HII - Earnings call transcript Q1 2022 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2022 HII Earnings Conference Call. [Operator Instructions] I'd now like to hand over the call to Christie Thomas, Vice President of Investor Relations, Mr. Thomas, you may begin.

Christie Thomas

First quarter 2022 earnings conference call. With us today are Chris Kastner, President and Chief Executive Officer; and Tom Stiehle, Executive Vice President and Chief Financial Officer.

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

Chris Kastner

us performance call. reported reaffirm margin, focus us Christy. cash morning we our each this across on on positioning revenue, today's divisions. everyone Good execution for Thanks, morning With solid Earlier to previous our and flow of operating thank growth our guidance. free and joining and you

of Moreover, shipbuilding challenging Our teams continue capital in well hire the of its the our it disruption. headwinds created execute risk Shipbuilding making we facing emission some Like the market, labor delivery on the challenges are for and COVID our areas human retain chain supply effects of are materials and programs. impact being shortage labor delays to by issues, as technologies creates inflation which economy employees. despite of suppliers key in broadly of lingering same by basically impacted well as the and to

customer proud continue on our of of customers. our these challenges XX,XXX and the of their both dedication aggressively commitments. our delivering of working employees of these In resilience and are suppliers We on of focus to the our challenges, mission to I'm extremely each light with

than from diluted our the in to XXXX. was of were of down quarter Sales quarter XXX XXXXand XXX EPS shifting XX% the billion results. $X.X for higher for Now,

the and and $X Jr keel approximately long-lead XX which award billion XX for quarter This quarter, Lauderdale trials Bougainville the program, backlog DDG during and XXX. laid in awards billion, of delivered LPD were results LHA is At for at the LHA Navy. of begun for M launched Harrisburg. driven was contract Ingalls Fort New end sea billion was the by is LPD to funded. $XX.X progressing McCool we On currently $XX.X Richard has LPD XX material completed LHA the X. X procurement of well

Lucas and completed quarter. on as call continues of program, April. and January, in the which program Lenah in floated Also, Higbee Jack XXX DDG maintenance H submarine quarter Navy XXX christened XXX sea support of trials and SSN News, the Jersey the launched DDG April. light our New in to XXX On Montana USS XXX fourth demonstrated was off And successful was Sutcliffe this Calhoun NSC Navy. capability Helena XX SSN our was SSN delivered in the discussed redelivered in off serial DDG main Newport finally on production achieved engine At NSC the reconstitution

XX% enterprise steel CVN aircraft inaugural the begun the the in Newport dry-dock. the XX has CVN front, quarter, US which carrier period. of on centennial and USS completion first XX the Kennedy, a erecting in after R XX to and complete Navy was Navy carriers On of News redelivered CVN Ford continued celebrated Progress modernization its Navy Gerald is and maintenance on

Technical better we of is and emission John technologies the resulting towards division USS had and of RCOH the XX% of weeks portfolio renamed support technologies our resolution Washington Solutions due the expertise delivering customers. phase largely continuing to few year, reflect our On the was CVN and complete. in A mission multi-domain our is USS Contract start and to to a XX to program lack have testing T commitment national George technologies of Stennis this to CVN progressing complete but adjudication slow approximately the advanced is ago XX our in our XX% capabilities security awards.

pipeline billion we We business ahead, are have Looking Mission our support billion it $X in are almost excited very proposal evaluation proposals confident about and growth of with our new will objectives. technologies pipeline currently REMUS of $X significant total had with win and of $XX qualified development more program We our as a the US small selection UUV Navy's the record. in next XXX than a unmanned billion. vehicle in of generation of

that with autonomy the the autonomy, Odyssey and released open industry of solutions recently a of also across architecture platforms suite variety salable We standards. offer aligned advanced is

Regarding our agreements at report we both collective that Shipbuilding bargaining workforce, I'm the finalized shipyards. glad to

Newport Our XXX hiring XXX Shipbuilding graduation retaining development had Shipbuilding workforce, quarter with over continue of saw needs. craft strong towards apprenticeship at May labor market. school colleges tight a graduates to continue and annual apprentice our the complete core will of Through their and on schools at X,XXX the we of focused remain headwinds program our we the we hiring face over the community as high individuals work News and on hired and end and a plan in we local Ingalls X,XXX for over personnel, year, to

