Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2025 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 1 on your telephone keypad. If you change your mind, please press star followed by 2 on your telephone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star zero to reach an operator. I would like now to hand the call over to Kristi Thomas, Vice President of Investor Relations. Mrs. Thomas, you may-
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2025 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 1 on your telephone keypad. If you change your mind, please press star followed by 2 on your telephone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star zero to reach an operator. I would like now to hand the call over to Kristi Thomas, Vice President of Investor Relations. Mrs. Thomas, you may-
Speaker #1: Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2025 HII earnings conference call. At this time, all participants are in a listen-only mode.
Speaker #1: After the speakers' 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.
Speaker #1: If you change your mind, please press star followed by two on your telephone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star zero to reach an operator.
Speaker #1: I would like now to handle the call over to Christie Thomas, Vice President of Investor Relations. Mrs. Thomas, you may.
Speaker #2: Thank you, Operator, and good morning, everyone. Welcome to the HII fourth quarter 2025 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.
Kristi Thomas: Thank you, operator, and good morning, everyone. Welcome to the HII Q4 2025 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 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 Stiehle, Executive Vice President and Chief Financial Officer.
Christie Thomas: Thank you, operator, and good morning, everyone. Welcome to the HII Q4 2025 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 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 Stiehle, Executive Vice President and Chief Financial Officer.
Speaker #2: 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.
Speaker #2: We will also refer to 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.hi.com.
Speaker #2: Chris Kastner, President and Chief Executive Officer, and Tom Stiehle, Executive Vice President and Chief Financial Officer, are on the call today. Now I'll turn the call over to
Kristi Thomas: Now I'll turn the call over to Chris.
Christie Thomas: Now I'll turn the call over to Chris.
Speaker #2: Chris.
Speaker #3: Thanks, Christie.
Chris Kastner: Thanks, Kristi. Good morning, everyone, and thank you for joining us on our fourth quarter 2025 earnings call. Before discussing the results, highlights, and guidance, I'd like to take a moment to reflect upon our progress over the past year. The solid results we posted this morning are the outcome of a measurable increase in shipbuilding throughput, a key indicator for schedule performance. During 2025, in partnership with our government customers, we've taken steps to increase our hiring, improve our retention, and strengthen proficiency levels within our workforce. What these efforts represent are thousands of skilled shipbuilders, engineers, technologists, and professionals who are committed to HII's mission. I'd like to say thank you to our 44,000 employees.
Christopher D. Kastner: Thanks, Kristi. Good morning, everyone, and thank you for joining us on our fourth quarter 2025 earnings call. Before discussing the results, highlights, and guidance, I'd like to take a moment to reflect upon our progress over the past year. The solid results we posted this morning are the outcome of a measurable increase in shipbuilding throughput, a key indicator for schedule performance. During 2025, in partnership with our government customers, we've taken steps to increase our hiring, improve our retention, and strengthen proficiency levels within our workforce. What these efforts represent are thousands of skilled shipbuilders, engineers, technologists, and professionals who are committed to HII's mission. I'd like to say thank you to our 44,000 employees.
Speaker #3: our fourth quarter 2025 earnings Good morning, everyone, and thank you for joining us on results, highlights and guidance, I'd like to take a moment to reflect upon our progress over the past year.
Speaker #3: The solid results we posted this morning are the outcome of a measurable increase in shipbuilding throughput, a key indicator for scheduled performance. During 2025, in partnership with our government customers, we've taken steps to increase our hiring, improve our retention, and strengthen proficiency levels within our workforce.
Speaker #3: What these efforts represent are thousands of skilled shipbuilders, engineers, technologists, and professionals who are committed to HII's mission. I'd employees, every improvement in our operations, every like to say thank you to our 44,000 every day we reduce from a schedule, translates directly into efficiency we unlock, capability, our customers' urgently need, and can deploy to protect American interests.
Chris Kastner: Every improvement in our operations, every efficiency we unlock, every day we reduce from a schedule translates directly into capability our customers urgently need and can deploy to protect American interests. Now, turning to our 2025 results, revenues of $12.5 billion grew 8.2%, and EPS was $15.39. 2025 awards totaled $16.9 billion. All three of our divisions reached record revenue levels and hit key milestones. Now, I'd like to share some of the 2025 division highlights, starting with Mission Technologies. In 2025, Mission Technologies delivered another year of top-line growth, with record revenues topping the $3 billion mark for the first time. Throughout 2025, we announced key milestones that highlight the breadth of our defense technology offerings.
Christopher D. Kastner: Every improvement in our operations, every efficiency we unlock, every day we reduce from a schedule translates directly into capability our customers urgently need and can deploy to protect American interests. Now, turning to our 2025 results, revenues of $12.5 billion grew 8.2%, and EPS was $15.39. 2025 awards totaled $16.9 billion. All three of our divisions reached record revenue levels and hit key milestones. Now, I'd like to share some of the 2025 division highlights, starting with Mission Technologies. In 2025, Mission Technologies delivered another year of top-line growth, with record revenues topping the $3 billion mark for the first time. Throughout 2025, we announced key milestones that highlight the breadth of our defense technology offerings.
Speaker #3: Now, turning to our 2025 results, revenues of $12.5 billion grew 8.2%, and EPS was $15.39. 2025 awards totaled $16.9 billion. All three of our divisions reached record revenue levels and hit key milestones.
Speaker #3: Now, I’d like to share some of the 2025 division highlights, starting with Mission Technologies. In 2025, Mission Technologies delivered another year of top-line growth, with record revenues topping the $3 billion mark for the first time.
Speaker #3: Throughout 2025, we announced key milestones that highlight the breadth of our defense technology offerings. These included developing the US Army's high-energy laser weapon system, debuting Grimm Spectrum Dominance EW solution, delivering Lionfish Small Unmanned Underwater Vehicles to the US Navy, expanding shipboard and shore-based training for US and coalition forces, and delivering our 750th REMUS Autonomous Underwater Vehicle.
Chris Kastner: These included developing the US Army's high-energy laser weapon system, debuting GRIM's Spectrum Dominance EW solution, delivering Lionfish small unmanned underwater vehicles to the US Navy, expanding shipboard and shore-based training for US and coalition forces, and delivering our 750th REMUS autonomous underwater vehicle. To accelerate support of a hybrid fleet, we unveiled the Romulus family of unmanned surface vessels, powered by our own Odyssey autonomy software suite, and construction of the first prototype is well underway on the Gulf Coast. In summary, the Mission Technologies team is executing well, and we are confident in continuing this success, particularly given how closely our portfolio maps to our defense customers' needs.... Shifting to shipbuilding, at Ingalls, we delivered our second Flight III destroyer, DDG-128, Ted Stevens, launched DDG-129, Jeremiah Denton, and authenticated the keel of DDG-135, Thad Cochran. Also in January, we completed sea trials on DDG-1000 Zumwalt.
Christopher D. Kastner: These included developing the US Army's high-energy laser weapon system, debuting GRIM's Spectrum Dominance EW solution, delivering Lionfish small unmanned underwater vehicles to the US Navy, expanding shipboard and shore-based training for US and coalition forces, and delivering our 750th REMUS autonomous underwater vehicle. To accelerate support of a hybrid fleet, we unveiled the Romulus family of unmanned surface vessels, powered by our own Odyssey autonomy software suite, and construction of the first prototype is well underway on the Gulf Coast. In summary, the Mission Technologies team is executing well, and we are confident in continuing this success, particularly given how closely our portfolio maps to our defense customers' needs.... Shifting to shipbuilding, at Ingalls, we delivered our second Flight III destroyer, DDG-128, Ted Stevens, launched DDG-129, Jeremiah Denton, and authenticated the keel of DDG-135, Thad Cochran. Also in January, we completed sea trials on DDG-1000 Zumwalt.
Speaker #3: To accelerate support of a hybrid fleet, we unveiled the Romulus family of unmanned surface vessels powered by our own Odyssey Autonomy software suite, and construction of the first prototype is well underway on the Gulf Coast.
Speaker #3: In summary, the Mission Technologies team has executed well, and we are confident in continuing this success, particularly given how closely our customers' portfolio maps to our defense needs.
Speaker #3: Shifting to shipbuilding, at Ingalls we delivered our second flight-three destroyer DDG-128 Ted Stevens, launched DDG-129 Jeremiah Denton, and authenticated the keel of DDG-135 Thad Cochran.
Speaker #3: Also in January, we completed sea trials on DDG-1000 Zumwalt. On the amphibious ship programs, we christened LPD-30 Harrisburg and began fabrication of LPD-32 Philadelphia.
Chris Kastner: On the amphibious ship programs, we christened LPD-30, Harrisburg, and began fabrication of LPD-32, Philadelphia. LHA-8 Bougainville is actively in the test program and has achieved generator light-off. We also signed a memorandum of agreement with HD Hyundai Heavy Industries, reinforcing our strategic collaboration to explore future partnership opportunities. Additionally, in December, the U.S. Navy announced a Golden Fleet, which includes a Trump-class battleship as well as a frigate, which will leverage the proven design of the Ingalls-built Legend-class National Security Cutter. I have great confidence in Ingalls team to execute this program and in our ongoing efforts with our partners to successfully expand the U.S. shipbuilding industrial base to meet the Navy's needs.
Christopher D. Kastner: On the amphibious ship programs, we christened LPD-30, Harrisburg, and began fabrication of LPD-32, Philadelphia. LHA-8 Bougainville is actively in the test program and has achieved generator light-off. We also signed a memorandum of agreement with HD Hyundai Heavy Industries, reinforcing our strategic collaboration to explore future partnership opportunities. Additionally, in December, the U.S. Navy announced a Golden Fleet, which includes a Trump-class battleship as well as a frigate, which will leverage the proven design of the Ingalls-built Legend-class National Security Cutter. I have great confidence in Ingalls team to execute this program and in our ongoing efforts with our partners to successfully expand the U.S. shipbuilding industrial base to meet the Navy's needs.
Speaker #3: NLHAA program and has achieved generator Bougainville is actively in the test light-off. We also signed a memorandum of agreement with HD Hyundai Heavy Industries reinforcing our strategic collaboration to explore future partnership opportunities.
Speaker #3: Additionally, in December, the US Navy announced the Golden Fleet, which includes the Trump-class battleship as well as the frigate which will leverage the proven design of the Ingalls-built Legend-class National Security Cutter.
Speaker #3: I have great confidence in Ingalls' team to execute this program and in our ongoing efforts with our partners to successfully expand the US shipbuilding industrial base to meet the Navy's needs.
Speaker #3: In 2025, at Newport News Shipbuilding, we delivered Virginia-class submarine SSN-798 Massachusetts, launched the keel of SSN-804 Barb, and undocked SSN-796 New Jersey and SSN-800 Arkansas. We also laid the keel for the Jersey, in preparation for a redelivery to the fleet.
Chris Kastner: In 2025, at Newport News Shipbuilding, we delivered Virginia-class submarine SSN 798 Massachusetts, launched SSN 800 Arkansas, laid the keel of SSN 804 Barb, and undocked SSN 796 New Jersey, in preparation for her redelivery to the fleet. We also delivered the bow of the first Columbia-class submarine, SSBN 826 District of Columbia. In our aircraft carrier programs, last year, we completed dock trials on CVN 79 Kennedy, and the team is now finishing up her first sea trial evolution, moving another step closer to preliminary acceptance and delivery. In addition, having completed deck over of both engine rooms post-receipt of the remaining major engine room components, CVN 80 has now reached 50% erected in the dry dock, and CVN 81 keel units are in fabrication, and we continue to receive major material components in support of production.
Christopher D. Kastner: In 2025, at Newport News Shipbuilding, we delivered Virginia-class submarine SSN 798 Massachusetts, launched SSN 800 Arkansas, laid the keel of SSN 804 Barb, and undocked SSN 796 New Jersey, in preparation for her redelivery to the fleet. We also delivered the bow of the first Columbia-class submarine, SSBN 826 District of Columbia. In our aircraft carrier programs, last year, we completed dock trials on CVN 79 Kennedy, and the team is now finishing up her first sea trial evolution, moving another step closer to preliminary acceptance and delivery. In addition, having completed deck over of both engine rooms post-receipt of the remaining major engine room components, CVN 80 has now reached 50% erected in the dry dock, and CVN 81 keel units are in fabrication, and we continue to receive major material components in support of production.
Speaker #3: We also delivered the BAL, the first Columbia-class submarine SSBN 826 District of Columbia. In our aircraft carrier programs, last year we completed dock trials on CVN 79 Kennedy and the team is now finishing up her first sea trial evolution, moving another step closer to preliminary acceptance and delivery.
Speaker #3: In addition, having completed deck over of both engine rooms, post receipt of the remaining major engine room components, CVN 80 has now reached 50% erected in the dry dock and CVN 81 keel units are in fabrication and we continue to receive major material components in support of production.
Speaker #3: After delivering two ships in 2025, DDG-128 and SSN 798, we expect to deliver another two ships in 2026, SSN 800 and LPD-30, as well as complete preliminary acceptance of CVN 79.
Chris Kastner: After delivering two ships in 2025, DDG-128 and SSN-798, we expect to deliver another two ships in 2026, SSN-800 and LPD-30, as well as complete preliminary acceptance of CVN-79. I'll note that we've accelerated our forecast of LPD-30 delivery into 2026 and adjusted LHA-8 Bougainville delivery to 2027. This ensures that we avoid any potential conflicts, people, or equipment, and establishes clear and consistent priorities for the joint Ingalls and Navy teams throughout all the interim milestones leading to delivery. Now, I'd like to update you on our operational initiatives. In 2025, we set out to improve throughput and achieve 14% year-over-year increase. As we continue to invest with our customer partner in our workforce, facilities, technology, and supply chain, we've established our 2026 target to increase throughput by another 15%.
Christopher D. Kastner: After delivering two ships in 2025, DDG-128 and SSN-798, we expect to deliver another two ships in 2026, SSN-800 and LPD-30, as well as complete preliminary acceptance of CVN-79. I'll note that we've accelerated our forecast of LPD-30 delivery into 2026 and adjusted LHA-8 Bougainville delivery to 2027. This ensures that we avoid any potential conflicts, people, or equipment, and establishes clear and consistent priorities for the joint Ingalls and Navy teams throughout all the interim milestones leading to delivery. Now, I'd like to update you on our operational initiatives. In 2025, we set out to improve throughput and achieve 14% year-over-year increase. As we continue to invest with our customer partner in our workforce, facilities, technology, and supply chain, we've established our 2026 target to increase throughput by another 15%.
Speaker #3: that we've accelerated our forecast of LPD-30 delivery into I'll note 2026 and adjusted LHAA Bougainville delivery to 2027. This ensures that we avoid any potential conflicts people or equipment and establishes clear and consistent priorities for the joint Ingalls and Navy teams throughout all the interim milestones leading delivery.
Speaker #3: that we've accelerated our forecast of LPD-30 delivery into I'll note 2026 and adjusted LHAA Bougainville delivery to 2027. This ensures that we avoid any potential conflicts people or equipment and establishes clear and consistent priorities for the joint Ingalls and Navy teams throughout all the interim milestones leading to Now I'd like to update you on our operational initiatives.
Speaker #3: In 2025, we set out to improve throughput and achieve 14% year-over-year increase. As we continue to invest with our customer partner, in our workforce, facilities, technology, and supply chain, we've established our 2026 target to increase throughput by another 15%.
Speaker #3: Supporting the throughput increase, we hired over 6,600 shipbuilders in 2025 and expect to hire at least this many in 2026. Given recent investments in wages and workforce, we expect continued improvement in our retention rate and we'll continue to develop our workforce to maximize productivity.
Chris Kastner: Supporting the throughput increase, we hired over 6,600 shipbuilders in 2025 and expect to hire at least this many in 2026. Given recent investments in wages and workforce, we expect continued improvement in our retention rate, and we'll continue to develop our workforce to maximize productivity. Also, we plan to continue to ramp our distributed shipbuilding strategy. While we've doubled outsourcing year-over-year in 2025, we are planning to increase outsourcing by another 30% in 2026. Our second operational initiative in 2025 was a cost reduction target of $250 million, which we met by removing mostly overhead and support labor costs for improved efficiency. Lastly, we expect several shipbuilding contract awards in 2026, including Virginia-class Block VI, Columbia build 2, CVN-75 RCOH, and CVN-82 long-lead material.
Christopher D. Kastner: Supporting the throughput increase, we hired over 6,600 shipbuilders in 2025 and expect to hire at least this many in 2026. Given recent investments in wages and workforce, we expect continued improvement in our retention rate, and we'll continue to develop our workforce to maximize productivity. Also, we plan to continue to ramp our distributed shipbuilding strategy. While we've doubled outsourcing year-over-year in 2025, we are planning to increase outsourcing by another 30% in 2026. Our second operational initiative in 2025 was a cost reduction target of $250 million, which we met by removing mostly overhead and support labor costs for improved efficiency. Lastly, we expect several shipbuilding contract awards in 2026, including Virginia-class Block VI, Columbia build 2, CVN-75 RCOH, and CVN-82 long-lead material.
Speaker #3: Also, we plan to continue to ramp our distributed shipbuilding strategy while we doubled outsourcing year-over-year in 2025. We are planning to increase outsourcing by another 30% in 2026.
Speaker #3: Our second operational initiative in 2025 was a cost reduction target of $250 million, which we met by removing mostly overhead and support labor costs for improved efficiency.
Speaker #3: Lastly, we expect several shipbuilding contract awards in 2026, including Virginia-class Block 6, Columbia Build 2, CVN 75 RCOH, and CVN 82 Longleaf Material. Regarding capital allocation, we have approach leading with reinvestments into our historically taken a very balanced shipyards.
Chris Kastner: Regarding capital allocation, we have historically taken a very balanced approach, leading with reinvestments into our shipyards. Stakeholders that have visited our yards have seen firsthand the tremendous amount of investment we have made over the past decade at both Ingalls and Newport News. In 2026, we will again target $ hundreds of millions of capital investment in the shipyards. Specifically, at Newport News, these projects include finishing a multipurpose carrier refueling and overhaul work center, making pier updates to support carrier inactivation, significant investments in manufacturing centers of excellence to support higher submarine throughput, and completion of the new parking garage that began construction in 2025. Now, I'd like to say a few words about guidance, and Tom will provide more detail in his remarks.
