HII - Earnings call transcript Q2 2024 | Huntington Ingalls Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2024 HII Earnings Conference Call. [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. Mrs. Thomas, you may begin.

Christie Thomas

good and operator, you, morning. Thank welcome I'd Quarter the Second to Earnings like Conference to XXXX Call. HII everyone

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

actual forward-looking other Act and statements or reminder, and or certain today, our future risks, results that the materially differ are for our statements. facts and meaning today As involve Chris These measures. our cause unknown our statements to results Litigation be statements uncertainties cause a the non-GAAP materially Reform different made refer remarks within to filings implied Securities Please from Tom from events performance known will future expected XXXX. SEC may not and important future that factors historical expressed could results financial are forward-looking of factors results. Private that by to Also of to these relate actual the see in

measures, the ir.hii.com. With that, Kastner. available For on President over at our Investor page reconciliations like are of Relations slides GAAP our Chris which to these and to website's comparable I Chris? accompany please webcast, the CEO, metrics turn this call the to that would see

Christopher Kastner

up from the second was per results. quarter was the I'd diluted and X the strong strategy forecast. To visibility on quarter a morning, like and United and HII another everyone. discuss in products delivered Christie, alignment from our States Thanks, year good Record our to quarter, and to our achieved team share executing remains Mission our X.X% continues billion, ago, National The $X.XX business of our programs start, strong revenue to XXXX. customers. ships, The our of for provide In division quarter, services shipbuilding quarter focused of $X our on Technologies second $X.XX up commitments meeting revenue and Security performance. to to our the earnings long-term second

which is quarter of record Mission billion we $X.X in quarter funded. of billion $XX were backlog over million, revenue second the XXXX. awards contract of of billion, $XXX had of consecutive sales resulted of the with $XX.X At end currently quarter the quarter, at during New XX% seventh which the Technologies, the

support towards execution Jr. availability, achievement and Richard have levels very a of technologies to our Technologies directing Mission shareholders. In the trailing will our of shipbuilding, coupled for at and technology XX-month second resources capabilities opportunity stabilize aligned requirements. In that facilities meet in XX, In our utilization M. pipeline scheduled the will on financial ability revenue, forward its our performance need, and milestones. X.XX, over contracts, create to year. LPD making continues the we billion. improve Other industrial-based on DDG remain projections strong predictable improve shipyards competitive as delivery efforts been downstream employee new to to to stability, for meeting our with goals. confirms meeting and new addition delivered LPD to and the ideal of workforce is Harrisburg and Jeremiah launching XXX, based of system shifts the completion XX investments, our portfolio with are sector market us we long-term Mission is leading-edge Denton, throughput delivery McCool, LHA our this to offer book-to-bill adjusted our toward efficient investments growth of is Significant $XX future at Navy most Technologies in are our this customers to continue portfolio later we focused The milestones, capacity, increase and and each development, including all labor Bougainville goals Ingalls, support launch aimed and of X today's shipyard commitments the capital in proficiency performance our commitments Navy. looking and quarter business of

second delivered in New for At milestones quarter, and later Jersey we remaining the are SSN this Newport progress continue XXX year. that planned News, toward to our make

construction some experienced quarter, shift from progress. the been early program test team XXXX. does, Massachusetts resolved, to XXX disruption XXXX a steady the identified into minor has SSN replacement delivery testing. due program equipment and disruption back late to is team During making The It the during to however, test

we discussed, negotiations awards by our expect in and Columbia-class We additional several ships. X and for significant Block end are And VI as the shipbuilding Virginia-class the of reaffirming year. margin are build outlook submarines, year, submarines amphibious including we've contract already this

in Turning Washington. to activities

We in through both continue progress bills reflected XXXX chambers to authorization they year fiscal appropriations see bipartisan programs Congress. the as support defense of for and our

the pleased additional support procurement that XX, Virginia-class authority are for authorization have including committees of We to support shipbuilding, advanced shown a amphibious multi-ship X for strong ships. procurement and funding support authority additional funding for construction CVN

