Huntington Ingalls Industries, Inc. · NYSE:HII
Huntington Ingalls Industries — Q4 2022 Earnings Presentation
20 slides from Huntington Ingalls Industries's earnings presentation, Feb 9, 2023
Slide 1: HII Q4 2022 Earnings
HII Q4 2022 Earnings February 9, 2023 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. You can generally identify forward-looking statem
Slide 3: HII Q4 & FY 2022 Highlights
3 HII Q4 & FY 2022 Highlights • Revenues were $2.8 billion in the quarter; $10.7 billion in 2022 • Diluted EPS was $3.07 in the quarter; $14.44 in 2022 • Total backlog at the end of 2022 was $47.1 billion Ingalls Shipbuilding 2022 Highlights • Delivered LPD 28 (Fort Lauderdale) • Launched and christ
Slide 4: Upcoming Shipbuilding Milestones
4 Upcoming Shipbuilding Milestones1 2024 o Ingalls Complete sea trials and deliver DDG 128 (Ted Stevens) Launch DDG 129 (Jeremiah Denton) Launch LPD 30 (Harrisburg) 2023 o Ingalls Complete sea trials and deliver DDG 125 (Jack H. Lucas) Launch DDG 128 (Ted Stevens) Launch LHA 8 (Bougainvi
Slide 5: Q4 2022 Consolidated Results
5 Q4 2022 Consolidated Results • Revenue grew $135M or 5% YoY driven by growth at all three divisions resulting in record quarterly consolidated revenue CONSOLIDATED REVENUE ($M) OPERATING INCOME ($M) & MARGIN • Operating income declined $15M or 12.5% YoY due primarily to lower segment operating inc
Slide 6: 2022 Consolidated Results
$513 $565 $0 $100 $200 $300 $400 $500 $600 FY21 FY22 6 2022 Consolidated Results • Revenue grew $1.2B or 12.1% YoY due primarily to growth at Mission Technologies (+61.7%) driven by the acquisition of Alion in Q3 21, as well as growth at Newport News Shipbuilding (+3.3%) and Ingalls Shipbuilding (+1
Slide 7: 2022 Segment Results
7 2022 Segment Results YoY Revenue + LHA & DDG - NSC Operating Income + Contract estimates + LPD risk retirement - DDG risk retirement (prior year incentive) Newport News Shipbuilding Ingalls Shipbuilding Mission Technologies REVENUE ($M) SEGMENT OPERATING INCOME ($M) & MARGIN1 REVENUE ($M)Revenue +
Slide 8: Capital Deployment
$0 $50 $100 $150 $200 $250 $300 Q4 22 FY22 Dividends Share Repurchases (at cost) 8 Capital Deployment • Cash balance of $467 million and liquidity of $2.0 billion at year-end 2022 • Net capital expenditures were 2.5% of revenues in 2022 • Cash contributions to pension and other postretirement benefi
Slide 9: Pension Outlook
9 Pension Outlook1 ($ in millions) 2022 (Actual) 2023 2024 2025 2026 2027 Pension Discount Rate 3.00% Change from prior est. N/A 5.47% 57bps 5.47% 247bps 5.47% 247bps 5.47% 247bps 5.47% Expected Long-Term Return on Assets 7.25% N/A 8.00% 75bps 8.00% 75bps 8.00% 75bps 8.00% 75bps 8.00% CAS Recoveries
Slide 10: Outlook
10 Outlook Outlook Shipbuilding Revenue2 $8.4B - $8.6B Shipbuilding Operating Margin2 7.7% - 8.0% Mission Technologies Revenue ~$2.5B Mission Technologies Segment Operating Margin2 2.5% - 3.0% Mission Technologies EBITDA Margin2 8.0% - 8.5% Operating FAS/CAS Adjustment ($68M) Non-current State Incom
Slide 11: Free Cash Flow & Capital Allocation
11 Free Cash Flow1,2 & Capital Allocation3 FY22 $494M FY23 $400M- $450M FY24 $730M- $830M • Committed to investment grade rating; Targeting ≤2x Debt/EBITDA1 by year-end 2024 • Continued dividend growth at low to mid single digit growth rate • Balanced share repurchases; $1.0B authorization remaining
Slide 12: Investment Thesis: Positioned for Success; Focused on Execution
INVESTMENT THESIS POSITIONED FOR SUCCESS; FOCUSED ON EXECUTION Historic backlog and positioning provide strong visibility Consistent long-term shipbuilding growth profile Reshaped Mission Technologies portfolio to address evolving customer needs in high growth markets 12 Nearing sustainable free cas
Slide 13: Appendix
Appendix 13
Slide 14: Non-GAAP Information
Non-GAAP Information 14 We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Mission Technologies EBITDA margin,” “Debt/EBITDA” and “free cash flow.” We internally manage our operations by reference to segment operatin
Slide 15: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions 15 Debt/EBITDA is defined as gross debt divided by net earnings before interest expense, income taxes, depreciation and amortization. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-curr
Slide 16: Non-GAAP Reconciliations: Segment Operating Income & Margin
Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin 16 ($ in millions) 2022 2021 2022 2021 Ingalls revenues 658 581 2,570 2,528 Newport News revenues 1,584 1,539 5,852 5,663 Mission Technologies revenues 602 586 2,387 1,476 Intersegment eliminations (32) (29) (133) (143) Sal
Slide 17: Non-GAAP Reconciliations: Shipbuilding Revenues & Operating Margin
Non-GAAP Reconciliations Shipbuilding Revenues & Operating Margin 17 ($ in millions) 2022 2021 2022 2021 Sales and service revenues 2,812 2,677 10,676 9,524 Mission Technologies (602) (586) (2,387) (1,476) Intersegment eliminations 32 29 133 143 Shipbuilding Revenues 2,242 2,120 8,422 8,191 Operatin
Slide 18: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations Free Cash Flow 18 ($ in millions) 2022 2021 2022 2021 Net cash provided by operating activities 601 271 766 760 Less capital expenditures: Capital expenditure additions (105) (115) (284) (331) Grant proceeds for capital expenditures 12 9 12 20 Free cash flow 508 165 494 449
Slide 19: Non-GAAP Reconciliations: Mission Technologies EBITDA Margin
19 Non-GAAP Reconciliations Mission Technologies EBITDA Margin (in millions, except per share amounts) 2022 2021 2022 2021 Mission Technologies sales and service revenues 602 586 2,387 1,476 Mission Technologies segment operating income 15 17 63 50 Mission Technologies depreciation expense 2 2 10 6
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