Good morning, and welcome to the General Dynamics Fourth Quarter and Full Year 2020 Earnings Conference Call. All participants will be in a listen-only mode. Please also, today's event is being recorded. I would now like to turn the conference over to Mr. Howard Rubel, Vice President of Investor Relations. Please go ahead..

Thank you, operator, and good morning everyone. Welcome to the General Dynamics fourth quarter and full-year 2020 conference call. Any forward-looking statements made today represent our estimates regarding the Company's outlook. These estimates are subject to some risks and uncertainties.

Additional information regarding these factors is contained in the Company's 10-K, 10-Q and 8-K filings..

Good morning. Thank you, Howard. Earlier today, we reported fourth quarter revenue of $10.5 billion, net earnings of $1 billion and earnings per diluted share of $3.49. This is, in most respects, a very solid quarter, even though we missed consensus by $0.05. I have more to say about that shortly.

Despite the adverse impact of the pandemic, we achieved most of our operational and financial goals added dramatically to our backlog and had a very good cash quarter. The results in comparisons with prior periods are rather straightforward and set out in our press release.

Because of the adverse impact to the economy caused by COVID-19, I'll devote less time to the quarter-over-quarter comparisons and spend more time on the sequential improvement that tells a compelling story of recovery. I'll go through that in some detail as I give you my thoughts on the business segments.

As we indicated that it would be, the final quarter is our strongest, it is quite remarkable that we came within $0.02 of the very strong pre-pandemic fourth quarter 2019. On a sequential basis, suffice it to say that revenue is up 11.1%, operating earnings are up 20.6%, net earnings are up 20.1% and earnings per share are up 20.3%.

So all in all, a solid quarter with good performance even compared to the year-ago quarter, but really good sequentially. For the full year, we had revenue of $37.9 billion, down from 3.6% from the prior year, net earnings of $3.17 billion and earnings diluted shares of $11, once again modestly below consensus.

Our business was strengthened by significant growth in the backlog to a year-end record high of $89.5 billion. The same is true of total estimated contract value at $134.7 billion. The total company book-to-bill was 1.1:1 for the year, led by the particularly strong order performance of Electric Boat.

The strong order intake across the Board positions the Company well for 2021 and beyond. Our cash performance for the quarter and the year was stronger than expected with a conversion rate of 91% of net income for the year. Jason will have more fulsome comments on this subject in his remarks.

Let me review the quarter, paying particular attention to sequential comparisons and the full year in the context of each group and provide some color as appropriate. First, Aerospace. Aerospace revenue of $2.4 billion is up 23.3% over the third quarter on the strength of the delivery of 40 aircraft, 34 of which were large cabin.

While this was the strongest delivery quarter of the year, it fell short of our expectations by three aircraft, two of which delivered after the first of the year, for reasons related to customer preference. The third aircraft had a willing customer, but it was not ready for delivery by year end, that one's on us..

Thank you, Phebe, and good morning. The first thing I'd like to address is our cash performance for the quarter and the year. As you can see from our press release exhibits, we generated just over $2.2 billion of free cash flow in the fourth quarter, approximately 220% of net income.

That resulted in free cash flow for the year of $2.9 billion, a cash conversion rate of 91%, nicely ahead of our anticipated 80% to 85% of net income.

To put this in context, our cash from operations for the year of $3.9 billion was less than $20 million shy of the highest annual operating cash flow we've ever had, notwithstanding the impact of COVID on our operations in 2020.

In fact, our free cash performance for the year was just short of achieving our original pre-COVID cash forecast, so really a remarkable outcome.

This was the result of outstanding performance across the business to close out the year, most notably in the Aerospace group, which began to draw down its inventory that we've been discussing for some time.

And the Technologies group, which continues to generate superb cash flows, as Phebe mentioned, in this case, in excess of 150% of imputed net income for the year.

And as you'll recall, at this time last year, we negotiated a path forward on our large international contract in Combat Systems, including a revised progress payment schedule that liquidates their receivables balance over the next three years.

As part of that agreement, we received two payments of $500 million each last year and we received the next progress payment earlier this month in accordance with the revised schedule. So that OWC will continue to unwind as we've discussed on past calls.

Of course, Marine Systems continues with its significant facilities improvements in support of the unprecedented growth on the horizon. To that point, we had capital expenditures of $345 million in the fourth quarter for a full year total of nearly $1 billion or 2.5% of sales.

