Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q4 2015 Earnings Presentation
21 slides from Huntington Ingalls Industries's earnings presentation, Feb 18, 2016
Slide 1: Q4 2015 Earnings Presentation
Q4 2015 Earnings Presentation February 18, 2016 Mike Petters President and Chief Executive Officer Barb Niland Corporate Vice President, Business Management and Chief Financial Officer Chris Kastner Corporate Vice President and General Manager Corporate Development Exhibit 99.2
Slide 2: Safe Harbor
Safe Harbor 2 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 actual results
Slide 3: Highlights from Q4 and FY 2015
Highlights from Q4 and FY 2015 3 Revenues were $1.9 billion for the quarter and $7.0 billion for the year Diluted EPS was $1.06 for the quarter and $8.36 for the year Adjusted Diluted EPS* was $1.95 for the quarter and $7.33 for the year Strong segment operating performance: Ingalls operat
Slide 4: Q4 2015 Consolidated Results
Q4 2015 Consolidated Results 4 * Non-GAAP metrics that exclude the impacts of the non-cash goodwill impairment charge and the non-cash intangible asset impairment charge. See appendix for reconciliation. ** Non-GAAP metric that excludes the after-tax effects of the goodwill impairment charge, the in
Slide 5: FY 2015 Consolidated Results
FY 2015 Consolidated Results 5 $6,957 $7,020 $6,957 $7,033 $— $2,000 $4,000 $6,000 $8,000 FY 2014 FY 2015 (S In M illi on s) Consolidated Revenues GAAP Adjusted* $655 $769 $702 $735 $— $300 $600 $900 FY 2014 FY 2015 ($ In M illi on s) Operating Income GAAP Adjusted** 9.4% 11.0% 10.1% 10.5% —% 2.0 %
Slide 6: Ingalls Shipbuilding – Q4 2015 Results
Ingalls Shipbuilding – Q4 2015 Results 6 Ingalls Q4 revenues declined YoY on deliveries of NSC-4 and NSC-5 and lower volumes on LPD 26. Q4 operating income and margin were down YoY due to lower risk retirement on the LPD program. $608 $580 $— $175 $350 $525 $700 Q4 2014 Q4 2015 ($ In M illi on s
Slide 7: Ingalls Shipbuilding – FY 2015 Results
* Non-GAAP metrics that exclude the impact of the insurance litigation settlement in 2015. See appendix for reconciliation. Ingalls Shipbuilding – FY 2015 Results 7 Ingalls 2015 revenues declined YoY due to lower volumes on amphibious assault ships and the NSC program. Ingalls 2015 operating inc
Slide 8: Newport News Shipbuilding – Q4 and FY 2015 Results
Newport News Shipbuilding – Q4 and FY 2015 Results 8 Newport News revenues and operating income increased for the quarter and year on higher volumes on the VCS program and in Fleet Support services. Operating margin for the quarter and full year was similar to fourth quarter and full year 2014.
