During Q2, we made solid headway in each of our four priority focus areas and in addressing what we believe to be the two transitory dynamics in our business I referenced last quarter; transitioning our high mix of development programs to production and converting our high level of working capital into significant cash flow. We believe this progress is evident in three highlights from the quarter; strong bookings, solid free cash flow and better than expected progress in closing out our challenge programs, most of which are development in nature. First, we delivered near record bookings in the quarter with a 1.65 book-to-bill. Our bookings were anchored by a number of important program wins that we believe will drive future growth. These awards reflect customer recognition of the unique value we deliver, the reliance on us for their most critical franchise programs and ongoing healthy demand.

Second, we delivered strong positive free cash flow and a reduction in net working capital. We generated over $37 million in free cash flow in the quarter along with an approximately $70 million improvement in net working capital. These accomplishments were primarily driven by strong in-quarter collections, reductions in our unbilled receivables and inventory and improved customer advance payment terms. And third, we are making progress with retiring risk in and completing challenged programs. While the underlying performance of the business continues to be obscured by unanticipated cost growth on a subset of programs, we believe we have largely narrowed these risks from the original 20 challenge programs to one product line with game changing technology that comprises approximately 25% of the original challenge programs.

Although we are still working through this remaining set of challenge programs, we anticipate retiring these risks on slightly more than half of the remaining challenge programs in FY24 and entering FY25 with a much clearer path to deliver predictable organic growth, expanding margins and strong cash flow. In addition to these Q2 highlights, we made significant progress this quarter in establishing the team and structure to lead Mercury through the next phase of our journey. We announced a reorganization to simplify and streamline our business by eliminating redundant corporate functions and consolidating a number of functional areas into a single operating unit under the leadership of Roger Wells as our Chief Operating Officer. In his previous role, leading our microelectronics division, Roger delivered strong results and demonstrated an exceptional aptitude for scaling business operations and expanding and converting pipeline opportunities.

We also announced the addition of Stuart Kupinsky to the leadership team as our Chief Legal Officer. Stuart brings a wealth of experience in legal leadership roles and a track record of driving dynamic change and value creation in a number of technology companies. I'm very pleased that Roger and Stuart have taken on these critical leadership roles. Please turn to Slide 5. Following those introductory comments, I'd like to spend time on each of our four focus areas. Our first focus area is enhancing execution to deliver predictable performance. In Q2, we incurred a number of costs that obscured the underlying performance of the business. Specifically, we recognized approximately $48 million of such items that we believe are transitory, including nearly $31 million of program cost growth impact across our portfolio, approximately $12 million of manufacturing adjustments associated with specifically identified inventory reserves and higher scrap due to unfavorable yields, and nearly $5 million associated with contract settlements where we worked with customers to transition away from programs where we did not expect to see acceptable returns.

These items, which again, we believe are transitory, represented the vast majority of the year-over-year decline across our P&L metrics. As a reminder, program cost growth identified within a given period has an overweight impact on the financial results of that period. In accordance with GAAP, there is a cumulative adjustment to reduce progress and align margins on the life-to-date of the program, which results in a decrease to revenue and gross margin that permeates down to net income and adjusted EBITDA in the current period. Breaking down the nearly $31 million of program cost growth, $14 million of this impact was derived from our challenge programs with nearly all of the impact tied to one single program. Approximately $8 million was spread across several development programs and the remaining $9 million related to multiple production programs.

The challenge program impact was driven primarily by unexpected redesign and prototype efforts following initial development unit deliveries. Similarly, the remaining program cost growth was a function in part of revised baseline costs predicated on initial unit deliveries across several development and production programs. In addition, the program cost growth reflects a risk adjusted outlook on program performance and estimates to complete across our program portfolio. As shown on Slide 6, with respect to the challenge programs, during the second quarter, we made better than anticipated progress by completing, exiting or retiring risk on an additional four of the original 19 programs. Together with the four completed through Q1, we believe we have now retired risk on eight of the original 19 challenge programs that have driven earnings volatility in recent quarters.

