Huntington Ingalls Industries, Inc. (HII) is a global defense partner specializing in the construction and delivery of naval ships and advanced technologies **[0001501585-24-000042_hii-20240930.htm:23]**. The company is organized into three main segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies, each focusing on different aspects of shipbuilding and technology solutions **[0001501585-24-000042_hii-20240930.htm:23]** **[0001501585-24-000013_hii-20240331.htm:19]** **[0001501585-24-000042_hii-20240930.htm:5]** **[0001501585-24-000007_hii-20231231.htm:87]** **[0001501585-24-000013_hii-20240331.htm:4]**. HII's primary customers are the U.S. Government and the U.S. Navy, with a significant portion of its revenue derived from these sources **[0001501585-24-000007_hii-20231231.htm:8]**. The company's offerings include a range of naval vessels and integrated technology solutions, catering to both nuclear and non-nuclear needs **[0001501585-24-000042_hii-20240930.htm:23]** **[0001501585-24-000013_hii-20240331.htm:19]** **[0001501585-24-000007_hii-20231231.htm:7]**.

1. **Ingalls Shipbuilding** - Focuses on the design, construction, repair, and maintenance of non-nuclear ships, including amphibious assault ships and surface combatants **[0001501585-24-000042_hii-20240930.htm:23]** **[0001501585-24-000013_hii-20240331.htm:19]** **[0001501585-24-000042_hii-20240930.htm:5]**.
2. **Newport News Shipbuilding** - Specializes in the design, construction, overhaul, refueling, and maintenance of nuclear ships, such as aircraft carriers and submarines **[0001501585-24-000042_hii-20240930.htm:23]** **[0001501585-24-000013_hii-20240331.htm:19]** **[0001501585-24-000007_hii-20231231.htm:87]**.
3. **Mission Technologies** - Develops integrated technology solutions, including C5ISR systems, AI and machine learning applications, cyberspace strategies, electronic warfare, unmanned systems, and fleet sustainment **[0001501585-24-000042_hii-20240930.htm:23]** **[0001501585-24-000013_hii-20240331.htm:19]** **[0001501585-24-000007_hii-20231231.htm:7]**.

0ab4c7159c22549429b5cb91872bb72af696f23b6f2e3638f69ebd800e545b24

| Metric (USD Million) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Ingalls              | 658  **[0001501585-23-000007_hii2022q4earningsrelease.htm:1]**  | 577  **[0001501585-23-000016_hii-20230331.htm:21]** **[0001501585-23-000016_hii-20230331.htm:7]**  | 664  **[0001501585-23-000026_hii-20230630.htm:27]**  | 711  **[0001501585-23-000033_hii-20230930.htm:29]**  | N/A | 655  **[0001501585-24-000013_hii-20240331.htm:23]**  | 712  **[0001501585-24-000036_hii-20240630.htm:26]** **[0001501585-24-000036_hii-20240630.htm:12]**  | 664  **[0001501585-24-000042_hii-20240930.htm:29]**  |
| Newport News         | 1,584  **[0001501585-23-000007_hiiq42022earningspresent.htm:6]**  | 1,506  **[0001501585-23-000016_hii-20230331.htm:21]** **[0001501585-23-000016_hii-20230331.htm:7]**  | 1,509  **[0001501585-23-000026_hii-20230630.htm:27]**  | 1,453  **[0001501585-23-000033_hii-20230930.htm:29]**  | N/A | 1,434  **[0001501585-24-000013_hii-20240331.htm:23]**  | 1,535  **[0001501585-24-000036_hii-20240630.htm:26]** **[0001501585-24-000036_hii-20240630.htm:12]**  | 1,412  **[0001501585-24-000042_hii-20240930.htm:29]**  |
| Mission Technologies | 602  **[0001501585-23-000007_hiiq42022earningspresent.htm:6]**  | 624  **[0001501585-23-000016_hii-20230331.htm:21]** **[0001501585-23-000016_hii-20230331.htm:7]**  | 645  **[0001501585-23-000026_hii-20230630.htm:27]**  | 685  **[0001501585-23-000033_hii-20230930.htm:29]**  | N/A | 750  **[0001501585-24-000013_hii-20240331.htm:23]**  | 765  **[0001501585-24-000036_hii-20240630.htm:26]** **[0001501585-24-000036_hii-20240630.htm:12]**  | 709  **[0001501585-24-000042_hii-20240930.htm:29]**  |
| Intersegment Eliminations | N/A | -33  **[0001501585-23-000016_hii-20230331.htm:21]** **[0001501585-23-000016_hii-20230331.htm:7]**  | -31  **[0001501585-23-000026_hii-20230630.htm:27]**  | -33  **[0001501585-23-000033_hii-20230930.htm:29]**  | N/A | -34  **[0001501585-24-000013_hii-20240331.htm:23]**  | -35  **[0001501585-24-000036_hii-20240630.htm:26]** **[0001501585-24-000036_hii-20240630.htm:12]**  | N/A |
| Total Revenue        | 2,812  **[0001501585-23-000007_hii2022q4earningsrelease.htm:1]**  | 2,674  **[0001501585-23-000016_hii-20230331.htm:21]** **[0001501585-23-000016_hii-20230331.htm:7]**  | 2,787  **[0001501585-23-000026_hii-20230630.htm:27]**  | 2,816  **[0001501585-23-000033_hii-20230930.htm:29]**  | N/A | 2,805  **[0001501585-24-000013_hii-20240331.htm:23]**  | 2,977  **[0001501585-24-000036_hii-20240630.htm:26]** **[0001501585-24-000036_hii-20240630.htm:12]**  | 2,749  **[0001501585-24-000042_hii-20240930.htm:29]**  |

0be6154f3f0932c87471d2f65d197396ab07420ce965ffa45fd4bc2d9dcfc11a

1e58f950f1c8d9da0fb843308086a8bfc42a13b4e06896b902572f0633f282e9

7ec958e9c7c90d1cd855eed63e6ce102a5ce449f1b286c05d9d36472d99b2c49

35c2dcf30dfe3f3901401f5f08b54da19a9d95ede4e526f037a6887309e615d0

1. Labor productivity in your shipyards remains below pre-pandemic levels due to the inexperience of the workforce  **[HII_3395738_14]** . When do you expect productivity to return to pre-pandemic levels, and what specific measures are you implementing to accelerate this improvement?
2. Ingalls Shipbuilding's margins dipped this quarter due to factors like lower risk retirement on surface combatant programs and schedule adjustments for milestones such as DDG 129  **[HII_3395738_9]** . How do these developments affect your profitability outlook, and what steps are you taking to restore margins at Ingalls?
3. You have adjusted delivery schedules for ships like SSN 798 Massachusetts, shifting delivery from late 2024 to early 2025 due to equipment replacement during testing  **[HII_3395738_1]** . How will these schedule changes impact your financial commitments and confidence in meeting future milestones?
4. Despite a strong trailing 12-month book-to-bill ratio of 1.15 and an $83 billion pipeline in Mission Technologies  **[HII_3395738_1]** **[HII_3395738_13]** , you are maintaining a 5% growth guidance  **[HII_3395738_13]** . What are the constraints preventing higher growth, and how might successful execution on your pipeline influence future growth rates?
5. With Deloitte winning a $2.4 billion Navy shipbuilding contract that HII was not involved in  **[HII_3395738_21]** , can you explain why Mission Technologies did not participate in this opportunity and how you are positioning the division to compete more effectively in such contracts?

