So, I'm Doug Harned, Bernstein Aerospace and Defense Analyst, and I'm really happy to have with us again, Chris Kastner, the President and CEO of Huntington Ingalls, or now HII, is the right- HII - right name? It's easier to say. Okay. Yeah. So, to start with, you have a few- Safe harbor statement. Yeah, remember, all safe harbor rules apply during this presentation, so just keep that in mind. Good. Well, Chris, I wanted just to start, like, we were sitting here two years ago, I think, and that was shortly after you had taken over as CEO. Maybe you could start out by telling us a little bit about how things have evolved over those two years, what kind of progress you see at the company, and where you're headed. Yeah. So I think shipbuilding, the demand in shipbuilding is pretty unprecedented. The $32 billion budget that showed up in contrast to $12 billion-$15 billion that we had historically kind of counted on. You know, we were always concerned about the Columbia class crowding out other shipbuilding programs and other ship classes, specifically amphibs. That has not happened. Columbia class has happened, and the other ship classes have continued. So the demand environment and the demand for ships is new and positive and important for us to react to. AUKUS was an unexpected highlight, where we essentially have two markets that are open to us now, when you think about Australia and the U.K. Mission Technologies has developed beyond what our expectations were, and we had pretty high expectations for Mission Technologies, but their growth has been pretty significant. You think about 13% last year and 20% quarter-over-quarter. So it's developed pretty positively. We're essentially out of debt from the Alion transaction, have our balance sheet where we want it to be. But there's still challenges that persist. Supply chain, we think has stabilized. Lead times have stabilized, but at their inflationary pricing that's showing up, which could impact buying power, and then labor, which is our biggest risk. We need to continue to attract. We're doing okay in hiring. Retention is still a challenge, mostly in this new workforce that we get, keeping them. So that's our major risk going forward. But, we're actually in a pretty good place from a demand standpoint. I'd much rather be in this place than the alternative, with too many people and not enough work to do. So we've done it before. We've fixed labor before. After Hurricane Katrina, we built a workforce down in Mississippi, so we know how to do this. At our core, you know, Mike used to say, "We're a workforce development company. Yep. The ex-CEO, my, my old boss. And we really are. We're a workforce development company, and that's what we're going to do. So, I'm really happy with where we are right now, but we have to execute. Now, it's time to execute. Yeah, well, you mentioned the budget, and when you look at the budget, like, the 2025 budget is coming in, but it's constrained by congressional caps. I know shipbuilding is tending to do pretty well, but perhaps you can talk a little bit about how you see that environment, particularly with respect to Congress, as we work through this. It was a brutal process last year. Do you see the potential for things to get better in a sense? Because I think if you want to keep that ramp going, it's going to need to. You know, I'm not sure the process is gonna get any better. It's gonna be a challenge going through the election. So that's, that's gonna be a challenge. I obviously think there's gonna be a—I'm not the only one out there. Pretty much everyone thinks there's gonna be a CR, and we'll- Yeah ... wait for the election to before we get a budget done. It's positive, even at the baseline levels, the constraint levels of the budget agreement, that's, that's a $32 billion deal. All, all our programs are supported. They support all our growth rates. So that's, that is a pretty great place to be, just there, that $32 billion. Now, if it grows from there, we'll be in a better place. And all our, all our programs are supported, in the 2025 budget. I actually got some added language this last week on the aircraft carriers, getting long lead for CVN -82, which is positive. And the discussions around the additional submarine, the material will get funded for that. Now, we just have to see if the, the entire submarine is funded. Won't really impact our guidance much, but it's an indicator. So yeah, the budget, the budgetary environment is very positive. The Navy really needs our ships. We need to deliver. Well, but one of the other aspects of this is inflation. And, you know, when you look at the DDGs that you won, you had a, you know, great win with seven- Right on that, on the Right - this last- Right tranche. But the prices look to us like about 40% higher than the previous ones back in 2018. Right. How do you see the budget working when you've got this... Let me back up. On one hand, I could say this is positive because you get funded for all of this- Right And you get a similar percent margin on fixed-price contracts on a bigger number. So that's could be really good for dollar, dollar value. But on the other side of this, it's all got to fit within that budget number. How do you work that? Yeah, the call comes down to the negotiation table. We have really good cost and pricing data on those, inflationary increases. We're one of the few companies that, you know, we're building the same thing, every other year or every two years or every three years. We have really