“So the tariffs that we are going to see in 2026 are largely based on cash that we expended in 2025. It will be higher than in 2025, so higher than the $41 million, but those tariffs are contemplated in our 2026 margins.”

In context

“Khanna at TD Cowen. Gautam Khanna: Good. You made a reference to a tariff impact at Gulfstream at Aero. I was wondering how much you guys absorbed in '25 and what are you expecting in '26? If you could frame that for us. Danny Deep: Yeah. Sure. Sure. So the impact of tariffs in 2025 was $41 million. But let me help you a little bit with tariff as best I can. So there's a cash outlay when the tariff is imposed when the material is coming into the country. But the cost to earnings happens at a different point. As you know, we recognize revenue and earnings when we actually deliver the plane. And that's also when we recognize the tariff impact. And so now there's this other element where how much of that can we get back in terms of some sort of reimbursement, and that's difficult to predict. So the tariffs that we are going to see in 2026 are largely based on cash that we expended in 2025. It will be higher than in 2025, so higher than the $41 million, but those tariffs are contemplated in our 2026 margins. Gautam Khanna: Got you. Thank you. That's helpful. And if we're gonna shift to Marine, the increase in 18% sequentially. How much is that at the yard itself in terms of productivity versus in the supply because historically, guys have called out the supply chain kind of being a constraint. I'm just wondering how that has improved. Relative to before. Danny Deep: Yeah. Look. I mean, I don't know how to apportion both of those impacts, but they're both impactful on the margins. I think as Phebe said, when we get the supply chain operating at a full cadence and at full efficiency, that will have an impact on margins. And then equally so, our own productivity and focus on execution. As we continue to improve and we're on that path, we should expect to see improvements in margins. So we think”