HII - Earnings call transcript Q3 2021 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2021, Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be Q&A session to ask a question. [Operator instruction] Please be advised that -- please be advised that today's conference is being recorded.

If you need further assistance, please signal a conference specialist [Operator Instruction] I will now like to hand the call over to Dwayne Blake, Vice President of Investor Relations. Mr. begin. may you Blake,

Dwayne Blake

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

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

Mike Petters

shipbuilding execution. financial quarter we morning, This joining released quarter Thanks results us XXXX program everyone consistent Dwayne. on morning, for another thanks included of that call. Good third and today's

XXXX third of Sales diluted the some EPS on $X.XX of Slide share from $X.X were from down quarter was quarter the the quarter of starting billion me in highlights the X% up $X.XX Let and presentation. third of from X XXXX.

billion under optimistic at in million, government Washington, X. activities quarter, the in the billion year authorization awards of $XX will a defense the of were end months $XX remain approximately to which the to backlog And the government approximately proceed quarter and New Shipping that fiscal $XXX the new be resolution, approximately through completed of federal during resulting which and contract funded. urge is the operations Congress we expeditiously processes ahead. appropriations in December continuing to continue began funds

We're support X through for bills and reflected The Congress, shipbuilding fiscal to XX continue programs second, multi-year include language appropriations strong a progress bill's in defense top to bipartisan bill navy defense House in for both As see also in XXXX. committees chambers authorization of support have oversight the for Arleigh FYXX. pleased the contract in that is procurement the Burke-class a Senate. shown which -- the navy appropriations we follow-on and include priority adding support of a destroyer, DDG a year our

as So, let me a close, COVID-XX. on give quick update I prepare to

as as our help our workforce an remain have serve customers committed our and customers and against continue employees, of critical view approximately without We and to December communities, and the as continuing nation's the to of and we At possible. continue health national unvaccinated country to this employees XXXX. as meet employees COVID-XX safely effort the vital interest families, and this work the for partners our to X by the infrastructure. in workforce security to their and disruption contributor efficiently safety critical of our with contractors federal vaccinated We requirement essential to to XX,XXX requirement HII their their promoting protecting satisfy our

we finally, let XX have has would months. Investor earnings to Day. impact the chain recap vaccine more from exactly HII me short, fourth February share well In and we the what to Delta XXXX our during and We our over quarter mandate shaping we as variant we And expect done will past supply availability from have a in portfolio continue workforce as February. call during how to the said done evaluate material perspective do what our

team and is And First, integration we that our in investment-grade ratings order our constantly the that the have the following returns financial a the of successfully maintaining opportunities business quarter, flexibility the continuing And of during positioned return closing we capital transaction growth Technical demonstrated customers. in markets to these laser-focused critical requirements also expect, the to shareholders. growth produce to financial evolving while And Solutions core credit flow, which the aligned support key appropriate second, generate repurchases. cash pursue to for have to our and return ensuring to on employees. generate we while to over the we're call to of programs turn free are via achieving sustainable that some continuing on milestones are production will dividends the our order now to strong capital share remarks these Chris sheet ship will believe building customers I We the deleveraging steps Chris. shareholders significant our balance long-term for our operations. the and firmly enable shareholders, in value our

Chris Kastner

LHA with Shifting (ph) with our Bonneville XX, of that and Congress a the for and LPD Thanks, for status, provide performance schedule me X, Mike. support material coupled and line few We awards shift still making report are pleased shifts everyone. XX. pending Good method and in believe is operational that important have update bundled of critically these the structural We're construction. progress morning, and XX, At phases quarter. XX contract LPD program With cost initial contract and LHA first LHA most steady a a let procurement to achieve to protected X the let the highlights. Navy schedules continues acquisition cost-effective the on of erection that, the I'm outfitting me pleased expectations. continued through on brief a solid another lead with very share long Ingalls, X

for guided this expects acceptance the program, DDG and Frank E the On destroyer XXX, DDG by Junior, successfully the to shift deliver Peterson year. the the missile team to end completed trials Navy of

sea XXX XXX on track year remain and DDGs planned. In trials as to complete addition, next

On program, Lauderdale to This Navy with LPD LPD sea during in the track first complete fourth quarter christened the delivery Fort trials to the was ship next quarter planned in on remains the August. year. of XX,

