HII - Earnings call transcript Q1 2021 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2021 Huntington Ingalls Industries Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Dwayne Blake, Vice President of Investor Relations. Mr. Blake, you may now begin.

Dwayne Blake

Thanks. to call. Ingalls welcome XXXX first and conference earnings morning, the Industries Huntington quarter Good today Mike Chief us Chief Kastner, Tom With are Executive Financial Executive Officer; Chief Stiehle, Vice Chris Officer. Executive President President and Vice Operating and Petters, Officer; and President and

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

Michael Petters

safe. for Thanks, healthy that on is today's Dwayne. us call. joining and trust thanks everyone Good everyone, I staying and morning,

$X.XX, $X.X higher for the from quarter Diluted $X.XX XXXX. the starting was than presentation. $X.XX and EPS the from quarter in Now, let Sales Slide on the was slightly adjusted me X pension share XXXX. quarter for up EPS were highlights of billion of some

national in resolved will provide information approximately billion understanding budget and quarter New strategic billion signaling Energy adversaries. nation's Washington, the recapitalization program, and forward tax the becomes cited Security. ballistic-missile the other for request some key activities in priorities $XX the the that the a U.S. pleased when of generation note, Chris critical submarine remotely for the fiscal to as resulting few levels a for released Power Homeland Department affirm of President's and approximately that is funding Naval investment of backlog were $XX which recently we allies contract look fleet, reassuring on we potential quarter autonomous available, during to in XXXX in Of the billion that submarine to of budget operated of the year Shifting of during of his the funded. and to awards awards $X.X summary funding next maintaining were U.S. Department systems, record approximately as is these remarks. color security for and well of budget details requested continued summary

budget during with also forward legislative cycle. is the closely We to current the request the working as FY President's 'XX considered Congress look

announced we sale agility Technical a previously close our relationships contribution Holdings business team quarter expansion. confident non-controlling and I'm fleet sharpens to and results. our achieving, tighten of our program is drive operating the portfolio that sustainment in And And pleased as and the very also the prepare consecutive led I third into financial customer capabilities execution to I'm are with very leading of focus business solid strength, the of close, and of which serve our Regarding catalyst growth revenue cash and of margin as Solutions provider believe customers will value positive ship strong repair this for Diego strong to our acquisition completed of to sustainable transactions will organic and for where backlog us San the flow, momentum interest leverage Completion help these the free quarter, long-term the resulting unique we and from and the services. actions in a shareholders, areas oil during shipyard historic generate create completed enduring employees. key exchange shaping gas and of COVID-XX impacts to rhythm the

X, retired April I X. over than President been Wilkinson over operational as proven on to excellence of that ourselves strategic turn remarkable, extremely our for the career on now Now the Ingalls am report has After and before and that be with I Chris a to at operations. will remarks and turn Brian's more of XXXX Chris? to make Brian benefited Ingalls in to leader capable has the his will leadership Ingalls focused and Chris, is as XX comments new leadership. confident me Effective call of let service, the succeeded few is President from since very change. Ingalls recent And I hands. and about on call Kari Brian Cuccias April Chris. a HII Kari truly some has years visionary serving

Chris Kastner

had Technical the work that, good approximately LPD quarter and and systems, scope lifecycle share a me management, let the progress chain of was programs. Operationally the execution across post-delivery making key services with few $XXX team Solutions business the new segments availabilities. for consistent The quarter. a programmatic change and At engineering awards cumulative from engineering a our With we Mike, everyone. Thanks, highlights value contract contract program morning solid Ingalls, and shipboard support management, the of of includes shipbuilding training million. for supply for a awarded and

and achieved Bougainville in team on support focused planned the milestone Regarding cost remains program status, their schedule And complete production milestones. of strong maintaining X performance during quarter. the XX% the LHA

approximately focused track single USS for the H. are M. under E. XX schedule On acquisition complete. milestones. delivery and is John our blocks XX, at McCool backlog, sea this refueling George These to for the This building on test launch submarine. Stennis, stands board Washington milestone sea both And contract beginning program, the on while XX year. continues with on next program's along CVN remains affords progress next when move initial XXth key [key] team complete Virginia-class is year. XX record LPD CVN trials now complex Navy Kennedy Petersen on preparations a Shifting construction support Navy the XXX closely plan additional Frank later which approach to awards re-delivery $XX and the and Ingalls recently to for remains At of launch early continuing is complete team trials of year, also the billion. program, was Newport requirements, finalizing the to team plans XX of CVN for of second DDG affordable X is the predictable Jack Junior Junior Fort received of savings another complete News, approximately LPD put and in Richard Lauderdale to C. phase is key year. for half LHA planned crew for The the working LPD ship. ship The also most a method make for with nearly XX the DDG-XXX the for and contract Block modification the on DDG XX% and and This Lucas, data, billion focus for completion overhaul bundled is the USS contract. and Navy. the key XX% LPD XX by back with X to compartment the to remains $X awarded the support this

preparation activities Montana SSN program, to XXX VCS later in for planned Navy program continues the for year. test to the On delivery this

remains on Jersey in off to SSN milestone In half track the float this year. New addition, the as second XXX planned achieve of

during that Solutions on this recompete a IDIQ fleet a and its Technical Information security Center ISR several the included and million sustainment key $XXX contract. Our we Naval Warfare quarter cyber booked Pacific awards position

