Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2023 HII Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions].

I would now like to turn the call over to Christie Thomas, Vice President of Investor Relations. Ms. begin. may you Thomas,

Christie Thomas

and XXXX everyone. earnings operator, HII to second quarter conference good you, Welcome morning, the Thank call.

President Tom Joining are me Executive and Chris call Vice Stiehle, Kastner, our today President and on and CFO. the CEO;

Laws. a the are historical that of Safe estimates expectations Harbor facts made statements forward-looking Securities company's not and our provisions any are statements considered made As reminder, or today forward-looking are pursuant Federal to

differ materially. Forward-looking subject to cause risks actual uncertainties and could statements that are to results

For factors expected results refer regarding additional differ to to filings. actual information cause could that SEC materially results, from our

their Chris to in Tom certain will Also, refer remarks today, non-GAAP measures. and

Investor For the reconciliations accompany are this the comparable these the ir.hii.com. to which slides website GAAP Relations measures, at that metrics please webcast, see on of available

the like I to Chris? call With Chris President and turn that, over would to Kastner. CEO, our

Chris Kastner

for everyone. delivered Good morning, another Thanks, quarter. Thank solid team Christie. us. you The HII joining

demonstrate steady and continued top growth Our results line performance. operational

progress executing We on continue our technologies. significant to on shipbuilding and mission strategy, make growing backlog our

their are on that all capabilities our delivering we also our are to to solutions domain connect executing only use perform customers the different to we our shipbuilding platforms backlog, Not missions. unique

from X turn per share growth was the to let's quarter in $X.X Diluted earnings on in second of $X.XX billion. down Page the XXXX. our X.X% second results $X.XX Top resulting Now the line from XXXX, presentation. of quarter was of second the quarter of quarter, revenue for

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

keel completed trials quarter XX for builder's and XX, Ingalls, Pittsburgh, LPD second for the we NSC Calhoun. laid the In successfully

H. delivered successfully the also first Jack Burke Arleigh Flight trials destroyer DDG XXX, and III Lucas. acceptance We completed

XX LPD launch Jr., to this Ted and Richard year. later XXX Bougainville and M. XX. expect deliver X and DDG Stevens, LHA NSC McCool, We

expects redelivered and SSN XXX this CVN to off aircraft class XXX and the christened Washington. float carrier attack we News Massachusetts, News, submarine XX Virginia Newport XXX USS Newport Nimitz SSN At Later SSN Jersey. George class New year, deliver

previewed more earlier, As the optimize a delivery to received quarter contract the capable deliver its CVN modification update to ship schedule to construction Kennedy the expected and fleet I intended which XXXX. ship last XX

Slide X Virginia reflecting XXX, and for shipment milestones contract modification the Utah, updates an XX projected final class module moved the summarizes XXXX. IV Block of update shipbuilding for submarine SSN to XXXX, XXXX which CVN the of the and for expected the is

with security we of mission serves of Mission both speed scale record had straight saw national in early Mission over Technologies wins battlespace. off the the vehicle a XXXX. revenue $X.X innovation lab the quarter $XXX with At at win X.X% partners capped Technologies, to quarter the high third that the its across billion and quarter enabling business of from network, multiple transition unit, quarter second million, the sales and second by the its contract growing J-NEEO, of innovation in the

broader international OCAS set as the represented [ph] with forth these align which other recognized opportunities agreement, well X to nuclear as in directly and of emerging in to capabilities are the addition In by Pillar we technologies submarines, committed the as accomplishments, OCAS our agreement.

as Turning see continue under Bill's is budget support activities we for by programs. to through year President's consideration to Washington, XXXX chambers, in fiscal for bipartisan both request the our progresses And Congress.

Bird funding shipbuilding multi-year authorization that the shown XX Both are procurement for for submarines. authorized include ballistic funding Columbia the Virginia class next support procurement and We LPD strong authorizing have the to Committees pleased block Services Armed of for and of Early missile DDG passed the class for by been Virginia class two authorization submarine submarines, XX bills which two chambers, requested had respective one destroyers.

Columbia House procurements Senate two Bird Virginia Committees missile and fund and submarines, procurement Block Virginia the one a And provides the XX third stable submarines, authority for ballistic and Bill ships. in for Appropriations class Early procurement in funding DDG supporting class of Bill destroyers. FYXX. and rate XX procurement include Both class XX FYXX, of advanced DDG LPD House Appropriations language multi-year includes VI of amphibious submarine Senate warfare two The a Appropriations

on depend between negotiations Authorization respected will the conference Committees. outcomes and the Appropriations Final

on to labor, of approximately second our through quarter, full the meet year craftsmen a moving hired women X,XXX. to pace X,XXX we over Now, and plan solid

meeting the we're Although plan. still targets, hiring risk and to our is labor greatest meeting our high attrition remains

are of to and retention in the both labor this environment. of workforce our training effort substantial challenging at We shipyards areas in devote continuing recruiting, robust very

all for products strong of on the our and the to our sets continued mission ships, fulfil nation. services against of strategy growing summary, the powerful and Mission for our and service and progress solutions the world's Technologies foundation backlog with coupled most deliver demand main our In HII continue the to to executing

And to now over Tom remarks our some results. the on financial turn for I'll call Tom?

