HII (NYSE:HII) reported second quarter 2023 revenues of $2.8
billion, up 4.7% from the second quarter of 2022, driven primarily
by growth at Newport News Shipbuilding and Mission Technologies.
Operating income in the second quarter of 2023 was $156 million
and operating margin was 5.6%, compared to $191 million and 7.2%,
respectively, in the second quarter of 2022. The decreases were
primarily driven by lower segment operating income2 compared to the
prior year, partially offset by favorable changes to the operating
FAS/CAS adjustment and non-current state income taxes.
Segment operating income2 in the second quarter of 2023 was $169
million and segment operating margin2 was 6.1%, compared to $225
million and 8.5%, respectively, in the second quarter of 2022. The
decreases were primarily driven by lower favorable changes in
contract estimates from facilities capital and economic price
adjustment clauses compared to the prior year.
Net earnings in the quarter were $130 million, compared to $178
million in the second quarter of 2022. Diluted earnings per share
in the quarter was $3.27, compared to $4.44 in the second quarter
of 2022.
Net cash provided by operating activities in the quarter was $82
million and free cash flow2 was $14 million, compared to cash
provided by operating activities of $267 million and free cash
flow2 of $208 million in the second quarter of 2022.
New contract awards in the second quarter of 2023 were
approximately $2.6 billion, bringing total backlog to approximately
$46.9 billion as of June 30, 2023.
“The HII team delivered another solid quarter. Our results
demonstrate continued strong revenue growth and steady operational
performance,” said Chris Kastner, HII president and CEO. “We
continue to make progress on our top priorities of consistent
shipbuilding execution and driving growth at Mission Technologies.
The teams at Newport News and Ingalls continue to hit important
shipbuilding milestones and Mission Technologies secured another
quarter of robust growth and record revenue generation.”
1The financial outlook, expectations and other forward looking
statements provided by the company for 2023 and beyond reflect the
company’s judgment based on information available at the time of
this release.2Non-GAAP measures. See Exhibit B for definitions and
reconciliations.
Results of Operations
| |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
| |
June 30 |
|
|
|
June 30 |
|
|
| ($ in
millions, except per share amounts) |
2023 |
2022 |
$ Change |
% Change |
|
2023 |
2022 |
$ Change |
% Change |
|
Sales and service revenues |
$ |
2,787 |
|
$ |
2,662 |
|
$ |
125 |
|
4.7 |
% |
|
$ |
5,461 |
|
$ |
5,238 |
|
$ |
223 |
|
4.3 |
% |
| Operating income |
|
156 |
|
|
191 |
|
|
(35 |
) |
(18.3 |
)% |
|
|
297 |
|
|
329 |
|
|
(32 |
) |
(9.7 |
)% |
|
Operating margin % |
|
5.6 |
% |
|
7.2 |
% |
|
(158) bps |
|
|
5.4 |
% |
|
6.3 |
% |
|
(84) bps |
| Segment operating income1 |
|
169 |
|
|
225 |
|
|
(56 |
) |
(24.9 |
)% |
|
|
325 |
|
|
401 |
|
|
(76 |
) |
(19.0 |
)% |
|
Segment operating margin %1 |
|
6.1 |
% |
|
8.5 |
% |
|
(239) bps |
|
|
6.0 |
% |
|
7.7 |
% |
|
(170) bps |
| Net earnings |
|
130 |
|
|
178 |
|
|
(48 |
) |
(27.0 |
)% |
|
|
259 |
|
|
318 |
|
|
(59 |
) |
(18.6 |
)% |
| Diluted earnings per
share |
$ |
3.27 |
|
$ |
4.44 |
|
$ |
(1.17 |
) |
(26.4 |
)% |
|
$ |
6.49 |
|
$ |
7.93 |
|
$ |
(1.44 |
) |
(18.2 |
)% |
| 1 Non-GAAP
measures that exclude non-segment factors affecting operating
income. See Exhibit B for definitions and reconciliations. |
| |
Segment Operating Results
Ingalls Shipbuilding
| |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
| |
June 30 |
|
|
|
June 30 |
|
|
|
| ($ in
millions) |
2023 |
2022 |
$ Change |
% Change |
|
2023 |
2022 |
$ Change |
% Change |
|
Revenues |
$ |
664 |
|
$ |
658 |
|
$ |
6 |
|
0.9 |
% |
|
$ |
1,241 |
|
$ |
1,289 |
|
$ |
(48 |
) |
(3.7 |
)% |
| Segment operating income1 |
|
65 |
|
|
106 |
|
|
(41 |
) |
(38.7 |
)% |
|
|
120 |
|
|
192 |
|
|
(72 |
) |
(37.5 |
)% |
| Segment operating margin
%1 |
|
9.8 |
% |
|
16.1 |
% |
|
(632) bps |
|
|
9.7 |
% |
|
14.9 |
% |
|
(523) bps |
| 1 Non-GAAP
measures. See Exhibit B for definitions and reconciliations. |
|
| |
|
Ingalls Shipbuilding revenues for the second quarter of 2023
were $664 million, an increase of $6 million, or 0.9%, from the
same period in 2022, primarily driven by higher revenues in surface
combatants, partially offset by lower revenues in the Legend-class
National Security Cutter (NSC) program.