DDG appropriations $X await positions included Appropriations and Flight also the submarine shipbuilding III The the final includes on Senate continues major into of authority LPD respective negotiations billion will base. bill our for authorizers XX support Flight and and depend funding eventual industrial and outcomes notably to conference investment authorization additional The Senate House by II committees. appropriations programs the ships. We

over acquisition on year X,XXX plan full keeps to in Positive labor. we approximately talent personnel track have us trends craft our achieve year-to-date, which to turning hired of Now as continue X,XXX.

on that shareholders. fundamentals positively the and confident second programs team's we commitments for on customers the and execution I'm of to forward to in half look and the positions more the as of summary, In milestones us our deliver focus our our future year the meet the

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

Thomas Stiehle

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

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

our as record consolidated attributable a the Slide at growth increased our approximately Newport very same Ingalls revenues was to year at on and compared quarter nearly Beginning X.X% of revenue increased X strong well billion, presentation, results year-over-year This of last $X with the Mission as of growth second represent and to HII. for News result quarter revenue second shipbuilding. Technologies period XX%

$XXX were the or the quarter quarter million X.X% million last by margin increased approximately quarter from approximately slightly growth of the XX.X% same XXXX. quarter of share Backlog second of to the year-over-year Diluted QX's income of Operating year, second XX%. quarter the the $XXX And a the close. earnings X.X% quarter in the in of per year. increased $XXX XXXX. of billion, Net $X.XX earnings quarter compared representing operating in up end margin $XXX were million to prior in the $XX.X at $XX in operating $X.XX million of from compared period second to compares for million to

period Moving last the X. Slide higher or a $X.X LP McCool, and the million to The same increased operating driven to or from Jr. At Cutter $XX Security volumes the on from by amphibious income quarter incentive the million to revenues year. by Newport X.X%, $XXX compared program. in the of Ingalls of in volumes lower for revenues offset billion quarter decreases assault from retirement by offset and XX in primarily combatants, year. $XX margin were Ingalls respectively, X.X% year, operating X.X% ships last surface and National period the partially of million $XX combatants, surface same million was Richard X.X% same contract period partially million due M. up on lower $XX delivery News, last were primarily risk

incentives program. income adjustments, and the Shipbuilding volume QX of quarter by was million and offset second lower driven operating X.X%, on carrier RCOH quarter to margin by News the prior operating period. the in aircraft performance margin this up primarily was X.X% X.X%, respectively, and program, operating was on X.X% VCS year. were from Newport partially the $XX contract favorable the construction in for $XXX increases year and compared in million, The

overperformance pleased to space. quarter into guide driven basis, the in work material of the going primarily of not the due and shipbuilding in previously to the cyber We for factored forward. margin million compared guidance and exceed that half was quarter second we to and $XXX XXXX, volumes or second that revenues year electronic increased the portion provided in consistent we margin of a by see enhancement. At on higher Mission are have A of to warfare Technologies continue reoccur significant our $XXX XX.X% Technologies the we Mission quarter, and million may for opportunity CXISR and

the We in are growth the pleased are revenue guidance quarter, with we by and Technologies obviously the for $XX million. year the Mission raising very range

million Mission X.X%, and and as driven as was I higher increases the primarily sustainment. was $X stronger second last Technologies year. in respectively, operating $XX fleet quarter compared The income for well in mentioned just performance quarter operating to X.X%, of were volumes million, the by margin

a of the $X of XXXX, quarter also In loss addition, the which in we venture the related year-over-year million to sale a recorded helps interest, comparison. second joint

approximately the second X.X% quarter. assets. $XX purchased X.X% for in million included XXXX amortization quarter X.X% of compared quarter Mission results quarter to the Second second was and of of Mission last margin Technologies in Technologies EBITDA intangible

postretirement capital to quarter X. million in or with negative we in operations were flow Turning was Net cash was Cash expenditures Free Slide consistent quarter. of $X $XX contributions used share benefit in Cash we in paid and the or other $XX during of million $X.XX pension the our quarter. call. $XX Also quarter per to plans first the dividends were on provided the $XX guidance million X% in the quarter, revenues. aggregate. million, million the

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

X. Slide Moving to

expectations the third quarter our the for summarized and have We year.