Tom Stiehle

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

results, more morning our to earnings refer the website. segment the posted detail please to and For on this release issued

was to our or Shipbuilding $XXX of compared year. XXXX Slide results to year and margin record Mission the the second News attributable growth of of the a decreased on second of for operating margin same HII. Technologies. million $XX second at quarter operating million consolidated Operating revenues period X income of with in for X.X% results and $X.X last Newport billion revenue XX% quarter approximately by of from increased X.Xi and same the to our increased Beginning largely X.X% represents period This presentation, the quarter quarter compared last

operating compared operating adjustments primarily period. compared by operating of in state the decrease the FAS/CAS were offset to $XXX earnings income income million million income, lower partially in to The favorable more Net non-current quarter due to segment year more prior and favorable was the quarter $XXX in XXXX. second taxes

significantly results was were quarter with to the than in on provided $X.XX stronger compared previous the facilities, of quarter $X.XX adjustment expected. in in capital for in News, at call. quarter Newport from in making year. as a Segment difficult clauses price benefited from the and quarter XXXX second the of line income and year-over-year comparison both second economic share slightly our per and Ingalls adjustments earnings first we the Diluted operating Shipbuilding favorable outlook expectations the quarter

of higher income on same revenues Moving lower increased primarily about on of quarter in facilities X% contract quarter favorable well expected LPD year, lower as price capital adjustment Ingalls to changes estimates million lower operating the driven clauses, X due risk period of margin operating revenues. declined by DTG economic year, as from million and XX NSC from Slide to $XX program X.X% or in million on in from primarily the partially as by $XXX offset the retirement Harrisburg. last Ingalls the $X revenues last program

X.X% last Newport $X.X by same $XX At growth or due million from revenues revenues. period carrier the increased billion in construction to both aircraft year, of News and submarine

income the was in increase compared Newport an or of quarter million, of X.X% year. quarter million News $XX XXXX to $X second of second operating last the

X.X%, X% operating Operating contract quarter. had the favorable and offset VCS price adjustments clauses. capital was margin were income Shipbuilding the in from in estimates outlook quarter program year-over-year, largely provided was previously we above economic second as facilities changes for by adjustment lower favorable consistent the

the year outlook is margin for Our full shipbuilding operating unchanged.

half the quarter. for milestones and the in previously our noted XXXX of expected the that concentrated are have year, in largely We second fourth

operating of cyber/electronic At CXISR, increased and or million second warfare which compared the our of million training solutions, income includes and driven Mission by X.X% $XXX volumes year. operating revenues virtual $X of in of the XXXX, quarter constructive Technologies compared million to $XX income of million mission-based to live and second Technologies last $XX Mission primarily quarter capabilities. higher

additional of of an investment equity which in second ship $XX of income non-recurring XXXX. sold method repair equity joint quarter second approximately million the XXXX quarter was included in venture, a The for

sale proceeds in investing $XX included Cash million the cash flows. from of are

Additionally, method approximately in for assets. the Mission purchased venture. included the of equity million from repair Mission joint of amortization second Current Technologies ship sale X.X%. Technologies million negative tangible was $X $XX margin results EBITDA the of quarter was recorded adjustment of

Turning to This operations the million quarter quarter $XXX of to of compares X.X% second capital million. in was cash of of of $XX plans to XXXX. and were the or revenues flow $XX net free Free $XXX or in pension from Cash capital the revenues. million expenditures expenditures and $XX in $XX contributions quarter. was quarter. from operations million, Slide our was retirement $XX cash million in of Net X, benefit flow cash million cash million the X.X% post other

of $XX share quarter per aggregate. the in $X.XX paid During second million we dividends or

aggregate the repurchased cost $X second at during We approximately aggregate approximately quarter shares at approximately XX,XXX also an Year-to-date XX,XXX an million. shares million. $XX repurchase we quarter, through cost of of approximately the

remains Moving unchanged, outlook X, free capital priorities. cash our flow XXXX as our do on allocation Slide to through

