Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2021 Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. 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 Eagles Industries Third Quarter 2021 Earnings Conference Call. With us today are Mike Pettis, President and Chief Executive Officer, Chris Kastner, Executive Vice President and Chief Operating Officer, and Tom Steele, 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, Chris, and Tom 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 is posted on our website. We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at HuntingtonEnglish.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. This morning, we released third quarter 2021 financial results that included another quarter of consistent shipbuilding program execution. Let me share some highlights from the quarter, starting on slide three of the presentation. Sales of $2.3 billion were up 1% from the third quarter of 2020, and diluted EPS was $3.65, down from $5.45 in the third quarter of 2020. New contract awards during the quarter were approximately $600 million, resulting in backlog of approximately $50 billion at the end of the quarter of which approximately $24 billion is funded. Shifting to activities in Washington, the federal government began the new fiscal year under a continuing resolution, which funds government operations through December 3rd. Now, we continue to urge Congress to proceed expeditiously and remain optimistic that the defense appropriations and authorization processes will be completed in the months ahead. As bills progress through both chambers of Congress, we continue to see bipartisan support for our programs reflected in the defense appropriations and authorization bills in the House and the Senate. We are pleased that the four defense oversight committees have shown strong support for shipbuilding, to include adding a second Arleigh Burke-class destroyer, which is a top Navy priority for fiscal year 2022. The appropriations bills also include language in support of a DDG 51 follow on multi year procurement contract in FY23. So as I prepare to close, let me give a quick update on COVID-19. We continue to work with our customers to satisfy the requirement for federal contractors to have their workforce vaccinated against COVID-19 by December the 8th, 2021. At HII, we remain committed to promoting and protecting the health and safety of our employees, their families, and their communities, and continuing to serve our customers and the vital national security interests of our country without disruption as an essential contributor to the nation's critical infrastructure. We view our workforce of approximately 44,000 employees as critical partners in this effort and continue to help our unvaccinated employees meet this requirement as safely and efficiently as possible. We will continue to evaluate how the vaccine mandate and delta variant impact our workforce as well as material availability from our supply chain, and we expect to have more to share during the fourth quarter earnings call in February. And finally, let me recap what HII has done from a portfolio shaping perspective over the past 20 months. In short, we have done exactly what we said we would do during our February 2020 investor day. First, we have positioned the technical solutions business in growth markets that support the constantly evolving requirements of our customers. And second, we have demonstrated the financial flexibility to pursue these critical growth opportunities while maintaining our investment grade credit ratings and continuing to return capital to shareholders. Following the closing of the Alliant transaction during the quarter, our team is laser-focused on a successful integration in order to produce the financial returns we expect. We are also ensuring that our core shipbuilding programs are achieving key production milestones in order to generate strong free cash flow, which will enable deleveraging of the balance sheet while continuing to return capital to shareholders via dividends and share repurchases. We firmly believe that these are the appropriate steps to generate significant long-term sustainable value for our shareholders, our customers, and our employees. And now I will turn the call over to Chris for some remarks on the operations. Chris?