Final for in finalized two and in Washington, two for support Turning Virginia-class attack for We our to Class reflected Act Appropriations continued Congress activities bipartisan fiscal March. Destroyers appropriations including XXXX submarines. the Defense Arleigh programs year funding Burke saw in

investment ships as in the continued Also funding measures investment and well his proposed now LPD and and refueling our in Congress. class Virginia-class XX nuclear continues of combatants the for for aircraft reflects request shipbuilding funding budget industrial two submarine in X, and Block two for the construction carrier budget budget procurement provided base. as submarines, The carriers funding funding amphibious surface XXXX President The submarines. programs fiscal LPD DDGs DDG-XX XX, million LHA appropriations class consideration Additionally, aircraft submitted by under X programs other request, well two Columbia as as procurement for advance advance year March, $XXX for our programs.

the of execute technologies flow Shipbuilding Electronic our to continuing positioned the emphasis such autonomous mission Beyond division. investments growth year development ISR shipbuilding and our to with capabilities Warfare, generate capability on mission our while cash well well reflects The conclusion, CX, anticipated and leverage and remain Cyber, advanced work increased with in we technologies free research request backlog AI, In enablers fiscal systems. division. within our technology and it XXXX to significant an as line capture on

on I'll Tom. results. the So call to our turn that, Tom financial some remarks for with over

Tom Stiehle

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

of by driven cash prior income to $XXX quarter at non-current state operating XX% third partially risk income billion results, of refer favorable to by adjustment increased million earnings year. the first by operating taxes decreased fast this issued retirement Operating with on Shipbuilding, was year. operating the million quarter please compared to of due income period website. presentation our largely and basis to XXXX. Beginning of the Newport decreases more For results morning margin lower $X.X News to and posted quarter from release for a This X were quarter and our more segment Slide detail segment lower on X.X% first the XXXX our line same $X the to points. compared offset of XXX revenue the due in of largely last the acquisition revenues of These the the attributable approximately to consolidated decreased

$X.XX of to Our was the lower the that quarter million primarily XXXX. $XXX the in approximately effective compared were in earnings in to quarter quarter compared first rate of Diluted quarter was share earnings of to XXXX the compared Net the tax The the the quarter first quarter rate in per $XXX of were first XX.X% XXXX. to quarter approximately first in during million in due divestitures $X.XX XX.X% XXXX. quarter. in

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

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

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

of last offset from by the the increased period X.X% $XXX was the support from risk revenues. due program, billion, XX.X% Moving operating in carrier amphibious DDG nuclear by revenues At the the and the higher revenue. program, last revenues partially X.X% and programs, and the of on last year, or to income or down by lower million which were X, offset $XX in risk same Ingalls by of million naval on decreased lower to lower $XX on revenues Ingalls quarter $X.X by retirement period assault LHA ship of driven due $XX Slide million delivery year from quarter Newport LPDXX. primarily slightly the aircraft high DDG same margin LPD News, to decreased retirement on largely of following submarine service largely offset million year

million technologies offset and and Diego $X venture retirement of Alion to the XX. first income quarter quarter Mission down the income Mission included by program purchase of of to joint of divestiture million million Alion-related operating quarter offset quarter compared due operating the of the primarily of of on Shipyard X.X%. of risk $XXX operating XXXX assets. an year, News we're quarter on in risk acquisition first Technologies' the approximately in the margin last by CVN of to of intangible was of X.X%, lower million revenues VCS technologies our XXXX. gas from of $X compared contribution amortization margin oil EBITDA results San third increased first XXXX, and in XXXX first primarily the partially million first of Newport a XXXX, million $XX in the income At business Mission partially the by $XXX driven retirement $XX higher to the of quarter

Turning our expectations expectations. margin X, and to sales free we cash slightly flow are Slide reaffirming have our revise XXXX pension and

which pension rate also a remeasurement at The through late workers the News During labor returns contract triggering February. the we a asset United Steel account agreement with reached in changes Newport takes quarter, discount includes into and pension increases benefits Shipbuilding.

