HII - Earnings call transcript Q4 2021 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fourth 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 Christie Thomas, Vice President of Investor Relations. Ms. begin. may you Thomas,

Christie Thomas

Executive and Chief earnings the today conference and Executive Chris Petters, morning Officer; Chief fourth 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

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

Mike Petters

today's us call. and everyone morning, Thanks, Christie. Good joining for on thanks

operational we to continuing COVID I and faced activities our an their of year innovation in XX,XXX of continuing promoting of the our execute infrastructure. a vital and are uncertainty and the a of employees thank unwavering the essential our quarter and during our serve pillars with daily Before getting to into variant, each of results At as safety, the and protecting cost to the pandemic. resiliency employees communities personally without Omicron remain interest to was our schedule. an quality, to solid their HII, recently their XXXX on focused improvement, full of contributor health customers and to commitment critical for performance employees, nation's disruption country year, with security the while Most committed want the creativity. around safety our driving families execution, and national continuous for

through of has at While the HII mandate any to workforce. contracts to committed our be this a vaccine time, shipbuilding we benefits not a continue promoting become subject of vaccinated to

Technical Earlier division requirement which we have with Solutions in results of morning, we contracts. vaccine and approximately believe fully we that vaccinated. division. a this And XX% Solutions does year-over-year Technical the XXXX employees consistent margin currently, full-time year our are Our for of number execution, reflect our released program a HII transformational our estimate shipbuilding expansion

our Technical backlog our and in division. by awards During Solutions resulting we major maintaining contract the levels acquiring captured we in expanded portfolio record Alion year,

growth, With pursue persevered generating business managing HII of returns. these outcomes and actions, driving strong the to diligently risk

year X% from $X.X billion the XXXX. $X.X full from of fourth the the sales of are fourth X year of billion highlights and X% start from Some XXXX for are Sales on of up of quarter presentation. quarter the the quarter down for Slide full the

and of were our year to guidance the XXXX, the time. numerous we low end shipbuilding in the Given with rate challenges the X% revenues over average confident remain in at shipbuilding pleased growth we finish

full XXXX a year for Diluted down the full was $XX.XX segment $XXX continued from in line of with over XXXX. expectations is year fourth of in $X.XX These million division. XXXX. Solutions performance Technical anticipated division. $XX.XX as XX% increase an improvement our EPS in Technical strong our or We the our year, in $X.XX returns for for Full in income of operating quarter shipbuilding also saw and strong and result margins growth the performance quarter of as Solutions the million and $XXX in

our New during approximately currently of awards $X of billion, resulting the were approximately funded. contract quarter billion billion end the of quarter, is at approximately $XX in which backlog the $XX

on unmatched HII methodically Now the pleased with Solutions solutions positioned talent family. and that entering capability, has capture to contracts, provides, we while the laser are backlog we our shipbuilding stability and Technical brought business executing remain opportunities. believe, technology, XXXX, is programs visibility Alion and extremely our growth the We focused to

shifting for activities Washington moment. in a the Now

XXXX We enactment strong year Defense and its Authorization shipbuilding. of are support passage pleased Bill and with for fiscal the the

will more finalized a one expeditiously. appropriations continue fiscal we the have be finalized to that proceed completed be urge do optimistic measures to at to Congress However, this February will remain continues than appropriations resolution the operate under continuing process federal the into year, We point funding the ahead. to uncertain yet XX. It weeks and and when remains quarter government congressional be annual in through

to HII. and let is a a Now and CEO to X. this our the March role This endorse with the moment fully close, me recommendation, address truly I transition. my consistent the Board of for plan elected before succession at believe Directors that, Chris effective I of company's fantastic development take recent I announcement is Kastner President this

Executive will of remain rest the Chris an will Board, As able and the I the year employee HII the support of Chairman through to be the Vice and Board.

before and remarks and our there tell Chris lead new chapter, free operations. company, this than And on growth our are bright into customers value create his for strong our you great ever generate HII Chris? to I this division the backlog to employees. long-term cash turn substantial demonstrate over sustainable where call we can to of the believe in Chris I for will to better Technical shareholders, our positioned choice than Solutions CEO first now, that flow, confidently better the leverage our is no As successfully I

Chris Kastner

Thanks, Mike everyone. and morning, good

and Let me HII on also him behalf Mike of us on to Board the Vice strong as to Mike's Board Executive of in electing next to well and vision, opportunity and employees congratulate is want succeed I positioned is of thank his chapter. Mike Directors thank to next ever. his me the transition honored our leadership. myself Thanks I'm CEO. Chairman for its for front today first XX,XXX extraordinary the HII's as to lead HII value creation in as of

our quarter. results. I'm to operational report solid another shifting Now pleased very to

At X cost Bougainville continues and our amphibious expectations. performance and in LHA LHA is X few Navy line ship. Let highlights. to schedule procurement for a achieving me Ingalls, the share fund patrol with advanced

Jr. Petersen of XXXX, the DDG fabrication Navy Lenah XXX, Higbee. with to team positive the program, delivery began George DDG line Sutcliffe Neil. This M. and the planned On of momentum guided XXX, Frank missile DDG destroyer continues DDG seal in delivered to E. production XXX

On LPD is XX completed quarter delivery and on the of the for the LPD program, in this Fort Navy first sea year. track Lauderdale, to has trials