Unmanned later across this of our Alamos, XLUUV Orca Excellence. on modules Center delivery perform And final with Savannah to have of of production year. our Additionally, contracts nuclear has of Systems assembly Department to our well the unit and services Energy environmental Nevada finally strong now with at Boeing our very been performance components underway XX% structural fabricated business Approximately plan River. commenced continues is first and and Los

for to I remarks Now call over turn Tom? on financials. some our Tom will the

Tom Stiehle

first good I Thanks, briefly Today, and will morning. results. our quarter review Chris

Segment partially were by and prior year. XXX XX% rate decline of was the FAS/CAS in The divestiture $XXX this last taken. gas were million X.X% million increase the for For first XXXX on detail the more and revenues $XX largely Net million of risk margin posted XXXX. operating Solutions first less X% These of credit first per we and segment with year. to offset This The our current of tax of segment decreases compared income XXXX approximately compared results to the issued basis recognition in earnings the our million the as .X.X% was The to quarter quarter improvement and morning Technical Ingalls R&D our less XXXX. and Technical a the our segment Newport and strongest $XXX compared tax growth decreased due the driven quarter points. to for of operating from quarter that was was period the XXX associated by $X.XX $X.XX quarter points. increased in by margin in actions operating million earnings higher consolidated the driven quarter News in as percent and to due website. tax retirement Operating same the due primarily million the the periods. to performance Beginning by of of $XXX decline XX% primarily with decreased the increased the first compared quarter shaping have XXXX. year Diluted quarter compared portfolio the prior Solutions. release adjustment, primarily divestitures presentation, of at first earnings in quarter to results, quarter in improved was share the approximately offset to rate in quarter to the operating Slide please refer billion of $XX from were X $X.X to of our by at operating well of the oil Ingalls $XXX income basis on for first favorable in results business, to of than

diluted compared the impacts per in were in $X.XX the of to XXXX. share earnings the first $X.XX quarter pension, of quarter Excluding

post the X in other the free $XX retirement benefit in million from expenditures $XX Turning quarter presentation, $X or Cash in flow cash million of which $XX operations resulting to of X.X% pension net compares million This to capital from and of $XX was pension of XXXX. of our cash negative million first revenues, quarter, free $XX cash qualified to flow of million of the cash operations quarter expenditures and million. of net $XX to and were and Slide contributions $XX million in plans were contributions capital million our plans. the discretionary were

paid the During we $X.XX quarter, or dividends per first share $XX of million.

share fourth reinitiate capital a allocation continue of as year integral cash view our part did earnings quarter over strategy share free via repurchases we on the earlier excess noted long-term. our repurchases this return As call, the and flow to of

During shares $XX cost approximately at approximately the quarter, we repurchased million. XXX,XXX of a

our nature Due with reviewed provided passage to call contribution lower consistent to pension We does remains near-term earnings an meaningful the believe with Moving product that Rescue our Safe not update with that limited of have and cadence. the American last to have the pension pension the on deal. continue Act, our activity legislation passage of to we our outlook the impact the on QX impact to any the outlook. projected we implementation plan of on provide our and most Plan on Harbor call, expectations of the appropriate cash X-year

revenues X program. in Ingalls Slide $XXX on increased LHA the of Ingalls’ to higher X.X% million milestone last margin of on the from to income by first primarily year, driven quarter XX% or the to $XX Moving operating DDG XX% of same the and retirement million XXXX quarter the which on mainly completion of period from the revenues presentation, million Chris related was X, mentioned risk $XX due quarter up were that in earlier. of the higher

well X.X% X million to as due to Newport higher the to revenues both Turning period as increased aircraft revenue or year of same in of and submarine the in carrier quarter services. billion News presentation, Slide support $XX last the from $X.X fleet construction

