Ladies and gentlemen, thank you for standing by, and welcome to the first quarter 2022 HII earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, please press star followed by one on your telephone keypad. Please be advised that today's conference is being recorded. If you need further assistance, please press star followed by zero and you'll be patched through to an operator. I'd now like to hand over the call to Christie Thomas, Vice President of Investor Relations. Mrs. Thomas, you may begin. First quarter 2022 earnings conference call. With us today are Chris Kastner, President and Chief Executive Officer, and Tom Stiehle, Executive Vice President and Chief Financial Officer. As a reminder, statements made in today's call that are not historical fact 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 their remarks today, 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 hii.com and click on the Investor Relations link to view the presentation as well as our earnings release. With that, I will turn the call over to our President and CEO, Chris Kastner. Chris? Thanks, Christie. Good morning, everyone, and thank you for joining us on today's call. Earlier this morning, we reported solid performance across each of our operating divisions with our focus on execution and growth, positioning us to reaffirm our previous revenue margin and free cash flow guidance. Our shipbuilding and Mission Technologies teams continue to execute well, despite facing some headwinds in the areas of human capital and supply chain disruption. Like the economy broadly, we are facing challenges created by the lingering effects of COVID and its impact on the labor market, making it challenging to hire and retain employees. Moreover, our suppliers are being impacted by the same shortage of labor as well as inflation issues, which creates risk of delays in delivery of key materials for our shipbuilding programs. We are aggressively working these challenges with our suppliers and our customers. In light of both of these challenges, I'm extremely proud of the resilience and the dedication of each of our 44,000 employees to continue to focus on the mission of delivering on their customer commitments. Shifting to our results, sales of $2.6 billion for the quarter were 13% higher than 2021, and diluted EPS of $3.50 for the quarter was down from $3.68 in 2021. New contract awards during the quarter were approximately $2 billion, driven by the award for DDG-139. This results in backlog of $47.9 billion at the end of the quarter, of which $24.8 billion is currently funded. At Ingalls, LPD-28 Fort Lauderdale completed sea trials and was delivered to the Navy. LPD-29 Richard M. McCool Jr. was launched, and we laid keel for LPD-30 Harrisburg. On the LHA program, LHA-8 Bougainville is progressing well, and long-lead material procurement has begun for LHA-9. On the DDG program, DDG-123 Lenah Sutcliffe Higbee achieved main engine light off, and DDG-125 Jack H. Lucas was christened this quarter. Finally, on the NSC program, serial production continues on NSC-10 Calhoun, launched in April. At Newport News, SSN-794 Montana completed sea trials and was delivered to the Navy, and SSN-796 New Jersey floated off in April. Also, as discussed in our fourth quarter call, SSN-725 USS Helena was redelivered in January, which demonstrated the successful reconstitution of our submarine maintenance capability in support of the Navy. On the carrier front, Newport News and the Navy celebrated the centennial of U.S. Navy aircraft carriers, and CVN-78 USS Gerald R. Ford was redelivered to the Navy in the first quarter after completion of its inaugural maintenance and modernization period. Progress continued on CVN-79 Kennedy, which is 83% complete, and CVN-80 Enterprise has begun erecting steel in the dry dock. On the RCOH program, CVN-73 USS George Washington is progressing in the testing phase and is 95% complete, and CVN-74 USS John C. Stennis is approximately 25% complete. A few weeks ago, we renamed our Technical Solutions Division Mission Technologies to better reflect our portfolio of capabilities and our commitment to delivering advanced technologies and multi-domain expertise to our support of our national security customers. Contract awards at Mission Technologies have had a slow start to the year, but this was largely due to the continuing resolution and the resulting lack of adjudication of awards. Looking ahead, we are very excited about our pipeline of new business at Mission Technologies and are confident it will support our growth objectives. We currently have almost $6 billion of proposals in evaluation, with $3 billion in proposal development and a total qualified pipeline of more than $25 billion. We had a significant win in unmanned with the selection of our REMUS 300 vehicle as the U.S. Navy's next-generation small UUV program of record. We also recently released Odyssey, a suite of advanced autonomy solutions that offer scalable autonomy across a variety of platforms and is aligned with the industry open architecture standard. Regarding our shipbuilding workforce, I'm glad to report that we finalized the collective bargaining agreement at both shipyards. Our annual apprentice school graduation at Newport News Shipbuilding saw 170 graduates, and over 200 individuals will complete their apprenticeship program in May at Ingalls Shipbuilding. We