Leidos Holdings, Inc. (LDOS) Earnings Call Transcript & Summary

Good afternoon, and welcome back, everyone, to the aerospace defense track of the 2022 JPMorgan Industrials Conference. We're going to be focused on federal services this afternoon, and we are very grateful to have with us here, Leidos, and we have CEO, Roger Krone, and we have Stuart Davis from Investor Relations.

I think we're going to just have a conversation here, Roger and I, but maybe just to kick it off in terms of setting the scene, Roger, if you could tell us kind of things stand? And also, I think sometimes in the federal services space for investors, it can be a little bit difficult sometimes to differentiate. And so can you talk a little bit about what you feel differentiates Leidos versus some of the peers in the space?

Yes. No, I'm happy to. Thanks for having us. It was a month ago, I think, we did our year-end call, and I'm thinking about, wow, what a month. And when we were on our call, we kind of put our notes together, we thought about all the uncertainties that were ahead of us for the year. You would call it overhang or you call it headwinds. And I'm just sort of amazed that here we are a month later, and most of those issues have cleared up and things have been definitized and almost all favorable. So -- and I'll just kind of run through the things we talked about on our call. And then again, I'll talk about, I think, how the company is positioned and why we have the strategy that we have, and why we think that's a preferred strategy to be in our space, which is, I think, what separates us. But we really talked about sort of 3 headwinds on the call. COVID, which we've all tried to forecast and predict. Budget uncertainty, because we didn't have a budget. And in fact, we were running a scenario at the company that included a government shutdown. And then what had been kind of a move to the right and a slowing of the acquisition process in the federal space across the board, not just in defense, but in the civil agencies as well. And then a fourth issue, which we really didn't talk about much on the call, but I think it was certainly on our minds and maybe on your minds as well, was some of the acquisitions that were $1 billion acquisitions for us. We have some in protests. We had some that hadn't been awarded, and they were right in front of us. So we had something called AEGIS, which is a big network program. We had Defense Enclave Services which we're sure we're going to talk about. Which was soon to be awarded, but we didn't know the outcome, right? We could get a second protest on AEGIS. We could lose DES, and so we looked at kind of where we were in with the year, what '21 or '22 is going to look like, and there's just a lot we didn't know. And here we are literally just about a month later, we've got a budget. We've got an Omnibus, and in fact, the Omnibus is significantly better than we thought it would be both on the federal side and on the civil side, kind of a 5%, 6% and an 8%. And there's a Ukraine supplemental, unfortunately, but there is a Ukraine supplemental and some of that will flow. We will get -- we'll benefit from that as well a lot of people in the industry. I have sort of forecasted the other side of COVID a couple of times, and I've been wrong, and I am likely to be wrong again. But if we look at the Omicron variant and the BA.2 and what have you. And the numbers that we have within our company for our own employees, what we see in the geographical areas where we operate the numbers are significantly better, and the fatalities are down. And I don't know if we're ever going to be on the other side of pandemic or endemic or virus, but I think we are close to what the new normal is going to look like. So that's a favorable. Some of the acquisitions, some of them have moved through the process. We think there are some acquisitions that are still going to be delayed. I think of all of the issues that affect our company that's probably still problematic. And I think it's more associated with just the acquisition workforce on the customer side. Like many organizations during COVID, they had people who are eligible who retired and there are just less people to do the work, and I think there was some budget overhang that led to some delays. And now, it's just the massive amount of work that has to be done to get some of these programs adjudicated and awarded. We have a big network program for the FAA called FENS. And they're really now talking kind of in the fall, maybe end of the year, and then you put 100 days on the back of that. We probably wouldn't see revenue on that program now until '22. But when we add it all up and then, of course, we won Defense Enclave Services, and by the way, the AEGIS protests, so it was re-awarded to us. And the other company who had filed the protest, we believe, has elected not to follow subsequent protest, so AEGIS is in the wind category. And DES is in the wind category but in that protest phase, which I think we all expected. But 100 days from the protest filing is the 20th of June, which is a little earlier than we would have anticipated if it ends at the 100-day protest. So we look at all of those factors and from a Leidos standpoint, certainly for '22 and frankly, going into '23 and '24, we think we've derisked our outlook, and we feel more confident about the company going forward. And then why are we different? We have been executing our strategy to balance our portfolio across the public sector. To not just be in defense or not just be in intel, but to be in civil infrastructure, our Security Detection & Automation business, our TSA, our CBP business and in the health care business. And the focus clearly has been on the defense budget. I think what has gone a little bit unnoticed is the non-defense budget actually got plused up even more, so they are going to spend money on infrastructure. There's going to be ports and borders and airports, and we're excited about that. And then just health care at large, we had a great year in '21 in our health care business. And I guided down and said, well, we just don't expect to see the same year in '22 that we had in '21. But initially, we still see really good strength in our health care business, both in the top line and the bottom line. And so if you're trying to figure out with Ukraine out there and a lot of uncertainty, where is the middle of the road? Where is a good place to put money which allows me to reap the benefits from across our government space? We are that company. And we have been able to prove that we can differentiate ourselves from the rest of the company, and we can win major significant awards in our customer space and do it on a time and time again basis. And so I always get the question, has it gotten more competitive in your space? And I say, no, it's always been hypercompetitive. And you just have to look to the companies that deliver value and win programs day in and day out. And I think that's -- that's where the investment is. That's where the return to shareholders are going to be. And then maybe the final, if I can switch it up a little bit. On our call, we really talked about our great cash generation model that we have and our asset-light balance sheet. And that when we have excess cash, we've always made a commitment to return that cash to shareholders. And not a lot of discussion in '21, what we've done with our dividend, and we had done open market purchases. And open market purchases never quite get the splash or the attention that an ASR did. But right after the earnings call, we announced a $0.5 billion accelerated share repurchase. And I think that was really well-received by the market because it reinforces the commitment that we made to return excess capital to our owners, to all of our investors.

