Earnings Call Transcript - GD Q4 2020

Operator, Operator

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.

Howard Rubel, Vice President of Investor Relations

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.

Phebe Novakovic, CEO

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, and that one is on us.

Jason Aiken, CFO

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, 2019, 2020 and 2021, 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.

Phebe Novakovic, CEO

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 of 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 outperforming many operating plans, 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.

Howard Rubel, Vice President of Investor Relations

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?

Operator, Operator

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

Jon Raviv, Analyst

Phebe, could you discuss your expectations for free cash flow conversion this year and into the future? I know you mentioned aiming for the end of the first quarter, but with the repo starting again in Q4 and an improved conversion rate this year, what does the big picture look like? Additionally, how do you plan to manage capital allocation as we progress through the year with debt repayments, and do you anticipate having any excess cash as well?

Phebe Novakovic, CEO

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

Jason Aiken, CFO

Yes. So Jon, 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 buoyed 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.

Phebe Novakovic, CEO

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, 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.

Operator, Operator

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

Seth Seifman, Analyst

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?

Phebe Novakovic, CEO

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?

Seth Seifman, Analyst

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?

Jason Aiken, CFO

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.

Operator, Operator

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

Cai von Rumohr, Analyst

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?

Phebe Novakovic, CEO

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 specifications. 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.

Cai von Rumohr, Analyst

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?

Phebe Novakovic, CEO

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 work with our FAA teammate and make 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 patterns we have and 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.

Operator, Operator

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

Robert Stallard, Analyst

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?

Phebe Novakovic, CEO

So the 650, as I've noted, continues 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 additive, not subtractive. So we believe that, that pattern will continue given the differentiation between the two airplanes. Does that help you?

Robert Stallard, Analyst

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?

Phebe Novakovic, CEO

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.

Operator, Operator

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

David Strauss, Analyst

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 that growth? And would you expect Marine's growth rate to reaccelerate once we get beyond 2021?

Phebe Novakovic, CEO

The growth can vary from year to year, but the trajectory is positive, supported by our backlog. In 2020, Colombia contributed 50% of that growth. To think about it simply, we are aiming for roughly $400 million to $500 million in annual growth. This is expected to accelerate as we increase production. For 2021, as I mentioned previously, there is potential for increased revenue, which will depend on the throughput in our shipyards, dictated by work cadence, scheduling, and availability. The potential for growth in 2021 hinges on these factors. You are correct that the comparison for this year reflects very strong growth, but there doesn’t seem to be any specific issues affecting this; it mainly comes down to timing and the mix of work.

David Strauss, Analyst

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?

Phebe Novakovic, CEO

No, the whole group.

David Strauss, Analyst

Okay, got it. Can you provide a breakdown of what you're seeing in the U.S. compared to Europe for Combat? Are there any challenges in Europe given the shutdowns we've observed there?

Phebe Novakovic, CEO

Let's discuss the U.S. We are recognized as the leading systems integrator for combat systems platforms in the country. Our key franchise programs are currently undergoing modernization and upgrades, which we expect to continue. Army modernization can be viewed in two ways. First, there is the upgrade of critical fighting vehicles and equipment to suit modern battlefields. The current Stryker and Abrams tanks, while visually similar to earlier versions, are fundamentally different in terms of lethality, capability, and agility. These enhancements ensure their relevance in today's warfare and future combat scenarios outlined by the U.S. military. The modernization upgrades will persist. Secondly, army modernization also includes new start programs, of which there are several on the horizon. With our capabilities and consistent track record of timely, cost-effective delivery, we are well-positioned, particularly given our technology investments in recent years. We are creating powerful platforms essential for future conflicts, which gives me confidence. Additionally, our ammunition and armaments business in the U.S. continues to expand, forming critical subcomponents in nearly every major missile system in the country. These programs have strong demand, significant backlog, and deep customer relationships. Internationally, we are also witnessing growth. The Ajax program has just commenced testing, indicating more progress ahead. Regarding our European land system, there are over 7,000 lab-type vehicles in service that have originated from our European operations, providing us with a substantial competitive advantage. Many of these systems are older and require upgrades, and we continue to see demand from various parts of Europe. We anticipate growth in European land systems, and given the current security challenges worldwide, the demand remains strong. I hope this provides additional insight.

