Good day, ladies and gentlemen, and welcome to the Raytheon First Quarter 2018 Earnings Conference Call. My name is Joyce and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Kelsey DeBriyn, Vice President of Investor Relations. Please proceed.

Thank you, Joyce. Good morning, everyone. Thank you for joining us today on our first quarter conference call. The results that we announced this morning, the audio feed of this call and the slides that we'll reference are available on our website at raytheon.com. Following this morning's call, an archive of both the audio replay and a printable version of the slides will be available in the Investor Relations section of our website. With me today are Tom Kennedy, our Chairman and Chief Executive Officer; and Toby O'Brien, our Chief Financial Officer. We'll start with some brief remarks by Tom and Toby and then move on to questions. Before I turn the call over to Tom, I'd like to caution you regarding our forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives and expected performance constitute forward-looking statements. These statements are based on a wide range of assumptions that the company believes are reasonable but are subject to a range of uncertainties and risks that are summarized at the end of our earnings release and are discussed in detail in our SEC filings. With that, I'll turn the call over to Tom.

Thank you, Kelsey. Good morning, everyone. I'd like to take a minute before getting into the details of the first quarter to welcome Kelsey DeBriyn, our new Vice President of Investor Relations. Some of you may already know Kelsey from her time in the investment community. She joined the company in October and we're pleased to have her on the Raytheon team. Welcome, Kelsey. Now turning to our results, Raytheon is off to a strong start in 2018 as we've continued to build on our growth momentum from last year. In the first quarter, sales increased 4.5% and our sales, EPS, and operating cash flow were all better than expected. Bookings were solid and our backlog was up over $2 billion year-over-year. Overall, our growth strategy continues to be well-aligned with the needs of our global customers and we are increasing our sales and EPS guidance for the year. Toby will take you through the quarter's financials in a few minutes. You can see the strong global demand for our integrated air and missile defense systems in our recent progress on international opportunities. At the end of March, Poland signed LOA for Phase 1 with the U.S. government to purchase our combat-proven Patriot air and missile defense system. This paves the way for the U.S. government to begin contract negotiations with Raytheon. We still expect booking for Phase 1 in 2019 and Phase 2 in 2020, making Poland a partner that depends on Patriot to protect its citizens and armed forces. The Phase 1 opportunity for Raytheon is expected to be over $1 billion with the total Raytheon Poland Patriot opportunity to be around $5 billion. And we continue to make progress on an opportunity to provide Qatar additional integrated air and missile defense capabilities. Last week, after the quarter,…

Thanks, Tom. I have a few opening remarks, starting with the first quarter highlights and then we'll move on to questions. During my remarks, I'll be referring to the web slides that we issued earlier this morning. If everyone would turn to page 3. We are pleased with the strong performance the team delivered in the first quarter with sales, EPS and operating cash flow better than our expectations. As a result, we're raising our full year outlook for sales and EPS which I'll discuss further in a few minutes. Our sales in the quarter were $6.3 billion, up 4.5%, led by our IDS, IIS and missiles business. Our EPS from continuing operations was $2.20, better than our guidance, and an increase of 27.2% year-over-year. I'll give a little more color on this in just a moment. We generated solid operating cash flow of $283 million in the first quarter. Operating cash flow was higher than last year's first quarter, primarily due to favorable collections and lower net cash taxes. During the quarter, the company repurchased 1.9 million shares of common stock for $400 million. I would add that last month we announced an 8.8% increase in our dividend. This marks the 14th consecutive year of increasing dividends at Raytheon. Turning now to page 4, let me start by providing some detail on our first quarter results. Company bookings for the first quarter were $6.3 billion, which were 11% higher than the same period last year. And on a trailing four-quarter basis, our total book-to-bill ratio was 1.11. International awards represented 45% of the total bookings, an increase of approximately 50% over last year's first quarter, primarily due to the $1.6 billion Patriot booking that we previously discussed in January. Backlog at the end of the first quarter was $38.1…

The first question will come from the line of Carter Copeland with Melius Research. Please proceed.

Good morning, guys. Nice quarter.

Good morning, Carter. Thank you.

Good morning, Carter. Thanks.

Tom, I wondered if you could give us an update a little bit on hypersonics. I know you mentioned it in your prepared remarks but clearly this is getting a lot more emphasis inside the building. And I noted one of your competitors got a big award last week and just wondered if you could just give us an update on the handful of initiatives or programs you've got there and what the opportunity is and how that's unfolding. Just an update would be really helpful. Thanks.

