February 11, 2021
NEWPORT NEWS, Va., Feb. 11, 2021 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported fourth quarter 2020 revenues of $2.8 billion, up 14.3% from the fourth quarter of 2019. Operating income in the quarter was $305 million and operating margin was 11.1%, compared to $186 million and 7.7%, respectively, in the fourth quarter of 2019. Diluted earnings per share in the quarter was $6.15, compared to $3.61 in the same period of 2019.
For the full year, revenues of $9.4 billion increased 5.2% over 2019. Operating income in 2020 was $799 million and operating margin was 8.5%, compared to $736 million and 8.3%, respectively, in 2019. Diluted earnings per share for the full year was $17.14, compared to $13.26 in 2019.
Cash from operations in 2020 was $1.1 billion and free cash flow1 was $757 million, compared to $896 million and $460 million, respectively, in 2019.
New contract awards in the quarter were approximately $3.5 billion, bringing total backlog to approximately $46.0 billion as of Dec. 31, 2020.
“2020 will be remembered as one of the most challenging business environments that we have ever had to navigate. Throughout the COVID-19 pandemic, we have made decisions that are focused on the safety and well being of our employees, and I could not be prouder of the way our team responded to the challenges. We enter 2021 as a stronger and more agile company with positive momentum and an enormous opportunity in front of us to leverage our $46 billion backlog to drive long-term, sustainable value creation,” said Mike Petters, HII’s president and CEO.
2021 Financial Outlook
Results of Operations
Three Months Ended Year Ended December 31 December 31 ($ in millions, except per share amounts)20202019$ Change% Change 20202019$ Change% ChangeSales and service revenues$2,757 $2,412 $345 14.3% $9,361 $8,899 $462 5.2 %Operating income305 186 119 64.0% 799 736 63 8.6 %Operating margin %11.1%7.7% 335 bps 8.5%8.3% 26 bpsSegment operating income1242 173 69 39.9% 555 631 (76) (12.0)%Segment operating margin %18.8%7.2% 161 bps 5.9%7.1% (116) bpsNet earnings249 149 100 67.1% 696 549 147 26.8 %Diluted earnings per share$6.15 $3.61 $2.54 70.4% $17.14 $13.26 $3.88 29.3 % Pension Adjusted Figures Net earnings2176 122 54 44.3% 406 442 (36) (8.1)%Diluted earnings per share2$4.35 $2.96 $1.39 47.0% $10.00 $10.66 $(0.66) (6.2)%1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. See Exhibit B for reconciliation.
Segment Operating Results
Ingalls Shipbuilding
Three Months Ended Year Ended December 31 December 31 ($ in millions)20202019$ Change% Change 20202019$ Change% ChangeRevenues$752 $702 $50 7.1% $2,678 $2,555 $123 4.8%Segment operating income196 59 37 62.7% 281 235 46 19.6%Segment operating margin %112.8%8.4% 436 bps 10.5%9.2% 130 bps1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Ingalls Shipbuilding revenues for the fourth quarter of 2020 were $752 million, an increase of $50 million, or 7.1%, from the same period in 2019, primarily driven by higher revenues in surface combatants and amphibious assault ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. Surface combatant revenues increased due to higher volumes on Jeremiah Denton (DDG 129), Ted Stevens (DDG 128), Sam Nunn (DDG 133), and John F. Lehman (DDG 137), partially offset by lower volumes on the re-delivered USS Fitzgerald (DDG 62) restoration and modernization. Amphibious assault ship revenues increased as a result of higher volumes on Pittsburgh (LPD 31) and Harrisburg (LPD 30), partially offset by lower volume on the delivered USS Tripoli (LHA 7). Revenues on the Legend-class NSC program decreased due to lower volumes on Friedman (NSC 11) and Calhoun (NSC 10), partially offset by higher volume on the delivered Stone (NSC 9).
Ingalls Shipbuilding segment operating income for the fourth quarter was $96 million, an increase of $37 million from the same period last year. Segment operating margin in the quarter was 12.8%, compared to 8.4% in the same period last year. These increases were primarily driven by higher risk retirement across all programs.
For the full year, Ingalls Shipbuilding revenues were $2.7 billion, an increase of $123 million, or 4.8%, from 2019, primarily driven by higher revenues in surface combatants and amphibious assault ships, partially offset by lower revenues in the Legend-class NSC program. Surface combatant revenues increased due to higher volumes on Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), Delbert D. Black (DDG 119), Sam Nunn (DDG 133), George M. Neal (DDG 131), and Thad Cochran (DDG 135), partially offset by lower volumes on USS Fitzgerald (DDG 62) restoration and modernization, Paul Ignatius (DDG 117), Frank E. Petersen Jr. (DDG 121), and Jack H. Lucas (DDG 125). Amphibious assault ship revenues increased as a result of higher volumes on Harrisburg (LPD 30), Pittsburgh (LPD 31), LHA 9 (unnamed), Fort Lauderdale (LPD 28), and Richard M. McCool Jr. (LPD 29), partially offset by lower volumes on Tripoli (LHA 7), LPD life cycle services, and Bougainville (LHA 8). Revenues on the Legend-class NSC program decreased due to lower volumes on Midgett (NSC 8) and Friedman (NSC 11), partially offset by higher volume on Calhoun (NSC 10).
