HII - Earnings call transcript Q2 2021 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2021 Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the call over to Dwayne Blake, Vice President of Investor Relations. Mr. begin. now may you Blake,

Dwayne Blake

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

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

Mike Petters

solid performance. XXXX another we morning, This joining released second Thanks, financial us quarter operational everyone, of Dwayne. on morning for by thanks driven quarter results call. Good strong and today's

EPS second from year X presentation. second of significantly share quarter last XXXX. starting EPS the and on me of $X.XX. $X.XX adjusted of billion from of the a Diluted in $X.X of quarter the the for was $X.XX quarter, $X.X let up some from pension up were was So quarter the billion Sales highlights Slide in

CVN Washington, of awards on XX in billion, missile the with class and was technology And the closely $X.X aircraft XX ballistic of driven and from the for production X forward which capabilities New for we on $XX amphibious Technology. quarter significant closing access HII submarines, transaction, backlog believe closing carriers, enhances defense destroyer key FY to DDG in Generation the is congressional for it DDG remarks. Ford-class the Alion approximately for in addition were a We warships. during priorities, that one federal XXXX and Military our approximately following with strategic strategic included some X. $XX and working that Virginia-Class the firmly We the requirements nation's and the a have XXXX. for The security second & Simulation, Alion provides announced unfunded high of were excited submarine color The Technologies Congress second in including and growth family. perfect recapitalization very are markets, our our Next Shifting a national also and technical release and solutions efficient and including the we provide critical team and we funded. of business quarter as technical funding Solutions. In to markup of for Science articulated Training few to contract priority approximately destroyer pleased XX about Navy's customer solutions takeaways focus begun agreement CXISR, turn pleased awards long-term the and the preparing CVN shareholders, supported are year the look are capabilities two of & to value request Of we're process an key an security XX our Alion DDG to other a capabilities number directly And some represents is national the the growth markup our expected Slide generate that the recently acquire evolving during fiscal in has Alion Chris will XXXX our budget fleet, potential Arleigh the fiscal is space. in they continued sustainable investment offers Burke-class process activities and customers, billion, solution for list for in note, during to in support one with complement resulting that urge products significant LHA the of request which year president's billion a provide budget the of the May. his and employees. existing requirements, support to DoD line earnest

turn over remarks the will I the Now, Chris for call some Chris? to operations. on

Chris Kastner

achieved everyone. quarter. approximately increases to business received was for provide another lead I'm consistent With good time long solutions and to the the procurement this programs. a modification and assault for additional amphibious and million. activities being material quarter awards and contract team segments LHA This me X, from $XXX current highlights million from a morning, At the very $XXX ship for Ingalls, funding across share ship advanced Mike, which that, shipbuilding our Navy few the the Thanks, contract on progress solid let pleased programmatic with U.S. key technical operational and

ships. bundled XX, customer. to critically of be ongoing and of We potential LPD a LHA with most acquisition continues discussions the bundled XX with of cost method the X LPD these the are important acquisition that effective believe procurement Regarding

and expectations. our Shifting and is program phases making construction the class of a contract In yard the variety class and X erection including services addition, million LHA structural initial planning of schedule class. Bougainville line progress with in-service amphibious awarded San $XXX X to XX for status, steady ships, America in years with and through LHA outfitting Antonio performance supportive over value costs of seven with Ingalls a of LPD total a potential was

launched Frank is this Jr. guided the Arleigh Lucas On first expected successfully Burke-class year. H. to the the team conduct destroyer Peterson, III and DDG missile trials XXX sea later E. DDG Flight DDG Jack June in program, XXX

Lauderdale production trials continues the On during sea program, and XX for awards LPD McCool there Jr. contract milestones the quarter achieve Newport LPD were to XX Fort in supportive the fourth track year. is on M. early News no to LPD significant highlight to Richard A conduct quarter. launch next