$XXX to Regarding XXXX million free see as the million continue most likely cash range. to flow guidance, we $XXX

continue this we At guidance will in We provided. flow agreement COVID-related mechanics time, do customer with place repayment increase currently and XXXX. which free our timing work of we on the have regarding in advances, to the to not the have forecasted an above range occur our cash is that

continue track. planned our to to through expect substantially repayment, on shareholders that highlight we which distribute after I'll flow is free to cash XXXX, debt all

remainder we will also third year. the of see our guidance. on Slide are the I we to color Turning reaffirming X, XXXX and segment how some the quarter provide

the to with revenue quarters when consistent occur. which be is does third meaningful shipbuilding to expect second milestones be This impactful X.X%. fourth we our shipbuilding the in most with expect margin expectation Regarding to $X.X approximately and quarter, of improvement we shipbuilding consistent quarter the operating billion results, result imply

operating quarter quarter Mission expect results revenue second For third margin expect and the similar of Technologies be approximately third to to quarter we X.X%.

and provided. are referenced to end second the accounting currently Technologies' Mission of ranges guidance have to closer the margins the low impact the method be I adjustment equity Given believe XXXX we earlier EBITDA of operating we and results that quarter likely

to We third free for no approximately year. million. expect guidance $XXX cash is there to change our the quarter be Again, flow

generation our expect flow predominantly quarter. the fourth fall We cash will in

milestones consistent provided expected of for quarter timing Our cash calendar shipbuilding our second the with on cash were expectation results in quarter call. first To with expectations is normal year. our cadence the the our we line and summarize, largely both

continues and year-over-year Mission pipeline. Newport to team News to shipbuilding Ingalls growth. Technologies a revenue capture impressive contract critical The Technologies robust meaningful maintains very continued and wins delivered milestones. hit Mission

creation confidence great the long their have in and term future We value opportunity.

on reaffirm the are focused pleased to to commitments our laid out. full With turn the Q&A. and guidance as we back I'll Christie segment call Finally, year over to remain executing the manage that milestones we we've that

Christie Thomas

Thanks, Tom.

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

Operator

you. Doug your Instructions]. our today [Operator from question And line the is line Bernstein. is first Doug, Thank from of Harned live.

Doug Harned

Good you. Thank morning.

Chris Kastner

Good morning, Doug.

Doug Harned

it now here that you rate? to class, year looks I in to per right What behind overcome Virginia the mean, get well path a two On obstacles it's is the Block program to Thanks. that are there? do delivery to get V. the objective need be see

Chris Kastner

largest We've labor targets. now the here Yeah, risk obstacle, the News and Newport program is on right VCS our hire. in largest worked labor hard to the meeting

You my heads we're X,XXX remarks for the of ahead year. saw plan over in prepared

of But as good said, continue years. is that a some to I -- labor do over that's So this And couple to just progress. We issue. need positive driven indicators. the made we've next it's

Doug Harned

you're Columbia with And class. which when subcontractor way how Boat programs? at work with a Electric relationships those Newport the do on Virginia News, on different mean, in you you're partner the you I on a Boat but look class, affect Electric

Chris Kastner

a they a years teams of relationship have to And it's But work not developed under be you between think two so over that transferring together. under place plate, done Columbia but been the efficiency Obviously, very about back work contractual contractual when very to put work class, need together. get deck mechanisms that's There's teams. forth, the difference. Yeah, potentially those need when you you closely the material don't down differences. Virginia you the a getting number and obviously work and of the closely in that some there's

Doug Harned

way -- So mind the than one the works sort in preferred relationship there's other? no real in no, there's your no better here there's of difference effective that

Chris Kastner

get can. to assets we as objective critical to fleet the really, there as the Not soon is these

So the we're team closely to ensure working that. on very works

Doug Harned

thank great, Okay, you.

Chris Kastner

Sure.

Operator

Spingarn Robert now question line is Robert, line next go Research. open. Our from of Please your the ahead. of Melius is

Rob Spingarn

Hey, good morning, Tom.

Just clarification a on…

Tom Stiehle

Good morning.

Rob Spingarn

impact million about a a you And talked for you. level you. the Thank the margins, $X Mission Technologies, on at then Chris the But high JV. from one but X.X%, of Tom, the sale

built impact that was So guidance? into the

Tom Stiehle

wasn't right now. wasn't It No, until it. it built into

So…

Rob Spingarn

Is interpret you're how this right, the tracking should to is I why that so low All end. that?

