Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2021 Huntington Ingalls Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the call over to Dwayne Blake, Vice President of Investor Relations. Mr. Blake, you may now begin.

Thanks. Good morning and welcome to the Huntington Ingalls Industries second quarter 2021 earnings conference call. With us today are Mike Petters, President and Chief Executive Officer; Chris Kastner, Executive Vice President and Chief Operating Officer; and Tom Stiehle, Executive Vice President and Chief Financial Officer. As a reminder, statements made in today's call that are 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 the remarks today, Mike, Chris and Tom will refer to certain non-GAAP measures. Reconciliations of these metrics to the comparable GAAP measures are included in the appendix of our earnings presentation that is posted on our website. We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at huntingtoningalls.com and click on the Investor Relations link to view the presentation as well as our earnings release. With that, I'll turn the call over to our President and CEO, Mike Petters. Mike?

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's call. This morning we released strong second quarter 2021 financial results driven by another quarter of solid operational performance. So let me share some highlights from the quarter, starting on Slide 3 of the presentation. Sales of $2.2 billion were up from $2.0 billion in the second quarter of 2020. Diluted EPS of $3.20 was up significantly from a $1.30 in the second quarter of last year and pension adjusted EPS for the quarter was $3.05. New contract awards during the quarter were approximately $1.2 billion, resulting in a backlog of approximately $48 billion, of which approximately $24 billion is funded. And Chris will provide some color on a few of the key awards for the quarter during his remarks. Shifting to activities in Washington, we're pleased with a congressional markup process for fiscal year 2022 has begun an earnest following release of the president's budget request in May. Of note, the budget request continued recapitalization of the nation's strategic ballistic missile submarine fleet, and supported funding for CVN 80 and CVN 81 Ford-class aircraft carriers, two Virginia-Class submarines, one DDG 51 Arleigh Burke-class destroyer and LHA 9. We were also pleased that a second DDG 51 class destroyer was included as the number one priority on the Navy's unfunded requirements list for fiscal year 2022. And we look forward to working closely with the Congress during the FY 2022 markup process to urge support for the second DDG and other critical priorities, including the efficient production of amphibious warships. In closing Slide 4 provides some key takeaways from the recently announced agreement to acquire Alion Science and Technology. The team is preparing for closing of the transaction, and we are very excited about the addition of Alion to the HII family. Alion is a perfect complement to our existing capabilities in the technology driven defense and federal solution space. The solutions and products they provide are directly in line with the strategic focus that we have articulated for our technical solutions business and it enhances our technical capabilities and customer access in high growth national security markets, including C5ISR, Military Training & Simulation, and Next Generation Technologies & Solutions. We firmly believe that Alion offers significant growth potential and represents an investment in capabilities that support the evolving DoD national security requirements, which in turn are expected to generate significant long-term sustainable value for our shareholders, our customers, and our employees. Now, I will turn the call over to Chris for some remarks on the operations. Chris?

Thanks, Mike, and good morning, everyone. This was another solid operational quarter and I'm very pleased with the consistent progress being achieved across our shipbuilding and technical solutions programs. With that, let me share a few key contract awards and programmatic highlights from the business segments for the quarter. At Ingalls, the team received a contract modification from the U.S. Navy for $107 million to provide additional long lead time material and advanced procurement activities for amphibious assault ship LHA 9, which increases current funding on this ship to approximately $490 million. Regarding the potential bundled acquisition of LHA 9 with LPD 32 and LPD 33, discussions are ongoing with the customer. We believe that a bundled acquisition continues to be the most cost effective method of procurement of these critically important ships. In addition, Ingalls was awarded a contract with a potential total value of $724 million over seven years for planning yard services and supportive of a variety of in-service amphibious class ships, including the LPD 17 San Antonio class and LHA 6 America class. Shifting to program status, LHA 8 Bougainville is making steady progress through the structural erection and initial outfitting phases of construction with costs and schedule performance in line with our expectations. On the DDG program, the team successfully launched the first Flight III Arleigh Burke-class guided missile destroyer DDG 125 Jack H. Lucas in June and DDG 121 Frank E. Peterson, Jr. is expected to conduct sea trials later this year. On the LPD program, LPD 28 Fort Lauderdale is on track to conduct sea trials during the fourth quarter and LPD 29 Richard M. McCool Jr. continues to achieve production milestones in supportive launch early next year. A Newport News there were no significant contract awards to highlight for the quarter. So…

