Huntington Ingalls Industries (HII) 8 Nov 172017 Q3 Earnings call transcript

Company Profile

Participants

Dwayne Blake	Vice President of Investor Relations
Mike Petters	President and Chief Executive Officer
Chris Kastner	Executive Vice President of Business Management and Chief Financial Officer
Doug Harned	Bernstein
Carter Copeland	Melius Research
Sam Pearlstein	Wells Fargo
Joseph DeNardi	Stifel Nicolaus
John Raviv	Citi
Gautam Khanna	Cowen and Company
Pete Skibitski	Drexel Hamilton
George Shapiro	Shapiro Research
Rob Spingarn	Credit Suisse

Call transcript

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Operator

Good day, ladies and gentlemen. And welcome to the Third Quarter 2017 Huntington Ingalls Industries’ Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time [Operator instructions].

As a reminder, this conference is being recorded. to President like Mr. Investor now would introduce of Vice Relations, I Blake. Dwayne Please go ahead.

Dwayne Blake

morning, the and today welcome third Andrew. President Officer and Thanks, Good Executive Kastner, to Officer. President Chief earnings Vice call. and Chris Petters, Business quarter conference Huntington Financial With Mike us Management are of and Executive Chief XXXX Industries’ Ingalls

Safe for our view federal huntingtoningalls.com presentation, access link CEO, the anticipated and call and facts, Web measures. are historical law. Relations on measures, segment and a these As of actual are results. pursuant may the plan included the cause comparable refer as supplement metrics are Mike? of made I’ll refer Mike that site. differ. to reminder, We a the With release. Please presentation from GAAP the the to to our including well of Investor click and results certain in statements Reconciliations our will presentation the President comments. on filings that, to our made Web to at description non-GAAP today, not are Harbor posted during site to results slides earnings is our posted measures to as our remarks Actual our the of some appendix forward-looking call turn address earnings securities factors over the the in call Mike Petters. in that that statements provisions certain financial today’s Also, materially Please adjusted considered and of to vary Chris may SEC to

Mike Petters

to we call. are XX,XXX that quarter met results expectations. nearly by once solid of commitments for joining safety, results Thanks, Dwayne. Good third quality, everyone. cost morning, schedule us reported of our function and unwavering These team on employees. our the again today’s a thanks Today, And

billion quarter billion million of received So of refueling $XX the USS EPS contract contract was of the $X.XX $X let quarter. for we from last and awards, year for approximately overhaul three cash and slide diluted Washington. complex starting new XX quarter, Operating $X.XX CVM presentation. were from me up and the George highlights Sales was including on $X.X the the share billion XX.X% in for some

a quarterly Yesterday, quarter to billion As we approximately which result, was $XX $X.XX XX% the Board at approved dividend of backlog per our $X.XX of that is from billion share in end per Directors our funded. announced increase the $XX of share.

the $X.X from shareholders. return executing also continue to cash substantially to the We $X.X billion program allow decisions of billion all to commitment XXXX free to path our authority most XXXX. and October our share flow XXXX to increased recent us our repurchase October extended term These of to from

Washington. in activities Regarding

committees the with the Congress for fiscal progress pleased building on the by are our We encouraged the by budget, XXXX Defense and programs support made various being builds. and in ship remain

the will months under order we a the defense resolution, in appropriations and and find remain Congress authorization complete to ahead. operating ourselves that optimistic regular While currently we process return continuing

important submarines cause However, yet is times because degree determine as continues Act numerous critically uncertainty the I to of other the priorities. have how the shipbuilding base, Congress shipbuilding to without a said Columbia Control industrial Budget be entire before for class funded impacting great will

high multi-ship submarines. would destroyers Virginia Burke-class cost material production in ship achieved and economic XXXX capture Ford and LXR savings class program allow year we budget, us procurement for accelerations significant order to class material administration Arleigh purchases. amphibi These inherent the As efficiencies ships, builds leveraging multi Aircraft class quantity for the to actions purchase and by lives of strategies, continue Carries, advocate the fiscal

as to quarter business ship the trials on provide segments. end year. of XX acceptance The very points navy they completed completed delivered Portland also of Johnson track Now, to DDG and few our Ralph deliver mid-September. Navy on interest the team by had trials in the a the acceptance XXX I’ll busy and Ingalls to LPD on a is

launched focuses and XAAA Delbert Construction XX% to approximately Kennedy XXX XX% Fitzgerald. is submarine overall. D. repair on In the USS progressing to addition, At News, Black, DDG and is Ingalls the selected were aircraft their LHA outfitting transition team carrier very continues assembly complete as in and period complete a Newport programs. Christen the team and XX DDG through XX on structurally unit well to dry-dock. CDM damage work

achieved first is This being teams Aircraft feel name. for of has the distinction carrier, the Xth bear the Ford-class the CVN addition, vessel Navy milestone a it cut grade the that third Enterprise. of to U.S. with significant In XX and