continue to work with local high schools and community colleges on our core hiring and development needs. Through the end of the quarter, we had hired over 1,000 craft personnel towards our plan of over 5,000 for the year. We remain focused on hiring and retaining a strong workforce as we continue to face the headwinds of a tight labor market. Turning to activities in Washington, Congress finalized appropriations for fiscal year 2022 in March. We saw continued bipartisan support for our programs reflected in the final Defense Appropriations Act, including funding for two Arleigh Burke-class destroyers and two Virginia-class attack submarines. Additionally, the appropriations measure provided $250 million for advanced procurement funding for LPD-32, advanced procurement for DDGs, as well as funding for our other programs. Also in March, the President submitted his fiscal year 2023 budget request, now under consideration by Congress. The proposed budget reflects continued investment in our shipbuilding programs, funding two amphibious ships, LPD-32 and LHA-9, two DDG-51 surface combatants, and two Block V Virginia-class submarines. The budget request continues funding for Ford-class nuclear aircraft carriers and aircraft carrier refueling programs and construction of Columbia-class submarines, as well as investment in the submarine industrial base. Beyond shipbuilding, the fiscal year 2023 request reflects an emphasis on research and development, with increased investments in capability enablers such as AI, cyber, electronic warfare, C5ISR, and autonomous systems that align well with our advanced technology capabilities of our Mission Technologies division. In conclusion, we remain well-positioned to execute on our shipbuilding backlog and leverage it to generate significant free cash flow while continuing to capture anticipated work and growth within our Mission Technologies division. With that, I'll turn the call over to Tom for some remarks on our financial results. Tom? Thanks, Chris, and good morning. Today, I'll briefly review our first 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 four of the presentation, our first quarter revenues of $2.6 billion increased approximately 13% compared to the same period last year. This was largely due to revenue attributable to the acquisition of Alion in the third quarter of 2021. Operating income for the quarter of $130 million decreased by $9 million from the first quarter of 2021, and operating margin of 5.4% decreased 110 basis points. These decreases were largely due to lower segment operating income, driven by lower risk retirement at Newport News Shipbuilding, partially offset by more favorable non-current state income taxes and operating FAS/CAS adjustment compared to the prior year. Our effective tax rate in the quarter was approximately 20.5% compared to approximately 14.5% in the first quarter of 2021. The lower rate in the first quarter of 2021 was primarily due to divestitures during that quarter. Net earnings in the quarter were $140 million compared to $148 million in the first quarter of 2021. Diluted earnings per share in the quarter were $3.50 compared to $3.68 in the first quarter of 2021. Turning to slide five, cash used by operations was $83 million in the quarter, and net capital expenditures were $43 million, or 1.7% of revenues, resulting in free cash flow of -$126 million. This compares to cash from operations of $43 million and net capital expenditures of $59 million and free cash flow of -$16 million in the first quarter of 2021. Cash contributions to our pension and other post-retirement benefit plans were $10 million in the quarter, of which less than $1 million were discretionary contributions to our qualified pension plans. During the first quarter, we paid dividends of $1.18 per share of $47 million. We also repurchased 51,000 shares during the quarter at an aggregate cost of $10 million. Moving on to slide six, Ingalls revenues of $631 million in the quarter decreased $18 million or 2.8% from the same period last year, driven primarily by lower revenues on the DDG program, partially offset by higher amphibious assault ship revenues. Ingalls operating income of $86 million and margin of 13.6% in the quarter were down slightly from last year due to lower risk retirement on the LHA and DDG programs, which was largely offset by increased risk retirement on the LPD program following the delivery of LPD-28. At Newport News, revenues of $1.4 billion decreased by $17 million or 1.2% from the same period last year due to lower aircraft carrier and naval nuclear support service revenues, largely offset by higher submarine revenue. Newport News operating income of $81 million and margin of 5.8% were down from last year primarily due to lower risk retirement on the VCS program, partially offset by higher risk retirement on CVN-78. At Mission Technologies, revenues of $590 million increased $331 million compared to the first quarter of 2021, primarily driven by the acquisition of Alion in the third quarter of 2021, partially offset by the divestiture of our oil and gas business and the contribution of the San Diego shipyard to a joint venture in the first quarter of 2021. Mission Technologies operating income of $9 million compared to an operating income of $7 million in the first quarter of 2021. First quarter 2022 results included approximately $24 million of amortization of Alion-related purchase and intangible assets. Mission Technologies EBITDA margin in the first quarter was 7.3%. Turning to slide seven, we are reaffirming our 2022 sales margin and free cash flow expectations and have slightly revised our pension expectations. During the quarter, we reached a labor agreement with the United Steelworkers at Newport News Shipbuilding. The contract includes increases in pension benefits, triggering a pension remeasurement, which also takes into account discount rate changes and asset returns through late February. Regarding our near-term outlook, our first quarter results were positively impacted by a very high-quality delivery for LPD-28, which allowed us to retire a significant amount of risk for that ship in the first quarter, as reflected in the Ingalls operating margin. The remaining shipbuilding milestones we expect to achieve in 2022 are back-end weighted. Given that backdrop, we expect the second quarter shipbuilding revenue to be relatively flat sequentially and shipbuilding operating margins to be approximately 7%. Regarding Mission Technologies, we expect results will ramp through the year, with second quarter sales up approximately 5% sequentially and operating margin in line with our full year guidance of approximately 2.5%. Regarding our longer-term targets, we remain confident in our free cash flow of $3.2 billion from 2020 through 2024. This outlook does assume the continued expensing of research and development costs for tax purposes. As a reminder, we believe the impact to 2022 free cash flow would be approximately $100 million if the current R&D amortization treatment remains in place. On slide eight, we provided a walk from our 2022 to our 2024 free cash flow outlook. This is consistent with the chart we began providing last quarter. Additionally, we are reaffirming our capital allocation priorities, which include significant deleveraging in the near term, along with continued modest dividend growth and balanced share repurchases. We will continue to evaluate M&A but see no significant capability gaps today. In closing, we are pleased with the operational milestones achieved in the first quarter, along with the financial results. Notwithstanding the challenges of the current environment, we remain enthusiastic regarding our long-term outlook. With nearly $50 billion in backlog, strong budgetary and customer support for our shipbuilding programs, and a mission technology business that we believe is poised for very strong growth, we are laser-focused on consistent execution and generating sustainable long-term value. Now 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 so we can get as many people through the queue as possible. Operator, I will turn it over to you to manage the Q&A. Thank you very much. If you would like to ask a question, as a reminder, press star followed by one on your telephone keypad. Our first question goes from Robert Stallard from Vertical Research Partners. Your line is now open, Robert. Please go ahead with your question. Thanks so much. Good morning. Morning, Rob. Morning. Chris, I'll start off with you. A bigger picture question on the FY 2022 request. It looks like the Navy is changing its plan for amphibious vessels, at least proposing this. How do you think this could play out, and what's potentially the risk to HII? Secondly, a more numbers question perhaps for Tom. You mentioned on slide eight, the potential for margin growth in mission. I was wondering, you know, what the sort of better long-term margin could be for this division? Because 2.5% is pretty low compared to other companies in the industry. Thank you. Yeah. Yeah. Okay, Rob. I'll start with the budget, the 2023 budget request, and then, Tom can talk about Mission Technologies margins. One thing we should always remember with the budgetary process is this is the first step of the process. We'll work through that throughout the year. All our major shipbuilding programs were supported. The one line we do have to work on is the amphib line, as you identified. We need to get LPD-32 under contract. We need to get LHA-9 under contract. Then we need to work on LPD-33 and ensure that we support the Marines and the Navy and the Congress really in analyzing that program going forward. You're right. We do need to work on the amphib line, but I'm positive as we work through this process that we'll get to a solution that makes a lot of sense. From a long-term, big picture perspective, I think that the budget really does support our long-term growth rate, and I'm comfortable with the 3%. Sure, Rob. I'll pick up the question on MT from a margin perspective. Yeah, 1.5%. We guided 1%, so it's higher than the guidance. You know, that's coming off 2.7% ROS last year, or 2.7% last year for Q1, and 2.9% for a quarter ago in Q4. I would tell you that because of the purchased intangibles, both with MT, about $30 million, and Alion specifically for $24 million, you know, that return on sales metric is not probably a good leading indicator as far as where we want to land. That's why we kind of give you the EBITDA perspective from 8%-8.5%. The quarter here was 7.3%, not unexpected because we guided you know, from a ROS perspective only at 1%. I would tell you with the CR award sales light, and obviously the margin will follow the sales. We're comfortable with