Kennedy Our And Newport approximately the XX% News and completion remains complete. compartment CVN-XX, plant is key milestones. propulsion on initial focus

cost contract the next impacts or single-phase year. Regarding the to modification, schedule early contract reached on this and delivery the sensitization agreement Navy year, with a and of execute expect have late we modification a

key complete. And CVN programs, and USS is a XX% USS propulsion Newport On Washington incremental the Gerald George approximately milestones CVN-XX, August to RCOH plant returned availability. in to XX, begin Ford, planned to continues achieve News

that the directly business closed the previously XXX, At Montana next that articulated. Helena track groups have on for August support later track year. plan the appointments remains build And year the XXX, And and submarine On program, ensure on that the to has announced VCS optimum aligned transaction technical this new XXXX. year. delivery moved finally, Navy the the SSN to from fleet XXX to program milestone Navy in for up remains on to we float Alion SSN focus the we to team early that redelivery later delivery New solutions SSN our sequence and in Jersey strategic executive with off achieve float to this

successful business of new the programs a for be business unmanned execute expectations. talented item. and solutions awards expecting to not remains contract critical Alion that We customers likely security but our the in year awards line while until team expect early unparalleled to to our We're this as of to producing returns this national very a Delays in the a in integration our deliver by tier end these growing and with watch mid-XXXX. are resolved

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

Tom Steely

our will third our good update Thanks, provide results for morning. quarter an I outlook Chris on Today, and and review XXXX. briefly

more detail consolidated the this beginning the our and to For our to earnings Slide results, four segment website issued with on presentation. posted results please morning release the refer on of

years of for last which quarter a of third to $X.XX decreased in at additional to Net XXXX recorded and segment increased third the volumes the adjustment was negative rate DDG in decreases was due in tax the Segment the and the from This were in XXXX, quarter These income of Technical driven to were $XXX largely earnings the operating to $X.XX margin period. income decreased margin quarter compared The primarily a to tax the quarter NSC, the by programs. third the year to X% HLA million prior revenues same of basis Allied less tax the period. by tax credits X% $XXX period XXXX Ingalls was the to comparison XXX diluted at due operating CAS of XXXX a XXXX quarter a compared XXXX. entirely XXX quarter million third of $XXX third billion decline for the lower quarter growth XXXX of and operating of increased the prior-year points. Operating $X of in to million favorable for million Solutions Our quarter share the the revenue through rate development the on FAS a decrease a by and the in in research with quarter X% is X.X% third million results of in the XXX due quarter prior-year earnings X.X quarter from almost were to due per primarily in period. was acquisition, compared compared operating million offset X.X% line year. compared approximately in to

related approximately XXXX -tax quarter pre the expenses non-recurring of acquisition million include of to Third Alion. $XX results transaction

quarter to the earnings of per third compared were quarter share in in impact Excluding share pension of XXXX. the the $X.XX. $X.XX per diluted

of cash or cash and XXX of X, principally were the million free XX XXX prior-year and was in expenditures from free cash related million of contributions XX capital XX flow in This and were million a quarter, can of to post-retirement from in benefits. other million to resulting benefit post-retirement slide pension flow to period. the expenditures operations Cash pass to revenues, million net plans million. capital Turning XXX the million XXX or quarter operations in of net X.X% cash our

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

per in X.X% share. Our take this this Board dividend $X.XX And fourth will to quarterly effect in approved the quarter recently year. a of of Directors our increase

of We $XX aggregate approximately the million. during at also XX,XXX quarter approximately repurchased an shares cost

lower million million driven the was by operating quarter of Moving income incentive quarter, and risk DDG from of Ingalls on margin onto to margin quarter higher income in operating $XX The and lower program. by the the on and margin decreased last period partially Ingalls revenues or X% of the driven primarily $XXX compared the programs. revenues in an $XX third and $XX LHA for X.X% million the year, X, same million NSC of by retirement the DDG, retirement Slide of NSC, in LPD XXXX. risk improvement program program, X.X% offset operating on of the

