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Form 8-K HUNTINGTON INGALLS INDUS For: Aug 05

August 5, 2021 7:28 AM EDT
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News Release
Contacts:

Jerri Fuller Dickseski (Media)
jerri.dickseski@hii-co.com
757-380-2341

Dwayne Blake (Investors)
dwayne.blake@hii-co.com
757-380-2104

Huntington Ingalls Industries Reports Second Quarter 2021 Results

Revenues were $2.2 billion in the quarter
Operating margin was 5.7% and segment operating margin1 was 7.6%
Diluted earnings per share was $3.20
Pension adjusted diluted earnings per share1 was $3.05


NEWPORT NEWS, Va. (Aug. 5, 2021) - Huntington Ingalls Industries (NYSE:HII) reported second quarter 2021 revenues of $2.2 billion, up 10.1% from the second quarter of 2020.

Operating income in the second quarter of 2021 was $128 million and operating margin was 5.7%, compared to $57 million and 2.8%, respectively, in the second quarter of 2020. The increases in operating income and operating margin were primarily the result of stronger segment operating results compared to the prior year, partially offset by a less favorable operating FAS/CAS adjustment. The prior year period included unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19.

Segment operating income1 in the second quarter of 2021 was $169 million and segment operating margin1 was 7.6%, compared to a segment operating loss of $5 million and (0.2)%, respectively, in the second quarter of 2020. The increases in segment operating income1 and segment operating margin1 were primarily the result of the unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.

Net earnings in the second quarter of 2021 were $129 million, compared to $53 million in the second quarter of 2020. Diluted earnings per share in the second quarter of 2021 was $3.20, compared to $1.30 in the same period of 2020. Excluding the impacts of pension, adjusted earnings per share1 in the quarter was $3.05, compared to $(0.49) in the same period of 2020.

Second quarter cash from operations was $96 million and free cash flow1 was $23 million, compared to $201 million and $126 million, respectively, in the second quarter of 2020.

New contract awards in the second quarter of 2021 were approximately $1.2 billion, bringing total backlog to approximately $47.7 billion as of June 30, 2021.

“We are pleased with second quarter results that demonstrate another quarter of consistent program execution,” said Mike Petters, HII’s president and CEO. "We recently announced the agreement to acquire Alion Science and Technology, which we believe is a perfect complement to our existing capabilities in the technology-driven defense solutions space. We believe Alion offers significant growth potential and represents an investment in capabilities that are critical to national security now and into the future and will generate significant value for our stakeholders over the long-term."
1Non-GAAP measure. See Exhibit B for definition and reconciliation.

Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com

Page 1 of 14


Results of Operations
Three Months EndedSix Months Ended
June 30June 30
($ in millions, except per share amounts)20212020$ Change% Change20212020$ Change% Change
Sales and service revenues$2,231 $2,027 $204 10.1 %$4,509 $4,290 $219 5.1 %
Operating income128 57 71 124.6 %275 272 1.1 %
  Operating margin %5.7 %2.8 %293 bps6.1 %6.3 %(24) bps
Segment operating income (loss)1
169 (5)174 3,480.0 %360 151 209 138.4 %
  Segment operating margin %1
7.6 %(0.2)%782 bps8.0 %3.5 %446 bps
Net earnings129 53 76 143.4 %277 225 52 23.1 %
Diluted earnings per share$3.20 $1.30 $1.90 146.2 %$6.87 $5.54 $1.33 24.0 %
Pension Adjusted Figures
Net earnings2
123 (20)143 715.0 %267 78 189 242.3 %
Diluted earnings per share2
$3.05 $(0.49)$3.54 722.4 %$6.62 $1.92 $4.70 244.8 %
1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.
2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. See Exhibit B for definition and reconciliation.

