HII - Earnings call transcript Q3 2018 | Huntington Ingalls Industries, Inc.

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Operator

Good day, ladies and gentlemen. And welcome to the Q3 2018 Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time [Operator instructions].

As a reminder, this call is being recorded. to of call Investor like Blake, to now President Vice Relations. would turn over the Dwayne I Please go ahead.

Dwayne Blake

call. Vice Thanks Ira. CFO third conference Industries’ the is Huntington Kastner, Good morning. flu. And quarter welcome out with XXXX Management of Business President to the Ingalls Chris and Executive earnings

Executive President will and be handling So Mike Officer Petters, the and Chief I call today.

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

Mike Petters

joining to to released performance our everyone financial hope wishes to feel continue for along meet Thanks, thanks Good this him pass we help third results Chris, the hope expectations and Dwayne. will better. he else Today XXXX And want I business. our better, that for call best I quarter feels I to us. morning

highlights some of on share the presentation. me X let Slide So starting

DDG quarter contract $X.XX include than two approximately the quarter the for new quarter, $X.X billion to the Our first quarter in competition. $X.X Diluted XX% the $X.XX was the for ships the XXXX. compared awards year. third for XD We last EPS billion of higher full were during funding flight sales of received

the results of the quarter DDG approximately awards six our billion one on funded. the As $XX at The backlog to $XX ship LPD Flight horizon XX XX a and our foundation that the and VCS will was NSC first XX business for the to of of XX form XX support approximately is the next XX, block billion X, contract which years the represents end and X. CVN

expected all contracting by years As ships supports noted five during call or our in XX for the the options award base our of next earnings and quarter to is activity of XXXX. of XX this be outlook to result for first sales end exercised to the contracts

during a CapEx XX% progress in share the investing Turning over cash at Ingalls returning and all made repurchases. moment through November free time our Newport committed investing Since of that capital have annually $XXX at facilities in least modernizing in XXXX by substantially million shipbuilding to capital business our expenditures. News deployment we substantial we through in to meeting, to flow shareholders day investor increases for and dividend

the $X X.X of year this continues In third announced addition, And recent each $X.XX this in roughly have and we commitment. of from of from dividend year. we most billion share yesterday XXXX $X.XX have a quarter excess also increase increased per shares to our XX% repurchased at cost our million through

minibus and included President other in a activities Washington Department agencies. that the signed for Regarding appropriations of recently XXXX for the funding bill Defense

accelerate to ships anticipated X for be to X LPD carrier several Navy material the for procurement. LHA funding Defense accelerate for shipbuilding X savings support Funding advance measure, procurement procurement flight of buy for two purchase CVNXX Act program. as confirmed. includes purchase the following. well can the the in XXXX by for final either encouraged the if or appropriations Authorization which National Alignment increased to funding advance with very R&D for XX We’re the as LPD the permitting Funding under the money of and across LHA material multiyear for future DEG

expeditiously We resolution. continue to finalizing FYXX under in currently that those urge agencies the for a lawmakers to proceed are continuing appropriations

released For the the the lines to hard base. we XXXX budget can requirements industrial address achieve administration's supply are building hopeful leverage challenges chains we by that to the ship affordably production critical fleet request our report recently on continue identified and

will on interest our striving X next DEG Kimball business focused and September I is Paul the is X few team half builder NSE to segments. NSC delivery and complete Ingalls team in trials and provide Ignatius last XXXX. test the expected on program early Now completed on on month in of in delivered deliver a At points XXX, the first trials with year the exceptions of QX completing DDG Midget

of end on to seeing erection in complete down. final completes year. support plan approximately LPD as ships dry trials the is very and for XX to on the complete overall. with this CVN support support deck be completion program plan initiatives transformation which next lifts XX% structures year. ships the trials team the On continue to an year. Kennedy The I progress and DDG to activities commitment. ship the all the the the look XXX digital meet approximately September costs Newport test end to Lauderdale with ship structurally late earlier and the utilize achieve joined activities, of delivery nearing is under and delivery integrated XEEE the integration to At with schedule expected D team lowered For water These focus is on XXX of on XX place dock teams construction a is Delver into of hull and to launch of together pleased the main and such the manufacturing beginning and the focus Black, the XX% team piece of next news LHA forward XXX of work from continues perform testing at shipbuilding well the next both continues Fort and