771e85e73961e88a8c82d692616237bbb7d8df4f216c43a882beb7115957ca76

- L3 Harris, Amentum, ManTech, Leidos: Competitors in the Mission Technologies segment, competing domestically and internationally across business capabilities  **[0001501585-24-000007_hii-20231231.htm:23]** .
- Small businesses serving the intelligence community: Increasing competition in the Mission Technologies segment  **[0001501585-24-000007_hii-20231231.htm:23]** .
- Lockheed Martin, General Dynamics, Northrop Grumman, Raytheon, Boeing: Compete on certain contracts with major prime A&D contractors  **[0001501585-24-000007_hii-20231231.htm:23]** .
- Another large defense contractor: Competes for contracts to build surface combatants, submarines, and large deck amphibious ships  **[0001501585-24-000007_hii-20231231.htm:23]** .
- Smaller shipyards: Entered the market for surface combatants  **[0001501585-24-000007_hii-20231231.htm:23]** .

8730e943a56d5cdaebfaf2a55e6a4f6a81d4947999200290dcb4e1ee29bb951f

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance**:
  - **Mission Technologies Revenue**: Raised by **$50 million** for the year.
  - **Shipbuilding Revenue and Margin**: Q3 shipbuilding revenue expected to be approximately **$2.2 billion** with a margin of **7.8%**.
  - **Mission Technologies Q3 Revenue and Operating Margin**: Expected revenues of approximately **$650 million** and an operating margin of **2.5%**.
  - **Interest Expense**: Updated to **$95 million**.
  - **Free Cash Flow**: Reiterated at **$600 million to $700 million** for 2024, with Q3 expected to be near **0**.
  - **Five-Year Free Cash Flow Outlook**: **$3.6 billion**.
  - **Capital Expenditures**: **5.3%** of revenues for the year, with a 5% CapEx over the next three years  **[HII_3395738_4]** **[HII_3395738_20]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Shipbuilding Margin**: **7%** for Q2 2024, with expectations for higher margins in the latter half of the year.
  - **Capital Expenditures (CapEx)**: **5.3% of sales** for the year.
  - **Free Cash Flow**: Between **$600 million to $700 million** for 2024, with a five-year outlook of **$3.6 billion**.
  - **Revenue and Operating Income**: Newport News volumes expected to ramp up.
  - **Mission Technologies Revenue**: **$2.7 billion to $2.75 billion** for the year.
  - **Share Buyback**: Target of **$300 million** by year-end  **[HII_3382117_5]** **[HII_3382117_9]** **[HII_3382117_4]** **[HII_3382117_3]** **[HII_3382117_23]** **[HII_3382117_7]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Free Cash Flow**: Between **$600 million and $700 million**.
  - **Revenue Growth**:
    - **Overall**: **4-plus percent** mid- to long-term.
    - **Shipbuilding**: Increased to approximately **4%**.
    - **Mission Technologies**: Approximately **5%**.
  - **Revenue**:
    - **Shipbuilding**: **$8.8 billion to $9.1 billion**.
    - **Mission Technologies**: **$2.7 billion to $2.75 billion**.
  - **Operating Margins**:
    - **Shipbuilding**: **7.6% to 7.8%**.
    - **Mission Technologies**: **3% to 3.5%**.
    - **Mission Technologies EBITDA Margins**: **8% to 8.5%**.
  - **Amortization of Purchased Intangible Assets**: Approximately **$109 million**, with **$99 million** for Mission Technologies.
  - **First Quarter 2024 Revenues**:
    - **Shipbuilding**: Approximately **$2.2 billion**.
    - **Mission Technologies**: Approximately **$650 million**.
  - **First Quarter 2024 Operating Margins**:
    - **Shipbuilding**: Near **7%**.
    - **Mission Technologies**: Near **2.5%**.
  - **Capital Expenditures**: Approximately **5.3% of sales** in 2024, with a long-term rate of 1.5% to 2% for general sustainment  **[HII_3371550_5]** **[HII_3371550_4]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Not available
- **Guidance**: Not available

The documents do not provide information from the Q3 2024 earnings call, so the guidance and guided period for that call are not available.

