Good day, ladies and gentlemen. And welcome to the Q3 2018 Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time [Operator instructions]. As a reminder, this call is being recorded. I would now like to turn the call over to Dwayne Blake, Vice President of Investor Relations. Please go ahead.

Thanks Ira. Good morning. And welcome to the Huntington Ingalls Industries’ third quarter 2018 earnings conference call. Chris Kastner, Executive Vice President of Business Management and CFO is out with the flu. So Mike Petters, President and Chief Executive Officer and I will be handling the call today. As a reminder, statements made in today’s call that not historical facts, are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Actual results may differ. Please refer to our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results. Also, in our remarks today, Mike and I will refer to certain non-GAAP measures. Reconciliations of these metrics to the comparable GAAP measures are included in the appendix to our earnings presentation that is posted on our Web site. We plan to address the posted presentation slides during the call to supplement our comments. Please access our Web site at huntingtoningalls.com and click on the Investor Relations link to view the presentation, as well as our earnings presentation. Mike, I'll turn the call over to you.

Thanks, Dwayne. And I want to pass along our best wishes to Chris, I hope he feels better, I hope this call will help him feel better. Good morning to everyone else and thanks for joining us. Today we released third quarter 2018 financial results that continue to meet our performance expectations for the business. So let me share some highlights starting on Slide 3 of the presentation. Our sales of $2.1 billion for the quarter were 12% higher than the third quarter 2017. Diluted EPS was $5.29 for the quarter, compared to $3.27 last year. We received approximately $2.8 billion in new contract awards during the quarter include full funding for the first two ships of the flight 3D DDG competition. As a results our backlog was approximately $22 billion at the end of the quarter of which approximately $17 billion is funded. The six ship DDG contract represents one of the first awards that will form the foundation to support the business for the next 10 to 15 years on the horizon our CVN 80 and 81, VCS block 5, NSC 10 and 11 and LPD Flight 2. As noted during our first quarter earnings call all of this contracting activity supports our sales outlook for the next five years and is expected to result in the award of base contracts or options to be exercised for 20 to 30 ships by the end of 2020. Turning to capital deployment for a moment during our November 2015 investor day meeting, we committed to investing in the business through CapEx and returning substantially all free cash flow to shareholders through dividend increases of at least 10% annually and share repurchases. Since that time we have made substantial progress in modernizing our shipbuilding facilities at Ingalls in Newport News by…

Thanks, Mike. As I review our third quarter financial results and provide a few updates to the full year. Please follow along with slide presentation we included with our earnings release, this morning. Beginning with our consolidated results on Slide 4 of the presentation we had another strong quarter as revenues of 2.1 billion increased 12% over third-quarter 2017 due to increased volume in our ship building segments. Operating income in the quarter of 290 million increased 49 million or 20% from third quarter 2017 and operating margin of 13.9% increased 99 basis points. These increases were primarily driven by higher segment operating income and a favorable change in the operating sales tax adjustment in the quarter compared to the same period of 2017. Turning to Slide 5 of the presentation, cash used in operations was 93 million in the quarter after contributing 434 million to our pension and postretirement benefit plan. This includes the final portion of 508 million discretionary contributions to our qualified plans in 2018. Free cash flow in the quarter was a use of 195 million and year-to-date free cash flow was 6 million. Net capital expenditures in the quarter were 102 million, or 4.9% of revenue, we expect capital expenditures for the year to be approximately 5% of revenue. We returned 130 million to our shareholders in the quarter, by repurchasing approximately 412,000 shares at a cost of 99 million and paying 31 million in dividends, bringing our cash balance at the end of the quarter to 68 million. Now to segment results on Slide 6 of the presentation. Ingalls results in the quarter of 694 million increased 17% from the same period last year driven by increased volume on LHA, LPD and NSE programs, partially offset by lower volume on the DEG program. Ingalls…

[Operator Instructions] Our first question comes from the line of Jon Raviv with Citi. Your line is now open.

It’s a pension and free cash flow question, so guys have previously talked about 2019 free cash flow being in the neighborhood of $750 million, with the lower net pension cash items and would it be fair to think of that, that 750 is a bit lower in 2019. And then just rolling forward from there, how do you think about sustainability of that number given what you guys have strategically approached the pension as we talked about earlier Mike with the pension net cash rolling off be able to be offset by lower CapEx for example. Thank you.

