Huntington Ingalls (HII) Q3 Earnings Beat, Revenues Rise Y/Y
Huntington Ingalls Industries, Inc.’s HII third-quarter 2023 earnings of $3.70 per share increased 7.6% from the $3.44 reported in the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of $3.39 by 9.1%.
Total Revenues
Total revenues came in at $2,816 million, beating the Zacks Consensus Estimate of $2,728.5 million by 3.2%. The top line increased 7.2% from $2,626 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 segment operating income of $187 million compared with $166 million in the third quarter of 2022. The company’s operating margin expanded 30 basis points from the prior-year quarter’s figure to 6.3%.
The increase in the operating income was primarily driven by higher segment operating income, favorable changes to the operating FAS/CAS adjustment and favorable non-current state income taxes.
Huntington Ingalls received orders worth $5.4 billion in the third quarter. As a result, the company’s total backlog reached $49 billion as of Sep 30, 2023.
Segmental Performance
Newport News Shipbuilding: Revenues totaled $1,453 million in this segment, up 0.6% year over year due to higher volumes in aircraft carrier construction.
The segment reported operating earnings of $90 million in the quarter, which decreased 11.8% year over year.
Ingalls Shipbuilding: Revenues in this segment totaled $711 million, up 14.1% year over year, primarily driven by higher volumes in amphibious assault ships and surface combatants. The segment’s operating income of $73 million increased 46% year over year.
Mission Technologies: Revenues in this segment totaled $685 million, up 15.1% year over year. The upside was primarily driven by higher volumes in mission-based solutions, driven by growth in C5ISR and cyber, electronic warfare and space programs.
The operating income soared 71.4% year over year to $24 million. The increase in the segment operating income was driven by higher volumes in mission-based solutions and improved performance in unmanned systems.
Financial Update
The company’s cash and cash equivalents as of Sep 30, 2023 were $109 million, down from $467 million as of Dec 31, 2022.
The long-term debt as of Sep 30, 2023 was $2,213 million compared with the 2022-end level of $2,506 million. The cash outflow from operating activities for the nine months ended Sep 30, 2023 was $408 million compared with $165 million in the prior-year period.
Guidance
Huntington Ingalls updated its 2023 guidance. The company now expects 2023 shipbuilding revenues in the range of $8.5-$8.6 billion, up from the prior guidance in the range of $8.4-$8.6 billion.
For Mission Technologies, HII now expects revenues of approximately $2.55 billion, up from the prior expectation of $2.5 billion. The company expects free cash flow in the band of $400-$450 million in 2023.
Huntington Ingalls increased the 2023 free cash flow expectation from the $400-$450 million range to nearly $500 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
Hexcel Corporation HXL reported third-quarter 2023 adjusted earnings of 38 cents per share, which missed the Zacks Consensus Estimate of 42 cents by 9.5%. However, the bottom line improved 15.2% from the year-ago earnings of 33 cents per share.
In the third quarter, net sales totaled $420 million, which missed the Zacks Consensus Estimate of $431 million by 2.6%. However, the top line witnessed an improvement of 15% from the year-ago quarter’s $365 million.
Lockheed Martin Corporation LMT reported third-quarter 2023 adjusted earnings of $6.77 per share, which beat the Zacks Consensus Estimate of $6.66 by 1.7%. However, the bottom line deteriorated 1.5% from the year-ago quarter's recorded figure.
Net sales were $16.88 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $16.66 billion by 1.3%. The top line rose 1.8% from $16.58 billion reported in the year-ago quarter.
AAR Corp. AIR reported first-quarter fiscal 2024 adjusted earnings of 78 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents by 6.9%. Earnings surged 27.9% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $549.7 million. The reported figure surpassed the Zacks Consensus Estimate by 8.7% and increased 23.2% from $446.3 million recorded in the year-ago quarter.
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