remains XXX year, recently SSN to News. on to is christened first by and in the was submarine of be deliver boat this three Delaware delivered For block a Newport next final half track

of Triad nuclear the transition US joint technical Turning joint issued is month will After to proceed Los technical security period, the and venture the full to assume solutions team Alamos management LLC. Security, Energy's four for an a and responsibility integrated at administration operational the transition Department the to process National Solutions subcontractor notice National to Laboratory management team. laboratory for National venture

in to employees. invests for shipbuilding steadfast a execution the safety, efforts, outcome and to market on In for returning on schedule. our energy prior remaining path to into oil sustainable the shareholders that shipyards that execution a appropriations top improving focusing us our in by quality, the are creating and bill it's value is execution while to technical the and FYXX while our strategy continue clear shipbuilding minibus modest on These capital and favorable business. in profitable and commitment long-term year our reason excess keenly gas on in cash the solutions combined profitability our translate in beginning deployment Additionally, primary business closing, contracts appropriations conditions cost programs this by line we’re solid recognizing that and team and fair our shareholders, our behind a the with negotiating grow focused keep programs customers on focus

strategy. lieu qualified base of as Chris over with before isn't feel So expense to remarks gets when cash going those our to I call our because some stay lower This thoughts in expense relief pension harbor of rates of the make be the senior conscious base use in the the in make in pension discretionary With we probably I time safe this always part moving caused established market the recover our to and leadership lower share plans, to for few a me discount tax used were market on good, with turn cash Dwayne were short-term rates for be rates. the a able rates. the financials contributions our progress decision and overhead on ahead future. higher with team pension the made would XXXX contributions about contributions to nervous in He At our to expectation higher the pension. think act introduced to under let rate same

pension Our as view competitive a our a as horizon that result a to cash qualified closer fully more expense with being was future plans future company could long our would be move lower cost and we funded. of position

turn will adjustment and and next a a status consistent decrease our funded we expense our more result and few business of cash the our more in fast cash our affordable. recent in of As the our in anticipate strategy, products rates, This favorable years. over discount with plans competitive make increase

the turn over call I'll for some to Blake remarks now the Dwayne financials. So on

Dwayne Blake

Thanks, Mike.

XXXX quarter and had favorable as with higher earnings our increased of increases increased to margin points. results driven building the strong on in third provide third-quarter we change our XX from increased to few adjustment income presentation Slide XX% million operating income of tax due with review release, the financial included XX% XXX I volume operating a period follow full another quarter morning. and increased consolidated ship million to quarter XXXX Please operating results X presentation XX.X% These billion segment XXXX. same quarter this of primarily in the with in revenues year. our over slide a of along XX Operating and our Beginning the As we segments. compared or updates by of quarter the third sales in basis the were X.X

to revenue, or in shareholders XXX shares to discretionary flow by in XXX benefit in the XX and Slide quarter final we the XXX expenditures X of was year-to-date of million at the to bringing XXXX. to use approximately This includes the to dividends, capital was of balance operations quarter quarter for contributions pension qualified quarter, paying million million. capital in our cost cash be revenue. quarter at Net end XXX,XXX million million. million, in our XX used year our Free million after our expect cash XXX the million and a million to approximately We of of repurchasing returned portion contributing expenditures the XX the was the postretirement Turning cash plans XXX in flow were presentation, X in million plan. of X.X% a free of the X% XX and cash

of quarter XX.X% lower in Now in the by XX operating increased Slide quarter income presentation. of and higher LPD to the same lower the of on the higher driven retirement of programs, Ingalls year partially on primarily lower results XXX was due million last basis XX, volume up LPD year last increased partially the X XX X of LHA, on Ingalls period points was period volume million year-over-year, by quarter NSE segment the the same offset from primarily offset NSC program. because Ingalls results DEG on margin program. million the on by operating retirement revenues. than to risk risk in XX%

source presentation, to approximately nuclear quarter active, is X, News we volume same next Newport Navy that the be period driven therefore revenues towards to year while expected mind class year navy long-term from the and volumes XX% sustainable Angeles to do keep overhaul down the submarines and nuclear increase it aircraft Turning of of services primarily due work of Please ramping the higher this in in increased to a good billion by and is the support revenue start mostly end growth. services. in not Slide X.X maintenance support in of consider Los carriers last

resolution in up basis offset XXX and of XX favorable discount trends, and benefit Newport of partially contract CVN XX on margin mainly rate. quarter XXXX workers compensation higher News respectively, million a XX due points million and were This the in and to CVN XX.X% and changes million income XX operating year-over-year experience loss of due a the was XXXX. to in medical by $XX

