Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Investor Day (March 2024)
99 slides from Huntington Ingalls Industries's investor day presentation, Mar 20, 2024
Slide 1: Delivering the Advantage
Delivering the Advantage HII Investor Day March 20, 2024
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements 2
Slide 3: Agenda
WELCOME, INTRODUCTION, AGENDA | Christie Thomas, VP Investor Relations INTRODUCTION VIDEO COMPANY & STRATEGIC OVERVIEW: DELIVERING THE ADVANTAGE | Chris Kastner, President & CEO THREE DIVISIONS: ONE MISSION NEWPORT NEWS | Jennifer Boykin, EVP & President Newport News Shipbuilding INGALLS | Kari Wilk
Slide 4: Company & Strategic Overview: Delivering the Advantage
Company & Strategic Overview: Delivering the Advantage Chris Kastner, President and CEO 4
Slide 5: Path to 2024: Commitments Made and Kept
Path to 2024: Commitments Made and Kept 2020-2024 Priorities Results Consistent, predictable long-term shipbuilding growth Driving Growth 6.6% FY19-23 Revenue CAGR • Disciplined pursuit of high-growth market opportunities 7.5% FY 19-23 Segment Efficient execution of backlog Operating Income1 CAGR Ma
Slide 6: Strong Portfolio Positioned for Growth
Strong Portfolio MT MT Positioned for Growth MT MT MT $11.5B revenues NNS Ingalls Ingalls $9.4B revenues NNS 2024+ Ingalls $6.6B revenues Investing for Accelerated NNS 2020 Growth & Margin Expansion Grew & Shaped Portfolio Capture shipbuilding upside & 2011 Strengthened & grew shipbuilding margi
Slide 7: Unique, Diverse Experience Drives Strategy & Execution
Unique, Diverse Experience Drives Strategy & Execution Executive Leadership Christopher D. Kastner Jennifer Boykin Kari Wilkinson Andy Green Todd Borkey Chad Boudreaux Eric D. Chewning CEO & President EVP & President, EVP & President, EVP & President, EVP & Chief Technology EVP & Chief Legal EVP, St
Slide 8: HII Mission & Values
HII Mission & Values MISSION: To deliver the world’s most powerful ships and all-domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world VALUES: Integrity Safety Respect Engagement Responsibility Performance 8
Slide 9: HII At-A-Glance
REVENUES HII At-A-Glance Year Ended December 31, 2023 Headquartered in Newport News, VA 23% Mission Technologies 53% $11.5B Newport News 24% Ingalls 138+ 44,000+ ~$1B Year History Employees RDT&E BACKLOG Year Ended December 31, 2023 11% Mission 7,100 4,000+ 40+ Technologies Engineers / Suppliers Cou
Slide 10: Three Divisions, One Mission
Newport News 138+ ~26K Shipbuilding Year History Employees Sole provider of U.S. Navy aircraft carriers and one of two $6.1B 4.8% nuclear submarine shipbuilders FY23 Revenue FY23 Growth 85+ ~11K Three Divisions, Ingalls Shipbuilding Largest supplier of U.S. Navy Year History Employees One Mission su
Slide 11: Our Strategy: Accelerate Growth, Expand Margins and Reduce Enterprise Risk
Our Strategy: Accelerate Growth, Expand Margins and Reduce Enterprise Risk Capture Grow Scale Expand Shipbuilding Growth Mission Technologies Internationally Nuclear market and Margin Revenues and (AUKUS) presence Improvement Margins 11
Slide 12: Poised for Significant Market Trends
Poised for Significant Market Trends MILITARY SHIPBUILDING DEFENSE TECH AUSTRALIAN & UK NUCLEAR SUPER-CYCLE INTEGRATION MARKET OPENING RESURGENCE $32B+ annual U.S. Naval Militarization of advanced $250B Pillar 1 opportunity 8% growth in NNSA budget to Shipbuilding budget capabilities from dual-use o
Slide 13: Positioned to Grow
Positioned to Grow SHORT TERM / MID TERM MID TERM / LONG TERM 43 ships in Process 22 Ships negotiated in next 36 months $8B MT awards over last 18 months $75B opportunity pipeline in MT AUKUS and Shipbuilding upside potential Debt paid down to target metrics Applying new data technology to serve cus
