Earnings Call: Q2 2021

Aug 5, 2021

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 Please be advised that today's conference is being recorded. I would now like to hand the call over to Duane Blake, Vice President of Investor Relations. Mr. Blake, you may begin. Thanks. Good morning, and welcome to the Huntington Ingalls With us today are Mike Petters Chris Kastner, Executive Vice President and Chief Operating Officer and Tom Steely, Executive Vice President and Chief Financial Officer. As a reminder, statements made in today's call that are not historical fact and are made pursuant 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 Consumed in the appendix of our earnings presentation that's posted on Ike Petters. Mike? Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's Call. This morning, we released strong Q2 2021 financial results, driven of $2,200,000,000 were up from $2,000,000,000 in the Q2 of 2020. Diluted EPS of 3 point Significantly from $1.30 in the Q2 of last year and pension adjusted EPS for the quarter was $3.05 New contract awards during the quarter were approximately $1,200,000,000 resulting in a backlog of approximately $48,000,000,000 of which approximately $24,000,000,000 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 are pleased that the congressional markup process for fiscal year 2022 has begun in 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, 2 Virginia class submarines, 1 DDG 51 Arleigh Burke class destroyer and LHA-nine. 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 'twenty two mark out process to urge support for the 2nd DDG and other critical priorities, including the efficient production of amphibious warships. In closing, Slide 4 provides some key takeaways from the recently announced transaction, and we are very excited about the addition of Alliant to the HII family. Alliant is a perfect complement to our existing capabilities in the technology driven defense and federal solutions 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 and simulation and next generation 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 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 $107,000,000 to provide additional long lead time material and advanced procurement activities for amphibious assault ship LHA-nine, which increases current funding on this ship to $490,000,000 Regarding the potential bundled acquisition of LHA9 with LPD 32 and 33, Discussions are ongoing with the customer. We believe that a bundle acquisition continues to be the most cost effective method a procurement of these critically important ships. In addition, Ingalls was awarded a contract with a potential total value of $724,000,000 over 7 years for planning yard services in support of a variety of in service amphibious class shifts, including the LPD 17 San Antonio class and LHA VI America class. Shifting to program status, LHA-eight Bougainville is making steady progress through the structural erection and initial outfitting phases of construction with cost and scheduled performance in line with our expectations. On the DDG program, the team successfully launched the 1st Flight 3 Arleigh Burke Class guided missile destroyer, DDG-one hundred and twenty five Jack H. Lucas in June and DDG-one hundred and twenty one Frankie 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 Q4 and LPD 29, Richard M. McCool Jr. Continues to achieve production milestones in support of launch early next year. At Newport News, there were no significant contract awards to highlight for the quarter, so I will go right on to program status. CDN 79 Kennedy is approximately 83% complete and the team remains focused on compartment completion and key propulsion plant milestones. CDN 73 USS George Washington is approximately 90% complete And the team remains focused on achieving key test program milestones, flexibility and modularity of these units. TS was also recently awarded a $273,000,000 cost plus fixed fee, indefinite delivery, indefinite quantity contract to support maintenance and planning for the overhaul and repair of equipment and systems associated with the Navy aircraft carriers and West Coast Navy Surfaceships. In addition, TS was awarded a contract with a 1 year base period and 4 1 year options with a total potential value of $346,000,000 to provide a variety of aircraft and operational support services for U. S. AFRICOM, included planning, management, maintenance, logistics and airlift airdrop services and emergency medical care. Execution within Technical Solutions remains consistent with expectations, except for delays in awards in our unmanned business for critical new programs, which we expect to be resolved by the end of the year. As I close, note that we have included Upcoming key program milestones on Slide 5. There are no changes from what we have previously provided other than designated those milestones that have been completed with a check mark. Now I'll turn the call back over to Tom for his remarks on the financials. Tom? Thanks, Chris, and good morning. Today, I'll briefly review our Q2 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 6th of the presentation, our 2nd quarter revenues of $2,200,000,000 increased approximately 10% compared to the same period last year. This was primarily due to the growth at Newport News and Ingalls and was partially offset by decline at Technical Solutions due to the portfolio shaping actions we have taken. Segment operating income for the quarter of $169,000,000 increased $174,000,000 compared to the Q2 of 2020 And segment operating margin of $7,100,000 $75,000,000 of net capital expenditures or free cash flow of $126,000,000 in the Q2 of 2020. Cash contribution to our pension and other post retirement $1,000,000,000 in the quarter increased 241,000,000 or 21.5 percent from the same period last year due to higher revenues in both the submarine and aircraft carrier construction. Newport News operating income of 7, we continue to expect the Align acquisition will close in the coming weeks and that we will incur approximately $25,000,000 of onetime pretax Transaction and financing related expenses in 2021. We completed this indication of the transitive update on our 2021 outlook Solutions on our Q3 call following the closing of the acquisition. Now I'll turn the call back over to Duane for Q and A. Thanks, Tom. 