submarine class RCOH and billion million [Indiscernible], in submarines or on of F. the as and carriers. $X Turning year, News RCOH Aircraft John result of CVN lower CVN-XX, facility higher to XX Virginia volumes submarine lower boats carrier and million of program, construction CVN revenues George maintenance Mellow in the Partially Washington, services. X block volumes less than offset income Summering program. primarily on volumes margin on construction submarine period the services offset increased was the higher submarine partially X Newport program a lower by million in by block services the volumes X.X% CVN-XX in the of of VCS $XX Nucleus Newport by X.X% of Slide volumes volumes and Nuclear approximately the USS Nucleus XX, carrier revenues by same USS support and of by Washington, increased the Virginia quarter compares income in quarter by driven Doris in decreased services class to of services revenues in last the of RCOH lower X, X partially support decreased $XX boats and the support revenues XXXX. The due revenues of on third the as Naval block partially due and News George class revenues retirement support and from support lower program. to and the of primarily Columbia aircraft quarter enabled higher of on operating the margin partially a submarine offset $X.X Naval higher and primarily offset fleet of to offset boats support risk higher fleet services. XX enterprise Kennedy, of services, of risk X% of CVN-XX result CVN USS improvement operating retirement

tangible $XXX Now the the mid-August the Alion quarter slide to Defense And XXXX in due year, in Technical in the million federal last of of to August attributable attributable previously million compares acquisition and a contribution Alion oil were as operating in our income by and divestiture from business divestiture presentation, year. the lower the Solutions, to and of San of of in of this the contribution third-quarter and mainly of oil third Diego in related Alion revenue XX, $X Solutions of as decreases same of Technical million an quarter and operating X gas of San XX% the the operating million solutions revenues closed X.X% of $XX purchase on the of margin approximately partially the Solution's of margin period inclusion first shipyard quarter Technical driven performance increased venture mentioned. $XX I income of included a offset by approximately gas align. of acquisition in amortization, shipyards to operating The and well to venture million X.X% the joint joint the on our a primarily Diego in results of revenue business. $XXX to quarter and to

Alion. quarter of included million XXXX approximately results $X Third income operating attributable of to

approximate margin X.X%. was quarter EBITDA Third of EBITDA million Technical an or Solution's $XX.X

the of outlook post-retirement pension our X and XXXX updated Moving for was onto XXXX, presentation, and slide benefits.

are to and XXXX. the that is primarily due Consequently, from total in be returns. XXXX, benefit remember projected and FAS projected higher to XX FAS prior criteria. performance Please year-end CAS now is than numbers to a now has For rather expense, million asset to pension-related the increased outlook measurement subject adjustment

a on multiyear of fourth pension update will We quarter earnings estimates provide February. in our call

a the the technical XX, and Slide perspective on Alion. both solutions, for year the outlook on shipbuilding Finally, for inclusive of remainder of

$X.X low now Regarding initial expect approximately be end billion, shipbuilding, we at range. to guidance our XXXX revenue but within the

the impacted quarter material modestly Third was which shipbuilding's persist may timing, near-term. by revenue in

well Additionally, labor as vaccine as a to through we COVID-XX challenging potential navigate mandate. market, continue the of impacts

that, it's be all expectations. of and prudent to [Indiscernible] Given we think near-term best

X% the year continue will in We expect that to ship the X.X margin to building operating finish range.

quarter consistent we operating the some the in as recognize roughly quarter retirement were that able margin including fourth sea be expect We for shipbuilding events key XXX. to will the with third quarter, trials the results third completion of DDG

noted our that expectation. incremental Regarding acquisition inclusive our closed acquisition, impacts I've amortization that include mid-August purchase for intangible Technical segment in Alion from of the date Solutions, expectations Alion updated and now of margin operating XXXX

initially the to be cash and as was flow, in expected between cash moved million expect. which out free has repayment to we Turning $XXX free three now flow XXXX, $XXX to XXXX million XXXX. of progress the now payments, accelerated

updated an other items with your discrete for modeling. to assist have XX, a Slide we provided Additionally, outlook of on number

believe continue CAGR X% longer-term revenue that targets, shipbuilding is Regarding the we for appropriate. to our

with we a to comfortable from target remain $X.X of quarter in more our XXXX on our view We XXXX billion of through flow cash Additionally, plan fourth detailed XXXX. call provide February. free