Thanks Jon and so when you think about the free cash outlook remember 2018, we talked about in essence, to be about 100 million headwinds from where we finished last year, so that would directionally put you in a 350ish range. You talk about the 400 million headwind and you're right, you look at the table that we provided in this presentation deck and it does indicates roughly a 60 million reduction from what we were looking at before. So that would directionally take that tailwind in 2019 from 400, call that 340. Given the fact that we still don’t know what the final discount rates and asset returns will be so call it in a range and say tailwind of 330 to 340 is probably a safe place to think about it. And kind thinking about it going into 2020 and we talk about the fact that we are positioning ourselves with putting out pension plans to a point where we're close to fully funded so that puts us in a place where the need and the demand for higher contribution is not as significant as it has been in the past. That nuance really puts us in a place where you don't have to really concern ourselves with the big contributions and that in turn keeps the CAS recoveries lower but at the same time with lower CAS recoveries to Mike's point earlier puts us in a place of affordability. So that's really what we focus on and I think that's kind of where we see ourselves.

And to your point in your question, you alluded to it is our intention to come off of the CapEx spending on schedule.

Got it and as a follow up on that CAS point, in your news point you have $247 million of CAS recoveries over CAS contributions. I understand the contribution requirement goes down could you speak to when the CAS piece goes down and the shape of the product CAS piece goes down, given the pension strategy.

So the CAS recoveries that we talked in the past that things will naturally gravitate towards kind of the zero. We really haven't talked specifically about the timing of that but as you can imagine there is a reduction that you can expect we'll give the specific number on the Q4 call, so stand by.

Thank you. Our next question comes from the line of Myles Walton with UBS. Your line is now open.

Mike I was hoping you could comment on this status of providing that evidence to the Navy so provide Congress for the savings of the block buy and kind of what the timeline is that you expect and what the hurdle of savings that you have to signup for or the Navy will have to see and provide evidence to support for you to get the go ahead.

I guess I can say that we submitted our proposal to the government several months ago and we had a very substantive and constructive dialogue working our way to closure on what that looks like as we go forward. We remain optimistic, starting with the legislative side both authorizing and appropriations we're looking forward to receiving information and we're trying to put that together. I would say that’s more of a long near-term than long-term issue because in order to get the savings that we're talking about we need to get this done. But given that we're into pretty steady conversation, I don’t think I want to predict timeline at this point, I’m just going to say were working really hard to do this as soon as we can.

And Dwayne you mentioned that the center cost referred work or after market work that you’re doing that you don't see as a necessary ongoing for multiple years. So what's the size of that contribution this year and what's the kind of headwinds for next year and is that pretty attractive margins relative to the base business.

Those availabilities on average Myles can run 200 million to 300 million run to 18 to 36 months on average. So you basically got three of them going on right now and so as I mentioned you will start to see the first of those kind of peel off in the middle part of next year. So we see that a little bit of a nothing substantial and at the same time, the Navy as they are continuing to make their push to increase the efforts on the modernization side of it is always opportunities on that front, so the team is certainly engaged on that front, and we’re prepared to support the navy if they have the availability that may need to come our way.

Let me just add, this falls into the whole readiness discussion that has been ongoing between the Pentagon and the services and the Congress and the issue from the industry standpoint is if you create a team that is capable of doing the work the feast or famine nature of this in the past has really had a pretty negative impact on the ability to efficiently achieve the readiness targets that you want. So our engagement today is not only in the work that we're doing to support the Navy's requirements for 2018 and 2019, but as also we are in discussion with the Navy along with the rest of the industry about how can you more efficiently support the readiness of the platforms that are out there whether they be surface ships or submarines. And so let’s see how that all works out at this point there is we are only at the discussion phase but my personal view is that what we then do and doesn’t really support the fleet that well what we as a team have been doing doesn’t support the fleet that well and as a team we've got to come to a better solution and we stand ready to help do that.

Thank you. Our next question comes from the line of Carter Copeland with Melius Research. Your line is now open.

I'm wondering if you can just expand a little bit on that on Myles' question on the repair and mod work and you have to strengthen that in the last few quarters but you didn’t explicitly mention it in the release so the slides there just wondering if the growth there is that sort of leveling off that's first question and then second one just so we make sure we cover all the accounting questions in addition to pension Dwayne can you give us the growth favorable and unfavorable EACs and just maybe some color around which segment they applied more to.