Technical period primarily million same by third-quarter lower presentation. Solutions driven Solutions year-over-year basis Technical portion in X solutions and XX of innovative revenues XXX year performance partially improved mission the operating an Technical higher offset to gas margin of in of increased million allowance on X.X% quarter XXX release related respectively, from accounts the of XXXX, bankruptcy a in the receivable of the the support offset oil last revenues gas services. decreased and nuclear Westinghouse the to filing in fleet X and and revenue. driven to and X.X% income and points of million due quarter, partially and by of oil Now solutions environmental Slide by

Before cash. facility completed final of impact our within are QX we and we couple transaction of details of or so earnings expectations, let there transitions Q&A me in address Avondale sale the the additional a material life, our to no the

be and approximately interest XX%. to to income rate We be our expect XXXX expense approximately million effective XX tax

to the presentation. Turning Slide in X

discount pension to related in XXXX XXXX we one so are prior the XXXX be to turn XXX to subject an the you my as follow partially has decreased also can up remember and XXXX for an XXXX to the as question quarter We outlook criteria estimates with yourself driven people rates. performance are year. moment our expenses Consequently, Note discount fourth XXXX XXXX and call. numbers to that initial These one the provide remember from we and million as expense the XX past on million quarter I Sarah now and Q&A. million, updated to for projected so by to due by as turn in X% call. previous Projected our queue provided million higher let's and adds a FAS down earnings have reductions during X updated Please XX get contributions measurement benefits cash through will outlook. XXXX and respectively fourth are pension a by year-end total cash concludes remarks, assumed Q&A adjustment the that possible. call That projected offset from of and by reminder, is manage limit pension you primarily higher return rates. outlook to for the over postretirement please up, FAS/CAS and and

Operator

Citi. Raviv Our question with Jon Instructions] first [Operator the comes of from line

Your line is open. now

Jon Raviv

just and million, lower XXX is free And and being previously pension pension flow a $XXX by how rolling talked in Thank it off question, with lower net have have be cash with that neighborhood flow so be to lower earlier the of a XXXX. strategically the forward number guys the do able cash pension free of the given you be It’s bit think from fair net would that then example. items cash you CapEx there, talked you. about of we cash XXXX as offset guys about think what approached to about sustainability Mike rolling pension that, in for

Dwayne Blake

be talked million remember put finished about free XXX we in think headwinds would so about cash from range. you when so and Jon Thanks last the year, where outlook you XXXish XXXX, that we to essence, about directionally in a

you that at about talk and presentation the look you're it in provided XX from You right, at and what a the were indicates before. reduction roughly table million we XXX we looking does million this headwind deck

from So XXXX that would directionally XXX. take XXX, call in that that tailwind

the recoveries a time into XXX with contributions plans going of don't in have a the ourselves what Given as CAS as us contribution place rates the a asset turn to earlier us the lower really that of the big XXX to in CAS nuance a be that safe recoveries at positioning has a demand ourselves fact fully and puts place in the the to place where and and with pension point tailwind the we puts probably call we Mike's where close the are where in for don’t about that is to keeps That and putting that know and but kind returns need we is fact final still And to will been past. place discount with you thinking it think say same so we're puts to so a affordability. us funded concern not it lower it out about XXXX in in about point higher really it. talk significant range

of that's really where on ourselves. focus I see what we and kind So that's we think

Mike Petters

schedule. And is your question, on intention point to alluded CapEx of in you off it spending to the come your our to

Jon Raviv

on CAS when you up down down, that speak as piece million could down the $XXX contributions. and of news the to point, a product goes CAS your contribution strategy. the piece CAS given I recoveries goes in over the CAS the you shape of requirement it and Got goes follow have CAS point pension understand

Mike Petters

talked CAS towards that on of of the but zero. the we'll kind by. recoveries a so timing you in naturally number that the imagine that the reduction stand haven't call, really we things gravitate the specific QX that past about give So talked can will the as expect you We is there specifically can

Operator

you. Thank

comes of Our the question next from Myles UBS. with line Walton

Your line is now open.