Yeah. Thank you, Carter. As we discussed in the past and as I talked about a little bit in my script today, hypersonics is an area that we continue to invest in for future growth. Now we are working multiple hypersonic programs today both – I would call them CRAD type contracts. Hypersonic area right now is really focused on demonstrating advanced technologies that will then be used to go into engineering, manufacturing and development programs in the future. And I can tell you we're heavily involved in many of these type of programs all the way from the hypersonic air-breathing weapons type concept which is with the DARPA program and also in several other areas, including some ground-based hypersonic systems. The other area of the hypersonic equation is the counter hypersonics which is also a big area and we are involved with that with several of our existing systems, improvements to those, but also in some new advanced counter hypersonic missiles. So bottom line is we continue to make solid progress in our hypersonic pursuits and we will continue to invest in that technology and invest to continue to put assets in place to support the contracts we have in those areas.

The next question comes from the line of Rob Spingarn with Credit Suisse. Please proceed. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Good morning.

Good morning, Rob. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: I just wanted to get a clarification from Toby. And then I had a question on IDS margins. Toby, just curious why the cash flow guidance didn't rise at all here with the fundamental improvement in sales, et cetera. We've seen this trend all week from some of your peers. Just wondering if there's something at play there. And then on the IDS margins, for the back end of the year, what are the headwinds that we see there? Why didn't this translate – this strength in the first quarter translate into slightly higher guide on those margins?

Sure. So I'll start with your first question on cash flow. And I'll point to maybe two or three things here to maybe help folks understand, right. So we're pleased with the performance in the quarter, right, about $83 million above the high end of our guidance. We had some favorable timing of collections moving from Q2 to Q1. Keep in mind this performance in the first quarter is on top of our record-setting cash flow performance in 2017 where in Q4 we beat our expectations by about $800 million. And then coming off of that, we set guidance this year. Last year we were – prior to our discretionary pension, our cash flow was a little over $3.7 billion and the range we set this year was $3.6 billion to $4 billion, right. So we didn't drop it down, if you will, for the $800 million improvement we saw late last year. And then the other thing I'll just bring back here. In January on our fourth quarter call, we showed a three-year look at cash flow that rough numbers was about $2 billion better than our previous expectations. And we're still on track for that. So, overall, the cash flow remains very strong. As I mentioned earlier, it's a little more biased, as we've seen in the past, towards the back half of the year. And then the last point I'll make. If you look at the sales improvement, the flow-through of the margin on that and the change in the tax rate, all else equal, that's plus or minus $40 million and we have a pretty significant range of $3.6 billion to $4 billion. So the other way to think of it is it's considered in that range already. But I would tell you the takeaway here.…

The next question comes from the line of Seth Seifman with JPMorgan. Please proceed.

Thanks very much and good morning.

Good morning, Seth.

Tom, I wonder if you could talk a little bit about sort of the longer-term outlook and the big plus-up in the budget that we got, especially for the investment account, should be fueling very healthy outlay growth for the next three years or so. And so probably coming into the year, you guys grew about 5% in 2017. You're forecasting 5% to 6% this year. When we put the domestic together with the international, can we think about acceleration in the out-years?

Let me take your first question first. Bottom line is the fiscal year 2018 appropriations bill did get several plus ups to many of our programs. I'll give you some examples. Patriot program had a plus-up of $40 million. The SM-3 IB program had a plus-up of $108 million. SM-3 Block IIA was about $111 million. The Javelin was up $142 million, Excalibur $150 million. I can go on and on, but significant plus-ups across many of our programs out of that appropriations bill. We expect to see some of those bookings in 2018 and we expect to see the impact of sales in 2019 and beyond. So some very good clear projections out in terms of transparency into our ability to grow in 2019 and beyond, just based on what we're seeing in plus ups on the FY 2018 appropriations bill. So the other one is this overall modernization surge and where it's going. And I think the bottom line is we can see continued uptick in the defense budget. The fight-up associated with the fiscal year 2018 budget shows growth beyond 2018, obviously, into 2019, 2020, 2021, 2022. So we're seeing some clear demand signals from the customer. I think the biggest area that we're seeing the uptick in, because – and it's actually called out in the National Defense Strategy and the Department is putting money behind the National Defense Strategy, is in the area of coming up with new technologies to be able to counter what they're calling the peer threat. The fact that we've been in 17 years head down fighting wars of counterinsurgency and had not really been pushing new advanced technology areas. So we're – for example, our classified bookings were 16% of our total Q1 2018 bookings and that was up 18% from Q1 2017 and our classified sales were 19% of our Q1 2018 sales, and that was up 9.6% from Q1 2017. So we're getting strong signals from the Department that this is an important area. We are fully behind it. I talked about it in my script relative to the investments we're making. We're seeing these growth activities across all of those technology areas. We're in the right place at the right time. So bottom line is we have a good projection and transparency here over the next several years for growth.