So I'll take the second one first. So the team adjustments net 34, 61 positive, 27 negative no material negative adjustments and the split was roughly 85 and Ingalls shifting Newport News.

Awesome.

And relative to the repair activity beyond some of what's driving that is the work we're doing in the refueling overhaul, and we're at that phase of putting the ship back together and so trying to get the delivery condition or the ship sorted out and so that's kind of the phase that we are in these are somewhat sequential you are planning the next one while you are kind of running to the end of this one and then you'll start on the follow-up when the ship leaves and so that's kind of there's a little bit of a cycle to that refueling business that you are seeing in the numbers this time too.

And then as it relates to the availability as again the pace that they are on they are kind of in the steady state now with the those that are actively working at Newport News and so I think all three of them are kind of in the I guess in the steady state mode if you will and as I mentioned you are start to see the first of those kind of peel off about middle towards the end of next year.

Thank you. Our next question comes from the line of George Shapiro with Shapiro Research. Your line is now open.

Two questions, one for you Mike and one for Dwayne. For Dwayne I'm estimating the workers comp that's facing expense in the quarter was about 15 day, and if you could explain where that came from. And then for you Mike, if you do get approval for the second carrier when do you need to get the money in the budget because the budget this year was kind of funny it said yeah maybe we will give you a approval but didn’t put any money in for it?

So your first question on the workers comp it was actually 43 million and it's basically a function of re-measurement of our workers comp liabilities that they do have periodically to look in that historical trends in terms of medical expenses and just Worker's Comp experience as well as discount rate. So something that is done periodically and that is the 43 million that I called in my remarks.

And George relative to the question about the funding, relative to the shipbuilder portion of the carrier construction acquisition when we look at not just the next year funding but the five year plan for funding for aircraft carriers, it was our view that you could reapportion that funding between the two ships and actually generate savings and that you wouldn't need to actually add any funding to make that happen and that really was the tipping point where you could say look if you already programmed the money for a ship if you actually just allow us to do two ships instead of one you don’t need to add any more money to the budget. You just need to get the authorization done we can proceed and actually generate savings. That's actually why, if we had to go and put more money in the budget to actually acquire the two ship. I would say that I will be a little less optimistic about the possibility of getting it done. But the fact that we can actually reprogram the money between the two ships to generate savings became a very exciting prospect for everybody we talked to, so its just a matter to definatizing it.

And just a quick follow-up for you Mike, you been saying 3% to 5% revenue growth this year you’re up 10% year to date and it looks like you got pretty much approved everything you said you hoped for in the '19 budget so you're willing to up that number.

Actually George to correct you, I’ve only said three, I never said 3 to 5. I’m not willing to change that because think about what's happening and on the one end we’re in a great spot that ships have been authorized and appropriated in the '18 or '19 window and it takes a lot of the uncertainty about '20 and '21 out of our business. As I said before, if you're going to sustain this the level of shipbuilding the SEN account for the last couple of years with Colombia on the horizon with frigates on the horizon with the LHA on the horizon, the LPDs on the horizon in addition to the Flight III destroyers, the block five submarines you have to be able to sustain the level that you're at today. And you know, we've seen comments where the Pentagon is already now stopping to think about maybe we need to prepare two budgets for '20. That’s not really consequential to us, but it does indicate there's a lot of uncertainty about whether we can sustain where we are today or not and as I said before, are we looking at a long-term sustained commitment to our higher level and a higher rate or is this just the rat and the snake that's going to be good for us but it's going to we’re going to go back to our historic levels. And I think the jury's still out on that, so I'm sticking to my number.

Our next question comes from the line of Rob Spingarn with Credit Suisse. Your line is now open.

You just kind of touched on this with George, but Mike with regard to the potential flattening out of the budget I’m think you just mentioned two budgets, I’m thinking of the lower one, the $700 billion and the spending on Columbia, which just seems to be a very top priority and that number is rising. How do we frame the risk to the rest of your portfolio?