Myles Walton

was and you of the this evidence Navy comment savings buy is that to for hoping on Congress provide of timeline providing I the of the get so Mike status what of the could kind that to ahead. the for that you you support Navy the hurdle expect see have for evidence or to signup savings go and to provide the and what you will have to block

Mike Petters

we as to think do working don’t predict going this to say steady than savings soon we're point, a conversation, really long get timeline want I given issue into of need hard done. this that order forward. at that we But to looking the I say working and legislative ago to as very appropriations receiving forward to and that way go and I several side government we closure starting optimistic, would authorizing like that proposal dialogue trying put a guess together. months we in both near-term as long-term substantive on our to because more talking to looks with were can to get that’s say this constructive information to submitted I we're I’m I pretty the and the We had that we about our just remain we're we're can. what

Myles Walton

referred years. that don't see you after you’re And as that center Dwayne ongoing for a or work market cost necessary work multiple doing you mentioned that the

the business. year what's of year headwinds relative contribution So the of this kind base that and pretty that size what's margins attractive for is and next to the

Dwayne Blake

to to XX Those average months Myles on average. XXX XXX run million to availabilities on million XX can run

you peel So will off in now going and to first right basically of on the got kind of mentioned the of see of three you start middle year. so as them I part next those

little to the that that front, that they the continuing the we of engaged our it nothing substantial So make and team to is same that they the of push see front, come to Navy have modernization to need side may is on increase a time, on as a availability bit efforts at their if always way. prepared the the so opportunities the on we’re and navy certainly are support

Mike Petters

Let me falls and targets a add, that is of whole and the industry the has the feast services in had team into of or the the this efficiently that to discussion ongoing this readiness doing Congress if readiness you create past and between negative the the just the the issue from been ability really a want. achieve is Pentagon you capable pretty on nature that work famine the impact has standpoint the

there our that with discussion XXXX doing of also So that about the is submarines. you we we're can ships as work support today requirements surface Navy out or in the support the for be with efficiently to how the they not are XXXX, but industry readiness and the of more the rest in platforms Navy's engagement the whether are only along

and come really better my well what that got help is stand see we do this support do we at only so and team point to a and well all that team but And we've a is the that are as the support fleet we have phase personal out let’s discussion doesn’t what there how to the solution as view been fleet a ready we doesn’t works that. at to that doing then

Operator

you. Thank

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

is now Your line open.

Carter Copeland

the few slides bit just that can didn’t can leveling and you to. growth and you so you of on if on second color there we you the sure applied first just that release off they in the wondering then favorable a wondering just quarters in the sort EACs the make more that I'm and explicitly one cover little is the and unfavorable addition last there the expand and segment all to give to accounting Myles' strengthen just Dwayne we questions some mention us question but repair pension on have that's maybe growth question around it if work mod so in which

Dwayne Blake

So I'll second take the one first.

and shifting adjustments roughly split adjustments was XX, positive, Newport Ingalls team net XX negative negative XX So material XX no the the News. and

Carter Copeland

Awesome.

Mike Petters

you we're these at of And of doing on relative a ship to and to somewhat you end so cycle delivery the the that while together we're some ship that when what's you overhaul, planning so trying follow-up little condition so are in then to of refueling and one this sequential putting sorted running to back business we of time in kind the the there's the start kind are the that's get driving beyond you'll that phase and the are refueling one the the this or phase a next activity work too. numbers repair of are kind leaves that that is seeing of in the the and ship out and that's the of are bit

Dwayne Blake

guess first peel in mentioned I state that at the of steady are all the Newport off on kind News the then availability relates to those end see in the I And kind actively I as towards start of it of are the of about next are state of steady think you again you pace kind and if working year. with those three and they are them that now are will the the middle mode they as as in of to so the

Operator

you. Thank

Shapiro Our next Shapiro of comes question the from line George with Research.

now line open. Your is

George Shapiro

Dwayne. for Two and questions, you for Mike one one

workers it the if then in but get any was the give facing because about for when for estimating we kind said carrier it? approval explain you if need put you Mike, and expense get comp XX do you came yeah second from. for a the do I'm could you didn’t year Dwayne you quarter will in the that approval money to budget was And day, the in For that's funny maybe this of money budget where the

