Huntington Ingalls Industries (HII) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 2.4% year-over-year to $2.75 billion, with EPS of $2.56 and net earnings of $101 million, both down from Q3 2023, mainly due to shipbuilding challenges and contract timing.

• Operating income fell 52% to $82 million, primarily from unfavorable adjustments at Newport News and lower performance at Ingalls.

• Major contract wins in Mission Technologies, including a $6.7 billion Air Force contract and a $3 billion federal task order, contributed to a record $11 billion in Q3 awards and a backlog of $49.4 billion.

• Delays in submarine contract awards, labor inefficiency, and supply chain issues impacted profitability and cash flow.

Financial highlights

• Q3 2024 consolidated revenue was $2.75 billion, down from $2.82 billion in Q3 2023; operating income was $82 million (3.0% margin), down from $172 million (6.1%).

• Net earnings were $101 million, with diluted EPS of $2.56, both down from Q3 2023.

• Free cash flow for Q3 2024 was $14 million, a significant decrease from $136 million in Q3 2023.

• Backlog reached $49.4 billion as of September 30, 2024.

Outlook and guidance

• FY24 shipbuilding revenue guidance set at ~$8.8 billion, with operating margin at 5.0%-6.0%.

• Mission Technologies revenue guidance raised to $2.8–$2.85 billion, with operating margin at 3.0%-3.75%.

• FY24 free cash flow guidance reduced to $0–$100 million; five-year free cash flow outlook withdrawn.

• Capital expenditures for 2024 expected at 3.4% of sales.