Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q4 2017 Earnings Presentation
16 slides from Huntington Ingalls Industries's earnings presentation, Feb 15, 2018
Slide 1: Q4 2017 Earnings Presentation
Q4 2017 Earnings Presentation February 15, 2018 Mike Petters President and Chief Executive Officer Chris Kastner Executive Vice President, Business Management and Chief Financial Officer Exhibit 99.2
Slide 2: Forward-Looking Statements
2 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. Forward-looking statements involve risks and uncertainties that could cause our
Slide 3: HII's Q4 & FY 2017 Highlights
3 HII’s Q4 & FY 2017 Highlights Revenues were $2.0 billion in the quarter; ~$7.4 billion in 2017 Diluted EPS was $1.41 in the quarter; $10.46 in 2017 Adjusted Diluted EPS* was $3.11 in the quarter; $12.14 in 2017 Strong cash flow generation in the quarter and for the year o Cash from operati
Slide 4: HII's Q4 2017 Consolidated Results
4 HII’s Q4 2017 Consolidated Results $1,922 $1,996 $— $500 $1,000 $1,500 $2,000 $2,500 Q4 2016 Q4 2017 (in m illio ns) Revenues $268 $227 $— $50 $100 $150 $200 $250 $300 Q4 2016 Q4 2017 (in m illio ns) Operating Income 13.9% 11.4% —% 3.0 % 6.0 % 9.0 % 12.0 % 15.0 % Q4 2016 Q4 2017 Operating Margin$4
Slide 5: HII's FY 2017 Consolidated Results
5 HII’s FY 2017 Consolidated Results $7,068 $7,441 $— $2,000 $4,000 $6,000 $8,000 2016 2017 (in m illion s) Revenues $858 $865 $— $200 $400 $600 $800 $1,000 2016 2017 (in m illio ns) Operating Income 12.1% 11.6% —% 3.0 % 6.0 % 9.0 % 12.0 % 15.0 % 2016 2017 Operating Margin $12.14 $10.46 $12.14 $— $3
Slide 6: HII's Q4 and 2017 Capital Deployment
6 $33 $115 $41 $288 $— $50 $100 $150 $200 $250 $300 $350 $400 $450 Q4 2017 2017 (in m illi on s) Shareholder Distributions Dividends Share Repurchases HII’s Q4 and 2017 Capital Deployment *Non-GAAP measure. See appendix for definition and reconciliation. ** Includes $2 million of share repurchases n
Slide 7: 2018 Outlook
7 2018 Outlook Non-Current State Income Taxes $8 - $12 million benefit* Effective Tax Rate ~21%* Interest Expense ~63 million* Capital Expenditures 5 - 6% of Revenues* * Estimated amounts.
Slide 8: 2018-2019 Pension Outlook
8 2018-2019 Pension Outlook 12 ($ in millions) 2017 (Actual) 20184 20194 Pension Discount Rate 4.47% 3.82% 3.82% Expected Long-Term Return on Assets 7.25% 7.25% 7.25% CAS Recoveries over/(under) Cash Contributions1,2 $26 ($89) $307 FAS/CAS Adjustment1,3 $189 $369 $356 CAS1 $361 $460 $399 FAS Service
Slide 9: Appendix
9 Appendix
Slide 10: Non-GAAP Measures Definitions
10 Non-GAAP Measures Definitions We make reference to “segment operating income (loss),” “segment operating margin,” “adjusted net earnings (loss),” “adjusted diluted earnings per share,” and “free cash flow.” We internally manage our operations by reference to “segment operating income (loss)” and
Slide 11: Non-GAAP Measures Definitions Cont'd
11 Non-GAAP Measures Definitions Cont’d Segment operating income (loss) is defined as operating income (loss) for the relevant segment(s) before the FAS/CAS Adjustment and non-current state income taxes. Segment operating margin is defined as segment operating income (loss) as a percentage of sales
Slide 12: Non-GAAP Reconciliations – Segment Operating Income (Loss) & Segment Operating Margin
12 Non-GAAP Reconciliations – Segment Operating Income (Loss) & Segment Operating Margin ($ in millions) 2017 2016 2017 2016 Ingalls revenues 638$ 641$ 2,420$ 2,389$ Newport News revenues 1,139 1,119 4,164 4,089 Technical Solutions revenues 242 186 952 691 Intersegment eliminations (23) (24) (95) (1
Slide 13: Non-GAAP Reconciliations – Adjusted Net Earnings & Adjusted Diluted EPS
13 Non-GAAP Reconciliations – Adjusted Net Earnings & Adjusted Diluted EPS 13 (in millions, except per share amounts) 2017 2016 2017 2016 Adjusted Net Earnings (Loss) Net earnings (loss) 64$ 197$ 479$ 573$ After-tax adjustment for loss on early extinguishment of debt1 14 — 14 — Tax reform adjustment
Slide 14: Non-GAAP Reconciliations – Footnotes to Adjusted Net Earnings and Adjusted Diluted EPS
14 Non-GAAP Reconciliations – Footnotes to the Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings per Share 14 (in millions, except per share amounts) 2017 2016 2017 2016 (1) Loss on early extinguishment of debt 22$ —$ 22$ —$ Tax effect at 35% statutory rate* 8 — 8 — After-tax eff
Slide 15: Non-GAAP Reconciliation – Free Cash Flow
15 Non-GAAP Reconciliation – Free Cash Flow 15 ($ in millions) 2017 2016 2017 2016 Net cash provided by (used in) operating activities 434 345 814 822 Less capital expenditures: Capital expenditure additions (154) (140) (382) (285) Grant proceeds for capital expenditures 21 — 21 — Free cash flow 301
Slide 16: Huntington Ingalls Industries
Huntington Ingalls Industries
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