Segment Operating Results
Ingalls Shipbuilding
Three Months EndedSix Months Ended
June 30June 30
($ in millions)20212020$ Change% Change20212020$ Change% Change
Revenues$670 $622 $48 7.7 %$1,319 $1,251 $68 5.4 %
Segment operating income1
80 55 25 45.5 %171 123 48 39.0 %
Segment operating margin %1
11.9 %8.8 %310 bps13.0 %9.8 %313 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Ingalls Shipbuilding revenues for the second quarter of 2021 were $670 million, an increase of $48 million, or 7.7%, from the same period in 2020, primarily driven by higher revenues in the Arleigh Burke-class guided missile (DDG) program and amphibious assault ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. DDG program revenues increased due to higher volumes on Jack H. Lucas (DDG 125), Jeremiah Denton (DDG 129) and Ted Stevens (DDG 128), partially offset by lower volumes on USS Delbert D. Black (DDG 119) following its delivery and USS Fitzgerald (DDG 62) restoration and modernization following its redelivery. Amphibious assault ship revenues increased due to higher volumes on Pittsburgh (LPD 31), LHA 9 (unnamed) and Bougainville (LHA 8), partially offset by lower volume on Fort Lauderdale (LPD 28). Revenues on the NSC program decreased due to lower volumes on Stone (NSC 9) following its delivery and Calhoun (NSC 10).

Ingalls Shipbuilding segment operating income1 for the second quarter of 2021 was $80 million, an increase of $25 million from the same period last year. Segment operating margin1 in the second quarter of 2021 was 11.9%, compared to 8.8% in the same period last year. The increases were primarily driven by the recognition of a capital investment related incentive for the DDG program on Jack H. Lucas (DDG 125) and higher risk retirement on Bougainville (LHA 8), Richard M. McCool Jr. (LPD 29) and Fort Lauderdale (LPD 28), partially offset by lower risk retirement on USS Delbert D. Black (DDG 119) following its delivery.

1Non-GAAP measure. See Exhibit B for definition and reconciliation.









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 2 of 14





Key Ingalls Shipbuilding milestones for the quarter:
Launched the first Flight III Arleigh Burke-class guided missile destroyer Jack H. Lucas (DDG 125)
Christened guided missile destroyer Lenah Sutcliffe Higbee (DDG 123)
Began fabrication of National Security Cutter Friedman (NSC 11)
Awarded $107 million advance procurement contract for amphibious assault ship LHA 9 (unnamed)
Awarded a contract for planning yard services in support of in-service amphibious ships with a potential total value of $724 million


Newport News Shipbuilding
Three Months EndedSix Months Ended
June 30June 30
($ in millions)20212020$ Change% Change20212020$ Change% Change
Revenues$1,363 $1,122 $241 21.5 %$2,770 $2,463 $307 12.5 %
Segment operating income (loss)1
76 (69)145 210.1 %169 26 143 550.0 %
Segment operating margin %1
5.6 %(6.1)%1173 bps6.1 %1.1 %505 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Newport News Shipbuilding revenues for the second quarter of 2021 were $1.4 billion, an increase of $241 million, or 21.5%, from the same period in 2020, driven primarily by higher revenues in submarine and aircraft carrier construction. Submarine revenues increased primarily as a result of higher volumes on Block IV and Block V boats of the Virginia-class submarine program and the Columbia-class submarine program. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the refueling and complex overhaul (RCOH) of USS John C. Stennis (CVN 74) and Doris Miller (CVN 81), partially offset by lower volumes on the John F. Kennedy (CVN 79) and the RCOH of USS George Washington (CVN 73).

Newport News Shipbuilding segment operating income1 for the second quarter of 2021 was $76 million, compared to a segment operating loss1 of $69 million for the same period last year. Segment operating margin1 in the second quarter of 2021 was 5.6%, compared to (6.1)% in the same period last year. The increases were primarily due to impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.

Key Newport News Shipbuilding milestones for the quarter:
Arrival of USS John C. Stennis (CVN 74) to begin its RCOH
Began crew move aboard on USS George Washington (CVN 73) as it continues to progress through its RCOH, now approximately 90% complete
John F. Kennedy (CVN 79) is approximately 83% complete
















1Non-GAAP measure. See Exhibit B for definition and reconciliation.