In addition, launched LPD was XX, Richard M. McCool, January. in Jr, early

aircraft and the Kennedy milestones. testing Enterprise for this to CVN XX of on year, of Later advanced Kennedy construction Miller LPDs. launch watch and XX% will Newport is this maintain focused electromagnetic compartment plans begin propulsion key on EMOLS, and XX CVN procurement plant material completion Doris XX CVN to lay early system. and Teal unit TVN continue procurement complete year. funding serial approximately is the LTD the the well. to the We XX XX At carriers team upcoming production and Ford-class release News, benefits budget for progressing the are continue

plant the testing On George redelivery XX reached RCOH and program, later is on and planned for complete CVN this XX% year. focused USS propulsion Washington is

Regarding USS CVN R. XX Gerald

Ford, Navy's deployment this the this asset. complete to critical incremental to track support planned on availability the of is first year

was VCS is completed and XXX to float-off achieve christened in sea SSN in QX XXX work early XXXX. SSN year. trials the New and program, Montana last year and On this its planned QX will expected milestone complete delivery as XXXX Jersey

continues from towards SSN cadence. recently per XXX trials improve its a While This we redelivered the consistent was month. sea following XXXX demonstrates achieve Helena is in of last on submarine program support submarine the and our maintenance fleet completed Alion Angeles milestones, of first the capability plan. class maintenance redelivery Technical a the Navy. of projected integration did to not Navy submarine progress program, X Los progressing News support submarine to reconstitution our completion VCS major since a availability Newport successful Solutions, the finally, And a the year and end-of-year on marks At

nearly This entering or move this for enough systems the pipeline already expectations year. and growth at is integration are the over in billion $X Book-to-bill a the end the of are swing is evaluation total was billion, largely should level currently award opportunities includes significantly complete million multiple a our of Moreover, to in support with over business and increased robust full expected already development. proposal in the this operating $XX organizations $X.X has healthy at new business. to for that consolidated velocity Our by contract strong XXXX billion value to Back-office qualified very $X business. year. as pipeline XXXX, in be

Before I our close, availability. regarding remarks I want labor to and material provide some

impacts on be will to COVID-XX support to are We supply able performance. ensuring continue chain watch focused items and supply to and our as labor keep continue our

place and we to the have with rates attrition overall Given plans increased XXXX. detailed labor to pressures, hiring in attention for regard accelerate and nation's hiring have we

hiring targeted well actively talent and and world-class the events to as of development. as pace utilizing leveraging our increase high schools with We relationships and schools are colleges community apprentice acquisition

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

Tom Steely

our Chris our also Thanks, review XXXX. full fourth year outlook for Today, I'll and and good briefly quarter and morning. results provide

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

FAS/CAS by decreased operating on were retirement at as Newport risk the decreases $XXX decreased which volume programs in million basis this material $X.X due a Alion at Our at largely by Solutions by quarter the was the a third operating very by X% of period billion submarine compared $XXX the well lower of as the well income the fourth favorable of This of less of Ingalls approximately partially quarter to operating X.X% high the lower due Technical to at year. lower the same fourth risk These segment offset quarter margin fleet News and to of as revenues of XXX driven points. Ingalls last XXXX largely acquisition in million Newport for quarter year on to adjustment quarter NSC as from income of News. the DDG Operating from prior level was and fourth support shipbuilding driven growth compared year. decreased XXXX, retirement and decline

and an programs shipyard was million in submarine compares year, and shipbuilding consolidated XXXX. oil assault of Slide X. amphibious driven class to increase of $XXX volumes income offset million carrier the income the the On our construction operating for margin segment decreases was an to due operating margin X.X% were operating and Moving to was full ships margin on Segment This quarter of segment and the was of acquisition The joint Newport Columbia revenue by This increase compares compared the and in operating and results for XXXX. segment and segment billion to our on XXXX. adjustment year revenue the of as X.X%. flat year $X.X as million primarily for This to in and decline growth operating and income sale million organic in to Technical XXXX. in operating at and to stronger third year-over-year. Virginia offset well in contribution the due operating X.X%. was $XXX partially by Operating were at divestiture Solutions Ingalls programs class business FAS/CAS a a of for operating $XXX well as $XXX results. X.X% margin from early year a operating News basis, of X.X% the less Alion venture was income of XXXX, essentially the Revenues was overhaul. the for as Diego NSE lower by gas partially San The

in recorded additional credit XXXX third the effective for XX.X% full the development The year. primarily for in in year. Our $XXX Pension tax $XX.XX compared XXXX Diluted million million full per were XXXX. was prior Net tax in $XXX quarter $XX.XX income share XX.X% decrease and Alion. earnings adjusted and to rate XXXX earnings due XXXX in for for the an $XX.XX, per was and $XX through rate share and the quarter results of diluted This year operating to transaction tax increase compared in was compares segment research XXXX, quarter XXXX. results acquisition of financing of XX% due to the to XX.X% to and years million approximately fourth XX.X% the were expenses pretax tax XXXX earnings of in related the from XXXX annual stronger XXXX included performance. respectively. to

of which of intangible results purchased totaling approximately Alion. to was related $XX $XX assets million include amortization XXXX Additionally, million, approximately

XXXX We cash $XXX up Turning million flow end to cash quarter X of fourth million, Slide of in with the $XXX flow ended balance cash $XXX million. from operations was from was million free and the Cash on at XXXX. of presentation. a $XXX the

$XXX pension the $XXX totaled flow other capital million. operations was million in $XXX cash from in Cash to benefit X.X% and revenues. our For postretirement free cash was or of million plans full year, million were XXXX XXXX. $XXX and Net expenditures contributions

dividends quarter, the $XXX share year the we paid $X.XX dividends million, or paid During million. for to $XX per total of fourth bringing

