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. 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.

Now I'll turn the call over to Chris.

Thanks, Christie. 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. 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. These included developing the U.S.

Army's high-energy laser weapon system, debuting REMS spectrum dominance EW solution, delivering Lionfish small unmanned underwater vehicles to the U.S. Navy, expanding shipboard and shore-based training for U.S.

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 toward 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.

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 the 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. 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. 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 achieved 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%. 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 will continue to develop our workforce to maximize productivity. 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. Our second operational initiative in 2025 was to have 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 II, CVN-75 RCOH, and CVN-82 long-lead material. 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 dollars 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.

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, 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, 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 Appropriations 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 RCOH, 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.

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 U.S.

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?

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 six, 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.

At Newport News, fourth-quarter 2025 revenues of $1.9 billion increased $303 million, or 19%, from the fourth quarter of 2024, primarily due to higher volumes in both submarines and aircraft carriers. At Mission Technologies, fourth-quarter 2025 revenues of $731 million increased $18 million, or 2.5%, from the fourth quarter of 2024, primarily driven by higher volumes in warfare systems, global security, and unmanned systems.

Moving to slide seven, 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 the fourth quarter of 2024.

Results at all three segments improved compared to the fourth quarter of 2024. Ingalls fourth-quarter 2025 operating income of $68 million and margin of 7.6% compares to $46 million and 6.3%, respectively, in the fourth quarter of 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 fourth quarter of 2024. Newport News fourth-quarter 2025 operating income of $84 million and margin of 4.4% compares to $38 million and 2.4%, respectively, in the fourth quarter of 2024.

If you recall, these results are 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. Fourth-quarter 2025 results also include favorable contract adjustments on the 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 of 5.9% compares to $19 million and 2.7%, respectively, in the fourth quarter of 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. 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 year. Moving on to consolidated results for 2025 on slide eight, 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.

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 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.

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 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 in 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 -$28 million. Newport News net cumulative adjustments was -$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.

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 and 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 continue to prioritize investments to drive higher throughput in our shipyards. 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 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. Regarding our multi-year targets, we are updating the medium-term growth targets that we had provided previously.

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 or battleship programs. We will need to revisit these growth assumptions once we have a better understanding of 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.

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.

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 the first quarter of 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 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.

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 Christie for Q&A.

Thanks, Tom. As a reminder to everyone on the call, please limit yourself to one initial question and one follow-up, we can get as many people through the queue as possible.

Operator, I will turn it over to you to manage the Q&A.

Thanks so much. Good morning.

Morning.

Morning.

Chris, I'd like to follow up on those productivity numbers that you gave, the 14% progress in 2025. Is there any view if that performance there was the same across the various shipbuilding programs?

Then how much more is needed, for example, on the Virginia class, if you're going to get consistently to two a year?

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. There's an incremental walk-up in throughput required to get to the two Virginia class per year, but they had a very good year last year.

It was really broad-based improvement across the portfolio, both at Newport News and Ingalls.

Okay. 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?

We don't have guidance beyond this year yet, Rob, but 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, but we're not going to provide additional guidance at this point.

That's right, Chris. I'd just comment on that as he says, 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. 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.

Okay. That's great.

Thanks so much.

Thanks, Rob.

Good morning. Thank you.

Morning, Doug.

You saw Morning. Good morning.

You saw a really good revenue growth in Q4 and at both yards. In Newport News, though, your margins are still pretty low.

Tom, you mentioned the two negative EACs on the CVN program. 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 for longer term?

Appreciate the question. 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. 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 lift. I believe what we've done in wages and what we've done in contract adjustments, some change management REAs that we have on that will assist in that, too.

A piece of what we're seeing at Newport News, fairly consistent across all four four quarters there, it's just a mix of the portfolio itself, contract type, 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 at either 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 and 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.

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 rework. It's stabilization of EACs, making our milestones, working off the existing portfolio, and getting into those new-start contracts.

You've got a lot of money for the industrial base off those last two Block V boats, and as you commented, the '26 budget has really big support for shipbuilding. One one of the things that we've found challenging is the money can be there, but it's getting it through, the throughput that you're talking about.

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. 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? Is that enabling you to get where you need to be with respect to your industrial base?

