, I request each analyst to lift themselves to a single question. Shelly, please open the line for Q&A.

[Operator Instructions] Your first question comes from Rob Spingarn of Credit Suisse.

Good afternoon.

Hi, Rob.

So -- hi, Ken, I guess the elephant in the room here is the sales growth, primarily ATS, but an MS2, so I wanted to ask about the recoveries for both of those. It sounds like from the bookings in your comments just before that, maybe MS starts growing here in the second quarter, but I wanted to check on that, see if that's correct. And then with TS and given that the book-to-bill was below one there, can you really see growth in 2020 is -- I think you said last time, and how do you think about that sector strategically, would you say that the first quarter was below your expectations?

So, Rob thanks for the question, and I'll start and then ask Ken to provide more details on the financial, and let me start with the second part of your question first in terms of the positioning at Technology [ph] Services. From a portfolio shaping perspective, and the program losses that we've experienced, which we've been talking about for a while, first West was indicating those and then more recently maybe we certainly saw that those were quite impactful this quarter. A tough Q1 compared to 2018 as we had multiple programs that have rolled off over the last year, including but not limited to KC10, JRDC, and Vito, which we talked about quite a bit. So what we have been doing with that business is really repositioning it for growth. And you are seeing the impact of some of those changes that we made late last year, including the consolidation into two segments. This is positioning the business better for competitiveness in the marketplace and also margin rate performance. And they've delivered that this quarter. So we're going to continue to be a better profile from TS as those programs roll off several of them in this first quarter, and look toward a return to growth for TS late this year. In terms of Mission Systems, you hit the nail on the head, we've seen strong backlog improvement at MS, 30% year-over-year for MS and they are positioned for accelerating growth. They too had two program headwinds that end in the first quarter of this year, and then, largely those headwinds are behind us, and I expect enough to return to a healthy growth rate in the second quarter. Ken, anything you'd like to add?

I would just say that from a details perspective, TS, we were certainly hoping for a bit of a different outcome in the first quarter. We did certainly understand that there were the headwinds that existed and that represented about 11% headwind for the quarter. So, if you think of without those note items, TS would have been down about 4%, and we were hoping for less than that. So, we'll certainly continue to work hard there to generate the awards that will present for 2020 and beyond. And at MS, I think I would just say, you know, I would reiterate strong backlog, whether you look at from last year's first quarter or even from your end backlog is up 16%. We did have some timing of material recedes [ph] that I mentioned, which had some impact, and I think we feel awfully darn good about how MS is positioned right now.

Thank you both.

Your next question comes from Jon Raviv of Citi.

Thank you. Is the implied -- when you talk about growth going forward, would you say the implied kind of exit growth rate this year is sustainable? And then, at least something accelerated 2020, and to what extent really can you do that? And then really admit that growth acceleration, how think about -- how should we think about margin from the mid-high 10 this year, since the margin that's usually mixed-driven, do you see a path to accelerating growth, while also expanding margin? Thank you.

So -- thanks, Jon, at the macro level, I certainly see the opportunity for accelerated growth, and we've pointed to backlog a couple of times, but let me also talk about other things that we've done in the business because I think it's important context. We talked earlier in the year about having added an element of our incentive compensation to focus on segment operating margin growth with the full impact that our team will be incentivized to capture profitable sales. We're also winning programs that represent revenue synergy from the IS acquisition, I talked to AARGM-ER this time in the last call; I talked about some of the opportunities in space. And we've started to make some structural changes that better position us for capturing growth. I talked about the TS consolidation, and earlier in this call, I mentioned the creation of the safe resilience and rapid prototyping unit. All of these activities in combination are positioning us to continue with growth and accelerate it over the coming year. So, absolutely see that as possible, and expansion of margins also you saw in the results of this quarter. So, margin expansion, we are taking the cost synergies that are created through the integration of Orbital ATK, and those are benefiting all sectors, and you're seeing that in the result, not just solid program performance, which also continues, but the addition of these overhead reductions that are benefiting the sectors.