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

Dwayne Blake

Tom. Thanks,

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

Operator

your please momentarily will now pressing the [Operator a question-and-answer time, Instructions] keys. our roster. to speakerphone, session. this you're At before will We [Operator pick If up assemble pause the we handset Instructions] begin using

UBS. question Our Myles from comes Walton with first

ahead. go may You

Myles Walton

Thanks. morning. Good

Mike Petters

Myles. morning, Good

Myles Walton

or of the as you and attendance, where mandate could what you more do get to less with and to that yet I and quarter? hoping the it what more specific moving this anticipating seen specific revenue workforce it you maybe of that low-end revenue labor seeing in things Is to third just range. shipbuilding covered outlook relates the could haven't Was workforce, outlook, the the what If start to saw you're in it going. I'm the and to is

Tom Steely

Hey, good start Tom. it's morning, one. with that Myles, I'll

So, go the of the from we to bottom perspective, did an outlook end range.

you the As year. to for X you beginning recall, we of X gave the

out move in material As we're what's right played now, quarter I we of -- to couple how on little shipbuilding now. specifically right left Ingalls. see $X.X of us at light expectation that right points on the when that front a We revenue now, billion. A

$XX behind quarter. News lag talking we're forward All look the Newport look revenues net flat. That the into perspective, a look were when QX. shipbuilding, but persist. right. from Obviously, as you from about roughly material a about If million we a perspective, PTC little And back in could

see revenue. oppression this don't You to our impact at that's labor significant time going

And have the and as keen with on see now keeping the material right But and We supply we of changing situation right year. that's it's on now how to see as beginning there, mandate it's the EO the a range flows as our well at outlook. say, the you dynamic very just gave timing we how in the still chain that an eye I the as here.

Myles Walton

workforce if is requirement of Okay. currently being because vaccinated your new the upon contracts and there placed were is what it's it the a And in covered percent perturbations, you. that's

Mike Petters

we're, uptick days in now, Right. a Miles, vaccine. the say, XX%. We've the seen this getting folks is XX roughly last I'd and Mike. Right around tremendous

-- not about out it shot quarantine. executive the into looks moved like January, I and your think orders January the by the the through talking and now, completely having breaking news being right they're

aligned do closely the with executive white But have the policy at what very -- a is order. been, we're we've plays to implement put our the We're is how contractual. customers interpret been have to there, directly order it going that -- have mean, executive how house hinted been order on the working you out. we with So, not as I you we standpoint, from out. all executive

all what best so, we're And order is customers implement our and with executive doing our of out contracts on that the to how that to doing, working we're board. figure across

continuing we're So, to ahead. move

is as that's way can workplace Our vaccinated we of it. to best committed our do because a to we are many as and think to ambition the we safe employees get possibly

Myles Walton

you. Thank Alright.

Operator

comes from Our next question Harned Bernstein. with Doug

may You go ahead.

Doug Harned

you. morning. Thank Good

Mike Petters

Morning,

Tom Steely

Doug Harned

Virginia-class of for the how you X you to to in now, that, risks you on content one you how amount of the block you the X. the transition terms have could Block-X, on relative Right are Block-X transition to comment looks block any in describe you would on move when and did in

Mike Petters

to then negotiate Chris kicked up. and I'll helped procurement, that as material in to a and we kind was pick a well rocky as some there contract production. off late X let a start get quite the ramp result, Well, off while program that to as start When of material the it took relative block us helped, up that contract

So, a of any we lot on moving the But parts the X. moving, of block moving block things beginning have don't those at of of partners X. had we a lot of building

so, excited that to that's from block about the going into block X, we're basically, about pretty -- pretty and moving And seamlessly go. optimistic is us for transition X where

Chris Kastner

into you vote delivering year and makes block right. a think X where block vote off workforce X think then through and VCS floating X X getting sense. year back and great And transitioning we're right to when that a a I No, cadence that's

year lessons get we of when have X for high learning per through you the on block So, a block X cadence. X hopes to performance because we're

Doug Harned

X this here? Can your News And bit. down how services, revenues Newport and the ships where couple Los process at then, that trending stand on you their years commented also you were in comment Angeles you next class little time services a see submarines, the over revenues in of

Chris Kastner

customer in have and is Sure. with work start as into in that through where as is Helena That's and think get our steady said, consistent customer great in And Chris, Boise makes our sort will really it going of that to we going forward a customer. Columbus moving a is plan will the prompts create -- had revenue. Doug. now. of to I will their repair of ensure Helena this status News with and here. We're place the going in a period. been communication the their to stream this be of to not are three deliver year. It cycle contract sense forward. I we with And cadence a in probably high it's Newport process we're as and working activity need

Doug Harned

Okay. Thank Very you. good.