9598136d9b3383051bf74739a29d19aa0c3451ff880d2827a649c25cf3c9d2f1

| Name                  | Position                                                      | Start Date           | Short Bio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------|---------------------------------------------------------------|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Christopher D. Kastner| President and Chief Executive Officer                         | March 1, 2022        | Christopher D. Kastner was elected as the President and CEO of HII effective March 1, 2022. He previously served as Executive Vice President and COO from February 2021 and as CFO from March 2016 to February 2021. He holds a B.A. in Political Science from the University of California at Santa Barbara and an M.B.A. from Pepperdine University  **[0001193125-24-071268_d542037ddef14a.htm:50]** **[0001501585-24-000007_hii-20231231.htm:143]** **[0001193125-24-071268_d542037ddef14a.htm:41]** **[0001193125-23-074724_d252789ddef14a.htm:41]** .                                                                                                                                                                                                                                                             |
| Todd R. Borkey        | Executive Vice President and Chief Technology Officer         | September 26, 2022   | Todd R. Borkey was elected as the Executive Vice President and CTO of HII effective September 26, 2022. He previously served as CTO at Alion Science and Technology and held positions at Thales Defense and Security and DRS Defense Solutions. He holds a Master's Degree in engineering management from Stevens Institute of Technology and an undergraduate degree in Applied Mathematics from the University of Albuquerque  **[0001501585-24-000007_hii-20231231.htm:143]** **[0001501585-23-000010_hii-20221231.htm:152]** **[0001501585-23-000010_hii-20221231.htm:153]** .                                                                                                                                                                                                 |
| Chad N. Boudreaux     | Executive Vice President and Chief Legal Officer              | April 1, 2020        | Chad N. Boudreaux serves as the Executive Vice President and Chief Legal Officer at HII. He joined HII in 2011 and has held various legal positions. He holds a B.A. from Baylor University and a J.D. from the University of Memphis School of Law  **[0001193125-24-071268_d542037ddef14a.htm:51]** **[0001501585-24-000007_hii-20231231.htm:143]** **[0001501585-24-000007_hii-20231231.htm:144]** **[0001193125-23-074724_d252789ddef14a.htm:49]** **[0001501585-23-000010_hii-20221231.htm:153]** .                                                                                                                                                                                                                                                                                                                                                             |
| Jennifer R. Boykin    | Executive Vice President and President, Newport News Shipbuilding | July 2017            | Jennifer R. Boykin has served as Executive Vice President and President, Newport News Shipbuilding since July 2017. She joined Newport News Shipbuilding in 1987 and has held various roles, including Vice President of Engineering and Design. She holds a B.S. in Marine Engineering from the U.S. Merchant Marine Academy and a Master's Degree in Engineering Management from The George Washington University  **[0001501585-24-000007_hii-20231231.htm:144]** **[0001193125-23-074724_d252789ddef14a.htm:49]** .                                                                                                                                                                           |
| Eric D. Chewning      | Executive Vice President, Strategy and Development            | January 30, 2023     | Eric D. Chewning was elected as the Executive Vice President, Strategy and Development at HII effective January 30, 2023. He previously co-led McKinsey & Company's Aerospace & Defense practice in the Americas and served as Chief of Staff to the U.S. Secretary of Defense. He holds a B.A. and an M.A. in international relations from the University of Chicago and an M.B.A. from the Darden School of Business at the University of Virginia  **[0001501585-24-000007_hii-20231231.htm:144]** **[0001501585-23-000010_hii-20221231.htm:153]** .                                                                                                               |
| Edgar A. Green III    | Executive Vice President and President, Mission Technologies  | December 2016        | Edgar A. Green III has served as the Executive Vice President and President, Mission Technologies at HII since December 2016. He previously held positions at Celanese Corp and Wells Fargo Securities. He holds a B.S. in Systems Engineering from the U.S. Naval Academy and an M.B.A. from Duke University  **[0001193125-24-071268_d542037ddef14a.htm:51]** **[0001501585-23-000010_hii-20221231.htm:154]** .                                                                                                                                                                                                                                                                                                           |
| Paul C. Harris        | Executive Vice President and Chief Sustainability and Compliance Officer | March 14, 2022      | Paul C. Harris was appointed as Executive Vice President and Chief Sustainability and Compliance Officer at HII effective March 14, 2022. He previously served as Corporate Vice President, Chief Compliance and Privacy Officer at HII. He holds a Bachelor of Arts degree from Hampton University and a Juris Doctor degree from The George Washington University Law School  **[0001501585-24-000007_hii-20231231.htm:145]** **[0001501585-23-000010_hii-20221231.htm:154]** .                                                                                                                                                                                                 |
| Brooke A. Hart        | Executive Vice President, Communications                       | September 27, 2021   | Brooke A. Hart was appointed as the Executive Vice President, Communications at HII effective September 27, 2021. She previously served as Vice President of Communications and Brand at Sierra Nevada Corporation. She holds a B.A. from Stanford University and an M.A. from Georgetown University  **[0001501585-24-000007_hii-20231231.htm:145]** **[0001501585-23-000010_hii-20221231.htm:155]** .                                                                                                                                                                                                                                                                                                               |
| Stewart H. Holmes     | Executive Vice President, Government and Customer Relations    | September 27, 2021   | Stewart H. Holmes was appointed as the Executive Vice President, Government and Customer Relations at HII effective September 27, 2021. He previously served as Senior Vice President of Washington Operations for Textron Inc. He is a graduate of The Citadel and the Naval Postgraduate School  **[0001501585-24-000007_hii-20231231.htm:146]** **[0001501585-23-000010_hii-20221231.htm:155]** .                                                                                                                                                                                                                                                                                                                     |
| Edmond E. Hughes      | Executive Vice President and Chief Human Resources Officer     | April 1, 2022        | Edmond E. Hughes was appointed as the Executive Vice President and Chief Human Resources Officer at HII effective April 1, 2022. He previously served as Vice President of Human Resources and Administration for Ingalls Shipbuilding. He holds a B.S. from Tougaloo College and an M.B.A. from Indiana University  **[0001501585-24-000007_hii-20231231.htm:146]** **[0001501585-23-000010_hii-20221231.htm:155]** .                                                                                                                                                                                                                                                                                                   |
| Nicolas G. Schuck     | Corporate Vice President, Controller and Chief Accounting Officer | August 2015         | Nicolas G. Schuck was appointed as Corporate Vice President, Controller and Chief Accounting Officer at HII effective August 2015. He previously served as Assistant Controller at HII's Newport News Shipbuilding division. He holds a Bachelor's Degree and a Master's Degree in Accounting and Finance and is a certified public accountant  **[0001501585-24-000007_hii-20231231.htm:146]** **[0001501585-23-000010_hii-20221231.htm:155]** .                                                                                                                                                                                                                                   |
| Christopher W. Soong  | Executive Vice President and Chief Information Officer         | April 2023           | Christopher W. Soong was elected as the Executive Vice President and Chief Information Officer of HII in April 2023. He previously served as CIO for HII's Mission Technologies business segment. He holds a bachelor's degree in civil engineering from Virginia Tech  **[0001501585-24-000007_hii-20231231.htm:146]** .                                                                                                                                                                                                                                                                                                                                                   |
| Thomas E. Stiehle     | Executive Vice President and Chief Financial Officer           | February 12, 2021    | Thomas E. Stiehle serves as the Executive Vice President and Chief Financial Officer at HII. He was elected to this position effective February 12, 2021. He previously worked for Northrop Grumman's Aerospace Sector for 24 years. He holds a B.S. in Mechanical Engineering from Hofstra University and an M.B.A. from Adelphi University  **[0001501585-24-000007_hii-20231231.htm:146]** **[0001501585-23-000010_hii-20221231.htm:156]** .                                                                                                                                                                                                                                     |
| Kara R. Wilkinson     | Executive Vice President and President, Ingalls Shipbuilding   | April 1, 2021        | Kara R. Wilkinson has served as Executive Vice President and President, Ingalls Shipbuilding since April 1, 2021. She began her career at Ingalls Shipbuilding in 1996 as a naval architect. She holds a B.S. in Naval Architecture and Marine Engineering from the University of Michigan and an M.B.A. from Temple University  **[0001501585-24-000007_hii-20231231.htm:147]** **[0001193125-24-071268_d542037ddef14a.htm:51]** **[0001501585-23-000010_hii-20221231.htm:156]** .                                                                                                                                                                                                                                               |
| D. R. Wyatt           | Corporate Vice President and Treasurer                         | March 2011           | D. R. Wyatt has been serving as the Corporate Vice President and Treasurer at HII since March 2011. He previously was the Director of Business Management at NGSB. He holds a B.S. in Economics from Hampden-Sydney College and an M.B.A. from Old Dominion University  **[0001501585-24-000007_hii-20231231.htm:147]** **[0001501585-23-000010_hii-20221231.htm:156]** .                                                                                                                                                                                                                                                                                                         |
| Kari R. Wilkinson     | Executive Vice President and President, Newport News Shipbuilding | January 1, 2025     | Kari R. Wilkinson was elected to serve as Executive Vice President and President of Newport News Shipbuilding, effective January 1, 2025. She previously served as Executive Vice President and President of Ingalls Shipbuilding since April 1, 2021. She holds a B.S. in Naval Architecture and Marine Engineering from the University of Michigan and an M.B.A. from Temple University  **[0001501585-24-000046_hii-20241105.htm:1]** **[0001501585-24-000046_hiiform8-kxex991110424.htm:0]** **[0001501585-24-000007_hii-20231231.htm:147]** .                                                                                                                                                                               |
| Brian Blanchette      | Executive Vice President and President, Ingalls Shipbuilding   | January 1, 2025      | Brian Blanchette was elected to serve as Executive Vice President and President of Ingalls Shipbuilding, effective January 1, 2025. He previously served as Vice President of Quality and Engineering at Ingalls Shipbuilding. He joined Ingalls in 1996 and has held various roles in technical and design engineering  **[0001501585-24-000046_hii-20241105.htm:2]** **[0001501585-24-000046_hiiform8-kxex991110424.htm:1]** .                                                                                                                                                                                                                                                         |

