Huntington Ingalls Industries ((HII)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Huntington Ingalls Industries (HII) presented a mixed sentiment, reflecting both optimism and challenges. While the company celebrated positive strides in operational initiatives and strategic contract wins, it also faced hurdles such as revenue decline, shipbuilding delays, and negative free cash flow.
Operational Initiatives Progress
HII has made significant progress in its operational initiatives, particularly in improving shipbuilding throughput by 20% year-over-year. Ingalls Shipbuilding is largely on track, but Newport News is slightly behind schedule due to atypical weather conditions and equipment delays.
Strategic Contract Wins
The company secured a significant agreement on the Block V FY 2024 II Built contract and is actively pursuing future contracts like Block VI and Columbia Build II. Additionally, HII announced a promising partnership with HD Hyundai Heavy Industries to explore potential collaborations in shipbuilding.
First Quarter Revenue
HII reported a first-quarter revenue of $2.7 billion, with earnings per share standing at $3.79. The company ended the quarter with a robust backlog of $48 billion, of which $28 billion is funded, indicating a strong pipeline of future work.
Mission Technologies Achievements
The Mission Technologies division achieved notable milestones, including the delivery of Lionfish small uncrewed undersea vehicles to the U.S. Navy and being selected to develop a laser counter-drone system for the U.S. Army. The division also surpassed the sale of 700 Remus Uncrewed underwater vehicles.
Revenue Decline
Despite the achievements, HII experienced a revenue decline of 2.5% compared to the same period last year, primarily due to setbacks at Newport News Shipbuilding, Ingalls Shipbuilding, and within Mission Technologies.
Shipbuilding Delays
Newport News Shipbuilding is experiencing delays, particularly with the CVN 80 project, due to late delivery of major equipment, which has impacted the construction timeline and approach.
Negative Free Cash Flow
The company reported a negative free cash flow of $462 million for the quarter, attributed to the timing of incentives and normal fluctuations in program receipts and disbursements.
Forward-Looking Guidance
Looking ahead, HII remains optimistic about its growth prospects. The company reaffirmed its guidance for 2025, projecting significant revenue growth to $15 billion by 2030, along with margin and free cash flow normalization. HII also expects to secure over $50 billion in awards across 2025 and 2026, maintaining its focus on improving shipbuilding throughput and achieving $250 million in annualized cost reductions by year-end.
In summary, Huntington Ingalls Industries’ earnings call highlighted a blend of achievements and challenges. While the company is making strides in operational improvements and securing strategic contracts, it continues to navigate revenue declines and shipbuilding delays. However, with a strong backlog and optimistic forward-looking guidance, HII is poised for future growth.