The next question comes from the line of Doug Harned with Bernstein. Please proceed. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: Thank you. Good morning.

Hi, Doug.

Good morning. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: I wanted to turn to IIS. This is a business that's had – I mean, it's had virtually no growth for the last three years. And if we take the midpoint of your guidance for 2018, it's still the case in 2018. And I understand the Warfighter FOCUS Program decline, that's an important part. But the Q1 backlog – it's about where it was in each of the last two years for Q1. So given that this is a short cycle business, I would think it can turn very quickly, and we're certainly seeing interest in the space, such as the GD CSRA deal. So my question is, are we in a turning point where we should expect to see growth in IIS at a rate comparable to the budget growth rate, or should we expect the mix here to just be a slower growth business? How do you look at this over the next few years?

Doug, let me start and then if Tom has anything to add, he can jump in and maybe address your question in a couple points because you raised a few things that are – you are spot on, and I'll elaborate a little bit. So you mentioned IIS generally a book in turn type of business and reference where their backlog is. So one thing that I'll point out here is towards the middle of last year we started to see some shifts – I think they're somewhat temporary, but we have seen some shifts in the mix of programs at IIS moving away from that quick turn work that you referred to, and in a couple cases, to some longer duration programs that were rather large, especially for IIS. So, the backlog has grown, but with a little bit of a higher percentage of that towards the longer duration mix and that is affecting the conversion cycle here in the near-term in 2018. Your other point, you're right and we have talked about it with Warfighter FOCUS between the competitions and just the natural program plan where there was going to be a natural ramp down in that in the back half of this year. That, as we've said before, is a couple hundred to $0.25 billion impact in IIS revenue in the quarter. And excluding that, because of their efforts in other areas around classified, cyberspace, et cetera, excluding Warfighter, we would be seeing growth this year in the 3% to 5% range. So I think you are seeing some benefit from the focus on services that IDS has seen and it's being masked a bit by the Warfighter conversion as well as a mix change in their backlog.

Yes. Doug, just to jump in on that. Two areas that we're seeing a strong pipeline for IIS in the coming year is one of them is ground-based space control really being driven by the issue relative to contested space. And the other area for a strong pipeline is government cybersecurity and then also including strong government international cybersecurity business. And we are seeing those two areas starting to pick up and assume that they will be seeing growth here in the out-years in those two big areas.

The next question comes from the line of Jon Raviv with Citi. Please proceed.

Hey. Good morning.

Good morning, Jon.

Can you talk us through a little bit just on the Missile Systems margin and IDS margin? I'm just trying to think about those in the context of – we know IDS went through some mix shifts a few years ago and we're now ramping up there. Can you describe a little bit more is MS in a similar spot right now where there is this opportunity to pick up on mix going forward from your – as implied by guidance, but also out into the future?

Yes. So, if you have – and I understand the comparison to IDS. I think maybe a little bit of a follow on to Rob's question, I would point out that IDS – the margin profile there is playing out, I think, pretty much as we had expected or predicted over the last couple years, given the shift that you referred to when we talked about and again strong start for the year for IDS and real pleased with their outlook for the year as well. What I would tell you on Missile's margins, I think, as I alluded to briefly, their Q1 margin lower than last year's Q1 but we were expecting that and the mix is what's driving it. We do expect this year that Missile's margins will grow sequentially, a bit more pronounced in the second half, aligned with some higher production volumes and the timing of expected program efficiencies related to risk reduction and risk retirement. On the prior call, we had talked about higher CRAD in classified sales in 2018 impacting Missile's margins. And this is what we're really seeing early on in Q1. We've also talked about Missiles has, I think, within the company, from my perspective, the broadest and most balanced portfolio with programs at all end of the spectrum from early-stage CRAD-type of work into TMRR phases, into EMD low rate production, mature production, some international. And really, it's going to be the ebb and flow between those categories that drives it. But, again, we expect improved margins this year. And keep in mind that this mix that in Q1 was a margin headwind because of the nature of it, the CRAD work, that's the type of programs that lead to future franchises, ties back to some of Tom's comments around hypersonics as example. So, overall, we're pleased with the Missile's portfolio and, again, would expect to see margins improving through the balance of the year.