Doug, let me take that, and Tom, if he wants to add, that's great. Definitely, the Block V two-boat 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. 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. 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. We welcome the opportunity to continue investment to increase throughput, and we're going to continue to do that.

I'd piggyback on the backside of that. I'm with you about the budgets and opportunity sets there, and we're seeing it flow into the company.

It's not just on the budget line. 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. We saw shipbuilding at 9.7% for the year for '25 over '24.

I'm inspired by 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.

The dollars are there, there's a need for our products and services, the funding's in place, both with our backlog and anticipated awards that we have coming in 2026. I'm happy to see an inflection of 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've increased outsourcing by 100% last year, and we have a 30% target this year.

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 beaten that the last two quarters, and we'll see that we can continue hiring, retention, and outsourcing.

Very good. Thank you.

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 fourth quarter had some pull forward, but the first-quarter guide, if my math is right, calls for shipbuilding sales to be up 13% year-over-year.

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?

I wouldn't get too tied up in how that plays out for the whole year. There's a lot of timing in that, both we saw a little bit material unexpected, even the guide we gave you to go from 8.9 to 9.1 to 9.0 to 9.1, and then we came out at 9.5.

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 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.

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 expect that to continue going forward here.

There's always some choppiness from quarter to quarter on milestones and margin recognition on ship deliveries and major milestones. There's nothing overly to highlight that's going to be problematic as the revenue I expect to continue to ramp into 2026.

Okay. 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.

I'm 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. You need to keep that aperture open, and depending on how that acquisition profile or that acquisition strategy develops, then I think the investments will follow.

All right, thank you.

Sure.

Hey, good morning, guys.

Morning, Noah.

I guess, if I kind of zoom out and look at the shipbuilding margin, it's kind of flattish through 2025. It's actually down sequentially a little bit through '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 '27, 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? 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?

Let me start on that, Noah, and then Tom Tom can chip in on the back end. 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 there's investment required that we're making in outsourcing and overtime to prioritize schedules on these ships, which is impacting our profitability, there's no doubt.

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.

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 '26 budget was done and then the '27 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.

I have some comments to Scott and the street there. To your point with the new contract starts that are coming with the awards when we book, well, that's baked in already into the guidance that we provide, right?

Nothing's changed just because those awards are coming and what we gave you in 2026. Then 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 '25 to '26. If you think about '24, it was 5.2%.

'25 was 5.9%. That's up 13%.

Although we gave you a range of 5.5 to 6.5, it's kind of in line, Chris said back in Q3 '24 hey, the next 18 to 24 months, it's going to be choppy, we're going to work off these old ships. A re-guide of what we gave you last year is not inconsistent.

Even in Q3, when I gave you that hey, 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 '25, they're falling into this year, and we finished at 5.9%, right?

We're not surprised or it's off what we've been talking about that we're dealing with here. I'd tell you that the range is consistent in '26 as it is in '25.

We finished '25 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 going to change what the last 13 weeks did for the next 13 weeks. Again, if we think about it, we shouldn't be surprised that we guided fairly conservative at the beginning of the year, and consistent with what the actuals were for Q4.

As we look at Q4, there's timing in there, 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, we'll work that off. 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.

The 5.5 to 6.5, it's still a good range of outcomes. Last year it was just about at the midpoint without the awards, we're expecting those awards to happen this year.

In my remarks, I said in the first half of the year. Then with the milestones that we've given you, Q2, Q4 we provide the milestones.

We met most of them last year, and we expect to go do that, most to all of them, this year here, so that's going to 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 going to be an assist as we go forward.

Then I mentioned the increase from the 5.2 of '24 to 5.9 of 2025. 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.

Then kind of lastly, as Chris said, it was baked in already, but 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, there's a little bit of draw on cost efficiency on that.

Then the first-time outsourcing and first-time builds, 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 over heading towards 2027. I hope that was helpful.

That was very helpful. That'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. Can you talk a little bit more about that?

How much upside? Specifically on the SSC win, when does that start ramping up for you?

Thanks, Noah. The frigate win, very confident that 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 '27 budget comes out.