abf7a69e3f6696c58a18a656b52223ac0e73da1495406cbdc99f93e3f011cf1a

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | November 2012   |
| End Date/Duration        | December 31, 2028  **[0001501585-24-000042_hii-20240930.htm:49]**  |
| Total additional amount  | $3.8 billion  **[0001501585-24-000042_hii-20240930.htm:9]** |
| Remaining authorization amount | $1,352.3 million  **[0001501585-24-000042_hii-20240930.htm:49]**  |
| Details                  | Authorization increased in January 2024  **[0001501585-24-000042_hii-20240930.htm:9]**  |

cbbd5ac868a0ef46f182fbc3ca8c2f035ff2f791d56c4d68da8162a897f167a0

94e7b62fed87ebdb902078ffb85fafb16921fda78a699b6bec087a8766747760

1. **Q4 Free Cash Flow Outlook**  
   **Q:** Can you discuss the visibility into generating $1 billion free cash flow in Q4?  
   **A:** Management acknowledges that cash flow is back-end loaded this year, expecting significant cash generation in Q4 driven by milestones, contract incentives, and improved working capital. They are confident in meeting the **$600-$700 million** free cash flow guidance for the year, with line of sight to key milestones and program performance. The ramp includes unwinding working capital from **9%** to **2-3%** by year-end.  **[HII_3395738_7]** **[HII_3395738_8]** **[HII_3395738_18]** **[HII_3395738_19]** 

2. **Labor Challenges Impacting Production**  
   **Q:** How are labor and attrition issues affecting milestones and productivity?  
   **A:** While hiring goals are being met at both shipyards, **attrition is not materially improving**. Attendance and overtime have recovered, and outsourcing programs are executing well. Labor challenges have impacted milestones on programs like **LHA 8** and **DDG-129**, but management is taking a holistic approach, including salary adjustments, flexible recruiting, and establishing manufacturing footprints in new areas to attract labor. Productivity is expected to improve as the workforce stabilizes.  **[HII_3395738_5]** **[HII_3395738_6]** **[HII_3395738_15]** 

3. **Ingalls Margin and Recovery**  
   **Q:** What caused the dip in Ingalls margin this quarter, and can we expect recovery?  
   **A:** The dip in Ingalls margin was due to milestone shifts, with costs moving alongside schedule changes, and less risk retirement on **LPD 29** at delivery than usual. Management expects Ingalls to recover quickly, as this was just a quiet quarter, and they continue to execute well on their programs.  **[HII_3395738_9]** **[HII_3395738_17]** 

4. **Virginia-Class Submarine Progress**  
   **Q:** Can you update us on Virginia-class Blocks IV, V, and negotiations for Block VI?  
   **A:** **Block IV** is **95% complete**, with delivery of **SSN 798** expected early next year and progress on **SSN 800** maintaining schedule. **Block V** is over **20% complete** and now generates higher revenue than Block IV. Negotiations for **Block VI** are ongoing and expected to conclude this year, aiming for a fair deal that accounts for macroeconomic factors like inflation and supply chain risks.  **[HII_3395738_11]** **[HII_3395738_12]** 

5. **Mission Technologies Growth Prospects**  
   **Q:** How is Mission Technologies performing, and what are the growth expectations?  
   **A:** Mission Technologies has a trailing twelve-month book-to-bill ratio of **1.15** and an **$83 billion** pipeline. While maintaining a conservative **5% growth** guidance, strong performance in areas like **C5ISR** and **CEWS** could drive growth beyond current expectations. The division is also involved in innovative projects like deploying **REMUS** vehicles autonomously from Virginia-class submarines, demonstrating value to customers.  **[HII_3395738_14]** **[HII_3395738_18]** **[HII_3395738_19]** 

6. **Capital Allocation and M&A Strategy**  
   **Q:** What is your current appetite for acquisitions and capital allocation priorities?  
   **A:** The company remains focused on maintaining **investment-grade** status, investing in shipyards, and returning excess cash to shareholders through dividends. They will evaluate M&A opportunities that make strategic and financial sense but there is no change in capital allocation philosophy at this time.  **[HII_3395738_13]** 

