HUNTINGTON INGALLS INDUSTRIES INC

Previous wording

We conduct most of our business with the U.S. Government, primarily the Department of Defense ("DoD"). As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs. Ingalls includes our non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of our nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Our Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of Artificial Intelligence and machine learning to battlefield decisions; defensive and offensive cyberspace strategies and electronic warfare ("CEW&S"); unmanned autonomous systems; live, virtual, and constructive training solutions ("LVC"); fleet sustainment; and critical nuclear operations.

Current wording

We conduct most of our business with the U.S. Government, primarily the Department of Defense ("DoD"). As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs. Ingalls includes our non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of our nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Our Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of Artificial Intelligence and machine learning to battlefield decisions;

Previous wording

We continue to see uncertainty in the economy, our industry, and our company, with challenges for customers and suppliers, labor and supply chain challenges, and inflation, among other impacts.

Current wording

We continue to see uncertainty in the economy, our industry, and our company. Our customers and suppliers continue to face challenges, and our results for the three months ended September 30, 2024, have been adversely affected as we continue to experience significant challenges relating to labor availability, our supply chain, and inflation, among other challenges. We cannot clearly predict how long these challenges will continue, whether these challenges will change over time, or whether our actions to address these challenges will be successful.

Previous wording

Defense Spending Environment - The President submitted the fiscal year 2025 Budget Request on March 11, 2024, which is now under consideration by Congress. The budget request reflects continued investment in shipbuilding, funding two Arleigh Burke class (DDG 51) surface combatants, one San Antonio class (LPD 17) amphibious warship, and the lead Block VIVirginia class (SSN 774) submarine, which is proposed to be executed as a multiyear procurement. Additionally, the budget request continues funding for Ford class (CVN 78) nuclear aircraft carriers and the first of three years of full funding for the refueling and complex overhaul of USSHarry S. Truman (CVN 75). The budget request continues investment in the submarine industrial base and research and development on next generation large surface combatants (DDG(X)) and nuclear submarines (SSN(X)).

Current wording

Defense Spending Environment- The President submitted the fiscal year 2025 Budget Request on March 11, 2024, which is under consideration by Congress. The budget request reflects continued investment in shipbuilding, funding two Arleigh Burke class (DDG 51) surface combatants, one San Antonio class (LPD 17) amphibious warship, and the lead Block VIVirginia class (SSN 774) submarine, which is proposed to be executed as a multiyear procurement. Additionally, the budget request continues funding for Ford class (CVN 78) nuclear aircraft carriers and the first of three years of full funding for the refueling and complex overhaul of USSHarry S. Truman (CVN 75). The budget request continues investment in the submarine industrial base and research and development on next generation large surface combatants (DDG(X)) and nuclear submarines (SSN(X)).

Previous wording

Congressional consideration of the fiscal year 2025 President’s Budget Request began following its release in March 2024 and is continuing. Each of the House and Senate Armed Services Committees have acted on their respective National Defense Authorization bills for fiscal year 2025. The full House approved its authorization bill and the Senate version awaits Senate floor consideration before the two bills are reconciled to produce a final authorization measure. The full House also approved the fiscal year 2025 defense appropriations bill. The Senate Appropriations Committee has yet to conduct markups of the Senate defense appropriations bill, and the timing of committee action remains uncertain. We cannot predict the outcome of the fiscal year 2025 budget process or whether short-term funding will be required in the event annual appropriations measures are not finalized by the October 1, 2024 start of the next fiscal year.

Current wording

Congressional consideration of the fiscal year 2025 President’s Budget Request began following its release in March 2024 and is continuing. The House and Senate Armed Services Committees have acted on their respective National Defense Authorization bills for fiscal year 2025. The full House approved its authorization bill, and the full Senate has not yet completed floor consideration of the Senate version. It is expected that the two bills will be reconciled to produce a final authorization measure. The full House also approved the fiscal year 2025 defense appropriations bill. The Senate Appropriations Committee advanced its defense appropriations measure out of committee and awaits further consideration by the full Senate.

Previous wording

Sales and service revenues for the three months ended June 30, 2024, increased $190 million, or 7%, compared to the same period in 2023, primarily due to higher volumes at Mission Technologies, Ingalls, and Newport News. Sales and service revenues for the six months ended June 30, 2024, increased $321 million, or 6%, compared to the same period in 2023, primarily due to higher volumes at Mission Technologies and Ingalls, partially offset by lower volumes at Newport News.