allowed impacted a the XXXX very outlook, our quality, significant for the were Regarding our back-end quarter our in for operating first by which a of remaining milestones, ship in we quarter results first expect delivery risk weighted. LPD as in reflected near-term positively achieve margin. The that Ingalls retire Shipbuilding XX, us to high to amount

to be we be Given X%. relatively expect that sequentially backdrop shipbuilding shipbuilding margin approximately quarter to revenue the operating flat and second

results sales, mission expect second up Regarding X% of year line approximately with sequentially, approximately full guidance and quarter with through technologies, in we the will X.X%. year our margin ramp operating

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

reminder, would walk impact quarter. place. we if cash is On free free began the $XXX the R&D last in remains a approximately to outlook. consistent flow the provided a As providing XXXX believe with treatment we Slide million This chart flow be XXXX from to our amortization XXXX cash current we X,

Additionally, we deleveraging growth allocation near repurchases. share with and include balance term, capital the priorities, along dividend continued significant modest which are our reaffirming in

we significant remain and we closing, environment, capability programs our challenges We results. the outlook, regarding for milestones enthusiastic pleased in our evaluate first we the $XX gaps with strong backlog, are along today. billion financial support the believe nearly emission poised current budgetary with will continue know quarter of long-term strong for In customer technology very growth. that to business the shipbuilding Notwithstanding and in with the operational but achieved M&A, we is

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

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

Christie Thomas

Tom. Thanks,

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

Operator

from Research. [Operator Vertical Robert from Our goes Stallard question first Instructions]

Your Please line Robert. is your now go ahead open. with question.

Robert Stallard

the other this you. off with is the question potentially this, play bigger And proposed how could wondering vessels X, start Tom you planned question as do what's was numbers division FYXX on margin what I'll the you Chris. like in on a mission. for secondly, HIIs. picture maybe think companies looks this sort into growth because perhaps Thank then for you Slide to It mentioned industry. could potential out the to be better pretty the changing of compared for in the X.XX year and long-term risk request. I low for margin amphibious

Chris Kastner

okay. Tom the should can first the with Technologies and always 'XX of process, budget Mission talk budget, request Robert, remember I'll is we about the One with the budgetary Yes, process. this start thing step margins. then the

Congress XX to building we We need we LHA all major that identified. need the ship need under LPD through is the ensure supported under get work program We analyzing X in do have as We work that Marines really line programs work to line forward. So that Navy LPD get contract. NCIB were all our we the throughout and on one to you the on year, contracts. XX and the support the to going and

as positive to perspective, does a rate, solution with this we So we lot comfortable of NCIB the that work and think do I our From long-term process makes growth a that the through long-term get will big sense. really work I'm the but you're that need picture budget to a right, X%. I'm that support on line

Tom Stiehle

Sure, pick Rob, and perspective, up the from a on X.X%. margin MT question I'll

So we X%. got guided

a EBITDA So metric last X.X% about in XX because X.X%, X.X% QX herewith year, why indicator take from where intangibles from as sales light you net both tell we told stand of is where comfortable up that's the The sales we've sales, in QX. a guidance go, I unexpected, not, you you range now million a and quarter as not return revenue with we're will line X% land we a where that's to we've ago from quarter on kind X% empty would specifically perspective appropriate We the with for for from coming X% a to CRM right. the the highlighted to year good gross and obviously year that want or of percent purchase from X.X% can guided X.X% margin follow of for it's with it's more higher you perspective and because X%. perspective is only X.X%. lead XXXX land. so at the of for give that we an a was the could as $XX than where the we far we is through about think XX%is and EBITDA to probably going perspective at All to MT last

Operator

from Our Advisors. Please Alembic next line go now question Pete, open. comes ahead from your Pete question. Skibitski your Global with is

Pete Skibitski

trend, if a is the you fit-up, hard also are a Chris that's starting thoughts question I thing just guys for fit-up, if timing-wise on the were. tell, of just trend. to should you us look know, one always bit maintenance you a give out. Can building sense maintenance be is what wonder flatten you at ship you little tailwind mean see, your to a

