Huntington Ingalls Industries, Inc. (NYSE:HII) Q4 2022 Earnings Call Transcript

And although being either at 6% our Shipbuilding sales or is subside, including all my sales with Mission Technology is on the low end of the range. I think what offsets that is the revenue — an incremental revenue and margin that we think we are going to have in the coming years. So I am still bullish on the north of $700 million is going to be a run rate in a couple of years from now and I think 2024 is that inflection point to kind of start that run.

Noah Poponak: Okay. The north of $700 million in a few years, I guess, if 2024 is $780 million midpoint about $200 million of working capital, once you get to the working capital goal, you then cease to have positive change in working capital flow to the cash flow. So 2025 million, I mean, who knows exactly what it’s going to be, but sort of directionally would not have that. So is there a step down from 2024 as — and then as the business grows, you over time get back to that $700 million?

Chris Kastner: Yeah. Noah, we are not going to discuss.

Noah Poponak: You are not.

Chris Kastner: We are not going to forecast 2025 free cash right now. But I think your logic is okay. The business is going to grow. And if we stay down with those working capital numbers, you are not going to get a benefit from it. You are going to have to get it from growth and margin improvement. So I think your logic is sound. But we do definitely believe that free cash is going to get north of $700 million in 2024 and then continue to grow from there.

Tom Stiehle: I will tell you stick with a lot of the numbers, right? So I walk through how we normalize out the 2021 and 2022 because of COVID that you can see we are incrementally going from that $460-ish million to $510 million to $550 million with the guide of $425 million this year, COVID-adjusted, that’s another $550 million. And then I am telling you the working capital is going to get us there in 2024. So that is just say what’s the run rate. I think you are looking at

Noah Poponak: Okay.

Tom Stiehle: the right way on how you model it and we will provide guidance

Noah Poponak: Okay.

Tom Stiehle: for 2025 a year from that.

Chris Kastner: Yeah.

Noah Poponak: Great. And then, Chris, just on labor, you spent some time on it, but — and it’s unpredictable, but I guess maybe just how — when do you think you could get to something close to normal on your labor churn and development of the people you are hiring in. I guess with the amount of time you spent on it, the amount of time you have been in the business, obviously, it’s an unprecedented situation, but how much more time do you need to get to something that’s pretty stable?