Thanks, Chris, and good morning. Today, I'll briefly review our second quarter results. 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 of the presentation, our second quarter revenues of $2.2 billion increased approximately 10% capacity at the same period last year. This was primarily due to the growth of Newport News and Ingalls and was partially offset by decline at technical solutions due to the portfolio of shaping actions we have taken. Segment operating income for the quarter of $169 million increased $174 million compared to the second quarter of 2020, and segment operating margin of 7.6% compares to a segment operating margin of negative 0.2% of the second quarter of 2020. The prior year results were negatively impacted by the Virginia-Class submarine program performance as well as impacts related to COVID-19. Operating income for the quarter of $128 million increased by $71 million from the second quarter of 2020 and operating margin of 5.7% increased 293 basis points. These increases were primarily driven by the segments, I just mentioned partially offset by a less favorable operating FAS/CAS adjustment. The tax rate in the quarter was approximately 19.9% compared to 18.5% in the second quarter of 2020. The increase in the tax rate was primarily due to adjustments related to research and development tax credits recorded in the second quarter of 2020. Net earnings in the quarter were $129 million compared to $53 million in the second quarter of 2020. Diluted earnings per share in the quarter were $3.20 compared to $1.30 in the second quarter of 2020. Excluding the impacts of pension, diluted earnings per share in the quarter were $3.05 compared to a loss of $0.49 per…

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'll turn it over to you to manage the Q&A.

We will now begin the question-and-answer session. Our first question comes from Doug Harned with Bernstein. Please go ahead.

Good morning, thank you.

Good morning, Doug.

In Q2, you had a big increase in Newport News revenues. And when you look at the back half of the year, you've got several pretty important milestones. So you've got a lot going on there. Can you give us a sense of sort of what took the revenues up so much in Q2? And how we should expect the workflow in revenues to kind of play out over these next few quarters?

Sure. It’s Tom here. Good morning, Doug. I appreciate the question here. Although the growth year-over-year for Q2 was large, capital result took a charge in Q2 last year for the Virginia-Class programs, so that comes on the margin side and the revenue side. So, it has a 21% increase, looking larger than it is. I'll tell you on the back half of the year with COVID understood right now the labor force stable, the contracts that we have no place right now. The run rate that we see is going to play out pretty consistent to the back half of the year. I’d say it's probably a flat to consistent back half of the year. I wouldn't let it run away from you as you try and see the growth from a year-over-year perspective and stick with the guidance that we gave you back at the beginning of the year, I still think that we're running on top of that.

Okay. And then you got this $926 million service award at Ingalls, you're in the process of working through the Los Angeles classwork as well in services. Can you give us a sense of how you expect services revenues to flow? Because I always think of this as something that we kind of know that trajectory for shipbuilding, but services is less certain. So how do you see that flowing? And do you get a sense on your Navy and budget discussions that – that there is going to be a pretty consistent driver of revenue coming from the services side?

Yes. So, a couple of parts on that answer there. On the Ingalls award down there, it's a long-term services type contract, obviously as the claims in the years get funded in the out years, we'll see that revenue mature down there. The services contract they have is the oversight and then the services aspect for the LPD and LHA program. So that was anticipated as far as our revenue projections that we had for you there. It's not a large portion of the Ingalls portfolio as you see it today. There are potentials going forward depending on how the landscape plays out both from a construction and feature services and our own type work to play out. We'll have to see how that goes forward. From a Newport News perspective, as you mentioned, we took on the LA's overhaul right now. So those were anticipated in our plans also, that was an overflow, right, from where the Navy was. I think medium to long-term we'd like to see ourselves get into a cadence of getting an overhaul on the subside going forward. And as we work with our Navy partner and what that kind of looks like, we'll provide additional guidance on that front.

Okay, thank you.

Our next question comes from Myles Walton with UBS. Please go ahead.

Thanks. Hi, Mike, I think in your remarks, you talked about stability or more predictability in the emptive purchasing power or purchasing strategy. And I guess you've got to a "handshake agreement" with the Navy. The congressional committees are pushing that to be more formalized into a contract. Can you just give some color aside from the greater visibility of having the ships under contract? What are the financial implications to Huntington Ingalls? I know there is savings for the customer. I'm just curious from a financial perspective to the company, how would it change if they bought it individually or they bought by agreement?