Slide 14: Investments in Capacity and Growth to Meet Customer Demand
Investments in Capacity and Growth to Meet Customer Demand Ingalls Newport News 1 10 Year Investment of $4.1 Billion in Facilities and Technology 1. Per year value 14
Slide 15: Strong, Highly Visible Growth Outlook
Strong, Highly Visible Growth Outlook MSD Organic + Growth 4%+ + ~5% Organic ~4% Growth Growth Growth $11.5B Growth Catalysts 15
Slide 16: Margin Expansion
Key Drivers Margin Expansion Shipbuilding Build-out workforce SHIPBUILDING MISSION TECHNOLOGIES (MARGIN) 1 (EBITDA) 1 Effective Supply Chain management 9-10% 9-10% Secure contracts reflective of Future state Future state current business environment Performance improvements through ~ +100 - 200 Bps
Slide 17: Enterprise Risk Reduction
Enterprise Risk Reduction Capture Additional Shipbuilding Opportunities Investing in Technology Ensure Fair Contractual Arrangements NEWPORT NEWS Operating System Maturity SHIPBUILDING Navy Partnership through Labor and Attrition Initiatives Submarine Industrial Base INGALLS SHIPBUILDING Expand Inte
Slide 18: HII Capital Allocation Strategy
BALANCED CAPITAL ALLOCATION PRIORITIES SUPPORT ALL STAKEHOLDERS Committed to Investment Grade Rating HII Capital Maintain and Grow Capacity in Our Shipyards Allocation Strategy Continue Annual Dividend Growth Continue Excess Cash to Evaluating M&A Share Repurchases 18
Slide 19: Compelling Investment Thesis
Compelling Investment Thesis Largest U.S. military seapower provider with leading all-domain, integrated defense technologies Historic and significant market tailwinds providing highly visible growth Margin expansion opportunity driven by operational execution and delivering on commitments Free cash
Slide 20: Newport News Shipbuilding
Newport News Shipbuilding Jennifer Boykin, Executive Vice President and President, Newport News Shipbuilding 20
Slide 21: Newport News Shipbuilding At-A-Glance
Newport News Shipbuilding At-A-Glance Newport News, Virginia HEADQUARTERS 2023 REVENUES 138+ $27B 5.4% YEAR HISTORY BACKLOG Five-Year Revenue CAGR 18% Fleet Support and Engineering 33% Largest shipyard in U.S. with more than Services Aircraft 500 acres and 2-1/2 miles of waterfront Carrier Construct
Slide 22: Our People
Our People ~26K 12,200 Craft Many Employees 5,500 Engineers 3rd, 4th, & 5th generation shipbuilders >1K >$100M $100K Master Invested annually in Granted in Shipbuilders workforce training STEM awards The Apprentice School – Founded in 1919 • 4 year fully paid program • Accredited Associate Degree •
Slide 23: Nation's Only Designer, Builder, Refueler and Defueler of Nuclear-Powered Aircraft Carriers
Nation’s Only Designer, Builder, Refueler and Defueler of Nuclear-Powered Aircraft Carriers • First product modeled aircraft carrier Gerald R. Ford-Class • Incorporates 23 new technologies Construction • Designed for decades of new technology insertion 4 Total Ships in Production • Refuel ship at 25
Slide 24: World's Most Advanced Nuclear-Powered Submarines
World’s Most Advanced Nuclear-Powered Submarines Length: 377 – 461 (Virginia Payload Module) feet NEW CAPABILITIES Displacement: Approximately 7,800 – 10,200 14 Ability to deliver Virginia-Class (Virginia Payload Module) tons weapons, vehicles and (SSN) Partner with General Dynamics Electric Boat un
Slide 25: Tight Alignment with National Defense Strategy
Tight Alignment with National Defense Strategy SUBMARINES AUKUS AIRCRAFT CARRIERS “ …our Submarine Force is the best in the world, the Submarine Force is “ AUKUS will help advance our shared vision of a free and open Indo- “ For 100 years, aircraft carriers have been the most survivable and versatil
Slide 26: Generational Submarine Demand Opportunity