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 and A. We will now begin the question and answer session. Our first question comes from Doug Harnett with Bernstein. Please go ahead. Good morning. Thank you. Good morning, John. 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? Yes, sure. It's Tom here. Good morning, Doug. I appreciate the question here. So although the growth year over year from Q2 was large, We took a charge in Q2 last year for the Virginia class program. So that comes both on the margin side and the revenue side. So it has that 21% decrease looking larger than it is. I'd tell you on the back half of the year, with COVID understood right now, the labor force is stable, the That we have on 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 Back half of this, I wouldn't let it run away from you as you try and see the growth from a year over year perspective. I'd stick with the guidance that we gave you Back at the beginning of the year. I still think that we're running top of that. Okay. And then you've got this $926,000,000 service award at Ingalls. You're in the process of working through the Los Angeles class work 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 the trajectory for shipbuilding, but services is less certain. So how do you see that Flowing and do you get a sense from your Navy and budget discussions that there's 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 on that, it's a long term services type contract. Obviously, as the cleanse and the years get funded in the You guys will see that revenue mature down there. The services contract they have is the oversight and the services aspect for the LPD and LHA program. So that was anticipated as far as our revenue projections that we had to be there. It's not a large portion of the Ingalls portfolio as we see it today. There are potentials going forward depending on how the landscape plays out from a construction And the future services and MRO 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 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. Mike, I think in your remarks, you talked about stability or more predictability in the MTIB purchasing power or purchasing 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's savings for the customer. I'm just curious from to the company, how would it change if they're bought individually or in that block buy agreement? So I'll Just kind of talking in general, anytime you're in a multiyear program, you're able to sequence the schedule of the platforms to conform to The way you've got your capital and your people and your material lined up, and you get into, as Tom used the word, case before, case matters a lot. Yes. 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 Englerts 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 the predictability. So that's kind of the way we think about it. I don't know if Collin, if you want to add Yes. So Miles, it's Chris. It really solidifies the next 3 to 4 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 Sure. Okay. I'll 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, it provides To our customers have already got this. So, whether they decide to take the bundle that's on the table now or buy them kind of Separately, the financial impacts on that obviously, as Mike said, there's rates that come into play, the schedule, 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 But we put that forth to be as flexible to our Navy customer as possible and we will see how they move forward with appropriate funds and award accordingly. Okay. And I think you increased the 5 year cash flow to $3,200,000,000 after a LION acquisition from 2020 to 2024. As we look to 'twenty two to 'twenty four, I guess it implies the $740,000,000 or so. Is that remind us, is that a linear Is it a big step up with significantly higher back end? Can you just give any color to that as you see it today? Yes, Saurabh, they come online. As you know, we'll close on the deal at the end of August. In Q3, you'll get a look see of The financials with the line rolled in there. We'll give you a little bit more color on the Q3 call for the specifics on how we see 2020 Falling out and then I give additional color. 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 Spread the $200,000,000 but I just hold the thought there until we come through the integration and We finished out this year. Our next question comes from Robert Spingarn with Credit Suisse. Please go ahead. Hey, good morning. 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 ex EACs 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. Hi, Fred. I appreciate the question. Sure. So now from an inputting We kind of guided in Q1 that there was not going to be many opportunities for risk and time and some milestones that could spread Q2, That was exasperated at Newport News. I tell you, a low 5000, 6000 is a bit low when you combine them with the Q1, it's 6.1 for 1st half year, so it's right in the run rate of 6% to 7%, even if it's on the low side. It was not impacted by any major setbacks. The favorable EAC increases were $62,000,000 The unfavorable were $27,000,000 down for a net of 35 The upside is a little bit, slightly towards Ingalls and then on the unfavorable, it was just slightly flopped from fifty-fifty It's important news, but there wasn't anything specific to call out there. On the favorable side, you will find in the Q, there was a 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, LP28 and LP29. But on the downside, there's nothing notable to kind of highlight here, okay? Can you capital investment incentive recognized on Jack Lucas? Yes, it's $14,000,000 And you'll find that in the Q, it's upfront. All right. Thank you very much. It seems like when you raised the shipbuilding margin for the year that this benefit 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. Yes, Tom here. I'll tell you that with half year in the books, we kind of have a line of sight how the year is going to play out. So factoring in Actual the 2 quarters and what we see here, we're still foreshadowing that Q3 is going to be light in terms of milestones and risk retirement In the back end of the year, Ford's additional opportunities, another 6 months of 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 about how the year is at. Okay. But specifically, was that capital investment benefit Not an expected thing for the year? 