Huntington Ingalls Industries (HII) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $3.0 billion, up 6.8% year-over-year, with diluted EPS of $4.38, up from $3.27 in Q2 2023, and net earnings rising 33.1% to $173 million.

• Growth was driven by strong performance across all segments, especially Mission Technologies, Ingalls, and Newport News.

• Backlog reached $48.5 billion as of June 30, 2024, supporting long-term revenue visibility.

• Delivered Virginia-class submarine New Jersey (SSN 796) and LPD-29 Richard M. McCool Jr.; posted seventh consecutive quarter of record revenue in Mission Technologies.

• Strong alignment with U.S. national security strategy and bipartisan Congressional support for defense appropriations.

Financial highlights

• Operating income rose 21.2% year-over-year to $189 million, with operating margin improving to 6.3% from 5.6%.

• Net earnings for Q2 2024 were $173 million, up from $130 million in Q2 2023; diluted EPS was $4.38, up from $3.27.

• Free cash flow was negative $99 million for Q2 2024, consistent with prior guidance and down from positive $14 million in Q2 2023.

• Paid $51 million in dividends and repurchased $65 million in shares during Q2 2024; first half dividends totaled $102 million and share repurchases $128 million.

• Cash balance stood at $11 million, with liquidity of ~$1.1 billion at quarter end.

Outlook and guidance

• FY24 shipbuilding revenue guidance reaffirmed at $8.8B–$9.1B, with operating margin expected at 7.6%–7.8%.

• Mission Technologies revenue guidance raised to $2.75B–$2.8B, with segment operating margin expected at 3.0%–3.5%.

• Free cash flow outlook for 2024 remains $600–$700 million; five-year free cash flow outlook reiterated at $3.6 billion.

• Q3 2024 shipbuilding revenue expected at ~$2.2B with operating margin of ~7.8%; Mission Technologies Q3 revenue expected at $650 million with 2.5% margin.

• Approximately 22% of the $48.5 billion backlog is expected to convert to sales in 2024.