where we stand and from a perspective of where we could go. You know, we've told you for the year it's 8%-8.5% from an EBITDA perspective. As a percent of revenue. You know, from now going through 2024, we've highlighted that it's more appropriate to think about 8%-10% as a range of where MT can land. All right? That's fair. Yep, that's great. Thanks so much. Thanks, Rob. Our next question comes from Pete Skibitski from Alembic Global Advisors. Pete, your line is now open. Please go ahead with your question. Hey, good morning, everyone. Morning. Hey, Chris, also a question on the FYDP. One thing that's always a little bit harder to tell timing-wise is just maintenance trends, shipbuilding maintenance trends. Can you give us a sense of, you know, look at the FYDP, you know, should maintenance be a tailwind for you guys or starting to flatten out? I was just wondering what your thoughts were. Yeah, I think it's pretty flat. They're coming through the submarine kind of maintenance schedule and how they're gonna proceed with LA-class and Virginia-class submarines from a maintenance standpoint. We think it's pretty flat from our perspective. A lot's gonna go into how they execute the SIOP, but we think it's pretty flat. Okay. One last question kind of off the beaten path. There was an export notification back in December for EMALS and advanced arresting gear to France. Both you guys and General Atomics were cited. Is that any kind of a meaningful or a real revenue opportunity for you guys? Just curious about the timing as well on that. Yeah. Not for us, no. Remember, we don't, you know, GA provides those systems, so not for us, no. Okay. Thank you. Thank you. Our next question comes from Seth Seifman from J.P. Morgan. Seth, your line is now open. Please go ahead with your question. Hey, thanks very much. Good morning, everyone. Morning. Chris, I think you mentioned on the last call, you know, that you guys had a lot of confidence in, you know, the hiring, your ability to hire this year. You know, you started off this call focusing especially on the tight labor market. Maybe if you could just give a little bit of color on, you know, how things are tracking there. Any metrics we can think about kind of, you know, what you need to do and then kind of, you know, where the risk would be in the financial plan, if, you know, to the extent that the hiring situation gets tougher. Sure, Seth. Thanks. You know, January and February were tough. Omicron really impacted our attendance. In March, attendance recovered, and we're back to attendance levels that we're used to seeing within both of our shipyards. We've hired over 1,000 people through the end of March. We need to hire over 5,000, so we're a bit behind. We're really focused on our relationships with our apprentice schools, our high schools, community colleges, and we expect that to ramp over the summer months as graduations happen. It's definitely a watch item. We need to hire, we need to train, and we need to be productive. Still comfortable with our guidance, but labor's a watch item for us as we move through the year. Right. Just to follow up, is it more about I mean, I would think, you know, people come in in the summer. There's, you know, probably only so much contribution they can make in a couple of months. You know, is this really more about kind of setting up for 2023? To the extent you have an idea of how you're set up for 2023, that would affect your, you know, the risk tolerance that you have in your estimates at completion. Yeah. When they come out of the apprentice school, they're ready to go. If they can come out of the community colleges and the high schools where we have programs in place where they're learning, they're gonna fill a critical role within the shipyard. Now, they're not gonna be first-class shipbuilders right away, but they're gonna be earning. They're gonna be making progress and executing. It's all incumbent on our shipbuilding teams to make sure they're trained up, and they've got the right mentorship, and we do that very well. Yeah, they're not gonna be first-class shipbuilders coming out of the gate, but we expect them to contribute. Okay. Thanks very much. Sure. Thank you. Our next question comes from Doug Harned from Bernstein. Doug, your line is now open. Please go ahead with your question. Thank you. Good morning. Good morning, Doug. I'd like to just spend a little bit of time on Virginia-class. I mean, it was identified as a margin headwind in this quarter and in Newport News. If I go back to when you had the issues back in 2020, and it was the Montana, the New Jersey, the Massachusetts, those, I mean, the Montana is delivered, New Jersey float off. Then one of the big issues then was this question of lots of new people in a complex environment needing to train them. Some of the issues you had then were attributed to that. If you look at the situation on Virginia-class today, you know, where does it stand? Because it seems that you might run into some of these similar issues as you try and bring a lot of new people in. How are you looking at the Virginia-class performance right now? Yeah, Doug, it's a good question, and I appreciate it. Remember the issues we had previously, and we were in the heart of COVID, right? We had significant outages and significant labor issues within Newport News, which drove a lot of that. What we're seeing