You may recall, we had expected our CapEx to peak in 2020 at roughly 3% of sales due to these shipyard investments. As you might expect, given the impact of the pandemic, we've managed the timing of this CapEx spend prudently, and the result is three years, '19, '20 and '21, at roughly 2.5% of sales.

This timing fully supports our Columbia and Block V build plant at Electric Boat. We then expect to trend back down and return to the more typical 2% range by 2023, consistent with our previous expectations..

With that, I'll turn to our expectations for 2021. So let me provide our operating forecast initially by business group and then on a company-wide rollout. In Aerospace, we expect revenue to be about $8 billion, essentially flat with 2020. Operating margins will be about 12.5%, leading to operating earnings of $1 billion, maybe slightly more.

So what is driving this forecast, and in particular, the lower margins in 2021 when revenue is similar to 2020? You will recall that I told you last quarter, we will deliver 13 fewer G550 as that airplane is no longer in production. This leaves us with 13 fewer aircraft, not including the three slips from 2020.

So all up, 10 fewer aircraft, this reduction in revenue will be made up by a roughly $500 million increase in services across Jet Aviation and Gulfstream at about 10% lower operating margin. There are a lot of other puts and takes, but this gives you the big picture for the lower anticipated margins.

By the way, our forecasted production delivery considers our backlog, our fourth quarter orders and our take on current demand. I fully expect 2022 will have better revenue and earnings, stimulated by the entry into service the G700 in the fourth quarter and improving demand across the product lines as the economy recovers.

In Combat Systems, we expect revenue of about $7.3 billion, an increase of approximately $100 million over 2020. We expect the operating margin to be about 14.5% and operating earnings to exceed last year by $20 million or 2%.

We look for revenue, earnings and margin rate to grow quarter-over-quarter during the year with a particularly strong fourth quarter. After several years of good revenue growth, 2021 and 2022 will have modest growth. Growth should resume in 2023 and beyond as several developmental programs move into production.

The Marine group is expected to have revenue of approximately $10.3 billion, an increase of over $300 million. Operating margin in 2021 is anticipated to be around 8.3%, driven in large part by increased work on the first two cost-plus Columbia submarines, which have conservative initial booking rates. We anticipate growth at each of the yards.

The long-term driver of growth here is the submarine work, which will expand significantly. Our biggest upside opportunity in this group is to outperform the forecasted revenue line. We expect revenue in the Technologies group of $13.2 billion, $580 million more than 2020. This is a growth of 4.5% with GDIT growing at a rate of 7.1%.

Mission Systems will be essentially flat with organic growth of 3%, offset by the SATCOM divestiture. We expect earnings of $1.25 billion, about $50 million more than 2020. This implies an overall margin of 9.5% with GDIT returning to 7% or more.

So for 2021, company-wide, we expect to see approximately $39 billion of revenue, up over $1 billion from 2020 and operating margin at 10.5%.

This all rolls up to a forecast range of $11 to $11.05 per fully diluted share basis, we expect EPS to play out much like it has in prior years with Q1 about $2.20 and progressively stronger quarters thereafter. Let me emphasize that this plan is purely from operations.

It assumes a 16% tax provision and assumes we buy only enough shares to hold the share count steady with year-end figures so as to avoid dilution from option exercises. So much like last year, beating our EPS guidance must come from outperformed many operating plan, achieving a lower effective tax rate and the effective deployment of capital.

I should leave you with this one final thought. Our strong cash flow in anticipation of a 95% to 100% conversion rate in 2021, leaves us with the ability to engage in a share repurchase program this year to enhance the EPS figures I have just given you. We will see how that plays out. I'll be more specific about this after the end of the first quarter.

Back to you, Howard..

Thanks, Phebe. As a reminder, we ask each participant one question and one follow-up question so that everyone has a chance to participate.

Operator, could you please remind participants how to enter the queue?.

Absolutely. today's first question comes from Jon Raviv with Citi. Please go ahead..

Phebe, if you could just sort of talk -- I know you mentioned that you want to have this for the end of the first quarter, but you're starting a repo again in 4Q, looking at a much better conversion rate this year.

Just sort of big picture on where free cash flow conversion goes this year and ahead, especially if you see a big recovery, a bigger recovery in 2022 and then kind of what the levers are for capital allocation as the year progresses with those debt repayments, but also saying that you might have some excess as well?.

Let me ask Jason to give you a little specificity there..

Yes. So John, I think at a macro level, the best way to think about this is we have to think about this is we have every expectation that we will see year-over-year increases in our free cash flow. As you saw, we had a nice outperformance of our expectation in the fourth quarter to wrap up a pretty strong 2020.