We also $XXX our million. XXXX updated aggregate during The notable XXX,XXX modest change This repurchased quarter repurchased rate. benefit. On of Slide have a lesser the shares outlook million. we cost in FAS prior increase approximately is discount XX,XXX cost approximately XXXX, in the of to X, aggregate In approximately X-year pension the shares the we an extent, of by at asset largely approximately was provided at an our the in and, driven XX.X% outlook. change from $XX returns

to X. on Slide Moving

We XXXX. on have provided for our details outlook

was margins of initial shipbuilding from of shipbuilding and X.X% our $X.X outlook marked of to our with end the This a the in growth XXXX over current environment. acknowledges the time, approximately at XXXX our While X% billion X.X%, at improvement the $X.X margin range shipbuilding we high guidance around XXXX. continue range billion We finished guidance of uncertainties operating expect to midpoint revised range. of

results. and for shipbuilding to expect beyond and operating improve margin shipbuilding XXXX expect between X% We to we XXXX XXXX operating continue X.X% will be margin

approximately amortization expected announcement XXXX, is run Technical XXXX all approximately our guidance Solutions. These expectations. the the X.X%. messaging margin and firmly In and of in support is margins For operating Solutions, time revenue of EBITDA and of intangible of $XXX total XXXX, we of million attributable results Alion billion X% and our in approximately current $XXX to purchased Technical X.X% which rate million, assets $X.X expect with between at are to consistent

Solutions, the shipbuilding the X% quarter near Given year, normal X%. margin seasonality expect segment the milestones the we to near timing Technical the Solutions operating with first of and shipbuilding and the operating for be program margin results operating Technical weakest of

Additionally, XXXX market of of start we challenging lightest year be given the first to and quarter shipbuilding expect driving labor year. the will that Omicron slow a the revenue the the

equally in $XXX Our million of expectation revenue be shipyards. is shipbuilding approximately results quarter for than with lower the XXXX, that to between first the split

capital guidance tooling expenditures related to capital XXXX incremental support base. modest in guidance This and we include expenditures industrial of our to to submarine above infrastructure the expect on, investments X.X% between Moving sales. and does X% be prior

We are minimal flow shared partner on believe the investment generation. our capital incentive and will these with regarding critical structure overall our working and have impact cash free investments Navy

We expect includes number XXXX $XXX nonrecurring $XXX be flow free between million million to items. cash of which and a

$XXX in received we XXXX payments First, the the as million. of totals third expect the which now quarter XXXX we repayment noted advanced in occur call, progress on we to approximately

payroll have XXXX we $XX holiday. Additionally, million a approximately the in to due of repayment tax XXXX

are also our to unions have we to that suppliers. is with due in the It to from our have the our and the contracts now continue impacts we're Our collections midpoint chain. latest assumes that inflation providing limited continue further pace outlook flow degradation distributions. and place we best based of employees staffing the timing given were to The no guidance, labor that assumes we supports on results able and arrangements today hire also supply nature than and in at we our million XXXX a information free our long-term see and $XXX better simply about cash of of that

updated we've a of for X, our outlook Slide modeling. provided items with number assist other on discrete your you to Additionally,

$X.X in cash targets, the XXXX. of through research free XXXX longer-term flow from we remain costs continued development purposes. This expensing billion our Regarding assume of outlook confident our for does target and tax

provided to from the For On now free impact free to be $XXX XXXX our remains believe context, XX, R&D flow approximately XXXX current a XXXX up the amortization if we have cash treatment we place. Slide flow outlook. would cash million walk in

progress I to holiday XXXX of First, enhanced tax lack repayments. payroll mentioned advance by is the just free the headwinds and flow XXXX, for discrete cash

capital Secondly, approximately is $XXX with we continued line tailwind incremental expected of that, to working do top along growth a shipbuilding, in cash in XXXX million expect flow. drive

to expansion XXXX is meaningful expected Finally, cash in the flow incremental free in growth Technical Solutions of margin beyond. contribute and

capital working can of we ranges provided and saw we variability. for to as have at reminder, a help that As the be account XXXX lumpy end quite

expecting be at cash XXXX, million to regarding In the current flow the our guidance. Solutions Technical XXXX, believe and the business consistent growth. the and poised very as is begin results well high enthusiastic that guidance, shipbuilding backlog outlook nearly we range with with closing, is long-term million $XXX able and are generally our in challenges we year which with Notwithstanding $XX our our with target above between initial complete end we environment, in For including margin of cash remain we billion free strong XXXX and to $XXX XXXX, between million were we $X.X consistent persistent flow we the are of XXXX. the all free and for with given pleased XXXX that billion $XXX and between presented million $XXX

generating laser-focused value. long-term are sustainable and We consistent on execution

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

Christie Thomas

Thanks, Tom.