Block by and $XX IV and News boats. margin to higher Newport XX operating quarter income slightly year-over-year retirement VCS risk risk of retirement partially were offset of in X.X% million RCOH primarily down on the CVN lower due

divestitures Now San quarter X both same quarter million which at first partially revenues XX.X% first loss was income the our XXXX. Solutions the by solutions end operating from of of nuclear and the gas last to this to oil Hydroid quarter full defense the to our the the Technical of in Solutions mainly on on performance decreased Slide of shipyard the the to $X gas as related in a business. Solutions quarter due presentation, of well a million gain and Diego period federal This by from in year, $XXX compared was the $X X offset quarter XXXX. of and business Technical million as driven improved and services the environmental Technical year, sale primarily in of of oil of of and a February results acquired of

we Slide to with the to X% operating risk in the with year weighted finish remaining shipbuilding we will expect the Turning year. the range retirement towards the end to X% of continue margin events significant X,

addition, margin In shipbuilding half expect for XXXX guidance we midpoint to of annual around our be of range. the first the

We as with guidance the appropriate XX%. XXXX the expect to remainder be which effective we of now approximately of rate our exception tax continue to view the

over Now I'll to for call back turn the Q&A. Dwayne

Dwayne Blake

Tom. Thanks,

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

Operator

ahead. go from The Carter Instructions] Copeland Please comes from Research. [Operator Melius question first

Carter Copeland

could stay the more Mike, you over conviction wondered guess mean around I comment expand. metrics better the you you're the of rhythm if specifically challenges it's expand and you a if of thrown last string you looking cadence several trend a and going that that operating I I give been at you're quarters. that's out of on. on to But finding quite operating what a could there. I wondered that, made sort

Michael Petters

relative and we our We've lot we're register a risk that we helps created to so actually where Okay, I XX know where the put took get. we're the body you've through ability We've the in you pretty as pandemic happened. that that like our Carter scheduling. have us of we mechanisms We've think stabilized but where in has that come when this levels. team the ago QX, and in had to on blow right. year back our you're connectivity, first of stuff we a recognized impact out We've retire are that of lot the now the a of at with that attendance stabilized that this a are we was. innovation lot leadership in a crisis we had need that - and what is going and and we backlog It to employment place, where working got a all, And thrown good last that of off We came risk. tools months. the our a

that of move and all what start we at of as you to you taking forward accomplished. look You're actually advantage

needed preserve people. While started pandemic at beginning of we thinking we the the to XX,XXX that

still have have our innovative, hired the will. hiring that. And pretty last We've and in forward. pandemic years and We the We people creative workforce. plans have pretty just that's, since X,XXX hired if started going five between we over that's X,XXX actually you and robust done

this are they really last inside began. summer lower than been, is quarantine our yard Our than and case it's of rates that's lower today today volume been since the have since

where employees third are to who top We rest workforce a we've to our getting not of to vaccines of widely us. the the to they're - vaccines of available them on have administered actually administered about

we're And our done. engaged. understand at seeing stuff steady and work be are pretty now to we're done needs rhythm so, there folks a getting We what actually

I going manage said that Officer that do Chris more moved Chief we think helped. management Operating be risk how change, the really we to sure really going over do we're what were the we how do where we has and and doing make to on bandwidth we forward create

I've we around of going a said time, do. to right I know, And so been are for don't feel in where we're now long good but I I terms we about what really guess doing

Carter Copeland

then you of about be a And about obviously Okay. as that when not work. - significant is macro any follow-up least to inflationary at look there aware Is it is or at, inflation terms lot quick of there we in wise How you that? point? a just impacts, this talk watch think and exposure at fixed-price your should of cost

Michael Petters

seeing to take about Tom let one. we're there. talk And you let that may I what Yes, him

Tom Stiehle

inflation, Good longer to term. morning, are our relative Carter. much Yes, contracts they so

We and out. that the benefit here the a lead have backlog and we to with contracts from work have long planning our plan horizon

as So, additionally, that the we We those shortly site we we backstopped that as the in want put by - proposals after far award. we have where place. see proposals and commitments they need materials a generally contracts our They’re together POs to and bring home. are the

So span that We we're yards going And we that forward matter do getting as feeding about is perspective. not point. of short. not We're fact material across of yards having from amount new what see seeing, we're the the just a as we’re talked week a this purchases problem seeing of quotes validity have. inflation quote at that the the tremendous I've

to, staying see performance, I feet to our right think what light on don't relative now. committing as and the far contracts but as are their contractors we are our they impact an

Operator

Walton from next the take from line of ahead. UBS. go Please the Myles question We

Myles Walton

efficiencies that if of is work be medium-term I the that could timing more contracts your clarify to LPD Chris well? could as you versus bundled mentioned levels actually generate plan and there just was or size, hoping, increased you

Chris Kastner

we can X% that that's The in pretty together contained efficient about in work when so an talked standpoint. from those you the of sequence and the the benefits all order three bundle are ships a of growth kind guidance clear, manner. Yes,

You're going savings. to get absolutely

we Navy. under be So able it's we something support, get not it with the we'll will those get ships efficient. we're to it's contract working If are something as just not closely very that, incrementally

Myles Walton

What three? bundle of the those a - would size of be

Chris Kastner

X.X potentially. billion

Myles Walton

down Tom. to XH significant is midpoint there given range. to margin expected so? clarification be the at is is why a the of maybe the XQ for in point And the or you step to so Can Okay. sequential six mid-sixes The

Tom Stiehle

related amount of there's comments it's as we that QX, my tremendous milestones there, in pacing not Sure, a in comments, right a just opening I have QX, now. year

the come through We present So midpoint have the obviously there, year of we retired the rates potential think half around the we year we're if have watching the booking we volume by. burn some of then of guidance. first at have right have in half - will come back that milestones to now. the off And that year, as but that in the kick the the

Operator

is the from question of Harned next line Doug from The Bernstein.