On SSN The capturing boat Technical early be to execute are businesses working to Solutions. complete XXX News units. very Block separate the contracts effectively turning Virginia-class seven Xth They well. while the key by of submarine be and the ramps activity delivered program the on Indiana, expected is four business integration through IV to continues Newport to And year, team into boats. next

programs perform So well. our continue in to closing

are financial on And strategy cash results Our solid. remains our track. deployment

long remain our committed maintaining employees. our We sustainable shareholders culture and products turn, produces customers, and quality a and for which affordable services on creates are for in value and stability safety, focus term to quality, our for high schedule, cost that our we

call to on my concludes for I Kastner remarks now the some over remarks. Chris? that financials. Chris So And the turn will

Chris Kastner

primarily over acquisition in of $X.XX in for XXXX, volume Today, our quarter with few contributed four morning. consolidated third the third quarter good to the due the outstanding and resolution of operating with third will and Technical approximately margin quarter which million. at performance end driven XXXX, the our increased and of were of contract million and XX of $XXX quarter at Ingalls segment or revenues Operating the receivable higher of points. reversal and primarily XX billion basis income presentation, a review the results of on for as strong Starting $XX News well portion XXX the slide million Camber, increased consolidated Newport Newport XX% and Mike on News, of Solutions, XX.X% results, year. as a by XX.X% CVN a of $XX FAS/CAS Thanks, allowance Adjustment. increased an you accounts the quarter changes These I increases updates at provide increased from

we expenditures Cash capital XXXX. cash expenditures $XX approximately Turning to slide in presentation. quarter free of year million to million the were million. the the quarter were compared and capital in X.X% for expenditures of five and to million revenues. be in was $XX Year-to-date, quarter operations the from of Capital of flow $X $XX third the expect X% was revenues

for $XXX fiscal during of million. to Additionally, XXXX the pension our our contributions quarter, million we completing $XXX of plans, year discretionary made qualified contributions

our We or shares $X.XX XXX,XXX bringing $XX of repurchased million, balance dividends million. per quarter end also to the at in a approximately paid $XXX share and cash of cost million quarter $XX

As and cash fiscal repurchase Mike by $X.XX through continued our per demonstrating authority $X quarterly flow share to share year substantially our mentioned, our Board dividend increased to commitment billion, expanded our free all shareholders XXXX. returning XX% to

volumes of the XXX the the $X $XX on segment program. XX.X% NSC results quarter in Ingalls of same the segment slide the higher on to offset LPD was and presentation. million NSC million and from program. due million were program, points by primarily revenues LPD retirement year-over-year programs, the margin the driven and income higher in lower by quarter on up Turning partially retirement offset basis risk by X.X% LHA the operating $XXX period increased of volume to last respectively, on partially year, Ingalls six on lower risk

seven by aircraft revenues billion and Moving higher from volumes last on the of carriers slide submarines. to quarter Newport driven presentation, X.X% of News increased in year, period same the $X the

income up margin risk of retirement VCS in Operating the $XX primarily Newport XX quarter partially the by was XXX operating contract of lower and on year-over-year, on operating points operating with due $XX outstanding News to basis offset was Block resolution million X.X%. XX, CVN income up the million changes III. margin and

operating million Camber fleet the Technical slide operating presentation. increased Now due higher year, the from acquisition and of of primarily year-over-year last and same the of QX accounts the quarter was support. XX% income allowance the related receivable $XXX XXXX. $XX to to were million primarily bankruptcy million, million Solutions X.X% to the in eight X.X% solutions of period due in These volumes to technical Westinghouse increases the Revenues margin compared and filing. $XX reversal and increased on of $XX

Now, on some for other items an for XXXX. update

a would of couple of to rate income million $X XX%. and Also, been adjustment tax $XXX to FAS/CAS you state expense like million we’ve in expense expect give approximately update We $XX tax million, tracking. to an on effective I our income range interest million, to non-current of XX% $XX items be the the

other released mortality effective that that guidance final First, the will on plans the September, defined-benefit in and late impact in IRS new XXXX. tables our regulations become will

We these results currently impact contributions, evaluating quarter provide our our are expected the the future during on we’ll updates call. and of fourth

investment Fitch, HII Second, Moody's rating joined grade. S&P in and recently

we remarks. over I'll call to opportunities. my With back turn the continue concludes Q&A. upgrade, refinance potential analyze the to That for Dwayne

Dwayne Blake

Chris. Thanks,

yourself to follow-up, to initial possible. to call, question Andrew, queue reminder through people over so a to one one and I'll on Q&A. as you manage can please the many turn As everyone the it we limit as get the

Operator

of Doug from Harned And our Instructions]. you with the Bernstein. [Operator Thank comes first line question

Your line open. is now

Doug Harned

the place for investment where continue? you expect long X% CapEx about to forecast. for to you’ve revenue when can and you is But a You at you talk how see previously level, your are investments at levels X% forward, what that’s now being should going of these we what to capital future look