Ingalls Shipbuilding segment operating income1 for the second
quarter of 2023 was $65 million, a decrease of $41 million from the
same period in 2022. Segment operating margin1 in the second
quarter of 2023 was 9.8%, compared to 16.1% in the same period last
year. The decrease was primarily driven by lower favorable changes
in contract estimates from facilities capital and economic price
adjustment clauses and lower risk retirement on Harrisburg (LPD
30).
Key Ingalls Shipbuilding milestones for the quarter:
- Delivered guided missile destroyer Jack H. Lucas (DDG 125)
- Completed builder’s trials for National Security Cutter Calhoun
(NSC 10)
- Authenticated the keel of Pittsburgh (LPD 31)
1Non-GAAP measures. See Exhibit B for definitions and
reconciliations.
Newport News Shipbuilding
| |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
| |
June 30 |
|
|
|
June 30 |
|
|
| ($ in
millions) |
2023 |
2022 |
$ Change |
% Change |
|
2023 |
2022 |
$ Change |
% Change |
|
Revenues |
$ |
1,509 |
|
$ |
1,433 |
|
$ |
76 |
5.3 |
% |
|
$ |
3,015 |
|
$ |
2,823 |
|
$ |
192 |
6.8 |
% |
| Segment operating income1 |
|
95 |
|
|
94 |
|
|
1 |
1.1 |
% |
|
|
179 |
|
|
175 |
|
|
4 |
2.3 |
% |
| Segment
operating margin %1 |
|
6.3 |
% |
|
6.6 |
% |
|
(26) bps |
|
|
5.9 |
% |
|
6.2 |
% |
|
(26) bps |
| 1 Non-GAAP
measures. See Exhibit B for definitions and reconciliations. |
| |
Newport News Shipbuilding revenues for the second quarter of
2023 were $1.5 billion, an increase of $76 million, or 5.3%, from
the same period in 2022, primarily driven by higher revenues in
submarines and aircraft carriers. Submarine revenues increased due
to higher volumes on the Columbia-class submarine program and the
Virginia-class submarine (VCS) program. Aircraft carrier revenues
increased primarily as a result of higher volumes on aircraft
carrier construction, partially offset by lower revenues in
aircraft carrier refueling and complex overhaul (RCOH).
Newport News Shipbuilding segment operating income1 for the
second quarter of 2023 was $95 million, an increase of $1 million
from the same period in 2022. Segment operating margin1 in the
second quarter of 2023 was 6.3%, compared to 6.6% in the same
period last year. Current year segment operating income1 was
substantially the same as the prior year, as favorable VCS program
revenue adjustments were offset by lower favorable changes in
contract estimates from facilities capital and economic price
adjustment clauses.