7. **Shipyard Labor Productivity**  
   **Q:** Is labor productivity in shipyards improving compared to pre-pandemic levels?  
   **A:** Productivity is currently below pre-pandemic levels due to the less experienced workforce. However, investments are being made in workforce proficiency and infrastructure, supported by Navy investments, to improve productivity over time as the workforce stabilizes. Management expects productivity to improve as these efforts continue.  **[HII_3395738_15]** 

8. **Working Capital Guidance**  
   **Q:** Can you provide guidance on working capital levels for this year and next?  
   **A:** Working capital is expected to decrease from **9%** to **2-3%** by year-end due to capital incentives and milestone achievements. Specific targets for 2025 were not provided, but management indicated they are on plan relative to the five-year free cash flow guidance and will update targets in February.  **[HII_3395738_7]** **[HII_3395738_12]** 

9. **Capital Expenditures and Navy Incentives**  
   **Q:** Can you discuss the uptick in CapEx and any offset from Navy incentives?  
   **A:** CapEx increased sequentially, with spending at **2.6%** of sales in Q1 and **3%** in Q2, guided to **5.3%** for the year and **5%** over the next three years. Investments are made in partnership with the Navy, aiming to add value and generate returns on capital projects, though specifics on incentives are not disclosed.  **[HII_3395738_20]** 

10. **Impact of Deloitte Winning Navy Contract**  
    **Q:** Do you have any insight into the Navy contract awarded to Deloitte instead of Mission Technologies?  
    **A:** Management was not involved in that contracting process and believes Deloitte is supporting the Navy in identifying and allocating investments.  **[HII_3395738_21]** 

7bad6a84be5e39c2cc8eab5b675c3cdc336c15c3181e722aeb7eccffab1aa085

**Quarterly guidance for Q3 2024:**
- **Effective Tax Rate**: 10%  **[HII_3405168_6]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Shipbuilding Revenue Guidance**: $8.8 billion  **[HII_3405168_1]**  (no prior guidance)  
- **Mission Technologies Revenue Guidance**: $2.8 billion to $2.85 billion  **[HII_3405168_1]**  (no prior guidance)  
- **Shipbuilding Operating Margin Guidance**: 5% to 6%  **[HII_3405168_1]** **[HII_3405168_6]**  (no prior guidance)  
- **Free Cash Flow Guidance**: $0 to $100 million  **[HII_3405168_1]** **[HII_3405168_6]**  (lowered from $600 million to $700 million  **[HII_3395738_4]** **[HII_3395738_20]** )  
- **Capital Expenditure Outlay**: 3.4%  **[HII_3405168_6]**  (lowered from 5.3%  **[HII_3395738_4]** **[HII_3395738_20]** )  
- **Tax Rate**: 17%  **[HII_3405168_6]**  (no prior guidance)  

51ec45adf4053ef14db6e9c8571246ad2ac10dd1020ecfc299ada5ec8218354b

| Name                  | Start Date | End Date | Reason for Change |
|-----------------------|------------|----------|-------------------|
| Deloitte & Touche LLP | 2011  **[0001501585-24-000007_hii-20231231.htm:81]**    | Present  | Current auditor   |

e3384d47f57869c75080830e2715932b73a9b33cea610f0d56f7a851c7c76b8a

- **Labor productivity is still below pre-pandemic levels**, due to the less experienced workforce, which may impact operational efficiency and timelines  **[HII_3395738_14]** .
- **Projected free cash flow for Q4 is significantly higher than historical levels**, raising concerns about the achievability of these projections and potential risks if milestones slip  **[HII_3395738_18]** **[HII_3395738_12]** .
- **Decline in operating margins at Ingalls shipyard**, with margins dipping for the first time in years, suggests potential challenges in executing certain programs, possibly affecting profitability  **[HII_3395738_9]** .

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- Total Revenue: $2.749 billion (-2% YoY)  **[0001501585-24-000042_hii-20240930.htm:2]** **[0001501585-24-000042_hii-20240930.htm:14]**   
- Ingalls: $664 million (**-7%** YoY)  **[0001501585-24-000042_hii-20240930.htm:11]**   
- Operating Income (EBIT): $82 million (**-52%** YoY)  **[0001501585-24-000042_hii-20240930.htm:2]**   
- Net Income: $101 million (**-32%** YoY)  **[0001501585-24-000042_hii-20240930.htm:2]**   
- EPS (Diluted): $2.56 (**-30%** YoY)  **[0001501585-24-000042_hii-20240930.htm:2]**   
- Time & Materials Contracts: $46 million (**-15%** YoY)  **[0001501585-24-000042_hii-20240930.htm:11]**   

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- **Labor and attrition challenges persist, with attrition not yet back to pre-COVID levels, impacting workforce retention and performance.**  **[HII_3382117_24]**
- **Slippage in milestones and extended schedules are leading to additional costs and pressure on margins, notably at Newport News where margins were lighter than expected due to productivity and labor issues.**  **[HII_3382117_7]** **[HII_3382117_10]**
- **First-of-class issues on the Columbia-class submarine program at Newport News have impacted schedules, raising concerns about execution risks and potential effects on critical programs like the Virginia-class submarines.**  **[HII_3382117_20]** **[HII_3382117_15]**

5913fe50df3c100ddd1a9c68bb6eae574d3c535b5415649a0d23a4e5cd889589

1. **$800 Million Cash Flow Cut**

   **Q:** How much of the $800M cash flow cut is due to contracts slipping versus performance?

   **A:** Management explained that the **$800 million cut** to operating cash flow guidance is due to a combination of both the delayed 17-ship submarine contract and performance issues at the yards.  **[HII_3405168_11]**  The expected awards of new contracts are not imminent by year-end, and performance hasn't met expectations, leading to the reduced cash flow outlook.  **[HII_3405168_11]** 

2. **17-Ship Submarine Contract Delay**

   **Q:** What's causing delays in the 17-ship submarine contract?

   **A:** The delays are due to budget constraints and the need for an innovative contracting approach that reflects the current economic environment.  **[HII_3405168_12]**  Original budgets didn't account for inflation and increased costs, making it challenging to finalize the contract without adjustments.  **[HII_3405168_26]** 

3. **Margin Guidance and Negative EACs**

   **Q:** Why does the margin guidance imply more negative EACs ahead?

   **A:** Management indicated that the low end of shipbuilding margin guidance accounts for potential negative EAC adjustments in Q4.  **[HII_3405168_14]**  They are monitoring performance and awaiting contract resolutions, which could impact margins either positively or negatively by year-end.  **[HII_3405168_14]** 