now is it's interesting. We talk about serial production a lot, but the VCS program is really a production line. When you miss, you miss schedule, there's a knock-on effect. As you know, we missed a couple schedules at the end of the year that drifted into Q1. We've accomplished those. It's really had an impact on the future shifts, and so we've had to deal with that in the quarter. We've reassessed our risk and you see the results in Q1. That being said, there is some stability in that workforce now. The attendance has recovered, we're a bit short of our hiring plans, but it's not like what happened during COVID. The team is very focused on meeting their interim milestones, working their operating system very diligently. I got a lot of confidence that there's actually some upside as we move through the next couple of years on the VCS program. If you look at kind of going forward, you're finishing the USS Massachusetts, your own boats in the USS Arkansas, and then you'll go into Block V. How should we think about kind of performance and margin trajectory as you move through those? You know, as well as the work that you're doing for Electric Boat, the modules for Electric Boat. I mean, how's this risk retirement likely to move in your thinking? Yeah. We've assessed the EACs and the risk on not only Block IV, but Block V boats and reset the EACs based upon how we project them to perform over the life of both of those blocks. We don't necessarily give margin guidance at a program level. But I do see after resetting that risk on Block V going forward, there's potential for upside if we're able to meet our milestones. Okay. Okay, very good. Thank you. Thanks, Doug. Thank you very much. Our next question comes from Myles Walton from UBS. Myles, your line is now open. Please go ahead with your question. Thanks. Good morning. I wanted to ask about carriers for a second, and in particular the 79 and the 73. On the 79, I think the progress, the completion metric you guys provide in the press release every quarter, it really hasn't moved in the last several quarters. I know one of the adjustments was for the single phase delivery, but I don't think that would have played out here in the first quarter. Any reason why there wasn't progress there? Then just to comment on the 73 and if the slip to 2023 made any difference for your financials. Thanks. I'll take the 73 one on the back end of that. Right now, we're still bringing that ship home and trying to target for a year-end completion. Through the EAC process, we are evaluating some risks to the schedule on that. That was incorporated into the Q1 EACs here. Yeah. CVN-79, Myles, we're absolutely making progress on that ship. We're heavily into the volume part of that ship, completing compartments. If you walk through the base in that ship right now, you see a lot of insulation and paint, which is a good place to be when you think about an aircraft carrier and attacking that volume and then starting the test program. I don't know specifically about the math around the progress. Christie will fill you in on that after the call. But they're very dedicated and making progress really on a weekly basis on the aircraft carrier. No movement to the expected delivery on that vessel? No, absolutely not. Okay. Thanks. Thank you very much. Our next question comes from Gautam Khanna from Cowen. Gautam, your line is now open. Please ask your question. Hey, thanks, guys. I was wondering if you could refresh us on how your contracts adjust for higher input costs. Whether it be steel, you know, what have you. Everything's, like you mentioned at the outset, is moving up in price. How do you recover those? You know, what does that do to margins? Is it just a pass-through or it actually dampens margins? Just if you could walk through the mechanics there. Thanks. Sure. It's Tom Stiehle here. Good morning. Yeah. From an inflation perspective, and I'll break that down. I know your question is focused just on the existing contracts and how that hits. I'll hit that. Also, you know, we're watching inflation as it applies to our new bids. It's like a two-part answer here. From the mechanics that we have on how that hits, as we spoke about this at other earnings calls, it really starts with our understanding of what we're buying and how we contract for. With these contracts being anywhere from four-eight years long, long lead contracts up front with an understanding of the material and the bill of materials. We have a very disciplined and dedicated process to make sure that we have live quotes and bids, and we go hand in glove making sure the quotes have the procurement side and ourselves locked into the contract value from a starting standpoint. While we have clear understanding of what we're buying and at the onset of these contracts, we have a good bid from our suppliers. We do run into from time to time as we move forward, where the contract's awarded, things are purchased after that and/or there's pop-up commodity buys, and we do see increases from time to time on raw materials and commodities. I will tell you that when we're in a long lead phase of a contract, it operates almost like a cost type contract, and we're rolling those expenses into the construction, the eventual award of that bid, that's helpful. Another piece of that is, when you look at, you'll see in the queue, we kind of break out