Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2022 HII 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 followed by one on your telephone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star followed by zero to speak to an operator. I would now like to hand the call over to Christy Thomas, Vice President of Investor Relations. Mrs. Thomas, you may begin.

Thank you, Operator, and good morning, everyone. Welcome to the HII Fourth Quarter 2022 Earnings Conference Call. Joining me today on the call are Chris Kastner, our President and CEO, and Tom Seeley, 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 ir.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 our fourth quarter 2022 earnings call. First, I would like to thank the entire HII team for a solid year and express my gratitude for their outstanding contributions throughout 2022. It was through their dedication and commitment that we were able to deliver results that demonstrated consistent performance in a pretty tough economic environment. Now, let's turn to the highlights for the quarter and the year on page three of the presentation. In 2022, we reported record sales of $10.7 billion, net earnings of $579 million, and free cash flow of $494 million. The demand for our products continues to drive a tremendous backlog of $47 billion, and we grew sales and earnings across all three of our segments in 2022. setting the foundation for continued growth in 2023 and beyond. At Ingalls in the fourth quarter, we delivered DDG-123 Lena Studcliffe-Higbee and completed builder trials on DDG-125 Jack H. Lucas. The first-by-three ship, just one quarter after DDG-123, completed her trials. Our DDG 51 team also started fabrication on DDG 133, Sam Nunn. In our amphibious ship product line, we were awarded a $2.4 billion detailed design and construction contract and started fabrication for LHA 9 Fallujah, the fourth big deck amphibious warship in the American class. Also at Ingalls, in January, we were awarded the Advanced Planning Contract for the modernization period for Zumwalt-class guided missile destroyers. At Newport News in the fourth quarter, we authenticated the keel for SSN 800 Arkansas, honoring the ship's sponsors, the Little Rock Nine. We continue to remain focused on reducing risk and meeting cost and schedule objectives on the Virginia-class boats, As for nuclear aircraft carriers, CBN 79 Kennedy is well into the test program. Distributed systems such as fire mains, potable water, air conditioning, and ventilation are coming to life. The EMALS catapult system, which we began testing in 2022, remains on track and is progressing as planned through her test program. And we expect to enter into the combat systems test program later this quarter. And finally, for the refueling and complex overhaul of CDN 73 USS George Washington, we are 98% complete as we near planned redelivery later this year. At Mission Technologies, we achieved solid revenue growth for 2022 with all of the business groups growing year over year. And we ended the year with a robust potential business pipeline of 66 billion, of which over one third is qualified. Significant wins in 2022 included the Decisive Mission Actions and Technology Services Contract, Mobility Air Force's Distributed Mission Operations Contract, and the REMIS 300 selection as the U.S. Navy's small UUV program of record. From an operational perspective, we have integrated Alliant into our mission technologies and HII team, and with the integration complete, we can turn our full attention towards executing our growth strategies. Moving on to slide four, we are providing the major milestones for 2023 and 2024. I'm proud to say that we met all of the shipbuilding milestones that we highlighted back in the second quarter of last year for 2022, and we are maintaining all of the 2023 milestones. This demonstrates growing confidence in our ship schedules and provides a solid platform to continue to improve our cost performance. Notable anticipated 2023 milestones at Newport News include the planned delivery of SSN 796 New Jersey and planned float-off of SSN 798 Massachusetts, as well as the planned re-delivery of CVN 73 and planned crew move aboard on CVN 79. At Ingalls, DDG 125 Jack H. Lucas, NSC Tim Calhoun, and LPT 29 Richard M. McCool Jr. are all forecast to deliver this year. while LHA 8 Bougainville is expected to launch. In addition to these shipbuilding milestones, Mission Technologies expects to see continued growth resulting from our large opportunity pipeline, including the several award decisions that we expect to be made in the first half of the year. Now, I would like to discuss our operational focus areas. Our top operational priority remains hiring and workforce development. I'm confident in our plans for hiring, and as importantly, our retention and training strategies. These strategies that center around employee skills and leadership development are gaining traction, and we've had a good start to the year. After hiring over 4,900 craft personnel in 2022, we expect a similar hiring rate in 2023, while at the same time improving our productivity, attendance, and overtime together to drive performance. Regarding inflation, we have some insulation to our contracting terms and conditions. However, non-programmatic elements of inflation have impacted us across all of our programs. And finally, the supply chain is stabilizing, and we have worked closely with our customers and suppliers to achieve the best possible schedules. To summarize, and notwithstanding being our most significant risk, as labor and supply chain impacts continue to stabilize and inflation abates, we believe we have the opportunity for improved performance over the next few years. Turning to the budget environment, we're pleased with the passage and enactment of the fiscal year 2023 defense appropriations and defense authorization bills. Both pieces of legislation strongly support shipbuilding, including funding and authority for an additional DDG 51 Flight 3 ship for a total of three DDGs, two Virginia-class attack submarines, the Columbia-class ballistic missile submarine program, Ford-class nuclear aircraft carrier programs, and the refueling and complex overhaul of CBN-74 John C. Stennis. Both appropriations and authorization bills continue funding for LPT-32 and LHA-9 and provide new advanced procurement funding for LPT-33, LHA-10, and a third DDG-51 and FY-24. The Defense Authorization Act also includes language requiring a naval fleet of no less than 31 operational amphibious warships, including a minimum of 10 amphibious assault ships. We continue to see bipartisan congressional support for our programs. We look forward to working with the administration and Congress on the President's fiscal year 2024 budget request. So with that, I will turn the call over to Tom for some remarks on our financial results and guidance. And then I have a few additional comments before we move on to Q&A.