good bill of material and very good data on inflation, which we can support with our customer. Now, the challenging part is, I can't build half an aircraft carrier or 0.8 aircraft carriers. You got to build a whole aircraft carrier. So that puts some pressure on it, as you indicated. I like to think the former, is that I, I deserve an appropriate level of profit based on the cost basis that we propose. I understand there's inflationary issues on the budget and could impact buying power, but I, we deserve a fair deal. So that's gonna be the challenge at the table, at the negotiation table. There's a lot of levers we can pull relative to EPA clauses. One of the benefits that I think we talked about previously is on some of these larger ships are incrementally funded. So you can push some of the inflationary impacts down the road to the next fiscal year. So that's a benefit. But your issue is very real. It's not just shipbuilding. This inflation has grown, it's starting to show up in prices. I'm not sure the budget has reflected that. Yeah, because when you, when you put all of this together for shipbuilding, I mean, when Mike Petters was CEO, he used to-- it was sort of like a universal constant, that you would grow at shipbuilding at 3, maybe 3.5%. Right ... per year. Now you're talking about 4%+. Right. Can you describe what has happened that gets you to that higher, higher growth rate? Well, just a lot of confidence in the demand environment. And then it'll be constrained by labor, right? You have to actually earn the progress in order to book the sales. So we absolutely have line of sight on the work because the budgets have been so good. Now it's executing in the supply chain, executing on your programs to generate the sales. That's kind of a risk adjusted growth rate, so- Yeah ... it's kind of right down the middle. And it's something we feel good about in the medium to long term, for sure. There could be some variations over the next couple of years, but in the medium to long term, 4% makes a lot of sense to us at shipbuilding. How does that fit? How does that 4%? Is that 4%, you've got higher input costs- Yes -that affect that? Yeah. You've got more program wins that affect that. Is there a way to discern, like, getting from the 3 to the 4+, what's been more important there? In other words, higher pricing or, or program? Yeah, it's more programs, contribute to it significantly. I think inflation could add to that- Yeah ... and create a bit of a tailwind there, as we realize that within the programs. But your issue relative to buying power factors into that as well- Yeah -and how much you can get through your factory. So we wrap all of that together when we develop those forecasts. Okay. Now, on margins, you've talked about it, Mike Petters talked about it. So long term, good shipbuilding program, a good shipyard, should be earning a 9%-10% type margin- Right when you consider the mix of Yeah mature fixed-price development work. That's right. I mean, you've certainly been doing that and doing better at Ingalls. Right. When you look at Newport News, what's the path to get there? Yeah, so it's not a different recipe than what we did at Ingalls. I was a CFO at Ingalls when we, when we executed that, actually. We had 5 ships and a forward loss at Ingalls. We were coming out of that, and the key was to get to the other side, understand all net cost data, and ensure that you get the next contract with all that cost data in the base. So we negotiated LPD -26, LPD -27, NSC -4, NSC -5, NSC -6, LHA -7, all of those ships on the back of those four and a forward loss. Yeah. And though those ships form the basis of the pretty excellent performance along with DDGs at Ingalls over the last 10 years. They've been very consistent. Newport News is in a similar place that Ingalls was. Fortunately, they don't have forward losses. It's been stable. It's not where we want them to be- Yeah But it's been stable. And we need to get to the other side of these ships that were negotiated pre-COVID, and then get to the ships negotiated post-COVID, where all that cost data is in it. Now, we still have Block V to get through. We have the CVN-79 to get through. Block IV is not done. The two aircraft carriers, fortunately, we put protection in there for inflation on material, which has protected us on the aircraft carriers a bit. But really, you need to get to the other side on the new ships. We're gonna negotiate 21 ships over the next 12 months, both in the submarine, VCS, Columbia- VCS ... Block VI, build two of Columbia-class, and the AMPHIB bundle. Yeah. Four ships, four amphibs. So it's the same recipe that we executed down at Ingalls, we're executing at Newport News. So does that suggest that at Newport News, once you get through these Block VI negotiations well, once you've got a significant amount of work on the Block VI group, you could be up with that? Well, I expect Block V will be better than Block IV. Yeah. Simply because Block IV was built during COVID. Right, not only negotiated before COVID, but built during COVID. Block V, I think, has some upside, even though it was priced and negotiated before COVID. But then when you really get into Block VI and the next submarines, I think you have an opportunity to increase the profitability. But as you know, we're pretty conservative when we start a ship, and we start a ship program. So we have to retire risk before we get there. In Block V, I mean, scope for you is pretty similar to Block IV. Yes. Now, the payload modules we don't do- Yeah Block V, that's Electric Boat's statement of work. Yeah. It's a little less total value, but about the same increments. It'll bolster sales. Like, where are you now? Can you say, I mean, I thought you were pretty much through Block IV, right? Right. We have two more to deliver. 