Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q2 2023 Earnings Presentation
18 slides from Huntington Ingalls Industries's earnings presentation, Aug 3, 2023
Slide 1: HII Q2 2023 Earnings
HII Q2 2023 Earnings August 3, 2023 Chris Kastner President and Chief Executive Officer Tom Stiehle Executive Vice President and Chief Financial Officer
Slide 2: Cautionary Statement Regarding Forward-looking Statements
Cautionary Statement Regarding 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. You can generally identify forward-looking statemen
Slide 3: HII Q2 2023 Highlights
HII Q2 2023 Highlights • Record second quarter revenues of $2.8 billion, up 4.7% YoY Change • Diluted EPS of $3.27 for the quarter Q2 from • Reaffirming shipbuilding and Mission Technologies guidance1 2023 • Reaffirming free cash flow2 guidance1 Q2 2022 Ingalls Shipbuilding Highlights Shipbuilding R
Slide 4: Upcoming Shipbuilding Milestones
Upcoming Shipbuilding Milestones1 2023 2024 o Ingalls o Ingalls Complete sea trials and deliver DDG 125 Complete sea trials and deliver DDG 128 (Jack H. Lucas) (Ted Stevens) Launch DDG 128 (Ted Stevens) Launch DDG 129 (Jeremiah Denton) Launch LHA 8 (Bougainville) Launch LPD 30 (Harrisbur
Slide 5: HII Q2 2023 Consolidated Results
HII Q2 2023 Consolidated Results CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN $3,000 $2,787 $250 $2,662 $2,500 $191 $200 $2,000 $156 $150 $1,500 7.2% 5.6% $100 $1,000 $50 $500 $0 $0 Q2 22 Q2 23 Q2 22 Q2 23 • Revenue grew $125M or 4.7% • Operating income decreased YoY driven primarily by
Slide 6: HII Q2 2023 Segment Results
HII Q2 2023 Segment Results SEGMENT OPERATING INCOME ($M) Ingalls Shipbuilding REVENUE ($M) & MARGIN1 $800 $120 $106 Revenue $658 $664 $100 + DDG $600 $80 $65 - NSC $400 $60 16.1% Operating Income $40 9.8% - Lower favorable changes in contract estimates from $200 $20 facilities capital and economic
Slide 7: HII Q2 2023 Capital Deployment
HII Q2 2023 Capital Deployment CASH FLOW GENERATION ($M) SHAREHOLDER DISTRIBUTIONS ($M) $300 $70 TOTAL $267 $64 TOTAL $250 $57 $60 $208 $200 $50 $150 $40 $100 $82 $30 $50 $14 $20 $0 ($50) $10 ($59) ($68) ($100) $0 Q2 22 Q2 23 Q2 22 Q2 23 Cash from Ops. CAPEX Free Cash Flow Dividends Share Repurchase
Slide 8: HII Free Cash Flow & Capital Allocation
HII Free Cash Flow1,2 & Capital Allocation3 FREE CASH FLOW1 FY20-24 • Committed to investment grade rating; (assumes Sec. 174 is not deferred or repealed) Targeting ≤2x Debt/EBITDA1 by year-end 2024 ~$1.2B over FY23 & FY24 • Continued dividend growth at a low to mid-single digit growth rate $730M- •
Slide 9: HII 2023 Outlook
HII 2023 Outlook1 FY23 OUTLOOK1 FY23 • Reaffirming shipbuilding and Mission Technologies guidance Outlook Shipbuilding Revenue2 $8.4B - $8.6B • Reaffirming FY23 free cash flow2 guidance Shipbuilding Operating Margin2 7.7% - 8.0% • Updating operating FAS/CAS adjustment, non-current state taxes Missio
Slide 10: Investment Thesis
Historic backlog and positioning provide strong visibility INVESTMENT Consistent long-term shipbuilding growth profile THESIS Reshaped Mission Technologies portfolio to address evolving customer needs in high growth markets POSITIONED FOR SUCCESS Nearing sustainable free cash flow inflection point F
Slide 11: Appendix
Appendix
Slide 12: Non-GAAP Information
Non-GAAP Information We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Mission Technologies EBITDA,” “Mission Technologies EBITDA margin,” “Debt/EBITDA” and “free cash flow.” We internally manage our operations by r
Slide 13: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions Debt/EBITDA is defined as gross debt divided by net earnings before interest expense, income taxes, depreciation and amortization. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current
Slide 14: Non-GAAP Reconciliations: Segment Operating Income & Margin
Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2023 2022 2023 2022 Ingalls revenues 664 658 1,241 1,289 Newport News revenues 1,509 1,433 3,015 2,823 Mission Technologies revenues 645 600 1,269 1,190 In
Slide 15: Non-GAAP Reconciliations: Shipbuilding Revenues & Operating Margin
Non-GAAP Reconciliations Shipbuilding Revenues & Operating Margin Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2023 2022 2023 2022 Sales and service revenues 2,787 2,662 5,461 5,238 Mission Technologies (645) (600) (1,269) (1,190) Intersegment eliminations 31 29 64 64 Shipbuil
Slide 16: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations Free Cash Flow Three Months Ended Six Months Ended Year Ended June 30 June 30 December 31 ($ in millions) 2023 2022 2023 2022 2022 2021 2020 Net cash provided by operating activities 82 267 73 184 766 760 1,093 Less capital expenditures: Capital expenditure additions (68) (5
Slide 17: Non-GAAP Reconciliations: Mission Technologies EBITDA & Margin
Non-GAAP Reconciliations Mission Technologies EBITDA & EBITDA Margin Three Months Ended Six Months Ended June 30 June 30 ($ in millions) 2023 2022 2023 2022 Mission Technologies sales and service revenues 645 600 1,269 1,190 Mission Technologies segment operating income 9 25 26 34 Mission Technologi
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