For the remaining programs, we expect to close out more than half over the remainder of the fiscal year. The balance of open challenge programs as well as the one program where we experienced significant program cost growth in the quarter are tied to a common processing architecture. So while we experienced a significant P&L impact during the quarter, we believe we had made progress in isolating the primary go-forward development risk in the challenge programs to this one technology area. Of note, our differentiation based on this technology has afforded us sole source positions on critical programs, and the functionality we provide is mandated on these programs. As such, we and we believe our customers, are committed to success in this area.

The challenges we are facing are related to efficiently and cost effectively maturing the manufacturing process to support the transition to scale production on these programs where we see significant growth potential at attractive margins. Even for the one challenge program with cost growth this quarter, the current margin outlook remains above our consolidated program gross margin profile. In addition, this common processing architecture is being developed within an isolated part of our business, representing approximately 20% of our revenue, which has experienced the majority of the revenue and earnings volatility that we saw in Q2 and that we expect to see within the fiscal year. We believe resolving the challenges in this technology will go a long way to restoring growth and profitability in this part of the business and Mercury as a whole.

So despite the challenges we're working through and the corresponding investment, we believe we are well positioned as a sole source provider with large growth opportunities and solid margins as we seek to execute on the remaining development efforts and transition these programs to production. Please turn to Slide 7. Turning now to the second focus area of driving organic growth. Bookings for the quarter were a near record $325 million, resulting in a 1.65 book to bill. We had several exciting awards for both development and production programs in the quarter. Two marquee wins in the quarter are worth noting. We received our first production award for LTM. This is an exciting and important award coming earlier than originally anticipated. While we don't expect significant revenue from this program in FY24, we expect this program to drive organic growth in FY25 and ultimately become our largest revenue contributor in the future.

We also won a large development program on a strategic weapon system, which we anticipate will drive growth in the near term and stronger growth in the future as it transitions to production. This program, while well within our technical capabilities, was awarded as a cost plus contract with favorable billing terms of at least monthly, thereby, reducing the potential earnings and cash volatility through development. While we still expect the majority of our contracts to be firm fixed price, we are exploring opportunities to take certain development contracts on a cost type basis where appropriate. In addition, as I have discussed before, we are working to incorporate more robust terms in all of our contracts to more clearly define scope, support improved execution and customer satisfaction and shorten cash conversion cycles.

Finally, last week, we received a large follow-on award to provide our solid state data recorders for a large defense space program. This technology, which was introduced only a few years ago, is now the largest driver of growth in the military space market for Mercury and we expect further growth opportunities for this unique commercially developed offering. These awards are important not only because of their value and impact on our long term growth but also because they reflect our customers' continued trust in Mercury to support their most critical franchise programs. I mentioned last quarter that this effort to build an organic growth engine will occur over a longer period of time given the time content involved with improving book to bill levels, and that our near term growth will be fueled by the transition of development programs to production where we are well positioned in the back half of this year and early FY25.

Demand remains strong and we anticipate the strong bookings momentum to continue through the year. Please turn to Slide 8, now turning to our third priority focus area, addressing our cost structure to expand margins. As we mentioned last quarter, to achieve our EBITDA margin targets, we are focused on the following levers; executing on our development programs and minimizing cost growth impacts; getting back to a historical 20-80 mix of development to production programs; driving organic growth to generate positive operating leverage and achieving cost efficiencies. In Q1, we took a series of actions designed to better align our cost structure with our scale and our financial expectations. These actions are on track to generate $24 million in annual run rate savings primarily related to SG&A efficiencies.

In January, we announced a corporate reorganization in which we streamlined and simplified our operations, consolidating our two division structure to a single integrated structure, incorporating all of our lines of business and matrix business functions, reporting in to Roger Wells, who was appointed Chief Operating Officer. This integrated approach is designed to clarify accountability and eliminate redundancy. In total, we expect this action to deliver an incremental $20 million in annual run rate savings, bringing our total action run rate savings to $44 million, of which approximately $24 million to $26 million will be recognized inside the fiscal year. Though we continue to see negative operating leverage in FY24 given little revenue volume, these structural reductions will be evident in our margin profile as we expect to return to growth in FY25 and beyond.