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 3 of 14





Technical Solutions
Three Months EndedSix Months Ended
June 30June 30
($ in millions)20212020$ Change% Change20212020$ Change% Change
Revenues$237 $320 $(83)(25.9)%$496 $637 (141)(22.1)%
Segment operating income1
13 $44.4 %20 18 900.0 %
Segment operating margin %1
5.5 %2.8 %267 bps4.0 %0.3 %372 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Technical Solutions revenues for the second quarter of 2021 were $237 million, a decrease of $83 million from the same period in 2020, due to the divestiture of our oil and gas business and contribution of the San Diego Shipyard to a joint venture earlier this year, as well as lower volumes in Unmanned Systems, partially offset by higher volumes in Defense & Federal Solutions.

Technical Solutions segment operating income1 for the second quarter of 2021 was $13 million, compared to $9 million in the second quarter of 2020. Segment operating margin1 in the second quarter of 2021 was 5.5%, compared to 2.8% in the same period last year. The increases were primarily driven by higher equity income related to our ship repair joint venture with Titan, as well as improved performance at Defense & Federal Solutions and Nuclear & Environmental Services, partially offset by the lower volume in Unmanned Systems.

Key Technical Solutions milestones for the quarter:
Awarded a contract by the U.S. Navy for two REMUS 300 unmanned underwater vehicles (UUVs)
Awarded first international order for four REMUS 300 UUVs from the Royal New Zealand Navy
Announced the commercial release of the REMUS 300 UUV

About Huntington Ingalls Industries

Huntington Ingalls Industries is America’s largest military shipbuilding company and a provider of professional services to partners in government and industry. For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical Solutions division supports national security missions around the globe with unmanned systems, defense and federal solutions, and nuclear and environmental services. Headquartered in Newport News, Virginia, HII employs approximately 41,000 people operating both domestically and internationally. For more information, please visit www.huntingtoningalls.com.

Conference Call Information

Huntington Ingalls Industries 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.huntingtoningalls.com. A telephone replay of the conference call will be available from noon today through Thursday, Aug. 12 by calling toll-free (877) 344-7529 or (412) 317-0088 and using conference ID 10158203.










1Non-GAAP measure. See Exhibit B for definition and reconciliation.









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 4 of 14




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. Forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: 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 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, including the COVID-19 pandemic; our ability to complete the acquisition of Alion Science and Technology and integrate its operations into our business; 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 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.









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 5 of 14




Exhibit A: Financial Statements

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended
June 30
Six Months Ended
 June 30
(in millions, except per share amounts)2021202020212020
Sales and service revenues
Product sales$1,763 $1,420 $3,484 $3,044 
Service revenues468 607 1,025 1,246 
Sales and service revenues2,231 2,027 4,509 4,290 
Cost of sales and service revenues
Cost of product sales1,495 1,253 2,949 2,543 
Cost of service revenues414 510 896 1,060 
Income from operating investments, net12 20 13 
Other income and gains(2)— 1 — 
General and administrative expenses204 214 410 428 
Operating income128 57 275 272 
Other income (expense)
Interest expense(18)(25)(39)(41)
Non-operating retirement benefit44 30 90 60 
Other, net7 8 (10)
Earnings before income taxes161 65 334 281 
Federal and foreign income taxes32 12 57 56 
Net earnings$129 $53 $277 $225 
Basic earnings per share$3.20 $1.30 $6.87 $5.54 
Weighted-average common shares outstanding40.3 40.7 40.3 40.6 
Diluted earnings per share$3.20 $1.30 $6.87 $5.54 
Weighted-average diluted shares outstanding40.3 40.7 40.3 40.6 
Dividends declared per share$1.14 $1.03 $2.28 $2.06 
Net earnings from above$129 $53 $277 $225 
Other comprehensive income
Change in unamortized benefit plan costs30 23 59 46 
Other 2 (1)
Tax expense for items of other comprehensive income(8)(6)(15)(12)
Other comprehensive income , net of tax22 18 46 33 
Comprehensive income$151 $71 $323 $258 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 6 of 14




HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in millions)June 30,
2021
December 31,
2020
Assets
Current Assets
Cash and cash equivalents$348 $512 
Accounts receivable, net of allowance for doubtful accounts of $2 million as of 2021 and 2020443 397 
Contract assets1,182 1,049 
Inventoried costs, net139 137 
Income taxes receivable141 171 
Assets held for sale 133 
Prepaid expenses and other current assets64 45 
Total current assets2,317 2,444 
Property, Plant, and Equipment, net of accumulated depreciation of $2,075 million as of 2021 and $2,024 million as of 20203,004 2,978 
Other Assets
Operating lease assets208 192 
Goodwill1,604 1,617 
Other intangible assets, net of accumulated amortization of $681 million as of 2021 and $655 million as of 2020499 512 
Deferred tax assets86 133 
Miscellaneous other assets414 281 
Total other assets2,811 2,735 
Total assets$8,132 $8,157 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 7 of 14




HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (continued)

($ in millions)June 30,
2021
December 31,
2020
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable$349 $460 
Accrued employees’ compensation305 293 
Current portion of postretirement plan liabilities133 133 
Current portion of workers’ compensation liabilities229 225 
Contract liabilities660 585 
Liabilities held for sale 68 
Other current liabilities447 462 
Total current liabilities2,123 2,226 
Long-term debt1,689 1,686 
Pension plan liabilities853 960 
Other postretirement plan liabilities393 401 
Workers’ compensation liabilities519 511 
Long-term operating lease liabilities170 157 
Other long-term liabilities318 315 
Total liabilities6,065 6,256 
Commitments and Contingencies
Stockholders’ Equity
Common stock, $0.01 par value; 150 million shares authorized; 53.4 million shares issued and 40.2 million shares outstanding as of June 30, 2021, and 53.3 million shares issued and 40.5 million shares outstanding as of December 31, 20201 
Additional paid-in capital1,977 1,972 
Retained earnings3,718 3,533 
Treasury stock(2,128)(2,058)
Accumulated other comprehensive loss(1,501)(1,547)
Total stockholders’ equity2,067 1,901 
Total liabilities and stockholders’ equity$8,132 $8,157 



























Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 8 of 14




HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six Months Ended
 June 30
($ in millions)20212020
Operating Activities
Net earnings$277 $225 
Adjustments to reconcile to net cash provided by (used in) operating activities
Depreciation102 92 
Amortization of purchased intangibles26 26 
Amortization of debt issuance costs3 
Provision for doubtful accounts 
Stock-based compensation12 13 
Deferred income taxes31 21 
Loss (gain) on investments in marketable securities(12)
Change in
Accounts receivable(45)(167)
Contract assets(127)(63)
Inventoried costs(3)(13)
Prepaid expenses and other assets(29)(4)
Accounts payable and accruals(32)172 
Retiree benefits(70)(50)
Other non-cash transactions, net6 
Net cash provided by operating activities139 269 
Investing Activities
Capital expenditures
Capital expenditure additions
(134)(150)
Grant proceeds for capital expenditures
2 
Acquisitions of businesses, net of cash received (378)
Investment in affiliates(22)— 
Proceeds from disposition of business20 — 
Net cash used in investing activities(134)(519)

















Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 9 of 14




HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)

Six Months Ended
 June 30
($ in millions)20212020
Financing Activities
Proceeds from issuance of long-term debt 1,000 
Proceeds from revolving credit facility borrowings
 385 
Repayment of revolving credit facility borrowings (385)
Debt issuance costs (13)
Dividends paid(92)(84)
Repurchases of common stock(70)(84)
Employee taxes on certain share-based payment arrangements(7)(13)
Net cash provided by (used in) financing activities(169)806 
Change in cash and cash equivalents(164)556 
Cash and cash equivalents, beginning of period512 75 
Cash and cash equivalents, end of period$348 $631 
Supplemental Cash Flow Disclosure
Cash paid for income taxes (net of refunds)$21 $23 
Cash paid for interest$37 $32 
Non-Cash Investing and Financing Activities
Capital expenditures accrued in accounts payable$5 $


Exhibit B: Non-GAAP Measures Definitions & Reconciliations

We make reference to "segment operating income (loss)," "segment operating margin," "adjusted net earnings," "adjusted diluted earnings per share" 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.

Adjusted net earnings and adjusted diluted earnings per share are not measures recognized under GAAP. They should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. We believe these measures are useful to investors because they exclude items that do not reflect our core operating performance. They may not be comparable to similarly titled measures of other companies.

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, analysis of our results as reported under GAAP. 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









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 10 of 14




measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.

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 sales and service revenues.