Chris Kastner

for where capital the being we definitely the X% XXXX. need our that should we now X% potential sales for or additional XXXX part indicate our and of at said, opportunities of back X.X% X.X% Look, year, make to $X.X capital That something from that’s And the that future programs we investments end it's XXXX. I’ve be that’s to we of continued in billion evaluate. capital would all forecast made around we commitment to

Mike Petters

the see to that we we ship I addition we opportunity in invest would sustainable Doug, the do to obviously we we capital add in And that, supports XXX navy that have If would need programmed. actually and and navy. expand that, just already that plan the have go

Doug Harned

of budget investments, the the the people And and the in support obviously, gone at in getting up be size how work do on with well. which of through scale. broad of lot real in growing When how Navy have these a talking on the obviously But scenarios you for we've give pretty there that, some very a potentially the Can you Huntington Congress. hill. you this see seems you not and today, basically challenges But see the a us discussions Ingalls? give for Navy. I'm discussions the you unfolding look to that your can difficult you're sense you taking timing, talk prospects your us sense when for about saying got

Mike Petters

Well, I of big think kind everywhere, that's right. question the

the discussions Budget mean I -- modeling out there, of out get is to Budget question be you going be general longer just in to I understood challenging. well a the Budget Control it's we've the the not for has The on that's these Act Control I think Act think because good depending be. law to year and done recognition It's through we're the years more career, couple be But about every that in continues decisions programs -- process that -- bit the on that's as of in good Navy been setting how you're And support still through from. of a that Act top we've get sustainable. budget place larger, of start means that frankly, next my environment any biggest unusual and the the my that's two pretty what to strategic problem with figure able view place had about to with the budget land a And and the needs Control to make not how and to would out. corner. every

to next bit in we -- us Navy becomes really what's month. long and decisions, our can't sure to next back really you the or we're not. place got else the budget the What be sure tracks in the way it the about there's they're has up actually a as executing four the out at the come aren't becomes branch. problems, that is this the for budget Control to this the meantime, discussion current for in with that current for is always the nothing we're is follow. have is three can well, and budget hill But took what to the cycle is between support us a in going step year the that XXXX hard creating and executive after. not in those is look budget our the Pentagon able to budget remind we things. is predict because on But to it's a going and or as debate. We for say okay And capital cycle in we the able branch program In still it here served going and because all a the the have beginning I Pentagon the forward investment well, year investment the Act hill great, is those where what in process do? since of if very binary it's hard particular began that executive BCA has And Budget front would is XXXX So make going-on big reality they to and causes whether to

smartest and to and program program as Doing there's way that smartest on And program-by-program, be engage of view is some it's aircraft going LPD through all earlier, to a to buy a accelerating get to through carriers. program find talk activity-by-activity. smartest this said a LXR the going level, it, but carriers -- it be way the to modeling the amphibs. the we to line we'll buy aircraft about be won't is connecting way is a to the we how as the to that I procurement buy multi-ship Our that it way is strategic result, basically have. at Doing the programs ship-by-ship, a on production way

well, be in at a to discussions. appropriate And I government there's having turn can always than said would of we how end, the I faster executing invest lot But the because budgets And a So we're those discussions. funding. we are those the reception proof the will the as say, can out. before, lot

we’ll ahead from an appropriation be positioned standpoint. well need of invest the So to

Operator

Melius comes the Research. from of question next our And with line Carter Copeland

Your line now open. is

Carter Copeland

weighed Just Camber, the about were to of contribution profit by wanted the performance? sense it looks couple integration I And strip-out on like there. with you any there? Just reversal down restructuring One expenses anyway flat technical solutions an if the trying on -- wondered associated if from Westinghouse get questions. was and in that to a basis underlying operating you of and the

Mike Petters

market, think Not any at making breakeven by significant digit, out restructuring as the been significantly. UPI current or efforts. integration starting material We about low driven still a so single of that and we’re SNX, at at or no investments businesses

Carter Copeland

amount like us time. in opportunity profitability on of given the those NSC LPD today. of And perform then significant And Is Do most it just are DDG where of more wondered underlying the another for you had your upside up? some absolute seems of it think that's terms one opportunity risk on that's that if give shifting, registers is you how well a the or right? you that’s or net programs metering just that that way if of increasingly period in Engels, transition It can seems like terms there. maybe insight and

Mike Petters

usually at which guess the I What it. of quite we're an seeing of look this program, that's to there, that’s way. we’re is towards we a moving point I'm indication the backend it doing depending frankly, sure what at look the not upon but way backend NSC competition is at new of very doing We're very a LXR. on round happens Destroyer there. a we're there, heading into well that very LPD we're mature of program, program. with we’re the on well program that and

we've coming -- heading on are round lessons building We okay, The Frigate X new going LHA of got into a from and is LHA competition eight X a that. new off learned behind or program.