Please turn to Slide 9. Finally, regarding our fourth priority focus, to drive improved free cash flow. I am pleased to report that in Q2, we delivered over $37 million in positive free cash flow. We made progress on converting our unbilled receivables, which were down nearly $38 million in the quarter, and we continue to have strong collection trends across our billed receivables. In addition, we continue to pursue advanced payments on certain contracts, which is reflected in the $23 million increase in deferred revenue in the quarter. In total, net working capital decreased $70 million or over 10% in the quarter. We continue to expect unbilled receivables to burn down through the fiscal year as we apply resources to completing hardware deliveries and especially as we continue to resolve challenge program.

We also continue to expect inventory to decline as we receive follow-on production awards. At the end of the quarter, we had cash and cash equivalents of $169 million. Net debt of $448 million is down $39 million in the quarter, reflective of our free cash flow generation. We expect to be cash flow positive for the second half of the year, which we believe will allow us significant flexibility to allocate capital. Please turn to Slide 10. As I have discussed, we continued to make progress on our four priority focus areas. Even so, for the first six months, our revenue and earnings are below expectations primarily due to higher than expected cost growth and other charges as we retire risk across the portfolio especially related to our challenge programs.

Aside from these headwinds, which we believe are temporary, I continue to believe this is a business capable of ultimately delivering above average industry growth with low to mid 20% adjusted EBITDA margins. In the second half of the year, we plan to continue to work on the transitions I discussed earlier; shifting our large portfolio of development programs to production, especially the majority of our remaining challenge programs; and focusing our operational capacity on burning down our large net working capital balances, particularly in unbilled receivables and inventory. Turning to guidance. We're going to do this a bit differently for the remainder of the year as we work toward completing these transitions. Based on our first half revenue and our outlook for the second half, we are updating our guidance for full year FY24 revenue from the prior range of $950 million to $1 billion to a revised range of $800 million to $850 million.

The reduction in revenue guidance is based in part on our first half revenue performance, particularly in the second quarter, which included significant revenue reductions due to program cost growth. The reduction in revenue guidance is also based on reduced volumes expected in the second half as we continue to apply our operational capacity to advance late stage development programs and shift against legacy unbilled balances. As a reminder, we expect the completing late stage development programs will reduce unbilled receivables, release cash and unlock production revenue, which should drive growth and margins. This work is critically important to unlocking value but we'll continue to deliver little revenue in FY24. Let me spend a little more time on the volume reduction because it is significant.

As we discussed in Q1, we continue to implement a more cash efficient operating approach with operational capacity focused on completing late stage development programs and releasing unbilled receivables. This approach should generate cash and clear the way to higher growth, higher margin production revenue. However, there's little revenue associated with completing this work in the near term. In addition, as we look to the second half, we are implementing a more mature process designed to ensure we have a robust low risk approach to transition from development to scale production, particularly as it relates to the common processing architecture I mentioned previously. This work is important as part of our priority to restore predictability and profitability into the business.

We will remain the flexibility in terms of timing and, in some cases, cost in H2 to get this right. Turning to our outlook for earnings, including GAAP net loss and adjusted EBITDA. The reduction in our expected revenue range due to the volatility we have seen and expect to continue to see in a small subset of programs related to a single technology offering, coupled with our focus on completing hardware deliveries in order to reduce unbilled balances naturally results in a reduction to our GAAP earnings and adjusted EBITDA expectations as well. That said, it is difficult to provide reliable guidance estimates beyond revenue for the remainder of the year. Consistent with Q2, we may take additional actions to settle contractual arrangements that do not yield acceptable returns or align to our long term strategy.

