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Huntington Ingalls (HII) Q1 Earnings Beat, Revenues Rise Y/Y

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Huntington Ingalls Industries, Inc.’s HII first-quarter 2021 adjusted earnings of $3.56 per share surpassed the Zacks Consensus Estimate of $2.52 by 41.3%. However, the bottom line deteriorated 15.8% from $4.23 reported in the prior-year quarter.

The company reported GAAP earnings of $3.56 per share compared with $4.23 recorded in the first quarter of 2020.

Total Revenues

Total revenues came in at $2,278 million, exceeding the Zacks Consensus Estimate of $2,220 million by 2.6%. The top line inched up 0.7% from $2,263 million in the year-ago quarter. The increase was driven by growth in both Newport News and Ingalls Shipbuilding divisions.

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise
Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise

Huntington Ingalls Industries, Inc. price-consensus-eps-surprise-chart | Huntington Ingalls Industries, Inc. Quote

Operational Performance

Huntington Ingalls reported total operating income of $147 million compared with $215 million in the first quarter of 2020. The company’s operating margin came in at 6.5%, down 300 basis points (bps) from the prior-year quarter.

Huntington Ingalls received orders worth $5.3 billion during the first quarter. As a result, the company’s total backlog reached $48.3 billion as of Mar 31, 2021.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,407 million in this segment, up 4.9% year over year on account of higher revenues in aircraft carriers, naval nuclear support services, and submarines.

Meanwhile, the segment reported operating earnings of $93 million in the quarter, which declined 2.1% year over year. The segment’s operating margin contracted 47 bps to 6.6%.

Ingalls Shipbuilding: Revenues in this segment totaled $649 million, up 3.2% year over year, driven by higher revenues in the Arleigh Burke-class DDG program.

Also, operating income improved 33.8% year over year to $91 million. Operating margin expanded 321 bps to 14%.

Technical Solutions: Revenues in this segment totaled $259 million, down 18.3% year over year on account of the divestitures of its oil and gas business and the San Diego Shipyard, as well as lower volumes in Defense & Federal Solutions.

However, operating income improved to $7 million against operating expenses of $7 million incurred in first-quarter 2020. The unit’s operating margin improved to 2.7%.

Financial Update

Cash and cash equivalents as of Mar 31, 2021 were $407 million, down from $512 million as of Dec 31, 2020.

Long-term debt as of Mar 31, 2021 was $1,688 million compared with the 2020-end level of $1,686 million.

Cash from operating activities at the end of first quarter grossed $43 million, down from $68 million at the end of first-quarter 2019.

2021 Outlook

The company currently continues to expect to generate revenues worth $8.2-$8.4 billion from its Shipbuilding business in 2021 and approximately $1 billion from technical solutions.

Huntington Ingalls still projects to generate free cash flow in the range of $150-$250 million.

Zacks Rank

Huntington Ingalls carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. LMT reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%.

Hexcel Corporation HXL reported first-quarter 2021 loss of 10 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corporation’s RTX first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%.

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