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Huntington Ingalls (HII) Q1 Earnings Beat, Revenues Rise Y/Y

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Huntington Ingalls Industries, Inc.’s (HII - Free Report) first-quarter 2021 adjusted earnings of $3.56 per share surpassed the Zacks Consensus Estimate of $2.52 by 41.3%. However, the bottom line deteriorated 15.8% from $4.23 reported in the prior-year quarter.

The company reported GAAP earnings of $3.56 per share compared with $4.23 recorded in the first quarter of 2020.

Total Revenues

Total revenues came in at $2,278 million, exceeding the Zacks Consensus Estimate of $2,220 million by 2.6%. The top line inched up 0.7% from $2,263 million in the year-ago quarter. The increase was driven by growth in both Newport News and Ingalls Shipbuilding divisions.

 

Operational Performance

Huntington Ingalls reported total operating income of $147 million compared with $215 million in the first quarter of 2020. The company’s operating margin came in at 6.5%, down 300 basis points (bps) from the prior-year quarter.

Huntington Ingalls received orders worth $5.3 billion during the first quarter. As a result, the company’s total backlog reached $48.3 billion as of Mar 31, 2021.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,407 million in this segment, up 4.9% year over year on account of higher revenues in aircraft carriers, naval nuclear support services, and submarines.

Meanwhile, the segment reported operating earnings of $93 million in the quarter, which declined 2.1% year over year. The segment’s operating margin contracted 47 bps to 6.6%.

Ingalls Shipbuilding: Revenues in this segment totaled $649 million, up 3.2% year over year, driven by higher revenues in the Arleigh Burke-class DDG program.

Also, operating income improved 33.8% year over year to $91 million. Operating margin expanded 321 bps to 14%.

Technical Solutions: Revenues in this segment totaled $259 million, down 18.3% year over year on account of  the divestitures of its oil and gas business and the San Diego Shipyard, as well as lower volumes in Defense & Federal Solutions.

However, operating income improved to $7 million against operating expenses of $7 million incurred in first-quarter 2020. The unit’s operating margin improved to 2.7%.

Financial Update

Cash and cash equivalents as of Mar 31, 2021 were $407 million, down from $512 million as of Dec 31, 2020.

Long-term debt as of Mar 31, 2021 was $1,688 million compared with the 2020-end level of $1,686 million.

Cash from operating activities at the end of first quarter grossed $43 million, down from $68 million at the end of first-quarter 2019.

2021 Outlook

The company currently continues to expect to generate revenues worth $8.2-$8.4 billion from its Shipbuilding business in 2021 and approximately $1 billion from technical solutions.

Huntington Ingalls still projects to generate free cash flow in the range of $150-$250 million.

Zacks Rank

Huntington Ingalls 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

Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%.

Hexcel Corporation (HXL - Free Report) reported first-quarter 2021 loss of 10 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corporation’s (RTX - Free Report) first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%.

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