We may also make continued adjustments to our cost structure, where appropriate, designed to position us for positive operating leverage in FY25 and beyond. Our objective for the remainder of the year is to maintain the flexibility to take this as necessary to complete this work as quickly as possible in order to position the company for what we believe will be a return to predictable organic growth, improved profitability and strong cash flow in FY25. So we are withdrawing our full year FY24 GAAP and non-GAAP net earnings guidance, including adjusted EBITDA, provided on November 7, 2023. As I have said in prior calls, demand remains strong, our outlook for bookings is unchanged and we continue to expect strong bookings for the second half with full year bookings expected to exceed $1 billion.

In addition, while we expect limited free cash flow in Q3, given the strong Q2 results, we believe we will be cash flow positive for the second half and full fiscal year. As Dave will discuss, total net leverage, based on our credit agreement definition, is well within our covenant thresholds and we expect cash generation to strengthen our balance sheet as we progress through the year. As we proceed through the second half of FY24, our goals are as follows; complete or retire risk on more than half of the remaining challenge programs; retire the risk associated with the common processing technology I mentioned earlier and validate a highly producible, scalable design that can be released into production; and validate capacity requirements and our ability to ramp production against our expected large and growing backlog in Q4 and into FY25.

Success in these areas, along with consistent performance against internal expectations, will give me and Dave the comfort to reestablish guidance across all financial metrics. To summarize, we are pleased with the progress we made in bookings and free cash flow in the quarter and expect strong results in these areas for the year. We will continue to assess our organization and cost structure through the second half to position ourselves for positive operating leverage in FY25 and beyond. We continue to make progress on our challenge programs and are working diligently towards the goal of a quarter free of material program execution volatility in our financial results. We look forward to showing progress in this area when we speak next quarter.

With that, I'll turn the call over to Dave to walk through the financial results for the second quarter, and I look forward to your questions. Dave?

Dave Farnsworth: Thank you, Bill. I'll start with our second quarter fiscal '24 results and then discuss our full year fiscal '24 outlook. As expected, our financial performance in the second quarter was below that of the prior year across all P&L metrics. As discussed in our last earnings call, fiscal '24 is a transition year where the organization is seeking to execute on both our challenge and development programs and then progress to the follow-on production awards. Through that transition, we expect to recognize the small proportion of remaining revenues on the challenge program contracts, but more importantly, we expect to move towards releasing significant working capital balances, especially related to unbilled receivables.

We then anticipate shifting our resources to execute on the follow-on production awards, which we believe will begin to rebalance our program portfolio more heavily towards higher margin predictable production programs as well as consume existing inventories. We continue to expect this transition to occur throughout fiscal '24 and into fiscal '25. In Q2, we made meaningful progress towards this rebalance with some positive early indicators emerging. First, our bookings for the quarter was $325 million with a book-to-bill of 1.65. Second, we completed exited or retired risk on four more challenge programs in the quarter for a total of eight programs through the first half of fiscal '24, better than the five we had expected. We continue to be on track to transition a majority of the approximately 20 challenge programs by the end of the fiscal year.

Finally, we generated over $45 million of operating cash flow, $37 million of free cash flow and improved working capital by approximately $70 million in the quarter. Cash flow generation in the quarter was primarily a result of strong collections, including a higher volume of customer advances as we successfully negotiated more favorable billing terms on newer awards. With that, please turn to Slide 11, which details the Q2 results. Our bookings for the quarter were $325 million with a book-to-bill of $1.65, yielding backlog of $1.3 billion, up over $160 million or 14% year-over-year and $128 million or 11% sequentially. As Bill discussed, we received two large awards in the quarter. LTAMDS was received earlier than expected in fiscal '24 and signifies an important franchise production program for which we are a key supplier of processing capabilities.

We also won a large cost plus development program on a strategic weapon system with favorable billing terms. Revenues for the quarter were $197 million, down $32 million or 14% compared to the prior year of $230 million. As expected, revenues decreased year-over-year as we continue to prioritize resources to execute our challenge programs, transition from our higher mix of development programs and aim to better align our operating cadence with prudent working capital management. As Bill noted, we experienced nearly $31 million of cost growth impact in the quarter as compared to approximately $7 million in the prior year. The $31 million was comprised of $14 million related to our challenge programs and $17 million related to multiple development and production programs.