Yes, so I'll just kind of talk in general, anytime you're in a multi-year program, you're able to sequence the schedule of the platforms super informed to the way you've got your capital and your people and your material lined up. And you get into, as Tom used the work cadence, where cadence matters a lot – yet in this case, getting the LPDs and the LHA on in a cadence that's predictable over the next several years creates a foundation for all the other programs that Ingalls is going to be working, we're chasing, we're trying to capture. So it's a foundational piece of predictability from a cost structure, rate structure perspective. And I guess our view of that is that if you can get that locked in and create that kind of stability it's worth the savings to our customer, customer gets a good price for it, but it's also worth that to us from the standpoint of predictability. So that's kind of the way we think about it. I don't know Thomas do you want to add any more to that or Chris?

Okay.

Yes. So, Myles, its Chris. It really solidifies the next three to four years at Ingalls moving forward and maybe even more important than that, it solidifies the supply base that we keep that that ship class moving on a normal cadence to support Ingalls' readily over the next three to five years.

Sure. And I would probably just follow-up on the back of that too. As you know these bundles whether it's a bundle like we're doing here or a multi-year that provide flexibility to our customers and our parties down there, so whether they decide to take the bundle that's on the table now, or buy them kind of separately, the financial impact – so that obviously, as Mike said, this rates – this rates that come into play, the schedule of the ships, how we buy the material in a lot quantity or do we buy them individually. So all that factors into an affordability profitability piece of the equation now, but we put that forth to be as flexible to our Navy customer as possible and we'll see how they move forward with appropriate funds and award accordingly.

Okay. And I think you increased the five-year cash flow to $3.2 billion after Alion acquisition from 2020 to 2024. As we look to 2022 to 2024, I guess it implies the $740 million or so is that – Mike, is that a linear profile? Is it a big step up with a significantly higher backends? Can you just give any color to that as you see it today?

Yes. So they come online, as you know, we closed on the deal in August. In Q3, you'll get a look – see of the financials when the line rolled in there. We'll give you a little bit more color during the Q3 call for the specifics on how we do see 2021 falling out and then give additional color, as I hold until Q4 in the February timeframe of next year when we give that guidance going forward. I mean there's only so many ways you can spread the $200 million, but I just hold the thought there until we come through the integration and we finish out this year.

Okay. All right, thank you.

Our next question comes from Robert Spingarn with Credit Suisse. Please go ahead.

Hi, good morning.

Hi.

Tom, the margins at Newport News were a bit below where we were thinking and also below the underlying margins we've seen over the past couple of quarters. So I wanted to just ask what's going on there, driving the fluctuations in the underlying margins XEACs or was this net – negative EACs at work, and while we're at it, maybe you can just give us the EAC splits between the segments. Thank you.

That's great. I appreciate the questions. Sure. So now from a Newport News perspective, we kind of guided in Q1 if there was not going to be many opportunities for risk retirement and milestone from Q2 and Q3 that was exasperated at Newport News. I'd tell you although 5,000, 6,000 a bit low when you combine it with the first quarter, it's 6.1 for the first half year. So it's right in the runway of 6, 7 even if it's on the long side. It was not impacted by any major setbacks. The – favorably EAC increases was $62 million, the unfavorable was $27 million down for a net $35 million. And the upside is a little bit slated towards the Ingalls and then on the unfavorable assistance, slightly slopped from 50:50 towards Newport News, but there wasn't anything specific to call out there. On the favorable side, you will find in the Q there was – and in my comments upfront that the DDG 125 took an incentive for the CapEx and there was some solid performance and risk reduction at LHA, LPD 28 and LPD 29. But on the downside, there is nothing notable to kind of highlight here. Okay.

Can you quantify the benefit of the capital investment incentive recognized on Jack Lucas?

Yeah. It's up $14 million, and you will find that in the Q, it's upfront.

All right. Thank you very much.

Our next question comes from George Shapiro with Shapiro Research. Please go ahead.

Yes, good morning. It seems like you've raised the shipbuilding margin for the year that this benefit from – this capital investment benefit was something that you weren't anticipating? Or is it raised because you're expecting higher EACs in the second half of the year? Or it's just continued performance versus the first half?