Current wording

Sales and service revenues for the three months ended September 30, 2024, decreased $67 million, or 2%, compared to the same period in 2023, primarily due to lower volumes at Ingalls and Newport News, partially offset by higher volumes at Mission Technologies.

Previous wording

The Operating FAS/CAS Adjustment was a net expense of $15 million and $17 million for the three months ended June 30, 2024 and 2023, respectively. The Operating FAS/CAS Adjustment was a net expense of $32 million and $36 million for the six months ended June 30, 2024 and 2023, respectively. The favorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by demographic assumptions, partially offset by lower interest rates under FAS.

Current wording

The Operating FAS/CAS Adjustment was a net expense of $16 million and $19 million for the three months ended September 30, 2024 and 2023, respectively. The Operating FAS/CAS Adjustment was a net expense of $48 million and $55 million for the nine months ended September 30, 2024 and 2023, respectively. The favorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by demographic assumptions, partially offset by lower interest rates under FAS.

Previous wording

Non-current state income tax benefit was $1 million and $4 million for the three months ended June 30, 2024 and 2023, respectively. Non-current state income tax benefit was $2 million and $8 million for the six months ended June 30, 2024 and 2023, respectively. The unfavorable change in non-current state income taxes for each period was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and the timing of long-term contract income for tax purposes.

Current wording

Non-current state income tax benefit was $1 million and $4 million for the three months ended September 30, 2024 and 2023, respectively. Non-current state income tax benefit was $3 million and $12 million for the nine months ended September 30, 2024 and 2023, respectively. The unfavorable change in non-current state income taxes for the three months ended September 30, 2024, was driven by an increase in deferred state income tax expense, primarily attributable to a change in the timing of long-term contract income for tax purposes. The unfavorable change in non-current state income taxes for the nine months ended September 30, 2024, was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and the timing of long-term contract income for tax purposes.

Previous wording

consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.

Current wording

Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.

Previous wording

For thethree and six months ended June 30, 2024 and 2023, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Current wording

For thethree and nine months ended September 30, 2024 and 2023, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Previous wording

For thethree and six months ended June 30, 2024 and 2023, net cumulative catch-up revenue adjustments by segment were as follows:

Current wording

For thethree and nine months ended September 30, 2024 and 2023, net cumulative catch-up revenue adjustments by segment were as follows:

Previous wording

Ingalls revenues, including intersegment sales, for the three months ended June 30, 2024, increased $48 million, or 7%, from the same period in 2023, primarily driven by higher volumes in amphibious assault ships and surface combatants, partially offset by lower volumes in the Legend class National Security Cutter ("NSC") program.

Current wording

Ingalls revenues, including intersegment sales, for the three months ended September 30, 2024, decreased $47 million, or 7%, from the same period in 2023, primarily driven by lower volumes in amphibious assault ships and the Legend class National Security Cutter ("NSC") program, partially offset by higher volumes in surface combatants.

Previous wording

Ingalls revenues, including intersegment sales, for the six months ended June 30, 2024, increased $126 million, or 10%, from the same period in 2023, primarily driven by higher volumes in surface combatants and amphibious assault ships, partially offset by lower volumes in the NSC program.

Current wording

Ingalls revenues, including intersegment sales, for the nine months ended September 30, 2024, increased $79 million, or 4%, from the same period in 2023, primarily driven by higher volumes in surface combatants and amphibious assault ships, partially offset by lower volumes in the NSC program.

Previous wording

Ingalls segment operating income for the three and six months ended June 30, 2024, was $56 million and $116 million, respectively, compared to segment operating income of $65 million and $120 million, respectively, for the same periods in 2023. The decreases were primarily driven by lower performance on surface combatants, partially offset by a delivery contract incentive on Richard M. McCool Jr. (LPD 29).

Current wording

Ingalls segment operating income for the nine months ended September 30, 2024, was $165 million, compared to segment operating income of $193 million for the same period in 2023. The decrease was primarily driven by lower performance on surface combatants and amphibious assault ships, partially offset by a delivery contract incentive on USS Richard M. McCool Jr. (LPD29).