798 will deliver this year, 800 will float off this year and deliver subsequently. So most of our content is Block V right now- Yeah. - by far. Yeah. But we're only between 40% and 50% complete on the first Block V boat. So they, they're going through the production process, but it's still new, it's still, it's still starting. But one would think that because of the similarity, you could get better performance out of V. So as that goes through, you should see better- We should. - margin performance. We should, we should. So, switching gears just a little bit, you know, CapEx, it was low in Q1. You're guiding to 5.6% of sales. Right. You do have advances. Can you just walk through, that looks like a big CapEx increase, but I think effectively, it's probably not. Yeah. So the customers. We work with the customer when we have large CapEx projects that we think will have an impact on our programs, and they. We say, "Hey, look, there's not an ROI for us to make this total investment, so we need you to contribute." And we work out with them so they offset a significant amount of the expense of the capital. So from a net cash standpoint, it doesn't impact you as much. So the $3.6 billion that we've committed to over five years in free cash flow is not impacted. It's even with the increase in capital, we could still meet that commitment. You expect that you'll be back kind of in that 2.5%- Unless, unless- Over time. Unless there's a capital project that the customer wants to partner with us, that could impact the facility significantly. Yeah. Now, on Newport News, one of the things that I think you all have seen as challenging over time has been the amount of complexity there. You know, you've got the overhauls, you've got CVN programs, you've got Virginia-class, Columbia-class. Right, right. A lot going on there. That's right. How do you manage that? You know, it's quite different than if you're sitting up at Bath or something, where you're kind of doing one thing. Yeah, it's completely different. Ingalls had this as well. They had five ship classes coming out of- I remember that. Coming out of Katrina. Yeah. And, when Mike came, said, "Hey, look," and brought Irwin Edenzon, who was the President there when I was a CFO, it's like, "We're gonna have an operating system. Everybody's gonna manage every program the exact same way. Same, same, nomenclature, same, tools, systems, processes. You're gonna report out the same way. It's gonna be an operating system that I can take a foreman from the LPD class over to the DDG class." We did the exact... 'Cause historically, Newport News has been a two-program yard. Submarines aircraft carriers. Yeah. Right, and they did not necessarily manage the, those two programs the same way. Leadership didn't move around very much between the two. When we saw the complexity showing up, we said, "Hey, look, we need this operating system, very similar to what Ingalls does over at Newport News." And they've seen it, they've implemented it, they've improved upon it. So they have a very robust operating system, in Newport News now, such that all those programs are managed the same way. It takes a lot of the complexity out of it. Now, how do we see that? I know there's among most of us this hunger to see that margin uplift. Haven't really seen it yet. So like, when should we start seeing more evidence of all the things you're doing there in the margin? Yeah, so leading indicators that may not show up in margin right away is adherence to program schedules. Right, we talk about milestones, and they're not directly related to margin performance because step-ups, sometimes there's more or less, or you've done it a quarter earlier. Yeah. But, in shipbuilding, because there's so much labor involved, schedule and cost are pretty closely related. So if you miss schedules- Mm-hmm. or you make schedules, you're gonna heavily impact how you're performing. So, I think the best indicator is to look at the program schedules, adherence to milestones, and that'll be a pretty good relationship to how we're performing. 'Cause you had a couple slips, right? We did. when you look forward, how do we get... I'm just trying to understand what's- 796, 798 and 800 are important this year. Yeah. Right? Getting those done by the end of the year. Okay. Now, it's really risk retirement on the boats. Because if they stay till the first or second quarter of next year, it's gonna cost more, which is a P&L impact. Yeah. Now, as far as labor goes, you've talked about getting, you know, 5,000 in this year. This is- 6,000, yeah. Uh, 6,000. Yes, yeah. I mean, this has been an ongoing process each year. Can you talk about how things have evolved over time? You've had to really rebuild sort of post-COVID. Right. How's that process gone on the larger workforce? Yeah, so we're miles better from a hiring standpoint, and knowing where to go get and hire people, hire them quickly, get them trained to get them on the deck plate. It's just miles better from when we started post-COVID. We still have challenges on attrition and keeping people on the job. We're not just one thing, unfortunately, there's a number of things that we're addressing to deal with that. And they revolve