Huntington Ingalls Industries, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2024 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. If you change your mind, please press star followed by two. Please be advised that today's conference is being recorded. If you need further assistance, please press star followed by zero. 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 2024 Conference Call. Matters discussed on today's call that constitute forward-looking statements, including our estimates regarding the company's outlook, involve risks and uncertainties and reflect the company's judgment based on information available at the time of this call. These risks and uncertainties may cause our actual results to differ materially. Additional information regarding these factors is contained in today's press release and the company's SEC filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to comparable GAAP measures, please see the slides that accompany this webcast, which are available on the Investor Relations page of our website at ir.hii.com. On the call today are Chris Kastner, President and Chief Executive Officer, and Tom Steele, Executive Vice President and Chief Financial Officer. I will now turn the call over to Chris.

Thanks, Christy. Good morning, everyone, and thank you for joining us on our fourth quarter 2024 earnings call. Last year, HII employees remained steadfast in their commitment to our mission of delivering the world's most powerful ships and all domain solutions in service of the nation. I thank them for these efforts, which contributed to HII reaching critical milestones last year. We remain focused on meeting our commitments to the Navy and all our customers. Before I discuss the 2024 results, operational initiatives, and guidance, I would like to put in context where we are and give you a perspective on the next 24 months, as well as the mid to long-term outlook. Over the next 24 months, we expect to secure over $50 billion of contract awards. These contracts are being and will be negotiated with current performance and economic conditions in our estimates. They are expected to have a more balanced risk equation, be predictable in cost and schedules for our customers, and provide an opportunity to achieve margins more consistent with historical norms. At the same time, we are achieving key milestones on ships contracted prior to COVID. And as our progress continues, these contracts are becoming an increasingly smaller portion of our portfolio and less of a drag on our financial results. By 2027, the majority of pre-COVID contracts will be behind us. In addition, our focus on increasing throughput and cost reductions are expected to lead to improved operational execution across the business. With these operational initiatives and the significant demand for our products and services, we expect improved financial performance over the mid to long term. We anticipate growing to 15 billion of annual revenue by 2030 with associated margin expansion opportunity and free cash flow growth. Now turning to our 2024 results we generated sales of 11.5 billion and earnings per share of $13 and 96 cents. All three of our divisions hit key milestones and one significant new business during the year. 2024 awards total 12 billion and our year end backlog was 49 billion, of which 27 billion is funded. Now I'll provide some highlights from each of our divisions. First, Mission Technologies had another strong year. It achieved awards of more than 12 billion in potential total contract value, a 2024 book to bill of 1.33, and 9% revenue growth year over year. This positive performance reflects Mission Technologies' continued alignment with our country's and our allies' national security strategies. For example, in 2024, Mission Technologies achieved its largest win ever, a $6.7 billion contract to provide electronic warfare engineering and technical services support for the U.S. Air Force, as well as a $3 billion logics task order to provide logistics services ISR operations, and next-gen technology. And in Australia, Mission Technologies was awarded an initial five-year contract to provide global supply chain services to the Australian government's Department of Defense. In summary, the Mission Technologies team is executing well, and we are confident in its ongoing success, particularly given how closely its portfolio maps to our defense customers' needs. In 2024, at Ingalls Shipbuilding, we were awarded a $9.6 billion multi-ship procurement contract for the construction of LPD 33, 34, and 35, and large-deck amphibious ship LHA 10, which secures amphib production backlog well into the next decade. Also, we delivered LPD 29, USS Richard M. McCool Jr., and launched LPD 30, Harrisburg, and we continued to make progress on the DDG program with six destroyers in production, authenticating the keel of DDG 133 Sam Nunn in the fourth quarter. Finally, we completed dry dock work and undocked USS Zumwalt DDG 1000 in December. In 2024 at Newport News Shipbuilding in the Virginia-class submarine program, we floated off SSN 798 Massachusetts, delivered SSN 796 USS New Jersey, shipped the final module of SSN 801 Utah, and in December, we christened SSN 800 Arkansas. As for aircraft carriers, we completed dry dock work for the RCOH of CVN 74, USS John C. Stennis, and were awarded the advanced planning contract for the RCOH of CVN 75, USS Harry S. Truman. Also, 94% of CVN 79 Kennedy compartments have been turned over to the Navy, and all combat systems have been turned over to the test team. And CVN-80 Enterprise was moved for the first time, enabling construction of two aircraft carriers at once in