And I think what I would add to that, Kathy, is if I think about the acceleration or the implied exit growth part of the question, I would say, we do feel pretty confident about that, and I think I guess, there are a couple drivers there. One would be you know, we are a long cycle business, and it takes some time for budgets to turn into outlays, and then outlays to turn into our sales. And we certainly try to be careful and thoughtful in terms of how we generate those sales such that we are as efficient as possible and don't motivate [ph] production lines for short-term growth. And then I would also say that where we are aligned within how the budget is positioning going forward, today and dealing with the threats that are identified and the National Security Strategy, National Defense Strategy, Missile Defense Review, we feel good about our capabilities and technology alignment to the mission needs that our customer will face. So, I would say we do feel good about the long-term growth that we've talked about, 2019, 2020 and beyond. And then on the margin expansion, I would say that a couple things, I think we have the opportunity for margin expansion. There are a few things that we need to think about in that regard. Number one, we've been I think effectively managing our cost structure, and that continues. That's a benefit. We also have strong growing production programs, I mentioned Triton getting ready to move into full rate production. That's a benefit. And then we also have a growing set of international opportunities, which should generate a nice margin. Going the other way, we have some margin rate pressure in terms of continued growth and development programs, both in national security space and hypersonic, as Kathy mentioned. So that could put a little bit of pressure on the margins. And if there were a big win, like a GBSD, as we've talked about before, that could have some impact as well, but we do certainly feel confident about maintaining strong margin rate and having a nice set of growing margin dollars consistent with what we see on the top line.

Thank you.

Our next question comes from George Shapiro of Shapiro Research.

Yes, good afternoon. Could you tell us how much F35 revenues grew in the quarter? And then also, will this be one of the best quarters of the year because with your high-end of your guide at 1930, 506 is obviously more than 25% of the of the year, or are you just providing conservative guidance

On the first question, George, I don't remember the precise F35 sales growth number for the quarter, but I will say that, I believe our largest program in the range of 9% to 10% of sales, we do see F35 growth that all four of the sectors, AS with the center fuselage, MS radar C&I and other equipment and then IS with air structure is in TS for sustainment. And for the year, I think we see that growing across the company at a rate of high single-digit growth. And then with respect to your question on EPS, I would say that, look, we continue to try to burn down risks as we worked through the year and realize opportunities, such that we can find ways to look at where we can ultimately get to an EPS. In terms of first quarter, I would say that we had solid operational results in terms of margin rate, and we look at that as giving us the opportunity to perform a bit better in our range, segment margin and total margin range that we previously talked about. And then, we had the reduction in the interest expense. So, Q1 is a solid quarter, a good EPS number, will continue again to try to find those risks to burn down. And I guess the only other thing to remind you of is that Q4 does tend to be a heavier quarter for corporate unallocated. And so that could drive a little bit more cost into fourth quarter than we normally see in the first three, so I would say that's the way to think about it, George.

Okay, thanks.

Our next question comes from Carter Copeland with Melius Research.

Hey, good afternoon, everyone.

Hey.

Hi.

Kathy, this may be somewhat of a too nuanced of a question, but I'm somewhat intrigued about the insertion of the word agility into your prepared remarks. And the press release. I went back and looked at that in terms of General, performance statement over the last couple years. And that's not a word that comes up. And so, it sort of strikes me as a particular point of emphasis. And I wondered if you might elaborate a little bit on what that means for all the simultaneous efforts you outlined in the previous answer to the question?

Yes, thank you. I would like to talk about agility in a couple of contexts. First, our ability to rapidly identify new solutions to help our customers and you've heard me talk about that and how important it is to the profitable growth in our company and also realizing the revenue synergy with the acquisition of orbital ATK. And I'm quite pleased to see the team responded in the way that they are to very rapidly put together the components of our portfolio and meet customer needs. I also talk about agility in the speed at which we are able to work with our customers today. I gave the example of our 3D2, and the fact that we were able to get something from concept on orbit in space in 20 months. So when we think about the way we deliver, we're also implying agility, to our operation. And this helps us to be more competitive in the marketplace. But it also aligns to what are our customers are talking about, in a need to address the threat at the speed of relevance. So as the threat is advancing speed of capability to mission is absolutely essential. And Northrop Grumman is well positioned to do that, with those components of our portfolio, and with our operations. We're just continuing to streamline those operations, so that we can move even more quickly.

How do you benchmark that?

The way I benchmark it is against the performance expectations that our customer has. So if a customer believes he should take a certain amount of time to get a capability, fielded, if we can beat that we're going to have a competitive differentiation. I benchmark it internally in terms of our own processes, in looking at the cost at which we deliver those services, but also the speed at which we deliver those services.

Great. Thank you.

Your next question comes from David Strauss of Barclays.

Thanks, good afternoon.

Hey, David.

The 25% to 30% of the portfolio that's restricted. Could you talk about how that grew in the first quarter.