around three issues. One is increasing pay. That's kind of the easy default. Let's just pay them more. I can't afford to pay everybody more like that. So we're doing pilots, select pilots, with participation from the Navy, on some interesting incentives they put on the 2023 DDG-51 contract, if you're aware of that, that workforce incentive they have on that contract. We're using that and doing some internal investment, down at Ingalls to pay select crafts more, to see if it'll impact attrition. There's some positive indicators, but it's not enough data yet for us to think that it's the only thing that's gonna solve it. We're doing, we're doing that in Ingalls, Newport News as well, with the specific performance incentives for specific high-risk crafts, stuff like machinists and welders. Yeah. We're also recruiting using analytical tools in regions, micro regions around the shipyards, where we know that if you hire someone from there, they'll stay, or high likelihood to stay. And if we know that we hire people from a specific region, they come for two weeks and leave, we're not recruiting from there anymore. And we're also having to be much more flexible with the workforce. Gone are the days where you hire somebody and just say, "Go to work." Right? That just doesn't work anymore. So you have to train them. You have to talk to them about their career, about their future. You have to ensure that you check in once they're hired and out in the deck plate. You have to treat them well. You have to give more flexibility and give them more time off so they don't just quit. And so, unfortunately, it's just not one thing. Yeah. If we can get people into the community colleges, regional development centers, apprentice schools, in the high schools, if they can choose being a shipbuilder and get enrolled in those programs, they stay. The people who just show up and respond to an ad and walk in, it's a challenge. Veterans are. We have 17% veterans in the company. If you can get a veteran, that's a win. That's a win, because they, they, they believe in the mission, and they'll stay. Now, have you had... I know at one time there was a concern that, you know, there are other businesses that would be hiring, and that certainly happened a long time ago in Ingalls with- Construction during Katrina ... oil field services. Oh, yeah, of course. All of it. Yeah, so I was there. I was on, the major EPC and I were on a panel, I won't name the company, that's all. But, they said there are 115,000 people in the Gulf Coast. Yeah. I looked at them like, "What are you doing?" But they've got a LNG terminal in Texas they're gonna build, so they're gonna hire a bunch of people. So that demand is out there. Construction, any manufacturing, organization needs good people. Has there been more pressure in Newport News or less recently from competing industries there? It's been pretty consistent in both facilities. It's been pretty consistent. Hasn't gotten worse, hasn't gotten really better yet either. Well, you said you're on track for the, for hiring- Yes - for this year. Yes. But, you and I talked about this before. One of the things that had always been a concern for us had been getting that sort of top hundred- Right ... shipbuilders that really have that institutional expertise. And I think of it as more important in shipbuilding than a lot of other things, because there's a lot, probably the wrong word, but there's sort of an art to this because they take a long time, they're so complex. Like, where are you in terms of having kind of, after losing people during COVID, those highly experienced people? So we did lose a lot of people during COVID. A couple of things. What's starting to show up, I was asked yesterday or last week, "What most excites you about the business right now?" And there's a core group of 35-45 year olds that are working on the VCS program, that you can just see it in their eyes, that they don't wanna fail. I asked the other people managing 798 and 800 right now, and I asked them, "Look, we just missed last year. Both those, I call it the drift, the little schedule drift at the end of the year. We're supposed to get done, we didn't. Explain to me how you're gonna get done this year, 798, 800." And they were aggressively adamant that they're gonna get it done, right? So there's a group of, you know, 35- to 45-year-olds that are emerging, that are taking the place of those shipbuilders that are between 55 and 65, that have taken every ship to sea at Newport News over the last 25 years. And a shipbuilder really learns when they, they travel the last 12 months of a ship, they get it ready to go to sea, they take it to sea. Because you can't pass your problems down the road. When you go to sea, you need to be done. Mm-hmm. So, I'm encouraged by that. I think, the more deliveries you make, the better it's gonna be, and we're gonna build back that core group of people that we lost during COVID. Yeah. Well, you know, when we look at Newport News, you talked earlier, you know, about this 4%+- Right growth rate over the next, like, five years or so. 10-15 years. Yeah, it's a long-term business, right? Well, so here's something that we have struggled with. So if I look at Newport News and take, like, the Navy plan for Virginia class, and look at how that goes up to the two boats per year between- Yeah - you and Electric Boat. Yes. Then I look at where pricing goes... we end up with something that's way higher than 4% growth rate. Well, you have to be able to execute