This Rob is what we've been talking about I think I feel like I've been -- we've been talking about this for four or five years now that we've got to figure out first of all we've got to figure out sequestration we're '18 and '19 were great because we had a budget deal we go into '20 and '21 there is no budget deal everyone expects that there will be another one but you got to go do it. So sequestration is the first blanket. The second blanket then is the one that we have talked a lot about it how are you going to pay for Columbia without causing collateral effects in the account. And so you know, we manage to do that in '18 and '19 as we head into the next couple of years over, and we get ready to start construction of the lead ship. We're going to be working really hard to make sure that the affordability of the programs that might be affected works our way through. So you see efforts on the multiyear for the LPDs, the frigate competition is still out there. What happens to the option ships on the destroyer, the Congress was interested in a couple of more submarines in addition to the base contract for block 5. The question is how you are going to work all that through with the priority of getting funding for Columbia done and our view is the best thing for us to do is to stay engaged and make sure people understand the impact and consequences of any particular course of action, we comment that those discussions from a position of we're executing really well on our business, so we can tell you what the efficient way to do the work will be and we have made significant capital investment in our business to actually make us more affordable. Both of those help the argument that the sustainable higher rate of funding for shipbuilding is actually the most efficient course for the taxpayers to take. And that's the path that we're taking.

And then with regard to the strong execution that you are talking about Mike just switching to the carrier and on CDM 79 if indeed you are ahead of schedule should we think about that as meaning that labor hours are coming in below budget or have you had to put in more labor than expected to get ahead of schedule as given your result here.

So we have a pretty disciplined process around both cost variances and schedule variances that we manage down there and review the program is reviewing that daily I'm reviewing that every month. And so I think that and the earned value system that we use when we if we want to accelerate something we better make sure that it’s worth it to us, but it's not going to cost us more than would have cost us to began with or accelerate it or that there is a payback to the acceleration. And so what I really worry about in a construction program typically as we get so focused in on one particular critical path that we'll go and knock the heck out of the critical path but we will neglect some of them just more mundane volume stuff that we need to be doing and we kind of create this backlog of volume stuff that needs to be done and it pushes it to the right in the program. That's not really happening in this program right now we're basically we're making decisions about the path and the sequence and the program management teams intent to accelerate the schedule actually that's a way to reduce the risk in the program and so that's why I'm very supportive of that and very encouraged by their initiative.

And then just to refresh were not going to know we won't know how well you've done there until you put the ship in the water which is around the year from now.

About a year from now and our process is very disciplined and we've been through the process that’s not disciplined and if you lose that discipline then you’re setting yourself, may feel good in the short-term but your setting yourself up for some long-term problems. So we will know more when we put the ship in the water.

Thank you. Our next question comes from the line of Ron Epstein with Bank of America. Your line is now open.

Just a couple of quick one when the, for the Colombia class, is there going to be any additional CapEx needed for that or is you kind capitalized for what you’re going to need to do in Colombia class.

Right now the capital plan that we have supports the portion of work that we are intended to do. As my sense is that’s pretty firm but as we get closer to construction there's something that pops we will have to evaluate that but we made a pretty significant investment in the program already and we kind of like what we've done and what it means to the program.

And Mike could you just talk to there has been some discussion I think on the Hill about possibly doing second refueling of the carriers so you get some more carriers in the fleet by just refueling then yet again, what’s your sense on that, what that mean, is that an opportunity for your guys, where is that going to go?

Ron, I guess my experience with these ships and we all lived through the end of life of enterprise and kind of like, I don't want to be mundane about it, but kind of like your car, there is a point where every time you take the car in it costs you a whole lot more than you thought it should and as ships get older and you take them in for maintenance that curve, that maintenance cost curve isn’t linear. It starts to accelerate and becomes a real burden for the rest of the fleet. So I would think that if you, I mean there is a whole lot of technical stuff to talk about whether you can actually really do that from a science and materials and technology standpoint, but even if you decided that you wanted to do that you better actually really understand the cost curve of just your maintenance and I would not be an advocate of that. I would argue that the better way to increase the number of carriers in the fleet is to build them more frequently and efficiently.

Our next question comes from the line of Krishna Sinha with Vertical Research. Your line is now open.

I got a two-part question on margins. So you know couple quarters ago you gave sort of midterm guidance for 7% to 9% margins. And I just wanted to know when you put that margin guidance out there was there a particular point in time where your mix became headwind enough headwinds to push that down towards 7% to so far you been doing much ahead of that and similarly to that you talked about some of this ad hoc work like the Los Angeles stuff or other modernization work that could come down the pipe. Was that 7% to 9% inclusive or exclusive of that ad hoc work, so meaning is there were you thinking more about the core business being 7 to 9 and then this ad hoc work being layered on top or were you factoring in some of his ad hoc work into that 7% to 9% guidance.