Dwayne Blake

question basically experience comp workers that in on Worker's Comp workers trends the function re-measurement well historical as have that liabilities first periodically medical of a they our as look actually just discount terms your million and comp expenses XX in So do it's rate. it of to and of was

something that in is periodically and I So called is remarks. done XX the that million my that

Mike Petters

actually And George that the just for relative the the actually question savings the the don’t to funding any money you it look aircraft year to between allow add acquisition you carriers, about that and not to if our portion generate happen that and carrier to plan of reapportion instead you relative view look you construction for ships tipping ship at a us we actually five wouldn't could really funding budget. funding, add when where that one two the already money shipbuilder was if next you more say year do need funding you point need that was to to the of but ships and the could for the to programmed two funding make the any just

reprogram get That's say little ship. the You a had actually proceed more we put why, actually the to the everybody and actually will two exciting two done budget generate a would for it. definatizing less go talked very generate to, became just we the I to we of matter ships optimistic need to that the and possibility between acquire done. if actually a in to prospect the getting that money about be so savings money it to its I can But just we savings. can fact authorization the

George Shapiro

growth been 'XX up Mike, so to saying you this you got And like just hoped you to follow-up number. looks and XX% year X% for in you're date you’re budget it quick said to willing for everything X% up you a approved year much the revenue that you pretty

Mike Petters

and our the to never because takes window only you, that I’ve authorized appropriated or what's think great 'XX on that have the to correct out and in spot not a ships of about of change about said a one 'XX uncertainty George been X willing end three, 'XX we’re it happening X. I’m to 'XX the Actually said lot I and and in business.

As SEN LPDs rate levels. the shipbuilding the to looking LHA horizon with I in number. sticking That’s our if on 'XX. so for level on the level the on with horizon with sustain good last long-term account Colombia addition or going the the you're of a my the frigates where to back years on does this couple before, the historic horizon, and it Flight said be this need snake us, horizon our the of the III is whether sustain about out to sustain indicate Pentagon today. about maybe And level sustained we’re on to submarines but we going you're And know, that's that think think for higher of and the now commitment today that, going to destroyers, where lot comments to prepare consequential at to to really uncertainty the to five to is have block to a rat going stopping not the you can seen us already two the or we are for higher to it's the we've just to able as be you we I'm the I still jury's at go but are a we there's not and budgets I before, said

Operator

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

now line Your open. is

Rob Spingarn

potential the frame think rising. to Columbia, on touched seems with of mentioned that of regard lower number which and the but George, rest is flattening this of portfolio? just Mike spending the you be and a with kind of out top billion to just $XXX budget just the one, priority risk two I’m the You the do the on to very your budgets, How we thinking I’m

Mike Petters

deal feel to been I've we've what this or all first got we budget were is 'XX go we're another it. there one to like no -- that but out to there everyone 'XX got be figure talking about been great Rob is we've budget because we've I a I out talking and This think that been four we've into will expects had of sequestration 'XX now years and you 'XX figure about for five do got deal we go

So is first sequestration the blanket.

it for The lot to is are Columbia in then going account. second that we talked one the a effects the pay you without causing blanket collateral how about have

do to really the the be ready our to affected and so you years get be 'XX the the into to through. way affordability And that that start we ship. couple make of know, sure hard might as of we and to construction 'XX works over, manage going working head of in next that programs We're we lead

argument you funding of going taking. help made tell we're those for the position stay of you is and can And question to understand course to be for the happens all our well view out is to and of efforts to action, interested Congress for addition is the the the way consequences thing that priority in to that's still affordable. how we business, that of destroyer, The business X. more through couple in do shipbuilding the efficient have that most the our on impact from those discussions the is frigate see competition for funding actually will particular the make ships work to executing we a more what LPDs, engaged significant the the the of and us So was our Columbia the taxpayers the getting sustainable in investment sure done best for What do on that we on with submarines people take. option really of base us of any the so are multiyear the block work to there. course contract and we're comment make the path higher a for actually you capital to efficient rate Both is

Rob Spingarn

here. meaning schedule labor and expected put budget switching in And your you strong had given about more to the schedule think as or get execution then ahead the Mike than of of if carrier are you we ahead are that that below that with result CDM talking to are coming regard as in about on you to indeed have labor hours to XX should just