it. So you have some limiting factors here on your delivery schedules from your suppliers, and the labor that you have employed in the shipyards. So you could call me conservative, that's fine, but we need to, we need to mitigate that. We don't wanna get out of- ahead of ourselves relative to a growth rate. But- Well, and neither does General Dynamics. Yeah. I mean- That's right. Yeah. I mean, so what I'm trying to understand is if there's a disconnect between what the Navy's putting out there in their plans and what is really achievable, given all of the operational constraints on the ground. Well, so the Navy's making significant investments to offset all those constraints on the ground. The industrial-based funding gets into the supply chain, gets into our shipyards, gets into technology with additive manufacturing, gets into workforce development. So they're really leaning in to try to solve a lot of those problems. If we do get back on a cadence that accelerates, during Block VI and Columbia-class, it could be in excess of 4%. Absolutely could. I mean, I guess, does it... when you look at future budgets, does the progress you're making, in other words, if they keep budgeting two per year, but you and Electric Boat are going at 1.4, isn't there a point where they would have to slow that down? Yeah, you would think, but we're gonna recover. It's gonna recover. We're building that, that capacity now. Yeah. All that industrial-based capacity, all the tooling, all the equipment that's... Or just the expansion that's going on, all the investments in the supply chain, we're gonna incrementally get better. Yeah. Is there any way to, to project when you might be able to get to that two per year? We have a lot of projections on us getting better to achieve that. I don't think any of that's public, but we're gonna incrementally get better. Yeah. Okay. And when you were talking about the industrial base, is that the... Are you- were you specifically referring to, like, the supplemental money that's coming in? Yeah. So in the baseline budget in 2023, there was SIB money as well. Yeah. But yeah, the $3 billion, $3.3 billion of SIB in the supplemental, there'll be more supplemental. I think over the five years, there was about $11 billion allocated for industrial submarine industrial base money. Where does that go in terms of, you know, to you, to GD, to, perhaps even people doing other- It goes... It's really all of the above. No, it's focused on the Submarine Industrial Base. Okay. So it'll go to GD Electric Boat and HII in Newport News. But it also goes down directly into the suppliers. Yeah. And it goes directly into industrial-based funding relative to employment and building the employment base. So they could contribute directly into a regional development center to increase the shipbuilding employment base. Yeah. It could also go directly into technology areas, where we're looking to use AI to improve efficiency within the shipyards. So they're evaluating that as well. Okay. So it's very broad now. It doesn't only go to us in Electric Boat- Yeah ... and GD. It goes into the supply chain, it goes into technology areas, it goes to workforce development areas. They're trying to address all of the issues in the supply base. Well, I know I'm trying to ask you the impossible question here, and when you- When you get- Get to the two per year. But when you look at this, do you look at it as a range of outcomes? You know, some could be where, you know, two per year by end of the decade, could be where it's gonna be still down at 1.6. I mean, how much play is there? So I'll tell you exactly how we look at it, right? We've got the Block V schedules already established. Yeah. They're public. Yep. They're, I mean, they're in the congressional record. And then you got Block VI, that you're gonna establish those schedules based on the supplier lead times that you get out of Block VI. And then the level of investment we've made and how we can deal with the spans within our shipyard and the construction spans based on the investments we made and the people that we have. And then when all those fall out, you're gonna get a calculation of 1.5-2.5 per year- Yeah ... towards the back end of Block VI. Okay. Yeah, seems like this is a- We don't start with- Yeah. We start with actually what it's gonna really take to build a ship. Yeah. Then the numbers will fall out. No, it just seems like this is a, this is a really critical- Well, it's critical we get the submarines delivered because the Navy really needs them. Yeah. Right? So it's important that we get these ships delivered, because they're working very hard. Can you just comment there? Actually, I'll stay on that, just on AUKUS, you know, Australia- Right ... program. When and how should we see you benefiting from that? We should get a contract this year. We are hoping to get a contract this year on AUKUS. I don't think it's gonna be material in nature. I think that'll show up over time, over the next couple of years, maybe three to four, before it becomes material. But you see things developing, you see a FMS case being drafted, which could potentially lead to some revenue. They named BAE as the design agent. Right. They may have named ASC over in Australia to be the sustaining partner. Sustaining partner means they're the people who are gonna sustain the boats. Well, they don't have any nuclear experience. Yeah, because they've never dealt with a nuclear ship, so they're gonna need some help from a nuclear partner. There's