Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2020 Huntington Ingalls Industries earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star then one on your telephone keypad. To withdraw from the question queue, please press star then two. Please be advised that today's conference is being recorded. If you need further assistance, please signal a conference specialist by pressing the star key followed by zero. I would now like to hand the call over to Dwayne Blake, Vice President of Investor Relations. Mr. Blake, you may begin.

Thanks. Good morning and welcome to the Huntington Ingalls Industries Third Quarter 2020 Earnings Conference Call. With us today are Mike Petters, President and Chief Executive Officer, and Chris Kastner, Executive Vice President and Chief Financial Officer. As a reminder, statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Actual results may differ. Please refer to our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results. Also, in the remarks today, Mike and Chris will refer to certain non-GAAP measures. Reconciliations of these metrics to the comparable GAAP measures are included in the appendix of our earnings presentation that's posted on our website. We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at HuntingtonEngles.com and click on the investor relations link to view the presentation as well as our earnings release. With that, I'll turn the call over to our President and CEO, Mike Petters. Mike?

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's call. I hope everyone is staying healthy and safe during these trying times. Let me start by providing a COVID-19 update on slide three of the presentation. The rate of new cases has stabilized in our shipyards, and we are maintaining a sustainable and manageable level of attendance. This has been driven by our ability to start rapid testing of employees and move them out of quarantine and back to work in a prudent way. While this has proven to be successful, the dynamic nature of this virus will require us to continue refining our policies to adapt to changing circumstances. And regarding COVID relief, we have highlighted to decision makers that the defense industrial base is at the nexus of economic sustainment and national security. And it is uniquely positioned to drive economic recovery in every state through thousands of suppliers. We remain hopeful that directly related COVID-19 labor costs like quarantining and other paid time off will be reimbursed. And we will work with the administration to provide the necessary documentation to support this effort. We also continue to encourage the customer to provide funding for cross program delay and disruption impacts. Now let me share some highlights from the quarter starting on slide four of the presentation. Sales were $2.3 billion, and diluted EPS was $5.45 for the quarter. New contract awards during the quarter were approximately $1.6 billion, resulting in backlog of approximately $45 billion at the end of the quarter, of which approximately $22 billion is funded. Turning to capital deployment for a moment, Earlier this week, we announced that our Board of Directors approved an 11% increase in our quarterly dividend from $1.03 per share to $1.14 per share. This action demonstrates our continued commitment to grow the dividend and return excess cash to our shareholders. Now, regarding activities in Washington, the federal government began the new fiscal year on October 1st under a continuing resolution which funds government operations through December 11th. During the intervening period, we continue to encourage Congress to complete their work on the fiscal year 2021 National Defense Authorization Bill, adopting the strong support for shipbuilding and other national security priorities reflected in the respective bills of the House and the Senate. We also continue to support completion of the appropriations process as soon as possible to minimize the impact that a long-term continuing resolution could have on current and future programs. Finally, regarding the Defense Department's future naval force study and the range of ship quantities it reflected, we are pleased to see our portfolio of ships in the plan and recognize that there is still much work to be done to bring any plan to fruition. We look forward to continuing our work with the Navy, the Coast Guard, and the Congress to help them effectively and affordably support America's national security requirements, and we remain confident that we can create additional capacity that may be necessary to support even the most robust shipbuilding plan. Now let me share a few business segment highlights from the quarter. At Ingalls, NSC-9 Stone successfully completed acceptance trials and remains on track to deliver late this year. On the DDG program, DDG-119 Delbert D. Black sailed away from the shipyard and was commissioned in late September. while the next ship, DDG-121 Frank E. Peterson, Jr., is focused on system completion in support of trials next year. DDG-125 Jack H. Lucas, the first Flight 3 destroyer, continues to move through important production milestones and is scheduled to launch in the first half of next year. Structural work on LHA-8 Bougainville is on track, and the ship is nearly 40% erected. On the LPD program, LPD-28 Fort Lauderdale completed electronic systems light-off at the end of July, and it's focused on preparation for additional major system light-off events as the ship comes to life. LPD-29 Richard M. McCool Jr. is well into production, and the key-laying ceremony for LPD-30 Harrisburg is planned for later this year. At Newport News, CVN 79 Kennedy is approximately 76% complete, and the team is continuing to focus on compartment completion and key propulsion plant milestones. And we recently reached agreement with the customer on an undefinitized contract action to begin execution of the single-phase delivery work, and we expect to definitize the contract change next year. CVN 73 USS George Washington is continuing to progress through its final outfitting and test phase and is approximately 81% complete. The ship achieved two significant milestones during the quarter, with commencement of shore scene testing and completion of the potable water system to support the start of moving the crew back aboard the ship later this year. On the VCS program, SSN 794 Montana achieved a key milestone as the boat was christened in front of a virtual audience in September and is preparing for launch expected by the end of the year. The submarine is approximately 89% complete and scheduled for delivery to the Navy in late 2021. And finally, SSN 796 New Jersey remains on track to achieve the pressure hull complete and float off milestones in 2021 as planned in our technical solutions business financial and operational performance was strong across the board the integration of hydroid is now largely complete and we continue to expand our presence in key markets during the quarter we were awarded more than 200 million dollars in new business we also have a number of large captures in progress that are expected to drive further growth while we continue to focus on delivering critical national security mission requirements across our broad customer base. We also broke ground on a new unmanned system center of excellence in Hampton, Virginia during the quarter. This new campus will complement our current facilities in Massachusetts, Florida, and Washington that have been delivering marine robotics to the Navy for nearly 20 years. and gives us the space and infrastructure we need to scale our operations and meet the needs of our customers now and into the future. This includes the manufacturing and support of large and extra large UUV requirements. I am excited about the alignment of our offerings in this market with the Navy's unmanned strategy, and we look forward to helping the Navy expand their unmanned fleet in an affordable and timely manner. As I prepare to close, let me first thank each and every one of our over 42,000 employees for their hard work, commitment, and dedication. Their efforts allowed us to continue meeting key programmatic milestones during these challenging times. I encourage each of our employees to take care of themselves, take care of their families, and for them to be safe. I am very pleased with the progress we have made this year. and the focus, skill, and creativity demonstrated by our entire team since the pandemic started. We are achieving key milestones. Our programs continue to be well supported in Washington, and our technical solutions business is well positioned to support the Navy's evolving unmanned strategy. And finally, I want to highlight the key attributes that create a very solid foundation and a bright future for our business. We have a $45 billion backlog, a strong management team, a well-trained workforce, a significantly recapitalized, more efficient shipyards, and a very strong balance sheet. The combination of these attributes positions Huntington Ingalls Industries to generate strong free cash flow and continue creating long-term sustainable value for our shareholders, our customers, and our employees. And now I will turn the call over to Chris Kastner for some remarks on the financials. Chris?