shipbuilding with the of third and expect to X.X%, we quarter, fourth revenue in shipbuilding of quarter. margin For $X.X continuing approximately margin the billion approximately ramp

and Technologies, approximately Mission of operating we $XXX For expect approximately million margin of X.X%. revenues

building revenue are are share we For range. revenue previously raising year, and reaffirming the noted, Technologies Mission and expectations I our we margin guidance as

our expense forecast. the are flow latest also updating our phasing of We million based $XX to on cash expectation interest

We million of are billion. of outlook our flow XXXX well million reiterating $XXX as as for cash flow $XXX X-year to free outlook $X.X cash our free

We met latter expect have which summarize, weighted be quarter strong we while part portfolio year, currently continues growth Mission towards perform cash cash cash collections flow well. delivered fourth near X, of As be is flow free strong noted, unusual. Technologies the shipbuilding the third the we to to not very preceding quarter we expect expectations, in of expected to revenue year-over-year another quarter. To and our free

manage call Mission are Technologies Q&A. to revenue our Additionally, raise and financial that, over the shipbuilding to year. With to pleased for our the reaffirm guidance outlook Christie I'll turn back we

Christie Thomas

over [Operator will it Q&A. Thanks, turn Operator, Tom. Instructions] to manage to you the I

Operator

first Instructions] question Wolfe of line Walton the is [Operator Myles with Research. The from

Myles Walton

attrition that's if milestones a are and both So meaningful on goals, goals want? shipyards to for slipouts? touch the of on good, with in but we traction to continue it's start to me labor. if increase but could like have head net-net where It your sounds you count to good the guess, hiring your hiring attrition, driver maybe the front, Chris, you I year clear at some not just

Christopher Kastner

sure. Myles. in Yes, hiring question. achieving goals we our for both the Thanks, are Thanks shipyards. Yes,

So get attendance we've have we progress time, excuse but improving, from materially work. labor there. significant Attrition and can it think the a Attrition We're well me, standpoint. both broadly about the execution made people not we're standpoint execute more thinking ensuring performing we that over recovered. or on -- is to

Our well the necessary is industrial-based the increase outsourcing where and are industrial funding applied it's to programs base. executing being

before our places. But to got We'll the we're it's salary, hadn't We'll independent recruiting our go stuff on footprint So manufacturing execute issues. in to on actually is. is work creating not attrition attract going working. to interesting where attrition how to on in areas need where Hampton We've of continue in Roads, labor. labor well we just right labor. having we're some work We on flexibility, programs,

thinking goals. So in just not our It's simply attrition and meet it throughput now. about more order to holistically we're labor

Myles Walton

understand a like of the in Massachusetts its milestone the sounds Are more And milestones? Ingalls technical more effect limitations driven? slippages I on terms workforce discovery. the

Christopher Kastner

to It's actually. of -- volume significant application both those and of X, LHA just labor milestones. labor it's achieve it's Well, amount and a on the

So is some that. There's but sequencing involved a launch, little to DDG-XXX we impact move in also that related getting different. labor. to

of comfortable in we financials with guidance, and that and our we're where is are. all our included in Now

Operator

question is Robert of Research. with next the The Spingarn line from Melius

Scott Mikus

or Tom $X about of generate ask, Spingarn. the the need Rob quarter. I to based wanted for to guidance, fourth you on cash flow Chris, Mikus, Scott This on in free billion

visibility that of fourth free of possible, So into early just generation? level And capital then is much you that if wondering could your how cash cash tied move I'm if you quarter about to working the 'XX? could talk can quantify into

Christopher Kastner

finish our and it's margin hate ships. in can the for Thanks make need year, In we I Yes. enough then with that cash. back to on timing details here, year start, I'll specific the progress some for our question. the the back Tom of of of and it just is of lot all. answer there not to give you a timing half the order for half but But milestones off to over the achieve because

not to ensure make contract need guidance, -- of adjust we achieve sight It's line our to have back half So all risk the incentives, the year over we programs just and it. that we it's and we to can a of one. of

back There's but unwind over we is some half line is it. of sight to working year. some the it There capital, timing. yes, do So in have of the

Tom?