Good morning, George. It’s Tom here. I'll tell you that we're happy in the books. We kind of have a line of sight the year is going to play out. So factoring in actually the two quarters than what we see here. We're still foreshadowing that Q3 is going to be in light in terms of milestones and risk retirements in the backend of the year for traditional opportunities another six months of a run rate to burn down risk. So, I think, we just felt comfortable and we wanted to help The Street understand where we think we're going to land by year's end.

Okay. But specifically was that capital investment benefit not an expected thing for the year?

So, George, it's a one-time event and it was expected, but it doesn't play out in the run rate for the range that we're giving you at 7.5% to 8%.

Okay. And then one, the free cash flow is pretty weak in the first half and it looks like working capital was up north of $200 million. The guide of $150 million to $250 million for the year still holds and what would it cause the second quarter to be as weak as it was. Thanks.

Sure. So, I'll tell you traditionally we use cash up front, so we punched out a minus 16 in the first quarter 2023 up here for net of plus seven through the first half of the year, not unexpected. And then Q2 was – the working capital was 7.9%. So, again, in the range of 6 to 8 what we expect. The back half of the year usually does see some favorability to the working capital, and that will come a little bit that we have to keep our eye on as we have to pay back the couple of progress payments at the end of 2021 and that may gates some of the positives – positiveness that you'd see in the working capital traditionally in the back half of HII. So from where we stand here to get to the $150 million to $250 million, it's just the number of operational run on the revenues and the payments flow to the book.

Okay. Thanks.

Our next question comes from Seth Seifman with J.P. Morgan. Please go ahead.

Hi, thanks. Thanks very much and good morning. A question, I guess, about profitability and whether I guess – if you look at the margin side and you talk about the opportunities for risk retirement later in the year and sort of the correlation between those two things, I guess, the new margin guide implies a down margin in the second half versus the first half, but you look at all the opportunities to check off at Newport News and even at Ingalls where margins have been very strong still more risk retirements ahead than have been checked off. So, I guess, the first part is kind of given this list for the second half, but why wouldn't we expect a stronger shipbuilding margin than we saw in first half. And then second, I guess, when we look at 2022 and we see sort of fewer milestones for Newport News, how do we think about – what that means for profitability there, and then Ingalls kind of coming off a high base, but obviously it looks like there's a lot to do there. So, I guess, looking at the correlation between these upcoming milestones and the ship building margins?

Sure. Yes, I can give you some color on both of those questions. So when you look at Q1, Q2, this was quite a few one-time events. Other than that, the incentives we're talking about here, on DDG 125 in Q2, Q1 there was a couple of incentives in there too, that we've highlighted. But I've been asked, can Ingalls keep this up at 14% and now 11.9%. And I keep providing the guidance down that that's not a run rate that's sustainable, I think between the one-time events and the incentives that we talked that – we'll see that come down. So I wouldn't really read that because we're giving you the 7.5% to 8% that somehow the margins are dropping off from a performance or operational standpoint at Ingalls. It's just that we won't see those one-time events in Q3 and Q4. From the question on the Newport News perspective, right now, if you look at it, they have a lot of new ships in their portfolio, right. So CVN 80, CVN 81 is coming online. There is a CVN 74 that just popped in here. And CVN 73 is nearing the end from a revenue perspective, and they have less weight on the portfolio there. So it's the mix of the ships that are in at Newport News. So when you talk about 2022 timeframe, those ships as they run through another three, four, five quarters, that'd be burning down risk, and there'll be a potential to increase booking rates.

Okay, great. I will take the one . Thanks very much.

The next question comes from Ron Epstein with Bank of America. Please go ahead.

Good morning guys.

Good morning, Ron.

Just quickly, could you give us an update on how things are proceeding with the Virginia-Class? Because that's a program that you ran into some challenges in the last 18 months, and how is it tracking now?

Yes, Ron, this is Chris. I'll start, if Mike wants to add on here. We'll do that, but really team performing well and the partnership performing well. Montana is proceeding to delivery this year, and New Jersey is proceeding to launch and then delivering next year, and then the shops are executing on the modules to support assembly for the subsequent votes. So confident and comfortable with how the Block IV and Block V programs are executing right now. Mike you want to...