In accordance with GAAP, this resulted in cumulative revenue adjustments to properly reflect progress on the programs due to the revised cost baselines driving an overweight impact in the second quarter. The $14 million cost growth impact related to our challenge programs was almost entirely driven by a single program and was a result of facts and circumstances in the quarter, specifically on the cost growth related to unexpected redesign and prototype efforts of a common processing architecture following initial development unit deliveries. While we executed largely in line with expectations across the remaining challenge programs, we did experience cost growth on certain other development and production programs in the quarter, which impacted revenues in a similar manner but to a lesser extent.

Of the remaining $17 million of cost growth impact, nearly $8 million related to development programs and $9 million related to production programs. The cost growth within our development programs was primarily attributable to $6 million of cost growth across a suite of three development programs with similar performance obligations. A majority of this cost growth was due to a revised cost baseline predicated on initial development unit deliveries and extrapolated across the remaining backlog. Similarly, we had several production programs in the first half of the fiscal year for which actual costs incurred were trending higher than the prior cost estimates. This resulted in a revised cost baseline for the remaining backlog on these programs.

In addition, we experienced minor technical issues resulting in incremental rework costs across several production programs in the quarter. The scope of the issues was narrow, risk mitigation plans are in place and the issues are expected to resolve and allow for delivery on these programs beginning in the third quarter. Finally, as we build and mature integrated processes and management systems, we seek to continuously assess our judgments and estimates, including potential future risks and opportunities based on the latest and best information available. We are applying our judgment consistently as we work through the full portfolio of programs. In addition, and consistent with prior earnings calls, we are shifting our operating cadence with the goal of more properly balancing our material purchases with contract awards and resource availability, driving better working capital results.

These factors are contributing to a temporary volume shift in our total revenue, especially our overtime revenue, which decreased by approximately $25 million year-over-year. We expect this trend to continue through the remainder of fiscal '24. Gross margin for the second quarter decreased to 16% from 35.3% in the prior year. Gross margin contracted year-over-year primarily as a result of cost growth impacts as well as higher manufacturing adjustments, especially as related to inventory reserves and scrap. As just discussed, we recorded approximately $31 million of cost growth impact in the second quarter. This represents approximately $23 million of incremental cost growth impact year-over-year contributing to more than 50% of the margin reduction, as shown on Slide 15 in the appendix.

The remaining decrease in gross margin year-over-year was primarily due to higher manufacturing adjustments of approximately $12 million related to inventory reserves and scrap. With regard to inventory reserves, we recorded over $8 million more reserves in the quarter as compared to the prior four quarter run rate average. This was a result of specifically identified excess and obsolete inventory in the quarter, primarily due to a shift in customer demand toward our next generation product offering. In addition, we are actively marketing and selling certain of our slow moving inventory, sometimes at a discount to the current carrying value. With regard to scrap, we experienced higher levels of discrepant material, especially related to the common processing architecture involved in several of our challenge programs.

Due to the nature of the technology, the discrepant material is high value and cannot be reused or reworked. We have several initiatives underway designed to address more efficient and cost effective producibility of these subsystems. We expect gross margins to recover gradually in the second half of the fiscal year. That said, we believe the full year fiscal '24 gross margins will be below those of fiscal '23 given the higher than expected cost growth impacts through the first half of fiscal '24. As Bill discussed, we believe we have successfully narrowed the scope of risk across our challenge programs to a single technology related to our common processing architecture within one of our business units. We expect gross margins to continue to be impacted by unknown risks that may materialize as we progress these challenge programs through final stages of completion.

In addition, we may continue to see cost growth impact as we transition from our higher than normal development program mix as well as continue to mature our operational management systems and reporting. Operating expenses decreased approximately $3.1 million year-over-year due to $2.1 million of restructuring charges as well as $1.3 million more of amortization expense in the prior year. That said, the second quarter of fiscal '24 included nearly $5 million of contract settlements, resulting from negotiations to reduce performance obligations on customer contracts that do not align with our strategy or otherwise do not have acceptable returns in exchange for lower cash consideration. We believe these costs are not comparable to the prior year, and thus, our run rate operating expenses would have decreased nearly $8 million year-over-year, reflecting the cost savings actions executed in our first quarter fiscal '24.