Previous wording

Newport News revenues, including intersegment sales, for the six months ended June 30, 2024, decreased $46 million, or 2%, from the same period in 2023, primarily driven by lower volumes in the Virginia class (SSN 774) submarine program and aircraft carriers, partially offset by higher volumes in the Columbia class (SSBN 826) submarine program.

Current wording

Newport News revenues, including intersegment sales, for the three months ended September 30, 2024, decreased $41 million, or 3%, from the same period in 2023, primarily driven by lower volumes in naval nuclear support services and cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program and aircraft carriers, partially offset by higher volumes in the Columbia class (SSBN 826) submarine program.

Previous wording

Newport News revenues, including intersegment sales, for the three months ended June 30, 2024, increased $26 million, or 2%, from the same period in 2023, primarily driven by higher volumes in the Columbia class (SSBN 826) submarine program.

Current wording

Newport News revenues, including intersegment sales, for the nine months ended September 30, 2024, decreased $87 million, or 2%, from the same period in 2023, primarily driven by cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program and lower volumes on aircraft carriers and naval nuclear support services, partially offset by higher volumes in the Columbia class (SSBN 826) program.

Previous wording

Newport News segment operating income for the six months ended June 30, 2024, was $193 million, compared to segment operating income of $179 million for the same period in 2023. The increase was primarily driven by contract adjustments, incentives, and volumes on the RCOH program and higher performance in naval nuclear support services, partially offset by lower performance on the Virginia class (SSN 774) submarine program and aircraft carrier construction.

Current wording

Newport News segment operating income for the three months ended September 30, 2024, was $15 million, compared to segment operating income of $90 million for the same period in 2023. The decrease was primarily driven by lower performance on the Virginia class (SSN 774) submarine program and aircraft carriers.

Previous wording

Newport News segment operating income for the three months ended June 30, 2024, was $111 million, compared to segment operating income of $95 million for the same period in 2023. The increase was primarily driven by contract adjustments, incentives, and volumes on the RCOH program, partially offset by lower performance on aircraft carrier construction and the Virginia class (SSN 774) submarine program.

Current wording

Newport News segment operating income for the nine months ended September 30, 2024, was $208 million, compared to segment operating income of $269 million for the same period in 2023. The decrease was primarily driven by lower performance on the Virginia class (SSN 774) submarine program and aircraft carriers, partially offset by contract adjustments and incentives on the RCOH program.

Previous wording

Mission Technologies revenues, including intersegment sales, for the three and six months ended June 30, 2024, increased $120 million, or 19%, and $246 million, or 19%, respectively, from the same periods in 2023, primarily due to higher volumes in C5ISR and CEW&S.

Current wording

Mission Technologies revenues, including intersegment sales, for the nine months ended September 30, 2024, increased $270 million, or 14%, from the same period in 2023, primarily due to higher volumes in C5ISR and CEW&S.

Previous wording

Mission Technologies segment operating income for the three months ended June 30, 2024, was $36 million, compared to segment operating income of $9 million for the same period in 2023. The increase was primarily driven by the higher volumes described above, a $6 million loss in 2023 on the sale of our investment in an unconsolidated ship repair and specialty fabrication joint venture, and higher performance in fleet sustainment.

Current wording

Mission Technologies segment operating income for the nine months ended September 30, 2024, was $97 million, compared to segment operating income of $50 million for the same period in 2023. The increase was primarily driven by the higher volumes described above and higher performance in fleet sustainment.

Previous wording

Product sales for the three months ended June 30, 2024, increased $47 million, or 3%, from the same period in 2023, primarily as a result of higher volumes at Ingalls in amphibious assault ships and at Newport News in the Columbia class (SSBN 826) program, partially offset by lower volumes in aircraft carriers.

Current wording

Product sales for the three months ended September 30, 2024, decreased $74 million, or 4%, from the same period in 2023, primarily due to lower volumes at Ingalls in amphibious assault ships and the Legend class NSC program.

Previous wording

Service revenues for the three months ended June 30, 2024, increased $143 million, or 16%, from the same period in 2023, primarily as a result of higher volumes at Mission Technologies in C5ISR and CEW&S.

Current wording

Service revenues for the nine months ended September 30, 2024, increased $323 million, or 12%, from the same period in 2023, primarily as a result of higher volumes at Mission Technologies in C5ISR and CEW&S.

Previous wording

Segment cost of service revenues for the three months ended June 30, 2024, increased $122 million, or 15%, compared with the same period in 2023, consistent with the higher service volumes described above.