XX% on remains key support onto achieving go milestones is Navy, to and complete George complete, key approximately will I XX, propulsion is Washington focused right the redelivery XX, plant is So program next compartment and for planned Kennedy completion USS to approximately on CVN XX% test CVN remains team milestones. status program focused the the year. team and which

the final of during program, the Iowa On SSN XXX shipment completed the VCS the module of quarter. team

with achieve modularity overhaul quantity SSN Royal remains second and underwater unmanned planning half for of cost the was addition, U.S. support carriers Montana recently technical the and are TS Navy associated Navy to a New XXX during of also awarded Coast and and quarter this repair these surfer the and flexibility ships. and vehicles delivery, Zealand support Navy units. the XXX Navy affirm XXX to indefinite indefinite plus contract equipment of Helena systems to this the year. Navy redelivery fixed on on track the awards aircraft SSN year milestone the on solutions, contract West fleet on fee maintenance SSN million in later In float for track and And track bringing to submarine as program, later this New is remains this for planned finally the Jersey XXX, XXX off to delivery the the Navy year. At

services delays unmanned operational consistent expectations period base In services medical technical with and planning, which care. U.S., options year. Execution airdrop for a addition, Afrikaan and business airlift, the resolved a million maintenance, programs, four of new solutions TS our a within was awarded of we by a for included one-year in variety expect and management, critical potential of be in to aircraft for awards value the contract total with provide emergency logistics, except $XXX support to with end one-year remains and

upcoming those milestones that the mark. key Slide been program previously that As from than have I X. milestones we completed on There with close, have what check provided other no are designated note we changes have included

for to I'll remarks Now, back over the Tom? on financials. his the Tom turn call

Tom Stiehle

quarter good I'll Thanks, review Today, and briefly morning. second results. our Chris,

morning These of million XXX in income quarter was by For quarter the X.X% million was offset by to earnings quarter have and of portfolio segment margin on of million research adjustments the XX% technical $X.XX segment the and posted quarter the were Segment due results consolidated more the to of in primarily XXXX. X.X% XXXX. increased a this for XXXX rate in quarter solutions and impacts quarter of of the for XXXX. $XXX as X.X% were quarter shaping related in quarter of recorded the decline $X.XX please $X.X revenues Operating compares increased This Diluted our million quarter and to XXXX. to website. from same The submarine with COVID-XX. the due operating XXXX. were second of capacity to $XXX $XX XXXX, of margin share points. million detail compared second our of less period the and by the increases performance the favorable our results, credits results the operating well by increase related Beginning of second year second last X XX.X% at negative million taken. segment in quarter the we margin FAS/CAS earnings the just compared billion the growth issued to mentioned $XXX driven I of $XX presentation, income Virginia-Class refer to primarily quarter as to to second was a The the actions the second tax compared of Newport of increased Net operating second of adjustment. negatively in operating to partially the $XXX at operating per The XX.X% Ingalls in earnings partially second rate and the tax quarter of quarter impacted was were Slide year. offset by release approximately primarily compared to News program prior on in to increased the tax development approximately due segments, basis of the

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

benefits. presentation; Turning or million expenditures from of X.X% $XXX operations million quarter and to Slide of other and pension in of flow million postretirement were expenditures $XXX the operations postretirement from the cash cash compassed free in of million of free principally resulting and second of million. of cash plan net to quarter in benefit XXXX. This or million $XX our $XX the revenues in contribution capital $XX capital related flow million to net quarter, was cash Cash $XX X to were the $XX

During at the of approximately second quarter, purchased shares $XX of $XX or we per a cost we $X.XX And million. paid share dividends million. XX,XXX

$XX to revenues the in risk operating million primarily by XX program on up income increased incentive as the on ships was well of XX DDG presentation, from driven quarter revenues X investment in and $XX recognized Slide and were revenues year. for the by of last XXXX, as same second Driven XX.X% amphibious Moving of LP partially LHA recognition million on retirement in Ingalls quarter X, period of and the X.X% or million the $XXX XXX, low that ships. the the the LP higher a by NSC from assault capital of of margin program Ingalls the DDG offset higher on DDG program. quarter related