Excellent. Thanks for setting the scene. That's very helpful. Let's run through -- since you mentioned a couple of the wins that are important ones, let's maybe run through them. DES is a contract to have several of the different defense agencies that are not part of a service, consolidate their IT infrastructure. What's the -- that's obviously somewhat complicated process. You've got different agencies with different equities. How do we think about the way that ramps up? Is it something that's going to ramp over time? And what's the level we should be looking for as it plateaus and how long does it take to get there?

Yes. Well, I appreciate the opportunity to talk about Defense Enclave Services. So it's a single award IDIQ from DISA, and there's a headline number of $11.5 billion. And that would be aspirational and that is what we call a ceiling value. So they can award up to $11.5 billion of work over the 10-year period of performance without having to go back and compete another contract. That is not our internal loan, all right? So -- and our experience in single award IDIQs is you very rarely get to see it. So I immediately wanted to spell anyone who's going to say, well, it's $11.5 billion and it's 10 years, I'm going to put $1 billion in per year. That probably is not the way it will happen. So the program, right now, we talk about combat agencies, so Navy, Air Force, Marines and then you know about things like AFRICOM and SOUTHCOM, okay. This program is to address everyone else, and they use a term called the Fourth Estate probably a term I know, particularly like because I think they're really, really important, but they're the non-combat agencies. There's DLA, the Defense Health Association -- Health Agency. There's the people who do security clearances, there's DTIC, they're testing communities. But there are these -- there are actually 22 of these agencies who are not on a ubiquitous DoD network. So the plan is there's a network that has started called DoD net, was started by another company called Qbase. We'll take that over. We will add to the architecture. There will be a security overlay to increase cyber. And then in several phases, we will do some small agencies, they are just a headquarter some of the -- and then we will grow to bigger agencies. And then over time, if we're successful, and we will do all of these Fourth Estate agencies. That will take 10 years, right? And it is -- we have been able to celebrate the ramp on our Navy NextGen program, where we really went from 0 employees to 4,000 employees over a period of a couple of months. That is not a good model. This is a very, very slow model, where if we are able to start executing the program in June, we will do architecture and design. So the revenue this year will be in very modest double-digit numbers. And then next year, we start to transition small agencies, so a crawl walk run. So it will be bigger but still nowhere near capacity. And then as we are successful and we demonstrate a cost savings and increase in the user experience, a higher degree in cybersecurity, then we will do more agencies. So it's much more akin to our defense health program called DHMSM where we installed electronic health care records. We did an IOC site. Once we got through the IOC site, then we started to go through waves. That's how DES will work with probably the max revenue not occurring until halfway through the program. So -- and the max revenue, not $11.5 billion divided by 10, but significantly below that. There is opportunity to grow the program, to provide infrastructure modernization, to add scope, to do what we call on-contract growth, but that's all a way out, way out in the future. And then the other thing that we always talk about whenever we start a program, we're always accruing at a lower EBITDA number. And task order 1, which is what we'll start out with, is the beginning of the program, and so it will be below the average for our Defense segment. But the program overall should perform at the level of our Defense segment.