That set us off on this course a little quicker than we expected. A lot of that was Gulfstream doing a great job getting some of that inventory to start to turn, and so working some of that operating working capital. As Phebe alluded to, GDIT also had an outstanding performance in the fourth quarter.

I think we expect to see those trends really continue. I mean, basically, the core fundamental underlying performance of each of the businesses, but then buoy by the further improvement in OWC. The one we talked about or I alluded to briefly on the call is the continued unwinding of the unbilled receivables balance in Combat Systems.

I mentioned we did receive the third major progress payment here earlier this month of January. That's encouraging to see that that program continues at pace.

And so between that program unwinding, the working down of the working capital over the next couple of years at Gulfstream and of course, the winding down of the CapEx at Marine Systems, we expect to see that year-on-year growth in free cash flow, obviously, to support further capital deployment, at which I'll turn back over to Phebe to address..

So look, we've been real clear over the years that we invest in our business depending on the need and the expected return on that invested capital. The one element of capital deployment that should be repeatable, achievable, each and every -- and sustainable each and every year are dividends. We'll be discussing that with our Board.

Obviously, debt repayment and then share repurchase. And let me just leave it at that. We have more work to do with our Board. But you can expect us to be good stewards of capital..

And our next question today comes from Seth Seifman with JP Morgan. Please go ahead..

I asked this question a little sheepishly, but I wanted to go back to something you said about Aerospace. And you said, if you've been following our R&D spending, you know there's more to come on this subject.

I like to think that I'm following it, but maybe if you could speak to that in a little more detail and what that means?.

So as you and I agree that I gave you as much detail as I intend to here.

So why don't we find another question to discuss together?.

Okay, maybe on the cash flow then. Jason, it looks like we're moving from 2 9 in 2020 to maybe about 3 1 in 2021.

Can you talk about the key moving pieces there, especially working capital and they ended the year with a very low receivables balance, and sort of, is working capital overall going to be a contributor and so to the extent it can continue to decline?.

Yes. I think to cut to the chase. I think you put your finger on it. It is the continued working of that OWC. It's partially receivables, you saw some good movement there in the fourth quarter of last year, but that should continue as well as the inventory side of things.

We'll get to unloading these test articles, a Gulfstream over the balance of this year and into early next year. So that will be a big help as well. And that will continue in terms of the OWC turn, not just through the balance of this year, but it will be a big mover in 2022 and 2023 as well..

And our next question today comes from Cai von Rumohr with Cowen. Please go ahead..

Yes. So Phebe, you mentioned Q4 initial deliveries of the G700. I think at one point, it looked like G700 was going to be early in the year. I know a lot has happened obviously with MAX and COVID.

How confident are you that you can really hit that delivery bogey? And what does that assume in terms of certification?.

So Cai, I think if we go back and look at the record, we've been pretty consistent that it would be toward the end of 2022. And the test program, all the test points, the expectation of the airplane throughout its test program has met all of our design specification. So the program is going very, very well.

And we will work with the FAA on certification prior to the entry into service. But the progress of the test program supports end of year 2022..

What I mean you said you're going to expect an up year in '22.

How many G700s? What if the G700 slips into '23, is it an up year or a down year?.

Well, look, our expectations are predicated on a recovery in the market that will drive fundamentally all of Gulfstream's performance. But we're pretty much counting on the 700. And if it is, it would be by a quarter or so, but I don't believe that that's the case at the moment.

And so what we do is in work with our FAA teammate and made the best estimates that we can for one, we believe this is going to enter into service. We're not going to get into the number of production and deliveries by model we never have or not going to. But that airplane is coming, and it comes with nice margin performance and good cash.

So our expectation, I think, is reasonable given all the fat patterns we have an evidence at the moment. And if it changes, of course, we'll let you know, but we have nothing to believe at the moment that it will change..

And our next question today comes from Robert Stallard with Vertical Research. Please go ahead..

Phebe, you mentioned that there's been some commentary around the G650 and the market demand for this aircraft.

I was wondering if you could give us some idea of what the sort of slot availability is for this plane, looking out over the next 12 months or two years? And whether you're seeing any sign of the G700 cannibalizing the market?.

So the 650, as I've noted, continued to be in demand. It is a powerful airplane. There's nothing close to it in its market. We are not going to get into open slots. We've never really done that with any specificity, and we're not going to start now. Just suffice it to say, we don't build strings and white tails.

But look, we've talked about this a couple of times and just to refresh, the 700 and the 650 have materially different missions and there are at different price points and the customers well understand the distinction.