Thomas Stiehle

Yes, color not I'll usually are provide beginning uncommon the we on Scott, use right year. where the cash some I at It's now. I mean of more too. that, from question. appreciate we the

And half the now XXX the minus first -- and XXX We QX, for at to kind the in year a then we minus was that $XXX and broken, minus through there about guided is million from right We missing of a QX million. payment. have QX closed QX of $XXX through and million this payment, respectively. ourselves QX find quarter $XX moved of both

and from was more back in and than a guided. From we perspective, and we're 'XX can cash, we a thought was over the and CapEx 'XX $XXX have that there million to in loaded was there I over right It down we're kind performance spending in of get to When you is we're operationally of in 'XX we had 'XX, from end So we'd shape anyway. another where it. and it the comparison where about XXXX. Q look to $XX be, you year It 'XX. back-end at, loaded take in mean, then million,

close about a then and for ships, X% and the on are couple sheet. see that milestones want at that XXX, of now again, that build year. QX, the guided. that for and the of of portfolio the QX. the had make back million we'd balance activity that underneath. where of just some to will a guided variability 'XX milestones we constitutes dragged XX, free major for incentives, of with of to all capital us 'XX. created although in There's SSN you milestones, the it. was the and slower it's that lot on all But and little you plan, allow X.X% online 'XX, But the on the have kind 'XX LPD which is making on half the We draw the would couple line comes have Capital a fully brought smaller the cash play has in portfolio. I we flow thought year, But you a $XXX progress just tell out in packages into we to cost So in down in the the a we guides progress of you existing in that work into have bit that that XXX here. over to right the work end that QX the be costs as provided, of on that It bit milestones launch a headway XXXX we little only than X.X% X

You in can there. AR contract and see ] [ the AP the liabilities and

now. level end capital And we'd $X.X told were the work advancement, I you It's it, range gave that's year net you X% just capital shape there's too. to down. We I because billion guidance to going working incentives the of with of free exiting actually we've by I foreshadow ourselves XXXX capital end X% bit And going and to little beginning the you at into So into goal, But the year at the aligned the And have is capital. to X% X% year. burn have the capital our that working working that itself perspective to this cash down under we'll going that's XXXX had, planned flow not in plan. aligned of $XXX an the of gave of finished of kind million a we at had shape year last this X-year of $XXX sit We some the some with working forward. to net only in for kind XXXX. right in the that million we

incentives. we the have was we with understand between have the capital with milestones, incentives, that I we that, at some to that a the the it QX by -- introduced and in the anticipate had cash year, new The business them be to the we we alignment contracts, that show is itself, QX like going And that think So variability QX, contract end half the increases little We then we or awards of not beginning it have where of assist we aligned those are. plan in environments well. year and if effect have of will that progressing, both here just awards that be But -- some at of new up end as we'll awarded this the year. margin on the back of the QX. will

Scott Mikus

into next gets That my Okay. question.

some a margin to that high So part have and of new of contract ask, pricing ships the story, better at for wanted boats shipbuilding, level, contracts. on I putting is just least your compared big older to

you many contract XX So contract many you on us how ships far how next the can to year? expect months? in put so put you this on on and give XX an boats And update to

Christopher Kastner

Yes.

the reflects current to to over expires next and pricing boats X year the before the contract So macroeconomic another put actually under XX that probably we months with expect XX environment.

under back half the of work intend significant a amount of to contract it's the put year. we that over So

Operator

Pete Skibitski Global. line Alembic next question of is The with from the

Peter Skibitski

margin. a on release question Ingalls have on years. on lower quarter. little for The conservatively, that's you're here got combatants. about sure time XXX just little of this quarter. out bit impacted I first I know service early XXs with year talked did deeply... wasn't -- through Could DG kind that the and you've Nice it sure I almost maybe And a that DDG booking the talk little bit or of it's a because if couple more touched in retirement risk push if yard next you some the if a you've a wasn't in us was I dipped

Christopher Kastner

sure, start. I I'll. can Sure. Yes, Sure.