As Bill mentioned, earlier this month, we announced an organizational consolidation of our divisions into one unified structure, incorporating multiple business units and supporting functions. The resulting workforce reduction is eliminating approximately 100 positions, resulting in expected restructuring charges of $10 million to $12 million in the third quarter. This cost savings action is expected to yield annual run rate savings of approximately $20 million. In total, our cost savings actions in fiscal '24 are expected to yield over $40 million in annual run rate savings. GAAP net loss and loss per share in the second quarter was $45.6 million and $0.79 respectively as compared to $10.9 million and $0.19 respectively in the prior year. The increase in GAAP net loss is primarily result of approximately $48 million of costs incurred in the quarter comprised of $31 million of program cost growth impacts, $12 million of inventory reserves and scrap expense as well as nearly $5 million of contract settlements.

GAAP net loss was also impacted by the temporary volume shift in revenues as we align our operating cadence with prudent working capital management. These factors were partially offset by approximately $16 million of incremental tax benefit year-over-year. Adjusted EBITDA for the second quarter was negative $21.3 million compared to $35.7 million in the prior year. Adjusted loss per share was $0.42 as compared to adjusted earnings per share of $0.26 in the prior year. Consistent with GAAP net loss and loss per share, the decrease was primarily a result of approximately $48 million of costs incurred in the quarter comprised of $31 million of program cost growth impacts, $12 million of inventory reserves and scrap expense as well as nearly $5 million of contract settlements.

Adjusted EBITDA and adjusted loss per share was also impacted by the temporary volume shift in revenues as we align our operating cadence with prudent working capital management. Slide 12 presents Mercury's balance sheet for the last five quarters. We ended the second quarter with cash and cash equivalents of $169 million. We increased our borrowings by $40 million in the quarter, resulting in $616.5 million of funded debt under our revolver. As Bill discussed, total net leverage based on our credit agreement definitions is well within our covenant thresholds. Our debt agreement allows for adjustments beyond those included in our adjusted EBITDA definition, including adjustments related to some of the headwinds that we believe are temporarily driving earnings volatility and obscuring the underlying performance of the business.

We are forecasting significant headroom in the covenants for the remainder of fiscal '24 and expect to end the year with lower gross debt as we deploy the positive free cash flow generated through the remainder of the year to pay down debt. Billed receivables decreased approximately $9 million as a result of continued strong collections in the quarter. Unbilled receivables decreased approximately $38 million, primarily due to successful execution and billings across the program portfolio, as well as cumulative adjustments associated with the cost growth impact in the quarter and our contract settlements as previously discussed. Inventory decreased approximately $8 million in the quarter, primarily as a result of the incremental reserve and scrap activities.

Accounts payable decreased nearly $8 million, evidencing the shift in our operating cadence aimed at better aligning the timing of material purchases with both contract awards and resource availability. Deferred revenues increased approximately $23 million in the quarter, reflecting the higher volume of customer advances as we successfully negotiate more favorable billing terms on newer awards. Working capital improved approximately $70 million in the second quarter as we transition through the completion of our challenge programs and start to shift the development and production mix in the program portfolio. We successfully converted unbilled to billed receivables and ultimately cash in the quarter through our focused execution efforts. We also negotiated advanced payments on a number of new contracts and reduced inventory growth through effective management of our material purchases.

We expect this working capital trend to continue, resulting in further progress by the end of the fiscal year, primarily driven by decreases in unbilled receivables and inventory. As we continue to execute, especially as related to our challenge programs, we expect to convert unbilled to billed receivables and then cash. In addition, we expect the mix of development programs to shift to better align with historical norms. And as we receive expected follow-on production awards, we believe we will consume inventory purchased in anticipation of these awards. As we have discussed on prior calls, we consider 35% of trailing 12 months revenues to be a more appropriate level of working capital for the business. Turning to cash flow on Slide 13. Free cash flow for the second quarter was $37.5 million as compared to $22.2 million in the prior year.