only two, right? So we could help with that. So we think at the back half of this year, we'll definitely have a contract. I'd be disappointed if we didn't, and then revenue will ramp from there. And this is not just Australia, this is U.K. There's a lot of submarine work, nuclear submarine work, that has to take place, over in the U.K, where we could be a partner to Babcock in that, because we have a partnership with Babcock now, who is the new-- They are the nuclear arm- Mm-hmm ... of the British Navy. when you look at trying to ramp on Virginia-class, then AUKUS comes in on top of that, I mean, that's great from a demand standpoint, but does this change the way you think about the shipyard over the next five or six years? Because you're gonna have even more. Not really. Not, not really. They're, it's, it's getting to 2.3. It's, we're building in support of getting ready for Block VI, right, and then Block VII. Is there gonna be a new order that is an increase to that, or it's just the next, next- Yeah ... boat in line? Okay. Right. That's to be determined, but it's not gonna significantly change the way we're investing in the shipyard. Columbia- class. Yes. Can you update us on how that's going? I know you had a couple issues on the first ship. We did. and there's a Northrop Grumman issue. There are a few things that have- Well, I'm not gonna comment on the Northrop Grumman issues. Okay. Um- But, uh- Even though I could have, 20 years ago, when I used to work for them. So our issues, we do 23% of the Columbia-class. We're a subcontractor to Electric Boat. We had some first-of-class issues related to the sleeve for the torpedo tube, the tube, the sleeve for the tube. And those are behind us. We've made that repair, and they're behind us now. We just need to finish the bow. So we're in a pretty good place, actually, a little bit ahead of the recovery schedule for that. So we're in a pretty good place on the Columbia-class. I don't wanna comment on the total program schedule. It's more appropriate for Electric Boat or GD. Okay. But the first -of-class issues are behind us. Yeah -for that part of the ship. Like, when we think about margins, how do we think about Columbia-class margins relative to overall Newport News margins? They're not a significant driver to Newport News margins right now. It's a cost type contract. It's pretty consistent within a range. We don't give margin by program, but it's not a drag or a big increase. That, that's kind of where I was going. Yeah. As a cost-plus program- Cost plus ... did it. I would expect it to... At least if you were close to that 9%-10% level, I would expect on a cost plus program like this, it would be similar to what- Potentially. Yeah. Potentially, yeah. Now, can you also perhaps comment on the prioritization of the Columbia-class, where it... You know, our understanding is that if, you know, Columbia-class takes priority right now for the Navy, and how does that impact what you do on Virginia-class or elsewhere at Newport News? Well, the DX Rating that it carries with it means that it's your top priority program, and it is our top priority program at Newport News. Which means that. So we don't have a lot of conflicts between our programs. Mm ... because our staffing is in a pretty good place. But if there's a conflict between the two, then Columbia has to get the preference. Mm. So if you have a latent issue that shows up where you have a manufacturing spot that Virginia-class has claimed to, but Columbia-class needs, Virginia-class has to wait. Right? So there, that could impact, that has impacted it like that. Now there's potential claim avenues relative to that because the DX Rating, but we have not entertained those as of yet. Yeah. And then, perhaps you can also just comment, you did before on carriers on the CVN program. You've got long lead funding now for the next one. Yeah, for 82. 82 and the 2025 budget, there's $100 million in the notes relative to the NDAA, so for potential, but to keep the super-critical suppliers on track for the aircraft carrier. And there's language that it'll be two aircraft carrier buy, which is important, because the delays on 80 that they've talked about- Yeah ... that have been fairly public. Because we bought that material together, we aren't having the same delays on 81 that we'd have on it. Okay. Are you at a place on 81 and sort of from a margin-cost standpoint- Right ... where you wanna be? Yeah, 81's just starting. Yeah, 80, 81's just starting out. We're having to do some interesting things on the dock where we build aircraft carriers. I don't know if you've been down... You've been down to Newport News before? Well, yeah. Yeah, yeah. So, in the dock there, we had to do some innovative things relative to putting another sill in there, so we can float off 80 and put 81 in, so we can build them next to each other. So that was supported by the Navy. It was pretty innovative, but 81's in a good place. It's just starting. Okay. Now, services. Services is something that I think you've benefited some from, over the last few years. Yes. Can you comment on that? Because I think of that as also something that can shift your top line up and down- Yes ... more in the short term. I think it'll be pretty consistent. Newport News Shipbuilding contracts will be pretty consistent. They've, they've got Columbus there that'll finish up here in a couple of years, year and a half, and then Boise behind that. We'll always- The Los Angeles. The two LA-class submarines