On August 1, 2024, Huntington Ingalls Industries Inc (HII, Financial) released its 8-K filing for the second quarter of 2024, reporting record revenues and significant growth across all segments.
Company Overview
Huntington Ingalls Industries is the largest independent military shipbuilder in the U.S., spun off from Northrop Grumman in 2011. It operates three segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies. Ingalls produces non-nuclear-powered ships, while Newport News is the sole producer of Gerald Ford-class aircraft carriers and a major subcontractor on nuclear submarines. The Mission Technologies segment focuses on uncrewed sea vessels and IT services for U.S. government agencies.
Q2 2024 Financial Highlights
Huntington Ingalls Industries Inc (HII, Financial) reported second quarter 2024 revenues of $3.0 billion, up 6.8% from the second quarter of 2023. This growth was driven by increased volumes across all segments.
Operating income for the quarter was $189 million, a 21.2% increase from $156 million in the same period last year. The operating margin improved to 6.3% from 5.6% in Q2 2023. Segment operating income rose to $203 million, with a segment operating margin of 6.8%, compared to $169 million and 6.1%, respectively, in the prior year.
Net earnings for the quarter were $173 million, up from $130 million in Q2 2023. Diluted earnings per share were $4.38, surpassing the analyst estimate of $4.11. However, net cash used in operating activities was $9 million, and free cash flow was negative $99 million, compared to positive cash flow figures in the previous year.
Segment Performance
Ingalls Shipbuilding: Revenues for the second quarter were $712 million, a 7.2% increase from Q2 2023. However, segment operating income decreased by 13.8% to $56 million, with a segment operating margin of 7.9%, down from 9.8% last year. The decrease was primarily due to lower risk retirement on surface combatants.
Newport News Shipbuilding: Revenues increased by 1.7% to $1.5 billion, driven by higher volumes in the Columbia-class submarine program. Segment operating income rose by 16.8% to $111 million, with a segment operating margin of 7.2%, up from 6.3% in Q2 2023.
Mission Technologies: Revenues surged by 18.6% to $765 million, primarily due to higher volumes in C5ISR and cyber, electronic warfare & space. Segment operating income increased significantly to $36 million from $9 million in Q2 2023, with a segment operating margin of 4.7%, up from 1.4% last year.
Key Achievements and Challenges
During the quarter, Huntington Ingalls Industries Inc (HII, Financial) delivered the Virginia-class submarine New Jersey (SSN 796) and the amphibious transport dock Richard M. McCool Jr. (LPD 29). The company also announced strategic executive leadership appointments to advance AUKUS goals in Australia and secured several new contracts, including a $65 million award for specialized research and analysis.
Despite these achievements, the company faced challenges with negative free cash flow and lower performance in certain shipbuilding programs. However, the reaffirmation of shipbuilding guidance and the raised revenue guidance for Mission Technologies indicate a positive outlook for the remainder of the year.
Financial Metrics and Analysis
Key financial metrics for the quarter include:
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenues | $3.0 billion | $2.8 billion | 6.8% |
| Operating Income | $189 million | $156 million | 21.2% |
| Net Earnings | $173 million | $130 million | 33.1% |
| Diluted EPS | $4.38 | $3.27 | 33.9% |
These metrics highlight the company's strong performance and growth trajectory. The increase in revenues and operating income across all segments underscores the effectiveness of Huntington Ingalls Industries Inc (HII, Financial)'s strategic initiatives and operational efficiencies.
Conclusion
Huntington Ingalls Industries Inc (HII, Financial) has demonstrated robust growth and operational efficiency in the second quarter of 2024, surpassing analyst estimates and achieving record revenues. While challenges remain, the company's reaffirmed guidance and strategic milestones indicate a positive outlook for the future. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Huntington Ingalls Industries Inc for further details.