Generational Submarine Demand Opportunity 1 CLB / YR 2 VCS 0.3 VCS for AUKUS (2032) + SSN(X) startup 5X Growth 1 CLB / YR in U.S. Submarine 2 VCS w/ VPM Production From 2010 to 2040+ CLB Startup 1 VCS 1 VCS w/ VPM 2 VCS 1 VCS/YR 2010 2020 2030 2040+ 26
Slide 27: Investing to Fully Realize Shipbuilding Potential
•Growing the workforce pipeline through partnerships •Accelerate data analytics for hiring and retention People •Strong training and development programs •Intrusive project management •Strategic partnerships for additional capacity Investing to Supply Chain •Disrupt with additive manufacturing Fully
Slide 28: Stabilizing Workforce to Improve Performance
Stabilizing Workforce to Improve Performance Hiring Develop & Grow Retention Utilizing data analytics to Formal leadership Utilizing predictive analytics focus recruiting efforts on development program from to identify potential hot spots most successful locations President to deckplate for attritio
Slide 29: Supply Chain Focus
Supply Chain Focus 2,500 Suppliers >$4B ~1M Open Orders Hours Outsourced 80,000 Purchase Orders Managed Annually Across 48 States 29
Slide 30: Investing in Technology and Infrastructure for Capacity and Operational Efficiency
Investing in Technology and Infrastructure for Capacity and Operational Efficiency Digital Shipbuilding Informatics and AI Additive Manufacturing Joint Manufacturing Fixture Based Sparc App and Assembly Facility Manufacturing (Arc Time Management) Targeting Opportunities for Full HII Capabilities 30
Slide 31: Case Study: World Class Capabilities for Submarine Bow & Stern Manufacturing
Case Study: World Class Capabilities for Submarine Bow & Stern Manufacturing The Process •Safety and efficiency embedded in step •Consistent build process on all bow and stern sections •Work consolidated in one location •Automated welding augments manual welding The Results •Second Columbia class st
Slide 32: Path to Newport News Growth and Margin Expansion
Path to Newport News Growth and Margin Expansion Evolve From Pre- New Contracts Reflective Fully Leverage Execution COVID Contracts of Macro-Economics Operating System Relentless Focus on Operational Excellence 32
Slide 33: Execution Operating System
Execution Operating System Standard processes, measures, and expectations across all product lines Program Schedule to Material and Tech Leadership Driven Daily Deckplate Instructions to Deckplate Accountability and Commitments On-Time Innovation Clarity of roles and expectations Daily, weekly, mont
Slide 34: Key Takeaways Newport News Shipbuilding
Key Takeaways Newport News Shipbuilding Solid backlog and growing pipeline aligned with Navy priorities Prepared for workforce and supply chain challenges Leveraging investments to capture shipbuilding growth Driving execution while positioning for future 34
Slide 35: Ingalls Shipbuilding
Ingalls Shipbuilding Kari Wilkinson, Executive Vice President and President, Ingalls Shipbuilding 35
Slide 36: Ingalls At-A-Glance
Ingalls At-A-Glance Pascagoula, Mississippi 85+ $16B HEADQUARTERS YEAR HISTORY BACKLOG 2023 REVENUES Demonstrated ability to evolve and deliver the most technologically advanced and relevant platforms 8% Planning 3% Yard Services National Dedicated partner to 1,300+ active suppliers Security Cutters
Slide 37: Our People
Our People ~11K Largest 200+ Industrial Employer Employees in Mississippi Master Shipbuilders >$100M $100K 1,000+ Invested in the last STEM grants annually to Veterans 5 years to develop grow future shipbuilders our shipbuilders Ingalls Apprenticeship School • Over 700 enrolled in the program • 2-4
Slide 38: Our Programs