Excellent. And then you mentioned some progress on NASA AEGIS program. And so if you take us through kind of when you expect that to ramp, and maybe the scale of that one?

Yes. It's certainly not as big. We are now -- we've had our -- I think we've scheduled the kickoff meeting, the IDR meeting, I don't know, maybe in a couple of weeks, so that will start to ramp -- that will be a faster ramp. But remember, we're going to have a partial year. So we won't -- even '23 may not be at the max level, that maybe probably till '24 until we are fully staffed. But that should -- there is some -- excuse me, some incumbent capture there, so there was an incumbent. We'll get the opportunity to bring some of those people on board. The ramp-up will be faster. But it is obviously not the size of a Navy Next Gen without getting too specifics, because we don't guide by program. It's not even half the size of the Navy NextGen, but it's significant. And for us, I think it's really what -- we take that and the NEST program. It's what we can do for the end user and the end user experience, and I think that's where the excitement is for us.

Excellent. And then the last one, I think you mentioned is FENS where it seems like that one is still in front of us for an award, and whenever that happens, potentially followed by protest. But I guess -- what kind of gives you the confidence that Leidos will be well positioned for that program?

Well, okay. So just to be absolutely clear, hey, I'm never confident, okay. I don't want anyone out there to ever think that -- I think it's anything but a really tough competition. And I don't know how many companies bid, but many companies bid. I mean, this is -- on Defense Enclave Services, that program started with 7 and got neck down. There were 3, then there were 2, and in the end, the best and final offer, the final price revision was between us and another company. On FENS, we don't think it's going to happen that way. We think there are going to be many bidders, and I will also tell you, many qualifying bidders. I mean, all of the names in our industry. Without getting into some competitive, we try to win on a better technical answer. And if we design our better technical answer right, we can be a lower cost, too. As opposed to the other way around, trying to find a way to get the low cost and then squeeze some technical answer into that. We really try to bring the latest partners. We've got a great network provider partner on FENS, and then our approach at the architecture and how we apply technology, so that -- we want to win the technical proposal and have that facilitate us winning the cost proposal. So on FENS, without getting into everything we want to do with the network, there's an incumbent L3Harris. And we just think so much has evolved from a technology standpoint that the customer can take advantage of, and in partnership with our network provider AT&T, we think we can provide a higher level of service at a significant reduction in cost. But we only know what we know. I obviously have no idea what anybody else proposed, and I'm sure there are other very competitive programs out there. But we've done great work for that customer and the confidence in what we can do, and we've proven we can do a multibillion-dollar network and IT transformation programs and executing on cost and schedule. So that gives us -- we think we've got a fighting chance to win as well.

One of the other things you mentioned was some of the, I guess, the difficulties of the pandemic in terms of getting -- I guess, contracts have been awarded, but maybe getting task orders led out. And I wonder if you see that with people coming back into the office post-Omicron with the end of the CR, which is just a couple of days behind us now, so it's probably early to say. Is it -- is that something where we're going to see a significant change soon? Or is it something that's going to take time?