that we're working on, there'll always be one, and it'll be very consistent. There's a couple contracts that are buried in the Newport News services that, that'll unwind, here, which will reduce it a little bit. But when you get to that consistent two, two submarines, a services line in our queue will be pretty consistent. So that should continue the Los Angeles-class Yes work on subsequent Yes -ships. Convert into Virginia class. Okay. Yes. Yeah. Great. Well, if we shift down to Ingalls. So these are all Flight III? Yes. DDGs that you won. Presumably, you really know how to build those well. We really know how to build them well. The LPDs, it should be the same. Right. Does this give you some opportunities to take margins up at Ingalls? So Ingalls has done very well, as you know. I'm comfortable with where they're at. We have lost the NSC program, which was a very good program, and that, that'll wind down. NSC, very predictable, stable configuration, able to reduce the cost every year, after accounting for inflation. So we have lost that. We need to replace that margin at Ingalls. So I expect them to continue to do well. They're being impacted by the same labor issues, as Newport News is, so we have to watch it. But I expect Ingalls to continue to do well. LPD -33 has been awarded- It has ... 34? 34, yes. 34, 10, 35, yes. Yes, so- Four ships. Yeah. Not awarded, but it's part of the budget- Yeah that we need to put under contract, yes. So, LHA -10. And are these the LHAs? These seem like very complex ships to me. So, LHA -10, I mean, is this one that is similar enough as you go through the LHAs? Sure, yeah. You have- So, 8, 9, and 10, same- Same design. Same standard design. Yeah. Right. Still complex. Big- Yeah ... and complex. Not nuclear, so not that complex, not that kind of complex. Yeah. But, yeah, complex ships to make, sure. But the DDG-51, the Flight III, that—think about the space and the size of that radar and the power generation that's required in a design of a ship that's, you know, 25 years old. The design's 25-30, 40 years old, right? Yeah. DDG, first DDG-51. That's very complex to build as well because you're putting a lot of equipment in a smaller space. Yeah. Shipbuilding's complex. So you're going to absorb... You're gonna have some margin. There's some margin headwind associated with the NSC- Right ... ramp down there. But can this get back? I mean, you were doing-- you pretty much got a heavily fixed price base down there. Right. Can you be back at this 11% type level that you were once at? Yeah. So our guidance is shipbuilding. Yeah. We don't, we don't give guidance into the, incrementally for the two, so I'm comfortable with our guidance for shipbuilding. There will be times where it could get better than that. Sure. Yeah. Yeah, sure. But over time, the entire portfolio, I expect to be back at 9%-10%. Okay. 'Cause I remember sitting here with Mike some years ago, and him saying to me... I'm looking at this fixed price space, and he goes, "No, can't be over 10%. Don't even put that in your model." And sure enough, you like just blew through 10%- We did -down there. We did. So that's why I'm asking, is that conceivable again, with, you know, a whole stable of mature designs going forward, to be able to- Yeah, but you know, you always reset. Remember, you always have to reset your cost basis based on how you're performing. Yeah. So while they got the benefit at Ingalls when they were performing poorly after Hurricane Katrina, and we got that when we blew through those margins- Right ... because we started to come down the learning curve. Conversely, when you start doing well, the Navy expects you to continue to do well, and with the- Yeah ... price pressures you talk about and the funding streams, that'll challenge margins. So that's the dance you do at the negotiation table every year when you have to renegotiate the next ship. So shift over to Mission Technologies. You've got a number of different businesses in there. What makes a business the right business for Mission Technologies? Yeah, so that's an interesting question, so I'm gonna go... When we spun, right? I'll go way back to when we- Yeah. When we spun, it gave us a chance to reset our strategy. That's the one really cool thing about getting spun, is you immediately get to prioritize your strategy versus, you know, just being an operating unit of a big company. So when we did that, we started to pay very close attention to the National Defense Strategy and what their priorities were. And if you know that the National Defense Strategy hasn't really changed that much in eight, nine years through three administrations. Think about Obama, Trump, Biden. The NDS, not a lot different. Yeah. Not a lot different. Pivot to the Pacific, technology focus, it's kind of been pretty consistent. So we started to watch that, and we had some technology-based businesses in our shipyards that were really not paid attention to... the nuclear work in Newport News, the Department of Energy work in Newport News, which is a market we really like. We had won one contract, we hadn't done anything in 15 years in Savannah River. Pulled it out. We had a training business, we pulled out. We had Continental Maritime, we had AMSEC. Those were two ship repair and ship maintenance businesses we pulled. So we created a Technical Solutions division, aimed at kind of the emerging national defense strategy things. They started to evolve more, and we, you saw electronic warfare, C5ISR, cyber and