Yes. Having to say that, moving the two per year in Block IV, and then we’ve been adding in the Virginia payload module in Block V. Success is going if it depend on rhythm and what we have established here; Chris's team and Jennifer, as the shipyard is establishing right now is they're establishing a rhythm and a program that's going to make them comfortable. We were working that when COVID hit us last year. And so we kind of hasn't stepped back a little bit and reset, but we're pretty excited right now about what's happening today, but also the rhythm that we're setting up for the rest of this program and the rest of the next programs; so pretty excited about that.

Got it. Got it. And then maybe just another with summary and question; this, do you guys, does the industrial have enough manpower labor right now to do the Virginia and the Columbia at the projected rates, where in a given year, if there's two Virginia’s delivered and Columbia, so you get three-subs. Is there enough capacity in terms of a qualified on a pipe fitters to do that?

Well, Ron, I guess if you took a – if you decided that everything was static and then you had to do all of that with the people that you have in the plant today, the answer is no, we don't have enough people in the plant today to do that. The fact is that we've been, since COVID began last March, we hired 6,000 people and train them and I will be forever remembered for saying that we can build capacity in the industry faster than the government can appropriate funding for it. So if the government wants to move ahead with a higher rate of so many production in a sustained way, not just doing it once in a while, but in a some sort of sustained way they want to go to three submarines a year or three Virginia-Class a year or two Virginia-Class and a Columbia a year, and they're going to sustain that for a period of time. We can absolutely have the workforce and the physical plant and the supply chain set up to go execute that. You set that it's a light switch and starting in the FY 2022 budget we're going to expand the buy from two to four. Well, we probably have some startup paints there, but we don't believe that's the way that's going to go. We believe that this has going to be done in concert, that's the history of it. And so I think I guess my own experience is that when you hear budget, people talking about lack of capacity, what they really mean is if they don't have fund, and that's, that's kind of the way the industry looks at it. So I think we can – we can expand, we can expand capacity if that's the plan, if it's the sustained.

Got it. Thank you.

The next question comes from Gautam Khanna with Cowen. Please go ahead.

Hey guys, I was wondering if you could talk a little bit about integration planning and sort of what early milestones we should be thinking about on the Alion deal to make sure that it's tracking the plan. So could you little – could you outline what you're doing, I know you're planning in terms of integration, sort of what the, what you hope to have accomplished by the end of the year with that deal?

Gautam, you've got to be careful here because this is Chris, we're not closed yet, obviously. She doesn’t want to get ahead of that. I will say that we had a very detailed immigration plan in place and then working very well with the Alion and in putting that plan in place. And I'd also I could say that Alion leadership team is going to play a very prominent role in the leadership team, king of the combined company when we do get closed. And we'll be able to report that the status of the integration on the Q3 call, but I don’t want to get in front of closing on that. And Mike, I won't hold up if you want to add anything.

I mean, I think we – I'll always say that we integrated high board last year. We have a blueprint for how to get into that effective and efficient way. Obviously this is a but muscles are to same. I'm pretty excited about; I'm excited about the opportunity to do this. There will be a lot of hard work by a lot of folks, but it will be the right time stuff to do. So, and we're certainly going to keep you posted on that.

Okay. And just as a follow-up, you talked about the $14 million benefit from the capital incentive this quarter. If I recall last quarter, you guys talked about Q2 and Q3 having fewer shipbuilding milestones. And I know this has been asked on the call, but I just trying to get a sense for; should we have thought about the potential for team catch-ups, maybe last quarter as $35 million minus the $14 million, like when we say not a lot of team catch up are opportunities, is $20 million sort of the not a lot opportunity, or should we think of it as like zero. There isn't a lot of, risk retirement opportunities. Because I guess, that was sort of the upside that certainly relative to my expectations walking in today, but there was an opportunity for a lot of favorable net adjustments.

Yes, I'll hop in there, we give that guidance. You talk about, hey milestones, hard milestones, so either milestones that if the, if we hit the milestone, we take a step up, as we check the EAC, we sell ship-off, really defined milestones that will bring in additional margin. So, I mean, that's true when we got it in Q1 and it's true right now when I look at punch through via Q2 into Q3. As I mentioned there was $62 million of $27 million out for net $35 million in the $62 million is $14 million of it, right? So as you're doing the math of that, I guess we're asking, hey zero to $20 million and $40 million is a of catch-up, as I mentioned to you 60-40 Ingles versus a Newport News there, but hey, just steady performance down at Ingles LHA, LPD programs. And there wasn't a specific hard milestone, but as we come through our quarterly EAC processes. We check the burn rate and the risk registers and where we stand. And the programs are running smoothly right now. So I don't think out of ordinary performance there and I think our guidance still holds true about Q3 is going to be light on milestones and there's opportunities over the next six months to retire additional risk.