Well, I want to be optimistic and say now that we have a budget, everybody is going to come back to work, and we're going to see this backlog and we're going to have -- we're going to make up in the next 6 months what we should have done in 12. Stories from the front. We've got one program that you're all familiar with and they have contracts, by the way, and government employees have defined benefit plans, okay? That means they can retire. I mean, they actually get a pension. And the head of contracts in this one program said, I have been working so hard. I've been working for 30 years. And I just went through COVID, and I'm going to retire. And it was like, oh gosh, because they're going to put more people in the program, but they don't -- this individual has been, I think, on the program since we were awarded. And now we have somebody new, so it's going to take more time. And they don't understand us, and we know the format that he likes. We know how he wants some of the ECPs submitted. And we're seeing that across the board, right? And it's not, they're bureaucrat. They can't get through the approvals, it's blah, blah, blah. No, it's what we're all seeing. We're seeing this -- the 50-something employees who have these 20 and 30 years of experience, who know how to get things done, have just -- their quality of life has been redefined and their balance and priorities have been redefined. So it's going to take a while to hire the acquisition core on the government side to backfill those people, to get them up to speed, to give them the experience. And -- so it's not going to be an overnight thing. It is going to be -- and we've got to help. We've got -- industry has to do their part. We have to submit good proposals. We have to give them the supporting information that they need in the format that they want in the first time so that they can process these things quickly. And we've only had an Omnibus for a couple of days. And if you understand what we call the PBDS system, we won't see that flow through, so that gets our forms and allocate it, and it gets to governments and they allocate it down and they take a tax. And by the time the contracting officer actually gets authority to let the contract, it will be months. And then we go into -- we give them a cost proposal, we go into negotiations. Maybe we get an early start. We work under an undefinitized contract action or something. It could be end of summer in the fall before some of these dollars start to flow. But now the good news is -- and it really is good news. It says, okay, '22 is what it will be, but these are big dollar numbers, much higher than we thought. And they're not one year. There's not a lot of 1-year money. I mean, this is a 2-year, 5-year money. Some of it is -- it doesn't expire. So what does that do for '23? Well, a few risk ones. And then also from the budget process, and we haven't seen a skinny budget from the president, but we'll see that this spring. They're going to start from the '22 number, right? So -- and the '22 number is significantly bigger than we all thought it would be both at the defense and the civil side. So that means the '23 number is going to be bigger than any of us had in our plans, right? And then you throw a Ukrainian supplemental on top of that, which is in the double-digit billions. And I'd love to say this Ukrainian thing is going to be over in a week, 30 days, 45 days. I think there will be a '23 supplemental for Ukraine. I cannot predict where this will end. It's not going well, right? And it is taking a lot longer, which is really bad. I mean -- and they're targeting the wrong targets. They're targeting civilian targets and things like that. So I suspect even if it were to end, there's going to be a Rebuild Bill to rebuild those commercial buildings, those apartment buildings, the transportation grid in Ukraine. And so there's going to be '23 Ukraine money, there'll probably be '24 Ukraine money. And sad, but for those of us in the industry, I mean, there's potential.

Right. Understood. Understood. When you think about where the '23 request might come in, is it fair to think about maybe mid-single digits above what was appropriated for '22 as a -- is that a type of number that people are talking about?

That would be 5.

Yes.

Okay. Well, that would be a real positive development. I think we're probably below that and what we expect between 3 and 4, and it varies. That's probably from a top line number. Hey, I don't know. Ask me in 2 weeks when -- if you're in the -- frankly if you're in the javelin and stinger business or something called switchblade, which I'm learning about, then your numbers are double digit, right. But for the rest of us, if we see 3 to 4, I think that's a really solid number for us. And then it's always about -- I mean, the truth is what happens below that? And what's important? And we don't have any involvement with F-35. But if you look at what came out in the Omnibus, there were some surprises. But space, hypersonics, some of the things that are important to us, did very well and did much better than the top line. And so again, we think what we have been doing at the company is trying to continue to reposition. What we do at Leidos to solve the problems that the customer is going to have tomorrow, and not work so much on what they did in the past. And so we expect to do better than the top line number, but that's just where we are.

Excellent. You mentioned hypersonics, and I wonder if we could talk a little bit about Dynetics, and a couple of different programs that they work on, but maybe starting with hypersonics and the glide bodies and sort of where things stand? I mean, it's obviously a key priority. There have been some tests that have -- that have failed, although I think part of the approach that DoD wanted to take was to test off and fell off and approve. And so, I guess, how do you think about Dynetics' role there, their role with various partners, and then the growth that would come from hypersonics there?