Chris Kastner

Sure.

Operator

comes with question JP Seth Seifman next Morgan. from Our

go may You ahead.

Seth Seifman

morning, And everyone. much. very Thanks good

Mike Petters

morning. Good

Seth Seifman

I start off. wanted to

bit agreement we I early is is or delivery think that were to with late in either about us cash for you finalized? think year you you tell this Again, there carrier the earlier once mentioned impact Navy pay the finalize a looking XQ. should the single any that can margin or

Chris Kastner

Yes. This is Chris.

the not in year, it beginning We extends because test out shift, extends would will of for increase the couple It's be this it a risk definitize but impact. significant program. or if events it that obviously an that, anticipate of also cash years the retirement margin Don't next. top-line

nothing a material a or cash So, impact from this sales point. at margin from significant

Seth Seifman

it that Should government? about progress increasing or we your flow with it those to seems issue, increase year. like of having go payments is when the back the this wanted X-year think do then mainly just to expectation And ask guidance timing about kind the mostly a but cash it's to timing of Okay.

Tom Steely

progress It's Tom. we a the are and payments change now. actual predominance we line sight the quarter have Yes, rich have morning. right and of The for we through another is. of retirement, the of QX pay of to Obviously, that that it getting of get the Keep half did mind -- payroll with XXXX-time end Good into to that the frame. payments in because back kicked [Indiscernible] have not year-end, the attacks bike there year, progress the predominantly change but was we the not XXXX. in have we

into baked that's So numbers. the

still holds. and timing within it the it's So, XX,

Seth Seifman

Okay. Thanks much. very

Operator

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

You may go ahead.

Ron Epstein

morning, Good guy. Yeah.

Tom Steely

morning. Good

Ron Epstein

about you're some us wondering maybe question going by color and or shortages on material you are what driven some it where in good. in could chain, just more up just following on Miles’s give was transportation is being your if just seeing supply delays what's I and

Tom Steely

Sure. one. here. that I Tom it's will Yeah, take

chain. of this obviously third have how of see a do, EO our of last requirements significant a offices from is be of at X the sight impacts of going we're supply touch order materials. ahead this base long-term next of hits of contractual a material we you Execution couple Cabot, contracts, the to aggressively we and of because we're managing of the that construction shrinking impact chain on where that that over and work is spots watching yard, have Preponderance the tier what the had on bit and we're little the the Obviously, we've on calls less as start validity time been supply have in conversation some on bit we mandate the art. within have given And needs with we time. the the of A a exactly were these put So, we've out volatility have watching and of have spot to pricing do contracting, regularly X high. them our existing tell those and of And perspective the nature fifth we're spin-off coming each right on orders, would flows yards. of second contracts that in a dates. the the of stand that now, significant as I in the are that with we in here days already need past, recently, has end-year amount in dependent the intently, speed [Indiscernible] months we backlog raw contracts. then this don't little on the the line things to precious performed we seeing you long-term material that of that meeting the But the material orders and that's the we

has that time. the things cabling, copper this here again, contracted that in supply of at So of But we stand because advance, today, as chain we've work nature. maintaining schedule how need at we us

Ron Epstein

to right. in see Got forward years mean, the we And is then it's bit give don't that better the going business? -- if where Services you All Okay. walk we much I'm margin most do up aperture it. from today. curious, I than X, X, think open a that. know little you mean, the out now, just on Thanks business, it. us where X and about for when Technical do be presumably giving I can not companies just I guidance, it just you're if And

margin not around term. we we I'm the that put think you asking should -- in for that can but if business framework about just So, a little how as think longer

Tom Steely

Yes.

