Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q4 2023 Earnings Presentation
23 slides from Huntington Ingalls Industries's earnings presentation, Feb 1, 2024
Slide 1: HII Q4 2023 Earnings
HII Q4 2023 Earnings February 1, 2024 Chris Kastner President and Chief Executive Officer Tom Stiehle Executive Vice President and Chief Financial Officer Exhibit 99.2
Slide 2: Cautionary Statement Regarding Forward-looking Statements
Cautionary Statement Regarding Forward-looking Statements 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. In some cases, you can identify forward-looking s
Slide 3: HII Full-Year 2023 Highlights
HII Full-Year 2023 Highlights 3 • Record 2023 revenues of $11.5B, up 7.3% YoY – MT $2.7B, up 13.1% – Shipbuilding $8.9B, up 5.5% • Operating Income of $781M, up 38.2% YoY • Diluted EPS of $17.07, up 18.2% YoY 1 Non-GAAP measure. See appendix for definitions and reconciliations. Results exceeded guid
Slide 4: HII Q4 and FY 2023 Financial Highlights
HII Q4 and FY 2023 Financial Highlights 4 1 Non-GAAP measure. See appendix for definitions and reconciliations. $ In Millions, Except EPS Q4 2023 Δ Q3 2023 Δ Q4 2022 2023 Δ 2022 Revenue 3,177$ 12.8% 13.0% 11,454$ 7.3% Operating Income 312 81.4% 197.1% 781 38.2% Operating Margin 9.8% 371 bps 609 bps
Slide 5: HII 2023 Segment Results
5 HII 2023 Segment Results YoY Newport News Shipbuilding Ingalls Shipbuilding Mission Technologies 1 Non-GAAP measures. See appendix for definitions and reconciliations. REVENUE ($M) SEGMENT OPERATING INCOME1 ($M) & MARGIN %1 REVENUE ($M) REVENUE ($M) SEGMENT OPERATING INCOME1 ($M) & MARGIN %1 SEGME
Slide 6: Upcoming Shipbuilding Milestones
6 Upcoming Shipbuilding Milestones1 2024 o Ingalls Launch DDG 129 (Jeremiah Denton) Complete sea trials and deliver LPD 29 (Richard M. McCool Jr.)* Launch LPD 30 (Harrisburg) o Newport News Re-deliver SSN 794 (USS Montana) Deliver SSN 796 (New Jersey)* Float off SSN 798 (Massachusetts)*
Slide 7: HII Outlook
7 HII Outlook1 FY24 Outlook Shipbuilding Revenue2 $8.8B - $9.1B Shipbuilding Operating Margin2 7.6% - 7.8% Mission Technologies Revenue $2.7B - $2.75B Mission Technologies Segment Operating Margin2 3.0% - 3.5% Mission Technologies EBITDA Margin2 8.0% - 8.5% Operating FAS/CAS Adjustment ($63M) Non-cu
Slide 8: HII Free Cash Flow
8 HII Free Cash Flow1,2,3 1 Non-GAAP measure. See appendix for definition. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward–looking GAAP and non–GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to t
Slide 9: HII Capital Allocation Prioritization
9 HII Capital Allocation Prioritization1 1The financial outlook, expectations and other forward looking statements provided by the company for 2024 and beyond reflect the company's judgment based on the information available at the time of this presentation. 2 Non-GAAP measure. See appendix for defi
Slide 10: Investment Thesis
INVESTMENT THESIS POSITIONED FOR SUCCESS FOCUSED ON EXECUTION & GROWTH Historic backlog and positioning provide strong visibility Consistent (Increased) long-term shipbuilding growth profile Mission Technologies portfolio aligned with evolving customer needs in high growth markets Projected sustaina
Slide 11: Appendix
Appendix
Slide 12: HII FY 2023 Operational Highlights
HII FY 2023 Operational Highlights 12 Ingalls Shipbuilding 2023 Highlights • Delivered guided missile destroyer Jack H. Lucas (DDG 125) • Delivered National Security Cutter Calhoun (NSC 10) • Launched and christened amphibious assault ship Bougainville (LHA 8) • Launched and christened guided missil