Our Programs Multi-mission backbone of the US fleet NEW CAPABILITIES Flight III Destroyer Combats air, surface and subsurface threats Air & Missile Defense Radar AEGIS Baseline 10 combat system 14 5 in Production Total Ships Flight III configuration delivery underway in Production DDG 1000 State-of-
Slide 39: Our Strategy: Accelerating Growth, Expanding Margins, and Reducing Enterprise Risk
Our Strategy: Accelerating Growth, Expanding Margins, and Reducing Enterprise Risk Relentless Workforce Expansion New Backlog Development Through Technology Execution Sustainment Partnerships Evolution 39
Slide 40: Strong Alignment with Navy Shipbuilding Priorities
Strong Alignment with Navy Shipbuilding Priorities 01 02 03 Ensure Accelerate Maximize Conventional Prompt Strike DDG Flight III Amphib Operational Availability Delivery to the Fleet Delivery Cadence at Delivery Tight Alignment of Expertise and Investments With National Defense Strategy 40
Slide 41: Generational Surface Ship Demand Opportunity
East Bank Unit Construction Generational Surface Ship & Outfitting Facility Demand Opportunity TODAY 1969 14 Ships in Production 2024 Contract Awards of $11B Contributing to $16B Backlog 11 Ships 14 Ships 15+ Ships 2020 2025 2030 41
Slide 42: Ingalls Shipbuilding Growth and Margin Expansion
Ingalls Shipbuilding Growth and Margin Expansion ACTION TO ACHIEVE PLAN TO CAPTURE •Perform on current contracts Execute on our commitments •Offer best affordability and deliver on time •Applying technology to the business Drive additional efficiencies •Exercise partnerships and collaborative networ
Slide 43: Investing to Fully Realize Shipbuilding Potential
• Apprenticeship expansion and on-the-job mentoring •Relentless focus on hiring, onboarding, and development People • Implementation of the Operations Resource Centers (ORCs) Investing to • Reimagined research and development investments to fuel growth Fully Realize • Step up efforts in data integra
Slide 44: Investing in Manufacturing & Technology
Investing in Manufacturing & Technology Robotic Cutting CSA III Unit Construction Steel Handling Floating Dry Dock Additional East Bank Profile Line & Outfitting Facility Crane (Doubled Capacity) Outfitting Pier (In Work) 2020 2025 CSA West Unit Construction Hybrid Laser Quality of Life Human Resour
Slide 45: Differentiated & Relevant Capabilities
Differentiated & Relevant Capabilities Engineering Planning Supply Chain Business Operations Deep bench Processes linking Center of a vast Solution-oriented Safety-minded from stem to stern investments to outcomes supplier partner network contracting and compliance and quality-focused 45
Slide 46: Delivering Complexity
Delivering Complexity Case Study: DDG 125 The DDG program established best-practices and redefined our approach across the portfolio with our customers and supplier partners The Result DDG 125, the first Flight III ship and a true first-of-class, was delivered within weeks of the projected timeline
Slide 47: Key Takeaways Ingalls Shipbuilding
Key Takeaways Ingalls Shipbuilding Highly capable 85+ year partner in pioneering the development and production of the most technologically advanced ships Agile in evolving platforms to meet the threat in support of our nation and to continue to be relevant Investing strategically in people and faci
Slide 48: Mission Technologies
Mission Technologies Andy Green, Executive Vice President and President, Mission Technologies 48
Slide 49: Focused on the Mission
Focused on the Mission People & Culture Technical Capabilities Brand Awareness Become employer of choice Expand capabilities into higher- Expand HII’s brand recognition in defense technology end, differentiated solutions as a technology solutions leader Growth Service Delivery Shareholder Value Achi
Slide 50: Mission Technologies At-A-Glance