XX.X% Turning period last the revenues year to presentation, of the revenues News from $X.X quarter in in billion the the carrier Slide $XXX Newport increased submarine due aircraft and same high construction. to or million of X both

due operating up $XX Newport and the the margin of to related the year prior in period. and COVID were primarily of to the quarter News in X.X% Virginia-Class impacts performance income million year-over-year

Diego the was operating income partnership business ship income unmanned and on gas year, with Solutions $XX XXXX. well million and solutions. primarily period the to unmanned equity by this to quarter to volumes quarter related improved XX.X% frontal to of defense quarter Technical million and and environmental mainly venture system. last first Technical our services, volumes performance in shipyard of systems divestiture same increase Titan decreased well contribution the as of the XX. due Technical repair in income of in million the lower in solutions the quarter in the in year, by of the second high at a Slide the and San compassed of $XXX low the the volumes federal the at partially joint partially as increases from of $X Now oil by solutions, as offset as defense and driven This the offset in revenues nuclear solutions

for outlook Finally, of perspective the part on a year. of the the the shipbuilding remaining

limited in the to continue year. the of risk-free quarter, opportunities towards third milestones weighted We with the remainder end see for of tightness the the

Given expect the half margins the the be year, will first X.X% strong to performance year for the X% the now of in of shipbuilding the range. that we full

available the expect of the and and more week term-loan to close coming that in million acquisition financing in completed continue of XXXX. we and details earlier transaction component We acquisition incur of of expenses the approximately in related the are weeks the align XX-Q. this will We will the funding syndication one-time $XX the specifics pre-tax

our our of acquisition. technical update quarter for following call XXXX will on outlook third the a We closing more on provide solutions comprehensive the

to the call over Dwayne turn for Q&A. back Now,

Dwayne Blake

Tom. Thanks,

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

Operator

question-and-answer with Bernstein. now Doug comes first go Please ahead. We Instructions] begin the Our session. question will Harned [Operator from

Doug Harned

Good you. morning, thank

Mike Petters

Good Doug. morning,

Doug Harned

in In several you've QX, big Newport half back revenues. got you pretty milestones. at increase had the important when the of And you year, look a News

we a kind us up on expect revenues out of a to play And quarters? over Can of revenues of few in got lot the you've So workflow much the you took what next in going QX? sort how sense so give these there. should

Tom Stiehle

appreciate It’s I Sure. question here. the morning, Good Tom Doug. here.

Although the that margin year-over-year in so revenue result for charge large, and was year side. Virginia-Class comes the side capital QX growth for last took a programs, the QX on the

it's now back the with looking than labor pretty right going back the the I'll year force that So, to COVID it the of now. the on of top you year-over-year of to still the you the away let run a see gave on run The that say of no XX% tell consistent year, flat the the growth I place with right and a is we're half out contracts I’d and larger from perspective guidance we wouldn't see try it year. back that a as it has half you is. I increase, beginning that. play think year. you the have that the probably stable, we rate half understood stick at to consistent from back running of we

Doug Harned

that in got always revenues the you you're million at process think as $XXX then but in certain. through us And of this classwork Okay. Because something service give of services shipbuilding, how award I expect Can to trajectory sense you Angeles a working Ingalls, well you kind services of services. Los of less for the we is know this that as flow?

that discussions see the you on do that how flowing? budget pretty side? sense from So – to and be revenue a Navy services consistent you of do is that coming there driver get your And a going

Tom Stiehle

Yes.

