“So for F-35, we do have. I'm sorry, for Aeronautics in total right now, the outlook for their margins does assume lower net profit adjustments, and that's called an apples to apples basis.”

In context

“do expect a benefit from taxes with lower R&D capitalization as that's coming down, and we expect a little bit of benefit from, I'll call it cash based net income. All that taken together takes us from $6.1 billion to the $6.7 billion midpoint. So those are the key drivers of free cash flow for 2025. Operator: The next question comes from Scott Deuschle of Deutsche Bank. Your line is open. Scott Deuschle: Hey, thanks, Jay. It looks like if you're guiding. Looks like you're guiding Aeronautics margins down about 20 basis points year-over-year in 2025. If I add back those unplanned charges to the 2024 base. Jay Malave: Yes. Scott Deuschle: Can you talk a bit about what drives that underlying margin decline, particularly given that you are on these newer contracts for F-35. Jay Malave: Yes. So for F-35, we do have. I'm sorry, for Aeronautics in total right now, the outlook for their margins does assume lower net profit adjustments, and that's called an apples to apples basis. So excluding the impact of the $555 million in the C-5 adjustment in 2024, profit adjustments, there are declining, there is a mixed benefit. But right now the net profit adjustments offset that, and that's what drives the margins down from 10.2 to around 10. We also have classified growth, which is just a mixed headwind there, but that's -- we've got some benefits from F-16 margins as well. But bottom line, again, it comes back to the net profit adjustments being lower. Operator: The next question comes from Matt Akers with Wells Fargo. Your line is open. Matthew Akers: Yes. Hey, guys, good morning. Thanks for the question. I guess a couple on F-35, you talked a little bit about the progress toward Tech Refresh 3. What exactly is left to get? Kind of the final withhold. How big is that?”