Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2022 high earnings conference call. At this time, all participants are in a listen-only mode. And after the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star followed by one on your touchtone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star followed by zero for an operator. I would now like to hand the call over to Christy Thomas, Vice President of Investor Relations. Ms. Thomas, you may begin.

Thank you, Operator, and good morning, everyone. Welcome to the HII Third Quarter 2022 Earnings Conference Call. Joining me today on the call are Chris Kastner, our President and CEO, and Tom Steele, Executive Vice President and CFO. As a reminder, any forward-looking statements made today that are not historical fact are considered our company's estimates or expectations and are forward-looking statements made pursuant to the safe harbor provisions of federal securities law. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For additional information regarding factors that could cause actual results to differ materially from expected results, refer to our SEC filings. Also in their remarks today, Chris and Tom will refer to certain non-GAAP measures. For reconciliations of these metrics to the comparable GAAP measures, please see the slides that accompany this webcast, which are available on the Investor Relations website at hir.hii.com. With that, I would like to turn the call over to our President and CEO, Chris Kastner. Chris?

Thanks, Christy. Good morning, everyone, and thank you for joining us on today's call. I would like to begin today by highlighting the HI teams that work hard day in and day out to support our national defense customers, craftsmen and women constructing and overhauling the most powerful and survivable naval ships ever built, engineers and technology specialists developing critical capabilities and mission-driven solutions, all aligned with supporting our customers' priorities and pressing national defense needs. Thank you to the entire HAI team. Now let's turn to our results on page three of the presentation. In the third quarter, we had sales of $2.6 billion, which were 12% higher than 2021 and diluted EPS with $3.44 for the quarter, down from $3.65 in 2021. New contract awards during the quarter were approximately $2.1 billion. which results in backlog of approximately $46.7 billion at the end of the quarter, of which $23.2 billion is currently funded. We continue to make progress across all of our shipbuilding programs. At Ingalls, we recently completed acceptance trials on DDG-123, Lena Sutcliffe-Higbee, and during the third quarter, the keel was authenticated for DDG-129, Jeremiah Denton. In our amphibious ship product lines, fabrication began on LPD 31 Pittsburgh, and last week we were awarded a $2.4 billion detailed design and construction contract for LHA 9. Also, we have commenced the work to complete the combat system installation and activation on the Zumwalt-class destroyer Lyndon B. Johnson, DDG 1002. At Newport News, CBN 79 Kennedy, is moving further into the test program and began testing of the electromagnetic launch system. And on the other side of the shipyard, the keel was laid in the dry dock for CVN 80 Enterprise. The RCOH program continues to make progress with CVN 73 USS George Washington on track to re-deliver next year. Also, we continue to see progress on the Virginia-class submarine program and expect to deliver SSN 796 New Jersey, and float off SSN 798 Massachusetts next year. In the quarter, we experienced continued challenges from the broader macroeconomic environment, most notably a persistent tight labor market with really no material improvement in general economic conditions. Through the third quarter, we have hired over 3,600 craftsmen and women against our full-year plan of approximately 5,000, and we continue to utilize the levers of outside lease labor and overtime to offset the short-term deficit of employees. In addition, supply chain challenges continue across our supplier ecosystem, resulting in longer material lead times and inflation pressure. As we've discussed previously on inflation, we do have some contractual mitigation, and we continue to actively manage the supply chain and our production schedules to minimize impacts. To address our shipbuilding labor challenges, we have aggressively enhanced our skilled workforce development pipeline. To this end, while we broadened our recruiting efforts to bring in more shipbuilders, we are also expanding our very successful apprenticeship programs, including revised curricula, reduction in completion timelines, a focus on pre-apprenticeships and youth apprenticeships, and expansion to underserved populations and women in the industry. Moving to our emissions technologies business, our pipeline remains very strong, with $4 billion in proposal or evaluation and $17 billion in capture. Our third quarter book to bow was 2.2 and was a healthy 1.1 year to date. Integration of operations and business systems following the Alliant acquisition is largely complete, and we are already seeing strong synergies, such as the recently announced DMAT and MAP DMO awards, totaling over $900 million in total contract value. We also received a couple of major contract actions in our nuclear and environmental business that were driven by sustained strong performance. At Savannah River, our joint venture received an extension for four years, plus an additional option year. And at the Nevada National Security Site, our joint venture received a simultaneous early exercise of all five of its option years, These are significant wins, and we are very proud to support DOE across the complex. Despite headwinds earlier in the year due to the delayed omnibus spending bill and the ongoing intense competition for talent, we continue to gain momentum and see strong growth potential going forward. This includes both domestic and international markets, where we are expanding our presence in regions consistent with the national security strategy. In summary, I'm confident that our presence across all the combatant commands, coupled with an increasing demand signal for advanced technology solutions from our DoD customers, positions mission technologies well going into FY23. Shifting to activities in Washington, the federal government began the new fiscal year under a continuing resolution, which funds government operations through December 16th. We continue to urge Congress to proceed expeditiously and remain optimistic that the annual defense appropriations and authorization processes will be completed in the months ahead. While final outcomes will depend on eventual respective appropriations and authorization conference committee negotiations, we are pleased to see defense oversight committees provide strong support to shipbuilding to include recommendations for new DDG 51, multi-year procurement authority, additional funding for amphibious ships, and requirements for not less than 31 amphibious warfare ships. The strong shipbuilding demand driven by our national defense requirements is shown on slide five. These critical customer needs spanning destroyers, amphibs, submarines, and aircraft carriers, and including new construction, overhaul, and maintenance and modernization will result in significant contract award opportunities driving continued backlog stability. And now I will turn the call over to Tom for some remarks on our financials. Tom?