Chris Kastner

submarines kind into maintenance up, perspective. with we and to Yes, pretty our flat. Virginia-class from the execute going to the I class how think from submarine flat coming and Lots going we of they're it's how flat. maintenance pretty, think it's it's go through proceed they pretty sign but pretty LA think They're but schedule standpoint,

Pete Skibitski

And or one excited. kind you then any a of off-the-beaten-path, of were France in General was about for kind opportunity and And as Advanced guys notification on guys. question a revenue there meaningful Arresting forum I'm the that. an Okay. you export curious Is both Atomics back Gear emails December for in to well timing that and last real just

Chris Kastner

now. not us system, for we so GA don't, remember now, provides for us not Yes, those

Operator

now Our question. from with your next ahead JPMorgan. open. comes go Seth Seifman Please is your Seth, question from line

Seth Seifman

a and this you Chris that your last focusing ability market. lot mentioned tight think labor confidence the hiring on guys of off you this had the started call you hire to on you in year the mentioned I especially call

then to a give metrics if do about the on hiring financial need So there maybe if the gets you where situation any plan tougher. and would of kind how things in the of to you be can are just color that that kind bit the what tracking could of, extent risk we little think

Chris Kastner

impacted tough of were used the shipyards. through in We've seeing February graduations that hire We relationships so really really and and our high January people March. on ramp need focused that bit our on hired over X,XXX levels summer of attendance. a with Thanks. our behind, to to recovered to end we're we're March happened. both But attendance Seth. apprentice tenants back X,XXX, and Sure colleges we're schools the and over community but our expect months we over schools, to within

we need and So be we need to We it's hire, item. train to watch definitely productive. to to, need we a need

with watch us move our through comfortable a is for but we still the guidance So as year. labor item

Seth Seifman

All right. it much come There's months. in follow-up, only I about, people there. a they can is would a so contribution more make of And mean probably summer in think just the I in couple

And to up so, that setting how estimates XXXX tolerance your, and is of about your in you're would this, idea set completion. of risk for that is the are you you up have this have really an extent affect for more XXXX you in the then

Chris Kastner

come high they're going apprentice the to come learning. have of there, colleges they of where where schools programs in within they the a They're to can we critical out place and they're out when role Yes, ready fill if the schools and community the go shipyard.

teams well. shipbuilders and up going on to first-class but the learning, be to and on be sure got right trained they've make going to incumbent be to have very all its shipbuilding going mentorship progress not we did making they're executing, they're Now away, they're they're our right

expect them So gate, be out coming to not of class shipbuilders contribute. the yes, we first the of going the to but they're out

Operator

Thank you.

is go ahead your with Doug Harned Doug, question Bernstein. Our your now comes Please line question. from next open. from

Doug Harned

of as the in identified Jersey, time Massachusetts XXXX, was the was a class. the attributed New them little this question go had Virginia of in float issues I margin when back that. News. in to of it those the I Newport the like to one mean of a train the then and of bit the it I was deliver Montana off. environment just had mean I'd so to New some and to new Jersey back this quarter then on spend Then a issues the big you you needing complex were issues in headwind If lots is Montana, people

If you you bring because on into new might of that and as people does today class of seems you look similar at try run the some it. situation where it stand it Virginia these a issues in lot

how are So now. you at Virginia looking class the right performance

Chris Kastner

about which effect. VCS serial drove Remember had is we interesting Yes, that it. line, we but outs a a program which we News, you significant we a Doug. good lot question miss there's with knock-on schedule, we're and production the issues I now talk a heart previously Newport is had right what production line. And in but COVID you seeing the labor appreciate really and the It's of drove, it's and when issues a of were the significant miss

that stability with in risk is some future know, you it's reassessed had and a and We've the as deal and so the into quarter, see we we that we in accomplished an workforce. our QX. said, QX. end missed drifted year the impact So, on at there of being results That really shifts you couple that had of the to schedules in the those

upside next bit of on diligently. their a operating offers The We're during the like that milestones couple short our what very focused there years working we through on got system meeting program. plans, it's that actually but recovered. lot I move the is has interim is as hiring COVID. very of a confidence tendency the Now VCS team happened of some not

Doug Harned

should So the finishing do boats at of to mean How own thinking. kind and that boat block margin work risk how if your then move performance for Arkansas. about if in the you, going you and into those through boat the this electric the you're we do And doing think will forward you, Massachusetts go I how look your as own, your well how electric trajectory you has for in but the as you you're move in likely retirement modules as five.