across the three divisions, the percentage of cost type versus fixed price contracts. From an HII perspective, it's from an enterprise perspective, it's about 52/48 fixed price and cost. There's recoupment there in the contract type. Mission Technologies is over 90% cost type, and Newport News is 50/50, that helps there. Several of our contracts do have EPA clauses, which kind of are recognized as things that we don't put on contract immediately, and we have that risk covered with our bids. There's an estimated cost from bids that we receive at the time of award, and then the actual cost that we pay can get adjusted depending on inflationary indices of the industry. That helps us out on that side as well. Even our fixed flexibly priced contracts, there's a ceiling on it, so we work ourselves through that as well. I think the tool set that we have on how we manage our existing contracts, as well as the change management process when we take on new orders to make sure that we maintain the equity of those contracts, keeps us in a relatively safe space. The last one I'd add to you, too, is a large majority of the cost of our existing contracts is on the labor side, and we have come through our union agreements of four-year down at Ingalls and a five-year at Newport News. We understand those costs, and there's a schedule of increases, and we use that when we put things on contract. I think overall it's a well-founded process on how we handle it, and it plays well against these inflationary times. On the new bids, I'll tell you that we are seeing on new bids price increases. We're seeing longer lead times, and we're seeing higher costs kind of year- over- year, but we ensure that we follow that same dedicated process of getting live quotes. Our customers are understanding of that. I mean, they're seeing inflationary pressures across the industry. You know, we bring that cost and pricing data for evaluation and make sure that we strike a reasonable risk balance here for inflation against the new awards. Just the mechanics, if you wouldn't mind, on, you know, if in fact you have an EPA and you gotta make the adjustment. So- Is that just an increase of revenue and cost, and therefore a decrement to? Yeah. I'll break that down for you. reported profit margin? Yeah. Sure. The back end of your question. With all that as the backdrop, the mechanics of that, obviously, we go through our disciplined quarterly EAC process. I mean, we're getting costs weekly, a monthly program review, and then obviously our quarterly EAC process. We can see how the material is trending, both against the existing orders that we have and material requirements and any pop-up requirements. We'll evaluate that, whether the EAC is improving or degrading and/or the associated risks that we thought were gonna be retired for the quarter and the rest of the remaining scope on those contracts. That will get incorporated into the EAC. If there is an increase, obviously, there'll be an increase in costs. We'll run that through our profit tables, and it will revise the booking rate accordingly. All that gets factored in by ship by ship across the program, and then it kind of rolls up into our adjustments that you see here against the portfolio. Yeah. I'd also add that if there is EPA protection, it's an increase in sales without the resultant impact on margin. That does provide us additional protection, and that's in our EAC process as well every quarter. Thanks, guys. Thanks, Gautam. Our next question comes from Robert Spingarn from Melius Research. Robert, your line is now open. Please go ahead with your question. Thank you. Good morning. Chris, I had- Good morning, Rob. A couple of questions, sort of higher level. A lot of talk about upside to defense spending from Europe, and while the export opportunity probably isn't great for the shipbuilding side, what kind of products and services from MT do you think will interest European countries? Yeah, that's a really good question. We think about it a lot. Unmanned, we've sold internationally about 30% of our unmanned sales have historically been international to NATO countries in nature. You think about ISR surveillance, big data platforms, cyber intel, all of that as part of Mission Technologies gets some traction internationally. We work on that. We're very tactical in how we do that. We make sure the opportunity is valid, but all those are opportunities in Europe and actually any NATO country, actually. Okay. On the domestic side, the Navy leadership's been talking about priorities as follows. Top priority is Columbia-class, then readiness, modernization, and lethality improvements, and then third, capacity. Knowing that the commitment to Columbia is rock solid and capacity is really a function of the budgets, future budgets, how do we think about HII's access to the middle part, the readiness and the modernization part? Again, how does that tie into MT? Interesting readiness and modernization. MT has very interesting tools related to big data and data analytics that absolutely support that. It definitely helps provide tools and access for our customer to improve the readiness. I actually thank you for that question. It's a very interesting thing we're working on with our customer. It's all upside, right? But it'll just give our customer additional capabilities. Thanks for that. Chris, do you see any timing