AI-enabled- Mm-hmm. - cyber, unmanned and autonomy. And we started to buy small businesses capitalizing on the National Defense Strategy. And then Hydroid, which was the biggest unmanned provider for the United States Navy, we purchased them, and then Alion, which aligned perfectly with the NDS priorities, technology priorities. And aligned with AUKUS Pillar Two. If you look at our Mission Technologies in AUKUS Pillar Two, besides quantum, it's aligned pretty well with Pillar Two. So that's how we put it together. It may look disparate, but it's really not. There's a data stream and a software development throughout all of that stuff. When you think about autonomy, you think about C5ISR and electronic warfare and cyber and AI, all those things, is a heavy software development and technology focus. And so that's how we think about Mission Technologies. Nuclear is a little different- Yeah. But that was just a business model thing where it was not failing in Newport News, it just wasn't achieving its full potential. And they go to, they go to market like a, they have to compete for those new DOE opportunities every time. Mm-hmm. We wanted them to be in a more competitive sort of division. Yeah -to do that. And they won, they won Los Alamos, they won Nevada National Security Site, and that's where we're doing the AUKUS. The AUKUS work's gonna come out of Mission Technologies, out of the nuclear team, but not out of Newport News. Yeah. On the unmanned and undersea part of this, I mean, that's an area that is, you know, desired to grow a lot. Yes. But, you know, how do you see that ramping up? I mean, is it... It's pretty small right now- It is ... in the whole scheme of things. It is. What, what do you see there in terms of how large that business could be? And also, there are a lot of people going into that market. Right. So I wasn't confused by how that market was gonna develop, because I worked at Global Hawk. Yeah. Global Hawk was gonna dominate unmanned. Right. Right? And then Predator showed up, right? And, it became a niche. Global Hawk's a great program. I loved it there. It's a valuable asset, it's a great program. Yeah. But you start to get... The barriers to entry are so low, and the different missions are so interesting, that you get—you're people are developing missions in different providers. I thought subsea and unmanned surface and subsea was gonna develop the exact same way. So I knew we weren't gonna, you know- Yeah dominate the market, right? Right. That, that there was gonna be a lot of missions, a lot of providers. But I did know that the installed base was important with Hydroid. And it's borne out with the $350 million award they got for the small UUV. And the way we think about unmanned is really a node in ISR that is a connector, right? It's just another way to enhance what our surface ships do as well. Mm-hmm. So, it's gonna grow, it's gonna grow from here for us, for sure. But it also keeps us in the conversation of some of the most important technologies being developed by the Navy, so we can actually implement them, potentially as a use case for our large platforms. When you look at Mission Technologies as a whole, and what do you see there as kind of a five-year growth plan? So we've talked about a 5% growth rate. It's going very well. It grew at 20% quarter-over-quarter, 13% year-over-year. Last year to this year, it's growing very well. It's got over an $80 billion pipeline. There could be some tailwind to that, but I conservatively think a 5% growth rate makes sense. Now, we're gonna have to transition the margins to a little bit more fixed price work in that space. It's been a R&D organization coming out of Alion, which is a lot of cost plus lower margin work. Which is good work, and we're not gonna sacrifice it just for, you know, percentage point of margin, 'cause that growth is good, but we're gonna, we will transition to more fixed price work. Do you have everything you need there, or would you be looking at any further acquisitions? Well, if there's a 200-person AI company that you can find me, that the valuation isn't through the roof, then give me a call. Okay. But we're pretty comfortable with our portfolio there. If we can add a capability we don't have now that makes us more competitive, we'd look at it. Cash, you're talking about $3.6 billion? 3.6, yes. Sounds like that's a pretty robust number, even with the CapEx increase, we got advances- Right to offset that. Right. Uh- Well, we said $3 billion 5 years ago. We're comfortable we're gonna get that, and $3.6 billion now. We're fortunate, we're not just making that up. We have line of sight on the programs, and vast majority of that's already in backlog. We have to execute. You have to execute and meet your profitability goals in order to achieve that, but we're comfortable with that forecast. Well, I guess we've got to wrap up here. Just perhaps you could, you know, when you look at the year ahead, what are you gonna be focusing your time on? What are the priorities? Execution. We're working very hard on execution in our shipyards, in hiring, in the supply chain. We got to get these contracts right, these 20, 21 ships we're putting under contract. They're gonna the next person that runs HII, 10 years from now, is gonna say, "Kastner did a great job getting those under contract, or he screwed it up." So, I'm gonna, it's very important because they don't bear fruit for a number of years. Yeah. Well, Chris, thank you very much. Thanks, Doug. It's been great. Thank you.