Huntington Ingalls Industries, Inc. (NYSE:HII) Q3 2023 Earnings Call Transcript

Thomas E. Stiehle: Hey, Doug. Yes, it’s Tom here. So, yes, we have been consistent throughout the year here saying that the shipbuilding milestones were in the back half of the year, specifically for Newport News. We have two large milestones here in the 796, delivery and then the 798 float off. So, that’s going to be a driver on the back half of the program. And there’s a lot of focus down there. Chris, has talked about the hiring and the attrition that we’re doing, the extra training, the operating system that we’ve added down there. Think as COVID becomes further in the rearview mirror against the portfolio of contracts that we have right there. And opportunity sets are bound as we finish off the ships that were impacted to start new ships.

Although we saw them up at a lower level, that incremental margin improvement story exists especially at Newport News. But specifically, just on Q4, I think for the last 13 weeks of the year, it’s continued performance on the ships that we have here. And kind of hitting the milestones I just described, ensuring that we’re getting progress and watching, the heads we have on the programs, and keeping the rework in check.

Christopher D. Kastner: Yes. To support that, Doug, it’s absolutely 796 needs to get delivered, that boat is essentially complete, which need to get to trials, 798 needs to float off and then 29 needs to continue to complete their test program and get through their trial efforts. So, it’s going to be a race to completion on 29, but we’re fine with where we are now.

Doug Harned: And then when you look at the submarines, in Columbia-class, becoming more and more important. I mean, how what is the, can you describe what the mix is right now in your work between Columbia-class versus Virginia-class and how you think of Columbia-class as it grows, affecting margins over time.

Christopher D. Kastner: Well, Columbia-class, as you know, we only build 22% to 23% of that, both the [bells] (ph) and the sterns. It’ll grow at an importance at Newport News and provide a good source of growth, but how we perform on the VCS program is going to really dictate how Newport News does in the long run. The Columbia-class is important work. It’s high priority work, but it really won’t dictate a margin performance going forward in Newport News.

Doug Harned: Okay. Very good. Thank you.

Christopher D. Kastner: Thank you, Doug.

Operator: Thank you, Doug. Our next question comes from Ron Epstein from Bank of America. Ron, your line is open. Please go ahead.

Jordan Lyonnais: Hey. Good morning. This is Jordan Lyonnais on for Ron.

Christopher D. Kastner: Good morning.

Jordan Lyonnais: Would you guys be able to give more color. Good morning. Would you guys give more color on the retention rates of where they are now and also to for all the new hires that you have when you expect them to reach optimal efficiency?

Christopher D. Kastner: Yes. So, we don’t provide our retention rates. We’re meeting or actually beating our hiring forecast for the year. So, feel good with, where we are there. The second — what was your second question again? I’m sorry.

Jordan Lyonnais: How long for the new hires, for the fully working?

Christopher D. Kastner: Yes. So, we talk about three to five years, the interesting stuff. Some of the interesting things we have going on in Newport News is digital shipbuilding, which we think will increase the time to talent. But we generally think three to five years and we can accelerate that with some of our digital tools.

Jordan Lyonnais: Got it. Okay. And then one other question too. For the office funding, the $3 billion and then also the, other supplemental from the White House was $3 billion. Are you guys seeing that flow through, or do you expect it? Can you size it?