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Huntington Ingalls Industries, Inc.’s (HII - Free Report) first-quarter 2023 earnings of $3.23 per share decreased 2.7% from the $2.99 reported in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $3.00 by 7.7%.
The year-over-year decline in earnings can be attributed to unfavorable non-operating retirement benefits in the current quarter.
Total Revenues
Total revenues came in at $2,674 million, beating the Zacks Consensus Estimate of $2,599.7 million by 2.9%. The top line increased 3.8% from $2,576 million in the year-ago quarter.
Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise
Huntington Ingalls reported an operating income of $141 million compared with $138 million in the first quarter of 2022. The company’s operating margin contracted 10 basis points from the prior-year quarter’s figure to 5.3%.
The increase in the operating income was primarily driven by favorable changes to the operating FAS/CAS adjustment and non-current state income taxes compared to the prior year.
Huntington Ingalls received orders worth $2.6 billion in the first quarter. As a result, the company’s total backlog reached $47 billion as of Mar 31, 2023.
Segmental Performance
Newport News Shipbuilding: Revenues totaled $1,506 million in this segment, up 8.3% year over year due to higher revenues from aircraft carriers and submarines.
The segment reported operating earnings of $84 million in the quarter, which improved 3.7% year over year. The increase was primarily due to higher sales volume across all programs.
Ingalls Shipbuilding: Revenues in this segment totaled $577 million, down 8.6% year over year, primarily driven by lower revenues in amphibious assault ships and the Legend-class National Security Cutter program. The segment’s operating income of $55 million decreased 36% year over year. The decline was primarily driven by lower-risk retirement on USS Fort Lauderdale.
Mission Technologies: Revenues in this segment totaled $624 million, up 5.8% year over year. The upside was primarily driven by higher volumes in Mission Based Solutions.
The operating income improved 88.9% year over year to $17 million. The increase in the segment operating income was driven by the improved performance in Mission Based Solutions and Unmanned Systems and higher equity income from Nuclear and Environmental joint ventures.
Financial Update
The company’s cash and cash equivalents as of Mar 31, 2023 were $318 million, down from $467 million as of Dec 31, 2022.
The long-term debt as of Mar 31, 2023 was $2,498 million compared with the 2022-end level of $2,506 million. The cash outflow from operating activities for the three months ended Mar 31, 2023 was $9 million compared with $83 million in the prior-year period.
Guidance
Huntington Ingalls reaffirmed its 2023 guidance. The company expects 2023 shipbuilding revenues in the range of $8.4-$8.6 billion.
For Mission Technologies, HII expects revenues of approximately $2.5 billion. The company expects free cash flow in the band of $400-$450 million in 2023.
It expects 2023 free cash flow in the range of $400-$450 million.
Hexcel Corporation (HXL - Free Report) reported first-quarter 2023 adjusted earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 39 cents by 28.2%. The bottom line improved massively from the year-ago earnings of 22 cents per share, highlighting solid growth of 127.3%.
In the first quarter, net sales totaled $458 million, which beat the Zacks Consensus Estimate of $428 million by 6.8%. Also, the top line witnessed an improvement of 17.2% from the year-ago quarter’s $391 million.
Lockheed Martin Corporation (LMT - Free Report) reported first-quarter 2023 adjusted earnings of $6.43 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 5.9%. However, the bottom line was in line with the year-ago quarter's figure.
Net sales amounted to $15.13 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $14.87 billion by 1.9%. The top line rose 1.1% from $14.96 billion in the year-ago quarter.
Northrop Grumman Corporation (NOC - Free Report) reported first-quarter 2023 earnings of $5.50 per share, which beat the Zacks Consensus Estimate of $5.16 by 6.6%. However, the bottom line decreased 10% from the $6.10 per share recorded in the year-ago quarter.
NOC’s total sales of $9.30 billion beat the Zacks Consensus Estimate of $9.20 billion by 1.1%. The top line also increased 6% from $8.80 billion in the year-ago quarter.