Chris Kastner

Yes.

life not the both them in five So how perform to we, assessed we've, we've GACS four those and on upon risk how but of boats the block. project block over only reset of we based RACs block the

at give our upside after meet level, don't see So necessarily I we're five a we but margin to for on able resetting block program there forward do that going potential milestones. guidance risk is if

Operator

you very Thank much.

question ahead your now Myles comes UBS. next question. is from with Please your line open. Walton Our go Myles, from

Myles Walton

ask good the Thanks, and I for a XX. and XX carriers about particular morning. wanted in to second the

provide in think it of first press several I quarter. So that out hasn't the single the one which completion you adjustments, on in the last I guys the think I quarter, release progress the phase metric know XX, the the don't were played in delivery quarters. moved And every but here the really have would

the there the your So Thanks. reason why and any for XX made to slip comment And progress a if financials. difference just wasn't any there. then XXXX on

Tom Stiehle

the So back that. on I'll XXone take of the

ship through So we're EAC bringing still yearend process. to the completion right and target for trying now that

some into EAC QX evaluating are schedule on incorporate that, the share. risks wasn't We that to the

Chris Kastner

heavily of ship, absolutely that making on from part ship that into we're completing Yes, progress volume XX the were compartments.

aircraft call. to you on right If that Christy weekly I base around that after through carrier. don't attacking the they're the, the volume you yield you about dedicated is and progress, paint, really around see program. very starting a of progress fill basis an on aircraft in and test But you in, walk the specifically good carrier math a and the think know making the of to lot the, place which that installation a walk about now, then through you ship When be.

Myles Walton

that expected to the movement on no vessel. So delivery

Chris Kastner

not. absolutely No,

Myles Walton

thanks. Okay,

Operator

Thank you very much.

Please comes Gautam line is now from from ask Cowen. Gotham Khanna open. your question. next question Our your

Gautam Khanna

your contracts I costs. was wondering adjust how for if on input us you refresh could higher

margins, mechanics at dampens just walk up what it recover you the So you it you what moving price. the actually there. mentioned be is Thanks. just pass-through How you that do in through everything like if outset, does have to whether those, do a margins, is steel, it where whether could

Tom Stiehle

Tom here. morning. Yes. It's Sure. Good

So how that of an bids that it with as we other and as of contracts these about but now here Long-lead really contracts calls. and what how on And I'll I understanding how the but, on that your also an fits focused upfront anywhere understanding we this to that break, applies our spoke buying, it's perspective know earnings it, we're material new long. so and like bill a we're from inflation it have our with inflation XX two-part contracts mechanics is starts the the question years existing we hit watching answer being from of contract with the materials. for from

contract process bids. and have side starting And the value standpoint. in locked the that glove We we to disciplined making live make a very sure into from procurement quotes ourselves a have go the and hand and quotes we dedicated sure have

buy we and the a of of while these So have onset we clear at understanding what contracts.

The eventuality of have our that of tell on almost long did so see and construction and contract good time the awarded commodities. when do the helpful. the have construction. materials we raw buys lead a we the cost-type time like after things we from contract, you to increases We time a operates up on to from phase that's I rolling it those as actions move commodity forward, will bit, and have that time into from that suppliers. purchased We run contracts and bid awarded into, we a

perspective, you fixed price an have XX-XX piece versus Another is at, percentage braked the of cost look that entirely you'll but of type high queue, fixed-price see three out cost. and contracts we in when about divisions. from across from it's The

So has this XX% Technologies cost contract Newport XX. type. price Mission needed in XX, recruitment there the and are got the

do policies, don't that contract immediately. contracts Several of a, on EPA that. had put things that So helps which recognizes have our we

cost the have We at risk on our award. time see actual that pay with it adjusted depending cost bids of get estimated the inflationary within bids a And the that from can we that industry. we covered

as us share contracts Even that. FX, well. flexibly on flexibly price there helps So that on side that is a our

that through ourselves work we So as well.