you of obviously, me, issue little risk to language. bit LPD last from had we moved that impacted think less bit have. a cost retirement year -- excuse And or probably than milestones, a so delivery I with quarter. in little X compare had that the have a at a then XXX But usually XX you schedule, goes bit

going here. So This a a them bit quiet expect continue Ingalls is I to quickly is recover to execute. them, for to just very and of quarter

Peter Skibitski

Okay. I but new one chain Do it. know is supply there's yard? one appreciate And on the system you guys arrive electric the of some -- new line I generators. I development of of think has just I think the been and that follow-up. -- the been in the to of carriers, issues issues a some time the Virginia, expected when have

Christopher Kastner

Yes.

depending right about referencing. on person So to not I'm program probably what you're that the talk

the really no ensuring good materially requirements on relative to change our have if things for And We hold doing expectations. XX we're They're QX how schedule delivery been either. relative material those estimates you're and some not on have have QX But for that or XX. our very not I'm that's between because those. going there's to changed to changed progress build making comfortable schedules what and not -- we They're to XX, referencing. interesting

Operator

David with question is of line The from Strauss Barclays. next the

David Strauss

IV, are about Chris, Block where terms Block on Block V VCS? VI in work can you negotiating talk of and then you

Christopher Kastner

And towards team a It's milestone, progress Sure. delivery a making leadership. test marching on. We a Sure. crew. that Block It's good good XXX. did have program move they're it's IV, good on on the we're now. on the minor but

it of is So start I making behind progress. the V then boats. Block have one to progress to relative about X, Block test getting and on beginning that next float insurance. those year, inflation at with fill chain in that and I off fair negotiation in fully expect a to the And to have holding XXX closely, deliver this in talk we this delivery is to expect this of we're integrated That module the of of then we dealing government deal, environment and they'll we're making will discussions macroeconomic and VI, more resolve year. that be think milestone the will then Block into XXX General Block supply resolve we half the with with to back Working Virginia-class block. Dynamics. V year. I

making expected in when The issue. is investments, We all protected. have this is, wrapped into to at deal. we And base of will Navy the industrial in be all a that and risk get we news good that making order be the we're will fair fully throughput VI, that deal, investments and it Block do

on stand we class. where that's So Virginia

David Strauss

is Block between What IV mix right revenue and Block your V? now

Christopher Kastner

vast has vast Tom V The -- is the majority of Yes. but it the in majority details, headed now. the Block of

Thomas Stiehle

Yes.

on the than the V at about IV. the contract revenue Block XX-plus has completed we're your range. Block over V So question, Block we're we but quarters mid-XX% X crossed to Block ago, spending percent IV know in And we're I and it's complete XX% not of -- V on exact IV. And higher answer -- then that at Block Block

David Strauss

year? then Okay. -- capital. to of this to does Did X% you're go correctly, in And now that it's working saying the follow-up Where going by a on hear I XXXX? drop end

Thomas Stiehle

we've a in been And capital for got now, think last couple about XXX pop to right incentives guys, the So things where of is capital talking working XXX the and calls, -- We couple the right? the -- that, I here. the here. of

lower we going front. than capital and of burn see will that what on, going to QX on X% X% forward, what's X% the we guided down to the We because through right, between that traditionally level

want for has you that And get everything specifically to call. for and guidance We to to activity on will I we're I that cash million. would year the we're cash the X-year as capital fall to on flow plan year that's I relative of how going exact targets haven't a forward. $XXX next flow at trajectory don't happen close hang with XXXX. And -- tell make for to on on targets specific of [indiscernible] QX, both of million front its be the to we going and But on to set lot back into implications out guidance. to the how for free guided the free kind the prefer going $XXX February's half I'd the working to the year as we the QX,

Operator

next is the Gautam TD from with question of line Khanna The Cowen.

Gautam Khanna

X have questions. I

the the flow. any that to then And have lumpy do delivery any might And impact they there a actually events -- you Was move major whatsoever? I are on -- QX relatedly, on milestone were could out? slips there cash number have just that slip materially First, like that that if follow-up.

Thomas Stiehle

Yes.