13.1% Mission Technologies Revenue $5.8B+ Awards1 ~7K Employees At-A-Glance Growth 1.9x 100+ 18 1 Global Book-to-Bill Countries Facilities 2023 REVENUES Leading technology solutions partner, supporting all-domains 18% 22% Live, Virtual, Well-positioned portfolio aligned with Cyber & Electronic Const
Slide 51: 2023 Award Spotlights
2023 Award Spotlights 1 $1.4 $1.3 $347 $285 $244 $242 $134 Billion Billion Million Million Million Million Million DOD DOD Navy Air Force Navy Navy Navy Joint Network USAFRICOM Lionfish Small Next Generation Minotaur software U.S. Navy Naval U.S. Navy Naval Engineering and Personnel Recovery Unmanne
Slide 52: Leading-Edge Growth Capabilities
C5ISR Developing, integrating and managing sensors, systems and assets to support integrated ISR operations, and accelerated decision-making LVC SOLUTIONS Designing, developing and operating the largest LVC enterprise that prepares warfighters for cross-domain battle Leading- CYBER & ELECTRONIC WARF
Slide 53: Case Study: MINOTAUR
Case Study: MINOTAUR Expanded contract from $75M to $244M Integrated Capabilities • Intelligence and surveillance • AI-enabled mission management system Well-Aligned with Future Initiatives • Priority of U.S. Navy • Aligned with Joint All-Domain Command and Control (JADC2) warfighting concept Warfig
Slide 54: All-Domain Solutions Aligned with Defense Priorities
All-Domain Solutions Aligned with Defense Priorities Develop for All-Domain Dominance Deter Aggression Wherever it Occurs Great Power Competition INTELLIGENCE AND SURVEILLANCE MINOTAUR Unmanned Air Reconnaissance Vehicles Aircraft Threat UNMANNED AUTONOMY Satellite Ground ODYSSEY Submarines Facility
Slide 55: Accomplishing the Mission
Accomplishing the Mission PROTECT & GROW CAPTURE DRIVE INVEST Base Business Strategic New Work Margin Expansion In Future Solutions Successfully defend large Combine / package Increase portfolio of Leverage government- recompetes technologies into new fixed price work funded applied research offerin
Slide 56: Advancing High-Caliber, Tech-Driven Team
Advancing High-Caliber, Tech-Driven Team 75%+ Hold Security Clearances 60%+ Engineers & Technologists Enhance talent Attract highly development, internal Build an engaged, skilled, next career mobility and diverse and inclusive generation talent advancement culture 35%+ Veterans Example Programs Str
Slide 57: Key Takeaways Mission Technologies
Key Takeaways Mission Technologies Achieved 13.1% YoY top-line growth and well-positioned for the future Secured $5.8B contract awards in FY23 and possess strong pipeline of opportunities Leading franchise positions in technology defense market Solutions aligned with Defense priorities Leveraging Le
Slide 58: Break
Break 58
Slide 59: Growth Catalysts
Growth Catalysts Eric Chewning, Executive Vice President, Strategy & Development 59
Slide 60: Enterprise Capabilities Enable Growth Catalysts
Advanced Enterprise Technology Sea Power Generation Nuclear Expertise Militarization Capabilities Enable Growth Catalysts Trusted partner with America’s largest 60+ years of legacy of rapid & shipbuilder with nuclear agile innovation leading surface & sub- experience to deliver new surface franchise
Slide 61: Interlocking Capabilities are Mutually Reinforcing
Interlocking Capabilities are Mutually Reinforcing Business agility, new sources of At-scale Advanced innovation, talent & nuclear infrastructure, technical acumen Sea Power workforce, Nuclear Technology supply chain, Generation Expertise Militarization Mission Expertise & certifications & Customer
Slide 62: AUKUS & Nuclear Create Upside Potential
AUKUS & Nuclear Create Upside Potential MSD Organic + Growth 4%+ + ~5% Organic ~4% Growth Growth 2 Growth NUCLEAR 1 RESURGENCE $11.5B DEFENSE TECH AUSTRALIAN & Recapitalization INTEGRATION UK MARKET of strategic OPENING nuclear Militarization of infrastructure MILITARY advanced AUKUS Pillar 1 SHIPBU
