Neil Mitchill: Thanks, Myles. Good morning. Let me start, let me maybe start to frame the answer to that question with a little bit of an updated walk between ‘23 and ‘25 on free cash flow to get to the $7.5 billion. And then I’ll talk about, you know, what obviously offset the reduction in the profit as part of that. So, as we look from ‘23 of $5.5 billion, that $2 billion increase is going to come principally from, you know, what I would call operational growth, about $4.8 billion, $2.9 billion of which is going to come from the pre-tax segment operating profit, and you pointed out that, that will be lower than our prior guide, and that’s around the midpoint. The remaining growth is going to come from working capital improvement, about $2.2 billion, about half of which we will deal with here in ‘24 as we look to hold our inventory flat.
So our ‘23 headwind operationally was about $600 million, so we’re looking year-over-year to improve that. And then we’ll have about a half of the, I’m sorry, $400 million of CapEx between ‘23 and ‘25, so that’ll be a headwind. And then I just talked about the $1.5 billion powdered metal impact and about $1 billion headwind that split pretty evenly between — sorry pretty evenly between interest and improvement in taxes and then finally a few $100 million of pension headwind. All of that should get you to $7.5 billion. So what’s changed as we look out to 2025, there’s been really three things that are different. The first is we’ve got about $1 billion net of tax lower operating profit baked into this long-term guide. But that’s been offset by about $700 million of improvement in taxes, most notably on the back of improvements in our R&D position, as well as a $200 million based on the assumptions we see today with respect to our pension outlays.
And then a little bit of additional working capital. So those are the key drivers.
Chris Calio: And I’ll talk to you now about the full life incorporations. As we said upfront, I think we had made this commitment early on in September, October timeframe, full life powder metal parts in OE, so at our customers final assembly lines, starting this year. So that’s a good thing. Keep in mind the OE engines have the latest build standard and so when you add in the full life parts to those you get the maximum time on wing for the customers and also keep in mind that means that the full life parts will go into our spare engines, which are going out to lift the fleet again, maximizing the time on the wing. On the MRO side, what we said was we were going to start the incorporation in Q2 of this year. We actually started that a little bit earlier.
We’ve found opportunities to put full life parts into MRO where we think it makes the most sense from a time on link perspective. As we said early on in the year, we’re not going to get all of our shop visits with full life parts. We’re going to ramp throughout the year where we don’t incorporate the full life parts into MRO. We’re going to continue to obviously inspect those parts with the angle scan inspection that we developed and they will be put back into service until the next inspection interval. And keep in mind, one of the things that we’ve been doing is just looking at the build standard and the interval for each of these engines that are coming in. There are opportunities to sort of match up just based on the condition of the engine and where it is and where it flies in terms of the environment.
A part that’s been inspected that’s not at full life, match it up with an engine that’s going to be coming in for another reason around that same time, so you’re not actually driving you know an incremental visit. So again that’s sort of the algorithm that we’re kind of going through each and every day with the Pratt team to sort of maximize our allocation in the full life parts. But the MRO will be a ramp throughout the year. I think ultimately we’ll get to roughly the same place that we had assumed we would had we started in Q2, but it’ll be a ramp throughout the year. And all of that’s been factored into our outlook.
Myles Walton: Thank you.
Operator: Thank you. Our next question comes from the line of Peter Arment of Baird. Please go ahead, Peter.
Peter Arment: Thanks. Good morning, everyone. Hey, Chris, on Raytheon, you talked about some of the headwinds. Could you maybe give us a little more color on just where we are in terms of the profile of the fixed price development programs and whether we’re peaking now? And then kind of related to all this just is when should we start to see more of that mixed shifts from more of the FMS that you kind of talked about where we could see some better pricing flow in terms? Thanks.
Chris Calio: Yes, okay. Thanks Peter. So again as we talked about the productivity issues at Raytheon, about 70%, as we said upfront, were in the fixed price development programs. And I’ll characterize some of these, Peter, as in some cases these are contracts that we took on that maybe weren’t in our core capability suite, and we signed up for requirements and other specifications that were really, really difficult. And so it’s taken us some time to continue to work through those. In some cases, what we’re doing, Peter, is we’re taking subject matter experts from across the company and just adding resources to these programs. It adds a little bit of expense, obviously, but I think in the long-term, it gets the capabilities of the customer faster and ultimately is better financially for us and for the customer.