Key Newport News Shipbuilding milestones for the quarter:
- Re-delivered USS George Washington (CVN 73)
- Christened Virginia-class submarine Massachusetts (SSN
798)
- Awarded $393 million contract modification for John F. Kennedy
(CVN 79)
- Awarded $568 million subcontract modification for
long-lead-time material and advance construction activities for
Columbia-class ballistic missile submarines
- Awarded $305 million contract modification for long-lead-time
material for two additional Block V Virginia-class
submarines
- Reached approximately 85% completion of John F. Kennedy (CVN
79) based on current scope and schedule
Mission Technologies
| |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
| |
June 30 |
|
|
|
June 30 |
|
|
| ($ in
millions) |
2023 |
2022 |
$ Change |
% Change |
|
2023 |
2022 |
$ Change |
% Change |
|
Revenues |
$ |
645 |
|
$ |
600 |
|
$ |
45 |
|
7.5 |
% |
|
$ |
1,269 |
|
$ |
1,190 |
|
$ |
79 |
|
6.6 |
% |
| Segment operating income1 |
|
9 |
|
|
25 |
|
|
(16 |
) |
(64.0 |
)% |
|
|
26 |
|
|
34 |
|
|
(8 |
) |
(23.5 |
)% |
| Segment operating margin
%1 |
|
1.4 |
% |
|
4.2 |
% |
|
(277) bps |
|
|
2.0 |
% |
|
2.9 |
% |
|
(81) bps |
| 1 Non-GAAP
measures. See Exhibit B for definitions and reconciliations. |
| |
|
|
|
|
|
Mission Technologies revenues for the second quarter of 2023
were $645 million, an increase of $45 million, or 7.5%, from
the same period in 2022. The increase was primarily due to higher
volumes in mission based solutions, driven by growth in C5ISR,
cyber and electronic warfare and live, virtual and constructive
training.
Mission Technologies segment operating income1 for the second
quarter of 2023 was $9 million, compared to $25 million in the
second quarter of 2022. Segment operating margin1 in the second
quarter of 2023 was 1.4%, compared to 4.2% in the same period last
year. The decreases were primarily driven by lower equity earnings
compared to the second quarter of 2022, which included a
non-recurring gain of approximately $15 million from our
unconsolidated ship repair and specialty fabrication joint venture.
In the second quarter of 2023, an equity method adjustment of
approximately $6 million was recognized from the sale of the same
joint venture.
Mission Technologies results included approximately $28 million
of amortization of purchased intangible assets in the second
quarter of 2023, compared to approximately $30 million in the same
period last year.
Mission Technologies EBITDA margin1 in the second quarter of
2023 was 6.7%.
Key Mission Technologies milestones for the quarter:
- Awarded a $242 million contract to provide shore-based
training, engineering and development support for the U.S.
Navy
- Awarded a $41 million task order to provide integrated training
systems installation and sustainment for the U.S. Navy
1Non-GAAP measures. See Exhibit B for definitions and
reconciliations.
2023 Financial Outlook1
- Reaffirming shipbuilding and Mission Technologies 2023 guidance
- Expect FY23 shipbuilding revenue2 between $8.4 and $8.6
billion; expect shipbuilding operating margin2 between 7.7% and
8.0%
- Expect FY23 Mission Technologies revenue of approximately $2.5
billion
- Expect Mission Technologies segment operating margin2 between
2.5% and 3.0%, and Mission Technologies EBITDA margin2 between 8.0%
and 8.5%
- Reaffirming free cash flow2 guidance
- Expect FY23 free cash flow2 between $400 and $450 million3
- Expect cumulative FY20-FY24 free cash flow2 of approximately
$2.9 billion3
- Revising operating FAS/CAS adjustment, non-current state income
tax and interest expense guidance
|
|
|
FY23 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 |
|
($70M) |
| Non-current State Income Tax
Benefit4 |
|
~$8M |
| Interest Expense |
|
($100M) |
| Non-operating Retirement
Benefit |
|
$149M |
| Effective Tax Rate |
|
~21% |
| |
|
|
| Depreciation &
Amortization |
|
~$365M |
| Capital Expenditures |
|
~3.0% of Sales |
| Free Cash Flow2 based on
current tax law3 |
|
$400M - $450M |
| |
|
|
| 1The financial
outlook, expectations and other forward-looking statements provided
by the company for 2023 and beyond reflect the company’s judgment
based on the information available at the time of this
release. |
| 2Non-GAAP
measures. See Exhibit B for definitions. 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 the variability in the occurrence and the
amounts of certain components of GAAP and non-GAAP measures. For
the same reasons, we are unable to address the significance of the
unavailable information, which could be material to future
results. |
| 3Outlook is based
on current tax law and assumes the provisions requiring
capitalization of R&D expenditures for tax purposes are not
deferred or repealed. |
| 4Outlook is based
on current tax law. Repeal or deferral of provisions requiring
capitalization of R&D expenditures would result in elevated
non-current state income tax expense. |
| |
About Huntington Ingalls Industries
HII is a global, all-domain defense provider. HII’s mission is
to deliver the world’s most powerful ships and all-domain solutions
in service of the nation, creating the advantage for our customers
to protect peace and freedom around the world.