Slide 63: Strong Portfolio Well-Aligned to AUKUS Partnership
1 Strong Portfolio Well-Aligned to AUKUS Partnership PILLAR 1: NUCLEAR-POWERED SUBMARINES PILLAR 2: ADVANCED CAPABILITIES Mission Technologies – Mission Technologies Newport News Shipbuilding Nuclear and Environmental Services Advanced Cyber Disciplined Nuclear Artificial Intelligence Operations Tal
Slide 64: AUKUS Pillar 1 Opportunity
1 AUKUS Pillar 1 Opportunity $250B1Australia Program with Tailwinds from Greater Industrial Base Integration 2025 2030 2035 2040 2045+ December 2023: $2B AUKUS FMS Case for Training, Planning and Engineering Support & Services Nuclear Infrastructure Uplift to Make Australia “Sovereign Ready” to Oper
Slide 65: AUKUS Pillar 2 Opportunity
1 AUKUS Pillar 2 Opportunity Enabled By Strategic Acquisitions “If Pillar One was historic, then Pillar Two promises to be revolutionary” - CSIS, July 10, 2023 Advanced Cyber Artificial Intelligence Autonomy C2 / Data Sharing Autonomy Business Undersea Acquired Capabilities Defense Innovation Acquir
Slide 66: Leveraging Nuclear Shipbuilding Workforce & Core Capabilities to Expand in Nuclear
2 Leveraging Nuclear Shipbuilding Workforce & Core Capabilities to Expand in Nuclear Differentiated Strong Tailwinds Significant Pipeline MT - Newport Nuclear & News Environmental Shipbuilding Group Operating Model Deploys 8%+ $5B+ Capabilities 4x DOE JVs Across Divisions DOE NNSA DOE M&O Long-Durat
Slide 67: Nuclear & Environmental Opportunities
DOE Opportunities 2 Nuclear & D&D Opportunities AUKUS Pillar 1 Sovereign Ready Support Y-12 Environmental M&O $1,800M Kansas City Opportunities M&O Annual Budget Pantex M&O $1,400M $1,100M UK SSN AUS Nuclear D&D Portsmouth / Infrastructure ++ Current DOE JV Footprint Paducah ++ OSMS Strategic AUS CV
Slide 68: Case Study: Babcock International
Case Study: Babcock International Strategic agreement signed in July 2023 to explore growth Pursuing Strategic Partnerships to Accelerate Growth opportunities in international civil and defense nuclear Rationale • Complementary nuclear maritime asset build & support capabilities • Strong AUKUS propo
Slide 69: Key Takeaways Growth Catalysts
Key Takeaways Growth Catalysts Mutually reinforcing capabilities enable capture of AUKUS and nuclear growth catalysts Our portfolio is well-aligned to both AUKUS Pillars 1 & 2 Near-term AUKUS opportunity is nuclear infrastructure, workforce and supplier development in Australia $5B+ nuclear opportun
Slide 70: Leading with Technology
Leading with Technology Todd Borkey, Executive Vice President and Chief Technology Officer 70
Slide 71: HII Technology Leadership for Pivotal Times
HII Technology Leadership for Pivotal Times New Business Environment New Threats to Overcome Silicon Valley >> DOD Technology Pacific Theatre Demands • Information Race impact on DOD • Vast Area Denial / Weapons Parity & Quantity • AI Revolution / Autonomy & Robotics Acceleration • Space Threats, Hy
Slide 72: Ideal Tech Portfolio for the Coming Decade
Ideal Tech Portfolio for the Coming Decade C5ISR CYBER, EW & SPACE UNMANNED NEWPORT NEWS SHIPBUILDING • AI Accelerated Processing • Big Data Platform (JADC2 Data) • Prep of the Battlespace • AUKUS Pillar 1 • Kill Web Compression / Resiliency • Next Gen Electronic Warfare • A2AD Operations / Replicat
Slide 73: Near Term Portfolio Power
Near Term Portfolio Power Decision Dominance - JADC2 Replicator Renewed Great AI / Big Data Combatant Command (All-Domain (New INDOPACOM Power Competition Capabilities Warfighting) Strategy) Federal Agency Virtualization Edge Sensing and Autonomous Systems, Next Generation Transformations of Operati