Adjusted net earnings is defined as net earnings adjusted for the after-tax impact of the FAS/CAS Adjustment.

Adjusted diluted earnings per share is defined as adjusted net earnings divided by the weighted-average diluted common shares outstanding.

Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds.

FAS/CAS Adjustment is defined as the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP (FAS) and the expenses determined in accordance with U.S. Cost Accounting Standards (CAS).

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.





















Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 11 of 14




Reconciliations of Segment Operating Income (Loss) and Segment Operating Margin
Three Months EndedSix Months Ended
June 30June 30
($ in millions)2021202020212020
Ingalls revenues$670 $622 $1,319 $1,251 
Newport News revenues1,363 1,122 2,770 2,463 
Technical Solutions revenues237 320 496 637 
Intersegment eliminations(39)(37)(76)(61)
Sales and Service Revenues2,231 2,027 4,509 4,290 
Operating Income128 57 275 272 
Operating FAS/CAS Adjustment37 (63)77 (126)
Non-current state income taxes4 8 
Segment Operating Income (Loss)169 (5)360 151 
  As a percentage of sales and service revenues7.6 %(0.2)%8.0 %3.5 %
Ingalls segment operating income80 55 171 123 
  As a percentage of Ingalls revenues11.9 %8.8 %13.0 %9.8 %
Newport News segment operating income (loss)76 (69)169 26 
  As a percentage of Newport News revenues5.6 %(6.1)%6.1 %1.1 %
Technical Solutions segment operating income13 20 
  As a percentage of Technical Solutions revenues5.5 %2.8 %4.0 %0.3 %












Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 12 of 14




Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share
Three Months EndedSix Months Ended
June 30June 30
($ in millions, except per share amounts)2021202020212020
Net earnings$129 $53 $277 $225 
After-tax FAS/CAS Adjustment(1)
(6)(73)(10)(147)
Adjusted Net Earnings $123 $(20)$267 $78 
Diluted earnings per share$3.20 $1.30 $6.87 $5.54 
After-tax FAS/CAS Adjustment per share(1)
(0.15)(1.79)(0.25)(3.62)
Adjusted Diluted EPS**$3.05 $(0.49)$6.62 $1.92 
(1) FAS/CAS Adjustment$(7)$(93)$(13)$(186)
Tax effect*(1)(20)(3)(39)
After-tax impact(6)(73)$(10)$(147)
Weighted-average diluted shares outstanding40.3 40.7 40.3 40.6 
Per share impact after tax-impact**$(0.15)$(1.79)$(0.25)$(3.62)
*The income tax impact is calculated using the tax rate in effect for the relevant non-GAAP adjustment.
**Amounts may not recalculate exactly due to rounding.























Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 13 of 14




Reconciliation of Free Cash Flow
Six Months Ended
June 30
($ in millions)20212020
Net cash provided by operating activities$139 $269 
Less capital expenditures:
Capital expenditure additions (134)(150)
Grant proceeds for capital expenditures 2 
Free cash flow$7 $128 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 14 of 14


Q2 2021 Earnings Presentation August 5, 2021 Mike Petters President and Chief Executive Officer Chris Kastner Executive Vice President and Chief Operating Officer Tom Stiehle Executive Vice President and Chief Financial Officer Exhibit 99.2


 
HARD STUFF DONE RIGHT 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 actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: 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 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, including the COVID-19 pandemic; our ability to complete the acquisition of Alion Science and Technology and integrate its operations into our business; 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 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 presentation 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 99.2


