Huntington Ingalls Industries, Inc. (NYSE:HII) Q3 2019 Earnings Conference Call Transcript

Nov 07, 2019 • 09:00 am ET

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Huntington Ingalls Industries, Inc. (NYSE:HII) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2019 Huntington Ingalls Industries Inc. Earnings Conference Call. [Operator Instructions]

I would like to hand the conference over to your speaker today, Dwayne Blake, Vice President of Investor Relations. Please go ahead sir.

Executive
Dwayne B. Blake

Thanks, Michelle. Good morning, and welcome to the Huntington Ingalls Industries third quarter 2019 earnings conference call. With us today are Mike Petters, President and Chief Executive Officer; and Chris Kastner, Executive Vice President, Business Management 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 laws. Our actual results may differ. Please refer to our SEC filings for descriptions of some of the factors that may cause actual results to vary materially from anticipated results. Also, in their remarks today, Mike and Chris 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?

Executive
Mike Petters

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on the call. Let me share some highlights from the quarter starting on Slide 3 of the presentation. Sales of $2.2 billion for the quarter were approximately 6.5% higher than 2018 and diluted EPS was $3.74. New contract awards during the quarter were approximately $2 billion resulting in backlog of approximately $39 billion at the end of the quarter, of which $17.8 billion is funded.

Turning to capital deployment for a moment. Earlier this week, we announced that our Board of Directors approved a 20% increase in our quarterly dividend from $0.86 per share to $1.3 per share. We also increased our share repurchase program from the most recent authority of $2.2 billion to $3.2 billion and extended the term from October 2022 to October 2024. These decisions demonstrate continued confidence in the free cash flow generation of the business that supports our path to 2020 commitment to return substantially all free cash flow to our shareholders.

Regarding activities in Washington, we are encouraged that the House and Senate our conferencing The National Defense Authorization Bill and are hopeful that a timely conference agreement will be produced for fiscal year 2020. We are very pleased with strong support for shipbuilding by the Senate Appropriations Committee, which included funding for surface combatants, submarines, amphibious warships, aircraft carriers and autonomous platforms.

In particular acceleration of both LPD 31 and LHA 9 to fiscal year 2020, will best leverage the hot production lines and supply chains for amphibious warships and incremental funding will permit the Pentagon to