Slide 74: HII Technology Synergies
HII Technology Synergies Shipbuilding New Nuclear / AUKUS Navy Transformation Interdivision Solutions Transformation Directed Energy Pillar 1 & Pillar 2 Warship, Program, and GenAI Automation, Small Modular Nuclear NNS and MT New Disruptive Shipyard Data Centric Enterprise Twins and Micro-Nuclear di
Slide 75: Key Takeaways Technology
Key Takeaways Technology All units are experiencing demand growth from the new great power competition; Technologies align AI / Big Data synergies will transform shipbuilding into “data centric” operations to improve execution HII is poised to support Navy transformation towards “data centric” opera
Slide 76: Financial Strategy & Outlook
Financial Strategy & Outlook Tom Stiehle, Executive Vice President and Chief Financial Officer 76
Slide 77: Key Financial Messages
Key Financial Messages Diversified portfolio well positioned for growing global defense demand Consistent and resilient financial performance Forecasting higher revenue growth, expanding margins, and increased cash flow Disciplined capital allocation strategy driving value creation Investing in Ship
Slide 78: Financial Performance
Financial Performance Consistently Growing Revenue REVENUE ($B) SEGMENT OPERATING INCOME ($M) 1 grounded in major DOD cornerstone programs 6.6% CAGR 7.5% CAGR 10.7 11.5 842 9.4 9.5 683 712 8.9 631 555 Resilient, Expanding Operating Income during pressurized business environment 2019 2020 2021 2022 2
Slide 79: Increased Revenue Growth Profile
Increased Revenue Growth Profile CLEAR PATH TO STRONG REVENUE GROWTH Shipbuilding Mission Tech HII Revenue Growth Growth Growth FY22-FY23 Guide 3.0% 5.0% 3.5% FY22-FY23 Actuals 4.2% 8.0% 5.3% FY24-Fwd Guide 4.0% 5.0% ~4%+ Potential Upside From Opportunities Could Yield Additional Growth Potential up
Slide 80: Margin Expansion Outlook
KEY DRIVERS Margin Expansion Outlook Shipbuilding Build-out workforce Effective supply chain Shipbuilding 8.3% 9-10 % MARGIN 1 management • Stabilize and grow workforce Performance improvements • Improve supply chain through investments, operating • Capital, operational, and technology investments s
Slide 81: Sustainable & Growing Free Cash Flow
Sustainable & Growing Free Cash Flow 1 KEY DRIVERS 1 $3.6B FREE CASH FLOW ($M) Cumulative FCF over next 5 years 757 $3.0B Revenue growth 692 600-700 Margin expansion 494 449 Higher operating income Efficient working capital Disciplined capex with partnership 2020 2021 2022 2023 2024E 2024E-2028E Foc
Slide 82: Capital Allocation Strategy
HIGHLIGHTS Capital Allocation Strategy 29% Dividends 899 53% Capital FY19-FY23 BALANCED PRIORITIES Expenditures ($ millions) SUPPORT ALL STAKEHOLDERS 1,633 18% Stock Committed to Investment Grade Rating Repurchases Completed near-term Alion debt pay-down 574 Expect debt repayment of $229M in 2024 Ma
Slide 83: Strong Balance Sheet & Liquidity
2023 LIQUIDITY Strong Balance Sheet & Liquidity PROFILE $430M Cash Balance Rating Agency Prior Current BBB- BBB- $1,488M (Negative) (Stable) Revolver ($12M Letters of Credit Outstanding) Baa3 Baa3 (Stable) (Positive) BBB- BBB- $1,918M (Stable) (Positive) Total Liquidity $2,462M Total Debt Investment
Slide 84: Investing for Growth & Capabilities
Investing for Growth & Capabilities KEY DRIVERS CAPITAL EXPENDITURES Investing to accelerate revenue and improve (% of Revenue) segment performance Shipbuilding capacity Emerging technologies Yard maintenance Outsized opportunities over next 3 years 1 1 Expected free cash flow generation incorporate
Slide 85: Reaffirming 2024 Outlook
FY24 Outlook 1 Reaffirming Shipbuilding Revenue 2 $8.8B - $9.1B 2024 Outlook Shipbuilding Operating Margin 2 7.6% - 7.8% Mission Technologies Revenue $2.7B-$2.75B Mission Technologies Segment Operating Margin 2 3.0% - 3.5% 2 Mission Technologies EBITDA Margin 8.0% - 8.5% Operating FAS / CAS Adjustme