Current wording

Segment cost of service revenues for the nine months ended September 30, 2024, increased $271 million, or 11%, compared with the same period in 2023, consistent with the higher service volumes described above.

Previous wording

For the three months ended June 30, 2024, the non-operating retirement benefit was $46 million, compared with $37 million for the same period in 2023. For the six months ended June 30, 2024, the non-operating retirement benefit was $90 million, compared with $74 million for the same period in 2023. The increases in the non-operating retirement benefit for the three and six months ended June 30, 2024, were primarily driven by higher 2023 returns on plan assets.

Current wording

For the three months ended September 30, 2024, the non-operating retirement benefit was $44 million, compared with $37 million for the same period in 2023. For the nine months ended September 30, 2024, the non-operating retirement benefit was $134 million, compared with $111 million for the same period in 2023. The increases in the non-operating retirement benefit for the three and nine months ended September 30, 2024, were primarily driven by higher 2023 returns on plan assets.

Previous wording

Other, net income for the three months ended June 30, 2024, was $5 million, compared with other, net of zero for the same period in 2023. Other, net income for the six months ended June 30, 2024, was $12 million, compared with other, net income of $9 million for the same period in 2023. There were no individually significant drivers for the increases in other, net for the three and six months ended June 30, 2024.

Current wording

Other, net income for the three months ended September 30, 2024, was $9 million, compared with other, net income of $2 million for the same period in 2023. Other, net income for the nine months ended September 30, 2024, was $21 million, compared with other, net income of $11 million for the same period in 2023. The increases in other, net income for the three and nine months ended September 30, 2024, were primarily driven by higher unrealized net gains on investments.

Previous wording

Our effective income tax rates on earnings from operations for the three months ended June 30, 2024 and 2023, were 19.9% and 23.1%, respectively. Our effective income tax rates on earnings from operations for the six months ended June 30, 2024 and 2023, were 18.5% and 22.0%, respectively. The lower effective tax rate for each of the three and six months ended June 30, 2024, was primarily attributable to a taxable gain associated with the sale of our interest in an unconsolidated ship repair and specialty fabrication joint venture recorded in 2023.

Current wording

Our effective income tax rates on earnings from operations for the three months ended September 30, 2024 and 2023, were 9.8% and 21.7%, respectively. Our effective income tax rates on earnings from operations for the nine months ended September 30, 2024 and 2023, were 16.6% and 21.9%, respectively. The lower effective tax rate for the three months ended September 30, 2024, was primarily attributable to current and prior period research and development tax credits recorded in the current period. The lower effective tax rate for the nine months ended September 30, 2024, was primarily attributable to current and prior period research and development tax credits recorded in the current period and to a taxable gain associated with the sale of our interest in an unconsolidated ship repair and specialty fabrication joint venture recorded in 2023.

Previous wording

For the three months ended June 30, 2024, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to research and development tax credits. For the six months ended June 30, 2024, our effective tax rate differed from the federal statutory corporate income tax rate primarily due to research and development tax credits and income tax benefits associated with stock award settlement activity.

Current wording

For each of the three and nine months ended September 30, 2024, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to research and development tax credits for the current and prior periods.

Previous wording

Total backlog as of June 30, 2024, and December 31, 2023, was $48.5 billion and $48.1 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded Indefinite Delivery/Indefinite Quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer.

Current wording

Total backlog as of September 30, 2024, and December 31, 2023, was $49.4 billion and $48.1 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded Indefinite Delivery/Indefinite Quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer.

Previous wording

The value of new contract awards during the six months ended June 30, 2024, was $6.2 billion, including an award for the maintenance and overhaul of USSBoise (SSN 764), an award for an advanced planning contract for the RCOH of USSHarry S. Truman (CVN 75) and an award for construction of USSRichard J. Danzig(DDG 143).

Current wording

The value of new contract awards during the nine months ended September 30, 2024, was $9.8 billion, including an award for the maintenance and overhaul of USSBoise (SSN 764), an award for an advanced planning contract for the RCOH of USSHarry S. Truman (CVN 75) and an award for construction of USSRichard J. Danzig(DDG 143).

Previous wording

The following table summarizes key components of cash flow provided by (used in) operating activities:

Current wording

The following table summarizes key components of cash flow provided by operating activities:

Previous wording

obligations as they come due through internally generated funds from current levels of operations, existing borrowing facilities, and/or through refinancing in the debt markets prior to the maturity dates of our debt.