We're fortunate on that program that we still have a lot of the material from NSC 11, which is really a lot of the upfront cost on a ship. I don't expect material impact to 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's going to unfold with us, the Navy, and BIW. There will 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.

Thank you.

Sure.

Hey, good morning, guys. Chris, could you talk more about the supply chain at Newport News?

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 the fourth quarter on CVN-80?

Or was it later than expected? Is that what drove the negative EACs and kind of where are you right now in that program and just want to get a better sense of that.

We have received all of the engine room material, done deck over as I said in my prepared remarks. We're 50% erected and will continue to make progress this year.

Have a little bit of momentum on that program. Throughput has actually accelerated, and the key there is getting back in sequence, which they're working very hard to do.

There was investment in overtime on 80 to get back on schedule, try to get back on schedule, and as I said, they're working hard to do that.

Sounds good. Then just, Chris, 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?

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.

No, it's universal support for shipbuilding in reconciliation, the '26 budget, the potential '27 budget. It's all on us to execute now, but all of our programs are supported.

Great. Thank you.

Sure.

Hey, thanks very much, and good morning. Wanted to follow up quickly on the frigate.

I think you talked about that being a driver potentially of growth in 2027. Given the target of having a boat in the water in 2028, should we think about that ramping up rather quickly?

Is there anything you can say about the magnitude of the lift there at Ingalls and what it will do to the mix as well, given that I think the NSC was a very profitable ship for that yard?

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 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.

That is upside. 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.

Okay. Should we think about that mix-wise being NSC-like?

I wouldn't necessarily think that, right? We're going to work with our customer to get a fair deal on that contract, 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.

Thanks. Then just to follow up, given where you ended the year with the cash balance and what you're forecasting for '26, have a decent amount of excess cash on the balance sheet.

By year end, I know there's understandably a certain amount of reticence about repurchases at this point. With good performance, does that become more of an option, or are there other things you would think about doing with it, or do we just kind of maybe sit with some excess cash for a little while?

Yeah. Remember, in the words of one of my predecessors, cash can be pretty lumpy.

It will continue to be lumpy in shipbuilding. We think the overwhelming opportunity from a value standpoint is to continue to invest in the shipyards.

We're going to do that. It's going to improve both the top and bottom line.

That's our focus right now, and it's been our focus for a while.

Great, thanks very much.

Sure.

Hey, guys. Thanks for taking the 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 the first quarter, 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?

Obviously we gave you the annual guide of 5.5 to 6.5. We've been giving, for the last couple years, the next quarter, 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 going to alter it one way or the other, other than timing, how we perform over the next 11 months.

Then the awards themselves will bring about a good balance of affordability to profitability, the contract terms and conditions. There'll be some incentives in there, we'll have to work ourselves through that.

Not going to give any more comment on that, as we're through negotiations as that effort's trying to get through approval cycle right now. I think it's the beginning of the year.

We don't want to get our head over ourselves. Really, it makes sense that we exit Q4 a 5.5 kind of run rate over there.

We're going to hold pat at this number. We'll update you in May, and you'll get a look-see both for what's going to happen as a forecast in Q2.

We have hinted that expect the awards the first half of the year here, so that's going to facilitate a good pace and a trajectory of at least midpoint or better going forward here for the year.

I guess my question is, is it even possible that we start the year at the higher 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, that's not even on the table?

The range is for the entire year. I'd stay focused on what we gave you for the quarter.

Fair enough. Then if we just double-click on the milestones in the timeline, as you guys know, with deliveries, with the milestones, there's been 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 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 take the opportunity to bound for us?

Sure. Delivery of 30 and the delivery of 800 towards the end of the year.

Very focused on getting both of those boats done. 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.

Got it. Thank you, guys.

Sure.

Hey, good morning. Tom, do you expect the company to make money on CVN-80 and 81, given this trend of negative EACs?

Yes. We do.

We think we're booked accordingly right now. We've described what 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, the schedule's a little bit longer, and it's created some cost efficiency. We're working 80 specifically out of sequence.

With the deck over right now, the team's feverishly working with the experience they have building carriers to getting that back on sequence, getting out of the dry dock, and then doing the shipboard work how to go forward here. We have not forecasted, we do not expect it not to be profitable.

Okay. 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 pipe fitters?