parts answer So, on that of a there. couple

there, in services oversight type for On years get award the down down the The the aspect revenue the see LHA the that and services contract long-term and years, the as contract, have program. we'll it's obviously the claims Ingalls mature out LPD a there. in services they then is funded

see a our plays as as There far anticipated the portion today. that how Ingalls as to mentioned, feature potentials revenue you out It's work the Newport we for now. So out. services as how you had on the large going our we on and From right own was projections have goes overhaul LA's perspective, a there. depending see you a that both and portfolio News forward. forward not took from landscape are to construction play it that of We'll type

plans So those right, also, were the from our in Navy overflow, was. was that an where anticipated

the an subside kind medium that our like as guidance I additional we'd what overhaul Navy of with front. think And get see work partner on and ourselves of to getting cadence on a we'll like, long-term provide looks into going we that forward. to

Doug Harned

you. thank Okay,

Operator

go Myles Walton question from with UBS. next comes Our Please ahead.

Myles Walton

it predictability Thanks. that emptive Mike, stability the in with is implications The perspective color And ships be Can the for they you aside the give Ingalls? are your the change from financial I I there greater contract? I "handshake curious or guess remarks, agreement? by power committees to What company, just Hi, bought if agreement" talked in more formalized purchasing strategy. from know a visibility the financial the to how got bought to they congressional more you've of customer. are having Navy. or the I'm to individually about would just purchasing under a it think contract. savings into a or pushing some Huntington you

Mike Petters

of I'll up. kind of talk in got informed the get in people Tom a cadence where we're yet years working, work the just next capital And the the we're program, and you to other you're to multi-year getting so general, a and you've your a this sequence Yes, anytime schedule to able that LPDs the over the the capture. foundation your LHA as in into, you're – lined your way going material be on and trying creates platforms super used is for chasing, cadence Ingalls matters to programs cadence, all lot that's several predictable a the case, in

price also perspective. in a you for is of piece us guess it, that stability to the standpoint that of that kind to cost our the it's that predictability view if it's a customer, that locked and I create of customer it's worth predictability. savings of foundational a And good from worth rate structure from So gets structure, our but get can

it. any or add I to Thomas think kind do to know want of you that's more about the don't Chris? So way we that

Myles Walton

Okay.

Chris Kastner

Yes.

So, it three important Chris. Ingalls' to support Ingalls ship readily that, over to the really Myles, base at next forward three more class a moving solidifies solidifies It normal supply and that to the five even years cadence the that its next that keep four than moving maybe on we years.

Mike Petters

And I Sure. just probably back would too. that the of follow-up on

that there, buy As you now, take impact to a – the or bundles or doing said, the our of schedule to material decide as on whether a parties play, like here that's it's the our customers rates they buy financial them bundle kind do that this flexibility down the come bundle multi-year whether how in we're a know into the the them that of so rates and we separately, these table – individually. so this Mike or obviously, lot ships, provide buy quantity we

and So affordability customer all into we possible flexible forward appropriate that be move an the funds but accordingly. and of as now, our see factors with to forth piece as they that award equation Navy to profitability put how we'll

Myles Walton

increased Okay. I acquisition And cash think Alion the billion $X.X from you flow XXXX after to five-year XXXX. to

$XXX to with up that I it look we color a as that is Is so it – implies significantly step XXXX to guess or backends? that see Mike, to a million big linear profile? any the today? a just you Can you is As XXXX, give it higher

Mike Petters

Yes.

In then but I QX see on we you the and more the XXXX there's QX as do mean look QX, know, integration So there call this so in see the give color there. during thought out million, a just on the falling they bit We'll give guidance going finish ways we February hold out the the in line you come forward. the specifics can get come in online, only you'll rolled of and hold you of how the – for many little the a when we I closed financials I until that we through when August. give as we year next timeframe $XXX year. additional spread until color, deal

Myles Walton

Okay. All right, thank you.

Operator

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

Robert Spingarn

morning. good Hi,

Mike Petters

Hi.