Christopher D. Kastner: Regarding capital allocation, we have historically taken a very balanced approach, leading with reinvestments into our shipyards. Stakeholders that have visited our yards have seen firsthand the tremendous amount of investment we have made over the past decade at both Ingalls and Newport News. In 2026, we will again target $ hundreds of millions of capital investment in the shipyards. Specifically, at Newport News, these projects include finishing a multipurpose carrier refueling and overhaul work center, making pier updates to support carrier inactivation, significant investments in manufacturing centers of excellence to support higher submarine throughput, and completion of the new parking garage that began construction in 2025. Now, I'd like to say a few words about guidance, and Tom will provide more detail in his remarks.
Speaker #3: Stakeholders that have visited our yards have seen firsthand the tremendous amount of investment we have made over the past decade at both Ingalls and Newport News.
Speaker #3: In 2026, we will again target hundreds of millions of dollars of capital investment in the shipyards. Specifically, at Newport News, these projects refueling and overhaul work include finishing a multipurpose carrier center, making pier updates to support carrier inactivation, significant investments in manufacturing centers of excellence to support higher submarine throughput, and completion of the new parking garage 2025.
Speaker #3: Now I'd like to say a few words about guidance, and Tom will provide more detail in his remarks. With our keen focus on execution, the progress made this past year the large investments in shipbuilding and the unprecedented demand for our products and services we are raising our medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6%.
Chris Kastner: With our keen focus on execution, the progress made this past year, the large investments in shipbuilding, and the unprecedented demand for our products and services, we are raising our medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6%. We did have some sales, driven by material timing, move into 2025 that were expected in 2026, so our current year outlook for shipbuilding revenues is between $9.7 and 9.9 billion, and shipbuilding margins in the range of 5.5% to 6.5%. For mission technologies, we expect revenues between $3 and 3.2 billion and margins of approximately 5%, with EBITDA margins between 8.4% and 8.6%. Our free cash flow outlook for 2026 is between $500 and 600 million. Turning to activities in Washington for a moment.
Christopher D. Kastner: With our keen focus on execution, the progress made this past year, the large investments in shipbuilding, and the unprecedented demand for our products and services, we are raising our medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6%. We did have some sales, driven by material timing, move into 2025 that were expected in 2026, so our current year outlook for shipbuilding revenues is between $9.7 and 9.9 billion, and shipbuilding margins in the range of 5.5% to 6.5%. For mission technologies, we expect revenues between $3 and 3.2 billion and margins of approximately 5%, with EBITDA margins between 8.4% and 8.6%. Our free cash flow outlook for 2026 is between $500 and 600 million. Turning to activities in Washington for a moment.
Speaker #3: have some sales driven by material timing move into We did 2026, so our current year outlook for shipbuilding revenues is between 9.7 and 9.9 billion.
Speaker #3: And shipbuilding margins in the range of 5.5 to 6.5%. For mission between 3 and 3.2 billion and margins of approximately 5%, with EBITDA margins between 8.4 and 8.6%.
Speaker #3: Our free cash flow outlook for 2026 is between 500 and 600 million. Turning to activities in Washington for a moment, Congress, on a bipartisan basis, passed a national defense authorization act for fiscal year 2026 in December.
Chris Kastner: Congress, on a bipartisan basis, passed the National Defense Authorization Act for fiscal year 2026 in December. The fiscal year 2026 NDAA strongly supports our shipbuilding programs, including incremental funding and block buy procurement authorization for CVNs 82 and 83, incremental funding and procurement authorization for up to five Columbia-class submarines, and continuous production authority for a range of Virginia-class components to optimize construction schedules and supply chain resilience. The fiscal year 2026 defense appropriation bill shows strong support for our programs. The bill includes continued incremental funding for CVNs 80 and 81, along with advanced procurement for CVN 82, continued funding for CVN 74, our COH, funding for the Virginia-class and Columbia-class submarine programs, advanced procurement for the DDG 51 program, and funding for long lead materials for the new frigate program.
Christopher D. Kastner: Congress, on a bipartisan basis, passed the National Defense Authorization Act for fiscal year 2026 in December. The fiscal year 2026 NDAA strongly supports our shipbuilding programs, including incremental funding and block buy procurement authorization for CVNs 82 and 83, incremental funding and procurement authorization for up to five Columbia-class submarines, and continuous production authority for a range of Virginia-class components to optimize construction schedules and supply chain resilience. The fiscal year 2026 defense appropriation bill shows strong support for our programs. The bill includes continued incremental funding for CVNs 80 and 81, along with advanced procurement for CVN 82, continued funding for CVN 74, our COH, funding for the Virginia-class and Columbia-class submarine programs, advanced procurement for the DDG 51 program, and funding for long lead materials for the new frigate program.
Speaker #3: 2026 NDAA strongly supports The fiscal year our shipbuilding programs including incremental funding and block-by procurement authorization for CVNs 82 and 83. Incremental funding and procurement authorization for up to five Columbia-class submarines and continuous production authority for a range of Virginia-class components to optimize construction schedules and supply chain resilience.
Speaker #3: The fiscal year 2026 defense appropriation bill shows strong support for our programs. The bill includes continued incremental funding for CVNs 80 and 81 along with 82, continued funding for advanced procurement for CVN CVN 74 RCOH, funding for the Virginia-class and Columbia-class submarine programs, advanced procurement for the DDG-51 program, and funding for Longleaf program.
Speaker #3: Combined with the shipbuilding funding provided in the budget reconciliation July 2025, the bill that was enacted into law on Materials for the new frigate continues the strong support for the shipbuilding industry.
Chris Kastner: Combined with the shipbuilding funding provided in the budget reconciliation bill that was enacted into law in July 2025, the FY 2026 defense appropriations bill continues the strong support for the shipbuilding industry. In summary, we've made meaningful progress over the past year and have increased throughput and improved execution. We must build on this momentum and continue to increase our shipbuilding throughput. The US Navy and all of our defense customers need our ships and technologies now more than ever. The global security environment demands that we operate with a sense of urgency and purpose that matches the seriousness of the threats our nation faces. Now, I will turn the call over to Tom for some remarks on our financial results and guidance. Tom?
Christopher D. Kastner: Combined with the shipbuilding funding provided in the budget reconciliation bill that was enacted into law in July 2025, the FY 2026 defense appropriations bill continues the strong support for the shipbuilding industry. In summary, we've made meaningful progress over the past year and have increased throughput and improved execution. We must build on this momentum and continue to increase our shipbuilding throughput. The US Navy and all of our defense customers need our ships and technologies now more than ever. The global security environment demands that we operate with a sense of urgency and purpose that matches the seriousness of the threats our nation faces. Now, I will turn the call over to Tom for some remarks on our financial results and guidance. Tom?
Speaker #3: In summary, we've made meaningful progress over the past year, and have increased throughput and improved execution. We must build on this momentum and continue to increase our shipbuilding throughput.
Speaker #3: The US our ships and technologies now more Navy and all of our defense customers need than ever. The global security environment demands that we operate with a sense of urgency and purpose that matches the seriousness of the threats our nation faces.
Speaker #3: Now I will turn the call over to Tom guidance. Tom?
Speaker #2: Thanks, Chris, and good morning. for some remarks on our financial results and Today, I'll results, and also provide some additional color regarding our outlook for 2026.
Tom Stiehle: Thanks, Chris, and good morning. Today, I'll review our fourth quarter and full year results and also provide some additional color regarding our outlook for 2026. For more detail on the segment results, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on slide 6, our fourth quarter revenues of $3.5 billion increased approximately 16% compared to the same period last year. The higher revenues were driven by growth at all three segments. Ingalls' fourth quarter 2025 revenues of $889 million increased $153 million, or 21% compared to the fourth quarter of 2024, driven primarily by higher volumes on amphibious assault ships and surface combatants.
Thomas E. Stiehle: Thanks, Chris, and good morning. Today, I'll review our fourth quarter and full year results and also provide some additional color regarding our outlook for 2026. For more detail on the segment results, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on slide 6, our fourth quarter revenues of $3.5 billion increased approximately 16% compared to the same period last year. The higher revenues were driven by growth at all three segments. Ingalls' fourth quarter 2025 revenues of $889 million increased $153 million, or 21% compared to the fourth quarter of 2024, driven primarily by higher volumes on amphibious assault ships and surface combatants.
Speaker #2: For more detail on the segment results, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on slide six, our fourth quarter of revenues of 3.5 billion increased approximately year.
Speaker #2: The higher revenues were driven by growth at all three segments. Ingalls' fourth quarter 16% compared to the same period last 2025 revenues of $889 million increased 153 million or 21% compared to the fourth quarter of 2024, driven primarily by higher volumes on amphibious assault ships and surface combatants at Newport News, fourth quarter 2025 revenues of $1.9 billion increased 303 million or 19% from the fourth quarter of and aircraft due to higher volumes in both submarines carriers.
Tom Stiehle: At Newport News, Q4 2025 revenues of $1.9 billion increased $303 million, or 19% from Q4 2024, primarily due to higher volumes in both submarines and aircraft carriers. At Mission Technologies, Q4 2025 revenues of $731 million increased $18 million, or 2.5% from Q4 2024, primarily driven by higher volumes in warfare systems, global security, and unmanned systems. Moving to slide 7. Segment operating income for the quarter was $195 million, and segment operating margin was 5.6%. This compares to $103 million and 3.4%, respectively, in Q4 2024.
Thomas E. Stiehle: At Newport News, Q4 2025 revenues of $1.9 billion increased $303 million, or 19% from Q4 2024, primarily due to higher volumes in both submarines and aircraft carriers. At Mission Technologies, Q4 2025 revenues of $731 million increased $18 million, or 2.5% from Q4 2024, primarily driven by higher volumes in warfare systems, global security, and unmanned systems. Moving to slide 7. Segment operating income for the quarter was $195 million, and segment operating margin was 5.6%. This compares to $103 million and 3.4%, respectively, in Q4 2024.
Speaker #2: At Mission Technologies, fourth quarter 2025 revenues of $731 million 2024, primarily increased 18 million or 2.5% from the fourth quarter of 2024, primarily driven by higher volumes in warfare systems.
Speaker #2: Moving to slide systems global security and unmanned quarter was $195 million, and segment operating margin was 5.6%. This compares to $103 million and 3.4% respectively in the fourth quarter of 2024.
Speaker #2: Results at all three segments improved compared to the fourth quarter of fourth quarter 2025 operating 2024. income of $68 million and Ingalls' margin of 7.6% compared to $46 million and 6.3% respectively in the fourth quarter of 2024.
Tom Stiehle: Results at all three segments improved compared to the Q4 2024. Ingalls' Q4 2025 operating income of $68 million and margin of 7.6% compares to $46 million and 6.3%, respectively, in the Q4 2024. The improvement was due to the higher volumes I noted, as well as lower unfavorable cumulative adjustments for amphibious assault ships and surface combatants compared to the Q4 2024. Newport News' Q4 2025 operating income of $84 million and margin of 4.4% compares to $38 million and 2.4%, respectively, in the Q4 2024.
Thomas E. Stiehle: Results at all three segments improved compared to the Q4 2024. Ingalls' Q4 2025 operating income of $68 million and margin of 7.6% compares to $46 million and 6.3%, respectively, in the Q4 2024. The improvement was due to the higher volumes I noted, as well as lower unfavorable cumulative adjustments for amphibious assault ships and surface combatants compared to the Q4 2024. Newport News' Q4 2025 operating income of $84 million and margin of 4.4% compares to $38 million and 2.4%, respectively, in the Q4 2024.
Speaker #2: The improvement was due to the higher lower unfavorable cumulative adjustments for amphibious assault ships and surface combatants compared to the fourth quarter of 2024.
Speaker #2: volumes noted as well as Newport operating income of $84 million and margin of 4.4% compares to $38 million and 2.4% respectively in the fourth News' fourth quarter 2025 quarter of 2024.
Speaker #2: you recall, these results are If lapping the fourth quarter of 2024, which included unfavorable cumulative adjustments for Virginia-class submarines and new carrier construction as well as contract incentives related to the Columbia-class program.
Tom Stiehle: If you recall, these results are lapping the Q4 2024, which included unfavorable cumulative adjustments for Virginia-class submarines and new carrier construction, as well as contract incentives related to the Columbia-class program. Q4 2025 results also include favorable contract adjustments on the Virginia-class program. Shipbuilding margin for the Q4 2025 was 5.5%. Mission Technologies' Q4 2025 operating income of $43 million, and segment operating margin of 5.9% compares to $19 million and 2.7%, respectively, in the Q4 2024. The improvement was driven by better performance in warfare systems, global security, and unmanned systems, as well as the higher Mission Technologies volume I noted earlier.
Thomas E. Stiehle: If you recall, these results are lapping the Q4 2024, which included unfavorable cumulative adjustments for Virginia-class submarines and new carrier construction, as well as contract incentives related to the Columbia-class program. Q4 2025 results also include favorable contract adjustments on the Virginia-class program. Shipbuilding margin for the Q4 2025 was 5.5%. Mission Technologies' Q4 2025 operating income of $43 million, and segment operating margin of 5.9% compares to $19 million and 2.7%, respectively, in the Q4 2024. The improvement was driven by better performance in warfare systems, global security, and unmanned systems, as well as the higher Mission Technologies volume I noted earlier.
Speaker #2: Fourth quarter include favorable contract adjustments on the 2025 results also Virginia-class program. Shipbuilding margin for the fourth quarter of 2025 was 5.5%. Mission Technologies' fourth quarter 2025 operating income of $43 million and segment operating margin to $19 million and of 5.9% compares 2.7% respectively in the fourth quarter of 2024.
Speaker #2: improvement was driven by better performance in The warfare systems global security and unmanned systems as well as the high emission technologies volume I noted earlier.
Speaker #2: Net earnings in the quarter were $159 million compared to $123 million in the fourth quarter of last year. Diluted earnings per share in the quarter were $4.04, compared to $3.15 in the fourth quarter of the previous results for 2025 on slide eight, revenues of year.
Tom Stiehle: Net earnings in the quarter were $159 million, compared to $123 million in Q4 of last year. Diluted earnings per share in the quarter were $4.04, compared to $3.15 in Q4 of the previous year. Moving on to consolidated results for 2025 on slide 8. Revenues of $12.5 billion increased $949 million, or 8.2% compared to 2024. While each segment contributed to the higher revenue, growth was particularly strong at Ingalls and Newport News Shipbuilding. Ingalls revenues of $3.1 billion in 2025 increased $311 million, or 11.2% from 2024, driven primarily by higher volumes in surface combatants and amphibious assault ships.
Thomas E. Stiehle: Net earnings in the quarter were $159 million, compared to $123 million in Q4 of last year. Diluted earnings per share in the quarter were $4.04, compared to $3.15 in Q4 of the previous year. Moving on to consolidated results for 2025 on slide 8. Revenues of $12.5 billion increased $949 million, or 8.2% compared to 2024. While each segment contributed to the higher revenue, growth was particularly strong at Ingalls and Newport News Shipbuilding. Ingalls revenues of $3.1 billion in 2025 increased $311 million, or 11.2% from 2024, driven primarily by higher volumes in surface combatants and amphibious assault ships.
Speaker #2: $12.5 billion increased. Moving on to consolidated, $949 million or 8.2% compared to 2024. While each segment contributed to the higher revenue, growth was particularly strong at Ingalls and Newport News Shipbuilding.
Speaker #2: Ingalls' revenues of $3.1 billion in 2025 increased $311 million or 11.2% from 2024, driven primarily by higher volumes in surface combatants and amphibious assault billion increased by 2025 revenues of $6.5 $538 million or 9% from 2024, due to higher volumes in both submarines and aircraft carriers.
Tom Stiehle: At Newport News, 2025 revenues of $6.5 billion increased by $538 million, or 9% from 2024, due to higher volumes in both submarines and aircraft carriers. At Mission Technologies, 2025 revenues of $3 billion increased $107 million, or 3.6% from 2024, primarily driven by higher volumes in warfare systems, global security, and unmanned systems. Moving to Slide 9, segment operating income for the year was $717 million, and segment operating margin was 5.7%. This compares to $573 million and 5%, respectively, in 2024. Ingalls operating income of $233 million and margin of 7.6% in 2025 compares to $211 million and 7.6%, respectively, in 2024.
Thomas E. Stiehle: At Newport News, 2025 revenues of $6.5 billion increased by $538 million, or 9% from 2024, due to higher volumes in both submarines and aircraft carriers. At Mission Technologies, 2025 revenues of $3 billion increased $107 million, or 3.6% from 2024, primarily driven by higher volumes in warfare systems, global security, and unmanned systems. Moving to Slide 9, segment operating income for the year was $717 million, and segment operating margin was 5.7%. This compares to $573 million and 5%, respectively, in 2024. Ingalls operating income of $233 million and margin of 7.6% in 2025 compares to $211 million and 7.6%, respectively, in 2024.
Speaker #2: At Mission Technologies, 2025 revenues of $3 billion increased $107 million, or 3.6%, from 2024, with Warfare Systems Global primarily driven by higher volumes in security and unmanned systems.
Speaker #2: Moving to slide nine, segment operating income for the year was $717 million and segment operating margin was 5.7%. This compares to $573 million and 5%, respectively, in 2024.
Speaker #2: Ingalls' operating income of $233 million and margin of 7.6% in 2025 compares to $211 million and 7.6% respectively in 2024. The increase in operating income was primarily driven by the higher volumes noted earlier and favorable contract adjustments in surface combatants, partially offset by lower ships.
Tom Stiehle: The increase in operating income was primarily driven by the higher volumes noted earlier and favorable contract adjustments in surface combatants, partially offset by lower performance in amphibious assault ships. Newport News' 2025 operating income of $331 million and margin of 5.1% compares to $246 million and 4.1%, respectively, in 2024. The increases were primarily driven by favorable contract adjustments in the Virginia-class submarine program, partially offset by contract adjustments and incentives in 2024, the aircraft carrier refueling and complex overhaul program. Shipbuilding margin for 2025 was 5.9%, within the guidance range we provided for the year and consistent with my commentary on our last earnings call. This represents a 70 basis point improvement over 2024's results. Net cumulative adjustments for the year were negative $28 million.