look maturity the its at program of overall each relative right. terms programs of that to So those in we class, of

one of backend in your of on risk look pretty block News. we’re look should the and register should you’re buys, opportunity When one buys, on one the Newport instance, in for block the look you’re our register And front the programs. the we that. lot the So the -- there When at program of of of is submarine good. risk that's end way a your of every

you for the the And there new back sure so what if other the happens start coming the through to you’re of are with LPD, like NSC, way connection because not we're we of the program. to move end LXR. program, really

Operator

Pearlstein from question the Sam Wells with next our comes of line And Fargo.

now Your line open. is

Sam Pearlstein

just can I about you little you just challenges even actually made just if ahead approach afford Mike, Can Frigate with [indiscernible] some how on this differently can about do do that program and the given program. Navy And comment how bit to just you the about that it. what you of like, the with prior think opportunity follow-up just Just a with program? looks go Ingalls? talk the

Mike Petters

Yes, lot in questions there.

X over seen have do the to starting recognized pound a last clean list the the of trying XX in stack wish it off think First jam from area is that to pace several probably want then Act, get's probably by of is of beginning and happens program that one a they’ve and to that ship we in years Control of standpoint. that a Navy those of is -- the that affected how budget. of BCA, a going the one we’ve probably the with resolved requirements and programs, creating what a is bubble this to budget this in whiteboard the of of thing this is do Budget programs those in all, sheet I in pounds What what

made not parent And because the to figured that’s really parent interesting you're exactly the that design is to you're requirements The the great white early board have I with out decision going ago out that class what LXR that’s really makes Destroyer means do way one and That’s wish think the a that what list have LXR LPD That’s connection hall. they that’s to a the proven. several you already makes this of the work, Navy the LPD to the is the stuff think with program is with we're between on to Virginia I on where design. a business. for thing, Frigate a start going to not have start, that a requirements, starting place Navy a of sheet is is And not work. them paper. program blank going the great but is of years been Frigate

that. come make more if a of the it guys can do see requirements with us us. design to It's of investment, the we pretty right for we that have accelerate that production You ships. know in to We we and capability those that do parent how lane of for create kind exciting how more we then our That’s ship. can meet and

is point. is biggest fleet and view issue that in any time this Our program, there at out to the the

so the way that’s And we’re prosecuting it.

Sam Pearlstein

And terms and size News, Enterprise the the Lincoln? can just in contract with changes you of resolution Newport that Chris, on

Mike Petters

which to those and those growth activity. our $XX recognition There Sure. time work simply time approximately million, COH ships, is of with were and deal happens from on

the recognition So of growth was not within it or significant it work price. activity just litigation, was a claim

Operator

Joseph comes of from line question next our And Stifel. with DeNardi the

Your line is now open.

Joseph DeNardi

much, strong cited bit parse margin, performance in too out commentary strong a little your you Ingalls. maybe To

You Newport, guess about didn’t under X%. up and back $XX were looks margins about like there, million of mentioned I that

performance about that can what just So you're there? talk seeing yard of and you

Mike Petters

well programs. we're at So News, Newport very all of executing across

CVN put of beginning the because the you we're delay an if new the beginning the with the place Columbia of first in that, bunch history on sequestration a in the a today we’re where and News there go of even of programs. into the are XX, at back RCOH, We're block class. Newport beginning of half this, of the we’re sitting of they’re ahead carrier whole four, We of of

these all is are the in at beginning the simply really of high. our so risk And programs, operating registers model that really,

very, very we’re so conservative. And

that, operate if I’ve you’re it’s X% when times, So operating said many auto as the many, business and XX%, between healthy. outside

majority If you’re executing programs. new you have means probably it and you’re a below of X%,

now means executing in very you XX%, business you is a are If that. and of are mature exactly seeing it have above programs. majority our you you’re What probably shipbuilding right

closely at at lot have with a a News, programs executing Ingalls, both well. yards have new programs Newport of exceptionally of Navy The We lot are working we us. mature is

for solving every problems them We’re day.

a they is team years going at that are for these And am transformative a the work and that XX them part to look back carrier. now about exciting that’s partnership couple it’s in And through to business We’ve strong going ever and we up of business to that years. XXX years. are Newport got through excited drove But at a the a my because say excited the I’ve News and long-term next XXX So work guys to grind they’re in from got beginning that. be things News way an the And of. years is the about as old, I’m seen for thing change right to and programs. forward team those for be all the Newport doing. it’s the I of the business, programs, set now, people

Joseph DeNardi

I the of quarter it above the would for guidance maybe X% quarter depends on revenue CapEx on sales. for it imply fourth But just CapEx in is. fourth guess imply what your estimate Chris, of year, would it

coming So through CapEx we run and next then in think that being year? to get the average about I’m ’XX rate year’s above to the down X.X% just wondering into XXXX? Should to next X.X%

Chris Kastner

you’re reasonably off. taper relative start that strong it’ll and then year But be about capital, on year-end talk correct to capital year I’ll will the So the XXXX next call. to

Operator

with line from comes next our And of the Citi. Gursky Jason question

line open. now Your is

John Raviv

Raviv John actually is Jason. for This on

did that quantify Just a you could XQ clarification, TS reserve quick of you benefit, reversed the the how much out?