and So, nature. that because of how things intangibles, we purchase, put that division acquisitions, together with of the

and towards an the we we've and EBITDA noticed, relationship you performance driving where against see. been If guiding

there. going we time from in From cause the that with July You've in perspective, on close we then frame to noticed the had August, how frame the to we've and announcement of XXXX. got [Indiscernible] X% were in was the range lift on rough by gave a Both July July, be perspective we XX% We at dialed EBITDA an supported you guidance initial the to Alion XX%. time that. a from in

more cranked portfolio. in the right Alion on XX% today so As of that's sit that our quarter news now because after than They're August low that's range the with end financials. to we the of and that good close into the hovering close

rocks, improvement. intangibles be would for is baked an we those forward X, I tell I X, forward, burnt purchase the as right of that's X% purchase that the is although you think is and going off intangibles going next see to rocks, get X that PI obviously at you years going X.X% out the EBITDA into now. TSD the X.X% quarter this million with even at the for when $X last roll quarter

that's and near-term it how evolving out a perspective years. So see I in the

Ron Epstein

you. great. Thank Okay,

Operator

Our next question Research. with George Shapiro from Shapiro comes

go may ahead. You

George Shapiro

QX. And to to similar QX you Yes, some -- for what Next were had Shipbuilding moved and so in before? QX the QX? Can margin because to expect you QX thought we have that mentioned incentives we of had do in thought you'd moved QX versus the Items might QX What I moved in to list mentioned just year. some. what

Tom Steely

Hey, I'll that. morning. take Good here. George. It's Tom Yes.

moving Just into a licensed going there. be QX We would for a that. of guided it heavier bit QX little be couple would than parts

QX. to pulled on of moving News Ingalls trials XX taken have bad well the from fund there RCOH parts of to a to lane before? for anything XXX XXXX. X.X% moving a that as next in I or at contracting X% into Newport incentives on still on have in We we're a we DDG of just for my left, a retirement didn't we so couple to year-end. the evaluation there mention couple beginning as risk QX XX shipbuilding, the do staying gave you from remarks, of In year. But was the LPD the moving

George Shapiro

at XX% here then Okay. workers just Newport more up year. noticed got the about in I so the us I the here. perfecting a separate with like more the you they're News it's union mean, for what the a the of contract And status give to guess of given one, you news could contract -- if November results that probably now, you Mike. think end I

Chris Kastner

with a long expect on know I to contract while, for resolution. contract. has to we relationship probably George day try comments that, them get Chris. time ran I we're Oliver. and with a he is Newport the a agreement actually, This so a start. Newport but reasonable Yes. Mike News News better fully on probably George, union has working come process can for to a with every good with working a to them in through very I'll that We're

George Shapiro

Okay, thanks.

Mike Petters

on ourselves than very labor constructive different partners relationships don't I our with will pride think We be this having and any that.

George Shapiro

Okay. much. Thanks very

Mike Petters

[Indiscernible] George.

Operator

Our next comes Richard Research. Shapiro question Safran from with

You may go ahead.

Richard Safran

everybody. Thanks. morning, Good

Mike Petters

Good morning.

Richard Safran

your on Navy ship competition to the a new opening a the I'm the in doesn't on discuss represents impacts wondering it's since Correct new to slated be remarks, of XX ship I'm to destroyer crews that buy if or a -- late a DDG of to right So, new Navy's and very timeline the think with the decade. up terms for the how of schedule. until arriving. bit Could you but wrong, following isn't slide appear that arrive strategy you flight in think new class, ship now I the me the

the Now I down a wondering years line. thinking really was that of view flight that. close to my the reinforces you think is new for I'm ten of DDG, that's idea but what of

Mike Petters

general. don't I Mike. far think is there, just off too This in you're

until program are line production to trying And work really to pretty think When That's want thing fund path, down I a to pin is the dynamic view move is to principles a challenge. It down going forward. like general They a really you timeline design, going through of they and this design how precisely. to bit requirement the are for the early is the do the -- project? a where mature general trying are new don't ready this, -- it's to and be? have hard our product they that in they to so you're process. a pin it, development, stop how going that fund of to a

as XX if and course and we be it's threes DDGs will best on something work it to be production So, else, The going flight ready. we to XX maturing. designer is will prudent that ahead build that X So to into that's my ready then interact. continue happens will ships go We're will construction that then today, something on -- that. certainly will be to -- until And matures, product believe flight the that the advocate else,

in more into be, as get far when -- that that it'll visibility it program we'll what just sort the that matures, for might look what -- as competition goes, and thing. lay would competition As that will the of like, it