4. **Transition from Pre-COVID Contracts**

   **Q:** When will pre-pandemic contracts stop affecting financials?

   **A:** The transition away from pre-COVID contracts is expected over the next **2 to 4 years**, with more post-COVID contracts comprising the portfolio by **2027–2028**.  **[HII_3405168_28]**  Until then, performance and margins will continue to be impacted by these older contracts.  **[HII_3405168_28]** 

5. **Labor Issues and Outsourcing Impact**

   **Q:** How are labor issues and outsourcing affecting margins?

   **A:** The company faces challenges with attrition and inexperienced labor.  **[HII_3405168_27]**  They plan to hire fewer entry-level workers and focus on more experienced staff, while increasing outsourcing.  **[HII_3405168_22]**  Outsourcing comes with a premium, impacting current profitability, but is necessary to meet capacity needs.  **[HII_3405168_22]** 

6. **CVN 79 Delivery and Rework**

   **Q:** Is CVN 79 still on schedule despite rework issues?

   **A:** Management confirmed that **CVN 79** is still scheduled for delivery in **2025**.  **[HII_3405168_19]**  While acknowledging challenges due to rework on pre-COVID ships, no changes to milestones have been made.  **[HII_3405168_19]** 

7. **Mission Technologies Outlook**

   **Q:** What's the outlook for Mission Technologies?

   **A:** Mission Technologies is performing well, with **14% year-to-date growth** over last year.  **[HII_3405168_21]**  Management is confident in its future, expecting growth consistent with or exceeding prior communicated rates, focusing on high-growth areas like C5ISR and unmanned systems.  **[HII_3405168_21]** 

8. **Block IV Submarine Charges**

   **Q:** Did design changes cause Block IV charges?

   **A:** Yes, design changes related to submarine **SSN 800** contributed to charges.  **[HII_3405168_12]**  There's potential upside once negotiations with the Navy conclude, but other issues also impacted the quarter.  **[HII_3405168_14]** 

9. **Cash Flow Expectations Beyond 2024**

   **Q:** What's the outlook for cash flow beyond 2024?

   **A:** Management expects cash flow to be choppy for the next couple of years due to performance and the timing of new contracts.  **[HII_3405168_11]**  They have retracted their prior multi-year cash flow guidance until there's more clarity on contracts and performance.  **[HII_3405168_28]** 

10. **Ingalls Shipyard Performance**

    **Q:** Are there issues affecting Ingalls Shipyard's performance?

    **A:** Ingalls is facing challenges similar to other manufacturers, such as inexperienced labor and supply chain fragility.  **[HII_3405168_15]**  While there are fewer opportunities for positive adjustments, management remains confident in Ingalls' ability to meet milestones.  **[HII_3405168_15]** 

0d8686ed9398a065c4063dd09d1df293ecc270ed48042b9172361a04032f8c39

- **Mission Technologies division** has achieved a trailing 12-month book-to-bill ratio of **1.15** and has a new business opportunity pipeline of over **$83 billion**, indicating strong potential for growth beyond the current 5% guidance.  **[HII_3395738_13]**
- The company is investing in improving **labor productivity** in its shipyards, expecting enhancements that will boost performance and profitability.  **[HII_3395738_14]**
- **HII** has strong visibility into its portfolio and anticipates robust **free cash flow** in the fourth quarter, reinforcing its financial stability.  **[HII_3395738_18]**

4ffb83c1bdff7bec3172014ae1da2267bd46ad456805843bcd674b250f07df58

- HII is experiencing **strong demand for its products and services**, particularly in its shipbuilding segment, leading to an increase in shipbuilding revenue growth expectations from **3% to approximately 4%** in the mid- to long-term. This is underpinned by significant contracts, such as Ingalls being awarded **seven destroyers** in the FY '23 multiyear procurement competition, and increased activity in the **Virginia-class (VCS) and Columbia submarine programs**.  **[HII_3371550_18]** ,  **[HII_3371550_6]**
- The company is making strategic capital investments to **expand capacity and throughput**, especially in submarine construction, supported by the Navy's investment. These investments, amounting to an average of **5% of sales over the next three years**, are expected to facilitate growth and are financed in partnership with the Navy, which will help offset the costs, supporting HII's mid- to long-term revenue growth and cash flow expansion.  **[HII_3371550_6]** ,  **[HII_3371550_23]** ,  **[HII_3371550_18]**
- HII has achieved a strengthened financial position by reducing its leverage ratio to under **2 times**, a year earlier than planned, and has completed paying off its **$650 million term loan**. This financial strength enables the company to commit to returning approximately **$500 million** to shareholders in 2024 through dividends and share repurchases, with an available share repurchase authorization of **$1.5 billion** through 2028.  **[HII_3371550_4]**

01c0b9e6cab9d24d1ae2061cb9f4da8a020a91b7584a619ec5300f716b665355

1. **Capital Allocation Priorities**  
   **Q:** Can you commit to returning more free cash flow to shareholders?  
   **A:** Management emphasized that while they aim to progressively improve dividends and return any remaining free cash flow to shareholders, their primary focus is on operational priorities and delivering ships. They acknowledged having a strong balance sheet and the flexibility to consider M&A opportunities, but currently see no significant portfolio gaps. **They are not committing to returning all free cash flow to shareholders at this time.**  **[HII_3371550_7]** 

2. **CapEx Increase and Impact on Free Cash Flow**  
   **Q:** Why is CapEx increasing, and how will it affect free cash flow?  
   **A:** The company is ramping up CapEx by **$300 million annually** over the next three years to expand shipyard capacity, particularly for submarine programs like Virginia-class and Columbia. Although this won't impact 2024 revenue due to project lead times, it supports mid- to long-term growth. Management indicated that **the Navy will pay for the majority of these investments**, helping to offset the CapEx increase and **maintain free cash flow guidance**.  **[HII_3371550_6]** **[HII_3371550_20]** **[HII_3371550_21]** 

3. **Shipbuilding Margin Outlook**  
   **Q:** What is the outlook for shipbuilding margins in 2024?  
   **A:** Despite missing some milestones at the end of the year, management expects shipbuilding margins to be in the range of **7.6% to 7.8%** for 2024. They acknowledged being slightly short of prior targets but anticipate improvements as they achieve milestones and realize step-ups in performance. They are comfortable with this conservative outlook and aim to exceed it if conditions allow.  **[HII_3371550_15]** 

4. **Supply Chain Challenges on Virginia Program**  
   **Q:** How are supply chain issues affecting the Virginia-class submarines?  
   **A:** Management noted that supply chain challenges persist across all programs, including the Virginia-class submarines. They have **no inflation protection** on the VCS program and are actively managing risks through quarterly EAC evaluations. The Navy is aware of these issues, and efforts like **Submarine Industrial Base (SIB) funding** are crucial to mitigate risks and improve the supply chain.  **[HII_3371550_10]** 