Chris Kastner

million. $XX That’s

the million remainder first about million. quarter, when is we you about think $XX $X took in the the So

Unidentified Analyst

for any that out… getting And visibility

Chris Kastner

potentially bankruptcy resolves. at part could be when take months, a claim, not or where on that it the or will XX it depending that year, results all of No,

Unidentified Analyst

a then TS follow just business. quick And up the on

well. When opportunities that what’s you we those And the some point, What integration in of mentioned expect do cylinders? -- is going four units firing on then are have pipeline? that out are overall, integrated going work. guys looking that How be recompete, should up of TS new you after? much growth of is do how organic how is to for big at business? you You that all And much it the shaping pretty with it see

Chris Kastner

lot Well, questions. of that’s a

We cylinders milestone albeit expect majority TS now. or -- IT be the to we week, the on big business backbone. right got we those the a businesses this on same Actually, firing all have where the of integration on same,

large to Seattle as recompete up as and the look lateral hear It’s clean potentially a that the contracts deal Hanford you opportunities. some then the to large well, pending that’s that Savannah or well. of Some recompete River the out about. forward can It’s looking and we’re there is opportunities recompete

it cylinders So expect billion be all expect right single-digit previously have that be that Again, now. I growth. a hitting expect we we I them revenue year. $X said this on to to low

expect termination, and awards then some We Camber driven delays million to closer [SCANA] the sales. be $XXX in by SNX now, the that to

XXXX. So leap in questions place your we but good $XXX a know think for if off all I it's million closer hit don't to to there. pretty I we're

Operator

Company. Cowen and with And the our of comes Khanna next Gautam question from line

open. Your now line is

Gautam Khanna

Couple of questions.

how wondering with the sense we the hit? rates us? I you And Obviously, you're you those metrics your hoping quarter XX coming discussed about was the wanted labor But that report. could curve. share cost CVN and down I get conviction talk could after level it's since GAO if any hitting June on to for a to First, last

Mike Petters

I captured say we investments that the pointed from approaches is made substantial and of do that man drive is off. a point, complete. XX% What of we think based learned you we about out program. the I XX, that on we out we like are At are The over And lessons lead in we came I lessons ship ship. off paying would of to new when erected where made the lot halfway a that investments as this then learned hours

-- go we new that. investment, and new and end out front this to track go we that piece test a the we're a on the facility through it's or get much a whether long of we're seeing this the seeing As new of assembly process, practice expected we -- business. We're savings and to or ways of we're

us. be one good to of we do ship, ahead when through pretty And so far. And lot When investments there's were are. still be so the to to where you us be third that day has a that the made we've the way you're lots every made we But of of and thing of sure single a with where for with make it. to that's pleased capture to paid got very we expecting I'm we're progress attention the pleased that. that work we We do expect

Gautam Khanna

And CVN point, to period? favorable that on net were XX adjustments any in there the

Chris Kastner

that Nothing now. on material mention

Mike Petters

big of event our we a couple for way do been the on next really risk XX mean, has I years. register the

Gautam Khanna

at what the in were Ingalls And net adjustments favorable the quarter? then

Chris Kastner

total XX XX had negative. we positive adjustments, So

of Ingalls. of and net was XX% So that XX%

Gautam Khanna

And could opportunities are high a you retirement in remind maybe big risk QX what me XXXX? at the level of and in

Mike Petters

it So year XXX. year. in this late for is the remaining the DDG the end last the of is year, obviously delivery But

Indiana at DDG and will opportunity sub-milestones, XXX year the complete and opportunity well will and of and -- complete is not -- the there yet in the I to the LHA work is we ship delivered LPD some am half QX on that it will second on about next not is QX, year go there. XX. say on then I And And So deliveries, think that so of there then have first in half entire NSC analysis you X the X. XX looking LPD

Operator

line from Skibitski the of Pete question our with Hamilton. And next Drexel comes

Your now line open. is

Peter Skibitski

want top line line to I of through Mike, ask XXXX. you regard prior your flattish about to expectations expectations top with

come but have both of very guideline And of sense there on you liked there. is mentioned light of very, maybe this Fitzgerlad, in. repair shipper I the in out maybe incremental and start is And and orders. is simplistic probably also some even seemed that orders a Boise, the it get I think Just I payer large more

there I'm error. your is incremental and view of in 'XX particularly within top actually So some see these line, you if change maybe have you marginal your orders? too maybe orders Or these just much wondering 'XX, better incremental the growth visibility. and just that Could of because