I'm not sure. I've got that number off the top my head, David, in terms of first quarter growth. What I will say is that a few things, one, we do believe that the restricted portfolio is particularly well aligned to our customers' needs in terms of what they are focused on today and those threats. And we do expect that for 2019 and for sort of the long run we believe that the restricted portfolio will likely grow faster than the unrestricted portfolio. And I would say we expect that at the macro-customer level as well as at the north of ground level. And it's -- I can't say a lot about it but it is a strong portfolio that will likely turn into continued opportunities both from a customer relationship perspective as well as the potential to accelerate what happens in those programs to future phases be at AMD to production or whatever it may be. And so we feel really good about the portfolio and maybe just to point out a couple of things, for Q1 and Steve can certainly follow up later on with the number, but we did talk about growth at innovation systems and national security space, most of which would be restricted and certainly growth at aerospace systems where we talked about restricted. And then also comments at Mission Systems with respect to a few areas where they will see restricted growth in the next three quarters of the year and into 2020.

And then you highlighted the backlog growth at Mission System. Kathy anything, I think you previously talked about mid single-digit top line growth in 2020. Would you expect MS to lead that growth among the three businesses, or sorry, business segments?

As we look to the remainder of this year, MS will be a strong contributor to the growth in the Company.

Okay, thank you very much.

Yes.

Your next question comes from Sheila Kahyaoglu of Jefferies.

Good afternoon, Kathy and Ken. Thank you. Just on that, I guess on MS, you were awarded IBCS for Poland in the quarter. How do we think about the ability to leverage some of these programs to both grow the international business, and just when we think about other franchise opportunity?

Yes, I see good opportunity particularly in the Mission Systems portfolio. And I noted a few of them today, you mentioned IBCS as Poland and I talked about also the work we did with MBBA to demonstrate the ability to integrate an international missile with our missile defense system. I also see portability for gater [ph]. We talked about a new sensor that we're developing that has international applicability in MS as well. So across the board, we have had strong export business in Mission Systems and I see that potential continuing to grow. And we also have global operations, in particularly, Europe, and Australia that are continuing to grow across the portfolio, but particularly with opportunity in Mission Systems as well.

Great, thanks.

Your next question comes from Seth Seifman of JPMorgan.

Thanks very much, and good afternoon. So, I wonder if you could tell us, I mean historically you guys were a pretty good performer on working capital. I know things kind of move around quarter-to-quarter. So, this quarter is an anomaly. But now that we've got innovation systems in there, what's -- let's say, at year-end period, what's the appropriate level of working capital for the business, I don't know if you can size it as a percentage of sales or any way that you're comfortable?

Sure. Yes. As I mentioned in our prepared remarks we do think that there are working capital opportunities in front of us. As we look at 2019, we probably see more opportunity from a working capital perspective, quite frankly in 2020. I think as we grow the business in '19, we see the ability to either grow working capital at a similar rate or potentially slightly less, but we do see some opportunity to liquidate some working capital in 2020. And I would say that NGIS had a little different working capital structure than we did some of that is structural say NASA, CRS. Those payment terms are going to be, but they're going to be there's opportunity to burn some down -- some other programs and then we'll just continue to diligently work day to day to make sure that we get the right payment terms for the type of work that we are performing and the contracts that we're signing and just continue to stay focused on that. And then also, we need to continue to work with our customer and make sure that their payment terms are appropriate again for the type of contract and the type of work. And we would like to see opportunity on that side, as we continue to work with them for again appropriate industry wide payment terms.

Okay. Thank you.

Your next question comes from Hunter Keay of Wolfe Research.

Thank you. Hi, everybody. I think you talked about this $1 billion submarine subsystems systems award. Is that really to Columbia class, I'm sorry. And can you remind me of your total exposure -company exposure to shipbuilding and how you expect that to trend over the next few years? Thanks.

Sure. I wouldn't be able to comment on specifically the class of submarine, but what I would say is that we did reach an agreement in the quarter for about $1.3 billion, some of that had been previously recorded as long lead to provide a number of units for our propulsion and turbine generators in support of the U.S. Navy Submarine production and we do expect that to be delivered over a number of years. In terms of the overall exposure to shipbuilding, I would for us probably frame that in the range of mid-to-high single digits in terms of sales maybe bit more like mid single digits.

And you expect that to stay roughly there over the next say five to ten years?

I don't expect. Based on what we do in that area, we don't tend to see a lot of volatility. I think there is an opportunity for growth as we think about the Columbia class as you asked about, there are some other areas, we will provide capability for surface ships, electronic equipment and things like that on surface ships as well as some seaborne radar capability and, may be some opportunity for growth, but probably not one of the fastest growing areas in the Company.

I see. Thank you, Ken.

Your next question comes from Robert Stallard of Vertical Research.

