“For our outlook in 2025, what's implied in there is about one day which essentially offsets the growth that we're going to see from we would otherwise see in working capital.”

In context

“l Markets. Your line is open. Ken Herbert: Yes, hi Good morning. Jay Malave: Morning. Ken Herbert: Hey, Jay. In the past you've talked about working capital and specifically the opportunity there to improve the free cash flow. Can you provide a little bit more on what's implied in the 2025 guide for working capital improvement? And has anything structurally changed now as you look at the portfolio and the opportunity, as you've talked about taking days out and the ability to eventually or continue to drive towards sort of pre pandemic levels over time. Jay Malave: Sure. You look at. I'll start with maybe 2024. We had a good year in 2024 in spite of some of the headwinds that we faced. We reduced our working capital days by a couple and we're in the mid-30s as far as cash conversion cycle. For our outlook in 2025, what's implied in there is about one day which essentially offsets the growth that we're going to see from we would otherwise see in working capital. So what we're trying to do here is just prevent it from being a use of cash and have it be neutral. The opportunity set obviously would be to drive beyond one day and there's still opportunity I talked about before, particularly in our contract assets, our unbilled receivable. There's some opportunity there as we work through on the F-35, both in production as well as sustainment, but there's really opportunities across the portfolio. Sikorsky has a number of opportunities there on their programs as well as even segments Space and MFC, those are outstanding working capital businesses on a standalone basis. But even so, there's opportunity in the contract assets there. So I would expect in the years to come that we still have opportunity to continue to drive asset productivity there and th”