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Huntington Ingalls (HII) Q2 Earnings Miss, Revenues Drop Y/Y

Zacks Equity Research

Huntington Ingalls Industries, Inc.’s HII second-quarter 2020 earnings of $1.30 per share missed the Zacks Consensus Estimate of $4.16 by 69%. Moreover, the bottom line declined 57.8% from $3.07 reported in the prior-year quarter.

Total Revenues

Total revenues came in at $2.03 billion, lagging the Zacks Consensus Estimate of $2.14 billion by 5.3%. The top line also declined 7.4% from $2.19 billion in the year-ago quarter. The decrease was primarily due to revenue loss at the Newport News and Technical Solutions 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 incurred total operating loss of $5 million against operating income of $138 million in the second quarter of 2019.

Huntington Ingalls received orders worth $2.9 billion during the second quarter. As a result, the company’s total backlog reached $46.1 billion as of Jun 30, 2020.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,122 million at this segment, down 12.3% year over year, on account of lower revenues from aircraft carriers and submarine construction.

Meanwhile, the segment incurred operating loss of $69 million against operating income of $71 million in the year-ago quarter. This downside was due to unfavorable cumulative catch-up adjustments on Block IV boats of the Virginia-class submarine program as well as the impact of discrete COVID-19 delay and disruption.

Ingalls Shipbuilding: Revenues at this segment remained flat at $622 million, as higher revenues from the Legend-class National Security Cutter (NSC) program, the San Antonio-class LPD program and the America-class LHA program were offset by lower revenues from the Arleigh Burke-class DDG program.

Also, operating income declined 20.3% to $55 million, while operating margin contracted 225 basis points(bps) to 8.8%. These decreases were on account of unfavorable adjustments, including delay and disruption from COVID-19 and lower risk retirement on the Legend-class NSC program.

Technical Solutions: Revenues at this segment slipped 0.3% to $320 million on account of lower mission driven innovative solutions (MDIS), fleet support and nuclear and environmental services revenues.

The segment’s operating income was $9 million against operating loss of $2 millionin second-quarter 2019.

Financial Update

Cash and cash equivalents as of Jun 30, 2020 were $631 million, significantly up from $75 million as of Dec 31, 2019.

Long-term debt, as of Jun 30, 2020, was $2,276 million compared with the 2019-end level of $1,286 million.

Cash from operating activities, at the end of second-quarter 2020, grossed $269 million against cash used worth $33 million at the end of second-quarter 2019.

Zacks Rank

Huntington Ingalls carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Defense Releases

Teledyne Technologies TDY reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%.

Hexcel Corporation HXL reported second-quarter 2020 adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 20 cents by 60%.

Lockheed Martin LMT reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

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