Thomas E. Stiehle: The increase in operating income was primarily driven by the higher volumes noted earlier and favorable contract adjustments in surface combatants, partially offset by lower performance in amphibious assault ships. Newport News' 2025 operating income of $331 million and margin of 5.1% compares to $246 million and 4.1%, respectively, in 2024. The increases were primarily driven by favorable contract adjustments in the Virginia-class submarine program, partially offset by contract adjustments and incentives in 2024, the aircraft carrier refueling and complex overhaul program. Shipbuilding margin for 2025 was 5.9%, within the guidance range we provided for the year and consistent with my commentary on our last earnings call. This represents a 70 basis point improvement over 2024's results. Net cumulative adjustments for the year were negative $28 million.
Speaker #2: Newport News' 2025 operating income of performance in amphibious assault $331 million and margin of 5.1% compares to $246 million and 4.1% respectively in 2024.
Speaker #2: The increases were primarily driven by favorable contract adjustments in the Virginia-class submarine program, partially offset by contract adjustments and incentives in 2024 in the aircraft carrier refueling and complex overhaul program.
Speaker #2: Shipbuilding margin for 2025 was 5.9%, within the guidance range we provided for the year and consistent with my commentary on our last earnings call.
Speaker #2: This represents a 70 basis point improvement over 2024's results. Net cumulative adjustments for the year were negative $28 million. Newport News' net cumulative adjustments was negative $64 million, which included adjustments related to CVN-80 and CVN-81 carrier construction.
Tom Stiehle: Newport News' net cumulative adjustments was negative $64 million, which included adjustments related to CVN-80 and CVN-81 carrier construction. The negative Newport News cumulative adjustment was partially offset by positive net cumulative adjustments at Ingalls of approximately $16 million and Mission Technologies of approximately $20 million. Moving on, Mission Technologies' 2025 operating income of $153 million and segment operating margin of 5%, both improved from $116 million and 3.9%, respectively, in 2024. The improvement was driven primarily by the lower purchased intangible amortization, better performance in warfare systems, as well as higher revenue volumes noted earlier. Mission Technologies' 2025 results included approximately $89 million of amortization of purchased intangible assets, compared to approximately $99 million in 2024.
Thomas E. Stiehle: Newport News' net cumulative adjustments was negative $64 million, which included adjustments related to CVN-80 and CVN-81 carrier construction. The negative Newport News cumulative adjustment was partially offset by positive net cumulative adjustments at Ingalls of approximately $16 million and Mission Technologies of approximately $20 million. Moving on, Mission Technologies' 2025 operating income of $153 million and segment operating margin of 5%, both improved from $116 million and 3.9%, respectively, in 2024. The improvement was driven primarily by the lower purchased intangible amortization, better performance in warfare systems, as well as higher revenue volumes noted earlier. Mission Technologies' 2025 results included approximately $89 million of amortization of purchased intangible assets, compared to approximately $99 million in 2024.
Speaker #2: The negative Newport News cumulative adjustment was partially offset by positive net cumulative adjustments at Ingalls of approximately $16 million and Mission Technologies of approximately $20 million.
Speaker #2: Moving on, Mission Technologies' 2025 operating income of $153 million and segment operating margin of 5% both improved from $116 million and 3.9% respectively in 2024.
Speaker #2: The improvement was driven primarily by the lower purchase intangible amortization better performance in warfare systems as well as higher revenue volumes noted earlier. Mission Technologies' 2025 results included approximately $89 million of amortization of purchase intangible assets compared to approximately $99 million in 2024.
Speaker #2: Mission Technologies' EBITDA margin for 2025 was 8.6%, up from 7.9% in 2024. Net earnings in 2025 were $605 million compared to $550 million in 2024.
Tom Stiehle: Mission Technologies' EBITDA margin for 2025 was 8.6%, up from 7.9% in 2024. Net earnings in 2025 were $605 million, compared to $550 million in 2024. Diluted earnings per share in 2025 were $15.39, compared to $13.96 in 2024. Turning to cash flow on Slide 10, 2025 free cash flow was $800 million, above the guidance range we had provided for the year, as we finished the year very strong from a working capital position, slightly underran our planned capital expenditures for the year. During the year, the company invested $396 million in capital expenditures, or 3.2% of sales, as we continued to prioritize investments to drive higher throughput in our shipyards.
Thomas E. Stiehle: Mission Technologies' EBITDA margin for 2025 was 8.6%, up from 7.9% in 2024. Net earnings in 2025 were $605 million, compared to $550 million in 2024. Diluted earnings per share in 2025 were $15.39, compared to $13.96 in 2024. Turning to cash flow on Slide 10, 2025 free cash flow was $800 million, above the guidance range we had provided for the year, as we finished the year very strong from a working capital position, slightly underran our planned capital expenditures for the year. During the year, the company invested $396 million in capital expenditures, or 3.2% of sales, as we continued to prioritize investments to drive higher throughput in our shipyards.
Speaker #2: Diluted earnings per share in 2025 were $15.39 compared to $13.96 in flow on slide 10, 2025 free cash flow was $800 million above the guidance range we had provided for the year as we finished the year very strong from a working capital position and slightly under-ran our planned capital expenditures for the 2024.
Speaker #2: invested $396 million in capital expenditures or 3.2% of sales as we continued to year. higher throughput in our During the year, the company shipyards.
Speaker #2: We paid prioritize investments to drive dividends totaling $213 million in a year and did not repurchase any Turning to cash shares during the year.
Tom Stiehle: We paid dividends totaling $213 million in the year and did not repurchase any shares during the year. We ended 2025 with $774 million in cash and cash equivalents on hand and liquidity of approximately $2.5 billion. Cash contributions to our pension and other post-retirement benefit plans totaled $54 million in 2025. You can find our updated 5-year pension outlook in the appendix of today's presentation on Slide 14. Turning to Slide 11 and our financial outlook. First, I will highlight that the guidance we are providing today is predicated on achieving the shipbuilding throughput improvements that we've outlined, as well as reaching agreement on the next Virginia-class and Columbia-class submarine contracts in the first half of the year. Regarding our multiyear targets, we are updating the medium-term growth targets that we have provided previously.
Thomas E. Stiehle: We paid dividends totaling $213 million in the year and did not repurchase any shares during the year. We ended 2025 with $774 million in cash and cash equivalents on hand and liquidity of approximately $2.5 billion. Cash contributions to our pension and other post-retirement benefit plans totaled $54 million in 2025. You can find our updated 5-year pension outlook in the appendix of today's presentation on Slide 14. Turning to Slide 11 and our financial outlook. First, I will highlight that the guidance we are providing today is predicated on achieving the shipbuilding throughput improvements that we've outlined, as well as reaching agreement on the next Virginia-class and Columbia-class submarine contracts in the first half of the year. Regarding our multiyear targets, we are updating the medium-term growth targets that we have provided previously.
Speaker #2: We ended 2025 with $774 million in cash and cash equivalents on hand, and liquidity of approximately $2.5 billion. Cash contributions to our pension and other post-retirement benefit plans totaled $54 million in 2025.
Speaker #2: You can find our updated five-year pension outlook in the appendix of today's presentation on slide 14. Turning to slide 11 and our financial outlook, first, I will highlight that the guidance we are providing today is predicated on achieving the shipbuilding throughput improvements that we've outlined as well as reaching agreement on the next Virginia and Columbia-class submarine contracts in the first half of the year.
Speaker #2: Regarding our multi-year targets, we are updating the medium-term growth targets that we have provided previously. We now expect the consolidated HII medium-term top-line CAGR of approximately 6%.
Tom Stiehle: We now expect a consolidated HII medium-term top-line CAGR of approximately 6%. This is comprised of shipbuilding growth of approximately 6% and Mission Technologies growth of approximately 5%. We believe this shipbuilding growth has additional upside, as the forecast does not yet account for the recently announced frigate battleship programs. We will need to revisit these growth assumptions once we have a better understanding how each of these programs will proceed forward. Regarding our 2026 expectations, Chris provided our outlook, but let me provide a bit more color on our free cash flow expectations for the year. We expect 2026 free cash flow of between $500 and $600 million.
Thomas E. Stiehle: We now expect a consolidated HII medium-term top-line CAGR of approximately 6%. This is comprised of shipbuilding growth of approximately 6% and Mission Technologies growth of approximately 5%. We believe this shipbuilding growth has additional upside, as the forecast does not yet account for the recently announced frigate battleship programs. We will need to revisit these growth assumptions once we have a better understanding how each of these programs will proceed forward. Regarding our 2026 expectations, Chris provided our outlook, but let me provide a bit more color on our free cash flow expectations for the year. We expect 2026 free cash flow of between $500 and $600 million.
Speaker #2: This is comprised of shipbuilding growth of approximately 6% and Mission Technologies growth of approximately 5%. growth has additional upside as We believe this shipbuilding the forecast does not yet account for the recently announced frigate or battleship programs.
Speaker #2: We will need to revisit these growth assumptions once we have a better understanding on each of these programs we'll proceed forward. Regarding our 2026 expectations, Chris provided our outlook but let me provide a bit more color on our free cash flow expectation for the year.
Speaker #2: 2026 free cash flow of We expect between $500 and $600 million, at the midpoint that puts combined 2025 and 2026 free cash flow at $1.35 billion in increase from the $1.2 billion target we discussed last quarter for the two-year projection.
Tom Stiehle: At the midpoint, that puts combined 2025 and 2026 free cash flow at $1.35 billion, an increase from the $1.2 billion target we discussed last quarter for the two-year projection. As I noted earlier, we finished 2025 very strong from a working capital perspective. Overall, working capital was a tailwind of approximately $170 million in 2025. We think careful working capital management, along with beneficial cash tax impacts from the one big beautiful bill, will continue to be a cash tailwind in 2026. As Chris mentioned, we continue to prioritize strategic capital investments into our shipyards. We expect 2026 capital expenditures to be approximately 4% to 5% of sales.
Thomas E. Stiehle: At the midpoint, that puts combined 2025 and 2026 free cash flow at $1.35 billion, an increase from the $1.2 billion target we discussed last quarter for the two-year projection. As I noted earlier, we finished 2025 very strong from a working capital perspective. Overall, working capital was a tailwind of approximately $170 million in 2025. We think careful working capital management, along with beneficial cash tax impacts from the one big beautiful bill, will continue to be a cash tailwind in 2026. As Chris mentioned, we continue to prioritize strategic capital investments into our shipyards. We expect 2026 capital expenditures to be approximately 4% to 5% of sales.
Speaker #2: As I noted earlier, we finished 2025 very strong from a working capital perspective. Overall, working capital was a tailwind of approximately $170 million in 2025.
Speaker #2: We think careful working capital management along with beneficial cash tax impacts from the One Big Beautiful Bill will continue to be a cash tailwind in 2026.
Speaker #2: As Chris mentioned, we continue to prioritize strategic capital investments into our shipyards. We expect 2026 capital expenditures to be approximately $4 to $5% of sales.
Speaker #2: This represents approximately $500 to $600 million of investment to drive capacity and throughput. You can find additional 2026 guidance elements on the 2026 outlook table on slide 11 of the presentation or in the earnings release.
Tom Stiehle: This represents approximately $500 to 600 million of investment to drive capacity and throughput. You can find additional 2026 guidance elements on the 2026 outlook table on Slide 11 of the presentation or in the earnings release. This includes an anticipated 2026 effective tax rate of approximately 17%. This lower tax rate is primarily attributable to an expected reduction in total tax expense related to research and development tax credits. Turning to our provided look ahead for Q1 2026, we expect approximately $2.3 billion for shipbuilding revenues and $700 to 750 million of mission technologies revenues, with shipbuilding operating margin near 5.5% and mission technologies operating margin up between 4 and 4.5%.
Thomas E. Stiehle: This represents approximately $500 to 600 million of investment to drive capacity and throughput. You can find additional 2026 guidance elements on the 2026 outlook table on Slide 11 of the presentation or in the earnings release. This includes an anticipated 2026 effective tax rate of approximately 17%. This lower tax rate is primarily attributable to an expected reduction in total tax expense related to research and development tax credits. Turning to our provided look ahead for Q1 2026, we expect approximately $2.3 billion for shipbuilding revenues and $700 to 750 million of mission technologies revenues, with shipbuilding operating margin near 5.5% and mission technologies operating margin up between 4 and 4.5%.
Speaker #2: This includes an anticipated 2026 effective tax rate of approximately 17%. This lower tax rate is primarily attributable to an expected reduction in total tax expense related to research and development tax credits.
Speaker #2: Turning to our provided look ahead for the first quarter of 2026, we expect approximately $2.3 billion for shipbuilding revenues and $7 to $750 million of Mission Technologies revenues.
Speaker #2: With shipbuilding operating margin near $5.5% and Mission Technologies operating margin of between $4 and $4.5%. Consistent with normal cash flow cadence, we expect first quarter free cash flow to be negative representing a use of approximately $600 million as some of the fourth quarter working capital benefit unwinds.
Tom Stiehle: Consistent with normal cash flow cadence, we expect Q1 free cash flow to be negative, representing a use of approximately $600 million as some of the Q4 working capital benefit unwinds. To close my remarks and echo Chris's comments, we have exited 2025 with good momentum and are focused on a clear set of goals and objectives for 2026 that are aligned to our customers' needs and our national security, while continuing to create value for the HII enterprise. With that, I'll turn the call back over to Kristi for Q&A.
Thomas E. Stiehle: Consistent with normal cash flow cadence, we expect Q1 free cash flow to be negative, representing a use of approximately $600 million as some of the Q4 working capital benefit unwinds. To close my remarks and echo Chris's comments, we have exited 2025 with good momentum and are focused on a clear set of goals and objectives for 2026 that are aligned to our customers' needs and our national security, while continuing to create value for the HII enterprise. With that, I'll turn the call back over to Kristi for Q&A.
Speaker #1: To close my remarks and echo Chris's comments, we have exited 2025 with good momentum. And our focus on a clear set of goals and objectives for 2026 that are aligned to our customers' needs and our national security while continuing to create value for the HII enterprise.
Speaker #1: With that, I'll turn the call back over to Christie for Q&A.
Speaker #3: Thanks, Tom. As a reminder to everyone on the call, please limit yourself to one initial question and one follow-up so we can get as many people through the queue as possible.
Kristi Thomas: Thanks, Tom. As a reminder to everyone on the call, please limit yourself to one initial question and one follow-up, so we can get as many people through the queue as possible. Operator, I will turn it over to you to manage the Q&A.
Christie Thomas: Thanks, Tom. As a reminder to everyone on the call, please limit yourself to one initial question and one follow-up, so we can get as many people through the queue as possible. Operator, I will turn it over to you to manage the Q&A.
Speaker #3: Operator, I will turn it over to you to manage the Q&A.
Speaker #4: Thank you, Christie. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two.
Operator: Thank you, Kristi. To ask a question, please press Star, followed by one on your telephone keypad now. If you change your mind, please press Star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Robert Stallard from Vertical Research. Your line is now open. Please go ahead.
Operator: Thank you, Kristi. To ask a question, please press Star, followed by one on your telephone keypad now. If you change your mind, please press Star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Robert Stallard from Vertical Research. Your line is now open. Please go ahead.
Speaker #4: When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Robert Stallett from Vertical Research. Your line is now open.
Speaker #4: Please go ahead.
Speaker #1: Thanks so much. Good
Robert Stallard: Thanks so much. Good morning.
Robert Stallard: Thanks so much. Good morning.
Speaker #1: morning.
Speaker #5: Good
Speaker #5: morning. Good morning.
Tom Stiehle: Morning.
Thomas E. Stiehle: Morning.
Kristi Thomas: Morning.
Christopher D. Kastner: Morning.
Robert Stallard: Chris, I'd like to follow up on those productivity numbers that you gave, the 14% progress in 2025. I was wondering if the performance there was the same across the various shipbuilding programs, and then how much more is needed, for example, on the Virginia-class, if you're going to get consistently to 2 a year?
Speaker #1: Chris, I'd like to follow up on those productivity numbers that you gave for 2025. I was wondering if the performance there was the same across the various shipbuilding programs.
Robert Stallard: Chris, I'd like to follow up on those productivity numbers that you gave, the 14% progress in 2025. I was wondering if the performance there was the same across the various shipbuilding programs, and then how much more is needed, for example, on the Virginia-class, if you're going to get consistently to 2 a year?
Speaker #1: And then how much more is needed for, example, on the Virginia-class if you're going to get consistently to two a year?
Speaker #5: Yeah, it was pretty broad-based. Improvement across the programs. The Virginia-class program actually did very well in 2025. Remember, those schedules were reset post-COVID. So there's an incremental walk-up in throughput required to get to the two Virginia-class per year.
Kristi Thomas: Yeah, it was, it was pretty broad-based improvement across, across the programs. The Virginia-class program actually did very well in 2025. Remember, those schedules were reset post-COVID. So there's an incremental walk up in throughput required to get to the, the 2 Virginia-class per year. But they had a very good, good year last year, but it was really broad-based improvement across the portfolio, both at Newport News and Ingalls.
Christopher D. Kastner: Yeah, it was, it was pretty broad-based improvement across, across the programs. The Virginia-class program actually did very well in 2025. Remember, those schedules were reset post-COVID. So there's an incremental walk up in throughput required to get to the, the 2 Virginia-class per year. But they had a very good, good year last year, but it was really broad-based improvement across the portfolio, both at Newport News and Ingalls.
Speaker #5: But they had a very good year last year but it was really the portfolio, both at Newport News and Ingalls. broad-based improvement across
Speaker #1: Okay. And then quickly, as a follow-up, you mentioned that there's a step up in CAPEX this year. How do you expect the long-term CAPEX to progress from here?
Robert Stallard: Okay. And then quickly, as a follow-up, you mentioned that there's a step up in CapEx this year. How do you expect the long-term CapEx to progress from here? Do you expect it to remain around 4% of sales going forward?
Robert Stallard: Okay. And then quickly, as a follow-up, you mentioned that there's a step up in CapEx this year. How do you expect the long-term CapEx to progress from here? Do you expect it to remain around 4% of sales going forward?
Speaker #1: Do you expect it to remain around 4% of sales going forward?
Speaker #1: forward? Well, we don't have
Tom Stiehle: Well, we don't have guidance beyond this year yet, Rob, but I do expect it to continue to be elevated simply because there's such opportunity out there. Tom, I don't know if you want to give any more additional details related to that, but I, I do expect it to continue to be elevated and but we're not going to provide provide additional guidance at this point.
Christopher D. Kastner: Well, we don't have guidance beyond this year yet, Rob, but I do expect it to continue to be elevated simply because there's such opportunity out there. Tom, I don't know if you want to give any more additional details related to that, but I, I do expect it to continue to be elevated and but we're not going to provide provide additional guidance at this point.