Tom Stiehle

yeah. Right,

Rob Spingarn

might a and and to hear Chris, for to can interesting level businesses these CAC areas about then Okay, I but priority CX contribute shipbuilding between it high MT, talk be thought two DoD, that's Contested question, how you Logistics? and two

Chris Kastner

That's a really question. good

teed that CX CAC plans. into of products up concept. training. can CAC as when fit be line interesting, enterprise really big fit It think can they about Think well. not the war LVC and data data and into which products that model right great me kind contested about You We're And have in gaming, war potential the about logistics it Op just the AI/ML understood, think fits a data you and gaming right you and is a CX big into acquisition, missions. right speed there, data

plans, You contested think about about think logistics. to op you have

products two with that quickly Navy, other adapted be those high had about issues. that with have customers applications and to we there. the level We've can deal So conversations potential

we set. We we'll sets. we the talk it. customer they're So those And to to products can important think continue think to add about product

Rob Spingarn

much. so Thanks

Chris Kastner

Sure.

Operator

is of Skibitski line Our Global. Pete, Alembic Pete next open. of question now your line from today the is

Pete Skibitski

morning, good Hey, guys.

Chris Kastner

Good morning.

Pete Skibitski

the year? Chris, goals on hiring, at gauge don't the actual net of retention And after your can kind of attrition? you be revenue net give a that if us your the can of the could you risk level numbers hiring, you meet for maybe balance net

Chris Kastner

net. of going lot things right There's equation. don't a so Yeah, that into provide the we

the But have to to over meet of need that. our have have able contribute and attrition we time, Shop to attendance, just balance growth labor there's Job deal that continue the we say hiring We year. have attrition, develops. potentially some see we year will can with if over goals the I how to we're we upside

Pete Skibitski

$X in of then mod. was milestone and place, in next project? you terms level your could on that's it the a and, it, performance I little that Got about million the through ask how trend the does it raise okay. to raise your Does it potential And confidence now your opportunities under want mod, contract the project Kennedy on that for on year --

Chris Kastner

and Yeah, that the that work baseline team we're Kennedy assessing they're did their incorporating or I test the confident schedule work good and. And know baseline a We're compartment the the PSA job putting meeting is proceeding really the the schedule. the plants way work developing, and integrating completion into proceeding. contract -- the into their goals. They're rates

lot got at the we So a in confidence where of right now. Kennedy is

Pete Skibitski

Okay, meaningful the are or the should so much programs, to it, maybe opportunities saying milestone of focus Kennedy the other on not, way relative on another Kennedy? we

Chris Kastner

We're XX to a of things we going over in to But if be for going let just It's the XX front see. well, continue lot perform milestone have We're sure. critical to of opportunities months, to us. next to XX play months. work there'll have potentially, out to

Pete Skibitski

okay. Thank you. Okay,

Chris Kastner

Sure.

Operator

line from of Seifman today Seth, ahead. of question Morgan. please next Seth is JP go the The

is open. line Your

Seth Seifman

thanks Hey, Good morning. very much.

Chris Kastner

morning. Good

Pete Skibitski

and looking price the I to at ask contract Mission Tech, wanted a the there, in is relatively is small of looking fixed then portion -- at the mix mix. margin

I think it's XX%. like

to something try you is going take is not higher? there that where about an seems that so with now. when consistent over want it to right in that risk business the to Is be profile time really services the opportunities and are environment that And think the on? market move that in IT Or you to business, to Fed the profitability see you that want more

Chris Kastner

the XX%, margin will believe is -- plus. to a That's our majority move team there. going at those technology The cost lower. indicated of on the you think that are drives focused Technologies so Yeah, I true, we which contracts over we're -- higher. We're it bit Mission rate

there will and opportunities, pursue in be that? So also successful, And but you make price sense. a mix work, and of well where improve to and do fixed we're margin to improve. should they're their those cost anything have there's bit going a pipeline, very those going lot on if Tom, we're competing plus the is

Tom Stiehle

Yeah.

CD are is move sets of that's away introduce front. the products, we area technology, not a will portfolio, contracts. an And margin in from have an more potential into pricing that realized right, bring there more I we you kind customer on is on of that as we and premium a Seth, move afoot. get of X% about could there those cost is that then [ph] see too I expansion the mean, And jobs. So where we say on the that we to it. try would as services

Pete Skibitski

Great, advance cash with that flow follow real up, the thanks. target gave, regard quick you what then And to Tom, just contemplate repayment. a the that does QX

Tom Stiehle

color So right that now, little right. on a

got was repaid an the by It end of It was supposed we So extension. month June. extension two on a that. to be

So the in now contract settlement was have how place that negotiated yet. we'll don't pay advanced going out I the in back understanding from prog the on XXXX. transition and negotiations, Navy's that a since

So know what going entail. I don't to that's

The through go to that. guide a there's on as right And assumes have through now that here. work payback we ourselves that not we'll