I make add us how to when the have manage the five new you change majority down I'd at space. labor one our process and think on our equity the on four too on a a contracts sure in those a come contracts is to contracts, we take as well of we union at as that of a that the management and is relatively we keeps toolset we the maintain orders large of So safe Newport year cost year existing our last News. agreements, here side we Ingalls The existing through

we those increases of understand a things and put schedule when that costs contract. there is So we and on use we

overall well-founded it's think I So we times. inflationary and plays process a how handle it and well against these

bids costs times kind new I'll seeing along very, getting are on lead and of price higher that same increases year-over-year we live but we ensure bids, we're quotes. of follow the seeing new we the that process tell dedicated On you that we're

mean, industry make pricing and for I that strike customer across the for inflation pressures sure the a balance sets Our reasonable data inflationary we cost they're and evaluation that, are there against we understanding saying risk and new that awards. here bring of may

Gautam Khanna

mechanics just just a And therefore, an is would if document the cost if have on you and revenue and and together, the profit you to increased EPA mind margin. an fact that

Tom Stiehle

back-end of your question. The

remaining the the were risks the those to the of retired or a and-or were and we that for scope degrading evaluate quarter have on and whether obviously to EAC the that that thought do we're and that the is requirements our we associated obviously going improving weekly disciplined contracts quarterly our the be We'll rest get quarterly booking material EAC, accordingly. cost revise mean, if the tables for incorporated is I through see into it So will then an increase will multi-program there process, EAC profit the in be mechanics material our, go and increase run in rate is an costs orders obviously so all that a how any as can process, with proper we of getting EAC trending we existing all both that against that the requirements. there'll backdrop

gets our factored that across then up So all portfolio. ship into rolls adjustments it that kind program of you in ship the by here. by I and guess the see

Chris Kastner

in I'd protection, without an resultant is on it's there margin. also if impact that the add increase sales EPA

provide as So EAC process well our that additional in every and does us protection that's quarter.

Operator

from open. comes with Robert Please Melius next your now Our question from go Research. your question. line Robert Springer ahead is

Robert Springer

talk higher you for And about shipbuilding morning. opportunity countries. questions MT of the kinds services Good side, interest you, products think will export probably while sort Thank A of from lot Europe. the to spending European level. Chris from and what covering upside do of defense great

Chris Kastner

Yes, think good it about unmanned platforms, countries of a technologies question, sales internationally. have we XX% about we've get of our mission that international been a some in ISR cyber, Intel, to think sold nature. about all Unmanned you that's then And data internationally, part NATO of as really traction historically surveillance, lot. big

all So sure opportunities opportunity we in we but is country any Europe in that we're actually. are actually the make we do NATO valid tactical those work on that, how of and very

Robert Springer

then modernization as leadership follows domestic the and Okay. about has side, capacity. And lethality then class and top third Navy been Columbia priorities on improvements then priorities readiness the talking

again, is really about So modernization to part, capacity readiness Colombia budgets. how the HII's does the and with and to think solid the How middle the rock that function of knowing future then access the tie part we that in is commitment MT. do budget's, a

Chris Kastner

Yes.

absolutely data and tools MT that. big to is very interesting related and in data modernization interesting that analytics support So readiness

So provide to our definitely access customer it for improve their tools and readiness. helps

will but that thing our It's our upside. for just working you additional all it give very with question. Right, thank customer interesting actually, we're on capabilities. I So customer. It's

for thanks So, that.

Robert Springer

start visibility any do Chris, you or any to timing things when these through. on see come

Chris Kastner

think happen small award I No, quickly, is unmanned to that internationally. provides very can opportunity the sell additional of very us important

we'll to related The short-term don't I stuff, just sort have see, to it. other a upside of but see

Operator

line next ahead your Our question. Barclays. is from your from now go comes David question David, with Please Strauss open.

David Strauss

Good morning. Hey Chris.