Robert Spingarn

where over were seen margins thinking and were of we've Newport at bit past News margins quarters. a also the couple we the below the below Tom, underlying

in fluctuations and – while ask or the negative So you. the wanted there, EACs underlying maybe I the work, between give just this net us you going it, on margins segments. to at we're Thank driving the XEACs EAC just can what's was splits at

Mike Petters

appreciate I questions. great. Sure. That's the

with from from for So not you X.X a now kind that and if QX although was News. quarter, in QX bit the many QX was guided year. first X,XXX going it's at I'd and for of perspective, Newport tell to X,XXX, low half opportunities the when exasperated risk News there we Newport first it be you retirement milestone a combine

side. and down was towards there. on the for slated runway any upside bit X, even long it's was the So impacted setbacks. million specific unfavorable $XX a then not net but if by XX:XX a it's increases It slopped favorably X $XX assistance, from major call of in The unfavorable million, $XX million. wasn't was the right is And – there the News, EAC the slightly anything Newport out to the little towards Ingalls on

that kind you in notable the favorable downside, and the side, But comments On to for my is took here. and DDG there the highlight reduction at – LPD and the find of was risk XX. solid was there some LPD upfront on CapEx the incentive there XX performance will LHA, an nothing in Q XXX and

Okay.

Robert Spingarn

Lucas? on the of benefit the quantify you capital Jack investment recognized incentive Can

Mike Petters

Yeah. Q, It's upfront. the in $XX it's that up will million, and you find

Robert Spingarn

you All much. very right. Thank

Operator

Shapiro comes Research. with question Shapiro Our next go Please from ahead. George

George Shapiro

benefit good It because that higher was the shipbuilding Yes, the Or the the it's half for EACs like raised from seems is this just year? something it you're margin investment this morning. Or you've versus raised second anticipating? you first – in the continued year performance capital benefit of half? weren't that expecting

Tom Stiehle

the happy sight play we're line to is going George. in of books. year kind Good tell morning, the have of a you here. Tom We It’s that I'll out.

traditional six to risk. of in what quarters in months a foreshadowing the run to we rate see light down the QX still here. year backend opportunities be burn the of is actually in two in that factoring So another We're risk of and retirements for than terms going milestones

where just think and understand we we The I we end. land to to by felt help think, going Street wanted year's we're So, comfortable

George Shapiro

specifically But benefit year? investment that not an for capital Okay. the was expected thing

Tom Stiehle

one-time it George, we're X.X% for event but giving in run the range was doesn't X%. and play the it's a expected, you it out at So, rate that to

George Shapiro

the Okay. half working looks then be to The as million was one, free $XXX is year holds it And for and flow first like north capital cause guide in it the million what the was. the quarter weak to up Thanks. second cash $XXX $XXX pretty of still million. and would of weak as it

Mike Petters

Sure.

traditionally then I'll first year, here out tell XXXX punched unexpected. So, up plus of the front, X.X%. the And the you the a we we XX half use minus was for so capital – working first in seven up of not QX quarter cash was net through

of keep X X and we pay back usually expect. of little working end to our on to to we come as the year at the positiveness the the XXXX back in the does progress couple So, have working what of the may positives capital the traditionally some gates of you'd half HII. see a in have eye again, that see – that of that range and we payments to in favorability bit the back half that The some of capital, will

number million, to just payments we the it's stand to here run the the where from and So million operational $XXX revenues on the get flow $XXX to the of book. to

George Shapiro

Okay. Thanks.