Speaker #5: guidance beyond this year yet, Rob. But I do expect it to continue to be elevated simply because there's such opportunity out there. Tom, I don't know if you want to give any more additional details related to that, but I do expect it to continue to be elevated.
Speaker #5: And but we're not going to provide additional guidance at this
Speaker #5: And but we're not going to provide additional guidance at this point.
Kristi Thomas: That's right, Chris. I just comment on that, and as he says, there's opportunity. The awards are plentiful going forward, and obviously that's going to drive the top line. There's going to be a need for capital and investments, both from our Navy partner and ourselves in that. So I haven't provided that yet, but I would expect it to be higher than where we've been in the past and probably consistent with where we are right now going forward in 2026.
Thomas E. Stiehle: That's right, Chris. I just comment on that, and as he says, there's opportunity. The awards are plentiful going forward, and obviously that's going to drive the top line. There's going to be a need for capital and investments, both from our Navy partner and ourselves in that. So I haven't provided that yet, but I would expect it to be higher than where we've been in the past and probably consistent with where we are right now going forward in 2026.
Speaker #2: I'll just comment on that. That's right, Chris. And as he says, there's opportunity—the awards are plentiful going forward. And there's going to be a need for capital, and obviously, that's going to drive the top line. There's going to be investments both from our Navy partner and ourselves in that.
Speaker #2: So, I haven't provided that yet, but I would expect it to be higher than where we've been in the past, and probably consistent with where we are right now going forward in 2026.
Speaker #1: Okay. That's great. Thanks so
Robert Stallard: Okay, that's great. Thanks so much.
Robert Stallard: Okay, that's great. Thanks so much.
Speaker #1: much.
Tom Stiehle: Thanks, Rob.
Thomas E. Stiehle: Thanks, Rob.
Speaker #4: Thank you, Robert. Our next question is from Doug Horn from Bernstein. Your line is now open. Please go
Operator: Thank you, Robert. Our next question is from Doug Harned of Bernstein. Your line is now open. Please go ahead.
Operator: Thank you, Robert. Our next question is from Doug Harned of Bernstein. Your line is now open. Please go ahead.
Speaker #4: ahead. Good morning.
Doug Harned: Good morning. Thank you. You know, you got,
Douglas Harned: Good morning. Thank you. You know, you got,
Speaker #7: Thank you.
Speaker #1: Morning,
Speaker #1: Rob. Yeah, good morning.
Tom Stiehle: Good morning.
Thomas E. Stiehle: Good morning.
Doug Harned: Yeah, good morning. So, so you saw in a really good revenue growth in Q4, and, you know, both, both yards. And in Newport News, though, your margins are still pretty low. You know, Tom, you mentioned the, the two negative EACs on the CVN program. But when you look across the programs at Newport News, my, my assumption is you're working hard to get those margins higher. How do you see, each of the programs in terms of their ability to improve and, and get to the goals that you're really looking for longer term?
Thomas E. Stiehle: Yeah, good morning.
Douglas Harned: So, so you saw in a really good revenue growth in Q4, and, you know, both, both yards. And in Newport News, though, your margins are still pretty low. You know, Tom, you mentioned the, the two negative EACs on the CVN program. But when you look across the programs at Newport News, my, my assumption is you're working hard to get those margins higher. How do you see, each of the programs in terms of their ability to improve and, and get to the goals that you're really looking for longer term?
Speaker #7: So you saw in a really good revenue growth in Q4. And both yards. And Newport News, though, your margins are still pretty low. Tom, you mentioned the two negative EACs on the CVN program.
Speaker #7: But when you look across the programs at Newport News, my assumption is you're working hard to get those margins higher. How do you see each of the programs in terms of their ability to improve and get to the goals that you're really looking long term?
Speaker #6: I Newport News and the appreciate the question there. Yeah. So when we look at stable, the booking rates obviously, we want to get those up right there.
Kristi Thomas: Appreciate the question there. Yeah, so when we look at Newport News and the EACs are stable, the booking rates, obviously, we want to get those up right there. That's going to be a function, as we've described in the past, of working off the existing portfolio we have right now. We have these pre-COVID ships that have been impacted by schedule and inefficiency, and as those continue to evolve out, we talk about the portfolio in 2027 becoming more post than pre-COVID. That's going to assist in that list. I believe, you know, what we've done in wages and what we've done in contract adjustments, some change management REAs that we have in that will assist in that too. A piece of what we're seeing at Newport News, fairly consistent across all four quarters there.
Christopher D. Kastner: Appreciate the question there. Yeah, so when we look at Newport News and the EACs are stable, the booking rates, obviously, we want to get those up right there. That's going to be a function, as we've described in the past, of working off the existing portfolio we have right now. We have these pre-COVID ships that have been impacted by schedule and inefficiency, and as those continue to evolve out, we talk about the portfolio in 2027 becoming more post than pre-COVID. That's going to assist in that list. I believe, you know, what we've done in wages and what we've done in contract adjustments, some change management REAs that we have in that will assist in that too. A piece of what we're seeing at Newport News, fairly consistent across all four quarters there.
Speaker #6: It's going to be a function, as we've described in the past, of working off the existing portfolio we have right now. And we have these pre-COVID ships that have been impacted by schedule and inefficiency.
Speaker #6: And as those continue to evolve out, we talk about becoming more post- and pre-COVID. That's going to assist in that lift. I believe what we've done in wages and what we've done in contract adjustments some change management REAs that we have in that will assist in that too.
Speaker #6: A piece of what we're seeing at Newport News, fairly consistent across all four quarters there, it's just a mix of the portfolio itself, contract type, additional work scope that we have.
Kristi Thomas: It's just a mix of the portfolio itself, contract type, some additional work scope that we have. The growth, which is good on the top line, is coming about both in labor and material, but on the material side, it's hitting contracts that need an Advanced Procurement, which have restrictions on margins and fee right now. And then as we kind of work ourselves forward and definitize either those contracts or new contract awards, we'll see, you know, a moderate ramp and either fee on the existing contracts or incentives that can come in place on the new awards there. So that's the playbook going forward. We're working hard to kind of stabilize performance. We've seen, you know, improvement in hiring, attrition, moderately, improvements in rework.
Christopher D. Kastner: It's just a mix of the portfolio itself, contract type, some additional work scope that we have. The growth, which is good on the top line, is coming about both in labor and material, but on the material side, it's hitting contracts that need an Advanced Procurement, which have restrictions on margins and fee right now. And then as we kind of work ourselves forward and definitize either those contracts or new contract awards, we'll see, you know, a moderate ramp and either fee on the existing contracts or incentives that can come in place on the new awards there. So that's the playbook going forward. We're working hard to kind of stabilize performance. We've seen, you know, improvement in hiring, attrition, moderately, improvements in rework.
Speaker #6: The growth, which is good on the top line, is coming about both in labor and material, but on the contracts at either advanced procurement, on margins and fee right now, and then as we kind of work ourselves forward and definitize either of those contracts or new contract awards, we'll see a moderate ramp in either fee on the existing contracts or incentives that can come in place on the new awards there.
Speaker #6: So that's the playbook going forward. We're working hard to kind of stabilize performance. We've seen improvement in hiring attrition moderately improvements in EACs making our milestones working off the existing portfolio and getting into those new start contracts.
Kristi Thomas: So it's a stabilization, EAC, making our milestones, working off the existing portfolio, and getting into those new start contracts.
Christopher D. Kastner: So it's a stabilization, EAC, making our milestones, working off the existing portfolio, and getting into those new start contracts.
Doug Harned: ... Well, you know, when you look at, you've got a lot of money, you know, for the industrial base off those last two Block V boats, and as you commented, the 2026 budget has really, in a big support for shipbuilding. One of the things that, you know, we found challenging is money can be there, but it's getting it through the throughput that you're talking about. You know, right now, you've probably seen a lot of the commentary about a pretty significant addition to the 2027 budget, potentially, which could include money for the industrial base.
Douglas Harned: ... Well, you know, when you look at, you've got a lot of money, you know, for the industrial base off those last two Block V boats, and as you commented, the 2026 budget has really, in a big support for shipbuilding. One of the things that, you know, we found challenging is money can be there, but it's getting it through the throughput that you're talking about. You know, right now, you've probably seen a lot of the commentary about a pretty significant addition to the 2027 budget, potentially, which could include money for the industrial base.
Speaker #7: at when you look at you've got a lot of money for the industrial base off those last two block five boats. And as you commented, the 26 budget has really big support for shipbuilding.
Speaker #7: One of the things that we found challenging is the money can be there, but it's getting it through. The throughput that you're talking about.
Speaker #7: Right now, you've probably seen a lot of the commentary about a pretty significant addition to the 2027 budget potentially. Which could include money for the industrial base.
Speaker #7: When you look at it from a shipbuilding standpoint, do you need more, or are you already in a good position given the large amount of funding that's come in?
Doug Harned: When you look at it from a shipbuilding standpoint, do you need more, or are you in already a good position, given the large amount of funding that's come in, and is that enabling you to get where you need to be with respect to the—to your Industrial Base?
Douglas Harned: When you look at it from a shipbuilding standpoint, do you need more, or are you in already a good position, given the large amount of funding that's come in, and is that enabling you to get where you need to be with respect to the—to your Industrial Base?
Speaker #7: And is that enabling you to get where you need to be with respect to your industrial
Speaker #7: base? Yeah.
Chris Kastner: And so, Doug, let me take that, and I can, Tom, if he wants to add, that's great. But definitely the Block V two boat contract assisted us from a capital standpoint and a wages standpoint, to increase throughput at Newport News. There is more capital required if we're going to continue to ramp the throughput within Newport News on the submarine program and the aircraft carrier program. So there will be additional capital requirements. We hope to partner with our Navy customer to provide that capital, both our internal capital as well as incentives.
Christopher D. Kastner: And so, Doug, let me take that, and I can, Tom, if he wants to add, that's great. But definitely the Block V two boat contract assisted us from a capital standpoint and a wages standpoint, to increase throughput at Newport News. There is more capital required if we're going to continue to ramp the throughput within Newport News on the submarine program and the aircraft carrier program. So there will be additional capital requirements. We hope to partner with our Navy customer to provide that capital, both our internal capital as well as incentives.
Speaker #5: So contract assisted us from a capital standpoint, a wages standpoint, to increase throughput at Newport News. There is more capital required if we're going to continue to ramp the throughput within Newport News on the submarine program and the aircraft carrier program.
Speaker #5: So there will add, that's great. hope to partner with our Navy customer to provide as well as incentives. But there's plenty of opportunity to increase throughput in shipyards and then through distributed shipbuilding as well because it's not just labor.
Chris Kastner: But there's plenty of opportunity to increase throughput in both internally within the shipyards and then through distributed shipbuilding as well, because it's not just labor, it's not just additional labor and throughput within the shipyards. We need to expand distributed shipbuilding as well. We had a pretty good year last year. We'll have another good year this year in expanding the industrial base, and some of the investments could go there as well. So, we welcome the opportunity to continue investment to increase throughput, and we're going to continue to do that.
Christopher D. Kastner: But there's plenty of opportunity to increase throughput in both internally within the shipyards and then through distributed shipbuilding as well, because it's not just labor, it's not just additional labor and throughput within the shipyards. We need to expand distributed shipbuilding as well. We had a pretty good year last year. We'll have another good year this year in expanding the industrial base, and some of the investments could go there as well. So, we welcome the opportunity to continue investment to increase throughput, and we're going to continue to do that.
Speaker #5: It's not just additional labor and throughput within the both internally within the shipyards. We need to expand distributed shipbuilding as well. We had a pretty good year last year.
Speaker #5: We'll have another good year this year in expanding the industrial base, and some of the investments could go there as well. So we welcome the opportunity to continue investment to increase throughput, and we're going to continue to do that.
Speaker #6: Yeah. I'd take you back on the backside of that. I'm with you So it's not just on the budget line. about the budgets and And we're seeing it flow into the company.
Kristi Thomas: I'd take you back on the backside of that. I'm with you about the budgets and opportunities that's there, and we're seeing it flow into the company, so it's not just on the budget line. You know, both Q3 and Q4 saw our HII have quarters of 16% growth. We finished out the year, this year in 2025 at 8.2% growth from 2025 over 2024. We saw shipbuilding at 9.7%, for the year for 2025 over 2024. And, you know, I'm inspired by, you know, several quarters now in a row of seeing double-digit growth in shipbuilding. Ingalls was at 11.2, and Newport News, 9% for the year. So, the dollars are there. There's a need for our products and services.
Christopher D. Kastner: I'd take you back on the backside of that. I'm with you about the budgets and opportunities that's there, and we're seeing it flow into the company, so it's not just on the budget line. You know, both Q3 and Q4 saw our HII have quarters of 16% growth. We finished out the year, this year in 2025 at 8.2% growth from 2025 over 2024. We saw shipbuilding at 9.7%, for the year for 2025 over 2024. And, you know, I'm inspired by, you know, several quarters now in a row of seeing double-digit growth in shipbuilding. Ingalls was at 11.2, and Newport News, 9% for the year. So, the dollars are there. There's a need for our products and services.
Speaker #6: Both Q3 and Q4 saw HII have quarters of 16% growth. We finished out the year this year in 2025 at 8.2% growth from 25 over 24.
Speaker #6: We saw shipbuilding at 9.7% for the year for 25 over 24. And I'm inspired by several quarters now in a row of seeing double-digit growth in shipbuilding.
Speaker #6: Ingalls was at the 11.2, and Newport News 9% for the year. So the dollars are there. There's a need for our products and services.
Kristi Thomas: The funding's in place, both with our backlog and anticipated awards that we have coming in 2026. And I'm happy to see an inflection of, you know, the labor material flowing into the yards, increased outsourcing. We've established over 23 vendors last year, and there's more to follow going forward. You can see from our earnings release, we're going to increase-- we've increased outsourcing by 100% last year. We have a 30% target this year. So, the inflection that we've discussed is happening right now. The guide right now at 6% is probably a conservative guide, but it's the beginning of the year. Let's get into it. We've, we've beaten that the last two quarters, and, we'll see, you know, that we can continue hiring, retention, and outsourcing.
Speaker #6: The funding's in place, both with our backlog and anticipated awards that we have coming in 2026. And I'm happy to see an inflection of the labor and material flowing into the yards, increased outsourcing.
Christopher D. Kastner: The funding's in place, both with our backlog and anticipated awards that we have coming in 2026. And I'm happy to see an inflection of, you know, the labor material flowing into the yards, increased outsourcing. We've established over 23 vendors last year, and there's more to follow going forward. You can see from our earnings release, we're going to increase-- we've increased outsourcing by 100% last year. We have a 30% target this year. So, the inflection that we've discussed is happening right now. The guide right now at 6% is probably a conservative guide, but it's the beginning of the year. Let's get into it. We've, we've beaten that the last two quarters, and, we'll see, you know, that we can continue hiring, retention, and outsourcing.
Speaker #6: We've established over 23 vendors last year, and there's more to follow going forward. You can see from our earnings release, we're going to increase we've increased outsourcing by 100% last year.
Speaker #6: 30% target this year. So the We have a inflection that we've discussed is happening right now. The guide right now at 6% is probably a conservative guide, but it's the beginning of the year.
Speaker #6: Let's get into it. We've beaten that the last two quarters, and we'll see that we retention, and can continue hiring, outsourcing.
Doug Harned: Very good. Thank you.
Douglas Harned: Very good. Thank you.
Speaker #7: you.
Operator: Thank you, Doug. Our next question is from Scott Mikus, from Melius Research. Your line is now open. Please go ahead.
Operator: Thank you, Doug. Our next question is from Scott Mikus, from Melius Research. Your line is now open. Please go ahead.
Speaker #1: question is from Scott Mikus Very good. from Melium Research.
Speaker #1: Your line is now open. ahead. Please go Thank
Speaker #7: Morning,
Scott Mikus: Morning, Chris and Tom. Quick question. Ingalls and Newport News both exited 25 with a lot of top-line momentum. You did note that the Q4 had some pull forward, but the Q1 guide, if my math is right, calls for shipbuilding sales to be up 13% year-over-year. But then that implies that shipbuilding sales are down 1% for the remaining three quarters. Is that just a function of tougher comps? Because it seems like you have a healthy amount of opportunity based on the milestones laid out in the slides.
Operator: Morning, Chris and Tom. Quick question. Ingalls and Newport News both exited 25 with a lot of top-line momentum. You did note that the Q4 had some pull forward, but the Q1 guide, if my math is right, calls for shipbuilding sales to be up 13% year-over-year. But then that implies that shipbuilding sales are down 1% for the remaining three quarters. Is that just a function of tougher comps? Because it seems like you have a healthy amount of opportunity based on the milestones laid out in the slides.
Speaker #7: News both exited '25 with a lot of question. Ingalls and Newport note that the fourth quarter had some
Speaker #7: pull forward, but the first quarter top-line momentum. You did guide, if my math is right, calls for shipbuilding sales to be up 13% year over year.
Speaker #7: But then that implies that shipbuilding sales are down 1% for the remaining three, of tougher comps? Because it seems like you have a healthy amount of opportunity based on the milestones laid out in the slides.
Speaker #7: Is that just a function
Kristi Thomas: Yeah, I wouldn't get too tied up in how that plays out for the whole year. You know, there's a lot of timing in that. Both, we saw a little bit material, you know, unexpected, even the guide we gave you, going from $89 to $91 to $90 to $91, and then we came out at $95. So there's some material that got pulled to the left. I would tell you, it's not a one-time trick there of getting revenue up in Q4, because we, as I just answered in the previous question, Q3 and Q4 saw some good growth. The backlog and the new awards are going to facilitate that, and then the outsourcing and the hiring is all going to continue that. I think it's more just a conservative guide that we have right now.
Operator: Yeah, I wouldn't get too tied up in how that plays out for the whole year. You know, there's a lot of timing in that. Both, we saw a little bit material, you know, unexpected, even the guide we gave you, going from $89 to $91 to $90 to $91, and then we came out at $95. So there's some material that got pulled to the left. I would tell you, it's not a one-time trick there of getting revenue up in Q4, because we, as I just answered in the previous question, Q3 and Q4 saw some good growth. The backlog and the new awards are going to facilitate that, and then the outsourcing and the hiring is all going to continue that. I think it's more just a conservative guide that we have right now.