So at of the doesn't It XXX for it impact the look guide we that's to quarter. guidance take right now. the run for best XXX and stick that that way you is year. it that the that normal I entire rate expect And model to I've would to a said tell a

of the that and it, entails, have we're the back of year. in significant days, then half we XX going another think timing although impact, I some the see look and negotiations to the what milestones

the There's for and the time get contract. have Navy I price, one ship. gets liquidate I off. some retentions the I delivery, work a we two the Every So was launches, there. incomplete have that float contract deliveries, three

So I the And opportunities myself retentions half to an with as there or to that's for this the those cash. opportunity that's next year work both LTE to back is going there's and And year not hit work XX off. then year. margin of

make as five comfortable those event. you, goals. We're But It's over still I'm milestone to look through we look. target XXXX to take a now make of from XX still on that chart XXXX, the the X.X next just holding billion the milestone I gave And that would we're cash kind a months. that year at

Pete Skibitski

Great. Cool, much. thank you very

Operator

next Research. of line of The ahead. from Wolfe Please the today Myles go is Walton question

now open is line Your

Myles Walton

hoping Was on two module there guess comment pressure the guidance range of also One, the does any could this And Thanks. And then I on you quarter you had items. any it absorb material? non year? or and sort XXX the on was that were move. margin costs that to put LHA-X, minor for in

Chris Kastner

can that if handle Tom chip I'll Yes, needs he and in to.

year. It year So some module beginning the up late late delivery. that XXX was had pushed next in rework breaking to the

So forth that, possible. said do previously, ensure as just material impact they good to that as Doug as and efficiently pretty modest, moving not really work at I to back a teams

So XXX. not on a material impact

to first make things the want to think, attention I kind did is LHA-X, of everybody's thing I first a the sure LHA-X a that thing We just pay good you fire job. The team first, have in on really safe. shipyards do On really significant is don't gloss pretty like. we over to

one no responders sure hurt. was The first made

the the shipbuilders, and safe. Just inhalation. were Navy But smoke personnel minor

some to corrective is cause the compartment, did now. that one [ph]. put working root a that, We're thing did minor through waterways a We plan plan, damage. analysis. damage to action Second really corrective action limit They

is thing that learned from issue. So this we the important

to cost, for that's real milestones the remain schedule ship cost on impact that or that no and material So intact. LHA-X,

Myles Walton

your of what's that. out portion for Savannah for portion then buying expected on the And River the of JV, the Honeywell's Okay, just acquired? incremental thanks being outflow

Chris Kastner

it's Yes, in, so already right.

Tom Stiehle

in we additional -- and the on in that. paid $XX out get you and in that flow So out to margin we is the Right the investing the cash see can now years. it's expect cash million

We haven't defined that.

Myles Walton

you. Thank

Chris Kastner

Thanks Myles.

Operator

of line Strauss from ahead. next go Our David question Barclays. the of is Please

Your open. line is

David Strauss

you. thank Great, Good morning.

Chris Kastner

Good morning.

David Strauss

into about working working capital X% an of just us expecting year-to-date, would where it it's I kind of capital revenues again cash the if you progress can And net end tracking? update flow Tom, at 'XX forecast. tracking what you're now expect what of you're you're year-to-date, think the remind year. free baking of the give you us you're

Tom Stiehle

to consistent forecast releases quarter. from we've about Yeah, of with through earnings then the 'XX the as find go of am myself where back out in get to X% what tailwinds some discussions of had right past And is myself consistent with that and half right year the we so there 'XX, target now, talked around this discussions. I And on plan. X% the I about. with we've popping had, past work shipyards the we've I

Technologies to the And We gotten X% used cadence we've of as where and in our to of working Technologies between two think was X%, think yards the would grown. be we for the to shipyard Mission Mission a capital norm yard the of production programs. has more

out on then I ourselves look this range we'll as we be And the low year XXXX, at that work finish X%. X% of that end range. of end we'll to higher here. it as the on And into more

or about as that's that some the going consistency the some see both Just status schedule And going about. I forward. me coming to us and range, in the material in the milestones making labor bring years norm and we deliveries, we give in settled cadence keep down

David Strauss

potentially margin guide? first range? XXXX, there the in when risk follow-up a if at And are And it that we of digit shipbuilding LPD-XX, looking great. was or QX Ingalls Thanks. at terms for half of of in Okay, strongly in you slip, the kind to range a delivery QX, to does is are what implied double then margin how similar in margin, the that's the much saw we

Tom Stiehle

Sure.

for very in for the for low QX obviously, quarter X%, the to can forecasts upper for yard. yards. ranges X% each we and we're at here. It's shipbuilding. guiding QX. do we QX math And So X%, first across the don't the by give It's comfortable shipbuilding I'm But quarter X% with this that. for both X% [ph] and specific for