As the nation’s largest military shipbuilder, and with a more
than 135-year history of advancing U.S. national security, HII
delivers critical capabilities extending from ships to unmanned
systems, cyber, ISR, AI/ML and synthetic training. Headquartered in
Virginia, HII’s workforce is 43,000 strong. For more information,
please visit www.HII.com.
Conference Call Information
HII will webcast its earnings conference call at 9 a.m. Eastern
time today. A live audio broadcast of the conference call and
supplemental presentation will be available on the investor
relations page of the company’s website: www.HII.com. A telephone
replay of the conference call will be available from noon today
through Thursday, August 10th by calling (866) 813-9403 or (929)
458-6194 and using access code 953843.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this release, 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 statements by words such as
“may,” “will,” “should,” “expects,” “intends,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,”
“continue,” and similar words or phrases or the negative of
these words or phrases. These statements relate to future events or
our future financial performance and involve known and unknown
risks, uncertainties, and other factors that may cause our actual
results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity,
performance, or achievements expressed or implied by these
forward-looking statements. Although we believe the expectations
reflected in the forward-looking statements are reasonable when
made, we cannot guarantee future results, levels of activity,
performance, or achievements. There are a number of important
factors that could cause our actual results to differ materially
from the results anticipated by our forward-looking statements,
which include, but are not limited to: changes in government and
customer priorities and requirements (including government
budgetary constraints, shifts in defense spending, and changes in
customer short-range and long-range plans); our ability to estimate
our future contract costs, including cost increases due to
inflation, and perform our contracts effectively; changes in
procurement processes and government regulations and our ability to
comply with such requirements; our ability to deliver our products
and services at an affordable life cycle cost and compete within
our markets; natural and environmental disasters and political
instability; our ability to execute our strategic plan, including
with respect to share repurchases, dividends, capital expenditures
and strategic acquisitions; adverse economic conditions in the
United States and globally; health epidemics, pandemics and similar
outbreaks; our ability to attract, train and retain a qualified
workforce; disruptions impacting global supply, including those
resulting from the ongoing conflict between Russia and Ukraine;
changes in key estimates and assumptions regarding our pension and
retiree health care costs; security threats, including cyber
security threats, and related disruptions; and other risk factors
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2022 and our other filings with the U.S. Securities
and Exchange Commission. There may be other risks and uncertainties
that we are unable to predict at this time or that we currently do
not expect to have a material adverse effect on our business, and
we undertake no obligation to update any forward-looking
statements. You should not place undue reliance on any
forward-looking statements that we may make. This release also
contains non-GAAP financial measures and includes a GAAP
reconciliation of these financial measures. Non-GAAP financial
measures should not be construed as being more important than
comparable GAAP measures.
Exhibit A: Financial Statements
HUNTINGTON INGALLS INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
| |
|
Three Months Ended June 30 |
|
Six Months Ended June 30 |
|
(in millions, except per share amounts) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Sales and service revenues |