Speaker #4: tied up in how that plays out for the Yeah. whole year. I wouldn't get too There's a lot of timing in that. Both we saw a little bit of material unexpected, even the guide we gave you going from '89 to '91 Thank you, Doug. to '90 to '91, and then we came out at '95.
Speaker #4: tied up in how that plays out for the Yeah. whole year. I wouldn't get too There's a lot of timing in that. Both we saw a little bit of material unexpected, even the guide we gave you going from '89 to '91 Thank you, Doug.
Speaker #4: one-time trick there of getting revenue up in Q4 because as I just answered in the previous question, Q3 and Q4 saw some good growth.
Speaker #4: The backlog and the new awards are going to facilitate is all going to continue that. I that. And then the outsourcing and the hiring think it's more just a conservative guide that we have right now.
Speaker #4: It's the beginning of the year. We want to make sure
Kristi Thomas: It's the beginning of the year. We want to make sure we continue with the momentum we're exiting last year on the top line, and I would anticipate, I expect that to continue going forward here. So, there's always some choppiness, you know, from quarter to quarter on milestones and margin re-recognition on ship deliveries and major milestones. So there's nothing overly to highlight that's going to be problematic as the revenue, I expect to continue to ramp into, into 2026.
Operator: It's the beginning of the year. We want to make sure we continue with the momentum we're exiting last year on the top line, and I would anticipate, I expect that to continue going forward here. So, there's always some choppiness, you know, from quarter to quarter on milestones and margin re-recognition on ship deliveries and major milestones. So there's nothing overly to highlight that's going to be problematic as the revenue, I expect to continue to ramp into, into 2026.
Speaker #4: we continue with the momentum. We're exiting Our next last year on the top line.
Speaker #4: And I would anticipate, I expect that to continue going forward here. So there's always some quarters.
Speaker #4: choppiness from quarter to quarter recognition on ship deliveries and major milestones. So there's nothing on milestones and margin overly to highlight that's going to be problematic as the revenue I expect to continue to ramp into 2026.
Scott Mikus: Okay. And then on the new battleships, is there a possibility that a Japanese or Korean shipyard could fund some of the CapEx to fulfill their obligations under the recent trade deals, and then you contribute the workforce and the design, sort of in a joint venture type format? That way, it would be an attractive investment for Huntington from a return on invested capital standpoint.
Operator: Okay. And then on the new battleships, is there a possibility that a Japanese or Korean shipyard could fund some of the CapEx to fulfill their obligations under the recent trade deals, and then you contribute the workforce and the design, sort of in a joint venture type format? That way, it would be an attractive investment for Huntington from a return on invested capital standpoint.
Speaker #7: battleships, is there a possibility that Okay. And then on the new a Japanese or Korean shipyard could fund some of the CAPEX to fulfill their obligations under the recent trade deals?
Speaker #7: And then you contribute the workforce and the design sort of in a joint venture type format? That way it would be an attractive investment for Huntington from a return on invested capital standpoint?
Speaker #4: Yeah. Really not sure. I think the aperture is open relative to the industrial base and how that battleship is going to get built. There's a need base.
Chris Kastner: Yeah, really not sure. I think the aperture is open relative to the industrial base and how that battleship is going to get built. There's a need for additional capacity in the industrial base, and could a foreign investor bring more capacity into the industrial base? Sure. I don't know if it'd be necessarily for the battleship, but that's always an opportunity. So, you need to keep the aperture open, and depending on how that acquisition profile or that acquisition strategy develops, then I think the investments will follow.
Christopher D. Kastner: Yeah, really not sure. I think the aperture is open relative to the industrial base and how that battleship is going to get built. There's a need for additional capacity in the industrial base, and could a foreign investor bring more capacity into the industrial base? Sure. I don't know if it'd be necessarily for the battleship, but that's always an opportunity. So, you need to keep the aperture open, and depending on how that acquisition profile or that acquisition strategy develops, then I think the investments will follow.
Speaker #4: And for additional capacity in the industrial, could a foreign investor bring more capacity into the industrial base? Sure. I don't know if battleship, but that's always an opportunity.
Speaker #4: So you need to keep it, it'd be necessary for the aperture open, and depending, I think the investments will develop, then I follow.
Speaker #7: All right. Thank you.
Kristi Thomas: All right. Thank you.
Christopher D. Kastner: All right. Thank you.
Speaker #4: Sure.
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Operator: Scott, our next question is from Noah Poponak from Goldman Sachs. You're live, please go ahead.
Operator: Scott, our next question is from Noah Poponak from Goldman Sachs. You're live, please go ahead.
Speaker #1: Scott, our next question is from Newark Open Dock from Goldman Sachs. Your line is open, please go ahead.
Speaker #8: Hey, good morning, guys. Right now, so I guess if I kind of zoom out and look at the shipbuilding margin, it's kind of flattish through 2025.
Noah Poponak: Hey, good morning, guys.
Noah Poponak: Hey, good morning, guys.
Chris Kastner: Good morning, Noah.
Christopher D. Kastner: Good morning, Noah.
Noah Poponak: So I guess, you know, if I kind of zoom out and look at the shipbuilding margin, it's kind of flattish through 2025. I mean, it's actually down sequentially a little bit through 25, 26 guidance, kind of flattish versus 25. You know, recognizing it's a long cycle business and manufacturing process, and these things take time. I guess, just with the incremental funding, the throughput achievements, the labor achievements, Tom, you just reiterated, you know, better mix of contracts by 27. How help us better understand how the shipbuilding margins are flat for that full two-year window. Do they snap in 27 when the mix flips to more post-COVID?
Noah Poponak: So I guess, you know, if I kind of zoom out and look at the shipbuilding margin, it's kind of flattish through 2025. I mean, it's actually down sequentially a little bit through 25, 26 guidance, kind of flattish versus 25. You know, recognizing it's a long cycle business and manufacturing process, and these things take time. I guess, just with the incremental funding, the throughput achievements, the labor achievements, Tom, you just reiterated, you know, better mix of contracts by 27. How help us better understand how the shipbuilding margins are flat for that full two-year window. Do they snap in 27 when the mix flips to more post-COVID?
Speaker #8: sequentially a little bit through I mean, it's actually down '25, '26 guidance kind of flattish versus '25. Recognizing it's a long cycle business and manufacturing process and these things take time, I guess just with the incremental funding, the throughput achievements, the labor achievements, Tom, you just reiterated better mix of contract by understand how the shipbuilding margins are flat '27.
Speaker #8: two-year window. Do they snap in '27 when the mix flips to more post-COVID? And what extent is the waiting on the Help us better next batch of nuclear subcontracts pretty binary in this discussion?
Noah Poponak: And to what extent is the waiting on the next batch of nuclear subcontracts pretty binary in this discussion because you have to book so much long lead at a low margin before you get that?
Noah Poponak: And to what extent is the waiting on the next batch of nuclear subcontracts pretty binary in this discussion because you have to book so much long lead at a low margin before you get that?
Speaker #8: Because you have to book so much long-lead at
Chris Kastner: Let me start on that, Noah, and then Tom can chip in on the back end. But I mean, you know our process. I think, relative to how we evaluate risk and opportunities when we do our plan, and we're very disciplined in how we evaluate them and how we develop our guidance for the subsequent year, and that's what we've done. I would say that we are. There's investment required that we're making in outsourcing and over time to prioritize schedules on these ships, which is impacting our profitability, there's no doubt. We think that makes sense. We're gonna continue to do it because the strategy to get out of these ships into the next ships just makes great sense.
Christopher D. Kastner: Let me start on that, Noah, and then Tom can chip in on the back end. But I mean, you know our process. I think, relative to how we evaluate risk and opportunities when we do our plan, and we're very disciplined in how we evaluate them and how we develop our guidance for the subsequent year, and that's what we've done. I would say that we are. There's investment required that we're making in outsourcing and over time to prioritize schedules on these ships, which is impacting our profitability, there's no doubt. We think that makes sense. We're gonna continue to do it because the strategy to get out of these ships into the next ships just makes great sense.
Speaker #4: Let me start on that note, and then that.
Speaker #4: back end. But I mean, you know our process, I think, relative to how we evaluate risk and opportunities when we do our plan. And we're very disciplined in how a low margin before you get we evaluate them and how we would say that we guidance for the subsequent year.
Speaker #4: required that we're making in outsourcing and overtime to prioritize schedules on these ships, which is impacting our profitability. And that's what we've done. I There's no doubt.
Speaker #4: We think that makes sense. We're going to continue to do it because the strategy to get out of these ships into the next ships just makes great sense.
Chris Kastner: Relative to the submarine program, we think that needs to get done by the end of the first half of the year. We need to make sure that we don't incur risk related to a delayed start on that program. The teams are meeting. I have high hopes that after the 2026 budget was done and then the 2027 budget, we get a little more clarity that everything will fall into place and we'll get started, but we really need to get that done in the first half of the year. Tom, I don't know if you have anything else.
Speaker #4: Relative to the submarine program, we think that needs to get done by the end of the first half of the year. We need to make sure that we don't incur risk related to a delayed start on that program.
Christopher D. Kastner: Relative to the submarine program, we think that needs to get done by the end of the first half of the year. We need to make sure that we don't incur risk related to a delayed start on that program. The teams are meeting. I have high hopes that after the 2026 budget was done and then the 2027 budget, we get a little more clarity that everything will fall into place and we'll get started, but we really need to get that done in the first half of the year. Tom, I don't know if you have anything else.
Speaker #4: The teams are that after the '26 budget was meeting. done, and then the '27 budget, we get a I have high hopes little more clarity that everything will fall into place.
Speaker #4: And we'll get in the first half of the year. Tom, I don't know if you have started. But we really need to get that done
Speaker #4: Anything else? I have some comments.
Kristi Thomas: Yeah, I have some comments for you, Scott, in the street there. So, you know, to your point on the new contract starts that are coming with the awards, and we book low, that's baked in already into the guidance that we provide, right? So nothing's changed just because those awards are coming and what we gave you in 2026. And then, you know, Chris and I have said that, hey, the 9 to 10% is not just aspirational. We've been there before, and we want to get there. We haven't given the street the timing of that. We've said incrementally, we would expect to improve annually, and we still feel that way right now, going from 2025 to 2060.
Christopher D. Kastner: Yeah, I have some comments for you, Scott, in the street there. So, you know, to your point on the new contract starts that are coming with the awards, and we book low, that's baked in already into the guidance that we provide, right? So nothing's changed just because those awards are coming and what we gave you in 2026. And then, you know, Chris and I have said that, hey, the 9 to 10% is not just aspirational. We've been there before, and we want to get there. We haven't given the street the timing of that. We've said incrementally, we would expect to improve annually, and we still feel that way right now, going from 2025 to 2060.
Speaker #7: Please, Scott, in the street there. So to your point on the new contract starts that are coming with the awards and we book low, that's baked So nothing's changed just because those awards are coming.
Speaker #7: And what we gave you in in already into the guidance that we provide, right? that, "Hey, the '9 to 10% is not just aspiration.
Speaker #7: We've been there before, and we want to get there." We haven't given the street the timing of that. We've said improve annually. And we still feel that way right now going from '25 to '26.
Speaker #7: If you think about '24, it was 5.2%. '25 was 5.9%. That's up 13%. And although we gave you a range of 5.5 to 6.5, it's kind of in line Chris said back Q3 and '24 had an 18 to 24 months.
Kristi Thomas: If you think about 2024, it was 5.2%, 2025 was 5.9%, that's up 13%. And although we gave you a range of 5 to 6.5, it's kind of in line. You know, Chris said back at Q3 in 2024, in the next 18 to 24 months, it's, it's gonna be choppy. We're gonna work off these old ships. So, you know, a re-guide of what we gave you last year is not inconsistent. And even in Q3, when I gave you the so that's around the midpoint, it could be a little bit higher with the awards, it could be a little bit lower without the awards. We didn't get the awards in 2025. They, they've fallen into this year, and we finished at 5.9% raw.
Christopher D. Kastner: If you think about 2024, it was 5.2%, 2025 was 5.9%, that's up 13%. And although we gave you a range of 5 to 6.5, it's kind of in line. You know, Chris said back at Q3 in 2024, in the next 18 to 24 months, it's, it's gonna be choppy. We're gonna work off these old ships. So, you know, a re-guide of what we gave you last year is not inconsistent. And even in Q3, when I gave you the so that's around the midpoint, it could be a little bit higher with the awards, it could be a little bit lower without the awards. We didn't get the awards in 2025. They, they've fallen into this year, and we finished at 5.9% raw.
Speaker #7: It's going to be choppy. We're going to work off these old ships. So a re-guide of what we gave you last year is not inconsistent.
Speaker #7: And even in Q3, when I gave you the, "Hey, I saw that it's around the midpoint, it could be a little bit higher with the awards.
Speaker #7: '25. They've fallen into this lower without the awards." And we didn't get the awards in year. And we finished at 5.9% It could be a little bit ROS.
Speaker #7: So we're not surprised or it's off what we've been talking about that we're dealing with here. '25. We finished '25 at '26 as it is in I tell you 5.5 for the quarter.
Kristi Thomas: So, like, we're not surprised or it's off what we've been talking about that we're dealing with here. I tell you that, you know, the range is consistent in 2026 as it is in 2025. We finished the 2025 at 5.5 for the quarter, and when we look at Q1 right here, there's not a plethora of milestones or sell-offs that's gonna change, you know, what the last 13 weeks did for the next 13 weeks. So again, we, if we think about it, we shouldn't be surprised that we got it fairly conservative at the beginning of the year, and consistent with what the actuals were for Q4. As we look at, you know, Q4, there's timing in there.
Christopher D. Kastner: So, like, we're not surprised or it's off what we've been talking about that we're dealing with here. I tell you that, you know, the range is consistent in 2026 as it is in 2025. We finished the 2025 at 5.5 for the quarter, and when we look at Q1 right here, there's not a plethora of milestones or sell-offs that's gonna change, you know, what the last 13 weeks did for the next 13 weeks. So again, we, if we think about it, we shouldn't be surprised that we got it fairly conservative at the beginning of the year, and consistent with what the actuals were for Q4. As we look at, you know, Q4, there's timing in there.
Speaker #7: look at Q1 right here, there's not And when we sell-offs that's going to change with the last 13 weeks did for the next 13 weeks.
Speaker #7: So again, if we think about it, we shouldn't be surprised that we got it fairly conservative at the beginning of the year and consistent with what the actuals were for Q4.
Speaker #7: As we look at Q4, this that the range is consistent in new starts that I've talked about, advanced procurement, fee. So we'll work that off.
Kristi Thomas: There's a higher volume of the new starts that I've talked about, advanced procurement, that kind of either no fee or limits fee, so we'll work that off. And then the material, which is good for the top line, pulls a little less fee on a couple of our contracts as we work ourselves through that. You know, the 5.5 to 6.5 is still a good range of outcomes. Last year, it was just about at the midpoint without at the award. So, we're expecting those awards to happen this year. In my remarks, I said in the first half of the year. And then with the milestones that we've given you in this, you know, Q2, Q4, we provide the milestones.
Christopher D. Kastner: There's a higher volume of the new starts that I've talked about, advanced procurement, that kind of either no fee or limits fee, so we'll work that off. And then the material, which is good for the top line, pulls a little less fee on a couple of our contracts as we work ourselves through that. You know, the 5.5 to 6.5 is still a good range of outcomes. Last year, it was just about at the midpoint without at the award. So, we're expecting those awards to happen this year. In my remarks, I said in the first half of the year. And then with the milestones that we've given you in this, you know, Q2, Q4, we provide the milestones.
Speaker #7: And then the little less fee on a couple of our material, which is good for the top line, pulls a contracts as we work ourselves through that.
Speaker #7: Still a good range of outcomes. Last year, the $5.5 to $6.5, it was just about at the midpoint without the awards. So we're expecting those awards to happen this year in my remarks.
Speaker #7: still a good range of outcomes. Last year, The 5.5 to 6.5, it's it was just about at the midpoint without the awards. So we're expecting those awards to happen this year in a plethora of milestones or year.
Speaker #7: And then with the milestones that we've given you in this Q2, Q4, we provide the milestones that most of all of them this year here.
Kristi Thomas: We met most of them last year, and we expect to go do that, most all of them this year here, so that's gonna be a lift on where we go forward here. The awards will have some incentives to them, too, that we didn't have last year, so that's gonna be an assist as we go forward. And then, I mentioned the increase from the $5.2 of 2024 to $5.9 of 2025. And the midpoint at 6%, although moderate, is still kind of better than the actuals of last year, and we have a whole year to go work the contracts here.
Christopher D. Kastner: We met most of them last year, and we expect to go do that, most all of them this year here, so that's gonna be a lift on where we go forward here. The awards will have some incentives to them, too, that we didn't have last year, so that's gonna be an assist as we go forward. And then, I mentioned the increase from the $5.2 of 2024 to $5.9 of 2025. And the midpoint at 6%, although moderate, is still kind of better than the actuals of last year, and we have a whole year to go work the contracts here.
Speaker #7: So that's going to be a lift on where we go forward incentives to them to do that. We didn't forward. And met most of them last year, and we expect to go do 5.2 of '24 to 5.9 of then I mentioned the increase from the 2025.
Speaker #7: And the midpoint at 6%, although moderate, is still kind of better than the actuals of last year and we have a whole year to go work the contracts here.
Kristi Thomas: And then kind of lastly, as Chris said, it was baked in already, but, you know, we have had, you know, as we put focus on milestones and delivering the ships as fast as possible for our Navy customer, and we have put a premium on additional overtime. We have both sites working higher overtime than usual, so there's a little bit of draw on cost efficiency on that. And then the first time, you know, outsourcing and first-time bills, just a little bit of extra cost in that. Not unanticipated, again, it's all in our guide and our progression as we turn the portfolio heading towards 26.
Speaker #7: And then, kind of lastly, but we have had a—as we put focus on milestones and delivering the ships as fast as possible for our Navy customer.
Christopher D. Kastner: And then kind of lastly, as Chris said, it was baked in already, but, you know, we have had, you know, as we put focus on milestones and delivering the ships as fast as possible for our Navy customer, and we have put a premium on additional overtime. We have both sites working higher overtime than usual, so there's a little bit of draw on cost efficiency on that. And then the first time, you know, outsourcing and first-time bills, just a little bit of extra cost in that. Not unanticipated, again, it's all in our guide and our progression as we turn the portfolio heading towards 26.