Mike Petters

cost that review program we a reviewing down that every I'm schedule and around there that daily reviewing disciplined month. pretty is both have So variances manage variances we and process the

we is so or acceleration. than that to better if the would have when to want something sure worth or I it began use accelerate with more going value and but that system it's accelerate us to And it we we the it’s we earned make think cost that a that payback to us, us there cost to not

their knock we in And focused in management get on sequence the so that go pushes the and path it happening critical right path heck basically worry schedule the the we'll so critical program risk why in to a what as the by making about particular and the the I accelerate typically we're That's really reduce one construction and about the to that's of the and out right that encouraged need path in of intent actually stuff that be program so done initiative. supportive this volume but I'm that's and volume backlog of we needs very and it some doing them this we program mundane to program we and that stuff will in to just really the of neglect of now more program. not be a to kind create we're decisions very teams way

Dwayne Blake

which going to from now. ship done know won't know we how until there just year well were not refresh around then to you've is the in the put you the And water

Mike Petters

and very some for process is feel and if up your setting through in long-term About yourself, the short-term problems. but not that our then you’re been may discipline setting a the yourself lose disciplined good and year that’s from we've process you now disciplined

when know water. we ship will put the more we the in So

Operator

Thank you.

question Epstein from next the Our Ron line Bank of with comes of America.

Your is open. now line

Ron Epstein

kind Just to a need be or any couple of for is class. what quick there is to when you’re the for Colombia the, going to that CapEx for in additional Colombia capitalized needed one class, you going do

Dwayne Blake

we of portion work capital to that intended supports that the now are Right have do. the plan we

we but to investment like As means we will closer there's we that we the my program. and already sense kind pops and what get is that it something but a evaluate that’s what have to made pretty the we've done to firm program in pretty as construction of significant

Ron Epstein

carriers think what again, the carriers Mike some And discussion talk possibly go? sense you is has to yet guys, you that that, an then in your could of the get the by where on doing Hill more I that to been so some just just on there going about fleet is refueling refueling second what’s for mean, that opportunity your

Mike Petters

of car all a ships for becomes and of curve, car, Ron, like, in mundane it cost that take It time every than enterprise to older but you about get fleet. want the as kind I end kind in is of of your it, whole and lot maintenance burden it the where thought ships I the rest be curve costs for to starts life a we and take guess like through there lived my of point you you with maintenance linear. and don't the you experience isn’t that should more and a accelerate real them these

of lot would if that whole stuff can would there technology that and you really I just is cost a decided and even do about that. that and think really frequently you the build that I efficiently. mean an science to would to your I a you do actually you standpoint, in wanted that be maintenance the if the but from is whether I So understand materials more not to of to actually the technical you, talk fleet way them of curve better carriers of better advocate increase number argue and

Operator

next from with Our Research. question the comes Krishna Vertical of line Sinha

Your line is open. now

Krishna Sinha

on question two-part a got I margins.

that ago there that put became ad that to where guidance X% down similarly talked enough guidance ahead work particular so was there point you and margin that doing margins. time hoc mix been know some quarters to headwinds of wanted push a of to about your And headwind towards this X% sort far know just you X% for of when you couple gave midterm in you I out to So you to much X or Angeles the other were the stuff hoc X into inclusive X% guidance. is factoring in exclusive you like thinking work, X% this that Los or hoc top to then down being that of work being and pipe. X% ad there modernization some that on work more about or ad to were you that so work Was come X% business hoc his of to core meaning could layered the ad

Mike Petters

the we between perspective Well, credit in a healthy if be the you we range. work you the X% were our the XX% And you probably off and our in operating us coming balance a than mature see we we see ought work different more see give pieces of we and all deserve. couldn’t the very the that still was have at we we of all work. 'XX, timing different with that an for come could weighted through of what kind we've and be couldn’t see what new to towards but frankly going of see and that new to business look X% When we lot to outlook heavily appropriations could are as now bill X%

push healthy X% capturing was positive work you range you were out we be work that. out new felt the that the a for then backlog to destroyers this submarines, in should two balance not for expect than that significantly, going quarter, contract us a work it through starting and understand but X with of going go a follow pretty would significant to work just destroyers balance we to you to here, as contract we and the of for what to way past for to carriers push which about because of was doing up create the really going X% important in that's and with be think up that to our business XX% going and balance. for it's is If it's the amount block but we XX% that just could It's

keep in them have Now folks yards under get better two that in open. us the we're ship it. the in start we of we're of timing we think balance beam, so speaks of up completely eyes proud actually with we've so when where were arena back to something front and zone way that out we than contract done way to this of a just proud I'm end is about to we have in thought the place But that think down the don’t the risk I'm I do, team, kind shift well starting are that phase and that a been we even set contract it's of the what is of fact stuff I kind looking to this got that have on of yet retiring A going but to gets actually to able the doing carrier the that that think the that perform you the keep to your thinking that's we to executing. might we're that so weigh of I balance