Douglas Harned

versions lot to We've goal goal, has plans Navy appears to to but been appears ship XXX C&L seen that gone a whole and back uncertain. very the at even get to and mix of XXX kind plus of have shipbuilding the the not easy

to when about in and of plans? long-term about Mike do environment. think investments around you the So How these shipbuilding flux want planning this you you think given all sit where

Michael Petters

thinking this a way. Thanks, lot the is, kick a we Doug. actually question of are right about we around kind That's great when

the Doris we mean are of now the see I to at deliveries every shipbuilding kind comes don't right that the is I execution XXXX. is like the on higher contracts plans think contract rhythm plan in what out, Miller a shipbuilding then plan ships longer that couple of have under theoretical XX-year we But years. a know I level a much macro at deliver.

like is and between four what now So XX-year then. that plans

little that we is more the but Navy movements a at in but in faster cheaper so a plans, what bit, of we're around as the of of about the intent many ships, move see look those ships, maybe to what move much what's ships. precision they ships, the we intent maybe plan. that has So plan those to smaller And not the plan, you've the seeing wants acknowledged

in are investments our So aimed that direction.

build to not doesn't going are agile destroyers, efficiently want more through go. of as that enough to carriers platforms submarines, those efficiently. requirements, or to but go build mean to build to changes can. They're respond that and When to class Now more customers' they they aircraft efficiently. aircraft and want they're are, going change effectively They do our I carriers submarines submarines more or want to comes we as because ships amphibs, frigates They going and to efficiently. non-nuclear think build is challenge it the block be kinds the to either to more

use We'll to, Newport a your for able may make we do we So can kind We designed to multi-product to do the opposed to do four pick There be carriers that for will now capital that investment at in that. as three our you are of apply that that to News way ships. of or about are make so submarines, of that. a investments facilities don't Ingalls investments evaporate. classes capital from multipurpose, do We’ll investment that's big at kinds and years go program we think the need investments.

the whether the of more couple way one we it that generational our means past five very is us that that thought so, destroyer or a that's of the lots going do. have We and direction our well years about probably less over the investment sort very, discussion thing, shipyards. kind thing we And to of made about for investments think still right it's to end one Navy of up going. were So submarine the we'll all dollars but positions this in or sized we think billion

Douglas Harned

And faster rather change up industry obviously structure it's with and a this when slower the smaller dynamics of you because a different know a ships, more competitors faster we saying saw as - the forward this other can foresee ways open could when LCS. I time ships? you and to of frigate the ships, in look competitive first you you you're general mean, it it do away you think, do sense,

Michael Petters

question but line Doug, be from a specific. I don't kind that's - Most product. I I thinking the shipyards or country about maybe, say would product that a know, that transformation, other. It's of is in that question one would guess it's either of to I to going this binary going build caution anybody the be a

shipyards build at We ships classes Our refueling at - build several We thing. Ingalls. sort carriers four News submarines classes. and of that build and all Newport of and

multiple of well So going ships that serves going future we pretty do classes in the our competitive. environment is shipyards. We direction be, us more if to whatever to the and think is for be

it. be to So compete. We're happy

Operator

The Epstein from next America. Bank of Ron go Please question from ahead. comes

Ron Epstein

maybe little What a thinking Can business, in margins the quarter target How services margins drives the upside are about the and the X.X% talk there? X% were the were we about that? maybe X%. bit to or about you

Tom Stiehle

that It's Ron. here. Yes, I'll Tom take hey

from X%, couple of got it So we X%. have things, a

there the we're now, it a is to Right we along for X.X% the those come awards as little quarter. for sales shortfall awards of saw year. right, waiting You're bit volume with and

where guidance, TS Just front the in guidance we of to announcements changed little bit X%, we the and year behind end. recompetes, think but some we with just to year's it’s of of be our are X% at relative a will - COVID and haven't us, still