Slide 13: HII Q4 2023 Consolidated Results
13 HII Q4 2023 Consolidated Results • Revenue grew $365M or 13% YoY driven by growth at all three segments: Mission Technologies, Ingalls Shipbuilding and Newport News Shipbuilding CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN % 5.6% • Operating income increased $207M YoY primarily due to
Slide 14: HII FY 2023 Consolidated Results
14 HII FY 2023 Consolidated Results • Revenue grew $778M or 7.3% YoY driven by growth at all three segments: Mission Technologies, Newport News Shipbuilding and Ingalls Shipbuilding CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN % 5.6% • Operating income increased $216M YoY primarily due t
Slide 15: HII Q4 & FY 2023 Capital Deployment
$0 $50 $100 $150 $200 $250 $300 Q4 23 2023 Dividends Share Repurchases (at cost) 15 HII Q4 & FY 2023 Capital Deployment CASH FLOW GENERATION ($M) SHAREHOLDER DISTRIBUTIONS ($M) TOTAL $275 FY23 • Cash balance of $430 million and liquidity of $1.9 billion at year end • Net capital expenditures were 2.
Slide 16: Pension Outlook
16 Pension Outlook1 ($ in millions) 2023 (Actual) 2024 2025 2026 2027 2028 Pension Discount Rate 5.47% Change from prior est. N/A 5.28% (81)Bps 5.28% (19)Bps 5.28% (19)Bps 5.28% (19)Bps 5.28% Expected Long-Term Return on Assets 8.00% N/A 8.00% N/A 8.00% N/A 8.00% N/A 8.00% N/A 8.00% Actual Return on
Slide 17: Non-GAAP Information
17 Non-GAAP Information We make reference to “free cash flow,” “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Mission Technologies EBITDA” and “Mission Technologies EBITDA margin.” We internally manage our operations by reference to
Slide 18: Non-GAAP Measures Definitions
18 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. Segment operating margin is defined as segment operating income as a percentage of sales and service revenu
Slide 19: Non-GAAP Reconciliations: Segment Operating Income & Margin
19 Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin ($ in millions) 2023 2022 2023 2022 Ingalls revenues 800 658 2,752 2,570 Newport News revenues 1,665 1,584 6,133 5,852 Mission Technologies revenues 745 602 2,699 2,387 Intersegment eliminations (33) (32) (130) (133) Sal
Slide 20: Non-GAAP Reconciliations: Shipbuilding Revenues & Margin
20 Non-GAAP Reconciliations Shipbuilding Revenues & Margin ($ in millions) 2023 2022 2023 2022 Sales and service revenues 3,177 2,812 11,454 10,676 Mission Technologies (745) (602) (2,699) (2,387) Intersegment eliminations 33 32 130 133 Shipbuilding Revenues 2,465 2,242 8,885 8,422 Operating Income
Slide 21: Non-GAAP Reconciliations: Free Cash Flow
21 Non-GAAP Reconciliations Free Cash Flow ($ in millions) 2023 2022 2023 2022 2021 2020 Net cash provided by operating activities 562 601 970 766 760 1,093 Less capital expenditures: Capital expenditures additions (128) (105) (292) (284) (331) (353) Grant proceeds for capital expenditures - 12 14 1
Slide 22: Non-GAAP Reconciliations: Mission Technologies EBITDA & Margin
22 Non-GAAP Reconciliations Mission Technologies EBITDA & EBITDA Margin ($ in millions) 2023 2022 2023 2022 Mission Technologies sales and service revenues 745 602 2,699 2,387 Mission Technologies segment operating income 51 15 101 63 Mission Technologies depreciation expense 3 2 11 10 Mission Techn
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