Speaker #7: And we have put a premium or additional overtime. We have both sites working higher overtime than usual. So there's a little bit of drawing on cost efficiency on that.
Speaker #7: And then the first outsourcing and first-time bills just a little bit of extra cost on that. Not unanticipated. Again, it's all in our guide and our progression as we turn the portfolio heading towards helpful.
Chris Kastner: ... 2027. I, I hope that was helpful.
Christopher D. Kastner: ... 2027. I, I hope that was helpful.
Noah Poponak: Yeah, that was very helpful. It's a lot of detail, and I appreciate it. When you provided the shipbuilding medium-term revenue growth target to 6%, you have the sub bullet point there that says additional upside from recently announced programs. Can you, can you talk a little bit more about that? I mean, how much upside and, specifically on, on the, the SSC win, when does that start ramping up for you?
Noah Poponak: Yeah, that was very helpful. It's a lot of detail, and I appreciate it. When you provided the shipbuilding medium-term revenue growth target to 6%, you have the sub bullet point there that says additional upside from recently announced programs. Can you, can you talk a little bit more about that? I mean, how much upside and, specifically on, on the, the SSC win, when does that start ramping up for you?
Speaker #3: That was very helpful. It's a lot of detail, and I appreciate it. When you provided the shipbuilding medium-term revenue growth target, the 6%, you have the sub-bullet point there that says additional upside from recently announced programs.
Speaker #3: Can you talk a little bit more about that? I mean, how much upside and specifically on the SSC win? When does you?
Speaker #4: Yeah. So yeah, that start ramping up for thanks, Noah. win very confident we're going to build the first two boats or first two ships in that class.
Chris Kastner: Yeah. So, yeah, thanks, Noah. The frigate win, that, pretty confident, very confident we're going to build the first two boats or first two ships, in that class. We're unsure what the acquisition strategy is. Beyond that, I think we'll learn more when the 2027 budget comes out. But we're fortunate on that program that we still have a lot of material from NSC 11, which is really a lot of the upfront cost, on a ship. So I don't expect material impact to sales this year. It should start to ramp in 2027. Battle-- the battleship is a little different. We're still engaged with the Navy on understanding how that design is going to unfold, with us, the Navy and BIW.
Christopher D. Kastner: Yeah. So, yeah, thanks, Noah. The frigate win, that, pretty confident, very confident we're going to build the first two boats or first two ships, in that class. We're unsure what the acquisition strategy is. Beyond that, I think we'll learn more when the 2027 budget comes out. But we're fortunate on that program that we still have a lot of material from NSC 11, which is really a lot of the upfront cost, on a ship. So I don't expect material impact to sales this year. It should start to ramp in 2027. Battle-- the battleship is a little different. We're still engaged with the Navy on understanding how that design is going to unfold, with us, the Navy and BIW.
Speaker #4: acquisition strategy is. Beyond that, I think We're unsure what the we'll learn more when the '27 budget comes out. But we're fortunate on that program that we still have a lot of material from NSC 11, which is really a lot of the upfront cost on a ship.
Speaker #4: So I don't expect material impact of sales this year. It should start to ramp in ’27. The battleship is a little different. We're still engaged with the Navy on understanding how that design is going to unfold with us, the Navy, and BIW.
Chris Kastner: So there'll be modest revenue this year, and then it'll ramp from there. We don't have specific numbers for you right now, but as we understand them, we will provide them.
Speaker #4: So, there will be modest revenue this year, and then it will ramp from there. We don't have specific numbers for you right now, but as we understand them, we will provide them.
Christopher D. Kastner: So there'll be modest revenue this year, and then it'll ramp from there. We don't have specific numbers for you right now, but as we understand them, we will provide them.
Speaker #3: Okay. Thank
Noah Poponak: Okay, thank you.
Noah Poponak: Okay, thank you.
Speaker #4: Sure.
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Speaker #1: Thank you, Noah. Our next
Operator: Thank you, Noah. Our next question is from Pete Skibitski, from Alembic Global Advisors. Your line is now open. Please go ahead.
Operator: Thank you, Noah. Our next question is from Pete Skibitski, from Alembic Global Advisors. Your line is now open. Please go ahead.
Speaker #1: question is from Fitzgibbety. From Alambic Global. Your line is now open. Please go you. ahead.
Pete Skibitski: Thank you. Good morning, guys. Hey, Chris, could you talk more about the supply chain? Chris, can you talk more about the supply chain at Newport News? I think you touched on it in your remarks. I didn't quite hear all of it. Did you receive all the equipment from the supply chain that you expected in Q4 on CVN 80? Or, was it later than expected? Is that what drove the negative EACs? And kind of where are, you know, where are you right now in that program, and just want to get a better sense of that.
Pete Skibitski: Thank you. Good morning, guys. Hey, Chris, could you talk more about the supply chain? Chris, can you talk more about the supply chain at Newport News? I think you touched on it in your remarks. I didn't quite hear all of it. Did you receive all the equipment from the supply chain that you expected in Q4 on CVN 80? Or, was it later than expected? Is that what drove the negative EACs? And kind of where are, you know, where are you right now in that program, and just want to get a better sense of that.
Speaker #5: Good morning, guys. Hey, Chris, could you talk more about the supply chain? Chris, can you talk more about the supply chain at Newport News?
Speaker #5: I think you touched on it in your remarks, but I didn't quite hear all of it. Did you receive all the equipment from the supply chain that you expected in expected?
Speaker #5: Is that what drove the negative EACs? And kind of where are you right now in that program? And I just want to get a better sense of
Chris Kastner: Yeah, so we have received all of the engine room material, done deck over. As I said in my prepared remarks, we're 50% erected, and we'll continue to make progress this year. Have a little bit of momentum on that program. Throughput has actually accelerated, and the key there is to getting back in sequence, which they're working very hard to do. So there was investment in overtime on 80 to get back on schedule, or try to get back on schedule. And they're, as I said, they're working hard to do that.
Christopher D. Kastner: Yeah, so we have received all of the engine room material, done deck over. As I said in my prepared remarks, we're 50% erected, and we'll continue to make progress this year. Have a little bit of momentum on that program. Throughput has actually accelerated, and the key there is to getting back in sequence, which they're working very hard to do. So there was investment in overtime on 80 to get back on schedule, or try to get back on schedule. And they're, as I said, they're working hard to do that.
Speaker #4: have received all of the engine
Speaker #4: room material done deck over. As I said in my prepared remarks, we're 50% erected, and we'll continue to make that. of momentum on that accelerated, and the key program throughput has actually Yeah.
Speaker #4: very hard to do. So in So we overtime on 80 on schedule. And as I said, they're working hard to do
Speaker #4: that. Okay.
Pete Skibitski: Okay, sounds good. Then just, Chris, on, you know, between reconciliation and the 26 appropriations bill that's law now, did you get all of your priorities through in the budget this past year that you wanted? You know, just wondering if there's anything that didn't get into those bills that is going to be a priority for you in fiscal 27.
Pete Skibitski: Okay, sounds good. Then just, Chris, on, you know, between reconciliation and the 26 appropriations bill that's law now, did you get all of your priorities through in the budget this past year that you wanted? You know, just wondering if there's anything that didn't get into those bills that is going to be a priority for you in fiscal 27.
Speaker #5: Sounds good. And then just, Chris, between reconciliation and the '26 appropriations bill that's law now, did
Speaker #5: you get all of your priorities you wanted? Just wondering if there's through in the budget this past year that anything that didn't get into those bills that is going to be a priority for you in fiscal
Speaker #5: '27? No.
Chris Kastner: No, it's universal support for shipbuilding and reconciliation, the 26 budget, the potential 27 budget. It's all on us to execute now, but all of our programs are supported.
Christopher D. Kastner: No, it's universal support for shipbuilding and reconciliation, the 26 budget, the potential 27 budget. It's all on us to execute now, but all of our programs are supported.
Speaker #4: It's universal support for shipbuilding and reconciliation the '26 to get back on schedule and try to get back budget. The potential '27 budget is all on us to execute it did.
Speaker #4: now. But all of our programs are There was investment supported.
Pete Skibitski: Okay, great. Thank you.
Pete Skibitski: Okay, great. Thank you.
Speaker #5: you. Okay. Great. Thank
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Speaker #1: Thank you, Pete. Our next question
Operator: Thank you, Pete. Our next question is from Seth Seifman from J.P. Morgan. Your line is now open. Please go ahead.
Operator: Thank you, Pete. Our next question is from Seth Seifman from J.P. Morgan. Your line is now open. Please go ahead.
Speaker #1: is from Seth Seifman Sure. Your line is ahead.
Speaker #1: Seth Seifman: Sure. Your line is ahead. Now open. Hey.
Seth Seifman: Hey, thanks very much, and good morning. Wanted to follow quickly on the frigate. I think you talked about that being a driver, potentially, of growth in 2027. I mean, given the target of having a boat in the water in 2028, should we think about that ramping up rather quickly? And, you know, is there anything you could say about the magnitude of the lift there at Ingalls and what it will do to the mix as well, given that, you know, I think the NSC was a very profitable ship for that yard.
Seth Seifman: Hey, thanks very much, and good morning. Wanted to follow quickly on the frigate. I think you talked about that being a driver, potentially, of growth in 2027. I mean, given the target of having a boat in the water in 2028, should we think about that ramping up rather quickly? And, you know, is there anything you could say about the magnitude of the lift there at Ingalls and what it will do to the mix as well, given that, you know, I think the NSC was a very profitable ship for that yard.
Speaker #6: Thanks very much. And good morning. Wanted to
Speaker #6: Follow up quickly on the frigate. I think you talked about that, please, as being a driver potentially of growth in boat in the water in 2028. Should we think about that ramping up the target, of having a rather quickly?
Speaker #6: And is there anything you could say about the magnitude of the lift there at Ankles and what it will do to the mix as well, given that the, I think, the NSC was a very profitable ship for that?
Speaker #6: yard? Well, I think it's a little bit
Chris Kastner: I think it's a little bit too early for that. I think if you were to project the cost related to ship getting in the water in 2 years, less the long lead material, there's probably enough data out there for you to figure out what that could mean from a sales standpoint. So that, that is upside. But beyond that, I think it's a little bit too early to talk about potential top-line upside related to that until we get a little bit further along.
Christopher D. Kastner: I think it's a little bit too early for that. I think if you were to project the cost related to ship getting in the water in 2 years, less the long lead material, there's probably enough data out there for you to figure out what that could mean from a sales standpoint. So that, that is upside. But beyond that, I think it's a little bit too early to talk about potential top-line upside related to that until we get a little bit further along.
Speaker #4: too early for that. I think if you were to cost related to ship getting in the water in two years, less the long lead material, there's probably enough data out there for you to figure out what that could mean from a sales standpoint.
Speaker #4: So that is upside. But beyond that, I think it's a little bit too early to talk about potential top-line upside related to that until we get a little bit further along.
Speaker #6: Okay. Okay. And should we think about that being mix-wise being
Seth Seifman: Okay. Okay, and should we think about that being, you know, mix wise, being, you know, NSC-like?
Seth Seifman: Okay. Okay, and should we think about that being, you know, mix wise, being, you know, NSC-like?
Speaker #6: NSC-like? I wouldn't necessarily
Chris Kastner: I wouldn't necessarily think that, right. We're going to work with our customer to get a fair deal on that contract, so I wouldn't necessarily think about that. I think on a blended rate, getting to 9% to 10% margin is still our objective, and I think we'll eventually get there.
Christopher D. Kastner: I wouldn't necessarily think that, right. We're going to work with our customer to get a fair deal on that contract, so I wouldn't necessarily think about that. I think on a blended rate, getting to 9% to 10% margin is still our objective, and I think we'll eventually get there.
Speaker #4: think that, right? We're going to work with our customer to get a fair deal on that contract. So I wouldn't necessarily think about that.
Speaker #4: blended rate, getting to 9 to 10 I think on a percent margin is still our objective. And I think we'll eventually get
Seth Seifman: Great. Okay. Okay, thanks. And then just to follow up, given, you know, given where you ended the year on with the cash balance, and what you're forecasting for 2026, to have a decent amount of excess cash on the balance sheet. But by year end, I know, you know, there's understandably a certain amount of reticence about repurchases at this point. But, you know, with good performance, does that become more of an option, or are there other things you would think about doing with it? Or, you know, does that, do we just kind of you know, maybe sit with some excess cash for a little while?
Seth Seifman: Great. Okay. Okay, thanks. And then just to follow up, given, you know, given where you ended the year on with the cash balance, and what you're forecasting for 2026, to have a decent amount of excess cash on the balance sheet. But by year end, I know, you know, there's understandably a certain amount of reticence about repurchases at this point. But, you know, with good performance, does that become more of an option, or are there other things you would think about doing with it? Or, you know, does that, do we just kind of you know, maybe sit with some excess cash for a little while?
Speaker #6: Thanks. given where you ended the year on with the cash balance and what you're forecasting there. for '26, have a decent amount of excess cash on the balance sheet.
Speaker #6: And then just to follow up, Okay. Okay.
Speaker #6: know there's understandably a certain amount of reticence But by year-end, I about repurchases at this point. But with good performance, does that become more of an option, or are there other things you would think about doing with it, or does we just kind of maybe sit with some excess while?
Chris Kastner: ... Remember, in the words of one of my predecessors, "Cash can be pretty lumpy." So it will continue to be lumpy in shipbuilding, but we think the overwhelming opportunity from a value standpoint is to continue to invest in the shipyards. So we're gonna do that. It's gonna improve both the top and bottom line. So that's our focus right now, and it's been our focus for a while.
Christopher D. Kastner: ... Remember, in the words of one of my predecessors, "Cash can be pretty lumpy." So it will continue to be lumpy in shipbuilding, but we think the overwhelming opportunity from a value standpoint is to continue to invest in the shipyards. So we're gonna do that. It's gonna improve both the top and bottom line. So that's our focus right now, and it's been our focus for a while.
Speaker #4: Yeah. Remember, in the words of one of my predecessors, cash can be pretty
Speaker #4: lumpy. So it will continue overwhelming cash for a little opportunity from a value standpoint is to continue to invest in the shipbuilding. But we think the shipyards.
Speaker #4: So we're going to do that. It's going to improve both the top and bottom line. our focus for a So that's our focus right now.
Speaker #6: Great. Thanks very much.
Scott Deuschle: Great. Thanks very much.
Scott Deuschle: Great. Thanks very much.
Speaker #4: Sure.
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Speaker #1: Thank you, And it's been
Operator: Thank you, sir. Our next question from Jason Gursky from Citigroup, your line is now open. Please go ahead.
Operator: Thank you, sir. Our next question from Jason Gursky from Citigroup, your line is now open. Please go ahead.
Speaker #1: Seth. Our next question is from Judd Godin from Citigroup. Your line is now open. Please go
Jason Gursky: Hey, guys. Thanks for taking my question. I wanted to just revisit shipbuilding margins one more time. There was a lot of good detail. I think you made clear that there's some conservatism in the outlook. What I'm interested in is in Q1, you have shipbuilding margins kind of at the low end of the full year guidance. It suggests that the conservatism is more of a back half event as it plays out. Is that right, or is that not? Can you help us just think about the shape of margins throughout the year and is that conservatism something in the back half, or might we just see a stronger start to the year than expected, as you suggested?
Jason Gursky: Hey, guys. Thanks for taking my question. I wanted to just revisit shipbuilding margins one more time. There was a lot of good detail. I think you made clear that there's some conservatism in the outlook. What I'm interested in is in Q1, you have shipbuilding margins kind of at the low end of the full year guidance. It suggests that the conservatism is more of a back half event as it plays out. Is that right, or is that not? Can you help us just think about the shape of margins throughout the year and is that conservatism something in the back half, or might we just see a stronger start to the year than expected, as you suggested?
Speaker #7: guys. Thanks for taking my Hey, question. I wanted to just revisit
Speaker #7: shipbuilding margins one more think you made clear that there's some conservatism in the outlook. What I'm interested first quarter, you have shipbuilding margins kind of at the low end of the full-year guidance.
Speaker #7: It suggests that the conservatism is more of a back half event as it plays out. Is that Can you help us just think about the shape right, or is that not?
Speaker #7: and is that conservatism something in the back half, or might we just see a stronger start to the year than expected as you
Speaker #7: suggested?
Speaker #4: Yeah. So obviously, we gave
Kristi Thomas: Yeah. So, you know, obviously, we gave you the annual guide at $5.5 to 6.5. We've been giving for the last couple of years, the next quarter, so it's $5.5. That kind of leaves you guessing for Q2, Q3, Q4. I'd say stay consistent with just what you've seen from us over the years. It's about the milestones, it's about performance, it's about the deliveries. There's nothing that's gonna alter it one way or the other, other than timing, how we perform over the next 11 months. And then, the awards themselves will bring about, you know, a good, good balance of, you know, affordability to profitability, the contract terms and conditions. There'll, there'll be some incentives in there, so we'll have to work ourselves through that.
Jason Gursky: Yeah. So, you know, obviously, we gave you the annual guide at $5.5 to 6.5. We've been giving for the last couple of years, the next quarter, so it's $5.5. That kind of leaves you guessing for Q2, Q3, Q4. I'd say stay consistent with just what you've seen from us over the years. It's about the milestones, it's about performance, it's about the deliveries. There's nothing that's gonna alter it one way or the other, other than timing, how we perform over the next 11 months. And then, the awards themselves will bring about, you know, a good, good balance of, you know, affordability to profitability, the contract terms and conditions. There'll, there'll be some incentives in there, so we'll have to work ourselves through that.
Speaker #4: We've been giving for the last couple of years you the annual guide at 55 to 65. the next quarter. So it's 55. That Q4.
Speaker #4: I'd say stay consistent with ahead. just what you've seen from us over the years. It's about the deliveries. There's about the milestones. nothing that's going to It's about performance.
Speaker #4: alter it one way or the other. Other than timing, how we perform over the then the awards themselves will bring about a good kind of leaves you guessing for Q2, Q3, It's balance of affordability to profitability, the contract terms and conditions.
Speaker #4: we'll have to work ourselves through that. I'm not going to give any negotiations. Through negotiations as that There'll be some incentives in there. effort's trying to get through approval So cycle right now.