 
HARD STUFF DONE RIGHT HII Q2 2021 Highlights  Revenues were ~$2.2 billion in the quarter  Diluted EPS was $3.20 in the quarter; Pension adjusted diluted EPS1 was $3.05  Total backlog at the end of the quarter was $47.7 billion  Ingalls Shipbuilding o Launched the first Flight III Arleigh Burke-class guided missile destroyer Jack H. Lucas (DDG 125) o Christened guided missile destroyer Lenah Sutcliffe Higbee (DDG 123) o Began fabrication of National Security Cutter Friedman (NSC 11) o Awarded $107 million advance procurement contract for amphibious assault ship LHA 9 o Awarded a contract for planning yard services in support of in-service amphibious ships with a potential total value of $724 million  Newport News Shipbuilding o USS John C. Stennis (CVN 74) arrived to begin its refueling and complex overhaul (RCOH) o Began crew move aboard on USS George Washington (CVN 73) as it continues to progress through its RCOH, now approximately 90% complete o John F. Kennedy (CVN 79) is approximately 83% complete  Technical Solutions o Awarded a contract by the U.S. Navy for two REMUS 300 unmanned underwater vehicles (UUVs) o Awarded first international order for four REMUS 300 UUVs from the Royal New Zealand Navy o Announced the commercial release of the REMUS 300 UUV Backlog ($B) 1Non-GAAP measure. See appendix for definition and reconciliation. Earnings Per Share $1.30 $3.20 $(0.49) $3.05 -$1.00 -$0.50 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Q2 2020 Q2 2021 Diluted EPS Pension Adjusted Diluted EPS1 $46.1 $47.7 $0 $10 $20 $30 $40 $50 Q2 2020 Q2 2021 Exhibit 99.2


 
HARD STUFF DONE RIGHT Acquisition of Alion Science & Technology 1Non-GAAP measure. See appendix for definition and other information.  Alion significantly expands HII’s ability to support U.S. Navy and DoD customers in their most critical national security missions  Enhanced high-end capabilities are complementary to existing HII work and provide critical mass in targeted markets  C5ISR, Military Training & Simulation, Next Generation Technology & Solutions  Broad customer and contract access with minimal overlap  Franchise positions with diverse customers  Significant value-creating revenue synergy opportunity  Immediately enhances Technical Solutions potential topline growth rate  Expected to be cash flow accretive in 2022  Expect ~$200M of incremental free cash flow1 2022-2024, net of financing impacts  Expected to be GAAP EPS neutral in 2022, accretive in 2023 C5ISR Military Training & Simulation Next Generation Technology Cyber, AI/ML, EW, Big Data, Analytics Exhibit 99.2


 
HARD STUFF DONE RIGHT Upcoming Program Milestones1  2021 o Ingalls  Launch DDG 125 (Jack H. Lucas)  Complete sea trials DDG 121 (Frank E. Petersen Jr.)  Complete sea trials LPD 28 (Fort Lauderdale) o Newport News  Pier-side system testing on CVN 73 (USS George Washington)  Re-deliver SSN 725 (USS Helena)  Deliver SSN 794 (Montana)  Float off SSN 796 (New Jersey)  Ship final module of SSN 797 (Iowa) 1All milestones based upon current expectations and subject to change based upon future events. List is alphabetical by program designation.  2022 o Ingalls  Deliver DDG 121 (Frank E. Petersen Jr.)  Complete sea trials and deliver DDG 123 (Lenah H. Sutcliffe Higbee)  Complete sea trials DDG 125 (Jack H. Lucas)  Deliver LPD 28 (Fort Lauderdale)  Launch LPD 29 (Richard M. McCool Jr.) o Newport News  Re-deliver CVN 73 (USS George Washington)  Deliver SSN 796 (New Jersey) Exhibit 99.2


 
HARD STUFF DONE RIGHT HII Q2 2021 Consolidated Results Consolidated Revenue ($M) Operating Income ($M) Operating Margin  Revenues improved YoY due primarily to growth at Newport News and Ingalls Shipbuilding, partially offset by a decline at Technical Solutions due to the divestiture of UPI and contribution of the San Diego Shipyard to a joint venture in the first quarter of 2021  Operating income improved YoY due primarily to impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period $2,027 $2,231 $0 $500 $1,000 $1,500 $2,000 $2,500 Q2 2020 Q2 2021 $57 $128 $0 $20 $40 $60 $80 $100 $120 $140 Q2 2020 Q2 2021 2.8% 5.7% 0.0% 2.0% 4.0% 6.0% Q2 2020 Q2 2021 Exhibit 99.2