Mike Petters

XX opportunity I'm my on then going say accounts. who’ve a that is for off way Yes, a out I we're These it's not And it's you until account. move piece question. flat, look historically They years. in to budget of to projection. And it's ship FCN of they that, sorted just think a budget to budget -- one are The to while you jobs good about -- XXX business, that, hard is I been are think been worked the flat. guys for to being think tend repair if not Pete, typically do profile are be I in of out. you our because shipbuilding one out there tend over itself sorted plan going until funded there that be growth across here is is itself more And to sustainable that hasn’t piece five says if not And yet. the mean, believe they’re some opportunity not we our all the get in sort probably there. the get There for I'm see one the O&M and hit sustainable. you out and may building miss. next actually but ship I repair, that move business But to or to out Navy that they there figure I going

Peter Skibitski

And on just ask because wanted comments about you quick that when $XXX And just your I it you XXX at your Chris firm. Camber. I a I year-to-date was was think bought I call million said think about follow-up, revenues Camber it to at looking

Camber? or be strong something So margin I some just if know color more don’t or some to expected XQ or lower revenue approving loss on is could maybe give really maybe

Mike Petters

the and there the re-compete rate. We’re really team organization, pleased the with and

new new we've good. to that is on new it. should rate. has is on the think win opportunities pipeline, well very, a business Our for need very are focus filling been business And focused and pipeline up which set good rate the us lot Team and win What we the XXXX. got to very continue we business of and

Operator

next Our Instructions] of [Operator George with the question line Shapiro comes from Research. Shapiro

Your now line is open.

George Shapiro

a just on News. Newport bit wanted follow to Mike

X% if So also if of out, still it I part assume $XX is sales, I you at Newport. even had million growth take

X% abnormally flattish? above is So or I what was at strong what's quarter slows because somewhat look would down this

Chris Kastner

starting take is XX George, in being I really to introduced. and the block across will one. This kick-in It's XX production in CVN then Chris. four, that being full CVN

sales News, at in portfolio the across some Newport have we it’s So growth quarter. the there

Mike Petters

is flat, we we’re budget add I would what for account businesses. when that our George, a say talking And shipbuilding about flat shipbuilding

you what indicative I part add would see So, business. our you some in with year five business growth probably trend. a may quarter then one particular challenges not is other of And one that some of see in parts our in of

George Shapiro

in better Chris. operating And one QX flow follow-up QX the we than cash ‘XX? then of Will for see

Chris Kastner

last very headwind is I’ve historically that QX have this we Well, to a it. previously of headwinds to that and million us. still year hard spoken compared I But or in cash said, about we're being working for quarter strong cash $XXX have I year. the That offset see in

We same. expect be it to the

cash the it. think way now think headwind, I very we're to offset So best $XXX is working million hard to about

Operator

Rob the comes of question with Suisse. line next our Spingarn And from Credit

is line open. Your now

Rob Spingarn

over and on Or that’s question the of call, to I But couple go discussed. not on back be But period, and jumped anything when over business to X% Newport wanted don’t is News because another of before during that that, float from XX. were small things yard yard Can on I that X% profitability off margin and been hopefully XXXX? I between that X% hope Gautam’s I ask ship, of XX so that XX. now you this asked.

Chris Kastner

I basis. XX% quarter-to-quarter business X%, X% that about frustrated with has represented greater But than total or quarters than be way in within to a know on than to Mike have way that or shipbuilding you answer. is that less we're may each greater the think, is is the is to XX% than less X% it going think XX%. I

to So little it way a X% on XX% will long-term a But basis. think bit. about it move to around is the best

Rob Spingarn

plus, we CVN the think perhaps, a you're you, rate Well fixed Do Mike if ship a we at and Ingalls LPD News LPD. Ingalls yes, another your the XX% Chris, get is in about and blend that we continue that’s XX% X%. up type hang and XX% that XX a the to plus for 'XX? beginning So can way is of by as I maybe offset in questions, simply question this X% is Newport booking may be X% at around at conservatively to because get therefore of you're out and an another get my price XX an and know, does one

Mike Petters

many there… do want So to in if's how you put

Rob Spingarn

only don’t I XX. LPD the Actually is the if --

Mike Petters

will launches. then You centrally But three. it be be have CVN XX, finishing milestone so you’ll and big when between block now

an will finishing be mostly finishing the getting or to one. next RCOH You and ready start