I'll again. Yeah, still float an think deliveries, I but loaded timeframe. and it all QX we I two QX, in off in heavily launches, gave earlier, one three answer hit QX have

year, that and upcoming, two change bring on we've margin of are And the half incentives had to the deliveries associated some have and out. and that and cash. both retentions Both that themselves play releases adjudication the then that, that we with have smaller some this will back

I 'XX XX% as of a the XXXX. 'XX. pacing of the into saw as that half, yards the higher first first of the very meaningfully XX%, to going specifically, mentioned a back the But half breakdown for half to strong you think We forecast the half, get front So year. with here back is than this QX opposite I'm I half Ingalls the won't comfortable be is in QX. for in and is

David Strauss

And risk LPD XX around delivery. if the slips, the

Tom Stiehle

So half here. the it's at the year of very back

are my five deliveries talked risk there. As or want see the any right things But with and play they hand the overly do, what have that don't whether on the do XX not. We taking way avenue now or don't that. retentions a want timely see Right burning go our plays past, I through is ship of out. is to that We'll now. have to see how to the we'll LP to down progressing months well. of in we've we clean, we lot come around or

and It's one the context milestone the in shipbuilding one here. ship of

I either now. hurt I help still appropriate maintain or And overly yearend. think We don't us. to by think overly think will the shipbuilding X% right the I margin X% it So guide's

David Strauss

you. Thank

Tom Stiehle

Thanks.

Operator

Our Gautam, ahead. go is next of Khanna line Cowen. TD please question the from of Gautam

Your line open. is

Gautam Khanna

guys. good Hey, morning,

Chris Kastner

Gautam. morning, Good

Gautam Khanna

there various ships, to if reconcile the dates And in any that next the years. with to of when you had schedules couple fit for curious, update, of was on better remember and delivery was up out, own I Hey, just over curious wondering, and different for expectations color came terms the like. prior dates I your the delivery were I'm how relative

Chris Kastner

then Tom then start Yeah, in. can I then can chime

context one a think months those and a of on I But of the couple have or really different a EACs delivery move very risk. basis. other. consistent assess might dates, months, and it's They our timing we of assessment a representation and on couple schedules deliveries or our, our way

a adjustment at potentially notification Congress. looking time or one You're to

So context customers very more so are how issue understand than of we're Because assessing where schedule. view work that we and own on it's a standpoint, closely I from disconnect. more really the a we think they reconcilable. with it's our They very their schedule a the a point than have schedules,

Tom Stiehle

I and EACs stand. forecast more sure a which a out, you we that budgets complete five we the performance where the NDAA weeks It's with future -- On all we home, perspective, the are of do gives to And cross that we year look labor then doing range marries to and funding [indiscernible], at as site. that to on the burn and schedules on reconcile and annual reference an have, have construction what we and strategic plan that. gets anyway, we basis XX baked date our align labor into every performance. we make material revised much then EAC don't updated really to the look estimates that resource have expectations add at pop and we and where plan actuals obviously each take a we master that at of and an long a

ourselves. So into tight then have our customer. we with we're offices program our And monthly reviews with locked

disconnect there. was So any I there think don't

Gautam Khanna

give was on providing the the update And segment you EACs some language also program that by quick if on Thanks. in Okay, the Could EAC mind program variance. a favorable performing? EACs us is how a wouldn't and in release was there and particular? net you favorable just that that just about if VCS there

Chris Kastner

EACs start quarter. the the the then performance talk the net Tom in -- with net So will VCS I'll about

and yeah, So positive showing VCS some some definitely momentum. stability is

cost VCS, targets, So quarter working as team, very there the environment. meet our in a Tom program and their every -- difficult kind really on we milestones team's some of but the material macroeconomic EACs and their to said, hard, is nothing assess meet there's to note,

there some is progress there. So

progress continue have meet stability There's those do program have VCs out on can the Block we opportunity. then best VCS. more think transition thing is and modules contract, the into definitely on where block more the commitments get ships I on our for we where V to some we on and

So with the that Tom EACs.

Tom Stiehle

the XX% specific net was Ingalls and $XX million, made was and that the $X.X unfavorable gross That Thanks. favorable million $XX in was was That favourable unfavorable. material. or $XX up was or Yeah, that And NMT. of XX% $XX million. million no million. was or favorable, There was

Gautam Khanna

Great.