That's interesting. We haven't seen an impact, and the applicants and the hiring at Newport News was very, very strong over the back half of the year.

We haven't seen it yet. We'll watch out for it.

We're fortunate in the regional workforce development centers have been coordinated with the federal government, state governments to produce good shipbuilders, and we're going to continue to work on that pipeline. We have not seen that.

Good to hear. Thank you.

Sure.

Thanks, good morning. Tom, or Chris, 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.

I also think that you finished headcount flat versus the start of the year. Walk me through what your definition of improvement of attrition is.

Did you end with the headcount you expected, and then do you expect headcount to grow in '26?

Let me start, and if Tom has anything additional, he can add it. 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, Myles, we have support labor in that as well, and obviously Mission Technologies labor in that as well. 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. 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. 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 going to be required to be more efficient.

We need to work on distributed shipbuilding, continue to qualify suppliers, and make sure they're efficient and producing what they need to produce as well.

I just comment on that, as Chris said, there's a mix of that. What's the direct labor?

What's the support? There's job shoppers that we have that's not in the number.

Then there's outsourced work that we have. 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.

Okay. Then one quick one on Mission Technologies.

I think you're benefiting by another $20 million runoff in amortization, which would 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' profit?

Are you talking about against the guide, or are you talking about from how we performed in '25 or '24, the guide to '26?

2026's guidance of 5% 5% EBIT, but it should be benefiting, I believe, by about 80 basis points of amortization runoff.

I think the amortization runoff is about $10 million improvement, it's not as much of that. I would tell you so that's a piece of it, it's about half of it.

Then just the other half is what we're seeing in our contract performance, the maturity of how we're executing. Had some fee write-ups in 2025 that we took, and there's a potential of opportunity sets in 2026.

Our nuclear business with equity income always has upside, and we'll 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.

Although 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 8.6 finish. Up almost 50 bps 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.

It's an incremental improvement. 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.

Great, thank you. Thanks for the question.

Hey, good morning, guys. Morning.

Morning, Gautam.

Wanted to ask on Ingalls. I know there was, and maybe 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?

No, not at Ingalls, no.

No, and what's sort of the timing on that?

We expect to get through that in the first quarter. 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.

We expect that to get done in the first quarter.

Gotcha. Just on the VCS Block VI and the Columbia class contract, what is your best sense on timing of when that might get awarded formally?

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. As I said previously, the '26 budget getting done and then clarity around what's going to happen in '27 in the FYDP I think really helps.

After that falls into place, we can get those contracts behind us. One thing I know for sure, the Navy is going to buy submarines.

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.

I would just love to get your perspective, if you're willing to share them, on how this thing was expected at one point to be done 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 Ts and Cs, minor stuff that needs to get hashed out? 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.

Gautam, I just think it's a big, complicated contract. 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.

Thank you, guys.

Sure.

Thank you very much for taking my question. Good morning, everyone.

Morning.

My question is going to be about Mission Technologies and how should we think about the share or the mix towards unmanned solutions, autonomy, and those things in that portfolio? Because I could imagine those are growing double digits, and I'm wondering when we should start to see that reflected in the growth for that segment.

It's

so interesting. Let me start here, and thank you for bringing up that question.

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 can see by the launch of our new Romulus vehicles.

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. From an unmanned standpoint, I do believe there's potential tailwinds there.

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.

I think it's going to continue to evolve. I think it's going to continue to play right into our sweet spot, and I thank you for the question because I think it's something that's going to be very positive going forward.

Then when you think about those opportunities, right, and an administration that is leaning into what we're going to call commercial terms, how do you think about investing your own dollars, owning that IP, and actually getting I don't know, out of this mid-single-digit, cost-plus type of margins for that segment, I don't know, 5, 10 years from now? Is that a possibility?

How you think about investments from that end?

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 into the space.

That is a different argument. That's a different discussion 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.

That's why we've invested against it. We will continue to invest it against it, and it's probably our highest source of IRAD internally within the organization.

All right. Thank you so much.

Thank you.

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 week to be a shipbuilder. I'm proud of the team, and I think the ship performed very, very well, and we'll keep that momentum towards delivery on CVN-79.

Thanks everybody for joining, and we'll see you out there.