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

Operator

[Operator UBS. the question Instructions] Please first And from Walton with will Myles ahead. go be

Myles Walton

Hi, good morning.

second well the can So wondering a being non think, about 'XX, after as noncash ratios you're I sustainable. converting I well converting 'XX, 'XX, XXX%. Obviously, algorithm if in you're think you just -- for what's beyond 'XX, pension, was just implied flow the cash focus for on we adjust income, and above conversion you and above, pension that

should the what equation about us be 'XX. tell just maybe conversion structure or So after

Tom Steely

Sure. Tom Sure. I'll here. that. Thanks, Myles. take

we've as is as into guiding 'XX, ships the we're we've out the past frame The year, getting as 'XX, and where we deeper 'XX year getting ships prime. more been time getting of cycles. the So their into we've this deliveries are come get -- We're deeper kind in in and We're seeing portfolio from from. highlighted maturing. build into into

seeing retentions So years improvement conversion in we're working ships. and progressing deliveries run capital then released higher and through as in additional the rate out we of those the a and

a the as that off have 'XX with headwinds cash our working contribution catch-up out, actually cash there's of and given of work actually in half capital the progress in But the So, turn here that into that see the we I'm X% going worse. Page favorable for deliver end kind some you and little there's high there. years XX ships gets of that almost and into playing top as And bit we that working shows the then back ships on we of exiting in and I've the actually couple range, of we we actually The become bridge a and get Xs. 'XX we're 'XX. capital

Myles Walton

any assume shouldn't materials off opposite capital drop direction. the post on from substantive working 'XX we But

Tom Steely

deliver, the collections highlighted, ships long one-off. cash and No. we then we've free have No, a flow into margin term, think as the mean, what and I gravitate off, will the work I

see the on progress, And here, end backwards billion. as kind whole then You'll XXXX more pressure cycle. enterprise back where that work on bit then on we've in maturity of heavy of years the end see a we of through to $XX in that and little that favorability the of some state hiring that both of the now as as you'll accumulated the kind up ramp-up is this the there's cycle, of move and swing a front the the pushing we're backlog the XXXX. achieving of And

Chris Kastner

it's Myles, Chris.

free you're cash those elevated getting normal I a at new flow levels. into think up generation a from standpoint

So it there. just naturally gets

Myles Walton

Thanks, again. Okay. And congratulations, Chris and Mike.

Chris Kastner

Myles. Thanks,

Operator

go question Please Doug the be will Bernstein. And from with Harned next ahead.

Doug Harned

thank Good you. morning,

the there just Mike, want wish so I First, to HII, you great in all a was best It's been you this an with it's road, been working pretty before I exciting transition. from think. even

Mike Petters

Thanks, Doug.

Doug Harned

X% look should by got line pretty is, shipbuilding consistent where question your growth there's rate when versus I lot go. ship XXXX. you talked negligible The growth ship the about a all model XXXX if top which out a But things is revenues I've in the we guidance, really at

the so Ingalls, your And services? down this break News you can with consistent of it Newport And expectations? between impact also is and

Mike Petters

take I'll Sure. Thanks, that. Doug. I appreciate that.

and So you we XXXX. how the labor material each some on sway quarter how depending line when trend at gave out XXXX each looks. And it that of specifically against hits yes, look close year, the how can year, finished color on at

we in closed you $X.XX about out XXXX. billion, finished but the had we XXXX, strong $X we thought in We shipbuilding strong, about just a If on billion billion, quarter actually fourth that. off had in the would think $X.XXX XXXX be at $X.X shipbuilding billion

almost increase year was that on X% So that. a

So than in it that earlier little material to thought of slid a we 'XX in be 'XX. to bit kind going was

hundred here million X% that of from material was although into billion on have kind which up kind We on labor billion. the we was about we -- on with Omicron XXXX. of medium of time the side pushed and $XXX pressures last accelerating slight Newport at line planning term, a year, is either outlook, some accelerated the dollars growth to shrunk back under Delta saw did see frame trend primarily of long sales. movement because the Ingalls And things XXXX that $X.X were down. out just both pressures $X.X was a News couple end and a a and then the the have So and of million at the about that driven although perspective, We end. XXXX $XX air million highlight of in

is and shipbuilding looking actually backed billion XXXX that at and $X.XXX if at at $XX XXXX, for up true it you in XXXX. itself $X.XXX million We So you're then look billion.

Now relative seeing normal rates of of and your billion, itself case to Omicron virus down now. at are we're the pace the now lightening range have billion that $X.X question to going a a and problems sustains quick with right $X.X this right The year. we if and in beginning at the both would X.X%. run still over in we billion. 'XX be $X.XXX then right the -- on clean billion shipbuilding see normal were about actual rate year XXXX and we with But year $X.X is here, think rates. a which clean if X% for impacted a case at And that the virus

to So billion. range of we've billion that's you given $X.X why $X.X a

another we clean a of labor some billion runs And year. the at still we the XXXX. the and for would entire So flat the The see variant, or reason side, year. right? COVID there's end manifest of pressure XXXX disruption itself on $X.X through think could some year is I do beginning see another

On know plans. to the labor have how that. we go side, hiring We do

we important Our resource human have. capital the most that is

in and the in be labor in down that we and are year. years the both in my that going do that as we at beginning the QX bit year happen a was successful light been this anyway to recoverable train, opening could that And our to we've head quarter, see the QX over see pressures first then our quarter of got able a of establish this low well to retain. we believe labor hire, being because perspective. put plan, the I notes just So little

lumpy, if If or line you're always and even the we concerned cash the it's strike say, on whether revenue it's about you that, side.

the of X.X%. look kind look another quarter-to-quarter at that can XXXX base CAGR the it year stuff. you you using from shipbuilding from at But at years EBIT as over $X.X is if of on year to X that from So X billion,

base, If you using that then use the a is because the in of X.X% XXXX X had on little XXXX we X.X%. where even XXXX a and CAGR. years acceleration these in as And COVID flatness is an CAGR

last we're that $X.X mean, the X%. being X.X%. $X.X notes the just and X although years, it's get can still did last billion. years, believe range shipbuilding guide said, the We it's I that we But as And in to long believe X we billion is to of So transparent sustainable it's I we over that moderated term. X% slightly X.X%, a