X,XXXs mistake would destroyer to path a done we've think curtailment and be submarines. kind that and some back. that, actually, for in in of that did I tried to We couple any of down then career, the transitioned a program. sort We during programs to Anticipating be with kind went path. with we DDGs transition the maturation it over there though of my of

program. gap then a we had So, and short

seen for of who Our production. gaps tremendous of problems have in become full industry restarts is production people

the to So, let's line, line to when keep the transition it. design transition, churn when moving. the production production And off will we

Richard Safran

I Any talk might you getting that margin you had answer, you bit but things thought about could thought your to we little improvement. digital contribute you eventually, And, more while I efficiency that. to general, transformation, know, reduce margins. talk X% could a how in objective for about back Thanks to initiatives efforts much maybe Okay. discuss like might and costs then

Chris Kastner

manufacturing by margin year-end and then technology we'll contribution really to shipbuilding But efficiency in on to I we've very Columbia to the more August investments Chris, the more when discuss help and capital if drive products. to both encouraged in of capital hope investments becoming and Ingalls our very that won't about been the the products continue drives is News at ever the technology we we're getting made X%, we've investments well. And class. undercover in all lot and the on form This are made work Newport and the on going the out rate. digital are get a mature And simplest the talk Ingalls Mississippi costs made you've the we so, investments and the we've expect in CVN to call. XX

Richard Safran

Okay. Thank you.

Operator

Our Alembic Skibitski next comes question Pete with from Global.

You may go ahead.

Pete Skibitski

Good guys. morning,

Dwayne Blake

Go ahead.

Pete Skibitski

contract little registers get a follow-on going risk want you in line going with. to to bit. make move the the that's on just the Chris, I Seth's to think Kennedy. the I'm to maybe say Just sure a I you're question right defeminization to

shifted that or they level will retirement who the I XX at just set to XXXX case assuming still to XX. XXXX. retirement I that I've be opportunities opportunities, or the been Kennedy that. those want are Is right the think

Chris Kastner

and make XX, XX XX now But sense. comes right testing. through XX no. frame. No, starting a localized really to and compartments getting packages, work XX-time when it's lot in volume of We're it

Pete Skibitski

ask maybe always appreciate regard with hope if the on at have like that to sure or that? all I any any like Mike. one all stuck reported language I wasn't funding and left for in committees you, I NFC to seems anyone XX, with it

Mike Petters

that reading you're think, right. I Well,

We it's line done. the But not we've about right well. excited a -- now, there are product in have great this what very fairing we're we resources -- contest there's and for very just

just probably So, that. it leave we'll at

Pete Skibitski

Yeah. Those and know, seems I to short always up too guys. come bad. All thanks, right,

Operator

Next Barclays. question comes with Strauss from David

ahead. go now may You

David Strauss

Thanks. Good morning. to Alion. wanted I about ask

announced and when the that the you on you're XX. you would that? billion just like applying growth running when seem when you in Based about talked the think comment in it's below revenue. expecting year you're quarter in I do either it and or for ' you $X.X annualized deal, well big Can

Tom Steely

Yeah. morning. Sure. Good

think I court, the in from see a the for remarks, million $XXX line you'll my QX perspective. So,

as we. that it's million like million. the run then You little rate. kind And about another so that's $XXX change. On for of A over and quarter you run get EBITDA. the math annualized out rate that's stand $XXX basis, $X.X an QX, collectively so We that's adjusted there. than to still And now. higher guidance of revenue bit little that growth and of it right by the X/X XX%, a XXX XX.X%, the the

Chris Kastner

has add David, business well gone and in the of very capture. integration is development I'd also front that end this that of business the Chris.

number quarter. through a over at a significant the book-to-bill pipeline of We that a working prioritizing X.X we're next and $XX competitions total have billion in [Indiscernible]. and the

all business. for are positive So, indications that

David Strauss

Okay. for Thanks that.