The next question comes from the line of George Shapiro with Shapiro Research. Please proceed.

Yes, a couple of quick ones, Toby. I try and pin you down in IDS, so was there EAC benefit of $20 million to $30 million because of retirement of risk on some prior ending programs as you've alluded to?

We did see some EAC benefits that we were expecting later in the year, George, right, where we did retire risk and that risk was retired in the first quarter versus beyond that. And, as I mentioned in the opening remarks, they had some favorable mix due to the international component of their business that also contributed to the margin performance in the quarter, so a combination of both.

The next question comes from the line of Pete Skibitski with Drexel Hamilton. Please proceed.

Hey. Good morning, guys.

Hey, Pete.

Good morning.

Tom, can you update us on the status of the Navy over-the-horizon missile program. I think you guys were waiting to get an approved budget to maybe begin an award announcement there. So maybe just an update and maybe quantify it.

Yes, just to make sure just to quantify for everyone who is listening. This is a program where, Raytheon and Kongsberg, as a team, we submitted a proposal for something what's called – we called The Naval Strike Missile, which is the Navy's over-the-horizon weapon system that they need to put on the LCS, but turns out they're also going to put them on all the Future Frigates. We think we're in a very good position there. We have a system that requires minimum development essentially to develop systems, some small changes we'll make, but can go into production very quickly, which is something the United States Navy needs. We are anticipating an award here in Q2 with significant more funds placed against it in the fiscal year 2019 budget to move forward with that program.

The next question comes from the line of Sam Pearlstein with Wells Fargo. Please proceed.

Good morning.

Good morning, Sam.

Good morning.

I was wondering if you could talk a little bit more about the investments you said you were making. You talked about the IRAD growth of 15% this year, but it looks relatively flat this year. So I'm just wondering can you play off CRAD versus IRAD and shift it around as one growth and move it as that part of the timing as we go through the year. And related, the CapEx seemed relatively high in the quarter, just given that you usually have a back-end loaded CapEx. So I just want to make sure you're still on track for the same level of CapEx.

Yes. Sam, let me give you kind of the top level here. The IRAD – and, obviously, we'll use the IRAD to give us the technologies to go capture the CRAD. We'll use the CRAD to go capture the development programs and we capture development programs, so we can have the production programs. So the IRAD is kind of the initial fuel for the engine to kind of get us going. And you're absolutely correct. Once we win the CRAD we'll redirect the IRAD to other opportunities, to be able to pick up more CRAD in other areas. And that's just the nature of the game that we play to win with. The bottom line is, is we are focusing and we have been focusing on several years in what I would consider the key areas, especially that are being called out in the National Defense Strategy. And, again, what's key about that is that's where the Department is going to be focusing its money relative to next-generation capabilities. And I can tell you we are 100% aligned with those areas. We are again using the IRAD to give us the start to fuel in our engines to go capture CRAD and so forth up the line. In area of the capital, we are up this year in capital. We did mention that in the discussions, up about 50%. Those areas – again, there are some demand signals based on new work at missile companies to be able to support that in terms of facilities and test equipment, which is going meaningful but also in other areas that support our overall growth. And I'll hand it over to Toby for some more details.

Yeah. So I'll address, Sam, I guess, the cadence of both the IR&D and the capital. So, on the IR&D, we haven't changed our outlook. We still expect roughly that 15% growth. You're right. The spend in Q1 was a little light from a linear point of view. But we do expect that to ramp up sequentially through the balance of the year. Similarly, on the CapEx and software spend, still same outlook, $910 million to $950 million for the year. I think the CapEx was about $220 million, $221 million and another $10 million or $12 million in software in Q1, so 230-ish million. So not linear but think of it as equal for the balance of the year maybe with a little bit of a bias towards a little bit higher spending in the back half relative to the capital.

The next question comes from the line of Robert Stallard with Vertical Research. Please proceed.

Thanks very much. Good morning.

Hey, Rob.

Good morning, Rob. How are you doing?

Good. Thanks. Tom, I guess, a question for you. The administration has been changing up the export rules. And I was wondering if there might be some benefit here for Raytheon, particularly as it seems to be shifting a little bit away from FMS towards more commercial sales and whether some of your products could benefit from that? Thank you.