Operator

Morgan. with Seifman go J.P. Seth ahead. question next comes Please Our from

Seth Seifman

half checked half, strong implies at been profitability very you the more look a guess two for and you I check versus between than been you and guess, side guess, whether at look A Thanks question, off. risk the those opportunities things, and at the good if the where – I about Ingalls have opportunities I thanks. new later down but sort morning. and at risk margin still of all News and to the margins about much retirements first correlation margin second off talk the year very guide ahead in the in the retirement Newport even Hi, margin have

sort shipbuilding the at then I guess, half. what a profitability we half, Ingalls list do first – think looks see for XXXX of So, but guess, second, we there. this for I there, of the of means and how a kind in lot high do expect Newport to part obviously margin then look wouldn't that base, is like first and we And milestones fewer saw but about given kind we coming there's stronger why News, we than a for when it second off

I guess, these milestones correlation ship the between So, looking margins? at the building and upcoming

Mike Petters

both Yes, Sure. you I those questions. some can color give on of

I when QX, about think we're than and a the that, QX a that a run rate too, at Ingalls sustainable, – been that's asked, QX, I've couple Other we've was between And incentives keep can guidance down one-time events that one-time we'll there few highlighted. quite see events. talked So on at of look this incentives that up there you XX% this was and talking that XX.X%. But that's we the down. the now I that XXX keep incentives here, DDG in the providing QX, come in not

X% see So somehow from that we dropping that you to margins are operational off It's X.X% because or the wouldn't read that really we're standpoint performance a Ingalls. the won't giving From just I at events their those in it, one-time on QX have portfolio, look perspective, a if the in ships Newport at QX. and right new now, right. of lot question the they you News

a perspective, nearing online. is CVN coming from weight they the CVN XX in less CVN on here. CVN popped the just end portfolio is revenue there. XX And So and have There is XX XX, that a

mix the it's of So the ships News. that at in Newport are

as risk, be a that'd burning potential through timeframe, four, run they XXXX you to down booking quarters, rates. when ships another those increase there'll So about talk five be three, and

Seth Seifman

I great. Thanks very Okay, one take the [indiscernible]. much. will

Operator

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

Ron Epstein

Good morning guys.

Mike Petters

Good Ron. morning,

Ron Epstein

the an update Because how tracking Virginia-Class? in with that's into how you is ran a proceeding give us things XX it Just on months, quickly, you now? could challenges that program last are and some the

Chris Kastner

performing proceeding team proceeding on then wants and is are the and performing launch for if well. this executing and subsequent on start, is well next do then Montana Ron, the assembly I'll We'll Jersey year, modules and Chris. year, to Mike delivery this add to to really but shops New here. is votes. the to partnership Yes, the that, delivering support

V and confident are right Block Mike with and comfortable to... you IV now. want the Block executing So programs how

Mike Petters

here; been have to two it year per that, and Block rhythm we’ve a the established Having now going hit and IV, us what in the program were payload establishing Chris's when to working module rhythm V. going We Success they're in that that's we Block and shipyard Yes. is is right say on team last year. moving in them if depend Jennifer, COVID Virginia then and adding as is establishing a make the comfortable.

stepped rhythm next And of of rest for little excited we pretty now this today, what's so right back kind and but but the about programs; we're excited also happening program that setting a the the and bit rest that. so the reset, hasn't of we're up pretty about

Ron Epstein

industrial maybe do with you Got the And it. at Got Virginia and enough question; to and guys, Columbia manpower labor just does right the another that? have of summary this, the do it. there then delivered now get a if fitters enough Columbia, and in given pipe qualified capacity you so terms where do a three-subs. on rates, Virginia’s two a to in projected Is there's the year,

Mike Petters

that had and remembered guess for I that. build the in do been, today, of with all then if appropriate to government industry I have we that no, fact capacity plant in March, if was faster can you everything a that saying have you people – that we don't the began X,XXX last is you decided static do Ron, people we The answer plant in enough today and funding Well, to the people will that the the you it. and train the hired forever than COVID since is them for be can took we've

period of in So but a if sustain many and set submarines rate they're to and to can the to a of it physical Virginia-Class wants a or Virginia-Class with production a just for up the three way doing want move supply some go a or they three absolutely and while, year the go We not chain a once sustained the government a a that. to higher time. in way, have workforce a two plant ahead sort in Columbia year sustained and of going so to execute year, that

budget and We the light two in have that's the to switch the going to some we're the this expand four. to to don't paints go. be done FY Well, of concert, that believe has starting it's that's believe going buy that's that set from XXXX in history going You but a we it. probably we way there, startup

my own guess the you budget, so mean think of they fund, is that And what looks way that's, don't at experience talking the about and of hear really I when if that's lack industry it. kind people capacity, have I they is

if if So I can can we we expand it's think expand, we capacity sustained. that's can the – plan, the

