Huntington Ingalls (HII) Q2 Earnings Beat, Revenues Rise Y/Y
Huntington Ingalls Industries, Inc.’s HII second-quarter 2023 earnings of $3.27 per share decreased 26.4% from the $4.44 reported in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $3.13 by 4.5%.
Total Revenues
Total revenues came in at $2,787 million, beating the Zacks Consensus Estimate of $2,725.2 million by 2.3%. The top line increased 4.7% from $2,662 million in the year-ago quarter.
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 $156 million compared with $191 million in the second quarter of 2022. The company’s operating margin contracted 160 basis points from the prior-year quarter’s figure to 7.2%.
The decrease in the operating income was primarily driven by lower segment operating income.
Huntington Ingalls received orders worth $2.6 billion in the second quarter. As a result, the company’s total backlog reached $46.9 billion as of Jun 30, 2023.
Segmental Performance
Newport News Shipbuilding: Revenues totaled $1,509 million in this segment, up 5.3% year over year due to higher revenues from aircraft carriers and submarines.
The segment reported operating earnings of $95 million in the quarter, which improved 1.1% year over year.
Ingalls Shipbuilding: Revenues in this segment totaled $664 million, up 0.9% year over year, primarily driven by higher revenues in surface combatants. The segment’s operating income of $65 million decreased 38.7% year over year. The decline 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).
Mission Technologies: Revenues in this segment totaled $645 million, up 7.5% year over year. The upside was primarily driven by higher volumes in Mission Based Solutions.
The operating income declined 64% year over year to $9 million. The decrease in the segment operating income was driven by lower equity earnings compared with the second quarter of 2022.
Financial Update
The company’s cash and cash equivalents as of Jun 30, 2023 were $313 million, down from $467 million as of Dec 31, 2022.
The long-term debt as of Jun 30, 2023 was $2,396 million compared with the 2022-end level of $2,506 million. The cash outflow from operating activities for the six months ended Jun 30, 2023 was $73 million compared with $184 million in the prior-year period.
Guidance
Huntington Ingalls reaffirmed its 2023 guidance. The company expects 2023 shipbuilding revenues in the range of $8.4-$8.6 billion.
For Mission Technologies, HII expects revenues of approximately $2.5 billion. The company expects free cash flow in the band of $400-$450 million in 2023.
It expects 2023 free cash flow in the range of $400-$450 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
Leidos Holdings, Inc.’s LDOS second-quarter 2023 adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.55 by 16.1%. The bottom line also increased 13.2% from $1.59 per share registered a year ago.
Leidos Holdings generated total revenues of $3,810 million in the reported quarter, exceeding the Zacks Consensus Estimate of $3,725.7 million by 2.3%. The top line also improved 6% year over year, driven by increased demand across all customer segments, especially for digital modernization, hypersonics and medical examination solutions.
Lockheed Martin LMT reported second-quarter 2023 adjusted earnings of $6.73 per share, which surpassed the Zacks Consensus Estimate of $6.43 by 4.7%. The bottom line also improved 6.5% from the year-ago quarter's figure.
Net sales amounted to $16.69 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $15.86 billion by 5.3%. The top line rose 8.1% from $15.45 billion in the year-ago quarter.
AAR Corp. AIR reported fourth-quarter fiscal 2023 adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 77 cents by 7.8%. Earnings surged 15% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $553.3 million. The reported figure surpassed the Zacks Consensus Estimate by 4.5% and increased 16.5% from the $474.9 million recorded in the year-ago quarter.
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