Rob, thanks for that. By the way, any effort by the administration to improve this regulatory process relative to foreign sales on defense items is very welcome, obviously, by us and also by our industry. I can tell you it has been extremely helpful. This administration from day one has been very supportive of international weapon sales, which has helped us. And you can see our international has been up here over the last year, and a lot of it's driven by the support of the administration. I think this is a next step by the administration to even press forward to support more weapon sales internationally. And one of the key areas here is not just to support sales for jobs to improve industry, but it's also being used by the Department of Defense to gain collaboration with different countries. So when they go and have to go to fight, they're able to be interoperable with these other countries. So they want these other countries to be using – our coalition partners to be using U.S.-based weapon systems, so, again, that they can be interoperable and support. And the administration is behind that now. This is one way of doing it. They just reduced some of the fees they charge on FMS but are also leaning forward on direct commercial sales, which obviously is our preferred approach, especially relative to margin perspective.

The next question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed.

Hi. Good morning.

Good morning, Sheila. How are you doing?

Good. Thank you. You mentioned contested space earlier. Maybe if you could discuss some of the larger pursuits and opportunities in space and some of the investments you're making in that arena.

I'll cover that pretty lightly. And the reason is, once I get beyond the words contested space, things get classified pretty quickly. We are supporting in all elements of space relative to topic. I mentioned IIS heavily involved in the area of space control, especially in ground stations and ensuring our ability to have a resilient and reliable space control capability. And then also, obviously, in space arena itself, our ability to have very good sensors that go on these satellites to help again support resiliency and also getting those sensors down to a size where we don't lose the performance, but we still have the capability, so that they can go on smaller satellites, small sats and also medium-sized satellites, so there's a lot of our work in that area. And that's about as far as I can go relative to the area of contested space.

The next question comes from the line of Noah Poponak with Goldman Sachs. Please proceed. Noah Poponak - Goldman Sachs & Co. LLC: Hey. Good morning, everyone.

Hi, Noah.

Hi, Noah. How are you doing? Noah Poponak - Goldman Sachs & Co. LLC: I'm doing well. How are you?

We're doing pretty good.

Good. Noah Poponak - Goldman Sachs & Co. LLC: Can you guys get me set on Warfighter? How much revenue is it when you exit 2018? And I imagine with the Army TADSS piece being protested, I guess you're not losing any of that out of 2018. But in the scenario where that goes against you, what happens to Warfighter from that in 2019? And then I guess any commentary on what you expect from the other two pieces. And then a question on a different program going the other way. The EO DAS on F-35 win that you had, can you walk us through what happened, what transpired on that win and what the terms of trade are like with the customer there?

So, Noah, this is Toby. I'll start with the Warfighter question. So I think you alluded to this, but within the current guidance for 2018 – and I think I mentioned this a little bit in the prepared remarks, right. We always assumed a decline in the Warfighter related activities because of the program plan and the transition in the second half to the new contract vehicles regardless of whether we were to win them or somebody else was. So to that point, the current situation on ATMP doesn't change the outlook for IIS for the year. It is being broken, to your point, into separate contract vehicles, one of them, ATMP, being the first one in the queue. Over the longer-term, the ATMP effort only represents a part of the scope being performed under the Warfighter contract vehicle. And we do still feel good about our competitive position on the other pursuits, both of which, ETSC and HTSC, are going through the procurement process. And the current customer's outlook is for award midyear in June-ish timeframe. As you said on ATMP, it's in protest. We feel we provided very competitively priced bid there. But at the same time, we weren't willing to make any type of significant investments ourselves to participate in that program. And I talked about this earlier, but I think it's important to reinforce it, advance of this, right. The IIS business has been working on growth in a number of other areas, including cyberspace as well as international, which we believe will allow them to continue to grow into the future regardless of the outcome of the Warfighter program. And keep in mind Warfighter, right, it's been about a $10 billion, $11 billion program, call it, $1 billion a year. As we mentioned, we saw about a 25% ramp down in the plan for 2018. And these follow-on efforts in total are only about half the size of the current Warfighter program albeit over a little bit shorter period of performance, about seven years on average. So, anyway you look at it Warfighter was going to ramp down and that's why we've been working with the – the IIS business has been working to look to grow in other areas.

And, Noah, then on your second question on F-35 EO DAS, unfortunately, I'm going to have to refer you to Lockheed for any discussions on that topic. I can tell you though that EO DAS is a product line that we have. It's a great product line, especially for the rotorcraft market as well as aircraft like the F-35. So it is a technology that we have been developing over the years and have multiple contracts in that area.

The next question comes from the line of Cai von Rumohr with Cowen and Company. Please proceed.

Cai?

I think we dropped Cai.

Yeah. Cai, I don't know if you are on mute?