Kristi Thomas: Not gonna give any more comment on that, as it, you know, we're in negotiations, through negotiations of the efforts, trying to get through, approval cycle right now. But, yeah, I mean, I think it's the beginning of the year. We don't want to get ahead of ourselves. Really, it makes sense that we exit Q4, you know, at 5.5, kind of run right over there. So we're going to hold pat at this number. We'll update you in May, and you'll get a look, see, you know, both for, what's going to happen, as a forecast in Q2. We have hinted that, you know, we'd like to see the awards, connect the awards the first half of the year.
Jason Gursky: Not gonna give any more comment on that, as it, you know, we're in negotiations, through negotiations of the efforts, trying to get through, approval cycle right now. But, yeah, I mean, I think it's the beginning of the year. We don't want to get ahead of ourselves. Really, it makes sense that we exit Q4, you know, at 5.5, kind of run right over there. So we're going to hold pat at this number. We'll update you in May, and you'll get a look, see, you know, both for, what's going to happen, as a forecast in Q2. We have hinted that, you know, we'd like to see the awards, connect the awards the first half of the year.
Speaker #4: But yeah, I mean, I think it's the beginning of the year. We don't want to get our head over ourselves. And really, it makes sense that we exit next 11 months.
Speaker #4: Q4 at 55 kind of run right over more comment on that as we're in there. So we're going to hold pat at this number.
Speaker #4: We'll update you in May, and you'll get a look to see both what's going to happen as a forecast in Q2. We have hinted that we'd like to see the awards—expect the awards—in the first half of the year here.
Speaker #4: So that's going to facilitate a good pace and a trajectory of at least midpoint or better going forward here for the
Kristi Thomas: So that's going to facilitate a good pace and a trajectory of at least midpoint or better going forward here for the year.
Jason Gursky: So that's going to facilitate a good pace and a trajectory of at least midpoint or better going forward here for the year.
Speaker #7: And I
Jason Gursky: I guess, I guess my question is: Is it even possible that we start the year, you know, at the higher end, at 6.5, that we fast forward a quarter or 2, and we realize that we delivered numbers like that? Or in terms of the art of the possible, that's not even on the table.
Speaker #7: guess my question is, is it even year. possible that we start the end, at 6.5, that we fast forward a quarter or two and we realize that we delivered numbers like that or in terms of the art of the possible?
Jason Gursky: I guess, I guess my question is: Is it even possible that we start the year, you know, at the higher end, at 6.5, that we fast forward a quarter or 2, and we realize that we delivered numbers like that? Or in terms of the art of the possible, that's not even on the table.
Speaker #7: That's not even on the table.
Speaker #4: The range is for the entire year. I'd stay focused on what we gave you for the—
Kristi Thomas: The range is for the entire year. I'd stay focused on what we gave you for the quarter.
Jason Gursky: The range is for the entire year. I'd stay focused on what we gave you for the quarter.
Speaker #7: Okay. Fair
Speaker #7: Enough. And then if we just double-click on the quarter, the milestones and the timeline—as you guys know, with deliveries, with the milestones—there's an intense focus on different milestones as we get closer to the dates.
Jason Gursky: Okay, fair enough. And then if we just double-click on the milestones and the timeline, as you guys know, you know, with deliveries, with the milestones, there's an intense focus on different milestones as we get closer to the dates. Are there any milestones or delivery dates that you would just flag for us right now to kind of bracket and sensitize a little, that one that might be pushed a little bit more than others? Just so that we can have that conversation now, you know, instead of on the eve of expecting some sort of delivery or a milestone event. Any risk around anything that you would just kind of, you know, take the opportunity to bound for us?
Jason Gursky: Okay, fair enough. And then if we just double-click on the milestones and the timeline, as you guys know, you know, with deliveries, with the milestones, there's an intense focus on different milestones as we get closer to the dates. Are there any milestones or delivery dates that you would just flag for us right now to kind of bracket and sensitize a little, that one that might be pushed a little bit more than others? Just so that we can have that conversation now, you know, instead of on the eve of expecting some sort of delivery or a milestone event. Any risk around anything that you would just kind of, you know, take the opportunity to bound for us?
Speaker #7: Are there any milestones or delivery dates that you would just flag for us right now, to kind of bracket and sensitize a little—that one that might be pushed a little bit—we can have that conversation now instead of on the eve of expecting some sort of delivery or milestone event?
Speaker #7: Any risk around anything that you would just kind more than others? of take the opportunity to bound for Just so that we us?
Chris Kastner: Sure. Delivery of 30 and the delivery of 800 towards the end of the year. Very focused on getting both of those boats done. So those, that, that's how I would call from a risk standpoint and an opportunity standpoint. Those two, that boat and that ship, are very critical to us.
Christopher D. Kastner: Sure. Delivery of 30 and the delivery of 800 towards the end of the year. Very focused on getting both of those boats done. So those, that, that's how I would call from a risk standpoint and an opportunity standpoint. Those two, that boat and that ship, are very critical to us.
Speaker #4: Of the 800 towards the end of the year, sure. Delivery of 30 and the delivery year. Very focused on those boats, getting both of those done. So that’s how I would call it from a risk standpoint and an opportunity standpoint.
Speaker #4: Those two, that boat and that ship, are very critical to—
Speaker #4: us. Got it.
Speaker #7: Thank you, guys.
Jason Gursky: Got it. Thank you, guys.
Jason Gursky: Got it. Thank you, guys.
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Operator: Thank you, John. Our next question is from Scott Deuschle, from Deutsche Bank. Your line is now open. Please go ahead.
Operator: Thank you, John. Our next question is from Scott Deuschle, from Deutsche Bank. Your line is now open. Please go ahead.
Speaker #1: question is Sure. from Scott Dushall from Deutsche Bank. Your line is now open. Please go ahead. Thank
Speaker #8: Hey, good morning. Tom, do you expect the company to make money on CVN 80 and 81 given this trend of negative EACs?
Scott Deuschle: Hey, good morning. Tom, do you expect the company to make money?
Scott Deuschle: Hey, good morning. Tom, do you expect the company to make money?
Kristi Thomas: Morning
Scott Deuschle: Morning
Scott Deuschle: ... on CVN 80 and 81, given this trend of negative EACs?
Scott Deuschle: ... on CVN 80 and 81, given this trend of negative EACs?
Kristi Thomas: Yes. Well, yes, we do. We think we're booked accordingly right now. We've described what, you know, transpired on those ships up front, we've impacted by some material that goes deep into the ship. That risk is behind us. Obviously, that's caused an impact on the schedule, so the schedule's a little bit longer, and it's created some cost efficiency. We're working 80 specifically out of sequence. But with the deck over right now, the team's feverishly working with the experience to have building carriers, getting that back on sequence, getting it out of the dry dock, and then doing the ship show work kind of going forward here. But we have not, you know, forecasted, or we do not expect it not to be profitable.
Scott Deuschle: Yes. Well, yes, we do. We think we're booked accordingly right now. We've described what, you know, transpired on those ships up front, we've impacted by some material that goes deep into the ship. That risk is behind us. Obviously, that's caused an impact on the schedule, so the schedule's a little bit longer, and it's created some cost efficiency. We're working 80 specifically out of sequence. But with the deck over right now, the team's feverishly working with the experience to have building carriers, getting that back on sequence, getting it out of the dry dock, and then doing the ship show work kind of going forward here. But we have not, you know, forecasted, or we do not expect it not to be profitable.
Speaker #4: We think we're booked accordingly right now. We've Yes. Yes. We do. some material that goes deep into the ships up front. We've impacted by ship.
Speaker #4: That risk is behind us. Obviously, that's caused an impact on the schedule. So the schedule is a little bit longer, and it's created some cost efficiency.
Speaker #4: We're working 80 specifically out of sequence, but with the deck over right now, the team's feverishly working with the experience they have building carriers, getting that back on sequence, getting it out of the dry dock, and work kind of going forward here.
Speaker #4: We're working 80 specifically out of sequence, but with the deck over right now, the team's feverishly working with the experience they have building carriers, getting that back on sequence, getting it out of the dry dock, and described what transpired on those then doing the ship show forecasted or do not expect it not to But we have not be profitable.
Scott Deuschle: Okay. And then, Chris, there are a lot of data centers under construction in the state of Virginia. It looks like within an hour or two's drive from Newport News. Are you seeing that have any kind of impact on the labor situation at Newport News, particularly for trades like electricians or pipefitters?
Scott Deuschle: Okay. And then, Chris, there are a lot of data centers under construction in the state of Virginia. It looks like within an hour or two's drive from Newport News. Are you seeing that have any kind of impact on the labor situation at Newport News, particularly for trades like electricians or pipefitters?
Speaker #8: data centers under construction in the state of Okay. Virginia. It looks like within an hour or two's drive And then, Chris, there are a lot of from Newport News.
Speaker #8: Are you seeing that have any kind of impact on the labor situation at Newport News, particularly for trades like electricians or pipe
Chris Kastner: That's interesting. We haven't seen the impact, and the applicants, and the hiring in Newport News was very, very strong over the back half of the year. So we haven't seen it yet. We'll watch out for it. We're fortunate and the regional workforce development centers have been coordinating with the federal government, state governments, to produce good shipbuilders, and we're going to continue to work on that pipeline, but we have not seen that.
Christopher D. Kastner: That's interesting. We haven't seen the impact, and the applicants, and the hiring in Newport News was very, very strong over the back half of the year. So we haven't seen it yet. We'll watch out for it. We're fortunate and the regional workforce development centers have been coordinating with the federal government, state governments, to produce good shipbuilders, and we're going to continue to work on that pipeline, but we have not seen that.
Speaker #4: impact, and the applicants That's interesting. We haven't seen the and the hiring in Newport News was very, very So we haven't seen it yet.
Speaker #4: We'll watch out for fitters? it. We're fortunate in the regional workforce development centers have been coordinating with the federal government, state governments, to produce good shipbuilders, and we're going to continue to work on that pipeline.
Speaker #4: that.
Speaker #8: Good to hear. Thank
Speaker #8: you.
Kristi Thomas: ... Good to hear. Thank you.
Christopher D. Kastner: ... Good to hear. Thank you.
Speaker #4: Sure.
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Speaker #1: Scott, our next question is from Miles Walton from Wolfe Research. Your line is now open. Please go ahead.
Operator: Thank you, Scott. Our next question is from Miles Walton from Wolfe Research. Your line is now open. Please go ahead.
Operator: Thank you, Scott. Our next question is from Miles Walton from Wolfe Research. Your line is now open. Please go ahead.
Speaker #1: ahead.
Speaker #4: Thanks. Good
Myles Walton: Thanks. Good morning. Tom, I was wondering-
Myles Walton: Thanks. Good morning. Tom, I was wondering-
Speaker #4: wondering if you can give us a little bit more color on the morning. Tom, I was improvement in nutrition because I'm trying to put the math together.
Chris Kastner: Fine.
Christopher D. Kastner: Fine.
Myles Walton: Okay. I'm wondering if you can give us a little bit more color on the improvement in attrition, because I'm trying to put the math together. You hired 6,600 shipbuilders. I think you got another 500 employees from W International's acquisition. But I also think that you finished headcount flat versus the start of the year. So walk me through what your definition of improvement in attrition is. Did you end up with the headcount you expected? And then do you expect headcount to grow in 2026?
Myles Walton: Okay. I'm wondering if you can give us a little bit more color on the improvement in attrition, because I'm trying to put the math together. You hired 6,600 shipbuilders. I think you got another 500 employees from W International's acquisition. But I also think that you finished headcount flat versus the start of the year. So walk me through what your definition of improvement in attrition is. Did you end up with the headcount you expected? And then do you expect headcount to grow in 2026?
Speaker #4: You hired another 500 employees from, what, 6,600 shipbuilders? I think you got International’s acquisition. But I also think that you finished headcount flat versus the start of the year.
Speaker #4: So, walk me through what your definition of improvement in nutrition is. Did you end with the headcount you expected? And then, do you expect headcount to grow in '26?
Speaker #7: So let me start, Tom, as anything additional. He can add it. So attrition did improve. Year over year. It's about a 15 to 18 percent improvement across both shipyards.
Chris Kastner: So let me start, and if Tom has anything additional, he can add it. So attrition did improve year-over-year. It's about a 15% to 18% improvement across both shipyards. Both shipyards improved. In that data, the 44,000 employees, Miles, we have support labor in that as well, and obviously, Mission Technologies labor in that as well. So we did increase staff in both shipyards. We ended pretty much where we wanted to be, and we're in a pretty good place from an applicant flow and a hiring standpoint for next year. So from a labor standpoint, we're in a pretty good place. We do need to continue to improve attrition and efficiency of the workforce, which we're working very hard at.
Christopher D. Kastner: So let me start, and if Tom has anything additional, he can add it. So attrition did improve year-over-year. It's about a 15% to 18% improvement across both shipyards. Both shipyards improved. In that data, the 44,000 employees, Miles, we have support labor in that as well, and obviously, Mission Technologies labor in that as well. So we did increase staff in both shipyards. We ended pretty much where we wanted to be, and we're in a pretty good place from an applicant flow and a hiring standpoint for next year. So from a labor standpoint, we're in a pretty good place. We do need to continue to improve attrition and efficiency of the workforce, which we're working very hard at.
Speaker #7: Both shipyards improved in that data. The 44,000 employees miles, we have supported labor in that as well. And obviously, mission technologies, labor in that as well.
Speaker #7: So, we did increase staff in both shipyards. We ended pretty much where we wanted to be, and we're in a pretty good place from an applicant flow and a hiring standpoint for next year.
Speaker #7: So from a labor standpoint, we're in a pretty good place. We do need to continue to improve attrition and efficiency of the workforce, which we're working very hard at.
Speaker #7: But with that, we also need to continue to focus order to get through all of these ships, it's not just the shipyards that are going to be required to be to work on distributed shipbuilding, continue to qualify suppliers, and make sure they're efficient in producing what they need to produce as
Chris Kastner: But with that, we also need to continue to focus on distributed shipbuilding, because in order to get through all of these ships, it's not just the shipyards that are gonna be required to be more efficient. We need to work on distributed shipbuilding, continue to qualify suppliers, and make sure they're efficient in producing what they need to produce as well.
Christopher D. Kastner: But with that, we also need to continue to focus on distributed shipbuilding, because in order to get through all of these ships, it's not just the shipyards that are gonna be required to be more efficient. We need to work on distributed shipbuilding, continue to qualify suppliers, and make sure they're efficient in producing what they need to produce as well.
Speaker #7: well. That's a comment on that.
Kristi Thomas: I'll just comment on that, and Chris, there's the mix of it. What's the direct labor? It's Tom here. I'll comment just on that. It's the mix of the labor, right? There's direct labor, there's support, there's job shoppers that we have that's not in the number, and then there's outsourced work that we have. So all that goes into our ability to kind of ramp and, and both get more earned progress and, and get more work accomplished towards the milestones going forward.
Christopher D. Kastner: I'll just comment on that, and Chris, there's the mix of it. What's the direct labor? It's Tom here. I'll comment just on that. It's the mix of the labor, right? There's direct labor, there's support, there's job shoppers that we have that's not in the number, and then there's outsourced work that we have. So all that goes into our ability to kind of ramp and, and both get more earned progress and, and get more work accomplished towards the milestones going forward.
Speaker #4: And Chris, the next one, what's the direct it's Tom here. I'll There's direct labor that's support. There's job shoppers that we have that's not in the number.
Speaker #4: Outsourced work that we have, and then there's—so all that goes into our ability to kind of ramp and both get more earned progress and get more work accomplished towards the milestones going forward.
Myles Walton: Okay. And then one quick one on Mission Technologies. I think you're benefiting by another $20 million runoff in amortization, which would imply a, you know, an 80 basis point step down in EBITDA margins, basically very little growth in EBIT despite the $20 million runoff. Is that right? And if so, what's driving the year-on-year profile for Mission Technologies profit?
Myles Walton: Okay. And then one quick one on Mission Technologies. I think you're benefiting by another $20 million runoff in amortization, which would imply a, you know, an 80 basis point step down in EBITDA margins, basically very little growth in EBIT despite the $20 million runoff. Is that right? And if so, what's driving the year-on-year profile for Mission Technologies profit?
Speaker #3: Imply an 80 basis point step down in EBITDA margins. Basically, very little growth in EBIT despite the $20 million runoff. Is that right? And if so, what's driving the year-on-year profile for Mission Technologies?
Speaker #3: profit? Yeah.
Speaker #4: So you're talking about, I guess, the guide, or are you talking about how we performed in '25 to '24, or the guide to '26?
Kristi Thomas: Yeah. So you're talking about, against the guide, or are you talking about from how we performed in 2025 to 2024-
Myles Walton: Yeah. So you're talking about, against the guide, or are you talking about from how we performed in 2025 to 2024-
Myles Walton: Correct.
Myles Walton: Correct.
Kristi Thomas: -or the guide to 26?
Myles Walton: -or the guide to 26?
Speaker #3: 2026 is guidance for 5%. Is
Myles Walton: 2026 is guidance-
Myles Walton: 2026 is guidance-
Kristi Thomas: Twenty-six, right
Myles Walton: Twenty-six, right
Myles Walton: for 5%, 5% EBIT.
Myles Walton: for 5%, 5% EBIT.
Speaker #3: 5% EBIT? But it should be benefiting, I believe, by about 80 basis Yeah. runoff.
Kristi Thomas: Yeah.
Myles Walton: Yeah.
Myles Walton: But it should be benefiting, I believe-
Myles Walton: But it should be benefiting, I believe-
Kristi Thomas: Yeah
Myles Walton: Yeah
Myles Walton: -by about 80 basis points of amortization runoff.
Myles Walton: -by about 80 basis points of amortization runoff.
Speaker #4: Yeah. I think the much as that. I would tell you million improvements. So it's not just as that so that's a piece of it.
Speaker #4: amortization runoff is about 10 what we're seeing in our contract performance: the maturity of how some fee write-ups in potential of opportunity steps in 2025 that we took, and there's a equity income 2026.
Kristi Thomas: Yeah, I think the amortization runoff is about $10 million improvement, so it's not as much as of that. I would tell you that... So that's a piece of it. It's about half of it. And then just the other half is what we're seeing in our contract performance, the maturity of how we're executing. We had some, you know, fee write-ups in 2025 go that we took, and there's a potential of opportunity sets in 2026. Our nuclear business with equity income always has upside, and we have to see how the year plays out and how our scores are. We get evaluated by the customer set, so that's included in there.
