Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the fourth 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, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. Please be advised that today's conference is being recorded. If you need further assistance, you can press star zero at any time to reach an operator. 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 fourth 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 their 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 huntingtoningles.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 trust that everyone is staying healthy and safe. So before getting into the results for the quarter and the full year, let me take a few moments to reflect on last year. 2020 will be remembered as one of the most challenging business environments that we have ever had to navigate. Throughout the COVID-19 pandemic, We have made decisions that are focused on the safety and well-being of our employees, and I could not be more proud of the way our team responded to the challenges. While enduring the difficulties and uncertainties of the pandemic, we demonstrated an uncompromising commitment to safety, quality, cost, and schedule that allowed us to achieve significant milestones on our programs and continue making meaningful contributions to national security. Specifically during 2020, we delivered three shifts, the amphibious assault ship USS Tripoli, the guided missile destroyer USS Delbert D. Black, and the National Security Cutter Stone. We also christened Virginia-class attack submarine Montana, and we laid the keel for Massachusetts. Now, consistent with the strategy outlined during our Investor Day meeting last February, we continued to invest in unmanned and autonomy capabilities. We acquired Hydroid and established a strategic alliance with Kongsberg Maritime. We broke ground on the Unmanned Systems Center of Excellence in Hampton and closed the year by acquiring the autonomy business of Spatial Integrated Systems, an industry leader in unmanned surface vessel solutions. Now let me share some highlights from the quarter and the full year starting on slide three of the presentation. Sales of $2.8 billion for the quarter and $9.4 billion for the full year were approximately 14 and 5% higher than 2019. respectively, and they represent record highs for the company. The diluted EPS was $6.15 for the quarter and $17.14 for the full year. New contract awards during the quarter were approximately $3.5 billion, resulting in backlog of approximately $46 billion at the end of the year, of which approximately $20 billion is funded. Shifting to activities in Washington for a moment, We were very pleased at the fiscal year 2021 budget cycle ultimately concluded with the passage and enactment of defense authorization and defense appropriations measures. Both pieces of legislation strongly supported shipbuilding, including funding and authority for an additional Virginia-class submarine, the bundled purchase of LHA-9 with LPD-32 and 33, and long-lead material for an additional DDG-51 class destroyer. The final bills also continue support for the dual purchase of CVN 80 Enterprise and CVN 81 Doris Miller, as well as the refueling and complex overhaul of CVN 74 USS John C. Stennis. Regarding the fiscal year 2022 budget cycle, we look forward to working closely with the new administration and Congress to best maintain the current fleet and build the future fleet that our nation requires. Now let me share a few business segment highlights from the quarter. At Ingalls, NSC-9 Stone was delivered and sailed away from the shipyard in December. The DDG program remains focused on completion of production and test activities planned for this year, including sea trials for DDG-121 Frank E. Peterson, Jr., Major machinery light-off events for DDG-123, Lena H. Sutcliffe, and the launch of DDG-125, Jack H. Lucas, the first Flight 3 destroyer. In addition, LPD-28, Fort Lauderdale, is on track to complete sea trials later this year, while LPD-29, Richard M. McCool, Jr., and LPD-30, Harrisburg, continue to achieve their planned production milestones. And at Newport News, CBN-79, Kennedy, is approximately 78% complete, and the team is aligning plans with the single-phase delivery requirements while continuing to focus on compartment completion and key propulsion milestones. CVN 73, USS George Washington, is approximately 85% complete, and the team remains focused on final outfitting and test activities to support re-delivery to the Navy planned for next year. On the VCS program, both SSN 794 Montana and SSN 796 New Jersey achieved key milestones this week. Montana achieved the float-off milestone and will continue its test program activities at the pier. This submarine is approximately 91% complete and still expected to deliver to the Navy in late 21. New Jersey achieved the pressure hull complete milestone as approximately 72% complete. The next significant milestone is scheduled for this submarine is float off in the second half of this year. In our technical solutions business, this was another busy quarter. As I mentioned earlier, we acquired the autonomy business of spatial integrated systems at the end of the year. This acquisition complements our current unmanned capabilities with proven autonomy, sensor fusion, and perception capabilities, including multi-vehicle control. These combined capabilities will help us serve our customers' growing needs for unmanned undersea and surface autonomy solutions. Now, other significant milestones in unmanned systems included the delivery of new Remus 100 unmanned underwater vehicles to the German Navy and opening of the first of two planned buildings on the 20-acre Unmanned Systems Center of Excellence campus. These facilities will be used to assemble hull structures for the U.S. Navy's ORCA extra-large unmanned undersea vehicle program. Our nuclear and environmental business continues to leverage HII's nuclear operations DNA to take advantage of opportunities within the DOE and commercial nuclear decontamination and decommissioning markets. And finally, our defense and federal solutions business continues to receive very positive customer feedback under our persistent multi-role operations contract. Under this contract vehicle, We provide support for U.S. Air Force intelligence, surveillance, and reconnaissance requirements in the European and the African theaters of operation. Now, as I prepare to close, let me thank our more than 42,000 employees for their sacrifices, hard work, creativity, and determination during a very difficult year. From the very beginning, we viewed COVID-19 as a human capital crisis, and we made the decision to give our workforce the flexibility they needed to deal with the disruption in their personal lives. This in turn allowed us to preserve the significant investment we have made over the past five years, hiring, training, and qualifying our workforce so that they would be available to execute our record backlog as we emerged from the pandemic. After finishing 2020 with two consecutive strong quarters, I am convinced more than ever that we have a very solid foundation and a bright future for our business. The key attributes that support this foundation include a historic $46 billion backlog, a strong management team, a well-trained workforce, a significantly recapitalized and more efficient shipyards, expanded unmanned capabilities, and a very strong balance sheet. We enter 2021 as a stronger and more agile company with positive momentum and an enormous opportunity to leverage our historic backlog to generate strong free cash flow and create long-term sustainable value for our shareholders, our customers, and our employees. Now, before I turn the call over to Chris, let me make a few comments about his transition to the newly created role of Chief Operating Officer. Chris will oversee the company's three operating divisions and work closely with the division presidents to drive execution on our historic backlog. And I see this as the next step in the maturation of HII. Our governance model has typically been very federated, pushing as many decisions as far away from the center of the company as possible. But what we are hearing from our customers is that they are looking for us to be able to bring different parts of our business together in order to solve their complex problems. They actually see us as more of an integrated whole than as a collection of businesses. And it's up to us to find ways to create value from this opportunity set by smartly collaborating across our shipbuilding and technical solutions segments. And let me also welcome Tom Steele to the role of CFO. Tom has done a fantastic job as the CFO at Ingalls, and I am confident that his strong financial and operational background make him the right choice for this position. And now I will turn the call over to Chris for some remarks on the financials. Chris.