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
1,879 |
|
|
$ |
1,829 |
|
|
$ |
3,708 |
|
|
$ |
3,553 |
|
|
Service revenues |
|
|
908 |
|
|
|
833 |
|
|
|
1,753 |
|
|
|
1,685 |
|
|
Sales and service revenues |
|
|
2,787 |
|
|
|
2,662 |
|
|
|
5,461 |
|
|
|
5,238 |
|
| Cost of sales and service
revenues |
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
1,602 |
|
|
|
1,526 |
|
|
|
3,170 |
|
|
|
2,994 |
|
|
Cost of service revenues |
|
|
796 |
|
|
|
746 |
|
|
|
1,552 |
|
|
|
1,505 |
|
|
Income from operating investments, net |
|
|
4 |
|
|
|
27 |
|
|
|
16 |
|
|
|
34 |
|
|
Other income and gains, net |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
General and administrative expenses |
|
|
238 |
|
|
|
227 |
|
|
|
458 |
|
|
|
444 |
|
|
Operating income |
|
|
156 |
|
|
|
191 |
|
|
|
297 |
|
|
|
329 |
|
| Other income (expense) |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(24 |
) |
|
|
(26 |
) |
|
|
(48 |
) |
|
|
(52 |
) |
|
Non-operating retirement benefit |
|
|
37 |
|
|
|
67 |
|
|
|
74 |
|
|
|
138 |
|
|
Other, net |
|
|
— |
|
|
|
(10 |
) |
|
|
9 |
|
|
|
(17 |
) |
| Earnings before income
taxes |
|
|
169 |
|
|
|
222 |
|
|
|
332 |
|
|
|
398 |
|
| Federal and foreign income tax
expense |
|
|
39 |
|
|
|
44 |
|
|
|
73 |
|
|
|
80 |
|
|
Net earnings |
|
$ |
130 |
|
|
$ |
178 |
|
|
$ |
259 |
|
|
$ |
318 |
|
| |
|
|
|
|
|
|
|
|
| Basic earnings per share |
|
$ |
3.27 |
|
|
$ |
4.44 |
|
|
$ |
6.49 |
|
|
$ |
7.93 |
|
| Weighted-average common shares
outstanding |
|
|
39.8 |
|
|
|
40.1 |
|
|
|
39.9 |
|
|
|
40.1 |
|
| |
|
|
|
|
|
|
|
|
| Diluted earnings per
share |
|
$ |
3.27 |
|
|
$ |
4.44 |
|
|
$ |
6.49 |
|
|
$ |
7.93 |
|
| Weighted-average diluted
shares outstanding |
|
|
39.8 |
|
|
|
40.1 |
|
|
|
39.9 |
|
|
|
40.1 |
|
| |
|
|
|
|
|
|
|
|
| Dividends declared per
share |
|
$ |
1.24 |
|
|
$ |
1.18 |
|
|
$ |
2.48 |
|
|
$ |
2.36 |
|
| |
|
|
|
|
|
|
|
|
| Net earnings from above |
|
$ |
130 |
|
|
$ |
178 |
|
|
$ |
259 |
|
|
$ |
318 |
|
| Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
Change in unamortized benefit plan costs |
|
|
5 |
|
|
|
13 |
|
|
|
9 |
|
|
|
(73 |
) |
|
Other |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
Tax benefit (expense) for items of other comprehensive income |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
19 |
|
|
Other comprehensive income (loss), net of tax |
|
|
4 |
|
|
|
9 |
|
|
|
7 |
|
|
|
(55 |
) |
|
Comprehensive income |
|
$ |
134 |
|
|
$ |
187 |
|
|
$ |
266 |
|
|
$ |
263 |
|
HUNTINGTON INGALLS INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (UNAUDITED)
| ($ in
millions) |
|
June 30,2023 |
|
December 31,2022 |
|
Assets |
|
|
|
|
| Current
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
313 |
|
|
$ |
467 |
|
| Accounts receivable, net of
allowance for doubtful accounts of $1 million as of 2023 and $2
million as of 2022 |
|
|
786 |
|
|
|
636 |
|
| Contract assets |
|
|
1,266 |
|
|
|
1,240 |
|
| Inventoried costs |
|
|
190 |
|
|
|
183 |
|
| Income taxes receivable |
|
|
184 |
|
|
|
170 |
|
| Prepaid expenses and other
current assets |
|
|
78 |
|
|
|
50 |
|
|
Total current assets |
|
|
2,817 |
|
|
|
2,746 |
|
| Property, Plant, and
Equipment, net of accumulated depreciation of $2,399 million as of
2023 and $2,319 million as of 2022 |
|
|
3,196 |
|
|
|
3,198 |
|
| Other
Assets |
|
|
|
|
| Operating lease assets |
|
|
264 |
|
|
|
282 |
|
| Goodwill |
|
|
2,618 |
|
|
|
2,618 |
|
| Other intangible assets, net
of accumulated amortization of $945 million as of 2023 and $881
million as of 2022 |
|
|
955 |
|
|
|
1,019 |
|
| Pension plan assets |
|
|
646 |
|
|
|
600 |
|
| Miscellaneous other
assets |
|
|
363 |
|
|
|
394 |
|
|
Total other assets |
|
|
4,846 |
|
|
|
4,913 |
|
|
Total assets |
|
$ |
10,859 |
|
|
$ |
10,857 |
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
| Current
Liabilities |
|
|
|
|
| Trade accounts payable |
|
|
519 |
|
|
|
642 |
|
| Accrued employees’
compensation |
|
|
345 |
|
|
|
345 |
|
| Current portion of long-term
debt |
|
|
484 |
|
|
|
399 |
|
| Current portion of
postretirement plan liabilities |
|
|
134 |
|
|
|
134 |
|
| Current portion of workers’