Operator

today question from the George, go from is next George Research. Shapiro line of Our ahead. please Shapiro

Your open. line is

George Shapiro

Tom. Yes,

look just the quarter, cash that contribute fourth midpoint's at that? free quarter, you the Of are flow key Newport around to milestones would listed the Ingalls have that the million. you ones in what $XXX fourth for the implied the If for in

Tom Stiehle

So I think it's it. of a host

deliveries run There's if about the minor to retention pick ships. to some You launches we've talked adjudication up slide on too. incentives talked go you the We've change. down on that the milestones, that delivered we and the can the about, releases

over strong the So saw you for see year us. seasonality, last with to QX. We usually QX do billion in of $X.X because be that very

generate milestones to us that the of So the situated are type and this I think result year. same plan for

I would to it's early. clarify, want

make the comment for a to now. for with the QX with change want we real we you and at know a what year. guide good any I the the do, we right repayment for rest since you would November that milestone color. Navy look how think My year how I much there is and sticking specific of that year at of beginning XXX this when negotiations was to -- with I up specific understands on I come the we COVID know performance, when expect the the QX give we'll guided how X that that occur anticipate guide the will the the we Navy, is everyone the more COVID the of us, some call and that. behind color more to is and wrapping changes and going assumes If repay have don't is could sure said to what are I give

George Shapiro

Okay, thanks much. very

Chris Kastner

George. Thanks,

Operator

from Ron, go line of Bank Our Please is now question Epstein of line America. your next ahead. is the open. from Ron

Ronald Epstein

morning, good Hey, guys.

of quick Just a couple ones.

Chris Kastner

morning. Good

Ronald Epstein

Could little gigantic? about pretty right? out? was start But And now I'm play about guessing to it a competitive How it you going that. award thinking you're with that's Was the was DDG-XX let's speak bid? bit that? a that

Chris Kastner

Ingalls capable next Yeah, Obvious proficiency that. Ingalls shipyards, was so excellent is the And very two awarded It DDG-XXX we're on competitive proceeding demonstrated very, we've There's on positive, destroyers. very that between executing. a delivered team shows the six shipyards. job are Getting already. which just DDG-XX, the both team standard three by competing of the environment for of competitive.

So indicator. really, really a positive

for ship it's What potential combined it is arrangements bundle and stability does provide Ingalls. moving And LPDs with for positive. XX and forward. of Ingalls fix lot of provides That by LPDs lot LHA for should and very moving a a support stability LPD forward for

Ronald Epstein

guys accounting would work, it. would it? Got And that stuff, how a my right. you the gain, of Savannah potentially take understanding Got the then on River

deferring that's Or think Are a did the take you it you in gain I quarter? how works. it?

Tom Stiehle

now. in quarter we right didn't a take No, the gain

joint a of the So higher still of higher we a owner owner but venture, minority a become owner, it.

as future, in as it's the that's happen past. we've than So gains in How consolidated. what recorded they'll the had released, are higher be proceeds

So play the I expect of over to couple that next out years.

Ronald Epstein

Got it.

you greater value carrying your an event could where whatever. or be and like to wasn't mark would market it So

Tom Stiehle

No.

Ronald Epstein

how to Got retention evolved COVID here and disruptions? just has you from of it. how the then all employees as of little the Got it. kind recover in And we speak terms going it's can a workforce bit of

Chris Kastner

Yeah, evolving. question. that workforce Ron, thanks is for definitely

we and better, said high down we're apprentice of stability. need is to XX are the of the XX next, and training sending come them sure school, the the And that better, walk-ins, their make challenge. them the retention. the still comes that hiring community really days someone, previously, months that through established growth a need to because of the what is understand to programs process there's is we and good for career, when this them colleges, opportunity make it employment, a school to very that shepherd is But still right. hires is over. finding successful, I hiring don't applicant ensure them programs, through We our to rate new plate but The to deck As retention the are

used same So fundamental as just the they walk really the applicants are that's change be. in is to not the

both Newport on. what that's are So Newport, and News Ingalls working

Ronald Epstein

you All it? very Thank right. Got much.

Chris Kastner

Sure.

Operator

of the And Noah the Poponak is open. of line from is question your line next Goldman Sachs. Noah,

Noah Poponak

good Hey, morning, everyone.

Chris Kastner

year-over-year Good flat little be, after the a quarter or eight be third think I to morning, for nine in at to of the flat in being Noah. the year. the through to first X% have maybe of guide to kind down fourth quarter, months If six I take be year, the the MT the we'd revenue sequentially

So from see how just revenue How do much some leaving growth of of the conservatism organic profile here? that you MT is kind there?