Operator, Operator

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

George Shapiro, Analyst

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?

Phebe Novakovic, CEO

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?

George Shapiro, Analyst

Not as much as I'd like.

Phebe Novakovic, CEO

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

George Shapiro, Analyst

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, we've seen this for quite a while at this time.

Phebe Novakovic, CEO

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.

Jason Aiken, CFO

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 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.

George Shapiro, Analyst

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

Jason Aiken, CFO

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, and 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.

Operator, Operator

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

Doug Harned, Analyst

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 are opportunities for you in that kind of work?

Phebe Novakovic, CEO

We aim to remain responsive to changing market trends. Over the past three years, we have observed that our services business and Mission Systems have been collaborating increasingly on several programs. They are now working together on and submitting bids. I appreciate that these are two distinct businesses that operate independently but understand each other well. The team at Mission Systems is skilled in managing their product portfolio, while GDIT excels in managing its IT business. This collaboration on bids presents significant opportunities. It's crucial to maintain their expertise as separate entities from a management perspective, even as they work more seamlessly together. We believe this reporting structure supports that collaboration without making changes elsewhere. Howard can provide a definitive list, and Jason can also share examples of the programs we are considering.

Jason Aiken, CFO

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.

Doug Harned, Analyst

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?

Phebe Novakovic, CEO

We are looking at additional configurations for the Stryker in the long term. The Stryker is a highly adaptable platform, and the Army is collaborating with us to develop innovative and increasingly critical variants. We have the SHORAD system coming along, and we are also focusing on electronic warfare and medical applications. Several sensitive variants are in development, and the number of Strykers per brigade has increased by around 4% to 5%. Over time, each brigade will receive more Strykers in various configurations, which is significant for the program. The Abrams is also continuing its modernization, and we expect additional international opportunities in the coming years, mainly through FMS. We anticipate growth in Canada, Morocco, Poland, and the Czech Republic, all of which factor into our growth assumptions for this portfolio. Globally, the large embedded fleet requires upgrades, and we might see more vehicles included in the Spanish program soon. We are optimistic about these elements, and there are also new developmental programs currently open for competition where we feel well-positioned. Regarding MPS, we have developed all 12 prototypes for testing and evaluation, and I believe we are the only ones to achieve this even during the COVID environment. This showcases our commitment to disciplined product and manufacturing excellence, which shapes our future pipeline.

Howard Rubel, Vice President of Investor Relations

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.

Operator, Operator

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

Ron Epstein, Analyst

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?

Phebe Novakovic, CEO

I don’t typically comment on others' portfolios, but I have some observations. In my experience, well-performing and well-supported programs tend to be the best defense against budget cuts. Almost all of our programs are on track and staying within budget, which makes them less likely to be affected in tough times. If we take a broader view, the U.S. Navy prioritizes submarines, particularly the Columbia class, as they provide a significant competitive edge against peer competitors. I believe that the defense budget will align with the threats relevant to our Marine group, thus supporting growth. The Navy continues to require destroyers, and the DDG-51 is demonstrating its versatility for added missions. Furthermore, our auxiliary yard at ASCO indicates that aside from nuclear carriers and submarines, the navy’s fleets rely on gas, which needs to be delivered safely and efficiently through our new oiler program. Regarding the Army, they have been vocal about maintaining their modernization priorities even within a tight budget. In terms of shorter cycle businesses, previous budget cuts typically targeted IT budgets within O&M accounts; however, that is no longer feasible as these IT systems are crucial for the mission of various agencies, both within the DoD and beyond. As a funding source, that’s becoming less likely to face cuts, considering the importance of IT in warfighting and other missions. Additionally, our Mission Systems benefit from having a diverse portfolio of established programs. We feel confident about many of these programs, as some are unique and linked to high-growth, nationally critical areas, particularly concerning submarines. While I think it’s overly optimistic to believe any organization is immune to budget constraints, performance and mission criticality do play vital roles. Looking at our portfolio, I feel reassured about our position.

Operator, Operator

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

Howard Rubel, Vice President of Investor Relations

Thank you all for joining us today. As a reminder, you can find the presentation and our press release on our website, gd.com. The presentation also contains our outlook for 2021. If you have any further questions, feel free to contact me at (703) 876-3117. Thank you once again.

Operator, Operator

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.