compensation liabilities |
|
|
229 |
|
|
|
229 |
|
| Contract liabilities |
|
|
833 |
|
|
|
766 |
|
| Other current liabilities |
|
|
383 |
|
|
|
380 |
|
|
Total current liabilities |
|
|
2,927 |
|
|
|
2,895 |
|
| Long-term debt |
|
|
2,396 |
|
|
|
2,506 |
|
| Pension plan liabilities |
|
|
218 |
|
|
|
214 |
|
| Other postretirement plan
liabilities |
|
|
257 |
|
|
|
260 |
|
| Workers’ compensation
liabilities |
|
|
465 |
|
|
|
463 |
|
| Long-term operating lease
liabilities |
|
|
224 |
|
|
|
246 |
|
| Deferred tax liabilities |
|
|
359 |
|
|
|
418 |
|
| Other long-term
liabilities |
|
|
367 |
|
|
|
366 |
|
|
Total liabilities |
|
|
7,213 |
|
|
|
7,368 |
|
| Commitments and
Contingencies |
|
|
|
|
| Stockholders’
Equity |
|
|
|
|
| Common stock, $0.01 par value;
150 million shares authorized; 53.6 million shares issued and 39.9
million shares outstanding as of June 30, 2023, and 53.5 million
shares issued and 39.9 million shares outstanding as of December
31, 2022 |
|
|
1 |
|
|
|
1 |
|
| Additional paid-in
capital |
|
|
2,030 |
|
|
|
2,022 |
|
| Retained earnings |
|
|
4,434 |
|
|
|
4,276 |
|
| Treasury stock |
|
|
(2,227 |
) |
|
|
(2,211 |
) |
| Accumulated other
comprehensive loss |
|
|
(592 |
) |
|
|
(599 |
) |
|
Total stockholders’ equity |
|
|
3,646 |
|
|
|
3,489 |
|
|
Total liabilities and stockholders’
equity |
|
$ |
10,859 |
|
|
$ |
10,857 |
|
HUNTINGTON INGALLS INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
| |
Six Months Ended June 30 |
|
($ in millions) |
|
2023 |
|
|
|
2022 |
|
|
Operating Activities |
|
|
|
| Net earnings |
$ |
259 |
|
|
$ |
318 |
|
| Adjustments to reconcile to
net cash used in operating activities |
|
|
|
|
Depreciation |
|
110 |
|
|
|
104 |
|
|
Amortization of purchased intangibles |
|
64 |
|
|
|
70 |
|
|
Amortization of debt issuance costs |
|
4 |
|
|
|
4 |
|
|
Provision for doubtful accounts |
|
— |
|
|
|
(7 |
) |
|
Stock-based compensation |
|
18 |
|
|
|
16 |
|
|
Deferred income taxes |
|
(62 |
) |
|
|
(1 |
) |
|
Loss (gain) on investments in marketable securities |
|
(12 |
) |
|
|
26 |
|
|
Change in |
|
|
|
|
Accounts receivable |
|
(149 |
) |
|
|
(241 |
) |
|
Contract assets |
|
(27 |
) |
|
|
(56 |
) |
|
Inventoried costs |
|
(7 |
) |
|
|
(35 |
) |
|
Prepaid expenses and other assets |
|
(42 |
) |
|
|
47 |
|
|
Accounts payable and accruals |
|
(57 |
) |
|
|
8 |
|
|
Retiree benefits |
|
(36 |
) |
|
|
(65 |
) |
|
Other non-cash transactions, net |
|
10 |
|
|
|
(4 |
) |
|
Net cash provided by operating activities |
|
73 |
|
|
|
184 |
|
| Investing
Activities |
|
|
|
|
Capital expenditures |
|
|
|
|
Capital expenditure additions |
|
(111 |
) |
|
|
(102 |
) |
|
Grant proceeds for capital expenditures |
|
3 |
|
|
|
— |
|
|
Investment in affiliates |
|
(24 |
) |
|
|
(5 |
) |
|
Proceeds from equity method investments |
|
61 |
|
|
|
6 |
|
|
Other investing activities, net |
|
1 |
|
|
|
— |
|
|
Net cash used in investing activities |
|
(70 |
) |
|
|
(101 |
) |
| Financing
Activities |
|
|
|
|
Repayment of long-term debt |
|
(30 |
) |
|
|
(200 |
) |
|
Dividends paid |
|
(99 |
) |
|
|
(94 |
) |
|
Repurchases of common stock |
|
(16 |
) |
|
|
(27 |
) |
|
Employee taxes on certain share-based payment arrangements |
|
(12 |
) |
|
|
(14 |
) |
|
Net cash used in financing activities |
|
(157 |
) |
|
|
(335 |
) |
|
Change in cash and cash equivalents |
|
(154 |
) |
|
|
(252 |
) |
| Cash and cash equivalents,
beginning of period |
|
467 |
|
|
|
627 |
|
| Cash and cash equivalents, end
of period |
$ |
313 |
|
|
$ |
375 |
|
| Supplemental Cash Flow
Disclosure |
|
|
|
| Cash paid for income taxes
(net of refunds) |
$ |
172 |
|
|
$ |
15 |
|
| Cash paid for interest |
$ |
51 |
|
|
$ |
49 |
|
| Non-Cash Investing and
Financing Activities |
|
|
|
| Capital expenditures accrued
in accounts payable |
$ |
4 |
|
|
$ |
6 |
|
| |
|
|
|
|
|
|
|
Exhibit B: Non-GAAP Measures Definitions &
Reconciliations
We make reference to “segment operating income,” “segment
operating margin,” “shipbuilding revenue,” “shipbuilding operating
margin,” “Mission Technologies EBITDA,” “Mission Technologies
EBITDA margin” and “free cash flow.”