Doug Harned

related this on just And timing. to

helped of about one Virginia you in on So and Newport performance that News -- the reported XXXX talked that things class. you you was you helping in margins

to seeing when issues looking and to the do you overall at transition. were transition terms chain that Now and Dynamics XXXX, mean any you're are General going they Block you're Block program through in there of this how X reported in seeing Block X I you this delays X? modules X now. some from Block supply issues right

Chris Kastner

in Actually, some encouraging stability year. they're it's this pretty the in from Yes. organization standpoint Chris. Doug, commitment getting module, manufacturing Newport News. They their met Newport No. is News module so last on in a

the it. on Montana Missed very to is and a the the getting towards stable. Jersey pretty New milestones will it's the year at So cadence; to related But of focused happen team X-tier but end they're here those back momentarily. pressing

Doug Harned

Okay.

Okay, you. great. Thank

Operator

question Epstein the be America. Bank go Please with of will And next from ahead. Ron

Ron Epstein

you at core. Services? the Yes. guide are Technical looks time. Because in Thanks if implies implying, Good that look the you like it growth it in the Could through morning, guys for walk the you guys. organic growth

mid-teens go into that pretty good. about what without line, And growth growth was for that? like the business a business that 'XX? And it mean pick might the drivers think we had actually organic we it darn I do we higher you If are how or out in as have Alion. seems been

Tom Steely

So Ron, consistent actually, notes was here. line the organic a it's the with you, year-over-year And Tom I gave growth flat. you out, pull if

a pressures driving and for we you way the positive highlighted We can did walk that some side that's different you have that reason, that feel help. on through going if, we we although that's we've something about some business unmanned, So on that. see think

the have Although high-growth to We smaller delayed the on summer fast-growing a XXXX. that that's be going been think if is the any frame and budget, We and in out awards account to full did appropriations right foreshadowing there's there. that's be the see probably going time budget pushed that the the were that, area side now. of they Navy the into to we've

with growth into 'XX, what were for We've though from that yourself XX% actually in And had XXXX. highlighted a Alion that highlighting organic and K they we 'XX, growth billion, that incorporated we teens at through 'XX, They growth about through X% And we've information from XXXX least gave, that last a the So work the within stymied rates the business. a $X.X XXXX. perspective. can $X our to from they consistent perspective. you the in stellar been to year X% at pro the were the actually TSD. perspective, feel comfortable side From TSD up -- billion year from the there of we've forma

QX, million, growth weeks where slightly XXXX. to whether and comments, $X.X actuals have run billion was the to been $X.X first there they at about be rate They've the So moving TSD run also, been I've or my with rates it opening QX needs QX, itself, XX% we're it for $XXX noted billion of in X the as of I And for kind date. the of that make consistent. QX highlighting thought highlighted with in out kind as we for that would division through the

over next He's other win, some although leaders unmanned Green we're He's in area. has that. so and watching the your bid got synergy there. and Alion to from go restructured the that business the his aligned. to getting with do good organic TSD. have resources So very at side, with of you're comfortable his always And growth closely Andy And to how then the combining see they leadership unfolds date,

Chris Kastner

want delayed unmanned part cyber-intel. to we market because comment this year. specific bid competitive year come but year. the from that items some that broadly on opportunities they're advanced have in -- bid And will don't Ron, the on then standpoint, across will I the that a have first ISR, significant there last training, on I of out opportunities we it's from and mentioned were

the markets pretty are in. broad and engaged growth Alion So legacy that it's TSD within

Ron Epstein

Got prepped maybe little for just it. it. And mean, you Is about to we Virginia think how Can Got making? a maybe bit that follow-on. as then the CapEx speak Or you're that? I investment class? do a more

Tom Steely

Yes.

CapEx CapEx come for specifically at from quarters, need coming it. at change VI a some XXXX a as X.X% current billion awards that with of previous would the business only as our clear, through look anticipated be in be Columbia into And a capital rates, range possibility were finished infrastructure against tooling. recently, with the discussions the X.X%. future it seen for that Navy More we've our is an highlighting from This these run the that that And was forward only just we're that, Block to -- the X% to $X.X of as with the out would considered a incorporated And in our to moderately industrial We're sense both of is had -- investments submarine there we'd reconfirmed. flow, are forecasted assistance. over the the customer that V, there, the go the down several we're now that additional Again, year, we down Navy forecast is the well of in minor next increasing generation we on on requirements we So years. the and customer Block would submarine and cash we up And if VI, with the class about Block X.X% investment taking last it partner We the requirements. XXXX. because move much follow-on, would we've kind guiding incentives, to X.X%. but and free on evaluating return made appropriate forward plan we've investment.