Thanks so much. Good afternoon.

Hey, Rob.

Ken, a quick question for you on cash, is there any way you can fix this seasonality that you see in this cash make it little bit level loaded throughout the year?

We're working on it Rob, I would say. There are some, I'd call them structural timing of certain payments and receipts that we see that make that a little bit of a challenge. There are just certain outflows that occur early in the year and we have always tended to have a strong fourth quarter and we're always working hard to pull more cash from next year into this year that means you're going to do it all over again. But we're looking at strategies, I don't see us ever get into a point where we're level but we can certainly be significantly better than we were this year we had a couple of notable challenges as I mentioned this year. And we can do better, but I wouldn't expect us to be kind of ratable across the year.

Okay, thanks so much.

Your next question comes from Ron Epstein of Bank of America Merrill Lynch.

Hi, good afternoon, guys.

Hi, Ron.

Kathy, as we think about the next couple of quarters. Can you give us a little, maybe insight baseball on what programs we should be keeping an eye on? What are the shorter-term opportunities that could as outsiders, we should be keeping on eye on that you guys could potentially when?

So Ron, as is usually the case, a good bit of the work we continued to pursue and even what we talked about winning in this first quarter is restricted. So while I can't point to specific opportunities. We are seeing growth in Hypersonics and the programs that we have already won will continue to have opportunities for increased scope. We have national security space, which is a number of restricted programs, some of which we booked in the first quarter and we referenced in today's call; others that are pending awards later in the year. We also have opportunities that are more public. Clearly, the launch services agreement that we are under today and working with the year forced to compete for the down to be launched one of two launch services providers for national security launches. And then we have TBSD, which we are competing for and we expect the RFPM later this year that will be awarded next year are just a handful of areas that I would suggest that you monitor with that.

Okay, great. And then maybe for follow-on related, when you think about the budget request from the administration and kind of maybe where we are through the process of the Armed Services Committee, House Armed Services Committee coming back with response, how do you feel about that budget relative to how you're positioned?

I feel very positive about our alignment to the budget even after we look at the Congressional process that is going to into. We have strong alignment to the threats and being able to address areas that are certainly of note. We've talked about a number of them today Hypersonics, artificial intelligence, the continual progression of sensors that can detect advanced threats which impact both our Mission Systems business, are continuing growth in the weapons and high-speed metals area. I talked about AARGM-ER today, and I see a strong alignment to the capability that will be needed in the future and both the Navy and the Air Force have expressed interest in that and full as a missile of choice. So, as I look at how those programs are supported in this budget, I see very strong alignment around the areas that we've been investing in and progressing our portfolio to fulfill and the budget. And the budget is very much based on the national defense strategy and that strategy is enduring and we expect it to continue to be the view of both parties that we need to align to that strategy and ensure that we're dealing with the threats of particularly China and Russia.

Okay, great. Thank you.

Your next question comes from Rajeev Lalwani of Morgan Stanley.

Hi, Kathy. Hi, Kenneth.

Hey, Rajeev.

Two quick ones, if I may. One, just curious on Algeria stay and how you're feeling about it as time has evolved and you've digested? Yes. Then unrelated to have become a back something you said earlier on the missile defense side, can you talk about Patriot and your involvement in the satin soften in the potential opportunity on the radar, that's a potential here on the domestic side?

Sure, I'll actually start with the latter. And as you might guess, there isn't a lot that I'm going to say about an active competition other than the fact that we are participating in the sense off. And so we're looking forward to offerings of competitive solution that meets the requirements. Shifting to GBSD, we have been working with the government as you know on the risk reduction contract EMR that is going well. We have received draft of the RFP for the next phase of GBSD and so we are in earnest working our proposal. There's nothing in the draft RFPs that have been a surprise to us. And we continue to work to put in place a very competitive offering for the Air Force and expect that proposal to go in later this year, and as I noted in the earlier comments to be awarded next year.

Thank you.

Your next question comes from Peter Arment of Baird.

Yes, thanks. Good afternoon, Kathy, and Ken. Kathy, maybe you could just give us a couple of comments or metrics that you can and the innovation and systems integration process? Where are you today? And are you on track for kind of the goals that you set up when the deal was achieved? Thanks.