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, Wanna the free cash flow is pretty weak in the first half, and it looks like working capital is up north of $200,000,000 The guide of $150,000,000 to $250,000,000 for the year still holds and what would have caused the Q2 to be as weak as it was? Thanks. Sure. So I'll tell you, traditionally we use cash upfront. So we've punched out minus 16 in the Q1, 23 up here for a net of Plus 7% 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 is we have to Back to corporate payments at the end of 2021. That negates some of the positiveness that you See in the working capital traditionally in the back half of HII. So from where we stand here to get to the $150,000,000 to $250,000,000 it's just the normal operational Right, on the revenues and the payments flowing through the book. Okay, thanks. Our next question comes from Seth Seifman with JPMorgan. Please go ahead. Hey, thanks very much and good morning. Question, I guess, about profitability and whether I guess, you look at the margin slide 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 1st 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, Why wouldn't we expect a stronger shipbuilding margin than we saw in first half? And 2nd, 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 shipbuilding markets. Sure. Yes. I can give you some color on both of those questions. So when you look at Q1, Q2, there's quite a few one time events Heather in there. The incentives we're talking about here at 1 $1.25 in Q2. Q1, there were a couple of incentives in there too that we highlighted. I've been asked to 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 about, 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 The standpoint in 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 80, 81 is coming online. There's a CVN 74 that just popped in And CVN seventy three is nearing the end from a revenue perspective and they have less weight on the portfolio So it's the mix of the shifts that are in at Newport News. So when you talk about 2022 timeframe, those shifts As they run through another 3, 4, 5 quarters, they'll be burning down risk and there'll be a potential to increase booking rates. The next question comes from Ron Epstein with Bank of America. Please go ahead. Good morning, guys. Just quickly, could you give us an update on how things are proceeding with the Virginia class? Because I know that's a Program that you ran into some challenges in the last 18 months. How is it tracking now? Yes, Ram, this is Chris. I'll start. If Mike wants to add on here, we'll do that. But Really, it's really a team performing well and the partnership performing well. Montana is proceeding to delivery this year, New Jersey is proceeding to launch And then delivery next year and then the shops are executing on the modules to support assembly for the subsequent boat. So Confident and comfortable with how the Block IV and Block V programs are executing right now. Mike, do you want to I would just say that moving to 2 per year in Block And then moving adding in the Virginia payload modules in Block 5, success is going to depend on rhythm. Yes. What we have established here, Chris' team and Jennifer at the Shipyard establishing right now is they're establishing a rhythm in the program We were working that when COVID hit us last year, and so we kind of had to step 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 Got you. Got you. And then maybe just another summary question. Do you guys does the industrial base 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 2 Virginias delivered and a Columbia, so you get 3 subs, is there enough capacity in terms of Qualified kind of pipe fitters to do that? Well, Ron, I guess, If you took a if you decided that everything was static and that 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 since COVID began last March, we've hired 6,000 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 submarine production in a Sustain way, not just doing it once in a while, but in some sort of sustained way, they want to go to 3 submarines a year or 3 Virginia class a year or 2 Virginia class and a Columbia a year and they're going to sustain that for a period of time, we can absolutely have the work And the physical plant and the supply chain set up to go execute that. If you said that it's a light switch and starting In the FY 'twenty two budget, we're going to expand the buy from 2 to 4. Well, we probably have some Startup, thanks there. But we don't believe that's the way that's going to go. We believe that this is going to be done in context. 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 that they don't have funds. And that's kind of the way the industry looks at it. So I think we can expand capacity if that's The plan is to sustain. 