the same dry dock. Looking ahead to 2025, at Ingalls, we expect to launch DDG-129 Jeremiah Denton and complete sea trials for DDG-1000. And at Newport News, we plan to deliver SSN-798 and float off SSN-800. Also, the team is focused on completing CVN 79. CVN 79 is scheduled to deliver in 2025, and the program team is evaluating options for optimizing combat capability additions and readiness for Navy workups. In 2026, we expect to deliver DDG 128 Ted Stevens and LHA 8 Bougainville at Ingalls. And in Newport News, we expect to deliver SSN 800 and lay the keel for CVN 81 Dore Miller. In 2025, we are also doubling down on operational improvement actions to address the residual COVID-related labor, productivity, and supply chain challenges that we've been facing. Starting with labor and enhancing throughput, in 2024, we exceeded our hiring goal of over 6,000 craft personnel, but attrition remains stubbornly high. Our data shows that additional investment in wages, in coordination with our Navy partner, will provide needed workforce stability. These increases also allow us to attract highly skilled first-class shipbuilders and the proficiency they bring. Additionally, we continue to deploy our enterprise operating system across all our shipbuilding programs to ensure consistency. On labor and throughput, we have acquired the assets of an existing advanced metal fabricator, W International, in Charleston, South Carolina. This acquisition increased our workforce by approximately 500 highly trained personnel. And we plan by 2027 to increase employment significantly at this site, a 480,000 square foot facility. HII Charleston operations is already working on aircraft carrier units for Newport News. And in the next few weeks, we expect to start submarine unit construction. Similarly, we plan to increase our outsourcing by 30% in 2025 and in-source contract labor to address critical skill gaps within our shipyards. As a result of these workforce strategies, we expect to achieve a 20% year-over-year improvement in shipbuilding production throughput. Our second operational initiative is an annualized enterprise-wide cost reduction target of approximately $250 million per year. Several actions have already been taken to achieve this target, including the realignment of mission technology segment from six business units to four, and the implementation of a new payroll system at the beginning of 2025. Further cost efficiency plans around optimizing cost structures, decreasing overhead and service and support costs, and reducing third-party services are under development and are expected to be executed throughout 2025. Our third operational initiative for 2025 is ensuring our new contract awards reflect the current economic and production environment. Regarding the FY24 Block 5 Submarine Contract Agreement, negotiations are continuing, and we continue to be confident that an agreement will be reached, although we do not have certainty today on the timing of that agreement. These three items, meeting our throughput improvement goals, executing our cost reductions, and achieving new contract awards that reflect the current economic and production environment, underpin our guidance and are expected to bring more predictability to our contract cost estimates delivery schedules, financial performance, and guidance. In terms of our financial outlook, more specifically for 2025, we expect shipbuilding revenues between 8.9 and 9.1 billion and shipbuilding margins in the range of 5.5 to 6.5 percent. For mission technologies, we expect revenues between 2.9 and 3.1 billion and margins between 4 and 4.5 percent. with EBITDA margins between 8 and 8.5%. Our free cash flow outlook for 2025 is between $300 and $500 million. The 2025 Shipbuilding Margin and Free Cash Flow Outlook is predicated on meeting our throughput and cost reduction objectives. It also assumes appropriate resolution on the last two VCS Block 5 boats and the Block 6 and Columbia Bill 2 contracts consistent with the continuing resolution anomaly language that was passed by Congress. Turning to activities in Washington for a moment, we are pleased with the passage and enactment of the Defense Authorization Act for fiscal year 2025. The FY25 NDAA strongly supports our shipbuilding programs. In addition to authorizing funding for three Arleigh Burke-class surface combatants, one Virginia-class submarine, and one San Antonio-class amphibious warship, the NDAA authorizes the refueling and overhaul, CDN 75, additional incremental funding for the second Virginia-class attack submarine in FY25, and continued support for Gerald R. Ford-class aircraft carriers in the LHA and LPD amphibious warship bundle. The NDAA also recommends the Navy optimize aircraft carrier acquisition strategy and procure CVN-82 in FY28. We applaud Congress for including anomalies in the CR that provide additional support for nuclear-powered vessel programs and we look forward to Congress finalizing FY25 appropriation bills. In summary, we continue to make progress on our programs with impactful operational initiatives that we believe will lead to meaningful improvements in productivity and throughput. Demand for our products and services is strong, and we continue our focus on executing for our key customer, the U.S. Navy, with five deliveries over the next two years. We have a line of sight for generating approximately $15 billion in annual revenue by decade's end, with incrementally improving operating margins over that period, which will facilitate improved results for all stakeholders. So with that, I will turn the call over to Tom for some remarks on our financial results and guidance. Tom?