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Huntington Ingalls (HII) Q1 Earnings Beat, Revenues Rise Y/Y
Huntington Ingalls Industries, Inc.’s (HII - Free Report) first-quarter 2023 earnings of $3.23 per share decreased 2.7% from the $2.99 reported in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $3.00 by 7.7%.
The year-over-year decline in earnings can be attributed to unfavorable non-operating retirement benefits in the current quarter.
Total Revenues
Total revenues came in at $2,674 million, beating the Zacks Consensus Estimate of $2,599.7 million by 2.9%. The top line increased 3.8% from $2,576 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 an operating income of $141 million compared with $138 million in the first quarter of 2022. The company’s operating margin contracted 10 basis points from the prior-year quarter’s figure to 5.3%.
The increase in the operating income was primarily driven by favorable changes to the operating FAS/CAS adjustment and non-current state income taxes compared to the prior year.
Huntington Ingalls received orders worth $2.6 billion in the first quarter. As a result, the company’s total backlog reached $47 billion as of Mar 31, 2023.
Segmental Performance
Newport News Shipbuilding: Revenues totaled $1,506 million in this segment, up 8.3% year over year due to higher revenues from aircraft carriers and submarines.
The segment reported operating earnings of $84 million in the quarter, which improved 3.7% year over year. The increase was primarily due to higher sales volume across all programs.
Ingalls Shipbuilding: Revenues in this segment totaled $577 million, down 8.6% year over year, primarily driven by lower revenues in amphibious assault ships and the Legend-class National Security Cutter program. The segment’s operating income of $55 million decreased 36% year over year. The decline was primarily driven by lower-risk retirement on USS Fort Lauderdale.
Mission Technologies: Revenues in this segment totaled $624 million, up 5.8% year over year. The upside was primarily driven by higher volumes in Mission Based Solutions.
The operating income improved 88.9% year over year to $17 million. The increase in the segment operating income was driven by the improved performance in Mission Based Solutions and Unmanned Systems and higher equity income from Nuclear and Environmental joint ventures.
Financial Update
The company’s cash and cash equivalents as of Mar 31, 2023 were $318 million, down from $467 million as of Dec 31, 2022.
The long-term debt as of Mar 31, 2023 was $2,498 million compared with the 2022-end level of $2,506 million. The cash outflow from operating activities for the three months ended Mar 31, 2023 was $9 million compared with $83 million in the prior-year period.
Guidance
Huntington Ingalls reaffirmed its 2023 guidance. The company expects 2023 shipbuilding revenues in the range of $8.4-$8.6 billion.
For Mission Technologies, HII expects revenues of approximately $2.5 billion. The company expects free cash flow in the band of $400-$450 million in 2023.
It expects 2023 free cash flow in the range of $400-$450 million.
Zacks Rank
Huntington Ingalls currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Defense Releases
Hexcel Corporation (HXL - Free Report) reported first-quarter 2023 adjusted earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 39 cents by 28.2%. The bottom line improved massively from the year-ago earnings of 22 cents per share, highlighting solid growth of 127.3%.
In the first quarter, net sales totaled $458 million, which beat the Zacks Consensus Estimate of $428 million by 6.8%. Also, the top line witnessed an improvement of 17.2% from the year-ago quarter’s $391 million.
Lockheed Martin Corporation (LMT - Free Report) reported first-quarter 2023 adjusted earnings of $6.43 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 5.9%. However, the bottom line was in line with the year-ago quarter's figure.
Net sales amounted to $15.13 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $14.87 billion by 1.9%. The top line rose 1.1% from $14.96 billion in the year-ago quarter.
Northrop Grumman Corporation (NOC - Free Report) reported first-quarter 2023 earnings of $5.50 per share, which beat the Zacks Consensus Estimate of $5.16 by 6.6%. However, the bottom line decreased 10% from the $6.10 per share recorded in the year-ago quarter.
NOC’s total sales of $9.30 billion beat the Zacks Consensus Estimate of $9.20 billion by 1.1%. The top line also increased 6% from $8.80 billion in the year-ago quarter.