Slide 86: Delivering & Raising the Bar
Improving Business Parameters Revenue Growth ~3.5% Revenue Growth ~4+% Backlog $40B+ through 2026 Average Backlog $50B+ through 2030 Previous multi-year Targets Current multi-year Targets FCF $3.0B Over 5 Years FCF $3.6B Over 5 Years Delivering & Raising Capex ~5% of Sales Next 3 Years, Capex 2.5%-3
Slide 87: Key Takeaways Financial
Key Takeaways Financial Significant revenue visibility and growth profile Increasing free cash flow - 5 year FCF $3.6B Investing in shipbuilding and technologies to meet customer needs and grow enterprise Focused on operational improvements to improve both affordability and profitability Strong bala
Slide 88: Wrap Up
Wrap Up 88
Slide 89: Building for the Future
Building for the Future ~$15B REVENUE BY END OF DECADE $3.6B+ FCF OVER NEXT 5 YEARS (2024-2028) 89
Slide 90: Break
Break 90
Slide 91: Appendix
Appendix 91
Slide 92: Non-GAAP Information
Non-GAAP Information We make reference to ”segment operating income,” “Shipbuilding revenue,” “Shipbuilding operating margin,” “Mission Technologies EBITDA,” “Mission Technologies EBITDA margin,” “free cash flow,” “operating FAS/CAS adjustment,” and “non-current state income taxes.” We internally ma
Slide 93: Non-GAAP Measures Definitions
Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes. Shipbuilding revenue is defined as the combined sales and service revenues from our Newport News Shipbuilding segment and Ingalls Shipbuildi
Slide 94: HII - Segment Operating Income Reconciliations
HII - Segment Operating Income Reconciliations Year Ended December 31 ($ in millions) 2023 2022 2021 2020 2019 Operating income $ 781 $ 565 $ 513 $ 799 $ 736 Operating FAS/CAS adjustment 72 145 157 (248) (124) Non-current state income taxes (11) 2 13 4 19 Segment Operating Income $ 842 $ 712 $ 683 $
Slide 95: HII - Free Cash Flow Reconciliations
HII - Free Cash Flow Reconciliations Year Ended December 31 ($ in millions) 2023 2022 2021 2020 2019 Net cash prov ided by operating activ ities $ 970 $ 766 $ 760 $ 1,093 $ 896 Less capital expenditures: Capital expenditures additions (292) (284) (331) (353) (530) Grant proceeds for capital expendit
Slide 96: HII – Shipbuilding Revenues and Margin Reconciliation
HII – Shipbuilding Revenues and Margin Reconciliation Year Ended December 31 ($ in millions) 2023 Sales and Serv ice Rev enues $ 11,454 Mission Technologies (2,699) Intersegment eliminations 130 Shipbuilding Rev enues $ 8,885 Operating Income $ 781 Operating FAS / CAS Adjustment 72 Non-current state
Slide 97: HII – Mission Technologies EBITDA Margin Reconciliation
HII – Mission Technologies EBITDA Margin Reconciliation Year Ended December 31 ($ in millions) 2023 Mission Technologies sales and serv ice rev enues $ 2,699 Mission Technologies segment operating income 101 Mission Technologies depreciation expense 11 Mission Technologies amortization expense 109 M
Slide 98: Acronym List
Acronym Definition A2AD Anti-Access/Area Denial ABET Accreditation Board for Engineering and Technology, Inc. ADJ Adjustment Acronym List AI Artificial Intelligence AMR Auxiliary Machine Room AP1000 Pressurized Water Reactor AUKUS Australia, United Kingdom, United States B Billion BDP Big Data Platf
Slide 99: Acronym List
Acronym Definition JADC2 Joint All Domain Command and Control J-NEEO Joint Networking of Engineering and Emerging Operations Acronym List JV K K-12 LHA Joint V enture Thousand Kindergarten through twelfth grade Amphibious Assault Ship (Landing, Helicopter, Assault) LPD Amphibious Transport Dock (Lan
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