Ron Epstein

it. you. Got Thank

Operator

The Gautam next go from question comes with ahead. Khanna Cowen. Please

Gautam Khanna

about we make was on you little the wondering tracking talk integration bit early could guys, it's sure Alion the of should thinking I and to a be sort Hey milestones plan. that if what deal about planning

could deal? what doing, by in of of little know outline have – I to year what that you're terms integration, of with the, you're sort what So the could accomplished end you planning you you the hope

Chris Kastner

And very to anything. could Alion to here combined ahead to that. do won't the if we're team got place be that obviously. well detailed the the report company I'd not we integration Alion the status leadership doesn’t you've in Gautam, will get I that then and but on is with want yet, I the because QX to closed. putting place. immigration on when say She very that call, very be don’t is closed going Chris, to team, hold of role we'll in we And to of had Mike, plan say of king front get a play plan up you this leadership careful prominent of And I working and want able that in also get that. want I in a closing in the add

Mike Petters

year. I board always we – think I'll mean, say I high integrated last we that

I'm have stuff the do There do. lot efficient a effective way. this. time of about; are to into I'm to blueprint same. about be to get will [indiscernible] a opportunity the by is that be but how We work lot hard to a right Obviously but excited folks, will pretty for muscles excited a and of this it

posted going that. So, and you we're certainly to keep on

Gautam Khanna

is should Okay. the but And milestones. the shipbuilding quarter. lot should the $XX thought million, of or zero. capital this lot we million of last talked $XX this opportunities, a say not QX think quarter, a catch quarter and team $XX it sense like team isn't There you sort the when I incentive from opportunity, know like last of million as we recall up about potential a are we having And in you trying net as I for there follow-up, of a been opportunity to relative that get the that adjustments. lot expectations just benefit as of, upside guess, risk about a the maybe a million catch-ups, just today, $XX If opportunities. I retirement lot guys sort fewer an the has talked QX Because I have of my but was about minus for; was call, walking favorable to on asked not certainly for

Mike Petters

I'll Yes, that guidance. in give there, we hop

we about, hit talk if defined sell that the in take milestones, really milestones, hard hey milestones if we ship-off, we EAC, milestones the, will a either check we up, so as margin. that milestone, bring step additional the You

look punch it's that's So, when true I got QX. right it when in true at now I and via mean, we into QX through QX

math hey, you're Ingles stand. to but of $XX in zero and burn a We $XX a of we we asking, of are LHA, million mentioned as I running mentioned the there, And and through $XX specific steady $XX million at check So versus risk to the we're hey as EAC processes. just $XX there for News programs I milestone, and down Ingles million quarterly doing As the catch-up, the performance $XX of out a million And million that, registers I where the our guess $XX come Newport was is but million wasn't there is rate programs. hard you right? LPD as XX-XX smoothly it, net million right now.

to there to be light the guidance is ordinary think opportunities retire our So QX milestones going next six I about think on still I additional holds over risk. months performance and out and don't of true there's

Gautam Khanna

Thanks lot. a

Operator

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

Noah Poponak

morning, everyone. Hi, good

Mike Petters

morning. Good

Noah Poponak

Tom, did you say first in quarter? also you had capital incentive investment related the

Tom Stiehle

up I said have put that capital but and you incentive. it an out may ECP I that, closed again, had bring mistakenly that we we now

for a an us. cleaned on that ECP program DDG So had up we

Noah Poponak

going to Okay. out I and to often was to the enough say looking something it. unusual? that for or that was I usually pretty that, potential call not occur it, is Is find small couldn't is that Yes, I has it's or and

Mike Petters

that and We big the – they time-to-time, a larger happened to so do have not into closed that rather that be timeframe. adjustment we that of ECPs from weighed that QX kind adjustments that had;

Noah Poponak

the incentive? capital And on same question

Mike Petters

incentive Fairly unusual a large. to that have capital

Noah Poponak

Okay.