Yes. And so first of all, the Air Force program called ARRW, it's not my program. I don't know much about it. Is -- in the development of a new technology, you're going to have success and you're going to have some test failures. It's why we test. And the fact that they're going to take their money and put it back into R&D makes all the sense in the world. We're not involved in the ARRW program, so I must just say about that. We are heavily involved in the boost-glide hypersonic capability, but we're also involved in some of the defensive hypersonics. We can get to maybe the wide field of view sensors, some of the space work that's being done to detect hypersonic flight, and there may be some potential. Maybe we can talk at some point about that, maybe in 6 months, see where the program goes. But we make the Hypersonic Common Glide Body, which is the point end of the Hypersonic stack. So if you think about there's a fire control system, there's a TEL, Transportable Erector Launcher. We build the TEL, so the thing that looks like a truck with missile tubes on it, we build those. And then we build the pointy end which is a Sandia government design that we are manufacturing as we speak today in Huntsville, Alabama. We then send that hypersonic glide body up to Tennessee to a Lockheed facility. They build the stack and then it gets filled out to a battery in the Army. We build the glide body. We bought a company in the fall called Spire that machines the thermal protection system carbon, carbon material. So we then, subsequent to that one, the program to build the thermal protection system for the hypersonic glide body. And so all of that is actually going well. We, on our own money, built a facility in Huntsville, a classified production facility. And we now have a glide bodies going down the product line. I can't tell you when they're going to be delivered, and I can't tell you how many we're going to build because those are non-public numbers, but the program is going very well. And in the Omnibus, there was -- I would just say ample money to support the development and fueling of the boost-glide hypersonic system. And we hope that we'll maintain all our pieces, and we'll continue to build TELs as they're needed. But we are the -- right now, the source of the hypersonic glide body and the thermal protection system. And it's great work. It's really important work, which we really love to do. And the customer has been great to work with, and we need to get hypersonic capability in the U.S. as soon as we can.

Excellent. Another program that's been notable at Dynetics is Gremlins, and I think we see in various forms in the conflict in Ukraine and other conflicts that have erupted recently, the importance of UAVs. Maybe you can update us on Gremlins, and where that stands?

Yes. So Gremlin is an uninhabited vehicle, looks about the size of a cruise missile, and it's a DARPA program. And the purpose of the program was to launch a UAV off of an aircraft and to recover it back on the aircraft without it having to land. A really hard problem, because the flow fields behind aircraft are unsteady. They're -- and so DARPA hard, but we were able to -- we do -- we have a little glide vehicle on a cable, and we dragged that out behind a C-130, and we used differential GPS to have the Gremlins intercept that probe, and then we lock on to the cable and then the cable brings the Gremlins up into the C-130. So we successfully demonstrated that this can be done, which opens up a whole broad set of missions. Everyone said, well, the whole idea of UAVs is they're expendable. Well, UAVs have gotten really expensive. There are expendable UAVs and there's a role for that, but there's -- these are millions of dollars vehicles. And if you can deploy them and recover them, you can use them again. So it opens up a whole broader set of missions. Now, like a lot of DARPA programs, you have to -- you have to, what we call, cross the valley of death, right? To go from an R&D tech demo to a program of record. And what DARPA is doing, really, as we said, and we're helping, is to try to find missions and services that want that capability. And so we're in that in between mode. We still have Gremlin UAVs, so we can do some more tech maturation directly with DARPA and then we can take this technology to a service to provide a capability for the service. But we're in that -- that transition point in the program. By way, I think we were nominated for Collier Trophy for the intercept, and that would be a wonderful thing. But it just speaks to how hard it really is to fly behind another vehicle and to do that capture and then to bring the vehicle aboard. But I'm really proud of the team at Dynetics, and it's something that had never been done before. Been contemplated all the way back, I don't know if you know the name, but the Gremlins name goes all the way back to a program in '50s behind a B-36, and Gremlin was the name of the vehicle that tried to do a capture behind a B-36. And so we're really proud of the technology and the team that did it.

I wonder if that's what inspired the movie, the name of the movie.

Yes, maybe.

Well, okay. Maybe if we could talk a little bit about the Civil -- the Civil business and to, I guess, there's a products and a services aspect to it. Starting with the services, you mentioned plus ups in the Civil side of the budget. Is there anything you'd highlight in particular as a place that provides more opportunity for Leidos that came out of the civil side of the appropriations on the book?

No single program -- it's across a whole game. But I mean, there is some nuclear cleanup work, and there's Hanford on there's Oakridge. They're -- some of those businesses, frankly, there's what we continue to be, hope, strong support of NASA and some of the missions that we have there, and we've got the NASA IT support programs. But usually, when we talk about civil, everybody wants to talk about the airport, border security. And first of all, I'll tell you, the service is there, there are really 2 businesses that we have. We have a Product Hardware business, and then we have a Service and Support business. And the Service and Support business covers almost immediately with traffic. So whether that be the number of us who are going to Orlando for spring break, which I was there yesterday, I can tell you, half of the country is in Orlando, which is a positive thing for us because the equipment is being used, and therefore, needs to be serviced. And so that business recovers much quickly. And we are seeing domestically, well, probably the wrong word. In the United States, we're seeing the recovery of air traffic and so that's a positive across the board. On the product side, the recapitalization rate is a much longer tail. If you do a regression analysis, it's second, third and fourth order. And our business is more balanced between U.S. and rest of the world. And until we get international travel back and we get it back on a sustained basis, the recap cycle is going to take longer. And we had -- obviously, we had been -- we were disappointed. I know the market was disappointed in how that business performed from a capitalization standpoint. We are seeing the beginnings and how this process works. You see RFPs, you have tech meetings, which lead to discussions which leads to procurements, which take months and years. And we saw a lot of procurements canceled, and we've seen procurements moved to the right. There's a big airport in the Pacific Rim that's doing a recap. And gosh, we've been in that proposal process for months, so it's better but it is not back to where it needs to be. I don't think we'll be fully recovered until '23, maybe even '24 right?