Dwayne Blake

for towards Let in front number me building the it's ship it's of the at number work for we the at year and this the X% are is out take about of ship and end you kind look of for when the kind year-to-date timers with big kind even when just quarter X.X% relatively like where of XX.X% add spot. at you X% on sweet we one a Krishna reported is building too to kind kind when puts you so the X.X% back it's their the of of and middle talk but

Krishna Sinha

quarter then and Los pipe but like just size opportunities coming would that through. a in any you modernization when do And about do work timing sense you about could you see down have the work you ad again on hoc in those in and other that type terms the maybe have talked talked the and of maybe sense when not terms the of some of would years through come come you or of Angeles of but wings any

Mike Petters

our to it. to of too kind be it's how how about its early comes and in its not depends the fleet Yes, and it's to going that's stability I on predictions it's mature discussion be any through ready on tell. just It role think make navy able improve get to to frankly what to enough the

Operator

Bernstein with Finbar of question comes line Sheehy the Research. next from Our

Your now open. is line

Finbar Sheehy

all you You've the to annually cash ultimately about But ratio to how and shareholders and want plan through dividends dividend it talked thinking is at dividends said been payout on increase give least between repurchases back also you to free you doing flow between you you about essentially primarily dividends. returning and a the can repurchases us you're to long-term for or XX% the example, dividing path split any thoughts get and repurchases. there

Dwayne Blake

have you done at the we then look repurchases when the the XX% Finbar and a and least So opportunistic. about the be we've we commitments will would dividend, that share at fact talked on which increase

we increase of dividend set But So we we'll on so advantage that of on opportunistic payout in the on nature. and terms opportunistic the say anything take be repurchases towards or dividend targets share have shooting a we're the know repost. that continuing really don't focused continue any you suffice to being commitment to of

Finbar Sheehy

in you And significant expect be the or just risk to there are coming on QX some these ACs, of negative that events up reserve quarter. positive

Dwayne Blake

we second XXX any the in trial don't for NSC preparing additional Mike DDG have mentioned in for half delivered deliveries, ship So we is X that as QX, had QX.

year. this for it much pretty that's So

Operator

you. Thank

comes & Our Gautam with of line Khanna the Cowen from question Company. next

Your now open. line is

Gautam Khanna

were have the just lower it cash right. to covered clear joined previously I I now be year is but officially is we pension apologize recovery that this thinking on just it flow, XXX delta late may but know you Chris the haven’t is You guided next

Dwayne Blake

Chris front you today. end the I’m guess weren't on of And the call,

safe XX So the cash and change talked in and the before that the know number put the still discount we could talking would then roughly I rates XXX the in versus that we don’t mention a XXX to final use tailwind about that of will pushing CAS also variance what be about the the been be returns fact million so that we XXX spot. some net fact additional kind so

Gautam Khanna

be to flat relatively is so about XXXX X.X. that clear, just assume CapEx to should XXX million And 'XX we and with XXXX get drops then in

Dwayne Blake

That gives talking you been to about. the number we

its think yes it. to So about way fair

Gautam Khanna

of guys update about have stand you on any some those longer-term today. just that the on where update pursuits things any talked icebreaker And

Mike Petters

engaged pace in are I frigate proceeding about those can engaged programs with read those we at those keep the mean ahead and or programs whether of moving both pace. you icebreaker and their at we're customers we're it’s the

Gautam Khanna

the pace Is ultimately fair be what to do icebreaker on done. expect that or seems this get actually you slowing. The

Mike Petters

good of much question, to kind want still buy. how what kind the they that to mind I’m they reconcile a That’s with they spend have of to want

doesn’t through sort that go get have it's wants And icebreaker, sorted so and longer a of important what just a appetite the of see to figure has buy little to you it that think but it not whenever to get bit program it I programs for a huge huge kind out because takes what's out whatever you. have budget to you

that's think I of are. so And kind they where

Operator

Thank you.