5. **Labor Retention Challenges**  
   **Q:** How is the company addressing labor retention issues?  
   **A:** Labor retention has been a significant challenge, with difficulties in retaining new hires beyond one or two years. The company is implementing initiatives focused on flexible work schedules, targeted hiring in geographies with better retention rates, and offering incentives for critical skills like machinists. They are also partnering with the Navy on workforce development programs, such as apprentice schools, which have higher retention rates. Addressing labor issues is a major priority to ensure operational success.  **[HII_3371550_19]** 

6. **Free Cash Flow Guidance Amid Higher CapEx**  
   **Q:** How will free cash flow remain stable despite higher CapEx in 2024?  
   **A:** Management plans to maintain free cash flow guidance of **$600 million to $700 million** for 2024, despite increased CapEx, through significant Navy participation in funding the investments. They expect the Navy's contributions to offset the CapEx increase, and they do not anticipate a major draw on free cash flow. Over the next five years, they project a cumulative free cash flow of **$3.6 billion**, averaging **$720 million per year**.  **[HII_3371550_20]** **[HII_3371550_21]** **[HII_3371550_22]** 

7. **Delayed Milestones and Impact**  
   **Q:** What is the status of the milestones that slipped in Q4?  
   **A:** Three milestones slipped out of Q4 due to late-breaking changes and testing issues. For the two Virginia-class submarines, operational commitments are essentially complete, with minimal financial impact. The LPD 29 faced testing issues but is expected to be delivered in late Q1 or early Q2. Management does not foresee significant downstream impacts or material financial issues from these delays.  **[HII_3371550_8]** **[HII_3371550_9]** 

8. **Supply Chain Investments**  
   **Q:** Where are supply chain investments being made?  
   **A:** The company is working with the Navy to target investments in single-source or sole-source suppliers, particularly in the Virginia-class and DDG programs. These investments aim to increase capacity in areas where supplier capacity has dwindled over the past 10 to 15 years. They are also exploring dual-sourcing and qualifying additional suppliers for critical materials.  **[HII_3371550_20]** 

9. **Working Capital Outlook**  
   **Q:** How does working capital look going forward?  
   **A:** Working capital has improved, ending the year at **5% of sales**, down from 6% to 6.5% earlier in the year. Management expects it to further improve to **4% to 5%** in 2024, attributing this to reductions in program activities and improved collections. They believe this level is appropriate and sustainable moving forward.  **[HII_3371550_16]** 

10. **Accounting on Delayed Milestones**  
    **Q:** Were there positive EAC adjustments from delayed milestones?  
    **A:** Management stated that there were **no material financial issues** related to the milestones that slipped. There was a slight opportunity loss on LPD 29, which will be recovered upon delivery. Any financial impact is accounted for in their guidance, and no significant EAC adjustments are expected.  **[HII_3371550_9]** 

11. **Earnings Impact of One-off Gains**  
    **Q:** How did one-off gains affect earnings in Q4?  
    **A:** The company recorded two one-off gains totaling **$120 million** gross, or **$95 million** net of tax, in Q4. This included a **$70.5 million** gain from the sale related to a frigate repair effort and a **$49.5 million** gain from insurance recoveries on the Hydroid acquisition representations and warranties. These gains were included in operating income due to their nature.  **[HII_3371550_17]** **[HII_3371550_25]** 

12. **Revenue Performance and Predictability**  
    **Q:** Why was shipbuilding revenue higher than guided?  
    **A:** Shipbuilding revenue exceeded guidance by nearly **$300 million** due to timing factors, including material receipts and outsourcing costs arriving earlier than expected. Management indicated that such timing variations can occur due to the nature of material procurement, affecting quarterly revenues but not the overall predictability of the business in the long term.  **[HII_3371550_25]** **[HII_3371550_26]** 

d2fde91daf255cf514506cd858aff9e134b5b6ee39ee5db1577b6860281c901a

1. **Shipbuilding Margins**

   **Q:** Why aren't margins improving with milestones being met?

   **A:** Delayed milestones led to extra costs, impacting margins. As we complete milestones, we expect margins to improve in the back half of the year. The team is committed to meeting them despite challenges.  **[HII_3382117_8]** **[HII_3382117_19]** **[HII_3382117_23]** 

2. **Labor Constraints**

   **Q:** Can you expand on labor issues affecting delays?

   **A:** Labor is the primary issue causing delays. We're focused on workforce development, apprenticeships, and improving labor rates to attract more workers. Manufacturing labor is a national priority that needs fixing.  **[HII_3382117_6]** **[HII_3382117_15]**  

3. **Supply Chain Challenges**

   **Q:** What's the status of supply issues in key programs?

   **A:** For Columbia-class, initial issues are behind us; we're ahead of the recovery plan. In Virginia-class, improvements are being made but more is needed. Supply chain health is critical, so securing full material orders is essential. Some major suppliers are impacting schedules, and we're working to resolve this.  **[HII_3382117_10]** **[HII_3382117_11]** **[HII_3382117_22]** 

4. **CapEx and Free Cash Flow**

   **Q:** How will CapEx and cash flow ramp up this year?

   **A:** CapEx will ramp up in the back half, targeting **5.3% of sales** for the year. We typically burn cash early in the year and recover working capital later, expecting strong cash generation in the second half. Navy support aligns with this plan.  **[HII_3382117_9]** **[HII_3382117_17]** 

5. **AUKUS Opportunities**

   **Q:** How will early involvement in Australia benefit you?

   **A:** The first steel order from Australia is an important step in strengthening their submarine supply chain. While not immediately material, it prepares us for significant future opportunities as we support Australia.  **[HII_3382117_12]** 

6. **Mission Technologies Growth**

   **Q:** Can MT sustain strong sales growth?

   **A:** MT had a strong quarter with **$750 million** in sales, over **20%** year-over-year growth. While being conservative in guidance (**2.7% to 2.75%**), there's potential for continued strength. The pipeline has grown from **$60 billion to $80 billion**.  **[HII_3382117_7]** 

7. **Share Buybacks**

   **Q:** What's the plan for share repurchases this year?

   **A:** We repurchased **$62 million** in Q1, aiming for **$300 million** by year-end. Buybacks will ramp up in the second half following our disciplined approach. No minimum cash balance constraints affect this plan.  **[HII_3382117_24]** 

8. **Working Capital Movements**

   **Q:** What caused the increase in working capital this quarter?

   **A:** Timing differences in billings and receipts led to higher receivables and contract assets. Similar to last year, we expect working capital to normalize, with strong cash flows in Q4.  **[HII_3382117_20]** 

9. **Employee Attrition Rates**

   **Q:** How is employee attrition trending?

   **A:** Attrition has improved but hasn't returned to pre-COVID levels. We continue to work on retention efforts to enhance performance.   

