Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q1 2023 Earnings Presentation
18 slides from Huntington Ingalls Industries's earnings presentation, May 4, 2023
Slide 1: HII Q1 2023 Earnings
HII Q1 2023 Earnings May 4, 2023 Chris Kastner President and Chief Executive Officer Tom Stiehle Executive Vice President and Chief Financial Officer
Slide 2: Cautionary Statement Regarding Forward-looking Statements
Cautionary Statement Regarding Forward-looking Statements Statements in this presentation, other than statements of historical fact, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statemen
Slide 3: HII Q1 2023 Highlights
HII Q1 2023 Highlights • Record first quarter revenues of $2.7 billion, up 3.8% YoY Change Q1 • Diluted EPS of $3.23 in the quarter from 2023 • Reaffirming FY23 guidance expectations1 Q1 2022 Ingalls Shipbuilding Highlights Shipbuilding Revenue1 $2.1B 3.1% • Awarded $1.3 billion detail design & cons
Slide 4: Upcoming Shipbuilding Milestones
Upcoming Shipbuilding Milestones1 2023 2024 o Ingalls o Ingalls Complete sea trials and deliver DDG 125 Complete sea trials and deliver DDG 128 (Jack H. Lucas) (Ted Stevens) Launch DDG 128 (Ted Stevens) Launch DDG 129 (Jeremiah Denton) Launch LHA 8 (Bougainville) Launch LPD 30 (Harrisbur
Slide 5: Q1 2023 Consolidated Results
Q1 2023 Consolidated Results CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN $3,000 $160 $2,674 $141 $2,576 $138 $140 $2,500 $120 $2,000 5.4% 5.3% $100 $1,500 $80 $60 $1,000 $40 $500 $20 $0 $0 Q1 22 Q1 23 Q1 22 Q1 23 • Revenue grew $98M or 3.8% YoY • Operating income increased driven by gro
Slide 6: Q1 2023 Segment Results YoY
Q1 2023 Segment Results YoY SEGMENT OPERATING INCOME ($M) Ingalls Shipbuilding REVENUE ($M) & MARGIN1 $700 $631 $100 Revenue $600 $577 $86 - Amphibs and NSC $500 $80 $55 + DDG $400 $60 13.6% $300 $40 $200 9.5% Operating Income $100 $20 - Amphib risk retirement (LPD 28 delivery in 2022) $0 $0 Q1 22 Q
Slide 7: Capital Deployment
Capital Deployment CASH FLOW GENERATION ($M) SHAREHOLDER DISTRIBUTIONS ($M) $0 $70 TOTAL TOTAL ($9) $57 $58 ($20) $60 ($40) $50 ($43) ($40) ($60) ($49) $40 ($80) $30 ($83) ($100) $20 ($120) $10 ($126) ($140) $0 Q1 22 Q1 23 Q1 22 Q1 23 Cash from Ops. CAPEX Free Cash Flow 1 Dividends Share Repurchases
Slide 8: Free Cash Flow & Capital Allocation
Free Cash Flow1,2 & Capital Allocation3 • Committed to investment grade rating; FREE CASH FLOW1 FY20-24 (assumes Sec. 174 is not deferred or repealed) Targeting ≤2x Debt/EBITDA1 by year-end 2024 • Continued dividend growth at a low to mid-single $730M- digit growth rate $830M • Balanced share repurc
Slide 9: 2023 Outlook Unchanged
2023 Outlook Unchanged FY23 OUTLOOK1 FY23 Outlook • Reaffirming our FY23 outlook Shipbuilding Revenue2 $8.4B - $8.6B Shipbuilding Operating Margin2 7.7% - 8.0% Mission Technologies Revenue ~$2.5B Mission Technologies Segment Operating Margin2 2.5% - 3.0% Q2 2023 Expectations Mission Technologies EBI
Slide 10: Investment Thesis
Historic backlog and positioning provide strong visibility INVESTMENT Consistent long-term shipbuilding growth profile THESIS Reshaped Mission Technologies portfolio to address evolving customer needs in high growth markets POSITIONED FOR SUCCESS; Nearing sustainable free cash flow inflection point
Slide 11: Appendix
Appendix 11
Slide 12: Non-GAAP Information
Non-GAAP Information We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Mission Technologies EBITDA,” “Mission Technologies EBITDA margin,” “Debt/EBITDA” and “free cash flow.” We internally manage our operations by r
Slide 13: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Debt/EBITDA is defined as gross debt divided by net earnings before interest expense, income taxes, depreciation and amortization. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current
Slide 14: Non-GAAP Reconciliations: Segment Operating Income & Segment Operating Margin
Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin Three Months Ended March 31 ($ in millions) 2023 2022 Ingalls revenues 577 631 Newport News revenues 1,506 1,390 Mission Technologies revenues 624 590 Intersegment eliminations (33) (35) Sales and Service Revenues 2,674 2,5
Slide 15: Non-GAAP Reconciliations: Shipbuilding Revenues & Operating Margin
Non-GAAP Reconciliations Shipbuilding Revenues & Operating Margin Three Months Ended March 31 ($ in millions) 2023 2022 Sales and service revenues 2,674 2,576 Mission Technologies (624) (590) Intersegment eliminations 33 35 Shipbuilding Revenues 2,083 2,021 Operating Income 141 138 Operating FAS/CAS
Slide 16: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations Free Cash Flow Three Months Year Ended Ended March 31 December 31 ($ in millions) 2023 2022 2022 2021 2020 Net cash used in operating activities (9) (83) 766 760 1,093 Less capital expenditures: Capital expenditure additions (43) (43) (284) (331) (353) Grant proceeds for cap
Slide 17: Non-GAAP Reconciliations: Mission Technologies EBITDA & EBITDA Margin
Non-GAAP Reconciliations Mission Technologies EBITDA & EBITDA Margin Three Months Ended March 31 ($ in millions) 2023 2022 Mission Technologies sales and service revenues 624 590 Mission Technologies segment operating income 17 9 Mission Technologies depreciation expense 3 2 Mission Technologies amo
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