Mike Petters

the the they to class. to next be Yes. would be Columbia investment then the that required. it's phase per also year, If Ron, consistent X there'd with plus initial were X, of accelerate

Ron Epstein

the on transition. congratulations my And

with nice the you over remark, Doug's For years. been it's working

Operator

will Robert next Spingarn And with come Please the from go Melius ahead. Research. Thank you. question

Robert Spingarn

It or 'XX, that. working collective be to talk new the agreement you you to of headcount Chris, and pieces might do to has in Mike. run cost with growth and bargaining how how affect I'd and that ask a be we that, congrats. morning. additions about little departures, so think expect within if been the about Chris could good excellent Hi, Mike Like an with labor. bit you, What net

Chris Kastner

We attendance had some and related that's really we're virus the and Yes, some -- There's half good some indicators Omicron to week that that's folks Newport battle. or had in improving is where optimistic. cautiously earlier question. outs only XX XX a -- News the this positive

attendance the on back have predictable to getting program. labor stability, the force we to a execute So

for shipbuilder. So really a it was nirvana

So that's half the battle.

need people. X,XXX The to half hire is north other we of

relationships and So we're I get college, we want a But attrition be a but build achieve our pretty schools, think community sales to by building We in high can can splitting to with the we think good shipyards. that to challenge don't it that workforce at meet going into order we commitment. schools. workforce our It's guidance. apprentice

Robert Spingarn

just one And quick Okay. Tom. for a then

EACs through in details If the quarter. run you the on could

Tom Steely

Sure.

a So for And Ingalls the favorable of of $XX TSD. between $XX favorability, and attributable debt $XX QX, split million and we unfavorable. to a net the million basically saw was $XX million million net

Robert Spingarn

you. Thank Okay.

Operator

from Wolfe ahead. Mike question will go with come next And Research. the Please Maugeri

Mike Maugeri

the more both you. transition IV And guys. Hey, following on Chris, little question, Block good a you, congratulations color of morning. around Mike you Chris, between to Virginia Class whether of and Thank upside you Doug's for you're bit to add V close and the happened risk an could Block as there? expecting sort where that out Block be there eye items IV, keeping Block year, on can you're V and

Chris Kastner

Yes.

a So on did remember, Block IV. charge we take

there VCS right training on That best the be roll on in right? about this thing to kind a the you're every team Block Block V. is And one training team deliver there that And early regard. is very potentially on commitments is fabrication. to The our in So year. some we're V. off year module upside going We met to focused could getting team rhythm you're afloat one team, of program the a

the we shipbuilding you in place if So -- to serial be with get in production. can that's want predictable really performance,

keep we the So need momentum just positive going. to

Mike Maugeri

Got it. And then a over years, X V related the years, probably? trend follow-up. How does X, the and mix between Block IV next X Block

Chris Kastner

We information X the happen But level. and get then provide for transition. Block don't IV don't have year X at next specific we through after guidance a years we'll that deliveries for you. really We on that Montana

So Block revenue. will more V it slowly evolve into

Mike Maugeri

Got it. Thank you.

Operator

question will next go The come with ahead. Please Seifman from Seth JPMorgan.

Seth Seifman

congratulations much very to and Chris. and good Thanks and morning, Mike

just the the wanted of capital. growth start little that's in working off and understanding a kind of flow $XXX think, to at the I 'XX, Just cash about bit asking bridge shipbuilding piece million

about when drop-through Just think shipbuilding we shipbuilding imply after would $XXX we vast, capital. about type margin and X% a growth top working think million that the of line majority that is with tax, a that vast

'XX, when it about the right kind of So, a then growth growth it. go you that's 'XX? from X% I similar anything just that EBITDA working the shipyards of we to as is about 'XX thing where what to of then is And drives there's that of underlying want on to confirm the from kind capital and else dynamic kind that think level

Tom Steely

thanks. yes, the So question. appreciate I It's Tom here.

there returns $X.X shows you in there capital The It's bar the $XXX is expected for so shipbuilding. drop working from and range right. here. the from the that you gave are have the we that volume we now billion there yes, perspective, So then a both million, lift the

working on of of did rest the either math there is the the it's is a And X.X% about though there you piece, We on I be working I back -- that cheaper working million CapEx not sitting kind working there. both range, capital look of 'XX kind have mean reverses on a through the which The 'XX I but repayments, So forward. The of the contracts way that. the see -- And leaving to of X% we kind in that do that capital preponderance run that, too. a itself, the the what's the there, $XX we capital. over at little to bar is as in comes mentioned, chart CapEx into although that, a forward of capital million capital it. on for X.X% at bit there advanced capital. and quick that. as of well as additional $XXX in drag low it's working is from and million. well even the itself about can X/X the to give $XXX as it then FICA a progress going The could that's And going is is $XX working that trade million both the push the as by of end a put rate going about

range in significantly as 'XX the of So, 'XX we end top to does the and you 'XX from that. work It X%. find yourself improve, of the from I X% sums can going through to said, the

X% kind slight improvement of it in forward end with in even a below that going cap us actually So incentives, bottom of gets the range actually, with 'XX 'XX.

Seth Seifman

recently people, that of It's years The to of does shipbuilding up on at quickly pretty Okay. other in compare it shipbuilding And a it number that's XX% -- guess the about as follow wanted gross to the workforce. seems percentage I the high. of then the how just it's Because just X,XXX hiring. adds. probably of terms like workforce, looking

Mike Petters

we're people. -- of that last year. good pretty Seth, We year; we'll that north this hiring almost at hire that hired much actually

and do -- So at my it's competency boss I. pretty yes, a -- this; considers it we so good we're core

Seth Seifman

Great.

guys. much, very Thanks Okay.

Operator

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

David Strauss

let to my as both Great, echo thanks. congratulations well. me And you

Mike Petters

David. Thanks,

David Strauss

Just want about to profile. ask margin the shipbuilding

give XX up. bps of been trend color improvement. So Newport some I break has -- has been the couple, a I here Ingalls or out might you're we've bps mean on that XX how XX, News calling guess, a shipyards? you down. talk coming Can been trending where for amongst

So how expecting 'XX? for in and I the beyond progress look, does then that you're guess, 'XX additional

Tom Steely

Yes.

