Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q2 2022 Earnings Presentation
18 slides from Huntington Ingalls Industries's earnings presentation, Aug 4, 2022
Slide 1: HII Q2 2022 Earnings
HII Q2 2022 Earnings August 4, 2022 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 Q2 2022 Highlights
HII Q2 2022 Highlights • Revenues were ~$2.7 billion in the quarter • Diluted EPS was $4.44 in the quarter • Free cash flow1 was $208 million in the quarter • Total backlog of ~$47 billion Ingalls Shipbuilding • Launched and christened National Security Cutter Calhoun (NSC 10) Virginia-class submari
Slide 4: Upcoming Shipbuilding Milestones
Upcoming Shipbuilding Milestones1 2022 2023 o Ingalls o Ingalls Complete sea trials and deliver DDG 123 Deliver DDG 125 (Jack H. Lucas) (Lenah H. Sutcliffe Higbee) Launch LHA 8 (Bougainville) Complete sea trials and deliver LPD 28 Complete sea trials and deliver LPD 29 (Fort Lauderdale) (R
Slide 5: Mission Technologies Robust $61B Pipeline
Mission Technologies Robust $61B Pipeline • Accelerating national security solutions to customers worldwide $27B • Delivering high-value engineering and technology solutions to enable multi-domain distributed operations Exploratory • Industry leader at transitioning Research, Development, Test and E
Slide 6: HII Q2 2022 Consolidated Results
HII Q2 2022 Consolidated Results CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN $3,000 $250 $2,662 $2,500 $2,231 $191 $200 $2,000 7.2% $150 $128 $1,500 $100 5.7% $1,000 $50 $500 $0 $0 Q2 21 Q2 22 Q2 21 Q2 22 • Revenue grew 19% YoY due • Operating income grew 49% YoY primarily to growth at
Slide 7: HII Q2 2022 Segment Results YoY
HII Q2 2022 Segment Results YoY Ingalls Shipbuilding SEGMENT OPERATING INCOME ($M) REVENUE ($M) & MARGIN1 Revenue - DDG $800 $670 $658 $150 $106 + LPD & LHA $600 $100 $80 Operating Income 16.1% $400 + Contract estimates $200 $50 11.9% + LPD risk retirement $0 $0 - DDG risk retirement Q2 21 Q2 22 Q2
Slide 8: HII Q2 2022 Capital Deployment
HII Q2 2022 Capital Deployment CASH FLOW GENERATION ($M) SHAREHOLDER DISTRIBUTIONS ($M) $300 $267 $80 TOTAL TOTAL $67 $64 $250 $70 $208 $200 $60 $21 $17 $150 $50 $96 $100 $40 $50 $23 $30 $46 $47 $0 $20 ($50) $10 ($59) ($100) ($73) $0 Q2 21 Q2 22 Q2 21 Q2 22 Cash from Ops. CAPEX Free Cash Flow1 Divid
Slide 9: Outlook
FY22 OUTLOOK1 Outlook Prior Current Outlook Outlook Shipbuilding Revenue2 $8.2B - $8.5B $8.2B - $8.5B • Reaffirming shipbuilding revenue2 and shipbuilding Shipbuilding Operating Margin2 8.0% - 8.1% 8.0% - 8.1% margin2 guidance Mission Technologies Revenue ~$2.6B $2.4B - $2.6B • Revising Mission Tech
Slide 10: Free Cash Flow & Capital Allocation
Free Cash Flow1,2 & Capital Allocation FREE CASH FLOW1 WALK FY22-24 • Committed to investment grade rating; ~$50M $800M- $900M Targeting ≤2x Debt/EBITDA1 by year-end 2024 ~$200M ~($30M) $750M- $800M • Continued dividend growth at low single digit growth rate Taxes, Other • Balanced share repurchases
Slide 11: Investment Thesis
Historic backlog and positioning provide strong visibility INVESTMENT Consistent long-term shipbuilding growth profile THESIS Reshaped Mission Technologies portfolio to address evolving customer needs in high growth markets POSITIONED FOR SUCCESS; Nearing sustainable free cash flow inflection point
Slide 12: Appendix
Appendix 12
Slide 13: Non-GAAP Information
Non-GAAP Information We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Mission Technologies EBITDA margin,” “Debt/EBITDA” and “free cash flow.” We internally manage our operations by reference to segment operating i
Slide 14: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Debt/EBITDA is defined as gross debt divided by net earnings before interest expense, income taxes, depreciation and amortization. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current
Slide 15: Non-GAAP Reconciliations: Segment Operating Income & Segment Operating Margin
Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2022 2021 2022 2021 Ingalls revenues 658 670 1,289 1,319 Newport News revenues 1,433 1,363 2,823 2,770 Mission Technologies revenues 600 237 1,190 496 Inte
Slide 16: Non-GAAP Reconciliations: Shipbuilding Revenues & Operating Margin
Non-GAAP Reconciliations Shipbuilding Revenues & Operating Margin Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2022 2021 2022 2021 Sales and service revenues 2,662 2,231 5,238 4,509 Mission Technologies (600) (237) (1,190) (496) Intersegment eliminations 29 39 64 76 Shipbuildi
Slide 17: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations Free Cash Flow Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2022 2021 2022 2021 Net cash provided by operating activities 267 96 184 139 Less capital expenditures: Capital expenditure additions (59) (74) (102) (134) Grant proceeds for capital expenditu
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