Slide 9: Other Segment – Q4 2015 Results
Other Segment – Q4 2015 Results 9 Other Segment Q4 revenue declined YoY on lower volumes in oil and gas services. Operating losses increased YoY due to lower volumes in oil and gas services and restructuring costs. Approximately half of the adjusted operating loss in the quarter was due to restr
Slide 10: Other – FY 2015 Results
Other – FY 2015 Results 10 $137 $134 $— $40 $80 $120 $160 FY 2014** FY 2015 ($ In M illi on s) Revenues $(59) $(134) $(12) $(32) $(150) $(100) $(50) $— $50 ($ In M illi on s) Operating Loss GAAP Adjusted* FY 2014 FY 2015 * Non-GAAP metric that excludes the impacts of the non-cash intangible asset im
Slide 11: 2016 Expectations
2016 Expectations 11 Revenues Relatively flat to 2015 Segment Operating Margin in Shipbuilding 9+% Deferred State Income Tax $10 - $15 Million Expense Interest Expense ~$75 Million Effective Tax Rate 33.5% - 34.5% Range Capital Expenditures 3.5% - 4.5% of Revenues
Slide 12: 2016 FAS/CAS Guidance
2016 FAS/CAS Guidance 12 ($ in millions) 2016 2015 Pension Discount Rate 4.73% 4.34% Expected Long-Term Return on Assets 7.50% 7.50% CAS Recovery in excess of cash contribution1,2 $88 $136 Net FAS/CAS Adjustment1 $137 $104 CAS1 $298 $272 FAS1 ($161) ($168) 1 Includes pension & other postretirement b
Slide 13: Appendix
U n sa ve d Docum e n t / 1 2 /2 9 /1 0 / 1 0 :0 2 Appendix
Slide 14: Reconciliations
Reconciliations 14 We make reference to “segment operating income,” “segment operating margin,” “adjusted sales and service revenues,” “adjusted segment operating income,” “adjusted segment operating margin,” “adjusted total operating income,” “adjusted operating margin,” “adjusted net earnings,” “a
Slide 15: Reconciliations Cont’d
Reconciliations Cont’d 15 We internally manage our operations by reference to "segment operating income" and "segment operating margin," which are not recognized measures under GAAP. When analyzing our operating performance, investors should use segment operating income and segment operating margin
Slide 16: Reconciliation – Segment Operating Income and Segment Operating Margin
Reconciliation – Segment Operating Income and Segment Operating Margin 16 ($ in millions) 2015 2014 2015 2014 Sales and Service Revenues Ingalls revenues 580$ 608$ 2,188$ 2,286$ Newport News revenues 1,296 1,263 4,700 4,536 Other revenues 29 56 134 137 Intersegment eliminations — — (2) (2) Total Sal
Slide 17: Reconciliation – Adjusted Sales and Services Revenues
17 Reconciliation – Adjusted Sales and Services Revenues ($ in millions) 2015 2014 2015 2014 Adjusted Sales and Service Revenues Ingalls revenues 580$ 608$ 2,188$ 2,286$ Adjustment for insurance litigation settlement — — 13 — Adjusted Ingalls revenues 580 608 2,201 2,286 Newport News revenues 1,296
Slide 18: Reconciliation – Adjusted Segment Operating Income & Adjusted Segment Operating Margin
Reconciliation – Adjusted Segment Operating Income & Adjusted Segment Operating Margin 18 ($ in millions) 2015 2014 2015 2014 Adjusted Segment Operating Income Total operating income 144$ 144$ 769$ 655$ As a percentage of revenues 7.6 % 7.5 % 11.0 % 9.4 % Non-segment factors affecting operating inco
Slide 19: Reconciliation – Adjusted Total Operating Income & Adjusted Total Operating Margin
Reconciliation – Adjusted Total Operating Income & Adjusted Total Operating Margin 19 ($ in millions) 2015 2014 2015 2014 Total operating income 144$ 144$ 769$ 655$ As a percentage of revenues 7.6 % 7.5 % 11.0 % 9.4 % Adjustment for insurance litigation settlement — — (136) — Adjustment for impairme
Slide 20: Reconciliation – Adjusted Net Earnings and Adjusted Diluted EPS
Reconciliation – Adjusted Net Earnings and Adjusted Diluted EPS 20 1 Tax effected at 35% federal statutory tax rate. 2 The goodwill impairment charges created $4 million, $16 million and $10 million Federal tax benefit for Q4 2015, 2015 and 2014, respectively. ($ in millions) 2015 2014 2015 2014 Adj
Slide 21: Reconciliation – Free Cash Flow
Reconciliation – Free Cash Flow 21 $ in millions 2015 2014 2015 2014 Net cash provided by (used in) operating activities 411$ 402$ 828$ 716$ Less: Capital expenditures (102) (74) (188) (165) Free cash flow 309$ 328$ 640$ 551$ Three Months Ended Year Ended December 31 December 31
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