Ingalls both up we Newport outlook between give we News. kind date, the so of don't enterprises, that or to break So against our

earlier EAP As ships the bit, I the down that burning them contract, kind the in risk. is processes, little registers the it have of working mentioned we a through

more to into down deliveries deeper clause payments collections. cycle, on we rates And progress, more in we into bringing with us have the out booking get as As years. get the we'll the additional build have the allows risk, high

So I of the it. that's essence mean,

Mike Petters

say, to going will I Yes. drive ships the David, of agree news maturity just it's a the lot earnings with of Newport that are Tom that growth. that really I

David Strauss

you could on And got Okay, unmanned touch the Chris, if maybe it. portfolio.

on risk I And guess, update an as the today, quarter. what in dragged think you just margin, you're release you highlighted last the on there. a item also I seeing TS a highlighted of it bit

Chris Kastner

Yes. Yes.

we Some will QX, upon. early progress and QX, medium, budget think both there, small is after late really be agreed awarded the

boat boat on a small We're get or We more Boeing, after its know the progress -- that our modules start good that So Boeing ship water critically and we'll we gets to size awarded. -- first or that so XL. making medium shipped demonstrating to important lot capability. are it's in

reasonable know So, we'll year. lot a unmanned progress this more in and

David Strauss

All much. right. very Thanks

Operator

Skibitski next with Global. Pete question is ahead. Alembic Please from the And go

Pete Skibitski

on That's apply on think, that maybe going contract mod Kennedy the And Chris, of Mike, I I'll Can have do elevators talk on you've your reiterate, you work I luck, aircraft looks the the the to deployment. carriers. learned talk of what about is want the slides risk to Kennedy? and to And like how about done. is saw and And on the about It finally Ford I getting statement congrats. to guys. morning, on ships work, the Kennedy? best class yet up finished good you Yes, just technical it. now Ford and closer that's

Mike Petters

the that I'll jump jump got in here do an aircraft We I curious hasn't the then old on if on so aircraft after. mod I'm wants program manager a the have Kennedy. answered he carriers, question, in carrier here Yes. to

Unidentified Company Representative

Thanks. It's Chris [ph].

this. those first time we the to I out supply learn think, on I ship tested. came of rest that, production you, off just We about we've We we we've came We kind plans, a capital. through plans, the we go to a the pointed the our that Ford set the million that get chains, and part by in So think where that also government prototype the the plan said, about the billion price was $XXX reduced do $X We of capital. run your We how okay. is class. did on the talked really test question in first have off of what to with about it, over invested then And manning to from things design, is of invest construction going based driven of of by that's that the and to the curves. Kennedy the all went learning out

need now and we the ship, have chains is we this do stuff buy next figured The that curves. to sort to to and We the build understanding things out need thing all efficiently these and of understanding how technology manning smarter. the learning supply and the

so we buy and XX the came government with and a for And us XX. with up X-ship worked

its towards deployment. I elevators is first where from availability on is right towards think us. it's us we are its are Ford trials that weapons ship with behind accelerating delivery the and accelerating now post-shock The last

as success this do start take program here extend and in be this going on think think in XX. and that, and drive already you're to that the focus and where Ford. We've that I doing I and going mature about invested after fabrication taken see to Miller go my package we've And talking point from We've XX the out, Enterprise ship a to work and put X-ship learned how how at all well. think for great seriously the lessons got then doing In flag and do customer forward. out put would those of think program running can Chris and to a they mean, I there it's the hot Dory going place And very you're pointed I the our all we're the modification of that this Kennedy about about the things. we've against a we is be we And that's talking forward. move really on to carrying meantime, the -- Kennedy. lessons after

where program. be going with I that's need to think we the

future do think program I'm and production. into through about positioned that. the ready it's very tremendous the the is I ship. of now to well We're efficient pains to and it a accelerate we're excited growing

Pete Skibitski

That's very much. great. Thanks

Operator

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

Gautam Khanna

Hey, good guys. congratulations, morning, Mike Chris. And and

Mike Petters

Gautam. Thanks,

Gautam Khanna

just it's now the wanted are By Anyways, sad [indiscernible]. I we way to…

Mike Petters

sure. I'm You'll [Technical Difficulty]. be okay.

Gautam Khanna

have us mean, given I on And that tell past. ask there. meant just is insult given any X.X%. year? those It's just us? X% around the get tighter there going catch-ups it's extraordinarily the or precision. a lumpy curious human waiting long you've human start, QX Like if shipbuilding it you what first range guidance of in a of has ton basis when I the we swing? got sense time. than QX soft been the could margin, was -- why risk to no to you. XX mean, catch-up seems I all, a or a retirement I conviction for And opportunities Like of could what opportunities precise, you kind do give later I a informs in No, was point And about the

Tom Steely

to in narrowed we to and is X% that QX on at came out play it more see we last We top we that probably see that a a we we range -- range. safe X.X%. Last year, it at in Yes, wanted although out went conservative And X.X% was did -- than X% with Sure. the and happen precise end range that to gave X% year. to started COVID. could that that, the but a range, of foresee up then

did that why we was So that.