profile. long-term about with As the a follow-up, Tom, free cash sticking Obviously, the the, flow I want to you're X.X. ask

it said free I across there that would Is time ramp still during be period? to 'XX, those or be Thanks. years. fairly period the cash 'XX, will frame view that ratable over think -- that is that previously flow is 'XX, -- you going that fairly had

Tom Steely

Yeah.

as is you So, QX good. said, the still

it's X-X what so years. given the three last the and outlook to behind have I've that you us. over We XXX for last leads about this year,

to pick about mentioned, $XXX to have million. as I million. next map the strict so be pay do fica a back we have payments, We would So $XX year, that's

progress math to it. there $XXX around do payments but have $XXX, some is a that's ramp so -- have that that, to can you be We paid back, on

those to billion X to guide model X between a X we still just out, mean, years and $X.X slight just those ramp, comfortable payments over can you I appropriate these feel it's So, and years. but

David Strauss

All right, you. perfect. Thank

Operator

Poponak Again, [Operator Instructions] from question with Our Goldman Sachs. next Noah comes

go may You ahead.

Noah Poponak

Good morning, everyone.

Mike Petters

Good morning.

Noah Poponak

Tom.

some just outsides just with Alion the these up headwinds normal of across -- there, challenges rate and then the growth year? material seen Should or those then how that in also And same those be we on the, items, of business hardware. of next fairly shakeout. Alion much? you of of combining the Are supply-chain, the shipbuilding we've seeing And outside with compares as first-half? labor. thinking following loaded their With with discussion business being that growth back-end course you of are outside seeing the hardware versus not seeing

Tom Steely

Sure.

shipbuilding the of we of outlook, a we work a needed a first bit hit sight So, requiring funding, the or the right? line For of piece I have part, little highlighted have I from perspective, earlier, in-house. backlog that the didn't new say, awards unlike

X% X% like looks I it were CAGR the perspective, and year, to at quarters exceptional compared through we to last the tell growth. to last year, So, at, an then we're was And is 'XX X% although this the another over 'XX with year shipbuilding. XX% first with was point of there. specifically the 'XX a last from good. year year that growth growth from QX even Still an look outlook you same quarter 'XX I would the previously X

into I of actually So, highlighted as XXXX, moved that it of has some flat. which material XXXX made QX as look -- makes the now big, Chris end year look

now work, the have the now. concerned not the labor we I'm we we right backlog, have have because force right So,

X I going workforce, think the EO your on I'm we're I and Relative as XXXX our was in I We And to good shaking had obviously, pretty earlier, are a under now with I and the in materials if the more not We're concerned we've how from oriented. watching his perspective. mandate weeks look watching close they're it's DFS and revenue the there. don't we into the play, but lying vice us leadership would initial that run for said and the building. with don't -- MDIF purchase a as synergies going impacts XXXX them. for question, on service comfortable different, between front and rate forward of the the that how contracts making Andy are bidding, ship board. see linearly assessments team the them Chris has hood versa. with in existing excited what's that put in had contracts We're and financials out their had they're better, items executing evaluating revenue The Alion mentioned

EL Alion again, So, I perspective. don't going see the forward I today, there. that revenue significantly mandate expectations feel comfortable an our with from impacting

We portfolio funding for and the us. When you going forward. watch highlighted about Special and the to [Indiscernible] perspective. on evolve watch unmanned grow a come from have get

Noah Poponak

Okay. Thank you.

Operator

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

Mike Petters

you. And today's thank for joining us on call. thank I Well, to want everyone

close, I has retire. to you I Dwayne me informed Blake to to wanted on that wishes Before that pass he

Dwayne Blake

Mike. that request, Deny

Mike Petters

of Dwayne our last But his extraordinary. XX Yeah. here been been I've career, family, throughout especially here all here already his but turn at in his years. just had position it couple and support it a us of parts His for times. -- personal Huntington, down of they've family for

With So, with harass that as the Dwayne interest their Dwayne we your that, best well, call. today welcome short or filing just and and you timer your move a the Thank the remember, And next wish engagement we feedback. with chapter of continued call, to he's and and so when some family his he in have lives. in that, about now you we call all and they we might the much. them appreciate wish your forward very HII leverage

Operator

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

may disconnect. You now

Huntington Ingalls Industries (HII) 4 Nov 212021 Q3 Earnings call transcript