I one? Newport go? going at on proceed the a connect, program of phase what's News of next bit Newport and programs. question other different budget a but trend of and of are something and maybe process material LPD it becomes conservatively a start? a that little program timing have at about more or program to we to with there going If is mature all NHC into that the the how how's phase transition end on the LPD for How's LXR got bit timing about Ingalls then in LPD to But a so of rhythm does just a the the How's product and fit? the If connection a put of same mature delay of talk the a new several little every their other they’re is you that. to it program -- hand, is of the or How is programs that you and they’re better, mark there pressure the is LPD is lines. fit across XX while. may the it. bunch the start the And LXR on on at their programs rhythm they’re is, XX, that hand, then macro the can that the the front in because News designated believe of Where

business, in that is forward, think is those grab for from well results run That’s way. our executing more our advantage that we’re ability. a go that executing to little you a And take step will my we beyond is you of as trying probably opportunities along and really I see business well. we those see really opportunities point are predict bit the the that we the results than would the So the climate business ups how across to

Rob Spingarn

And you things. small couple if a I ask more can just

little big the But to of XX, going a way like to I to is that bridge said bit what bias there the you ask decent unknown. or a chance from it's a from back sounds Going LPD there's we before you one so do you XX. -- other? still think or was LXR more It

Mike Petters

we’ll time And LPD the next how way in forward. would country, for forward think I chefs the the audit be class. out. come-in that's see for turns sequences what is talking to advocate it the lot ought move way the that and that the ourselves. for, be LPD XX for move it is first to come. But that the the That's view a that’s we how Navy about for see in smart we program There of personal that an and best XX My kitchen that’d to way we're so of

Rob Spingarn

if I for multiyears. you about And second was of the a feel profitable? all challenges do can have And any think XXXX, for the multiyear DDG concerned at were as Or at XXXX challenges think earlier, looking as we just the are when see then the to part or benefit might you I competition of be question, you And of ships transcript talking performance I'm about moving the DDG XXs? III? you Flight those wondering

Mike Petters

felt about your that the it really program. We the thing ultimately every resets view it register that of risk a time competition, was on resets competition the return have is The you important. your and

our of First they Flight operating so hands as could Navy as with seeing do start for all, it and the what quick they possible, III to get in could it.

risk a it belt, where have in the it that chance so program were. would under we our to that and get build we get Secondly, understand can

it. that the going to are at unobtainium get see plays need them. need they early sets heck to how anything that we'll they of the up the III with We -- ships are that block from Navy and think build in that in We went multiyear. jumps that begin And the next out. and and don’t when for the Navy a see to view But we will we so so last of we we did pretty an that. being how made Flight out ship ships that’s well help that us the It's as pretty the coming, our arrangement us of get standpoint

for do their has doing just production do block doing serial So been Destroyer -- the upgrades. been block this they upgrade. ships is of and program decades. They’ve is This next what they the

Operator

DeNardi line Joseph And from with you. next Thank comes the our of question Stifel.

open. is line Your now

Joseph DeNardi

years. you clarify retirement the opportunity to risk said CVN XX what of just terms Mike, the in in next is a of on schedule, couple

that next Just understand so or on than program, if would like a be there's earlier you recognize the adjustment, growth cost would to that but be… would opportunity you recognize the I favorable that

Mike Petters

starts it build doesn't and you're cost wait, we big better. then next that If a hoping problem breaking from number. thing we number up your small get see a have it'll with and because waiting experience, my In wait. start typically instead you growth don't you you to it the legs if of program, The is

we we head as job those things can off. right as XX that. to as or And them is at doing recognize now those good quick we very actually can quick a team as prosecute So we that

Chris Kastner

We EACs quarter. evaluate those every

Joseph DeNardi

question. Mike, just a maybe level then And higher

Newport shareholders value at look is you guys really have is maybe class, since you? or business when just faced this situation at a growth the the job done spin? up the for that. the You margin Virginia a that since risk challenging obviously of from standpoint that standpoint XX with spin and set course most now to normal with impressive Or return the stock you the amount margins reflects But and of

Mike Petters

figure to security know get cutters. the go in we and move production two ship, LPD how we lead were a on to that in think the two rhythm We At I that Avondale. trying performance to mean, X think I to a clearly back challenge were Ingalls. for have, actually opportunity for going business. the LHA and from But serial because not We ship had to spin. years had on that we the News more prosecute five we single with first schedule that do back it Bremen, where out there. are those I go contracts improve the last design. Coastguard of new I Well, at got I at are to trying were get did News, it the what That don't of Newport the ships of in where am national production out to Newport all. significantly production we get with mean, to to five Newport We a to us of north the a this there's challenge to have. compares demand were demand try get a today take line a we program the ships Ingalls at than actually to we that there needed to do at the business existed through done News, And we doing there's mean environment, where challenge a we underperforming when the that and good I spun we of working we shipyards. of and team days, is be to work was the -- beginning at environment different in couple

what And so at we Newport I'm News. excited can about do

have a fact business up after years couple cool opportunity fought at harvesting of My set have first fight that's a become in of frankly, the created programs years that serial I by be. production there that the to they decades, these place to to at next couple really that exceptional for the next team mature we on think we through several great over they pretty programs. the spun in Ingalls going out. And

go it's the would now. most to wouldn't So I challenging say the beginning. back I