Thanks a lot.

The next question is from Noah Poponak with Goldman Sachs. Please go ahead.

Hi, good morning, everyone.

Good morning.

Tom, did you say you also had capital investment related incentive in the first quarter?

I may have said that, but now that you bring it up again, we had an ECP that we closed out and I mistakenly put capital incentive. So we had an ECP on a DDG program that cleaned up for us.

Okay. Yes, I was going to say I was looking for that and I couldn't find it. Is that, something that has the potential to occur often and it's usually small enough to not call out or is it, or is that pretty unusual?

We do have ECPs that closed that from time-to-time, they not big adjustments that happened to be a rather larger adjustment that we had; and so that – that kind of weighed into the Q1 timeframe.

And the same question on capital incentive?

Fairly unusual to have a capital incentive that large.

Okay.

So we work, we work ourselves through, as we come through on these ECP that we provide for book proposals. We go to the table and negotiate. There's a balance of affordability and equity on these deals. And as we work ourselves through, sometimes they take time and then as we settled the deal whether it's additional large capital incentive. We'll let the street know when we close the booking.

Got it. Is there any other change to the previously provided 2021 guidance items outside of what you've mentioned on the shipbuilding margin?

No. We're going to give additional guidance that said in Q3 as we close out.

So that, that not being in the release or the deck is mainly just a reiteration as opposed to something else.

That's correct.

Okay. Thanks very much.

The next question comes from David Strauss with Barclays. Please go ahead.

Thanks. Thanks for taking the question. Good morning.

Good morning.

So in terms of performance year-to-date, does it change anything about how you're thinking about the shipbuilding margin progression beyond 2021? I think you've talked about low-80% in 2022 and then going up from there. So anything about the performance year-to-date give you more confidence. Maybe that could be a little bit better than that?

No. I would say where we got guided and where we expected today, and our outlook right now and next year is still whole.

Okay. And Tom, what has to happen from a working capital perspective over the next couple of years to be able to hit this $3 billion or $3.2 billion, I guess, with Alion included in it that, that free cash flow target. What's that embed for working capital and where specifically could the working capital upside come from?

Well, I think what we've always talked about is the working capital will be between 6% and 8%. So I think we'll continue to run operations accordingly. The Alion portfolio 85% costs that contract. So we don't see that as a claim from a working capital perspective as that gets integrated into the HI portfolio. But the big drivers that we kind of had highlighted how that $3 billion and now $3.2 billion come about, well more from a function of the 3% CAGR from the revenue, the margin rates popping up from shipbuilding, the capital getting back to 2.5%. And then we run through the math of that. The pension we've kind of cleaned up with Safe Harbor, so there's not going to be fluctuations on that front. I think on a couple of calls we've worked that through for $700 million on a run rate was attainable price of Alion purchase.

Okay. And thinking on pension is still, it's kind of a net neutral cash versus your contribution?

Yes.

All right. Thanks, very much.

Our next question comes from Burkett Huey with Morningstar. Please go ahead.

Hey, thank you so much for taking the question. So I was taking a look at the awards of $1.2 billion, and if you take out the shipbuilding – I'm sorry, the servicing contracts, and I think another $100 million contract to get to about $360 million and six unmanned awards. I'm wondering, is that a good way to think about the pricing point for you've used or may not thinking about that, right?

Yes. So there's a number of awards across the corporation in that value for awards. We don't get specific values to the price points of our UUVs? So yes, I wouldn't necessarily think about it that way.

Okay. Thanks.

Thank you. I'm not showing any further questions at this time. I would now like to hand the call back over to Mr. Petters for any closing remarks.

Well, I just want to thank everybody for joining us this morning. We had a good strong quarter. I'm pleased with where the leadership team is and where we're going. I hope that you and your families are able to stay safe and that you're able to encourage everyone out there to go get your shot. That's what we need right now. They are ready to get shots. So thank you all very much. We look forward to seeing you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.