Huntington Ingalls Industries(US:HII) ZACKS·2024-10-31 16:10Core Viewpoint - Huntington Ingalls Industries, Inc. (HII) reported a significant decline in earnings and revenues for the third quarter of 2024, primarily due to poor sales performance across its business segments, particularly in shipbuilding [1][2]. Financial Performance - Earnings per share for Q3 2024 were $2.56, down 30.8% from $3.70 in the same quarter last year, and missed the Zacks Consensus Estimate of $3.84 by 33.3% [1]. - Total revenues for the quarter were $2.75 billion, missing the Zacks Consensus Estimate of $2.88 billion by 4.5%, and declined 2.4% from $2.82 billion in the prior year [2]. Operational Performance - Segment operating income was reported at $97 million, down from $187 million in Q3 2023, with an operating margin of 3.5%, which expanded by 310 basis points year-over-year [3]. - The decline in operating income was largely attributed to poor performance at the Newport News Shipbuilding unit, which faced a net unfavorable cumulative adjustment of $78 million [3]. Segmental Performance - Newport News Shipbuilding: Revenues were $1.41 billion, down 2.8% year-over-year, with operating earnings of $15 million, a decrease of 83.3% due to lower volumes and unfavorable adjustments [5][6]. - Ingalls Shipbuilding: Revenues totaled $664 million, down 6.6% year-over-year, with operating income of $49 million, a drop of 32.9% due to lower performance in amphibious assault ships [7]. - Mission Technologies: Revenues increased to $709 million, up 3.5% year-over-year, with operating income rising 37.5% to $33 million, driven by higher volumes in cyber and electronic warfare programs [8]. Order and Backlog - HII received orders worth $3.6 billion in the reported quarter, increasing its total backlog to $49.4 billion as of September 30, 2024, compared to $48.5 billion as of June 30, 2024 [4]. Financial Update - Cash and cash equivalents as of September 30, 2024, were $10 million, significantly down from $430 million at the end of 2023 [9]. - Long-term debt decreased to $1.71 billion from $2.21 billion at the end of 2023 [9]. - Cash flow from operating activities was $2 million, down from $408 million a year ago [9]. - The company generated a free cash outflow of $273 million in the first nine months of 2024, compared to a free cash inflow of $258 million in the prior-year period [10]. Guidance - HII updated its 2024 guidance, expecting shipbuilding revenues to be approximately $8.8 billion, with Mission Technologies revenues projected between $2.80 billion and $2.85 billion [11]. - The company now anticipates free cash flow to be in the range of $0-$100 million for 2024, a significant reduction from the previous projection of $600-$700 million [11].