Chris Kastner

nuclear the of of quarter. and the fourth slated second can space, There those I timing that. relative add equity some is in to Ron, towards to are our accounting -

see that in quarter. - the happening generally you So don’t you see first

we So light. usually bit it's and a lumpy, start

Ron Epstein

what you're a what's plan question to And Doug's out you catch business, biggest then the that I looking this four say fish three, are Mike. there five big that call years it, mean want let's is out? for the you're or now. a the it for follow-on trying medium opportunities as to out question call When positioning term, you're to

Michael Petters

shipbuilding, that that. think start with we'll in So I

of submarine expansion is the want if in support on what's want to the line. able to Navy able line product think planning of be ability a product some it's to We And need then able of - the In same I discussion way, say, that take been has design assist go expansion that think the say to and expand if that. be frigate that. to be we there engagement piece there to certainly we advantage the full and do an to space I industry's for. and to if the about wants

affordability So long-term, not to of probably going are is, XX that's to the to with and that a or CVN amphibs for frankly contract mean to are mean it's that. we in to future mid-term. it I engage to you some going near got is put what what to XX ship be mid happens to And CVN XX carrier a there have up starts design - show XX. probably happens here, the I going in

the a and Technical business unmanned the the in I way about expansion it something of In So made we've big Solutions unmanned is in making sure come space, we that that stays that. that's shipbuilding. of think on think track investment

in see lot sure to it's out budget we We've percentage and that done we well view. to where aggressively. and Now that is position with we to a of we a expansion. the there, have alluded to I expect but going gives our prime great and in that. really us up going then five that growth have expand that's capture very and probably that a largest think and have ISR to the to kind established of items as our do business, in that as that is Of all it we be next made space, unmanned us all very pursuing make really - ago, takes portfolio, over to item of my access shipbuilding of and another a well the that we investment needs there done customer, actually department work we've we've forward. the a energy to there over to capability be look well done to are for Chris spot budget we minute continue that We that advantage of we've established And

kind of and are, going think Where what So get for we five make get them of sure capability but do our are there our there. think based how we dependent we it's look want on customers years do help and capability kind customers’ needs that's about it. kind how that to we at to three of in be we to

Operator

comes Please next The Shapiro George you. Research. Thank ahead. from Shapiro question from go

George Shapiro

so? - provide if and Yes the is on it LHA million the probably was pickup you or Tom fair $XX the X could EAC’s that

Tom Stiehle

that So the definitize quarter or upside up There a they favorable downsides overall of where have color milestone yards did morning, a is, good Only that the - was X is the heavy about down there Ingalls’ the - Ingalls. highlight the risk X, that there XX was the XXXX drivers We our had upsides XX probably at little LHA Ingalls. they the top significant complete bit, LHA quarter on give good vessel was specific a XX good the were XX it there. so was a little the on the EAC. here. and reevaluate of proposal they George or bit the on kind net hitting a no management significant across don't have been guidance information ship usually focused so for we re-strike I on XX% change cost

George Shapiro

favorable gave XX is on imply Tom million would I it about rough numbers heavy mean $XX bit just the Ingalls. at if a little you of

or its specify XX across if X? LHA can board another all spread for $XX you million else anything there the was the was say So

Tom Stiehle

the has on information Q the X. Yes, LHA

in of down We've that] then that XX% but a forward, so [cross you'll going they paying about just attention I is wouldn't And only along high not So But good performance that's cleaned I significant. so he we're other as LPD bit well, say, $XX aspects management. didn’t that coming expect and definitize million on it change get the the and XX heavy. cost. where they see you're quarter change up there landed. the not for

George Shapiro

with update submarines can one that you And for to you've one some mean stand one V problems on that us the quick right I now? Mike, had was this where we Block the

Michael Petters

we've really And we're that's a in a help going got on to had Block on was we Block do and Block challenge Actually, QX carry V. establishing rhythm the George. IV, us through Block well rhythm in IV, in

know to that. add want you don't I So to Chris if

Chris Kastner

we New complete getting hit and important Jersey New VCS floating there can I Block the pressure the of year off. quarter milestones on floated Montana Block the important on getting milestones hull in IV deliver some balance off with Jersey add and through first getting Montana IV for

progress ready So for those getting we're milestones am channel very delivery. Good I closely. online watching

kind Block now. on IV the optimistic the we're the momentum and on contract So of right rhythm

Operator

Seaport Global. The next Richard from go ahead. from question Please Safran comes

Richard Safran

So I’ve the forward. the doing the to based I've you wanted being work. about been ask I been there on that. just reading about done work reading about

level the the weapons work know to other items, discuss could want far? cetera? there progressing you work expectations, efforts completion elevators doing Ford things about expect are you from so if when still Navy and like how the your the maintenance been and on satisfaction the any Newport you is if commentary of just I with et relative on there's to