Well, you probably give us a lot more credit than we deserve. When we look at the 7% and 9% we were coming off of our perspective that if you have a healthy balance in the business between new work and mature work you ought to be operating in the 9% to 10% range. And our outlook we couldn’t see all of the different pieces and we couldn’t see all of the different timing but what we could see was and still see frankly with the now that we've kind of come through an appropriations bill for '19, what we could see as that we are going to be very heavily weighted towards new work. If you just think about what we could be doing here, starting with the destroyers in this past quarter, the work for the destroyers but then follow that up with a contract for two carriers than a contract for block 5 and submarines, the backlog is going to go up pretty significantly, and that's going to create a significant amount of new work which we just felt that it was really important for you to understand that was going to push 9% to 10% balance out of balance. It's healthy and positive for the business because it's work were capturing but it's going to push us out of balance and you should not expect that we would be in 9% to 10% range as we work our way through that. Now we don’t have this stuff under contract yet so the timing of when we start to phase out of that and get to a place where we're retiring the risk in a way that gets us back in the zone is something that we keep looking to and I think that the fact that we have been able to perform in this arena even with that kind of balance starting to shift I think that actually speaks well of the folks in the ship yards that are executing. But it's on them that we've actually done better than we might have thought we were set up to do, so I'm proud of the team, I'm proud of what we're doing but I think that you just got to keep your eyes open. A two carrier contract is going to completely weigh down the front end of the balance beam, so that's kind of the way we're thinking about it.

Let me just add too on the front end Krishna when you look at where we are this year for ship building and with the reported number is kind of a big number at 10.7% for ship building but when you take out the kind of the one timers and it's kind of puts you back towards like 8.4% for the quarter and even year-to-date is at 8.4% so when we talk about the 7% to 9% it's kind of work it's relatively kind of in the middle of their sweet spot.

And then just again on ad hoc work do you have any sense you talked about Los Angeles and you talked about maybe some other modernization type work in the wings but you could see coming down the pipe do you have any sense of the size of those opportunities and the timing of when that would come through and not like in terms of a quarter or but maybe in terms of years when that would come through.

Yes, I think it's frankly it's too early to tell. It kind of depends on how the navy comes through its discussion about how to improve its stability to get the fleet ready and what our role in that's going to be and it's just not mature enough to be able to make any predictions on it.

Our next question comes from the line of Finbar Sheehy with Bernstein Research. Your line is now open.

You've talked about returning essentially all the free cash flow back to the shareholders and you been doing it primarily through repurchases. But you also said you plan to increase dividends at least 10% annually and can you give us any thoughts on how you're thinking about ultimately dividing the path between dividends and repurchases is there for example, a long-term dividend payout ratio you want to get to or split between repurchases and dividends.

So Finbar when you look at the commitments and we talked about the fact that we would have at least a 10% increase on the dividend, which we've done and then the share repurchases will be opportunistic. So we continue to take advantage of opportunistic repurchases so we don't really have any set targets that we're shooting towards in terms of a payout dividend or anything of that nature. But you know suffice to say we'll be focused on continuing the commitment on the dividend increase and being opportunistic on the share repost.

And just on Q4 some of these ACs, are there significant risk reserve events coming up that you expect to be positive or negative in the quarter.

So for the second half we don't have any additional ship deliveries, we had NSC 7 that delivered in Q3, as Mike mentioned DDG 117 is preparing for trial in Q4. So that's pretty much it for this year.

Thank you. Our next question comes from the line of Gautam Khanna with Cowen & Company. Your line is now open.

You may have covered this I apologize joined late but just to be clear Chris on cash flow, I know you haven’t officially guided it but next year previously we were thinking 750 is it now the delta is just the lower pension recovery is that right.

And guess you weren't on the front end of the call, I’m Chris today. So I talked about the fact that change in the net CAS cash roughly 60 million and then also mention the fact that we still don’t know what the final discount rates and returns will be so that could put some additional variance in the number so use kind of a 330 to 340 tailwind versus the 400 that we been talking about before we would be pushing the safe spot.

And then in CapEx just to be clear, should we assume that 2019 is relatively flat with '18 and so 2020 drops about 200 million to get 1.8.

That gives you to the number we been talking about. So yes its fair way to think about it.

And just any update on icebreaker some of the longer-term pursuits that you guys have talked about any update on where those things stand today.

I mean you can read about those programs are proceeding at pace whether it’s the icebreaker or the frigate we're engaged in both of those programs and we're engaged with those customers and we keep moving ahead at their pace.

