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Huntington Ingalls (HII) Q2 Earnings Beat, Revenues Rise Y/Y

Huntington Ingalls Industries, Inc.’s HII second-quarter 2022 earnings of $4.44 per share improved 38.8% from $3.20 reported in the prior-year quarter. The bottom line also beat the Zacks Consensus Estimate of $3.43 by 29.5%.

Total Revenues

Total revenues came in at $2,662 million, surpassing the Zacks Consensus Estimate of $2,640 million by 0.8%. The top line also improved 19.3% from $2,231 million in the year-ago quarter.

The year-over-year upside can be attributed to the acquisition of Alion Science and Technology (Alion) and growth at the Newport News Shipbuilding segment.

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 an operating income of $191 million compared with $128 million in the second quarter of 2021. The company’s operating margin was 7.2%, which expanded 150 basis points from the prior-year quarter’s figure. The improvement can be attributed to higher segment operating income, as well as more favorable non-current state income taxes and a more favorable operating FAS/CAS adjustment compared to the prior year.

Huntington Ingalls received orders worth $2 billion in the second quarter. As a result, the company’s total backlog reached $47.2 billion as of Jun 30, 2022.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,433 million in this segment, up 5.1% year over year due to higher revenues from aircraft carriers.

The segment reported operating earnings of $94 million in the quarter, which improved 18% year over year.

Ingalls Shipbuilding: Revenues in this segment totaled $658 million, down 1.8% year over year due to lower revenues from the Arleigh Burke-class guided missile destroyer program.

The segment’s operating income of $106 million improved 32.5% year over year.

Mission Technologies: Revenues in this segment totaled $600 million, up a solid 153.2% year over year, primarily driven by higher volumes from Defense & Federal Solutions (DFS) attributable to the acquisition of Alion.

Operating income improved 92.3% year over year to $25 million.

Financial Update

The company’s cash and cash equivalents at the end of second-quarter 2022 was $375 million, down from $627 million as of Dec 31, 2021.

Long-term debt at the end of second-quarter 2022 was $3,102 million compared with the 2021-end level of $3,298 million.

Cash outflow from operating activities during the first six months of 2022 was $184 million compared to cash flow of $139 million during the first six months of 2021.

Guidance

Huntington Ingalls tweaked its 2022 guidance. The company continues to expect 2022 shipbuilding revenues in the range of $8.2-$8.5 billion. For Mission Technologies, it now guides revenues in the range of $2.4-$2.6 billion, compared with the prior guidance of approximately $2.6 billion.

The company still projects free cash flow in the range of $300-$350 million.

Zacks Rank

Huntington Ingalls currently 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 Corporation LMT reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.

The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.

Hexcel Corporation HXL reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.

The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.

Leidos Holdings, Inc.’s LDOS second-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.55 by 2.6%. The bottom line also improved 4.6% from $1.52 per share registered a year ago.

The company generated total revenues of $3,597 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,514 million by 2.4%. The top line also improved 4.3% year over year.


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