As previously discussed, this was primarily a result of strong collections in the quarter, including a higher volume of customer advances as we successfully negotiate more favorable billing terms on newer awards. I'll now turn to our financial guidance for the full year fiscal '24. Our results through the first half of fiscal '24 have been below expectations. In addition, we expect earnings volatility may continue for the remainder of the year, including as we make intentional decisions around the strategic alignment of our program portfolio, technology investments and working capital balances. As a result, our full year results are expected to fall short of the previously issued guidance. At the start of the fiscal year, we shifted our guidance approach to guide annually rather than quarterly due to the expected volatility in financial performance as we pivoted focus to operational execution, especially related to our challenge programs.

We have taken several actions designed to improve predictability within a subset of our business, and key early indicators of progress emerged in the second quarter. We have successfully completed eight of our approximately 20 challenge programs and believe we are on track to complete the majority of the challenge programs by the end of the fiscal year. That said, we have experienced development challenges on a single technology within one of our business units that spans several of our remaining challenge programs. These challenges will require heightened effort and potentially increased cost through the remainder of the fiscal year. We have quantified this risk, among others, across our program portfolio based on information available as of the second quarter as well as considered how best to allocate our resource capacity to further reduce working capital levels, resulting in a revised revenue range of $800 million to $850 million for fiscal '24.

Providing meaningful estimates of GAAP and non-GAAP measures beyond revenue is challenging, including in light of the continued actions we may need to take to complete our business transition in fiscal '24. Thus, we are withdrawing our GAAP and non-GAAP guidance outside of revenues as provided on our first quarter earnings call on November 7, 2023. While we are not formally guiding beyond revenues for the remainder of the fiscal year, we can provide further perspective over certain key financial metrics. First, we expect the demand environment to continue to support strong bookings especially in the fourth quarter, yielding expected fiscal '24 bookings in excess of $1 billion. We continue to expect these bookings to be weighted more heavily towards production based programs, supporting the start of a shift in the mix of development and production programs in our portfolio.

Second, we believe we have narrowed the risk and scope of effort within our challenge programs to a single technology in one of our business units with the remaining challenge programs executing largely in line with expectations. We have completed eight of our approximately 20 challenge programs and continue to expect to complete a majority of all challenge programs by the end of the year. The cost growth impacts incurred through the first half, coupled with the potential for continued volatility, especially related to this single technology, will negatively impact revenues and gross margin for the remainder of the year. As such, we now expect both revenue and gross margin to trend lower than the prior year. We believe operating leverage will improve as we progress through the year due to expected revenue and margin increases compounded by savings from the cost actions completed in both the first and third quarters of fiscal '24.

We expect GAAP net loss and loss per share as well as adjusted EBITDA and adjusted loss per share for fiscal '24 will be meaningfully below the prior year. We expect positive cash flow for the fiscal year before any benefit from the potential passage of the R&D tax legislation currently before the Senate, which we anticipate would add more than $40 million of additional cash flow in fiscal '24. While cash flow in the third quarter is projected to be near breakeven, we expect a significant improvement in the fourth quarter as we plan to complete a majority of our challenge programs, ship and build final product and convert unbilled receivables to billed receivables and then to cash. We continue to expect positive free cash flow for the year.

A government shutdown or prolonged continuing resolution may pose risk to our cash flow expectations. As discussed, we expect further improvement in net working capital by the end of the fiscal year as we anticipate seeing reductions in unbilled receivables, but also inventory with more meaningful reductions expected over the longer term. In closing, we continue to be focused on four priorities; enhancing execution to deliver predictable performance, driving organic growth, addressing our cost structure to expand margins and driving improved free cash flow conversion and release. We believe executing on these priorities will not only enable a return to historical revenue growth and profitability but will also drive further margin expansion and cash conversion, demonstrating the long term value creation potential of the business.

With that, I'll now turn the call back over to Bill.

Bill Ballhaus: Thanks, Dave. With that, operator, please proceed with the Q&A.

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