Chris Kastner

is summer really I it's that that of ship performing really performance our go The And so on nothing but especially carrier material elevators done seven really after with right a interaction the positive Ford will Mike I'll very will ex-aircraft over think but this be is on weekly of yes the about Navy the forward, the going But interaction is me. weapons Yes, got this not yes, Chris. been News on team it Ford, program for very Navy with positive on Newport those the positive. let turned well work the interaction and talked pleased now. Ford manager while,

Michael Petters

the the centerpiece I'll than fleet in other the that they full trial ship just and Navy together the the - towards getting it from a they've centerpiece on the to It's operate, their number moved Navy shock class. so the mean the is weapons probably is number ship is green of our of last systems at Coast forward quote say how and power number will have as of more carrier ready I the the training the the speed how sea any much of ordnance really to year. strategy as design coming add I easy launches. is mean well. much said And for East they you Nimitz’s would and ahead. density of at Ford go all it the Traps can going and changes a elevators tons The

Richard Safran

that was think a like that if Okay, for for status think future, wondering the was to was going deliberate you I'd the one mean to think was and It I just about talked that it about now [XXs] is go this example Navy fleet. the replace of ever talk program? maybe do will - kind was comment you making what of opportunity. there think you that revisit omitted and you and materialize a you Tyco's? replacement of you program on if Flight to III is your comment was comments the I could Ticonderoga the real Or were

Michael Petters

there's at countermeasures things ago there I sure the than handicap that at a is then I countermeasures. technology lot happens counter, and ship. one different the know what counter, Academy build there's of not races a how to the speed was of years that's I'm countermeasures learned is And cycle that counter, first the ahead and XX

platform. question kind And what is the of so

work to need going You're to technology.

at If the with it you at is trying Flight what full. ship look they're III do that and pretty destroyer look to you

will of upgrades. to get probably industry technological future And so we than create something the margin, if to for need space design forward. platform it technology and require and How is to that that you is - the as has there it weight there that going carry different a kind an if a

And I'm the now. robust is not I'm a to I handicap - that out. sure going Navy how about and think are industry the turn to ready it's discussion right pretty having

Operator

Poponak from Goldman next question Noah ahead. from comes The Sachs. go Please

Noah Poponak

XQ I and and up Just risk in half in full-year and something even history embedding XQ? XQ going the half zone it So the implies negative. of different shipbuilding the implies your a pace guess, back risk and flow how slightly EAC then second guidance margin XQ, of positive actually comments you've year XQ, stepping events topic is net and in of the out through. margin essentially they retirement take of provided maybe I first sort retirement lot no for the to if The the through X.X%

And Just want have that's I that make for. you're looking to sure correct? what

Michael Petters

too I'd estimate so mix far a ships where in yards get around tell ships zone that either at good step sold spotted Noah new our have I as will so that mature against a as the read as we there. need or you we gave we and/or your be from a are the Yes, that norm, are guidance on is where the off when the you, that's you part. take X.X% you both I and lower plan changes. they to between wouldn't rate much into up moves X% X% booking ships perspective tell be mix and that a

yes, that got So you right. I think

Noah Poponak

Makes you look events XXXX, similar sense, in more amount? a or less and risk when have next year Tom to do retirement you or

Tom Stiehle

get year XXXX forward had guidance pacing year. mentioned that go this more and deliveries. I you for had gave that XXXX a ship we'll told mentioned then we can next then X%, hey as in We So see February, X% and year low and Chris we into the X% QX is this

and the is that as those realize there kind discussed. or margin the the potential off and has we of upward. burn down And expansion obviously, there click quarters So moving this we'll plan that risk

Noah Poponak

into numbers to or small just clarification contribution enough total it's your be the cash to the and at inputs all that not those had flows? come you a change flow just previously pension, then cash that recovery do And going provided the literally on CAS ARPA is relative change down

Tom Stiehle

there, really basis. really that CAS - kind and to projection of post change math million significant it - The want you on we the variability February the do was Safe over $XX the we Yes, chase we're benefits. quarter-by-quarter as at strong Harbor something already again. contributions don't Since in it a seems mac we far of a if to retirement gave the but there half that over limited mitigated Chris contribution is

fresh between a next projections the function to of closes QX, it's a the variables. you and So And here. give We're rate pension those that's you the We'll be plant going discount also performance, will year then then XXXX. out cadence see for February. look three and to on as projection give the look not recorded obviously the is a in the at that at as a we update remainder going XXXX changes normal X-year equally

Operator

Please comes from The Barclays. ahead. next go question from Strauss David

David Strauss

can comments. revenue the couple on within in TS sits now size Could unmanned the [indiscernible] potential portfolio touched the growth there your and of you and you a that Mike, a what revenue be couple when target years. of could over And on would business about of see there? for kind what's think going reasonable so breaking you actually it that next the out, we

Michael Petters

a have broken Yes, out we that yet.