Let's move to the next question.

The next question comes from the line of Richard Safran from Buckingham Research. Please proceed.

Tom, Toby, Kelsey, good morning. How are you?

Good morning, Richard. How are you doing?

Good.

Good morning.

Good morning.

Very well, thanks. Okay. You know what I'm going to try again on asking about cash flow here, but a little bit of a different perspective here. Tom, in your remarks, you commented about a few programs being plused up, your munitions programs again focused on 2018. What I'd like to ask is more of a long-term trend here because for some time the Pentagon has been talking about a dire need for munitions restocking which goes right to the core of your business. And I would think that the recent op tempo, that might be getting some renewed focus. So I thought maybe you could discuss a bit more about your longer-term acquisition transfer munitions programs, beyond just AMRAAM, (54:02), Sidewinder, TLAM, et cetera. And is this plus-up more part of a longer-term trend than just a plus up in 2018? And if we factor that in with the better-than-expected numbers in the FY 2019 appropriations, does this imply possibly upside to your $7 billion to $8 billion long-term cash guide for 2019 to 2020. Or at the very least, does it cause you to lean towards the high end of the range?

Yeah. So, Richard, it's a good question. So let me start with I would call the missiles or munitions tempo. And the missile has seen some significant growth here leading up to 2018. I did mention all the plus ups that are in the FY 2018 appropriations. Again, a lot of them relative to missiles, so you see the uptick there but from all the words from Secretary Mattis is that 2019 will just be a start relative to the readiness refreshment area relative to munitions. So 2019 will be the start. And now you can see we've been having significant uptick here in 2017, 2018, but he's calling 2019 as the start with the majority of the uptick occurring in 2020, so fiscal year 2020. And then obviously our cycle on weapons and munitions is normally 18 months to two years, so that's going to take us 2019, 2020, 2021, again, providing a strong base of production and that the missile company there. And then, obviously, beyond that, the goal of the military is not to fall back into the problems they had before by not keeping themselves in a readiness state. So we see the missile business as being a very strong business relative to production. Toby just talked all about all of the CRAD, new activities we're getting, the fact that we've had to hire over 1,000 folks here in the last year or so, put buildings in place. There's a ton of work going on in the missile company and we see that as being a strong company here over the next five years. And then Toby will talk a little bit more about the cash...

Sure.

Relative to cash.

Yeah. I think – and you mentioned it, Richard, right, we gave a three-year look, 2017 through 2019. And I think you just heard Tom say in his current remarks in a little bit earlier, everything is pointing directionally good news, more spending. The timing is really what's going to dictate – the timing of those awards coming in is going to dictate how it's going to affect our top and bottom line. So I am not saying no to your question about, is there more upside? It's just too early to tell depending upon the timing as the money works its way through the system here in 2018 and then as the appropriations are done on 2019 how that will affect us. So we'll provide an update, obviously, later in the year or going into 2019, a new look out going forward.

Joyce, we have time for one more question, please.

The next question comes from the line of Peter Arment with Baird. Please proceed. Peter J. Arment - Robert W. Baird & Co., Inc.: Hey. Thanks. Good morning, Tom and Toby. Nice quarter.

Good morning, Peter. Peter J. Arment - Robert W. Baird & Co., Inc.: Tom, just a quick one on just – congrats on the Small Diameter II progress you have made. Can you remind us just how to think about the production profile of that program? It seems like that's another nice growth opportunity for you.

Well, I mean, it is. And we just had some successful testing throughout 2017 (57:32), so we just completed the development testing and not it's running into operational testing. But we also have in addition our Small Diameter Bomb II Lot 1 production assets have been completed and they've been delivered. And our Lot 2 is on track to complete all its deliveries on schedule some time here in late – the summer of 2018. Bottom line is this is a great new capability and the one main reason is that they can do – it's not only precision munitions, but it can also attack moving targets. So it's a very unique capability. It has something called a tri-mode seeker on it – technology, but that technology, tri-mode seeker, even though it's a very sophisticated technology, it's also at a very affordable price. And we see this Small Diameter Bomb as the future in terms of munitions. Number one, the reason for the small diameter aspect of it is you can fit multiple of them inside carriage, which is a requirement for stealth on an aircraft like the F-35. And so we see this as being a very attractive munition for the future and we already have a foreign military sales into Australia for the system, obviously, compatible on day one with the F-35. So everywhere F-35 goes into international market, Small Diameter Bomb II will also go.

Thank you for joining us this morning. We look forward to speaking with you again on our second quarter conference call in July.

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