 
HARD STUFF DONE RIGHT Capital Deployment Shareholder Distributions ($M) 1Non-GAAP measure. See appendix for definition and reconciliation. 2Excludes $1 million for share repurchases settled for cash for prior quarter. Cash Flow Generation ($M)  Cash balance of $348 million and liquidity of $1.6 billion at quarter-end  Net capital expenditures were 3.3% of revenues  Cash contributions to pension and other postretirement benefit plans were $12 million o No discretionary contributions to our qualified pension plans in Q2 2021  Distributed $66 million to shareholders in the quarter  Repurchased 95 thousand shares at a cost of $20 million2  Paid dividends of $46 million $201 $96 ($75) ($73) $126 $23 -$100 -$50 $0 $50 $100 $150 $200 $250 Q2 2020 Q2 2021 Cash from Operations CAPEX Free Cash Flow 1 $42 $46 $20 $0 $10 $20 $30 $40 $50 $60 $70 Q2 2020 Q2 2021 Dividends Share Repurchases (at cost) Total $42 Total $66 2 Exhibit 99.2


 
HARD STUFF DONE RIGHT Ingalls Shipbuilding Q2 2021 Results Revenues ($M) Segment Operating Income1 ($M) Segment Operating Margin1  Revenues improved YoY due primarily to growth on the DDG program and amphibious assault ships, partially offset by lower volumes on the NSC program  Segment operating income and segment operating margin improved YoY primarily due to a capital investment related incentive for the DDG program that was recognized on Jack H. Lucas (DDG 125) and higher risk retirement for Bougainville (LHA 8), Richard M. McCool Jr. (LPD 29) and Fort Lauderdale (LPD 28) $622 $670 $500 $520 $540 $560 $580 $600 $620 $640 $660 $680 Q2 2020 Q2 2021 $55 $80 $0 $20 $40 $60 $80 $100 Q2 2020 Q2 2021 8.8% 11.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Q2 2020 Q2 2021 1Non-GAAP measure. See appendix for definition and reconciliation. Exhibit 99.2


 
HARD STUFF DONE RIGHT Newport News Shipbuilding Q2 2021 Results Revenues ($M) Segment Operating Income1 ($M) Segment Operating Margin1  Revenues improved YoY due to growth in submarine and aircraft carrier construction  Segment operating income and segment operating margin improved YoY primarily due to impacts related to Virginia-class submarine program performance as well as COVID-19 in the prior year period $1,122 $1,363 $0 $500 $1,000 $1,500 Q2 2020 Q2 2021 ($69) $76 -$80 -$60 -$40 -$20 $0 $20 $40 $60 $80 $100 Q2 2020 Q2 2021 (6.1%) 5.6% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Q2 2020 Q2 2021 1Non-GAAP measure. See appendix for definition and reconciliation. Exhibit 99.2


 
HARD STUFF DONE RIGHT Technical Solutions Q2 2021 Results Revenues ($M) Segment Operating Income1 ($M) Segment Operating Margin1  Revenues declined YoY due primarily to the divestiture of our oil and gas business and the contribution of the San Diego Shipyard to a joint venture in the first quarter of 2021, as well as lower volumes in Unmanned Systems, partially offset by increased volumes in Defense & Federal Solutions  Segment operating income and segment operating margin improved YoY primarily due to higher equity income related to our ship repair joint venture with Titan, as well as improved performance at Defense & Federal Solutions and Nuclear & Environmental Services, partially offset by lower volume in Unmanned Systems $320 $237 $0 $50 $100 $150 $200 $250 $300 $350 Q2 2020 Q2 2021 $9 $13 $0 $2 $4 $6 $8 $10 $12 $14 Q2 2020 Q2 2021 2.8% 5.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Q2 2020 Q2 2021 1Non-GAAP measure. See appendix for definition and reconciliation. Exhibit 99.2


 
Appendix HUNTINGTON INGALLS INDUSTRIES PROPRIETARY Exhibit 99.2


 
HARD STUFF DONE RIGHT Non-GAAP Measures Definitions We make reference to “segment operating income (loss),” “segment operating margin,” “ pension adjusted diluted earnings per share,” “shipbuilding revenue,” “shipbuilding operating margin,” “Technical Solutions 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, Technical Solutions EBITDA margin and pension adjusted diluted earnings per share are not measures recognized under GAAP. They are measures that we use to evaluate our core operating performance. We believe that shipbuilding revenue, shipbuilding operating margin, Technical Solutions EBITDA margin and pension adjusted diluted earnings per share 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, analysis of our results as reported under GAAP. 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. Exhibit 99.2


