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| Statement |
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| Now to the bottom line metrics, solid operational execution translated to net earnings growth of 14% to $74 million for the fourth quarter but declined for the full year as a reminder the compare for the full year net earnings is skewed given the sizable net gain on the divestitures recorded in 2022 |
| Secondly, strong global demand from Allied for our ground network computing and advanced sensing technologies, resulted in a meaningful increase in international revenues |
| The transition of our development programs to production namely Columbia-class, but others as well are the primary drivers for this significant margin expansion |
| So financially, this was a very strong move but also it positions us as you're suggesting to be a part of that submarine industrial base expansion, and by extension part of the Navy investment in that |
| Additionally, we excelled accelerated capturing bookings and achieved a 1.2 book-to-bill ratio for the year, we saw impressive demand for our solutions enable and ground network computing, electric power and propulsion and multi-mission advanced sensing |
| We'd expect to capitalize on the momentum built throughout 2023 into strong organic growth and margin expansion this year |
| The team has done a remarkable job in improving execution |
| And we've just started Shipset 3 which had still better margins because it's part of the contract that was negotiated with new higher inflation assumptions |
| Lastly, 2023 free cash flow was robust at $159 million and was a result of significantly stronger than expected fourth quarter collections |
| Our backlog is growing and we have demonstrated a clear ability to execute |
| And I think that program expect it to be pretty positive for margins |
| As a team we are focused on leveraging our strong market position to drive long-term value for our customers, for our shareholders and employees |
| And this is evidence that our growing backlog and multiple years of robust bookings for our advanced technologies and sensing, network computing, force protection and electric power and propulsion |
| The confidence we have in our ability to drive long-term growth is backstopped by strong continued customer demand and our healthy opportunity pipeline |
| I'm pleased with the broad strength evident across our business |
| Throughout the year, we continued to expand our well-fortified market positions, secured new business wins and sharpened our differentiation through R&D investments |
| And on the missile defense, where your questions focus, we've seen strong customer interest in our payloads |
| We continue to strengthen our balance sheet and have expanded capacity for value-enhancing capital deployment |
| As a result, full year free cash flow was significantly ahead of our expectations at $159 million |
| ASC segment adjusted EBITDA increased and margin expanded for the year mostly on better volume and better mix |
| Our Integrated Mission Systems segment revenues benefited from strong contribution from electric power and propulsion programs to drive growth for the year |
| We believe, there are clear international growth opportunities across our business |
| Our advanced sensing and computing segment, revenue growth for the year was driven by strength in naval network computing and multi-mission advanced sensing programs, particularly leveraging our tactical radars lasers tactical communications and electronic warfare technology |
| Revenue was $926 million for the fourth quarter accelerating total growth of 13% and 11% on an organic basis |
| And as we look into 2024 we have confidence that we're going to be able to execute and continue to grow backlog |
| I'm proud of what we have achieved |
| Overall, our tactical radar program portfolio has been incredibly well received, as we continue to generate strong customer demand across active protection air defense and force protection markets |
| We continue to build on our execution track record and ended the year on solid footing, resulting in exceptional financial results for 2023 |
| And from that, with this new facility, we believe we've got a good path to increase the returns on that program as we start executing when this facility goes live |
| We saw broad-based demand drive growth in both Q4 and 2023 full year |
| Statement |
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| Resulting margins were 14.1% for the fourth quarter and 11.5% for the full year a decline of 60 and 30 basis points respectively |
| IMS segment adjusted EBITDA and margin were down due to unfavorable mix and higher G&A spend for the year |
| Longer term CR we still see as unlikely |
| Alternative technologies to electric power and propulsion are inadequate and their ability to scale to the power requirements needed for the future |
| But in any event the lower end of our guidance range caps -- captures that downside risks |
| Higher volume at the top line resulted in adjusted EBITDA growth but we faced headwinds to adjusted EBITDA margin primarily from higher G&A due to greater investments in internal R&D and an uptick in public company costs |
| But do you think you could have a book-to-bill greater than one and 2024? I know we've got some budget uncertainty |
| So that the only way you see a long-term CR is at the whole budget process fails and we think that that's unlikely |
| Lastly for revenue, I would condition you to expect Q1 revenue just shy of $650 million |
| So we knew that there was going to be a little bit about wave that created this anomaly in ASC in Q4, because of what we've seen in the supply chain and the proactive mitigations we took to secure our confidence in being able to deliver that ramp in Q4 |
| Separately, while there is some optimism about lead modification of section 174 provisions we believe it's premature to incorporate this into our outlook |
| I mean unfortunately short-term CRs and even shorts shutdowns it become a little bit to standard |
| We managed through peak inflationary headwinds and had increased G&A from greater investment in internal R&D and higher public company costs |
| Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors |
| We fundamentally believe that it is a question of when, not if, this technology is adopted for next-generation destroyers, as well as other platforms |
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