Current wording

We have historically maintained a capital structure comprised of a mix of equity and debt financing. We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations, existing borrowing facilities, and/or through refinancing in the debt markets prior to the maturity dates of our debt.

Previous wording

We discuss below our significant operating, investing, and financing activities affecting cash flows for the six months ended June 30, 2024 and 2023, as classified in our unaudited condensed consolidated statements of cash flows.

Current wording

We discuss below our significant operating, investing, and financing activities affecting cash flows for the nine months ended September 30, 2024 and 2023, as classified in our unaudited condensed consolidated statements of cash flows.

Previous wording

Cash used in operating activities for the six months ended June 30, 2024, was $211 million, compared with cash provided by operating activities of $73 million for the same period in 2023. The unfavorable change in operating cash flow was primarily due to an unfavorable change in trade working capital driven by the timing of payments of accounts payable and receipts of accounts receivable, partially offset by lower payments for income taxes.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024, was $2 million, compared with cash provided by operating activities of $408 million for the same period in 2023. The unfavorable change in operating cash flow was primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs, partially offset by lower payments for income taxes.

Previous wording

Cash used in investing activities for the six months ended June 30, 2024, was $162 million, compared to $70 million used in investing activities for the same period in 2023. The change in investing cash was primarily driven by the sale of our interest in an unconsolidated ship repair and specialty fabrication joint venture in 2023 and an increase in capital expenditures, partially offset by additional investment in one of our unconsolidated nuclear and environmental joint ventures in 2023.

Current wording

Cash used in investing activities for the nine months ended September 30, 2024, was $238 million, compared to $111 million used in investing activities for the same period in 2023. The change in investing cash was primarily driven by the sale of our interest in an unconsolidated ship repair and specialty fabrication joint venture in 2023 and an increase in capital expenditures, partially offset by additional investment in one of our unconsolidated nuclear and environmental joint ventures in 2023.

Previous wording

For 2024, we expect our capital expenditures for maintenance and sustainment to be approximately 1.5% to 2.0% of annual revenues and our discretionary capital expenditures to be approximately 2.5% to 3.5% of annual revenues. Our capital expenditures are increasing compared to the past few years due to investments to expand our shipbuilding capacity.

Current wording

For 2024, we expect our capital expenditures for maintenance and sustainment to be approximately 1.0% to 1.5% of annual revenues and our discretionary capital expenditures to be approximately 2.0% to 2.5% of annual revenues. Our capital expenditures are increasing compared to the past few years due to investments to expand our shipbuilding capacity.

Previous wording

Cash used in financing activities for the six months ended June 30, 2024, was $46 million, compared with $157 million used in financing activities for the same period in 2023. The change in cash used in financing activities was primarily due to a $440 million increase in proceeds from our commercial paper program, partially offset by a $199 million increase in repayments of long term debt, and a $111 million increase in common stock repurchases.

Current wording

Cash used in financing activities for the nine months ended September 30, 2024, was $184 million, compared with $655 million used in financing activities for the same period in 2023. The change in cash used in financing activities was primarily due to a $396 million increase in proceeds from our commercial paper program and lower repayment of debt in the current year, partially offset by a $125 million increase in common stock repurchases.

Previous wording

The following table reconciles net cash provided by (used in) operating activities to free cash flow:

Current wording

The following table reconciles net cash provided by operating activities to free cash flow:

Previous wording

Free cash flow for the six months ended June 30, 2024, decreased $338 million from the same period in 2023, primarily due to an unfavorable change in trade working capital and higher capital expenditures, partially offset by lower payments for income taxes.

Current wording

Free cash flow for the nine months ended September 30, 2024, decreased $495 million from the same period in 2023, primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs and higher capital expenditures, partially offset by lower payments for income taxes.

Previous wording

Statements in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission ("SEC"), as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to:

Current wording

Statements in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission ("SEC"), as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance," "outlook," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to:

Previous wording

•our ability to estimate our future contract costs, including cost increases due to inflation, and perform our contracts effectively;

Current wording

•our ability to estimate our future contract costs, including cost increases due to inflation, labor challenges, or other factors and our efforts to recover or offset such costs and/or changes in estimated contract costs, and perform our contracts effectively;