Yes, the integration continues to progress exceptionally well. I'm proud of how that team is performing. We had set cost synergy targets to reach $150 million run rate by the end of 2019 going into 2020. We are on track to achieve that. And as I said, some of the performance improvement that we've seen across the sectors even in this first quarter, our results of those cost synergies starting to be reflected in the sectors. We also are starting to see revenue synergy realized and when we first laid out the business case behind the deal, we did not anticipate seeing revenue synergy quite as quickly. So both in Space and Missile we've pleased at how quickly those have progressed. And then we also when we laid out the deal with all of you talked about operational synergies and these are areas like facilities overlap that we have within the portfolio that we have an opportunity now to rationalize with the addition of Orbital ATK and we are making good headway on those operational synergies as well, again even faster than I had anticipated. We've been able to identify some opportunities and realize those this year, so all-in-all, feel very positive about the performance of the business as well as the integration process that we're executing.

Great, thank you.

Your next question comes from Myles Walton of UBS.

Hey, good afternoon. Kathy, I was looking at the changes of incentive metrics on new leaders come in and you mentioned one of those with the insertion of segment operating margin growth. And I guess there was a little bit at the emphasis on the weighting of margin rates, and I think Ken touched on that. But the other incentive you added was RONA [ph] and I'm curious, the last time this was in the mix was prior to the spin-off of shipbuilding and was probably a pretty good indication of how the company was thinking about relative asset returns. So I'm curious when you included this new metric, what exactly are you trying to motivate and sense with the addition of this particular one?

So, let me start and then I'll have Ken add a little bit of color on the measure as well. And what we are looking to do is incentivize the top team and I should note that this metric has been in place for most of our leadership as part of our incentive plan. We added it for the top leadership team has the component of the long-term in incentive and we are working to drive performance in the elements of the business that leadership can control in terms of both returns but also managing the assets of the business and we focused more on the operating assets of the business, so that we aren't penalized the team for areas like goodwill and the issues that come with making an acquisition as we just did. And all I can detail that a little bit more for you, but really it is getting the team is focused on the operations of the business. I also added another element of our non-financial goals on operational efficiency and that is meant to streamline our processes, speed, decision making, so that we're able to operate more efficiently and effectively inside the corporation and it goes back to the comments I was making and Carter questions about agility.

Yes, just a couple comments I would add there, Myles. We essentially focus our incentives around growth from a profitable growth perspective, not just growth for growth sake which is why we like the segment, margin dollars as a growth metric. We also have cash generation, as a significant measure in both our annual and long-term plan. And then with respect to your question on sort of RONA in the old days, I think what you maybe remember in the old days wasn't economic value add metric. We actually have had RONA for some period of time and then two years ago we moved from RONA to what we call operating RONA and think of operating RONA as essentially a return on working capital, and we didn't want to try to dilute the -- our ability to create value through managing the balance sheet by including things in there like goodwill and intangible assets and, and those things that are more challenging for the team to manage, obviously on a day-by-day basis. So, we essentially created a metric that is, return to, to working capital and we call that operating RONA.

Okay…

I think we have time for one more question.

Sorry, Myles.

No worries.

Thanks, Myles.

Your next question comes from Cai von Rumohr with Cowen and Company.

Yes. Thanks so much. So Kathy, on the fourth quarter call, you talked about B21 being flattish this year. And yet it looks like it was up in the first quarter. Has anything change their and secondly, you…revenue growth is a key issue. What sort of backlog growth should we see in the remainder of the year to tell us this is going to happen in the future? Thanks.

Let me let me start on that, Cai, and then, Kathy can add some commentary. I would say that looking at Q1, we did see some higher volume on restricted programs within manned aircraft. And I wouldn't want to comment beyond that as to what that might be. In terms of the B21 program I would say, that's been one of our fastest growing programs for the last few years. And we continue to think that the profile we talked about for the full year 2019 is appropriate. In terms of awards, I would say that, Kathy mentioned, a multibillion-dollar, multi-year award on the E-2D that we got in April, we're certainly expecting another significant award as we look forward on working with Lockheed on F35, and that would be across a number of sectors. And then, Kathy mentioned, an option for nine aircraft on E-2D over Japan. We do think that is likely to come later in the year. And then also, we did highlight a significant restricted award in the quarter, and we're looking at some continued restricted awards in the balance of the year. So I think there is a really solid story here, not just the first quarter. But as we look forward into 2019, and I'll just remind you that we are a long cycle business and in particular, multi-year awards will turn themselves into sales over a longer period of times. But, we're gaining confidence and our ability to continue to grow as we look forward.

Thank you very much.

Let's now turn the call over to Kathy for final comments.

Thanks, Steve. I'll end the call again by thanking the Northrop Grumman team for their outstanding performance and commitment to deliver growth and provide long-term value for our customers and shareholders, and I want to thank everyone for joining us on today's call. That concludes the call. I'll speak to you in July.

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