Yes. That makes -- I guess that makes sense given the pace of traffic recovery. And so what we're really waiting on is for authorities in other countries to decide that they're going to spend on recapitalizing their airports.

And they're not going to do -- our revenue model in the U.S. is authorizations, appropriations. That's how we find CBP and TSA. In many of the international airports, they're funded off a ticket surcharge. If there are no tickets, there's no ticket surcharge, and that has to happen reliably and predictably for them to put capital programs in place. So you see more recapping in the U.S. because of our funding mechanism, and frankly, the threat and some of the chemicals like fentanyl that we want to be able to detect. We do trace at the airport, which is when you get pulled out of line and they put filter paper on your hands, that's called trace. And we're looking for new chemicals that we didn't look for 2 or 3 years ago because of the proliferation of new exotic things, so -- and that hasn't quite happened overseas though, but it will.

I guess we're at 3 minutes, so I want to make sure we talk a little bit about capital deployment as I mentioned and then we can go back to other questions, if you want. You mentioned the share -- accelerated share repurchase that was fairly well received, and there seem to be kind of an emphasis on cash return, I thought, in your remarks earlier. I know you can't comment on individual things that pop up in the press, but there was an item earlier this week that Leidos was interested in a rather large acquisition. I guess -- was I hearing you correctly on the earnings call in terms of where...

Yes. No, you are hearing it very correctly. Because we have done big M&A and because we do M&A on a fairly regular basis, I think the people who write articles put our name on list, okay. That doesn't mean we have any interest in the property, right? We're very thoughtful and very strategic about what we're looking at. We were clear on the call that we're looking -- I hate the word tuck-in. We're looking for things that complement our strategy from a capability or a market access standpoint. We are not looking for scale, right? We like the size. What, we have, like, 8 or 9 new programs that we're ramping up. Maybe we talked about the military Family Life and Counseling, RHRP, Navy NextGen, AEGIS, DES, our plate is full. To buy a company, to add $3 billion or $4 billion in revenue doesn't fit with our strategy. And by the way, it is so much more capital efficient to win a program than it is to buy a company and get a program. I mean, we'll talk about creation of value. And you're right, we're not going to comment specifically about what you read in the newspaper. It wasn't a quote for me, and so we will continue to look in the marketplace and never say never, but we were fortunate enough to do our scale transaction in 2016, and we're happy with the way that has evolved. We have what we think is an enviable leadership position. And so our priorities are invest internally for growth, right. Pay a dividend, get to the right leverage to maintain our investment rating, and then to give the excess money back to you, back to the people that own the company. And we'll do a tuck-in. I guess we bought a company in third quarter that helped us win a contract, we'll do that. But we have really no appetite right now for a scale deal.

Okay. Excellent. I guess -- we're closing out here. But I guess really quick, when you talk about the internal investments, are there like a top 2 or 3 things you'd highlight in terms of the destination for internal R&D?

I think we announced in -- at the earnings call that we had made a strategic investment in a new space company. We're trying to understand where the customer is going, what are their compelling needs, where are they underserved. And so whether that's to develop a capability like a space sensor on our own or something in hypersonics or -- and by the way, I got all the way through the 40 minutes and didn't say JADC2. But multi-domain command and control, which I think is a problem in for many of the services, those are areas that we want to invest in. We think we have a lot to bring to the party, and that's where we're spending our R&D, and that's where we're going to spend our capital.

Very good. I had JADC2 on my list too here, we just didn't get to that but...

We got to the end.

Yes. Thanks very much for being here. Roger. We really appreciate it. Great.

That was great. Thanks, everybody, for watching.