Can was in potentially meant think the stand going and on shipyards, the us Navy with just to expected things about talked of on call what it I that for split in be the where it So CapEx was and additional discussions investment you drawdown. terms you update how potentially the last the there.

Chris Kastner

working it. still we're on Yes,

Navy you to think supply And we're to allocated support in and capital infrastructure we'll with with support the the critical the to program. additional make them order three investments funding discussions that saw the critical on just, budget the in base, in we'll just to that continue now. in their I of discuss

David Strauss

capital the, on Tom, you around capital sales calculate on And represents quarter. I was guys think side, working this Okay. XX% networking that the

from in a seen adjusting typical and 'XX I trend into the that's working year talk 'XX kind even highest baking again of the while you're Can you that and what flow for capital for think the of free kind perspective. capital just a of seasonality. about working this we've course forecast through cash Thanks.

Tom Stiehle

Yes. David. Sure,

So it was XX%.

the collections, payable. accounts front back end about we bit as kind working would and receivable VCS on down. receipts We it half of now, So, that It's just and is the, see accounts have. just of the work on the upfront a of the the that's the coming the the be bit on the just the for right for that on timing these high we payments on talked through the draw, little stretch capital we both anticipated a the a as year, timing I And that milestones of little program. here

We were it's will XXXX. XXXX higher come than and into finish we then our break year the in XXXX, back at to but way

David Strauss

a a from capital targeting net specifically. in of 'XX you working 'XX as and percent are What Okay. sales

Tom Stiehle

milestones 'XX. into XX% to to for and capital we've back down about years range. more cash. specifically that's ship out the in more range, that would to we XXXX, that deliberate range, higher of is help a our but unexpected. on from more X% in not XXXX So the normal We coming XXXX heart and be to that expectations and saw out XX% quarter we don't talking working that tell impact that, This talked that range but is X% X%. and a facilitate here. that about the and on deliveries get and give helps And you would are on discussed 'XX I about playing then that is we've into guidance neutral. that then X%

Operator

from George question. Thank Research. Shapiro Shapiro you next ahead our open. very line go your comes with much. question Please your from George, And now is

George Shapiro

the wondering quarter were the just net was Tom could what you in I Yes, division. if provide EA's EACs by

Tom Stiehle

was million net on $XX EAC that the of Yes, were was XX% George Sure. Technologies. and the split XX% Ingalls and Mission

George Shapiro

the I Say missed that again. sentence. last

Tom Stiehle

unfavorable favorable, was Yes, of for it XX net XX. XXX

George Shapiro

the that or singled that quarter. number LPD XX said major out help in Okay. And in was no. had a Is the queue then, a the you

Tom Stiehle

do get clean see in was we $XX some the next quarter. we in also, this wash. will You The the sometimes It will a a or And following million work for had both We'll usually Yes. DDG-XX QX and happen in adjustment. a profitability. hot quarter. remaining that delivery that it after deliveries

pulled the factored shipbuilding So pull into expectation the opening QX frame. we in of QX this margin time that's remarks that been in quarter as in X% kind into somewhat of too, that

George Shapiro

is third quarter imply the average good And fourth as and Yes. then quarter quarter, if it as the has a first better. not the least got would X%, if the at second that little to

you margin if than to what to the one-time is the get get benefit QX better major benefits at So the QX in the X.X% to in quarter, that first have or had X% year X.X%. this you

Tom Stiehle

right. All

shifts board a have perspective with have year program. the know milestones on that. of on LPD people margin we back as So bring we process back the on construction several half we will sales gains that this Milestones the on continue we some through as efficiency in the rise and

the sales X.X%. margin of be the on still on kind the both the the We feel call with the half in February and come at of will and we that the beginning right year. it back highlighted would comfortable upfront So

George Shapiro

much. very thanks Okay,

Operator

very you over any Mr. this call like I'd Thank closing the much. for to further I'm to hand remarks. any time, not questions showing Kastner back at now

Chris Kastner

today's feedback. see you for and your We'll on welcome continued again is and call interest HII joining We engagement you appreciated. in your Thank us out there.

Huntington Ingalls Industries (HII) 5 May 222022 Q1 Earnings call transcript