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Huntington Ingalls Q3 Earnings Miss Estimates, Revenues Decline Y/Y
Huntington Ingalls Industries, Inc.’s HII third-quarter 2024 earnings of $2.56 per share declined 30.8% from $3.70 reported in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of $3.84 by 33.3%.
The year-over-year decline can be attributed to poor sales as well as operating income delivered by HII in the third quarter.
Total Revenues
Revenues for the quarter totaled $2.75 billion, which missed the Zacks Consensus Estimate of $2.88 billion by 4.5%. The top line also declined 2.4% from $2.82 billion recorded in the year-ago quarter due to lower sales volume from its Ingalls and Newport News business segments.
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 segment operating income of $97 million compared with $187 million in the third quarter of 2023. The metric expanded 310 basis points from the prior-year figure to 3.5%. The deterioration in operating income was primarily due to dismal performance at Newport News Shipbuilding unit, which included a net unfavorable cumulative adjustment of $78 million, as well as lower performance at Ingalls Shipbuilding unit.
HII received orders worth $3.6 billion in the reported quarter. As a result, its total backlog reached $49.4 billion as of Sept. 30, 2024, compared with $48.5 billion as of June 30, 2024.
Segmental Performance
Newport News Shipbuilding: Revenues totaled $1.41 billion in this segment, down 2.8% year over year. The deterioration was on account of lower volumes from naval nuclear support services and unfavorable cumulative adjustments on the Virginia-class submarine program and aircraft carriers.
The segment reported operating earnings of $15 million, down 83.3% year over year. This was due to poor performance from the Virginia-class submarine program and aircraft carriers. Unfavorable cumulative adjustment, including $34 million on Block IV of the Virginia-class submarine program, also affected this unit’s operating earnings.
Ingalls Shipbuilding: Revenues in this segment totaled $664 million, down 6.6% year over year, primarily due to lower volumes in amphibious assault ships and the Legend-class National Security Cutter program.
The segment’s operating income of $49 million dropped 32.9% year over year due to lower performance from amphibious assault ships and surface combatants.
Mission Technologies: Revenues in this segment totaled $709 million, up 3.5% year over year. The upside was primarily driven by higher volumes from cyber, electronic warfare and space programs.
The operating income soared 37.5% year over year to $33 million, driven by higher volumes and improved equity income from nuclear and environmental joint ventures.
Financial Update
The company’s cash and cash equivalents as of Sept. 30, 2024, totaled $10 million, significantly down from $430 million recorded as of Dec. 31, 2023.
The long-term debt as of Sept. 30, 2024, totaled $1.71 billion compared with the 2023-end level of $2.21 billion.
The cash flow from operating activities amounted to $2 million compared with $408 million a year ago.
HII generated a free cash outflow worth $273 million in the first nine months of 2024 against a free cash inflow of $258 million in the prior-year period.
Guidance
Huntington Ingalls updated its 2024 guidance. The company now expects its 2024 shipbuilding revenues to be approximately $8.8 billion compared with the prior guidance of $8.8-$9.1 billion.
For Mission Technologies, HII now expects revenues to be in the range of $2.80-$2.85 billion, up from the prior guidance of $2.75-$2.80 billion.
The company now expects free cash flow to be in the band of $0-$100 million for 2024 compared with the previous projection of $600-$700 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.
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