And I think the parable to think about to amplify that point is that when we announced the 700, 650 demand increased because of the clarity provided in that market space. So that was a -- it was additive, not subtractive. So we believe that, that pattern will continue given the differentiation between the two airplanes.

Does that help you?.

Yes. And just as a follow-up. On the G650, you did bring the rate down there modestly.

Do you see that now as a sustainable rate over the next few years? Or could it actually head higher again?.

We are comfortable with the rate that we're looking at the moment. But look, you've seen us sufficiently agile to adjust on the up. I don't expect that at the moment. We still have very good demand. Our rate supports that demand and the demand supports that rate. And we anticipate a nice steady order book and production schedule for the time to come.

So we're really pleased with that airplane..

And our next question today comes from David Strauss with Barclays. Please go ahead..

Phebe, I just wanted to touch on Marine and the growth that you're forecasting there. I think you said there's potential upside, but looks like your forecast about 3% top line growth. I know it's on a tough comp.

Can you just talk about where the potential upside could come from? How much Columbia is accounting for of that growth? And would you expect Marine's growth rate to reaccelerate once we get beyond 2021?.

So, the growth is -- can be on any given year, a bit lumpy, but the trajectory is there, supported by that backlog. I think this year, in 2020, I think Colombia accounted for 50% of that growth.

But the way to think about this in crudely approximately from a trajectory perspective is, we're looking between $400 million to $500 million of growth a year. And then that will continue to accelerate as we pull through more production. So in the moment for 2021, as I alluded to in my remarks, the opportunity there is for increased revenue.

And that happens in these shipyards by increased throughput. We pull work in, depending on the work cadence, the schedule, the planning, the availability. So that is in the moment. If any upside comes to growth in 2021, it will be based on that. But you are quite right, we -- that comparison base is off for this year is very, very strong growth.

But there's nothing to suggest that there's any particular issue here. It's simply just the timing and the mix..

Right, the $400 million to $500 million that you just referenced, is that the annual revenue increase that you're expecting out of Columbia per year for the next couple of years?.

No, the whole group..

Okay, got it. And then on Combat, can you -- may be split it out kind of what you're seeing on the U.S.

side versus Europe? And are you having any issues in Europe given some of the shutdowns that we've seen over there?.

Well, let's talk about the U.S. As we've talked about, we are the premier systems integrator for combat systems platforms in the United States. And all of our key franchise programs are in the process of modernization, upgrading, and we anticipate that to go forward. If you think about army modernization, it comes in two flavors.

One is upgrading a critical or fighting vehicles and equipment to meet the modern battlefield. And if you think about that, the Stryker of today and the Abrams of today are in all respects different than their predecessors. They look the same, but in all other respects, these are increasingly lethal, increasingly capable, agile platforms.

And that gives them relevance to the war fight today and the war fight envisioned in the joint forces combat scenarios of the U.S. military. So those modernization upgrades will continue. And then the second category of army modernization is in their new start programs. And they've got a number of them as we look out into the horizon.

Again, given our capability set, given our proven long-term delivery, we deliver things on time at cost. That puts us in very good stead, along with the Technologies investments we've been making over the last four, five, six years. We are producing some really powerful platforms that will be critical to the future fight. So, I feel good about that.

On top of that, in the U.S., our ordinance and armaments business continues to grow. They are critical subcomponents, on almost every major weapons missile system in the U.S. So, these are very, very strong, high leverage, deep backlog, deep customer intimacy programs in the United States.

When you look outside the United States, we are continuing to see growth. We've got the Ajax program that has just begun its testing. So, we've got quite a bit of ways to go there.

And when you think about our European land system, just to give you a little perspective, there are over 7,000 in-service lab-type vehicles that come out of -- has come out of our European business. That installed base is enormous. And it's an enormous competitive advantage. Some of those systems are older and they need to be upgraded.

And we continue to see demand out of multiple parts of Europe. So, we expect ELS to grow and the world hasn't got any safer and that reality of the threat environment drives the demand. So, I hope that gives you a little bit of color here..

And our next question today comes from George Shapiro with Shapiro Research. Please go ahead..

Phebe, I noticed when you call out 0.96 book-to-bill, that's a gross number.

So, it looks like there were like $244 million of cancellations in the quarter, if you could specify what they actually were?.

So, look, we still have a very low default rate that's really not meaningful either in the moment for us or going forward. So, we're not going to give you a model by model. I can tell you nothing particularly surprised us. And it signifies for us at the moment, really nothing on a going-forward basis.

