Financial Performance - The company reported second quarter sales of $3.1 billion, with earnings per share of $3.86 and a backlog of $56.9 billion [5][13] - Free cash flow was $730 million, with capital expenditures of $93 million [6][19] - Revenues increased by 3.5% year-over-year, driven by growth across all three divisions [13] Business Line Performance - Ingalls revenues were $724 million, up 1.7% year-over-year, primarily due to higher volume on the guided missile destroyer program [14] - Newport News revenues reached $1.6 billion, a 4.4% increase, driven by higher volumes on Columbia and Virginia class submarine programs [15] - Mission Technologies revenues were $791 million, up 3.4%, supported by a favorable resolution related to a C5ISR contract [15] Market Data - The company secured contract awards totaling $11.9 billion, including two Block V submarines and various shipbuilding investments [5][11] - The reconciliation bill and FY 2026 budget include significant support for shipbuilding programs, with $4.9 billion allocated for the shipbuilding industrial base [12] Company Strategy and Industry Competition - The company is focused on increasing throughput, achieving cost reductions, and capturing new contract awards [12][26] - A technology partnership with C3AI aims to leverage digital technologies and AI to enhance shipbuilding efficiency [8] Management Commentary on Operating Environment and Future Outlook - Management acknowledged challenges in transitioning from pre-COVID contracts to new contracts, with expectations for improved performance in the latter half of the year [9][10] - The company remains confident in achieving a 20% improvement in throughput, contingent on hiring experienced personnel and stabilizing the supply chain [32][36] Other Important Information - The company updated its 2025 free cash flow guidance to between $500 million and $600 million, reflecting improved cash tax expectations [22] - The company ended the quarter with a cash balance of $343 million and total liquidity of approximately $2 billion [20] Q&A Session Summary Question: How to reconcile the significant increase in shipbuilding throughput with the modest revenue guidance? - Management explained that the revenue forecast considers wage increases and material timing, and they remain confident in achieving their throughput targets [31][34] Question: Is the five-year cumulative free cash flow target back on the table? - Management clarified that they are focused on annual guidance and have not reinstated a five-year target at this time [41] Question: What is the expected impact of the changes in R&D tax code? - Management indicated that the changes provide a tailwind for cash flow, with an estimated increase of $150 million due to the new tax treatment [69] Question: What is the status of the unmanned undersea vehicle program? - Management noted that while the unmanned vehicle segment is currently small, they expect significant growth opportunities in the future [72] Question: How many employees were hired in the quarter? - Approximately 2,400 experienced employees were hired, with improvements in retention metrics observed [84]