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 the early milestones we should be Thinking about on the Allian deal to make sure that it's tracking the plan. So could you outline what you're doing, What you're planning in terms of integration, sort of what you hope to have accomplished by the end of the year with that deal? Yes, absolutely. You've got to be careful here because this is Chris. We're not close yet, obviously, so you don't want to get Ahead of that, I will say that we have a very detailed integration plan in place and been working very well With Align and putting that plan in place. And I'd also like to say that Align leadership team is going to play a very prominent role And the leadership team of the combined company when we do get close. And we'll be able to report that status of the integration On the Q3 call, but I don't want to get in front of closing on that. And Mike, I don't know if you want to add anything. I mean, I think we All I would say is that we integrated Hydroid last year. We have a blueprint for how to go do that in Effective and efficient way. Obviously, this is a bigger one than Hydroid was, but the muscles are the same. I'm pretty excited about the opportunity to go through this. That will be a lot of hard work by a lot of folks, but it will be the right kind of stuff to do. And we're certainly going to keep you posted on how it's going. Okay. And just as a follow-up, You talked about the $14,000,000 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 just trying to get a sense for Should we have thought about the potential for cume catch ups, maybe last quarter as $35,000,000 minus the $14,000,000 Like When we say not a lot of cune catch up opportunities, is $20,000,000 sort of the not a lot Opportunity or should we think of it as like 0? 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 was that there was an opportunity for a lot of favorable net adjustments. So, yes, I'll hop in there. Chris, it's statements. So yes, I'll hop in there. Chris, it's part of how. But when we give that guidance, we talk about milestones, hard milestones. So Milestone that if we hit the milestone, we take a step up. As we check the EACs, we sell the chip offs, really The 5 milestones that will bring in additional margins. I mean that's true when we guided it in Q1 and it's true right now when I look at punched through here in Q2 Into Q3, as I mentioned, there was 62 of 27 out for net of 35 and the 62 is 14 of it, right. So as you do the math of that, I guess we're asking, hey, dollars 0 or $20,000,000 $40,000,000 a lot of catch up. As I mentioned to you, sixty-forty Ingalls versus the Newport News there. But hey, just steady performance down at Ingalls, LHA LTV programs. And there wasn't a specific card model, Sterling, but as we come through our quarterly EAC processes, we Check the burn rate and the risk registers and where we stand. 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 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 Q1? I may have said that, but now that you bring it up again, we had an ECP that we closed out and By mistake, we said capital incentives. So we had an ECC on the DDQ 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 that pretty unusual? We do have ACPs that close out from time to time. They're not big adjustments. That happened to be a rather larger adjustment than we had. And so That's kind of weighed into the Q1 time frame. And then same question on capital incentive? Fairly unusual to have a capital incentive that large. So We work ourselves through as we come through on these ECPs that we provide for proposals, we go to the table and negotiate. There's a balance of affordability and equity on And as we work ourselves through, sometimes they take time. And then as we settle the deal, whether it's additional marginal capital incentive, We'll let the Street know when we close out and we'll take 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, I'd say, in Q3 as we close out. So 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 my 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 Talked about low 8% in 'twenty two and then going up from there. So anything about the performance here that gives you more confidence, maybe that could be a little bit better than that? No, I would say where we guided and where we expect it to be. And Our outlook right now on next year is still hold. Okay. And Tom, what has to happen from a working Capital perspective over the next couple of years to be able to hit this $3,000,000,000 or $3,200,000,000 I guess with Allian 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% 8%. So I think we'll continue to run our operations Accordingly, the ALI portfolio 85% is cost of contract. So we don't see that as a range from a working capital perspective as that's integrated into HI Portfolio. But the big drivers that we kind of had highlighted how the $3,000,000,000 and now If you come about, we're 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 fluctuations on that front. I think on a couple of calls, we've worked that through for you how 700,000,000 On a run rate was attainable prior to Alliant purchase. Okay. And thinking on pension, it's still kind of Net neutral CAS versus your contribution. Yes. All right. Thank you very much. Our next question comes from Burke Hui with Morningstar. Please go ahead. Hey, thank you so much for taking the question. So I was taking a look at the awards of $1,200,000,000 And if you take out The shipbuilding I'm sorry, the servicing contract and I think another $100,000,000 contract, You get to about $360,000,000 and 6 unmanned Awards. And I'm wondering, is that a good way to think about the pricing point for UUVs? Or am I not thinking about that right? Yes. So there's a number of awards across the corporation And that value for awards, we don't give specific values for the price points of all our UUVs. So yes, I wouldn't necessarily Thank you. I'm not showing any further questions at this time. I would now like to hand the call back over to Mr. Petros 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 shots. That's what we need right now. They're ready Thank you all very much. We look forward to seeing you.