So ramp to AR, to XXX progressing the going to but build. now ramp we could for improved closing just said of that where be that a everything and we how earlier I QX, QX, the are it's falls less tell there a kind I between out. AP composite and and from higher. on XXX trade of capital depending working here QX again, conservatively It guided between But be X QX, there, XXX that could we're to QX, to would but see XX you

balance You can cost see the I sheet. have in

able that. into So headway make all getting talked it's bit to right costs. The as be a the about that. just We progressing build to milestones on the add schedule we major

see of have then too. to year, kind kind incentives. hit then on new incentives that we that contribute PowerPoint ourselves on slide -- incentives and the contract lift can briefing you We both And the on have capital a half work And program then ones rise back of that there we and the the deliveries. the the of through awards

see milestone call. we'll going November think informed, missing not you the it. an X that drive give But you of of on is we'll there all forward. don't it's to here So of the and keep we the I lift going preponderance update or kind

of the X And part your question?

Gautam Khanna

Great. could that. And for just Chris, your wondering this just was talk at appetite about If you what's point? acquisitions I

Christopher Kastner

Yes.

our grade. capital So to to investment the be where year down We think to to has and been debt. we shipyards. then present going continue a we'll and like after dividend. to provide shareholders, to And evaluate going as And started allocation be. it it M&A opportunities cash, we evaluate the to pay to here invest we're themselves. We're want fairly to to need going sense, where it. last consistent back if We're it but makes in We financial that's they we and for pay be we'll excess with strategic entertain continue

capital allocation So there's in philosophy. not really our change a

Operator

Citi. the is The from of line with Gursky Jason next question

Jason Gursky

a quick on question Mission first Technologies. just Chris,

little of growth backlog the trailing and a XX the just execute to next out XXXX? that settles that of you book-to-bill really wondering that growth a when in to that on if beyond that couple X.XX and start for this bit the And how of I'm over available there solid years. obviously the minute off you rates of you for the and first and mentioned just curious can what have are you? can year. kind rate you this means I'm step You have back pipeline the half here X.XX We a in of about quantum the pipeline business. talk

Christopher Kastner

Yes.

and And X% with billion $XX comfortable if of it's and We're great interesting launch the a the great bit a It that. across in would submarine the on a very vehicle. the good. just REMUS there's going very be business pipeline all out Jason. Technologies. growth for [indiscernible]. each of is it's deploy of the business to that time customer. those full Mission to -- for continues things Mission a it it kind not -- well. I point It's our Navy the areas going that, book-to-bill we value the is beyond about we autonomously And and the Technologies. still it's first a broad-based of product, be really deployment, was with of is and to teaming This provides of can executing really conservative thanks, exercise lot that it's lot and that It man So an Virginia-class execute think rate in one increased our And autonomous year. guide. that's on could that like We've demonstrates recovery a man the of north

backlog continue advantage So if they expect skis. as don't they to of be, be But pipeline, very this, of us how to going encouraged by but that it execute to relatively on developing. that and for continue Technologies I'm could our would like far be get conservative too to that. we Mission We're they you to over want execute is north take

Jason Gursky

earlier where relative the ability the where kind helpful. you wondering productivity, couple productivity next just just I'm back great. I you think you to good stuff we're can of labor employees. of labor to of Just about learning kind to today important years Okay. on productivity? the shipyards. just I probably a maybe Great. relative when in step, wondering if curve That's a Q&A is the we labor all you Appreciate And return maybe pre-pandemic that. to of kind those is picture a and if of as is know kind back and maybe talk But still perspective about then hiring pre-pandemic? the big maybe bit during And that which the over a And numbers are would from levels productivity of from you little secondarily, talked rates and perspective? session have pre-pandemic were attrition what down to

Christopher Kastner

Great.

it's a Jason. question, great So

as not level is There's was experience no before that. around pandemic. the related productivity And it to it's the So getting the team. of

as coming the well, investments do SIB Newport Now Absolutely. -- are investments not to it well. ensure as in expect I of teams Navy both on you the the of workforce expect infrastructure. Ingalls focused just improve? And I targeted It's And that that News proficiency does. it's it making it see at do out are to the and

improve it We're it forward. we've before, stabilize I seen it to do to it it. before, expect and continue So expect moving I we investing against We've improve. done as to

Operator

of next line The the JPMorgan. Seth question with from Seifman is

Seth Seifman

you to Or happening that talked there In V? I in in profitability on Block on a think profitability. year-on-year a we the reduction Massachusetts? Should sub about reduction expected slides, what's attribute was Virginia

Christopher Kastner

Yes.