that we for we the feel still the want on been we X.X% going going that talked that strong to sight we've us kind which bit production, it feel high be take isn't DCS we backlog and the cost we The Chris Mike impact we back this be. the We for right and think in an that we're to to way mix, we now. little didn't The transparent the that's operating be range. in coming exited our from influence shipbuilding, as slow on, a doing, give revenue guiding we'd march the up and work felt year into think much. where forward. back where really going more know we're from is up and about is a the on behind how the portfolio think at where XXXX, we the have on land. feel wide back here could what thought going board of to I it's the we going a COVID about work We but about, we of XXXX really the that's serial -- that now, efficiency we'd that think so we're We've said to lift. right still we're mix, good but that's -- march march have going lessons to But learned doing, comfortable going

right it feel now. So about good we

higher lessons incentives, -- side unique a As specifically, with a the in learned next of we we're 'XX, ECP we get for on are risk, the in we them contracted ships Now of modified I into the DDG-XXX, think year incorporated realize 'XX, uniquely a that in than we right? with 'XX down or how example, as and 'XX, came deliveries -- contracted there where in we'll is work like couple see the plateau. so that year uniquely and 'XX we schedule here the 'XX, We more the and building in that, production was serial work we'll ships what see with incentives that of happening and from it. with as

But a right say, are margin, going be that a sight there's have additional X% normal that of nuances than So on comfortable we -- provide ships the we believe of now to to ship. that and outlook of X.X%. couple of we in feel line

Gautam Khanna

your through And is it point the year. builds sequentially

than terms is etcetera, QX margin. greater of So QX, than in greater QX,

Tom Steely

think, driver that And obviously, we not mean, we'll provide there, how didn't from from going out. QX, significant guidance. after would see be pretty then it light. you, it's out a plays to I QX tell quarter-to-quarter But is of flat. get I there. I it's We

Gautam Khanna

Okay. then just on... a And follow up

Tom Steely

not Margins -- is it's gain, a quarter-to-quarter right? like

Gautam Khanna

it. Got

for about be not of Alion, whatever Okay. contractors of awarded No, seen I'm with to services COVID, because curious. then that's just the due time government's it not soft whether We've lot be the a bookings And reason, late bidding I'm have and you on stuff results continuing Alion helpful. How in what curious, it whether resolution the And half. government are there great do or on some -- getting in COVID you 'XX? book-to-bill you're of say in do like. can mentioned sort for first book-to-bill QX? Alion like, what in the you the contracts were you just expect

Chris Kastner

So, we think Gautam. -- is this Chris,

in, book-to-bill significant into comfortable top with pretty opportunities line. and will markets significant pretty CR on Technical we're be there opportunities of I the have that pressure the far on in the we're With there. But bidding the could If X extends year, be and think we the based our the pipeline north comfortable. some the we're on we're Solutions. too Alion

Gautam Khanna

And QX book-to-bill?

Chris Kastner

have I that, of south in front With of information that specific don't Yes. me.

go it, have you if ahead. Tom, So

Tom Steely

year, the it's know X, for So X. I

Chris Kastner

X. Right. X,

Gautam Khanna

guys. you, Thank

Operator

The with go from next will Shapiro ahead. question Please George be Shapiro Research.

George Shapiro

to comment may that Yes. been the going there were learning Could that on curve on is was issue that has you you're have I the twice in beginning, XX% the learning be this big Kennedy the they remember done? curve where suggesting. you

Mike Petters

Yes.

specific progress. heavily making we miles don't really on into good volume extended at They're point. -- and Kennedy We ahead this figured curve schedule just the learning single-phase the on work have systems a ship. delivery. in the the for So They're some

but curve So don't learning have right at I'm George. for comfortable a where now, I they're with you financially specific

George Shapiro

Okay. And quick Tom. then one for maybe one

milestones QX, be the Montana better expected so, why them QX? to the New are And that little Jersey if Given in a meet wouldn't and the than they didn't X%? margin in meet

Tom Steely

Depending margin last happening the where both planned you, and of that as milestones Even and of goal bring against were we go though, will couple just the though they into bring over EAC quarter. mix a an goes do we wash in dollars there's year. some tell specifically that they the portfolio. will I that the be don't immediately. a the on So subsequent could quarter, finished line, fourth hot it we

see -- not accretive. when out quarter one math, So to at probably you that. drive lift more is the in going a specific of and like a that's really all big But you're it slight

outlook into our bolsters coming looks good. year our and on perspective X% to what year So without the X.X% them this last X.X%

Chris Kastner

Remember, charge take George, did those those. IV are Block boats we and on a

So the opportunity for risk retirement is reduced.

George Shapiro

Okay, Chris. of thanks. lots Mike. you, to luck And congratulations, And

Mike Petters

Thanks, George.

Chris Kastner

George. Thanks,

Operator

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

Mike Petters

financial to my time. earning to the again, say This all customer business, set. and of appreciate privilege years the with at of didn't that one alongside your work thank the I a I good for hope company been It's hands this you, But to you've you the our you has I is look bright, team. Thanks is serve the the I and frankly CEO senior way. us you for future. We we last in time safe the learned just bright stay last folks say and the tell questions, HII on every I with joining your and am our healthy. in community, company I've I've working learned the our so so appreciate XX that if of that lot. want in that enjoyed your to in leadership continuing for have opportunity to and confident and do take today's each by as company. Thank even hope would interest much. call. your years. Chris a continue I call, opportunity families in And very many a as little can very I and call. had you maybe me a with and to forward thoughtful along as research And very today's

Operator

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

You may now disconnect.

Huntington Ingalls Industries (HII) 10 Feb 222021 Q4 Earnings call transcript