For the full year, Ingalls Shipbuilding segment operating income was $281 million, compared to $235 million in 2019. The increase was primarily driven by higher risk retirement on Delbert D. Black (DDG 119) in connection with its delivery and a capital expenditure contract incentive, as well as higher risk retirement and improved performance on Tripoli (LHA 7) and Richard M. McCool Jr. (LPD 29), partially offset by unfavorable adjustments across programs, including delay and disruption related to COVID-19.
Key Ingalls Shipbuilding milestones for the quarter:
Newport News Shipbuilding
Three Months Ended Year Ended December 31 December 31 ($ in millions)20202019$ Change% Change 20202019$ Change% ChangeRevenues$1,750 $1,399 $351 25.1 % $5,571 $5,231 $340 6.5 %Segment operating income1128 137 (9) (6.6)% 233 410 (177) (43.2)%Segment operating margin %17.3%9.8% (248) bps 4.2%7.8% (366) bps1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Newport News Shipbuilding revenues for the fourth quarter of 2020 were $1.8 billion, an increase of $351 million, or 25.1%, from the same period in 2019, driven primarily by higher revenues in aircraft carrier construction and refueling and complex overhaul (RCOH), and submarine construction, as well as fleet support services. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80) and Doris Miller (CVN 81), and the advance planning contract for the RCOH of USS John C. Stennis (CVN 74), partially offset by lower volumes on John F. Kennedy (CVN 79), USS Gerald R. Ford (CVN 78), and the RCOH of USS George Washington (CVN 73). Submarine revenues increased primarily as a result of higher volumes on Block V boats of the Virginia-class program (VCS) and the Columbia-class program, partially offset by lower volumes on Block III and Block IV boats of the Virginia-class program.
Newport News Shipbuilding segment operating income for the fourth quarter was $128 million, compared to operating income of $137 million for the same period last year. Segment operating margin was 7.3% for the quarter, compared to 9.8% in the same period last year, primarily due to lower risk retirement on the Virginia-class submarine program. Additionally, results in the same period last year benefited from the award of the VCS Block V contract, as well as contract actions related to work on Los Angeles-class submarines.
For the full year, Newport News Shipbuilding revenues were $5.6 billion, an increase of $340 million, or 6.5%, from 2019, primarily driven by higher revenues in aircraft carriers, submarines, and naval nuclear support services. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the RCOH of USS John C. Stennis (CVN 74), and Doris Miller (CVN 81), partially offset by lower volumes on the RCOH of USS George Washington (CVN 73), John F. Kennedy (CVN 79), and USS Gerald R. Ford (CVN 78). Submarine revenues increased primarily as a result of higher volumes on the Virginia-class submarine program and the Columbia-class submarine program. The higher volume on the Virginia-class submarine program was due to higher volumes on Block V boats, partially offset by lower volumes on Block III and Block IV boats. Naval nuclear support service revenues increased primarily as a result of higher volumes in carrier fleet support services.
For the full year, Newport News Shipbuilding segment operating income was $233 million, a decrease of $177 million from 2019, primarily due to unfavorable cumulative catch-up adjustments in the second quarter on Block IV
boats of the Virginia-class submarine program.
Key Newport News Shipbuilding milestones for the quarter:
Technical Solutions
Three Months Ended Year Ended December 31 December 31 ($ in millions)20202019$ Change% Change 20202019$ Change% ChangeRevenues$311 $350 $(39) (11.1)% $1,268 $1,237 31 2.5 %Segment operating income118 (23) $41 178.3 % 41 (14) 55 (392.9)%Segment operating margin %15.8%(6.6)% 1236 bps 3.2%(1.1)% 437 bps1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Technical Solutions revenues for the fourth quarter of 2020 were $311 million, a decrease of $39 million from the same period in 2019, primarily driven by lower revenue at our oil and gas reporting unit, as well as lower revenue at the San Diego Shipyard due to the conclusion of several repair contracts, partially offset by the acquisition of Hydroid in March 2020.
Technical Solutions segment operating income for the fourth quarter was $18 million, compared to a segment operating loss of $23 million in the fourth quarter of 2019. The increase was primarily driven by a goodwill impairment at our oil and gas reporting unit and a loss on a fleet support services contract, both recorded in the prior year period.
For the full year, Technical Solutions revenues were $1.3 billion, an increase of $31 million, or 2.5%, from 2019, primarily due to the acquisition of Hydroid in 2020, partially offset by lower volume at our San Diego Shipyard due to the conclusion of several repair contracts.
For the full year, Technical Solutions segment operating income was $41 million, compared to an operating loss of $14 million in 2019. The increase was primarily due to a goodwill impairment at our oil and gas reporting unit and a loss on a fleet support services contract in 2019, as well as higher equity income from our nuclear and environmental joint ventures and improved performance in our Defense and Federal Solutions business unit.
Key Technical Solutions milestones for the quarter:
2021 Outlook
HII is a global, all-domain defense provider. HII's mission is to deliver the world's most powerful ships and all-domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world.
As the nation's largest military shipbuilder, and with a more than 135-year history of advancing U.S. national security, HII delivers critical capabilities extending from ships to unmanned systems, cyber, ISR, AI/ML and synthetic training. Headquartered in Virginia, HII's workforce is 44,000 strong.
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