So I [ quarter. related can related compare think broadly every note assess we blocks. material We across that's that no issue probably last a kind year. of issue It's our ACs that. to to the ] There's

plus We adjustment, an have do make minus. to we that, or

material there. individually this not So anything is

Seth Seifman

Okay.

you So earlier think about -- I the carrier. and mentioned

changes both with estimated Virginia there to and carrier Block V, meaningful the So the weren't profitability?

Christopher Kastner

] enough No, I quarter. quarter make adjustments not evaluation -- No. we we material assess note. said, when as by our ACs our every that in [ to we But dictated those

Seth Seifman

Okay.

kind Ingalls of And double-digit I Great. can still expect Is end just of of guess, Okay. of something of be the margins? Ingalls. solidly for good we've going Ingalls, then for too? should kind at kind profitability that shipyard seen margin forward there, we high typically kind that

Christopher Kastner

Yes.

So on programs we fully very But guide our their but by don't by yes, execute Ingalls I continue to expect to we shipyards. provide well. don't shipyard, guidance

Operator

is question next line of George The Shapiro Research. Shapiro with from the

George Shapiro

free the mean, little fourth $XXX flow bit to the obviously, wanted I pursue I to billion. we $X.XX for a can quarter. all Tom, needs arithmetic the cash do million

if done that's of X ever the twice 'XX. highest you've the look was million quarter $XXX last last I what nearly in in the fourth before, year back, Now

generated no row where never In flow. a addition, cash you've in had quarters positive X quarter

my of you such dramatic So years X swing before. that to changed contracts what the terms suggest from last seen in this year have a question what we've what is has or in

Thomas Stiehle

Yes.

were a we that think quarters of I have negative. had couple So

exceeded the I and costs catch we're can George. But annually And each we've construct offline on for annually. up executing odd that, isn't we have as still bill an the creates in a contracts right draw we a that. pretty get year. at last this or backloaded, back that. schedules tell progress met X-year a providing and we draw of of providing Two, little 'XX, allowed what as on X in now, that the it's I the of collect years. that seen pre-COVID manage a would and And bit you would tell you it we're just changes So the X good been you guidance these target and over years, we've or We to know, one.

billion actually that in we're mean $X.X I So now. right We've the increased lane billion. to $X

So XX% more. we at million $XXX a next it. put another years We've given the X

Yes. mature was that that's It's feedback So visibility some relatively a on going There the It's relatively I'm we we here. a have portfolio have here. portfolio. into good pretty sorry? --

little the as our And we have flow the more X% then line costs. sales, with and ACs capital have I the through far sight in and quarter been build, have year's the the is cash guidance that peak we there in we once Last along comparison, X of what I ramp take program last of here. It year, we've And Last forward that. Q saw to going did a half that's rolls of and could to CapEx commented as seen. come earlier, A we driving incentives expected year. that X.X% as back you on X.X% bit all years already, backloaded. that free what's come going of into of that? plans, the respectively, So quarterly of

million As capital, we to performance going and down, can coming as capital the books as drive and make well at back incentives milestones guide and continue working the balance the additional catalyst the to and contract and on on plan of the half the you be that to capital deliveries there, higher the a number awards year. The November right are that that's really working going that's drive September, that that happen we milestones we October to $XXX on $XXX leaned we million to side. of to in million was could frame. million and say X% to -- into didn't want see probably provide have and criteria less, and didn't conservative The $XX to We or for QX. be end want and $XXX are see we progress, that it liquidate the sheet time events to cost that

conservatively, it it's does be the QX plays as So a look lift we out. guided which may like larger it than make

George Shapiro

Okay.