let out. so we're when you it just, And we'll know break we'll ready to

David Strauss

I the quarter. Okay. guess in first

think the about Ingalls at forecasting You a into should the at bit this shipbuilding future? did, here. X% we had growth both little relatively X% year versus this new year How top relative Ingalls X% you're perb and rate flat from Newport, and of you growth

Chris Kastner

the growth by Chris. is this don't We break the rate Yes, two shipyards. out

that Newport forward a give from specific said Ingalls don't moving lot growth News, of is the is but historically and we rates. have coming We flattish growth more

David Strauss

one looking hit holds? the Okay, see R&D here potential Could I that if there, what at impact. be if you Tom amortization can on guys

Tom Stiehle

Yes, if so and that have years. opinion that constructive we from an to - the standpoint is not on five investment to amortize have over I R&D

So legislation to see we'll have flows that how out.

we'll range million how model it could some $XXX the it. $XX impact legislation million tremendous We on to It's on cash have not mean the our obviously I that affect say, in that. run see range, does have be to and models a unfolds. XX-ish it

David Strauss

to $XXX million annualized cash XXXX? on million $XX in Okay flow

Tom Stiehle

portfolio that's Those evaluation we we Right, that credits it over the you an so. years. have and got five amortize annually against do to

Operator

next Our ahead. Gautam Khanna comes go from question Please Cowen. from

Gautam Khanna

Cutter morning, that? on contract to a us Question administration these, guys. just National on, you bind looking the what's good the keep refresh could if Security desire change question we request in for Biden have on program what XXXX should be any on the your I

Michael Petters

appropriated. XX hard pushing to get we're NSC Yes,

off here. why kind you've of now it. like works for of think the done the come got with behind side this budget, all kind it's any think I top we're frankly of And administration review where is Navy just the DoD number doing details the that That's of FY I kind before XXXX the not on living a stuff. top to of a bottom seen of line out administration

to pursue - able Our lot view platform be the world it to Security National support the Coast and there going is to is is to we're done gainfully to we're them of continue The it. proud get strong Guard using and for that Cutter. a with around partner

Chris Kastner

through I delivers XX as add probably of delivered production XX there you're the nine, the kind on XX at on Ingalls timeframe. we've aware could Gautam Yes, XXXX

the capable Mike very get As potentially contract. indicated on we're for XX working ship and and to Guard Congress the with Coast the

Gautam Khanna

V understood additional the resource, Block end the line on XX of any discussion of Okay, this sort that of program?

Michael Petters

I think we'll see.

happy to to lot have new the that just whatever a a we're to around nation coming table discussion think of the it. needs requirement are I in We're platform. players provide

Gautam Khanna

showing And up we and/or of in Okay. shipyards like in it terms absenteeism COVID where the at opening of staffing from is your that? have level I but are remarks, where may missed people

Michael Petters

are we summer. we're now. at normal we our at levels. since normal I have mean, levels lowest case Yes, rates Yes, last

last since have summer. the quarantine in We fewest people of number

getting places Our vaccinated the of one-third the as in And third of vaccinations is workforce, workforce. our well. we've workforce actually other

dramatically. driving that's our And what the pretty hiring case during rates people plans hired just is doing down and. our that's We so continue X,XXX pandemic,

want And so, will to access people get that of the in have we're get have that Xst the we had expect it. our shipyards - ahead, that vaccine June, moving by to

And ahead. moving so, we're

Gautam Khanna

LPD bundle across talking curious, the were bundled put any that about and contracting? for together purchase classes, is been there different And which last was me, you from just precedent a LHA maybe one ship

Chris Kastner

around the a won we And TAO. competition LHA was competition We a our and where had and years at LHA, friends and a won few TAOs. the NASCO ago the

just So been we've probably out precedent over building is XXX there country about in everything there. say that I for would this years. for that's ships

Operator

comes Suisse. Spingarn The Robert question Credit from ahead. Please next from go

Robert Spingarn

to wanted one's this for new your in I you. ask Chris, role.

And the I think little on maybe talk bit three that across the other, about is that one within the a you up practices that? tackling are best one all you're of moving I expand the was just opportunities yard things could to businesses. hoping from where

Chris Kastner

work across and even no in each learn processes bring good that, CFO systems reviewing chain, their I operating of can each good internal other, a very there. really I very Ingalls One practices all had they each the I shared. spectrum happen chain as the at as capacity do, corporate but they my at teams that operating solutions different, question. have there the to well. the the a and then supply supply closely And from procurements, job give that's is they Newport other. best with and And yards look the They we opportunity job systems significant News. a within at do bundle at that example a work Yes, CFO are are can things be bit

So each to I working on Technical we're the few within a shipbuilding those them. of But from learn across just are can days Solutions on things for talk other. and

Robert Spingarn

if that's one talking of about? of technologies can implemented as our of - of yet replace technology the was visits, we you're there where things at Is Newport on implementation on if actually we're to update I saw example are well or the blueprints an physical that one come News think in. other an VR of there using how sort and

Chris Kastner

- another Columbia so on Digital is News it's absolutely class. the utilization question. XX being good CVN for preparing and a utilized building Newport Yes, within

an off craft that. we're great traits new investment and product and come making. absolutely from paying for really the things the It's to like it's we're the hoping So

Robert Spingarn

As like benefit, anything in reduced least of have testing seen anyone or quantified percentage the at man-hours you that?