or, you know, or any visibility on when these things start to come through? No, I think unmanned can happen very quickly. The award is small, it's very important, provides us additional opportunity to sell that internationally. The other stuff, we'll just have to see, but I don't see a short-term sort of upside related to it. Got it. Thank you. Sure. Our next question comes from David Strauss from Barclays. David, your line is now open. Please go ahead with your question. Thanks. Good morning. Good morning, Dave. Hey, Chris. I think it was on the last call, you talked about the discussions with the Navy in terms of, you know, additional investment in the shipyards and how that was potentially gonna be split and what it meant potentially for the, you know, the expected CapEx drawdown. Can you just update us on where things stand there? Yeah, we're still working on it. I think you saw in the 2023 budget additional funding allocated to capital in support of this infrastructure and the supply base. We're in discussions with the Navy on that now, and we'll just continue to discuss that with them in order to make the investments to support that critical program. Okay. Tom, on the working capital side, I think, you know, net working capital, the percent of sales that you guys calculated was around 10% this quarter. I think that's the highest we've seen in a while, even, you know, kind of adjusting for typical seasonality. Can you just talk about you know, the working capital trend through the course of this year? Again, you know, kind of what you're baking into that, you know, free cash flow forecast for 2023 and 2024 from a working capital perspective. Thanks. Sure, Dave. Yeah. It was 10%. That's just upfront as just the timing on the working capital that we have. It's both the timing on the receipts for the accounts receivable and the collections, the payments for the accounts payable. We anticipated that it would be high on the front end here right now. A little bit of a draw as we've talked about these milestones of kind of have just stretched a little bit on the VCS program. As we work through the back half of the year, I see that coming down. We will finish the 2020 year out higher than we were in 2021, but then it starts to come back and break our way into 2023. What are you targeting from a net working capital as a% of sales, you know, in 2023 and 2024 specifically? We don't give guidance specifically on that. We tell you that a normal range of our expectations is at 6%-8%. This 10% is high, a little bit higher on that range, but not unexpected for how we saw the quarter playing out and then the impacts that we've discussed here. I would tell you that would get back more into that range and we get into 2023. 2023 is a help on cash. Then for 2024, it's about neutral, 2023 and 2024. We've talked about more ship milestones and deliveries in the out years, and that helps to facilitate that working capital coming down from 10% and be more to that 6%-8% range. All right. Thanks very much. Mm-hmm. Thank you very much. Our next question comes from George Shapiro from Shapiro Research. George, your line is now open. Please go ahead with your question. Yes, Tom, I was wondering if you could just provide what the EACs and net EACs were in the quarter by division. Sure, yeah. The net EACs, George, were $45 million, and the split of that was 90% Ingalls and 10% Mission Technologies. It was 107 favorable sixty- And then some- Go ahead. Oh, say that again, I missed the last comment. Yeah, it was $107 favorable, $62 unfavorable, for a net of $45. Okay. You had said that the LPD 28 was a major help in the quarter. Is that a singled out number in the Q or no? You'll see that for a $17 million favorable stream adjustment. Both it was a clean DD 250 or delivery that we had in Q1. We usually, you know, after those deliveries, the following quarter, we'll do a hot wash of the remaining work, and there's sometimes some profitability that will happen in the next quarter. That's been pulled into this quarter too. That's kind of factored in into my opening remarks of a 7% shipbuilding expectation in Q2 as we pull that margin into the Q1 timeframe. Yeah. Then if the second quarter is 7%, it would imply that the third and the fourth quarters got to average at least as good as the first quarter, if not a little better. If you had this one time major benefit in the first quarter, what are the benefits you get in the Q3 or Q4 to get that margin better than 8.3%, you know, have the year at 8%-8.1%? Right. We have several milestones on the back half of the year as we continue through the construction process on the LPD program. There's milestones that we have on those ships. As we bring people back on board, sales will rise from a margin perspective, and there's some efficiency gains on that. We still feel comfortable with the 8% to 8.1%. We kind of highlighted at the beginning, on the February call that it would be light up front and both the sales and the margin will come out on the back half of the year. Okay. Thanks very much. Mm-hmm. Thank you very much. I'm not showing any further questions at this time. I'd now like to hand the call back over to Mr. Kastner for any closing remarks. Thank you again for joining us on today's call. Your interest in HII is appreciated. We welcome your continued engagement and feedback. We'll see you out there.