X if said quarter-by-quarter, be properly you was, I which the comment. time was third. quarter $XXX of Mission was it materials you and been if hasn't And hasn't quarter say, as there the the in you the at mentioned made? didn't -- in clear $XXX, is for where meant least not you the Just cash material actually last been the -- on where had had been of I X comment first say flow -- positive I X. drop quarters one X million, second a have which What down there's A There's I may flow look had to quarter. the quarter. several just cash that million, no years been negative, but at what what like in in $XXX the to little third in drove the follow-up Technologies, did similar guide Can that was you kind the X

Thomas Stiehle

Yes.

comment material the my more to that was that on in QX. So statements, I applicable said opening

revenue the don't QX driven kind we -- will on are there Technologies at forward. in and CEWS. going The included in we in had of So a CXISR basis that that was were forward. not not be continue QX going to And had, performance strong we Mission by or guide envision which was some the we that believe sales recurring

the We on now. book that right have normalized business of contract for

some out, as we're happen of several So month. though happen awards. millions of of dollars the we the expectations see clear sight we we -- well And the back awards there -- there's -- of still of tens half sales potential we're every there's there's load we is in the year, even on know the that how quarters what contracts for and that as last have revenues X a we have on executing and and

to our at basis, conservative And quarters XXX we've the We've ] to to from X have to year conservatively is in guide awards at ]. and on taken the over beginning first probably to between play X run Those up where X $XXX $XXX [ contracts. billion. the on existing X $X,XXX The X we that side of technologies plan an rate have out. of rightfully we XX annual So have million the stand. we it X million got execute Mission $X [ XXX

and it don't now at from has pipeline get XX.X% how I'm $XXX the get see good growth to to would we We acquisition, contracts to guide overly QX, of growth. saw to which and set XX% that 'XX the business a about strong QX XX% growth. want have feeling and But 'XX contracts 'XX the a Alion let's ahead feel comment million some we be got in, of to plays win out. We portfolio about generated, we've both So cash and 'XX we here. But continue performance. Obviously, people in good the really really earlier MT proposition it Chris ourselves. is. X% good and those made I some at about that respectively, don't want And growing. that the seen

George Shapiro

one one. last just So

So quarter? guide the [ ] in $XXX third why million only to

Thomas Stiehle

have of will a awards rest the we revenue over for miss, of it's a a to lot function say want We guide I'd year here. Well, that still on a don't and minor of have here. couple the going rather of work to do forward and the impact

Operator

of Lyonnais the is Jordan line America. The next Bank question of from with

Jordan Lyonnais

CapEx, you you CapEx that there uptick back the expect percentage the a to portion guys on incentives? that give had, sequential Navy could of that you'd color a On from is or that, get

Thomas Stiehle

CapEx into with of invest at things it years. leave was value getting Navy for and what business X with and we a that. X.X% QX. the X.X% the depending is the do X% year sales is that. guide I always we Yes, our the value, just what adds here. the operational It And tell We in get of or execute you in with Navy The and yard, part business construct it don't this timing like the of into investment. that it we approve we mix will we equation, a on that's bid, any X% case. choose design add for I on the goes we get that return that still that in we projects and over nature. there next it's here how mean, CapEx projects which a QX, There's I and capital on and partner the this and capital, whether and

Jordan Lyonnais

Got it.

Deloitte on for scope contract or have shipbuilding, -- guys the or Navy it that like wasn't you why then also Tech won in sense of you that's Mission Okay. for And picked to the do any general?

Christopher Kastner

can't some I question. that? you There's hear repeat necessarily feedback. Can the

Jordan Lyonnais

Yes.

contract So won, contract seems Deloitte, -- an shipbuilding base. they Navy was for Navy on like $X.X the billion a it it HR

Christopher Kastner

Yes.

allocation investments identification make their supporting support investments. should of to they're think I where they

we So that not contracting were in -- process. yes, we involved were

Operator

hand this now like Mr. not remarks. closing am any I for back to would time. I any to over Kastner questions call the at further showing

Christopher Kastner

everybody, joining for today. Thanks,

like you. to extend my forward Thank team thanks Before for speaking earnings HII you and our entire to we go, with we continued I'd their to next on call. look the focus,

Operator

today's does That conclude conference call.

may now disconnect. You

Huntington Ingalls Industries (HII) 1 Aug 242024 Q2 Earnings call transcript