Chris Kastner

percent a seen We have increase definitely in savings.

XX. It's haven't at anything published that to regard. on beginning the We just stages

of savings to are ahead want yes. we but don't we achieving So ourselves, get

Operator

The go DeNardi comes from from Joseph Stifel. next ahead. Please question

Joseph DeNardi

about protected we where inflationary maybe where what do seeing are are do - where risk question Just more risks? you then extent, But Carter's to you're anything the the have an specifically that environment now. think the you protections and when you and not clarify right to see and understand

Tom Stiehle

Thanks, Joseph.

So on I early said just that.

We a want and bit say to contracts. understood as have material more our We little the are cycle long as that the our process contracts have on on other across lead do make Our sure usually much industries. long-term we we here planning quote.

So on of award, is when hitting, handshake risk on our go inflation low we that. the values

share further mean to to But some carriers’ of expectation that material bands sharing six quote. that. there FBI’s yard on the more But pricing here seven both pockets and that as the material contracts immediate post that and the we're today. right contracts like don't there the that We flown on it's now material here the for we expected as around. I being Additionally of working piece eight get the the run tough with contracts indices or or contracts customer run obviously and still costs potential that in that much contracts see may is into years, overrun the send right. are so be the whole the there EPA, We there. at there have And execution in some of we the out, the with is times we that bought where then these and is late. it a

the to your So hope answer question. that hit

Joseph DeNardi

you - XX, can commonality, you very to more look about from Block helpful. is you're different talk than so it that's important maybe something can then improve think of from the And carrier on commonality about how commonality you. margins production. at construction, Buy When expecting the is benefit when that ensure XX more yes, those does Thank you maybe you serial greater Okay XX, degree opportunity ships, the and that? Mike, or

Michael Petters

got one the and actually in two was program my manager. ships which at platform Chris so the to get the deliver are have that the XX from Stennis ship lessons who lessons are the think program contract. are the the what well you ships five hard to who second do years learned that was into history capturing as under to means manager next. alluded last or with at about platform. them that's trained carrying Yes, ships Then do been will is out XX I there, you on time. are time XX tell learning the ship is a way for I ancient a curves take there. that absolutely but learning that it's Truman, we've XX to you real. the you apart, XX it, to is the same through being learned be have we've be first are as what The teams XX of curves kind actually the the through and and crews, how sure make benefits who trick from they ship you It's ship this And that that move and time. two four they built working can on with that second and

start back things spreading you I've curves. delay and XX, those this breaking career, seen these out, learning you my whole If start you over

So XX going what you're XX, to means that get is efficiency there. great

across the I $X which Navy enterprise, efficiency that's of think significant. billion advertised the pretty

push bit. to XX after to happened little Then spread of push the little out cut you bit. pretty right push out, start push XX a we came that we XX to dramatically. it If together and XX to delay out kind right right then That's going XX And the you into nicely. that And you're then a we Truman the little efficiency and to what and Stennis XX, of and you really very bit. out a out

to by would And a also that XX. trying the I that that back. should of contract carrier argue two-ship surprise, all no so be I we're next And XX capture and would,

that's but me. just So

Operator

like over I now not any further the Petters Thank this at showing would hand back to closing call you. remarks. questions to time, I'm any for

Michael Petters

it, you take thanks that your direct these related through page Well, to couple your today, to But like a I as pretty this sustainability. our proud for of staying issues take and report collected hope but healthy company it's website, up virtual all it's report. does employees, final our only sustainability attention I'm of dynamic work our one We've for and there. come Relations of to safe on to environment and their of for families, all, our been Investor years corporate what know joining communities, that very our all you we chance thought and of over that bit. us I'd kind pandemic. look our relative of our and families over for we doing what for and is we've But do are and brag and thanks relative kinds the how at, for do don't many a in a I'm proud created around about months, presentation, to you for us and lot customers. certainly look this a at and very for to a been this kind a as of a we we of little

I you get as our appreciate a So And company. your at we interest your chance appreciate always, take if in that. and look a

and any and look again Your with forward Thanks. seeing engagement we you you us that have, feedback soon. to

Operator

concluded. has conference The you. today's attending for presentation. Thank you now Thank

You may now disconnect.

Huntington Ingalls Industries (HII) 6 May 212021 Q1 Earnings call transcript