Huntington Ingalls Industries, Inc. · NYSE:HII

Huntington Ingalls Industries — Q4 2020 Earnings Presentation

17 slides from Huntington Ingalls Industries's earnings presentation, Feb 11, 2021

  1. Slide 1: Q4 2020 Earnings Presentation

    Q4 2020 Earnings Presentation February 11, 2021 Mike Petters President and Chief Executive Officer Chris Kastner Executive Vice President and Chief Financial Officer

  2. Slide 2: Forward-Looking Statements

    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 ac

  3. Slide 3: HII Q4 & FY 2020 Highlights

    Consolidated Revenue HII Q4 & FY 2020 Highlights ($M) $10,000 $9,361  Revenues were ~$2.8 billion in the quarter; ~$9.4 billion in 2020 $8,899 $8,176  Diluted EPS was $6.15 in the quarter; $17.14 in 2020 $8,000 $7,441 $7,068  Cash from operations was $1.1 billion and free cash flow1 was $757 mill

  4. Slide 4: HII Q4 2020 Consolidated Results

    HII Q4 2020 Consolidated Results Consolidated Revenues Operating Income ($M) ($M) $3,000 $2,757 $350 $305 $2,412 $300 $2,500 $250 $2,000 $200 $186 $1,500 $150 $1,000 $100 $500 $50 $0 $0 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Operating Margin 12.0% 11.1%  Revenues improved YoY due primarily to growth at 10

  5. Slide 5: HII FY 2020 Consolidated Results

    HII FY 2020 Consolidated Results Consolidated Revenues Operating Income ($M) ($M) $9,361 $1,000 $10,000 $8,899 $799 $800 $736 $8,000 $600 $6,000 $400 $4,000 $200 $2,000 $0 $0 2019 2020 2019 2020 Operating Margin 9.0% 8.5% 8.3%  Revenues improved YoY due to growth at all divisions, 8.0% particularly

  6. Slide 6: Capital Deployment

    Capital Deployment Cash Flow Generation Shareholder Distributions ($M) ($M) Total $300 $1,200 $1,093 $256 $1,000 $250 $757 $800 $602 $84 $200 $600 $469 $400 $150 $200 Total $100 $0 $46 $172 -$200 $50 ($133) -$400 $46 ($336) $0 -$600 Q4 2020 2020 Q4 2020 2020 1 Dividends Share Repurchases (at cost) C

  7. Slide 7: 2021-2025 Pension Outlook

    2021-2025 Pension Outlook Table1 2020 ($ in millions) (Actual) 2021 2022 2023 2024 2025 Pension Discount Rate 3.39% 2.80% 2.80% 2.80% 2.80% 2.80% Change from prior est. (13)bps Change from prior est. (59)bps Change from prior est. (59)bps Change from prior est. (59)bps Change from prior est. N/A 7.2

  8. Slide 8: Financial Outlook

    Financial Outlook 2021 Outlook1 Operating Margin 2021 Outlook  Q1 2021 Technical Solutions Operating Margin below the low-end of Shipbuilding Revenue2 $8.2B - $8.4B annual guidance range; consistent with normal quarterly pacing Shipbuilding Operating Margin2 7.0% - 8.0% Technical Solutions Revenue3

  9. Slide 9: FY20-24 Cumulative Free Cash Flow of ~$3B

    1 FY20-24 Cumulative Free Cash Flow of ~$3B  Consistent top-line growth, combined with margin expansion in both Shipbuilding and Technical Solutions  Long-term ~3% Shipbuilding revenue CAGR  FY22 shipbuilding operating margin expected in the low 8% range with steady improvement in subsequent year

  10. Slide 10: Upcoming Program Milestones

    Upcoming Program Milestones1  2021  2022 o Ingalls o Ingalls  Complete sea trials DDG 121  Deliver DDG 121 (Frank E. Petersen Jr.) (Frank E. Petersen Jr.)  Complete sea trials and deliver DDG 123  Launch DDG 125 (Jack H. Lucas) (Lenah H. Sutcliffe Higbee)  Complete sea trials LPD 28  Complet

  11. Slide 11: Appendix

    Appendix HUNTINGTON INGALLS INDUSTRIES PROPRIETARY

  12. Slide 12: Non-GAAP Measures Definitions

    Non-GAAP Measures Definitions We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Technical Solutions EBITDA margin,” and “free cash flow.” We internally manage our operations by reference to segment operating income

  13. Slide 13: Non-GAAP Measures Definitions Cont'd

    Non-GAAP Measures Definitions Cont’d Segment operating income (loss) is defined as operating income (loss) for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes. Segment operating margin is defined as segment operating income (loss) as a percentage of

  14. Slide 14: Non-GAAP Reconciliations – Segment Operating Income & Segment Operating Margin

    Non-GAAP Reconciliations – Segment Operating Income & Segment Operating Margin Three Months Ended Year Ended December 31 December 31 ($ in millions) 2020 2019 2020 2019 Ingalls revenues 752 702 2,678 2,555 Newport News revenues 1,750 1,399 5,571 5,231 Technical Solutions revenues 311 350 1,268 1,237

  15. Slide 15: Non-GAAP Reconciliations – Shipbuilding Revenues & Operating Margin

    Non-GAAP Reconciliations – Shipbuilding Revenues & Operating Margin Three Months Ended Year Ended December 31 December 31 ($ in millions) 2020 2019 2020 2019 Sales and service revenues 2,757 2,412 9,361 8,899 Technical Solutions (311) (350) (1,268) (1,237) Intersegment eliminations 56 39 156 124 Shi

  16. Slide 16: Non-GAAP Reconciliations – Free Cash Flow

    Non-GAAP Reconciliations – Free Cash Flow Three Months Ended Year Ended December 31 December 31 ($ in millions) 2020 2019 2020 2019 Net cash provided by operating activities 602 566 1,093 896 Less capital expenditures: Capital expenditure additions (133) (181) (353) (530) Grant proceeds for capital

  17. Slide 17: Huntington Ingalls Industries Hard Stuff Done Right

    17 HUNTINGTON INGALLS INDUSTRIES HARD STUFF DONE RIGHT

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