Does that help?.

Not as much as I'd like..

I'm sure. Do you think I want to start to backlog. You ..

I can figure, but I figured I'd ask anyway. And then my other question is the sequential backlog at Technologies dropped like 6% and this sector continued to disappoint again in revenues, as you mentioned. So, what's really going on there? I mean, I mean we've seen this for quite a while at this time..

So, look we had anticipated going into 2020 that we would see the growth that we had expected. COVID derailed it back a bit. But as we do our planning and think through how we are going to manage COVID going forward and the advance of COVID, at some point in the year, we see that growth in supported by that backlog.

And again, I think Jason gave you a very fulsome explanation of how we treat our backlog, and we do that differently than anybody else. And I think we sometimes get penalized for it, but we have the backlog to support growth that we are anticipating..

And George, just to add another fine point, and I alluded to this a little earlier, but I want to make sure it's clear. This business, in particular, I think, is the most relevant to pay attention to that total potential contract value versus the -- strictly the traditional firm-funded backlog.

And the reason is, I think I mentioned this earlier, this business year in and year out, 50% or more, and in fact, I think in 2020 was 60% of their annual orders and revenue value, comes out of that bucket of value that we articulate as IDIQ/options potential contract value.

So that's very different than the pure-play platform businesses that have the traditional contracting firm backlog and so on.

And so, I don't think it can be overlooked and in fact, it should be emphasized and should be the focal point of analysis on where that value is coming from and to Phebe's point, what's supportive of our expectations of growth for that business. .

But even Jason, on that basis, it was still down somewhat sequentially, if I looked at the total number that you gave..

So there's pieces of that, there's Mission Systems and GDIT in there. GDIT was actually up, I believe, in fact, I think in like 10% or 11%, between you and me.

And again, to reiterate what I discussed earlier, when we get these large programs, think of DOs as an example, it's a potential $4.4 billion program, not even a small fraction of that went into even that IDIQ bucket.

So major resolution of a significant headline award, so you're not yet seeing manifest in the backlog or even in the IDIQ bucket, but will over time support the fundamental underpinnings of the growth that we're alluding to, so a pretty conservative approach to it, but we think appropriate, and you'll see measured out over time as those programs progress..

Our next question today comes from Doug Harned at Bernstein. Please go ahead..

In the GDIT emission systems, I mean, once upon a time they were together and you split them up, and now they're coming back again. Could you talk a little bit about the evolution of your thinking about these businesses? And I know earlier, you talked about these integrated systems where they can work together.

And perhaps you could highlight some of the programs that of the programs that are opportunities for you in that kind of work?.

So we have -- look, you would expect us to remain agile to changing trends in the marketplace. And what we were observing is that while our services business and even the older incarnation of Mission Systems work closely together across a number of programs. Increasingly, in the last three years, we're seeing more and more of that.

They're working together on bids. They're submitting bids together. And that -- what I've liked about that, these are two separate businesses managed separately. They understand each other.

The guys who at Mission Systems know how to run their product portfolio, and the guys at GDIT know how to manage their IT work together business in the last three years, we're are opportunities for you in are two separate businesses managed separately. They services business.

And I think those areas of expertise, it's very important to keep them separate from a management point of view. To have them come together to work more seamlessly, we believe this reporting structure helped. But no other respects are we changing anything.

So we have a -- Howard, can give you a pretty definitive list, but Jason could give you a few of just the indicative kinds of programs we're looking at..

Doug, it's going to come across if we get into this in too much detail sounding like a bunch of alphabet soup just based on the nature of these businesses.

But suffice it to say, it is an increasing portfolio of opportunities where they're going to market together, including work on areas like supercomputing, which they're doing for NOAA, broader-based end-to-end enterprise network services, for example, like what they're working on for FAA, work on ground-based strategic deterrent, so on and so forth as well as a number of items for classified customers in FAA.

They've got work for the Air Force. Again, the list could go on and on, if I name the programs, it wouldn't necessarily mean anything because they're all code names, but it is an increasing portfolio where they are getting pull-through overlap and commonality in these offerings..

Okay. And then also one more thing that gets into the details here on programs.

If we go back to combat, Phebe, you talked about the trajectory here and flattening period, probably growth in 2023, where do you see that growth coming from? You mentioned some things, but if you had to say, this is why I'm confident in 2023 growth, would it be from some specific U.S.

programs? Would it be ELS? Could it be other international? What are the things that get you most confident on that longer-term trajectory?.