10. **EACs by Segment**

    **Q:** Can you provide EACs by segment for the quarter?

    **A:** EACs totaled **53 up**, net **2**. Ingalls was positive **13**, Newport News was negative **12**, and Mission Technologies was **1**.  **[HII_3382117_14]** 

11. **LPD 29 EAC**

    **Q:** Was the LPD 29 EAC taken in Q1 or Q2?

    **A:** We assessed the EACs in Q1, but LPD 29 delivery is a Q2 event and is included in our guidance and expectations for Q2.  **[HII_3382117_16]** 

12. **Milestones Shifting**

    **Q:** Have any milestones shifted this year?

    **A:** No, the **25 milestones** remain as planned. All milestones are important, especially for the Virginia-class program, where meeting commitments is critical.  **[HII_3382117_21]** 

13. **Supply Chain Concentration**

    **Q:** Are supply issues concentrated or widespread?

    **A:** Impacts are from a few major suppliers (**2 to 5**) affecting several programs. We're working hard to resolve these issues with subcontractors.  **[HII_3382117_22]** 

14. **CapEx and Navy Support**

    **Q:** Is Navy support for CapEx expected to step up?

    **A:** Yes, Navy support aligns with our CapEx plan, ramping up in the second half as part of our guidance.  **[HII_3382117_17]** 

15. **Margins at Shipyards**

    **Q:** What's weighing on margins in Q2?

    **A:** Margins can vary quarter to quarter due to EACs and milestones. First half margins are lighter, with major deliveries back-loaded. We're working through risks and opportunities, expecting improvement in the second half.  **[HII_3382117_18]** 

16. **South Korea Joining AUKUS**

    **Q:** How would South Korea joining AUKUS impact you?

    **A:** It would offer further upside, but discussions are ongoing. We'll focus on AUKUS for now and leave such matters to the Pentagon and the Navy.  **[HII_3382117_13]** 

17. **Impact of Missed Milestones**

    **Q:** Can you reconcile margins not improving despite completed milestones?

    **A:** Delays add costs. As we caught up on delayed milestones, there's less opportunity for margin improvement. Going forward, meeting milestones is crucial for better execution.  **[HII_3382117_8]** 

18. **Capital Allocation**

    **Q:** What's the minimum cash balance given free cash flow shape?

    **A:** There's no set minimum cash balance. We may use revolvers or commercial paper as needed. Our share repurchase plan is independent of cash balances.  **[HII_3382117_24]** 

19. **Visibility into Second Half**

    **Q:** How is visibility into second-half milestones compared to last year?

    **A:** Similar to last year, with more milestones in the back half. Execution will be key, and we have plans to meet them despite some risks.  **[HII_3382117_23]** 

20. **Pacing of CapEx Step Up**

    **Q:** When will CapEx step up, and what about working capital recovery?

    **A:** CapEx will increase in the back half as projects ramp up. Working capital recovery is expected later in the year, with strong cash flows anticipated in Q4.  **[HII_3382117_9]** 

21. **Milestone Importance**

    **Q:** Is Massachusetts the most important milestone for Newport News?

    **A:** All milestones are important, especially in the Virginia-class program where timely completion is critical to maintain production flow. Milestones have not shifted.  **[HII_3382117_21]** 

22. **EAC Step Backs**

    **Q:** Any step backs in productivity or labor at Newport News?

    **A:** We evaluate EACs quarterly, taking step ups or step backs as needed. While some minor adjustments were made due to milestone slips, there's nothing material to note.  **[HII_3382117_15]** 

99c38b7b64431fa9ff919749aabe3d748b1fc5f5834e0c034899506f119a5336

- **Delay in CVN-80 Delivery**: The company announced a delay of approximately **12 months** in the delivery of **CVN-80 Enterprise** due to major component delays from the supply chain, driven primarily by COVID and subsequent labor and supply chain effects.  **[HII_3363579_6]**  Although they have been holding that risk in their financials with no immediate financial impact, this delay could impact future schedules and costs.
- **Uncertainty in Shipbuilding Margin Improvement**: When asked about the outlook for shipbuilding margins in 2024, the CEO refrained from providing specifics, stating it's "a bit premature" but expects incremental improvement.  **[HII_3363579_20]**  The lack of detailed guidance may suggest potential challenges in achieving significant margin growth.
- **Labor Retention Challenges and New Hire Efficiency**: The company acknowledges needing to improve retention rates and is focused on addressing this challenge.  **[HII_3363579_11]**  Additionally, new hires take **3 to 5 years** to reach optimal efficiency, which could impact productivity and margins in the near term.

e9a1f3e4ac147d806a144b029fe6db3784c860419de178b503f3d6849a921030

- **Mission Technologies segment achieved 20% year-over-year revenue growth in Q1, with a pipeline that has grown from $60 billion to $80 billion, indicating strong future demand.**  **[HII_3382117_7]**
- **Shipbuilding margins are expected to improve in the second half of the year due to important milestones and cost efficiencies, potentially increasing margins to around 8% and adding $70 million to $75 million in profit.**  **[HII_3382117_5]** **[HII_3382117_18]**
- **The company is ahead of schedule on the Columbia-class submarine program after overcoming initial challenges, positioning it well for future revenue from this top-priority project.**  **[HII_3382117_10]**

eaaf758ee319255e534da081b459e2c0899676131d23dd84c81fc7af4ab26c2e

- **The award of new DDG-51 contracts solidifies Ingalls' base for the next few years, creating a stable business and contributing to an inflection point in shipbuilding growth.**  **[HII_3363579_15]**
- **Mission Technologies is experiencing record revenue growth, winning significant contracts, and has a robust opportunity pipeline, driving strong future growth for HII.**  **[HII_3363579_15]**
- **The company expects incremental improvement in shipbuilding margins as they stabilize labor and transition to more profitable programs like Block V Virginia-class submarines, providing upside potential.**  **[HII_3363579_8]** **[HII_3363579_7]**

a5be8d36810cd9193eeec9d83651645fce37ee00f4713d948bbf198536094d1f

Huntington Ingalls Industries Inc (HII)

Financials