Mike Petters

when equity we We'll of So sometimes we and through, these There's a deals. the balance the whether it's these to street then incentive. they we deal ourselves as proposals. settled additional for And book capital and on work that ourselves negotiate. through go work, on and We large affordability as close we let take booking. table we we provide work as come the know ECP through, we the time

Noah Poponak

mentioned shipbuilding margin? there provided other items the Is guidance XXXX to of outside it. the any Got previously change on what you've

Mike Petters

additional QX going as guidance that We're in to give close said out. No. we

Noah Poponak

not something that to release or a that, as mainly is reiteration the the else. in opposed being deck So just

Mike Petters

That's correct.

Noah Poponak

Thanks very Okay. much.

Operator

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

David Strauss

for Thanks taking the Good Thanks. question. morning.

Mike Petters

morning. Good

David Strauss

the about I progression So think beyond you've going in from about it does talked margin in terms up and then of change anything you're XXXX? performance year-to-date, about thinking shipbuilding how low-XX% XXXX there.

give than little confidence. be year-to-date Maybe better So more could that that? a you anything bit about the performance

Mike Petters

we No. and expected got would next where year our where right guided is still outlook we and and whole. say now today, I

David Strauss

Okay. next And billion, come or a happen Alion cash from? for of What's guess, from able couple specifically free $X $X.X capital it to hit the capital and capital with upside that, working working that that where what this flow Tom, has the working target. embed could over to years billion be perspective in included to I

Tom Stiehle

capital about talked always we've between what think is the will working and I X% Well, be X%.

run accordingly. operations Alion think The I contract. we'll costs that So XX% continue to portfolio

math So from of from that the billion a we that billion that gets we HI function drivers getting from cleaned of as capital capital going had X% The perspective $X the about, of integrated how of the shipbuilding, Harbor, a don't But big and now that kind CAGR with claim a from kind the up popping X.X%. be pension working not to back revenue, the front. to that more we And see the into come run fluctuations there's portfolio. up Safe the on $X.X well as then that. through highlighted rates margin we've so

we've calls million I a attainable think on purchase. was a that of couple through $XXX price on for of worked Alion run rate

David Strauss

net it's cash versus pension contribution? of your is Okay. kind on And neutral still, a thinking

Mike Petters

Yes.

David Strauss

All Thanks, much. right. very

Operator

next question Please Our Huey Morningstar. comes Instructions] ahead. go [Operator Burkett from with

Burkett Huey

the taking so question. you much for thank Hey,

I is and get So to good point million wondering, – the out take six may I pricing I'm think to and think way a was contracts, you million another the not contract of servicing taking about look if at shipbuilding awards and $XXX or sorry, about right? used to you've billion, $X.X unmanned that, a about the $XXX that thinking awards. for I'm the

Mike Petters

Yes.

of I corporation a there's specific of UUVs? number for value awards it the across way. in get the that necessarily points think We to yes, wouldn't values don't So that So our about price awards.

Burkett Huey

Okay. Thanks.

Operator

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

Mike Petters

That's good everyone need shot. this with where you're get going. strong now. is encourage Well, I and out just to to we your for had stay to us We a there everybody and able team want families where to quarter. I hope get you safe leadership shots. what go the ready pleased your morning. we're and joining are to are that right able They I'm thank that

So We thank you. much. forward very you all to look seeing

Operator

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

now disconnect. may You

Huntington Ingalls Industries (HII) 5 Aug 212021 Q2 Earnings call transcript