The pace on the icebreaker seems to be slowing. Is that fair or what do you expect this actually ultimately get done.

That’s a good question, I’m kind of the mind that they still have to kind of reconcile how much they want to spend with what they want to buy. And so I think you see that sort of whenever programs it's not just the icebreaker, whatever program has a huge appetite for what it wants to buy but doesn’t have a huge budget it takes a little bit longer to get it get that sorted out because you have to kind of go through and figure out what's important to you. And so I think that's kind of where they are.

Thank you. Our next question comes from the line of Joseph DeNardi with Stifel. Your line is now open.

Mike, it surprised me a little bit that you called out lower CBN 79 sales in the quarter was that just an anomaly or have sales kind of peaked on that contract at this point.

I guess comparatively speaking Joe it's Dwayne, so the timing maybe a bit of a nuance but I think when you look at where 79 is the team is marching full steam ahead towards launch so in terms of how the actual volume compares quarter-over-quarter can vary but it's not slowing them down at all in terms of where they are focused.

And then Mike just want to make sure I understand what you are trying to communicate, I guess on the pension commentary was the message that we should kind of temper expectations from a cash flow standpoint or if there's margin upside as you realize the cost savings of that strategy.

Well, I will tread gingerly here and just suggest that we were given the opportunity several years ago with everybody in the industry we were given the opportunity to make some choices that would free up cash in the near term for -- related to pension that would then create a longer tail in terms of recoveries. We chose not to do that because we already had figured that how to allocate our capital and as we were our focus in this businesses is to continue to make our businesses more competitive and our products more affordable. And so by making that choice I think we were a bit of an outlier, but we are in a place today where that choice is something that is pretty evident that we made that. So as we work our way through how we describe impact of pension for the next year and CAS recoveries for next year and the year after, I'm pretty happy with where we are because I think we are in a much more competitive position and I think our products are going to be more affordable and in an environment where every dollar in the budget is a knife fight that's not a bad place for us to be.

We do have a follow-up question from the line of Jon Raviv with Citi. Your line is now open.

Just going back to Krishna's question about the margin, 7% to 9% certainly appreciate that you are the midpoint year-to-date with all of this new stuff picking up should we expect that to go down in 2019. And then potentially recover once we get CBN in the water late next year or is it 7% to 9% perhaps apply a little bit beyond '19 as well.

Yes, so we've again the 7% and 9% range was the '18 and '19 get phenomenon margins back in the sweet spot as Mike mentioned on 2020 to 2021 timeframe so that remains our drives the fact that we are doing a little bit better, thus far certainly is certainly a positive phenomenon but we are still going to keep that 7% to 9% range out there for the current view of the world.

And the lumpiness of the business, I’m not going to try to handicap you know quarter by quarter we are typically not very good at that.

Thank you. We have a follow-up question from the line of George Shapiro with Shapiro Research. Your line is now open.

Can you just tell us what is the learning curve that you now running on the Kennedy versus the Navy's always been skeptical that you could achieve it given their history of what second ships are.

So in the history I think GAO did a report and pointed out that the best man hour reduction from one ship to the next in the carrier program was like 9% or something like that, you know, which is that’s an interesting benchmark. Our performance today is 15% or in some places better than that. So I’m very pleased with what's going on there and very happy with the way the team is looking for ways to continue to create value for customers and shareholders.

And if you looked at this say over the six months so is that 15% improved, stayed about the same.

Without getting too technical, it's been about the same, it's been a pretty steady rate.

Thank you. That concludes our question and answer session for today. I would now like to turn the call back to Mike Petters for closing remarks.

Thank you and thanks to all of you for your interest in Huntington Ingalls and for joining us today. Appreciate your perseverance as we muddled through without Chris and we hope Chris will feel better going forward. My hope anyway is also that you can see that over time all of the strategies that we have are designed to make our products make our businesses more competitive and make our products more affordable. I think you can see that whether it's in our capital improvement programs, our digital strategies, our transformation initiatives, our engagement opportunities all of that is designed to improve that experience for our customers. And so we think that's the best way for this business to create value. We believe that we are on track for that and we appreciate the time you put in this to working with us and we forward to seeing you soon. Thank you all very much.

Ladies and gentlemen thank you for participating in today's conference. This does conclude today’s program. You may all disconnect. Everyone have a great day.