Tom Stiehle

a that's XXX, quarter. had XXX, at comfortable record right quarter now. that which the previous record was with they've followed, So, Feel

in I do get -- for think be funded delivery and upside new awarded there's occur get a that happened XXX think orders some I between and could here. balance then is heads awards here. -- that, there

look see business We how now. see it's at year a We right Last X% Technologies, the plays that So each X.X% Mission six grew. over X%. they of units sequentially, grew out. we'll quarter-over-quarter, grew

seats that. So of a hard of to string look awards. way We'll seats, right think the fill And north working take right good of a kind have. see I now they the They out. that is they're at plays how that of kind on funded to X%

of good there. a But as be have feeling function the forward. pipeline awards to going it's and about we I labor go I'm So

bill Although to the right is book now. low

awards eye I pop right on. plethora close We'll year. we're of up think the keeping half the here QX that that's still going now. There's on and a QX that see to a on back for come in of

we to that justify acquisition business of as ramp alliances, play out is see I think and the starting really a happening. that's sales

Chris Kastner

for team create Technologies is value, will billion the Yeah, year, to for awarded, for Mission this of [indiscernible] Mission add record a doing really jump That early a QX, wins not and stability on $X could very Technologies. almost the well which we're really is I growth, a so and just in total into not awards lot Noah, I but together. into contract It's that, could future potential kind of and of unprecedented.

Noah Poponak

that But Tom, the shipbuilding get if it's XQ you more to that. a And high where likely the in do to the quarter quarter, But keep margin, see the I would the milestones range. need Can be to X.X% falling? sequentially flat end, X% margin that milestone the see X% need for Okay, to get shipbuilding to and range, full to occur you you the appreciate relatively year the speak close know fourth XX.X%. where to close the to in I to year, it of full do third to would to every tight in low end different. be and it need is range,

Tom Stiehle

do a Yeah, swinger, see and of right can about you for math said then a and change get the X.X% it contribute too end does there. I I right results. although of you when QX. there. LPD want big is there's and but not X.X% incentives now. early piece But to expect think hairs run X.X% mean, precise. margin I a to we're the that it, we we adjudication through X.X% there splitting precise occur, lot milestones wouldn't to it's QX, it out said the pretty are Things mean, I X.X% another I to that XX

And X%s I the speak what's the today. CFOs The math our weekly daily the with in the plate, yard. it. the feel We out for is I on I in comfortable and avenue, be performance with QX will see of

in I up So a of that to we're what's place and on then finish And has to know done what get it from to them in what of side. and has end the contract both performance in done range. front get very much

Noah Poponak

then Chris, has like item, just Got seems specific pretty but the that slowed rate the question, attrition important kind equation. question, one to into labor know that's another year? I attrition total back it? a your of element And other of it through

Chris Kastner

And was pretty in definitely been It's a year. early So It's job. COVID. the shipbuilding. career lot real really the working I of haven't I of very aren't challenging than this being that it them it's It's builder. consistent seen ship this a still people for year. just benefits attrition to slowing get the don't we're prepared lower in walk a coming to up prepared understand hard rigors of

Noah Poponak

guys. it. thanks, Okay, Appreciate

Chris Kastner

Noah. Sure. See you

Operator

line from is line the your Pete Pete, of next question Our now Skibitski open. is Global. of Alembic

Pete Skibitski

the working up on you Can have think about sizing the the out for will of Maybe there. Chris, roll although RFI an Yeah, HII strategy you this, retirement. about timing Then the talked we've think Nimitz but is Navy, a if and -- I that? there's talk that.

overall? Just your that thoughts on

Chris Kastner

OHS, uniquely it. role we and within in a lot a it. obviously Yeah, on have so and the did Newport absolutely retirements. of We going of News will planning do on enterprise, the Navy qualified There's to integration RCA,

the OHS really the DND. of finishing so of doing because it's between ships kind And it's and an and a dance actually, then the planning, RCA advance kind

business. the So rate News doesn't It's long absolutely. my work. into And of probably do will It perspective growth term that the Newport about change integrated forecasting. the

Pete Skibitski

before it's like after starts? maybe mid-decade it but decade slightly to mid Okay, a

Chris Kastner

next, specific integrated XX I to time, years, years, it's hate a but over XX to actually. give the you XX to

Pete Skibitski

I see.

you. Okay, thank

Chris Kastner

think the we plan, their mix. the in you mix, term all how of It's about the forecast all when growth the long rate It's business. in Pete, and

Pete Skibitski

it. Got

Operator

this Thank you. I'm at not showing any further time. questions

like back to hand I'd Kastner Mr. So call the over remarks. to any closing now for

Chris Kastner

in continuing you Thank look you We us appreciate with Yeah. going today. joining interest your forward. to all to and engage forward for HII

Operator

That concludes today's conference call.

disconnect You line. may now your

Huntington Ingalls Industries (HII) 3 Aug 232023 Q2 Earnings call transcript