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

now open. line Your is

Joseph DeNardi

kind you the or lower sales have just in anomaly a was at point. bit out this on sales Mike, XX CBN that peaked little me that an that surprised contract it of quarter called

Dwayne Blake

can it's towards Joe quarter-over-quarter where not all full they slowing ahead but the nuance a in bit XX look actual maybe team the focused. at Dwayne, terms when in volume timing vary so is speaking terms you them how comparatively of of steam guess I is it's down at launch but a where are so marching think compares the I of

Joseph DeNardi

that message of you commentary communicate, sure we the are pension flow expectations what realize or the upside strategy. And then make cost kind standpoint of as to that understand margin the Mike just if I from want savings trying to you guess on there's I cash a temper was should

Mike Petters

suggest to more affordable. allocate We were I we several make up everybody then products recoveries. to to is already opportunity focus that chose longer tail would to were we as would and in continue that that some industry businesses not more the the that with we Well, years businesses we opportunity cash create for in a ago the competitive and in to capital because and terms our that this had in given tread were near of the related free given just figured do pension our -- here our make gingerly term will how our choices to

an but evident we today by think that a choice is in were making is a so outlier, I bit of that we are we something And pretty that. place that that where made choice

environment bad in more a So year our CAS next think much recoveries us with that's I in as an we more where a impact we for pension describe for we are and to dollar year a and affordable the happy competitive for knife the way place be where year the we every not pretty next because I'm be. budget in fight are work going of through products to after, is position I how and think and our are

Operator

Raviv the do We a Citi. line have follow-up question of Jon from with

is line open. Your now

JonRaviv

in then is potentially XXXX. midpoint question back bit beyond X% margin, year up next we down recover all appreciate as new well. about going the you to the Just X% And X% year-to-date of late the are should 'XX apply to water once get it go stuff Krishna's with we or little picking CBN in X% this certainly to to expect perhaps that that a

Dwayne Blake

the fact for are spot and drives Yes, so of the world. we've XXXX X% 'XX range that going there a certainly again timeframe the doing thus the X% bit margins to a our certainly mentioned X% to remains 'XX that we Mike still was XXXX back as X% positive better, we little range but sweet in to current far so that are view the get on phenomenon is phenomenon keep the out and

Mike Petters

not to that. I’m typically you to at by business, good going not quarter are the of try quarter handicap know we very lumpiness the And

Operator

Thank you.

question Shapiro the a We George Research. of line from follow-up with have Shapiro

is line open. now Your

George Shapiro

the skeptical that could the tell ships just us what what of are. on you you Can been now you Navy's is always versus the given history it that second learning achieve their running curve Kennedy

Mike Petters

and I X% the out benchmark. the that, reduction an in think best like ship hour was did that interesting report carrier you GAO to program one which or So pointed next is the know, like in man history a the from that’s something

Our some performance or that. places today than XX% is in better

for very create to ways value customers for very team looking shareholders. the the way with with and what's to on So is and pleased continue I’m there going happy

George Shapiro

XX% say looked is the six And months same. improved, stayed this so over that if the about you at

Mike Petters

Without getting it's too about technical, been same, pretty steady it's the rate. been a

Operator

Mike answer concludes for today. question closing Petters I for turn now back remarks. the Thank our to to and would like you. call That session

Mike Petters

all you without Thank of Chris Appreciate for you and perseverance will Chris products Huntington feel of Ingalls can over better to My more we you us to going hope for competitive that we hope anyway today. as affordable. in products and your is time thanks all and our through our and strategies the muddled joining make interest see we forward. that businesses have make also that designed are more your our make

you customers. our think see our whether our all designed improvement initiatives, our that strategies, I to is in that of that improve programs, capital it's for our digital experience transformation can opportunities engagement

to in working with and And so value. the Thank appreciate us that's this forward this business soon. create to on you very for time We much. you track to are we for and we that that put seeing we think best way believe we the you all

Operator

participating today's and conclude thank Ladies program. you gentlemen does in conference. This for today’s

disconnect. You Everyone all may day. great have a

Huntington Ingalls Industries (HII) 8 Nov 182018 Q3 Earnings call transcript