00:00Andrew is in this place in its evolution, a life cycle, where you're trying to manage winning new contracts and
00:07put out new technology and ramp what's already out there.
00:10Just talk about that trio of news you put out and how you pulled it off.
00:15Yeah, so, you know, we are extremely excited to be awarded this production contract for the Air Force Loyal Wingman
00:23fighter jet.
00:24And, you know, this is really about taking it from prototype technology, which we've been validating.
00:29We've been flying multiple times a day into now an operational capability.
00:34So this is both the hardware side where we've already started to produce these out of our facility in Ohio,
00:40our Arsenal One facility.
00:41And we are now confirmed to move this into a production aircraft. Right.
00:47So really start to ramp this next year. So it's super exciting. But that that challenge is real. Right.
00:52And we know the defense industry has had struggles ramping production to the demand we're seeing around the world.
00:58But this is something we've systematically invested in.
01:01And everything we're showing is that we're hitting every ramp that we've promised to hit.
01:06There's like the established systems fury and there is the next phase of product and contract.
01:13How difficult a decision is it to assign resource to know where to put teams and capital right now?
01:22You know, we're seeing demand through the roof across the board. Right.
01:26And this is everything from weapons programs, aircraft programs, you name it.
01:31We're seeing just a massively increased demand across the board.
01:35And but we've been able to scale incredibly well. Right.
01:38We've doubled headcount every year. You know, we are continuing to be able to resource these successfully. Right.
01:45And I think we're just an incredibly attractive place to work.
01:48So for us, the challenge isn't really, you know, where do we put resources?
01:51It's just, you know, running through it as fast as we can, which we've demonstrated the ability to do year
01:56over year for the past near decade now.
01:58So that part we're not as concerned with. But, you know, I think a huge credit to the Air Force
02:03on this.
02:04You know, they have decided to move out. And I think the fastest fighter jet programs is the 1950s.
02:09This is just an immensely fast pace. And I think it shows that the government can move when it wants
02:15to.
02:15And then industry can respond to that pace.
02:18And it's just an incredibly exciting time to be able to deliver these capabilities.
02:24How do wins like this translate to the to the revenue run rate?
02:27You know, they're big announcements, big deals.
02:30But for the financials of this company, it's immediate or it's a distant opportunity.
02:36These types of programs give, you know, just this amazing base of growth for the next five years.
02:42Right. And so this is about how do we lock in that growth and success we've seen to date into
02:48something that's going to be producing and delivering for the next decade?
02:53And that that's something that I think really, you know, when we look at the financials for the out years,
02:58when we stack in all the types of big programs that we're working on now,
03:02it more or less gives us an extremely solid base that we're going to continue to grow on and compound
03:09on in the future.
03:11You know, Brian, I appreciate this is about autonomous fighters.
03:15Every time you come on the program, I get a flood of requests to ask you about subterranean.
03:20And I actually I get the sense that you don't it's not even that exciting to you guys.
03:24So what are the next domains, the next big bets that you probably can't talk as much about, but everyone
03:30wants me to ask you about?
03:33Yeah, we're doing, you know, an immense amount of work in space.
03:36You know, there's a huge number of areas where, you know, this is becoming the next generation warfighting domain.
03:42You know, I think the Space Force is talking a lot more about the adversarial activities that Russia and China
03:47are doing regularly.
03:48You know, they are constantly maneuvering around space, threatening the U.S.'s and allies' satellites.
03:53And I think there was an open source report of Russia maneuvering against a satellite that's a commercial satellite that's
03:59used to provide intelligence to the Ukrainians.
04:02So this is an area that's, you know, an active growth area that is incredibly important for the U.S.
04:07to have leadership in and deter the adversarial activities that, you know, our adversaries are doing every day.
04:14The other area we're seeing an immense amount of growth in is on the weapon side.
04:19You know, you can read all the reports.
04:21Everyone is well aware now of what's been sort of a poorly kept secret for a long time, which is
04:26the U.S. has amazing weapons, right?
04:28Like that's that's been obviously true. But the inability to produce these at scale to supply our allies, the huge
04:34delays that exist in delivering these is a major strategic issue for the U.S.
04:38and our allies. And so that is translated, you know, out of the conflict in Iran into, you know,
04:44an immense amount of demand to bring build up next generation weapons capabilities that can be produced at scale.
04:52So looking at the Iran conflict, you know, what is the lesson that you think is learned here for the
04:57Pentagon on these types of technologies and war preparedness?
05:03Yeah. So I think, you know, there's a lot of different lessons you can take away.
05:07But one of the biggest ones was really, you know, you look at the number of strikes, the number of
05:12munitions consumed in the first 30 days of the conflict.
05:15It was something around 10 times the amount we consumed in the entirety of the Gulf War, right?
05:21And we're shooting, you know, nearly a decade of tomahawk production in a week.
05:26Like these are really serious quantities of munitions consumed in these modern conflicts.
05:31And it parallels what has been seen in every conflict that's played out in the last several years, you know,
05:37particularly as you look at Ukraine,
05:38where the amount of munitions consumed is staggering.
05:40So I think this question of how do you actually get the inventory, the stockpiles, and have the producibility that
05:48you need, that becomes one of the critical questions.
05:51And, you know, the U.S., again, is amazing weapons.
05:54But for the vast majority of scenarios, you can deal with things that are sort of lower priced and more
06:01fit for purpose and the types of, you know, uses you're realistically going to have
06:05and what you need to convey to your adversaries, you have the resiliency to do.
06:09And so that is probably the biggest shift I've seen out of this conflict, which is really looking at and
06:16accelerating how to get to more producible capabilities quickly.
06:21And, you know, we've got, you know, maybe a half dozen or more different programs that have initiated out of
06:27that.
06:28Brian, we just have 30 seconds.
06:30You've said Arsenal 2 could be built outside of the United States.
06:35Big market for you is Australia.
06:37Taiwan is a big factor in Andrew's guiding mission.
06:41Are those realistic locations?
06:44Yeah, I mean, we have, I think the reality in the world is that our allies are going to look
06:52to have more control over their production and supply of weapons.
06:54I think that's correct.
06:55And I think production capacity for the allied nations is a contribution in and of itself.
07:00And so I think for the administration, they want the allies to be prepared to contribute.
07:05So the idea that they are also producing and contributing to the allied stockpiles is hugely advantageous.
07:12I think that's been a very consistent message from the administration.
07:15We've seen immense support for that.
07:16You know, where we put it exactly, you know, we have a factory up and running in Sydney, Australia, making
07:21Ghost Shark.
07:22And then we're constantly evaluating the right way to help any given country on what they need, how they want
07:28us to work with their local partners and industry.
07:30And so it's a very nuanced process.
07:33But the reality is we think of allied production as a critical dimension of providing that deterrence that we're here
07:40to do.
07:40Thank you very much.
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