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 in addition to, and not as alternatives
for, operating income and operating margin or any other performance
measure presented in accordance with GAAP. They are measures that
we use to evaluate our core operating performance. We believe that
segment operating income and segment operating margin reflect an
additional way of viewing aspects of our operations that, when
viewed with our GAAP results, provide a more complete understanding
of factors and trends affecting our business. We believe these
measures are used by investors and are a useful indicator to
measure our performance. Because not all companies use identical
calculations, our presentation of segment operating income and
segment operating margin may not be comparable to similarly titled
measures of other companies.
Shipbuilding revenue, shipbuilding operating margin, Mission
Technologies EBITDA and Mission Technologies EBITDA margin are not
measures recognized under GAAP. They are measures that we use to
evaluate our core operating performance. When analyzing our
operating performance, investors should use shipbuilding revenue,
shipbuilding operating margin, Mission Technologies EBITDA and
Mission Technologies EBITDA margin in addition to, and not as
alternatives for, operating income and operating margin or any
other performance measure presented in accordance with GAAP. We
believe that shipbuilding revenue, shipbuilding operating margin,
Mission Technologies EBITDA and Mission Technologies EBITDA margin
reflect an additional way of viewing aspects of our operations
that, when viewed with our GAAP results, provide a more complete
understanding of factors and trends affecting our business. We
believe these measures are used by investors and are a useful
indicator to measure our performance.
Free cash flow is not a measure recognized under GAAP. Free cash
flow has limitations as an analytical tool and should not be
considered in isolation from, or as a substitute for net earnings
as a measure of our performance or net cash provided or used by
operating activities as a measure of our liquidity. We believe free
cash flow is an important measure for our investors because it
provides them insight into our current and period-to-period
performance and our ability to generate cash from continuing
operations. We also use free cash flow as a key operating metric in
assessing the performance of our business and as a key performance
measure in evaluating management performance and determining
incentive compensation. Free cash flow may not be comparable to
similarly titled measures of other companies.
Reconciliations of forward-looking GAAP and non-GAAP measures
are not provided because we are unable to provide such
reconciliations without unreasonable effort due to the uncertainty
and inherent difficulty of predicting the future occurrence and
financial impact of certain elements of GAAP and non-GAAP
measures.
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 revenues.
Shipbuilding revenue is defined as the combined
sales and service revenues from our Newport News Shipbuilding
segment and Ingalls Shipbuilding segment.
Shipbuilding operating margin is defined as the
combined segment operating income of our Newport News Shipbuilding
segment and Ingalls Shipbuilding segment as a percentage of
shipbuilding revenue.
Mission Technologies EBITDA is defined as
Mission Technologies segment operating income before interest
expense, income taxes, depreciation, and amortization.
Mission Technologies EBITDA margin is defined
as Mission Technologies EBITDA as a percentage of Mission
Technologies revenues.
Free cash flow is defined as net cash provided
by (used in) operating activities less capital expenditures net of
related grant proceeds.
Operating FAS/CAS Adjustment is defined as the
difference between the service cost component of our pension and
other postretirement expense determined in accordance with GAAP
(FAS) and our pension and other postretirement expense under U.S.
Cost Accounting Standards (CAS).