 
HARD STUFF DONE RIGHT 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 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. Technical Solutions EBITDA margin is defined as Technical Solutions segment operating income before interest expense, income taxes, depreciation, and amortization as a percentage of Technical Solutions revenues. Pension adjusted diluted earnings per share is defined as diluted earnings per share excluding the impacts of the FAS/CAS adjustment. 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. Exhibit 99.2


 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Segment Operating Income (Loss) & Segment Operating Margin ($ in millions) 2021 2020 2021 2020 Ingalls revenues 670 622 1,319 1,251 Newport News revenues 1,363 1,122 2,770 2,463 Technical Solutions revenues 237 320 496 637 Intersegment eliminations (39) (37) (76) (61) Sales and Service Revenues 2,231 2,027 4,509 4,290 Operating Income 128 57 275 272 Operating FAS/CAS Adjustment 37 (63) 77 (126) Non-current state income taxes 4 1 8 5 Segment Operating Income (Loss) 169 (5) 360 151 As a percentage of sales and service revenues 7.6 % (0.2)% 8.0 % 3.5 % Ingalls segment operating income 80 55 171 123 As a percentage of Ingalls revenues 11.9 % 8.8 % 13.0 % 9.8 % Newport News segment operating income (loss) 76 (69) 169 26 As a percentage of Newport News revenues 5.6 % (6.1)% 6.1 % 1.1 % Technical Solutions segment operating income 13 9 20 2 As a percentage of Technical Solutions revenues 5.5 % 2.8 % 4.0 % 0.3 % Three Months Ended June 30 June 30 Six Months Ended Exhibit 99.2


 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Shipbuilding Revenues & Operating Margin ($ in millions) 2021 2020 2021 2020 Sales and service revenues 2,231 2,027 4,509 4,290 Technical Solutions (237) (320) (496) (637) Intersegment eliminations 39 37 76 61 Shipbuilding Revenues 2,033 1,744 4,089 3,714 Operating Income 128 57 275 272 Operating FAS/CAS Adjustment 37 (63) 77 (126) Non-current state income taxes 4 1 8 5 Segment Operating Income (Loss) 169 (5) 360 151 Technical Solutions (13) (9) (20) (2) Shipbuilding Operating Income (Loss) 156 (14) 340 149 As a percentage of Shipbuilding revenues 7.7 % (0.8)% 8.3 % 4.0 % Three Months Ended June 30 June 30 Six Months Ended Exhibit 99.2


 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Pension Adjusted Diluted Earnings per Share ($ in millions, except per share amounts) 2021 2020 2021 2020 Adjusted Net Earnings Net earnings 129 53 277 225 After-tax FAS/CAS adjustment(1) (6) (73) (10) (147) Pension Adjusted Net Earnings 123 (20) 267 78 Pension Adjusted Diluted EPS Diluted earnings per share $ 3.20 $ 1.30 $ 6.87 $ 5.54 After-tax FAS/CAS adjustment(1) $ (0.15) $ (1.79) $ (0.25) $ (3.62) Pension Adjusted Diluted EPS $ 3.05 $ (0.49) $ 6.62 $ 1.92 (1) FAS/CAS Adjustment (7) (93) (13) (186) Tax effect* (1) (20) (3) (39) After-tax effect (6) (73) (10) (147) Weighted-Average Diluted Shares Outstanding 40.3 40.7 40.3 40.6 Per share impact** $ (0.15) $ (1.79) $ (0.25) $ (3.62) **Amounts may not recalculate exactly due to rounding. Three Months Ended June 30 June 30 Six Months Ended *The income tax impact is calculated using the tax rate in effect for the relevant non-GAAP adjustment. Exhibit 99.2


 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Free Cash Flow ($ in millions) 2021 2020 2021 2020 Net cash provided by operating activities 96 201 139 269 Less capital expenditures: Capital expenditure additions (74) (79) (134) (150) Grant proceeds for capital expenditures 1 4 2 9 Free cash flow 23 126 7 128 Three Months Ended June 30 Six Months Ended June 30 Exhibit 99.2


 
HARD STUFF DONE RIGHT Exhibit 99.2


 


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