So look, we've got -- I think, longer term, we're looking at additional Stryker configurations. If you think about the Stryker, it is a very versatile very versatile platform. And we've seen the Army in working with us, finding innovative and increasingly more fight critical variance of Stryker.

So we have the SHORAD and like -- so we have the SHORAD system coming. We are looking at electronic warfare, medical. And there's a whole series of other increasingly, some of them sensitive, Stryker have -- their brigades have increased their numbers by about maybe 4%, 5%.

So each brigade is going to get over time more Strykers in these various configurations. So that's important to that program. We also see the Abrams continuing its modernization. And then we believe we have additional out-year international opportunities, largely through FMS. So we see some growth in Canada, Morocco, Poland, Czech Republic.

So all of that contributes -- that's all within the U.S. All of that contributes to our assumptions about growth in this portfolio. Outside the United States, I tried to give you some context about the large embedded fleet and the need to upgrade that fleet.

And that, along with the Spanish program, we may see some additional vehicles under that Spanish program, it's soon to call that. So we are really assuming that. But those are the elements that we are -- and by the way, there are new programs, developmental programs that are out for competition, and we like where we stand in those.

I will just say one thing about MPS. We developed all 12 prototypes for the testing and evaluation. And I believe we are the only ones to do so even within the COVID environment. That's a discipline will do for you, disciplined product excellence and manufacturing operating excellence. So that is the pipeline that we see in our future..

Operator, this is Mr. Rubel. We have time for one last question and I'll turn it back to you to do that and then give us final instructions..

Absolutely, sir. Today's final question comes from Ron Epstein with BofA. Please go ahead..

Sorry about that. I was on mute. So just maybe a bigger picture question. When we listen to the earnings calls of the group, every company tells us that they're well positioned relative to the defense budget. And I'm not saying you're not.

But my question is this, if the budget flattens with the change in administration and the deficit and so on and so forth, where do you expect to see some pressure in the budget? How do you dodge that? I mean it seems like you are, but like where would you not want to be? Does that make sense?.

Well, let me tell you, I never speak to anybody else's portfolio, but a couple of observations. It's been my experience that the best antidote for budget reductions, are well-performing, well-supported programs of record. We have all of those. Almost every single one of our programs are on schedule at or below cost.

That is when the budget tiers get their night out. Those are almost always the last fall. So that's, I think, a longer perspective to look at. But look, if you look at the U.S. Navy, submarines are its top priority and the Columbia in particular.

And why is that? It's because submarines remain a singular competitive advantage, a critical competitive advantage for the United States with near-peer competitors and peer competitors.

So I am quite confident that given my belief that the defense budget is driven by the threats that are key elements of our Marine group, growth will be nicely supported. We believe that the Navy will continue to need destroyers The DDG-51 is proving to be a very versatile program platform that can take additional missions.

And then with our auxiliary yard out at ASCO, with the exception of the nuclear powered carriers, and nuclear submarines, all these navy's fleets needs gas and the gas needs to get there safely, fastly and pumped efficiently, and that's our new oiled program.

So with respect to the Army, I gave you a little bit of color before, but the Army has been quite clear, even in a constrained budget. They will maintain their modernization priorities. They have been both privately and publicly quite articulate about that.

And then in terms of the shorter cycle businesses, in the old days, when you were dialing for dollars as a budget tier, you go to the O&M accounts and start cutting the IT budgets, that's not possible anymore. These IT systems are critical to the mission of these agencies, whether that's within DoD or outside DoD.

So that as a source of funds is increasingly less likely. And I think, frankly, insulated, given the criticality of IT and then within -- to the war fight and DoD into other missions. And then within our Mission Systems, there's a beauty to having a diverse portfolio of long franchise programs.

And I will tell you that we're quite secure in many of those franchise programs because they are, in some cases, unique and in some cases, tied to high-growth nationally critical areas to think against submarines. So, I think it's a height of hubris to assume that any organization is immune from constraints in budget.

But performance matters criticality to the war fit matters. And when I look across our portfolio, I'm pretty comfortable that we are in very good stead..

Thank you. I'd like to turn the call back over to Mr. Rubel for final remarks..

Thank you, everybody, for joining us today. And as a reminder, on our website, gd.com, you'll find the deck and our press release. And with that deck, you'll also find the data for the -- our outlook for 2021. If you have any additional questions, I can be reached at (703) 876-3117. Thank you again..

Thank you, sir. And this concludes today's conference call. We thank you all for attending today's presentation. You may disconnect your lines and have a wonderful day..