Operator

And with our Credit of line from next question Rob Suisse. Spingarn the comes

Your now open. line is

Rob Spingarn

if there that I is contract And thought last we for there any went a on is work. that? is -- $X I’d and know infer for way I But GD billion jump you've ITPD one. there can design the for out this for Colombia, the that early contract don’t from earlier. participation you to for any quantify to covered News But Newport

Mike Petters

And that participate. of don’t we facilitization we of expecting yet, award, of a in that formal award QX. will but the qualification I We as published -- haven't

Rob Spingarn

ramp? And to when start work would that

Mike Petters

continues lay over work has it's you and of mean, ramp-up I Columbia at the has is want this the ship [multiple just to to there. it to next begun ahead couple XXXX, speakers] done be try if for -- on the that of already in all the This years. basically

Rob Spingarn

significant. is to something to revenue the going But very program trying significant perspective of a out, piece top today's and you've quite Just But on about mean business. I notice? figure we're Obviously, the talked from it's this is bit call. line a

Mike Petters

sure. for significant couple next It becomes XXXX more years of as you to move the towards

Rob Spingarn

you. thank Okay,

Mike Petters

of work is in is actually we I And This design we sorted fabrication. actually at the are do just piece this where least important first that would building getting as the as out. the add,

to made going And effectiveness decisions the things. all that build those and construction. being are of how a lot drive the will now it, of on right of figuring We’re we’re efficiency

fungible, this a little maybe just be So about, you to been we sometimes move think important very a that very program while space. can that important I’ve I that program. it the important It's a design and is it's work, very there by around. a we Rob, it's It's forward in view bit continue contract. it's step funded talked And

budget track. around moving This this stay be from shouldn’t money standpoint. really on this politically a that You is critical

Operator

and Cowen from And line Gautam question with Company. comes our next the Khanna of

Your line is now open.

Gautam Khanna

First steep in for this correct? step the make to a Tax have up of rate just sure want that QX. implies Is I right. pretty I all, year,

Chris Kastner

Not XX% to really. It's XX%.

So up around I think so a we’re significant not now. step cum to-date XX%,

Gautam Khanna

also to I want just clear. be

budget the moves. is of curious, terms what the is the things the opportunities big forward is What request, script. or for? terms you the programmatic pulled about Is it, you looking main case 'XX that hoping what that talked for In guys. LXR fiscal full we should of this getting in you’re in that for the stuff be are just or that I'm

Chris Kastner

of line multi-ship discussion think move work out aircraft is I There a decision in to at lot about a lot the on is Yes, carriers. There very of for first a that. is the procurement it. done budget do in discussion at an the actually have around you being point. this it. the creating that, But do to It's on to contract influence actually towards start to FYXX a moving

supply arrangements to You got done. chain to start get creating the with the it

the starts inline And in two really if don’t appropriation, something so amount LXR. I could savings get it’s we first think think be get done. it to into procurement. the thing that’s ship of Frankly, you cut that the from that, the authorization and Behind I to needs 'XX

of But head business we really and I the the business, opportunity think on get the that and the the in to think I faster of block for a thing those getting the sequence there, multiyear And to is fall affordably. to course we amphibs down big rest Destroyers And next next ships the are that starts a carry. in is X think and the I getting are that’s two move those is the great the forward, in are amphibs coming, -- the Navy from coming, normal fleet that line. place. more things

Gautam Khanna

the that something expected year, of sometime DDG next on multi-year in June still And that? buy, is like

Mike Petters

Yes, that’s schedule. I on think

Gautam Khanna

expect should block X, DCS And that? when we

Mike Petters

work but [multiple 'XX, speakers]… 'XX probably it's A in lot of

Gautam Khanna

lastly, And is anything by expecting three of And then year. icebreakers. course there? the debate if What there you movement do

Mike Petters

we expect last -- one. Well, built think, to moves it in it that forward. the as we're engage watching I in And engaged respond and program we and

staying on the that. very to Coast we’re So Guard

Chris Kastner

And that’s probably XXXX…

Gautam Khanna

for be budget, terms -- out should And icebreaker the ’XX the are we request? looking on in we anything in of specific

Mike Petters

Well, scheduled to 'XX. be awarded in

So we need to be funds.

Operator

showing at time. I’m no this further And questions

remarks. would that, the call turn like closing with I over So Mr. Mike back for CEO, to Petters to

Mike Petters

joining to today. thanks with us for everybody Well,

results from our you discussion, As and can tell executing. we're our

to continue well. We execute

We Our financial committed strategy. to are deployment results solid. cash remain very our

cost we Our interest much. quality, we we Thank our bump schedule. are into wherever on and your very and teams you focusing seeing safety, might each forward to in business And appreciate all look other. you

Operator

you Ladies all may and thank conclude disconnect. program today’s gentlemen, does you This a wonderful the participating have for day. in conference. Everyone, and

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