Huntington Ingalls Industries(US:HII)2024-05-02 15:44Financial Data and Key Metrics Changes - Record first quarter revenue was $2.8 billion, up 4.9% compared to the same period last year, with diluted earnings per share increasing to $3.87 from $3.23 in Q1 2023 [3][7][36] - New contract awards during the quarter totaled $3.1 billion, resulting in a backlog of $48.4 billion, of which $27 billion is currently funded [3][36] Business Line Data and Key Metrics Changes - At Mission Technologies, revenues reached $750 million, a 20% increase compared to Q1 2023, driven by strong sales in C5ISR, cyber electronic warfare, and space [5][23] - Ingalls revenues were $655 million, up 14% from the previous year, primarily due to higher volumes in surface combatants and amphibious assault ships [22] - Newport News revenues decreased to $1.4 billion, down 5% from the same period last year, mainly due to lower volumes in aircraft carriers and the Virginia-class submarine program [37] Market Data and Key Metrics Changes - Mission Technologies has a robust opportunity pipeline that has grown to $80 billion, indicating strong future growth potential [9][48] - The company announced the integration of an Australian supplier into its supply chain, marking a significant step towards an integrated U.S., UK, Australian supply chain under AUKUS [4] Company Strategy and Development Direction - The company remains focused on delivering value to all stakeholders and is committed to workforce retention and development, hiring over 1,700 craft personnel in Q1 [6][20] - The fiscal year 2024 budget cycle concluded with bipartisan support for shipbuilding programs, including funding for multiple classes of destroyers and submarines [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming the 2024 outlook and a five-year free cash flow outlook of $3.6 billion, despite challenges in labor and supply chain [9][20] - The company is addressing labor challenges through partnerships with community colleges and apprenticeship programs to ensure a skilled workforce [46][125] Other Important Information - Cash used in operations was $202 million, with free cash flow in the quarter at negative $274 million, attributed to timing of collections [8][9] - The company paid dividends of $1.30 per share, totaling $51 million, and repurchased approximately 223,000 shares at a cost of about $62 million [24] Q&A Session Summary Question: What is the current completion percentage of CVN-79? - Management indicated that CVN-79 is progressing well and is around 90% complete, currently in the test program [40] Question: What is the outlook for Mission Technologies for the rest of the year? - Management noted that while Q1 was strong, they are being conservative with guidance, maintaining expectations for growth but acknowledging potential challenges [33] Question: Can you comment on the labor situation and potential subsidies? - Management highlighted that labor is the primary issue affecting production and emphasized ongoing efforts to improve workforce development [44][46] Question: What is the status of the Columbia-class issues? - Management confirmed that issues related to the Columbia-class program are being addressed and that improvements are being made [77] Question: How does the company view the integration of Australian suppliers? - Management sees this as a critical first step towards strengthening the Australian submarine supply chain and preparing for future opportunities [64][66]