Myles Walton: Yeah, I think the amortization runoff is about $10 million improvement, so it's not as much as of that. I would tell you that... So that's a piece of it. It's about half of it. And then just the other half is what we're seeing in our contract performance, the maturity of how we're executing. We had some, you know, fee write-ups in 2025 go that we took, and there's a potential of opportunity sets in 2026. Our nuclear business with equity income always has upside, and we have to see how the year plays out and how our scores are. We get evaluated by the customer set, so that's included in there.
Speaker #4: Always has upside, and we have to see how the year plays out and how our scores are. We get evaluated by the customer set.
Speaker #4: So, our nuclear business—with that's included in there—specifically on the return on sales side, the EBIT side, I would tell you that on the EBITDA side, you saw we raised the guidance from $80 to $85 million last year.
Kristi Thomas: Although the -- your question was specifically on the return on sales side, the EBIT side, I would tell you, on the EBITDA side, you saw we raised the guidance from 8.0, from 8 to 8.5 last year, to an 8.8 to 8.6 finish. So up almost 50 basis points on that, now to 8.4 to 8.6. Again, just the maturation of the portfolio. I'm trying to... Although it's predominantly cost type contracts, trying to see where we can get the additional value of bidding more products than services, a little bit more how we bid these jobs and a focus on profitability there. So it's an incremental improvement.
Myles Walton: Although the -- your question was specifically on the return on sales side, the EBIT side, I would tell you, on the EBITDA side, you saw we raised the guidance from 8.0, from 8 to 8.5 last year, to an 8.8 to 8.6 finish. So up almost 50 basis points on that, now to 8.4 to 8.6. Again, just the maturation of the portfolio. I'm trying to... Although it's predominantly cost type contracts, trying to see where we can get the additional value of bidding more products than services, a little bit more how we bid these jobs and a focus on profitability there. So it's an incremental improvement.
Speaker #4: The 86 finish. almost 50 bips on So up that, now to 84 to 86. Again, just the maturation of the portfolio, I'm trying to, although it's predominantly cost-type contracts, trying to see where we can get the additional value of bidding more products than services.
Speaker #4: A little bit more how we bid these jobs and a focus on profitability there. So it's an incremental improvement. I like how we finished out from 25 versus 24.
Kristi Thomas: I like how we finished out from 25 versus 24, and it's good to see an incremental improvement on both metrics going forward in 26.
Myles Walton: I like how we finished out from 25 versus 24, and it's good to see an incremental improvement on both metrics going forward in 26.
Speaker #4: And it's good to see an incremental improvement on both metrics going forward in '26.
Speaker #3: Thank you.
Myles Walton: Good. Thank you.
Myles Walton: Good. Thank you.
Speaker #4: Thanks for the
Chris Kastner: Yeah, thanks. Thanks for the question.
Christopher D. Kastner: Yeah, thanks. Thanks for the question.
Speaker #4: question.
Speaker #1: Thank
Speaker #1: you, Miles. Our next question is from Gautam Kanna from TD Cowan. Your line is now open. Please go ahead.
Operator: Thank you, Miles. Our next question is from Gautam Khanna from TD Cowen. Your line is now open. Please go ahead.
Operator: Thank you, Miles. Our next question is from Gautam Khanna from TD Cowen. Your line is now open. Please go ahead.
Speaker #5: Guys, good morning. Gautam, Ingalls, I know there was—and maybe you wanted to ask, or you addressed it and I missed it—but the union contract, did you guys push the wage increases through in Q4, and was that part of the revenue upside at Shipbuilding broadly in the quarter?
Gautam Khanna: Hey, good morning, guys.
Gautam Khanna: Hey, good morning, guys.
Chris Kastner: Good morning, Gautam.
Christopher D. Kastner: Good morning, Gautam.
Gautam Khanna: Wanted, wanted to ask on Ingalls. I know there was, and maybe you addressed it and I missed it, but you know, the union contract, did you guys push the wage increases through in Q4, and was that part of the revenue upside at shipbuilding broadly in the quarter?
Gautam Khanna: Wanted, wanted to ask on Ingalls. I know there was, and maybe you addressed it and I missed it, but you know, the union contract, did you guys push the wage increases through in Q4, and was that part of the revenue upside at shipbuilding broadly in the quarter?
Speaker #4: No, not at Ingalls,
Chris Kastner: No, not at Ingalls, no.
Christopher D. Kastner: No, not at Ingalls, no.
Speaker #4: no. No.
Gautam Khanna: No. And what's sort of the timing on, on that?
Gautam Khanna: No. And what's sort of the timing on, on that?
Speaker #5: timing on And what's sort of the
Speaker #5: that? We expect to get through that in the
Chris Kastner: We expect to get through that in Q1. I don't want to comment directly on a union negotiation, but we're engaged heavily with the union to get that done almost daily. But we expect that to get done in Q1.
Christopher D. Kastner: We expect to get through that in Q1. I don't want to comment directly on a union negotiation, but we're engaged heavily with the union to get that done almost daily. But we expect that to get done in Q1.
Speaker #4: On a union negotiation, but we're engaged heavily first quarter. I don't want to comment directly with the union to get that done almost daily.
Speaker #4: But we expect that to get done in the first
Speaker #4: quarter. Gotcha.
Speaker #5: And just on the DCS block 6 and the Columbia class contract, what that might get awarded is your best sense on timing of when formally?
Gautam Khanna: Gotcha. Just on the DCS Block VI and the Columbia-class contract, what is your best sense on timing of when that might get awarded formally?
Gautam Khanna: Gotcha. Just on the DCS Block VI and the Columbia-class contract, what is your best sense on timing of when that might get awarded formally?
Speaker #4: So it's really hard to say. We need it before the end of the first half of the year, in order to maintain our production schedules.
Chris Kastner: Really, it's – Gautam, it's really hard to say. We need it before the end of the first half of the year in order to maintain our production schedules, but it's just hard to say. We're engaged heavily with Electric Boat and the Navy to get it behind us, and I think we will get it done. And as I said previously, the 2026 budget getting done and then clarity around what's gonna happen in 2027 and the fit-up, I think really helps. And after that falls into place, we can get those contracts behind us. One thing I know for sure, the Navy's gonna buy submarines. So we need to get it done before the first half of the year, so we can maintain the production schedules and make sure that is not a risk that we have to deal with.
Christopher D. Kastner: Really, it's – Gautam, it's really hard to say. We need it before the end of the first half of the year in order to maintain our production schedules, but it's just hard to say. We're engaged heavily with Electric Boat and the Navy to get it behind us, and I think we will get it done. And as I said previously, the 2026 budget getting done and then clarity around what's gonna happen in 2027 and the fit-up, I think really helps. And after that falls into place, we can get those contracts behind us. One thing I know for sure, the Navy's gonna buy submarines. So we need to get it done before the first half of the year, so we can maintain the production schedules and make sure that is not a risk that we have to deal with.
Speaker #4: But it's just hard to say. We're engaged heavily with Electric Boat and the Navy to get it behind us, and I think we will get it done.
Speaker #4: And as I said previously, the '26 budget getting done and then clarity around what's going to happen in '27 and the fit-up, I think, really helps.
Speaker #4: One thing I know for sure, the Navy is going to And after that falls into place, we maintain the production schedules and make sure that is not a risk that we have to deal with.
Speaker #4: One thing I know for sure, the Navy is going to And after that falls into place, we maintain the production schedules and make sure that is not a risk that we have to deal with.
Speaker #4: buy submarines. So we need to get it done before the first half of the year so we can can get those contracts behind us.
Gautam Khanna: I would just love to get your perspectives, if you're willing to share them, on how, like, you know, this thing was expected at one point to be done north of over a year ago, then we were thinking year end, 2025. Is there any long poles in the tent, or is this just sort of T's and C's, you know, minor stuff that needs to get hashed out? Or is there a big... I'm just curious if you can give us any sort of update, just because we've been talking about it for north of a year.
Speaker #5: And I would just love to get your perspectives if your one point to be done over how this thing was expected a year ago.
Gautam Khanna: I would just love to get your perspectives, if you're willing to share them, on how, like, you know, this thing was expected at one point to be done north of over a year ago, then we were thinking year end, 2025. Is there any long poles in the tent, or is this just sort of T's and C's, you know, minor stuff that needs to get hashed out? Or is there a big... I'm just curious if you can give us any sort of update, just because we've been talking about it for north of a year.
Speaker #5: Then we were thinking year-end 2025. Is there any long balls in the tent, or is this just sort of Ts and Cs, minor stuff that needs to get hashed out?
Speaker #5: Just curious if you can give us any sort—or is there a big—I'm
Speaker #1: Sort update just because we've talking about it for north of a year been of .
Chris Kastner: Gautam, I just think it's a big, complicated contract, and you have three parties involved that need to all be comfortable with what the solution is. Fortunately, those teams work very well together, but it's just a big, complicated contract, and we need to get to the finish line here.
Christopher D. Kastner: Gautam, I just think it's a big, complicated contract, and you have three parties involved that need to all be comfortable with what the solution is. Fortunately, those teams work very well together, but it's just a big, complicated contract, and we need to get to the finish line here.
Speaker #2: involved that comfortable solution . is with what the those work teams very well together , but it's just a big , complicated and we need the get contract finish line here to the
Speaker #2: be Okay .
Gautam Khanna: Okay. Thank you, guys.
Gautam Khanna: Okay. Thank you, guys.
Speaker #1: Thank you
Speaker #1: guys . .
Chris Kastner: Sure.
Christopher D. Kastner: Sure.
Operator: Thank you, Gautam. Our last question is from Mariana Perez Mora, from the Bank of America. Your line is now open. Please go ahead.
Operator: Thank you, Gautam. Our last question is from Mariana Perez Mora, from the Bank of America. Your line is now open. Please go ahead.
Speaker #3: Thank you
Speaker #3: Gallatin . . Our last question from Sure Perez Mariana Mora from the America . Bank of Your line is now open . Please go ahead
Mariana Perez Mora: Thank you very much for taking my question. Good morning, everyone. So my, my question is gonna be about Mission Technologies. And how should we think about the, the share of the mix towards, like, unmanned solutions, autonomy, and those things in that, in that portfolio? Because I could imagine those are growing double digits, and I, I'm wondering when we, we should start to see that reflected in the growth for that segment.
Mariana Perez Mora: Thank you very much for taking my question. Good morning, everyone. So my, my question is gonna be about Mission Technologies. And how should we think about the, the share of the mix towards, like, unmanned solutions, autonomy, and those things in that, in that portfolio? Because I could imagine those are growing double digits, and I, I'm wondering when we, we should start to see that reflected in the growth for that segment.
Speaker #4: Thank you very much taking my
Speaker #4: when we we wondering start to should see that reflected in the growth for that segment .
Chris Kastner: So interesting. Let me, let me start here, and thank you for bringing up that, that question. We don't, we don't break out, growth rates within Mission Technologies by market segment, but I will say that unmanned is doing very well, unmanned undersea, and unmanned surface. As you, you can see by the launch of our new Romulus vehicles. And I think it's interesting when you think about the new or the evolving Navy strategy around the hybrid fleet or the hedge fleet, that we're right in the middle of that, with obviously a very keen understanding of large capital ships, but then also being the largest provider of unmanned undersea vehicles, and then having unmanned surface vehicles, all predicated upon an autonomy software that's really world-class.
Christopher D. Kastner: So interesting. Let me, let me start here, and thank you for bringing up that, that question. We don't, we don't break out, growth rates within Mission Technologies by market segment, but I will say that unmanned is doing very well, unmanned undersea, and unmanned surface. As you, you can see by the launch of our new Romulus vehicles. And I think it's interesting when you think about the new or the evolving Navy strategy around the hybrid fleet or the hedge fleet, that we're right in the middle of that, with obviously a very keen understanding of large capital ships, but then also being the largest provider of unmanned undersea vehicles, and then having unmanned surface vehicles, all predicated upon an autonomy software that's really world-class.
Speaker #2: So interesting . Let me here and for thank you bringing up that . That We don't we question . don't break out growth rates within market technologies by segment .
Speaker #2: I will But unmanned is very well . doing undersea and unmanned say that Unmanned surface you can see by the launch Romulus vehicles .
Speaker #2: I will But unmanned is very well . doing undersea and unmanned say that Unmanned surface you can see by the launch Romulus . I think it's of our new interesting when you think about the new As or the around the hybrid or the fleet evolving Navy , that we're fleet right middle of in the that with very keen obviously a understanding strategy of large capital then also ships .
Speaker #2: being the largest provider of unmanned undersea vehicles . And then have an unmanned surface vehicles , all upon an software that's really world class .
Chris Kastner: So from an unmanned standpoint, I do believe there's potential tailwinds there, but I think there's also tailwinds with the intersection between manned and unmanned. When you think about the Minotaur suite that we provide for the Navy, we're the chief developer of that. So I think it's gonna continue to evolve. I think it's gonna continue to play right into our sweet spot. And I thank you for the question, because I think it's something that's gonna be very positive going forward.
Christopher D. Kastner: So from an unmanned standpoint, I do believe there's potential tailwinds there, but I think there's also tailwinds with the intersection between manned and unmanned. When you think about the Minotaur suite that we provide for the Navy, we're the chief developer of that. So I think it's gonna continue to evolve. I think it's gonna continue to play right into our sweet spot. And I thank you for the question, because I think it's something that's gonna be very positive going forward.
Speaker #2: So from an unmanned standpoint , I do believe there's there's potential tailwinds there . But I think tailwinds there's also intersection between man and unmanned .
Speaker #2: When you think about the Minotaur suite that we provide for the Navy , where the chief developer that . of So I think it's going to continue to evolve .
Speaker #2: So it's going to continue to play into our right to sweet spot. And I thank you for the question, because I think it's something that's going to be very positive going forward—autonomy.
Mariana Perez Mora: And then when you think about those opportunities, right, and an administration that is leaning into what we're gonna call, like, commercial terms, how do you think about, like, investing your own dollars, owning that IP, and actually getting, I don't know, out of these, like, mid-single digit, like, cost-plus type of, like, margins for that segment, I don't know, 5, 10 years from now? Is that a possibility? How you think about, like, investments from that end?
Mariana Perez Mora: And then when you think about those opportunities, right, and an administration that is leaning into what we're gonna call, like, commercial terms, how do you think about, like, investing your own dollars, owning that IP, and actually getting, I don't know, out of these, like, mid-single digit, like, cost-plus type of, like, margins for that segment, I don't know, 5, 10 years from now? Is that a possibility? How you think about, like, investments from that end?
Speaker #4: And then when you think about those opportunities , right , and and an administration that is leaning into what we're going to call commercial how do you think investing your own that about IP and actually getting , I this ?
Speaker #4: out of mid-single Like digit , like cost plus type of like margins for that segment ? I don't know , five , ten years from now .
Speaker #4: Is that a possibility ? How do you think about like investments from that end
Chris Kastner: I definitely think there's more profitability potential within that segment. I think the IP situation or that argument gets to be a little bit more complex because we actually design our autonomy software to Navy standards, and it's open source, which allows you to plug and play and bring really good providers in, into the space. So that, that is a different argument. That's a different discussion on, on profitability. I do think that there's upside related to the unmanned space. I do think there's upside related to integrating the software into the product sets. And so that's why we've invested against it, and we will continue to invest it against it, and it's probably our highest source of IRAD internally within the organization.
Christopher D. Kastner: I definitely think there's more profitability potential within that segment. I think the IP situation or that argument gets to be a little bit more complex because we actually design our autonomy software to Navy standards, and it's open source, which allows you to plug and play and bring really good providers in, into the space. So that, that is a different argument. That's a different discussion on, on profitability. I do think that there's upside related to the unmanned space. I do think there's upside related to integrating the software into the product sets. And so that's why we've invested against it, and we will continue to invest it against it, and it's probably our highest source of IRAD internally within the organization.
Speaker #4: ?
Speaker #2: definitely think I there's more profitability potential within that segment . I think the IP situation or that argument gets to be more a little bit complex because we actually our autonomy software design to Navy it's open source , which allows you plug and play to bring really good providers in and standards , and into the space .
Speaker #2: So that that is a different argument . That's a different discussion on on profitability . I do that there's think related to the unmanned do think upside there's space .
Speaker #2: upside related to the integrating software into the I product sets so that's And why we've invested it . against And we will continue to invest against it .
Speaker #2: it And it's probably our highest source of Irad within the organization internally .
Mariana Perez Mora: All right. Thank you so much.
Mariana Perez Mora: All right. Thank you so much.
Speaker #4: Thank much you so .
Chris Kastner: Thank you.
Christopher D. Kastner: Thank you.
Speaker #2: Thank you .
Operator: Thank you, Mariana. I am not showing any further questions at this time. I would now like to hand back the call over to Mr. Kastner for any closing remarks.
Operator: Thank you, Mariana. I am not showing any further questions at this time. I would now like to hand back the call over to Mr. Kastner for any closing remarks.
Speaker #3: Thank you . Mariana . I am not any showing questions I would like to hand now back the call over to Mr. Karsner for any remarks closing .
Chris Kastner: Sure. Thank you, and thanks for joining the call today. Hey, I want to give a shout-out to the CVN-79 team. Both the sailors and the shipbuilders had a really great trial this week. It was an excellent, an excellent week to be a shipbuilder. I'm proud of, proud of the team, and, and I think the ship performed very, very well, and we'll keep that momentum towards, towards delivery on CVN-79. So thanks, everybody, for joining, and we'll see you out there.
Christopher D. Kastner: Sure. Thank you, and thanks for joining the call today. Hey, I want to give a shout-out to the CVN-79 team. Both the sailors and the shipbuilders had a really great trial this week. It was an excellent, an excellent week to be a shipbuilder. I'm proud of, proud of the team, and, and I think the ship performed very, very well, and we'll keep that momentum towards, towards delivery on CVN-79. So thanks, everybody, for joining, and we'll see you out there.
Speaker #2: Sure . Thank you , and thanks for the call joining a shout out to give the 79 CVN team . Both the sailors and the shipbuilders had a really great trial this week .
Speaker #2: was It a it was an excellent an excellent week to be a shipbuilder . I'm proud of proud of the team . And I think the performed ship very , very And well .
Speaker #2: That towards momentum delivery on CVN 79. So, joining, and we'll see you out there, everybody, for.
Operator: That concludes today's conference call. You may now disconnect.
Operator: That concludes today's conference call. You may now disconnect.