Non-current state income taxes are defined as
deferred state income taxes, which reflect the change in deferred
state tax assets and liabilities and the tax expense or benefit
associated with changes in state uncertain tax positions in the
relevant period. These amounts are recorded within operating
income. Current period state income tax expense is charged to
contract costs and included in cost of sales and service revenues
in segment operating income.
We present financial measures adjusted for the Operating FAS/CAS
Adjustment and non-current state income taxes to reflect the
company’s performance based upon the pension costs and state tax
expense charged to our contracts under CAS. We use these adjusted
measures as internal measures of operating performance and for
performance-based compensation decisions.
Reconciliations of Segment Operating Income and 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 |
|
| Intersegment eliminations |
|
|
(31 |
) |
|
|
(29 |
) |
|
|
(64 |
) |
|
|
(64 |
) |
| Sales and Service
Revenues |
|
|
2,787 |
|
|
|
2,662 |
|
|
|
5,461 |
|
|
|
5,238 |
|
| |
|
|
|
|
|
|
|
|
| Operating
Income |
|
|
156 |
|
|
|
191 |
|
|
|
297 |
|
|
|
329 |
|
|
Operating FAS/CAS Adjustment |
|
|
17 |
|
|
|
35 |
|
|
|
36 |
|
|
|
72 |
|
|
Non-current state income taxes |
|
|
(4 |
) |
|
|
(1 |
) |
|
|
(8 |
) |
|
|
— |
|
| Segment Operating
Income |
|
|
169 |
|
|
|
225 |
|
|
|
325 |
|
|
|
401 |
|
|
As a percentage of sales and service revenues |
|
|
6.1 |
% |
|
|
8.5 |
% |
|
|
6.0 |
% |
|
|
7.7 |
% |
|
Ingalls segment operating income |
|
|
65 |
|
|
|
106 |
|
|
|
120 |
|
|
|
192 |
|
|
As a percentage of Ingalls revenues |
|
|
9.8 |
% |
|
|
16.1 |
% |
|
|
9.7 |
% |
|
|
14.9 |
% |
|
Newport News segment operating income |
|
|
95 |
|
|
|
94 |
|
|
|
179 |
|
|
|
175 |
|
|
As a percentage of Newport News revenues |
|
|
6.3 |
% |
|
|
6.6 |
% |
|
|
5.9 |
% |
|
|
6.2 |
% |
|
Mission Technologies operating income |
|
|
9 |
|
|
|
25 |
|
|
|
26 |
|
|
|
34 |
|
|
As a percentage of Mission Technologies revenues |
|
|
1.4 |
% |
|
|
4.2 |
% |
|
|
2.0 |
% |
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Free Cash
Flow
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 30 |
|
June 30 |
|
($ in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net cash provided by operating activities |
|
$ |
82 |
|
|
$ |
267 |
|
|
$ |
73 |
|
|
$ |
184 |
|
| Less capital
expenditures: |
|
|
|
|
|
|
|
|
|
Capital expenditure additions |
|
|
(68 |
) |
|
|
(59 |
) |
|
|
(111 |
) |
|
|
(102 |
) |
|
Grant proceeds for capital expenditures |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
Free cash flow |
|
$ |
14 |
|
|
$ |
208 |
|
|
$ |
(35 |
) |
|
$ |
82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Mission Technologies EBITDA and 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 Technologies
depreciation expense |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
5 |
|
| Mission Technologies
amortization expense |
|
|
28 |
|
|
|
30 |
|
|
|
55 |
|
|
|
60 |
|
| Mission Technologies state tax
expense |
|
|
3 |
|
|
|
4 |
|
|
|
6 |
|
|
|
6 |
|
| Mission Technologies other,
net |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
| Mission Technologies
EBITDA |
|
$ |
43 |
|
|
$ |
64 |
|
|
$ |
93 |
|
|
$ |
107 |
|
| Mission Technologies
EBITDA margin |
|
|
6.7 |
% |
|
|
10.7 |
% |
|
|
7.3 |
% |
|
|
9.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Brooke Hart (Media)brooke.hart@hii-co.com202-264-7108
Christie Thomas
(Investors)christie.thomas@hii-co.com757-380-2104
Huntington Ingalls Indus... (NYSE:HII)
過去 株価チャート
から 6 2024 まで 7 2024
Huntington Ingalls Indus... (NYSE:HII)
過去 株価チャート
から 7 2023 まで 7 2024
