- Revenues were $2.7 billion in the fourth quarter, $9.5 billion in 2021
- Operating margin was 4.5% in the fourth quarter, 5.4% in 2021
- Segment operating margin1 was 6.0% in the fourth quarter, 7.2% in 2021
- Diluted earnings per share was $2.99 in the fourth quarter, $13.50 in 2021
- Pension adjusted diluted earnings per share1 was $2.84 in the fourth quarter, $13.03 in 2021
NEWPORT NEWS, Va., Feb. 10, 2022 -- Huntington Ingalls Industries (NYSE:HII) reported fourth quarter 2021 revenues of $2.7 billion, down 2.9% from the fourth quarter of 2020. Operating income in the fourth quarter of 2021 was $120 million and operating margin was 4.5%, compared to $305 million and 11.1%, respectively, in the fourth quarter of 2020. Diluted earnings per share in the quarter was $2.99, compared to $6.15 in the fourth quarter of 2020. Pension adjusted earnings per share1 in the quarter was $2.84, compared to $4.35 in the fourth quarter of 2020.
For the full year, revenues of $9.5 billion increased 1.7% over 2020. Operating income in 2021 was $513 million and operating margin was 5.4%, compared to $799 million and 8.5%, respectively, in 2020. Segment operating income1 in 2021 was $683 million and segment operating margin1 was 7.2%, compared to $555 million and 5.9%, respectively, in 2020. Diluted earnings per share for the full year was $13.50, compared to $17.14 in 2020. Pension adjusted earnings per share1 in 2021 was $13.03, compared to $10.00 in 2020.
Net cash provided by operating activities in 2021 was $760 million and free cash flow1 was $449 million, compared to $1.1 billion and $757 million, respectively, in 2020.
New contract awards in the fourth quarter of 2021 were approximately $1.0 billion, bringing total backlog to approximately $48.5 billion as of Dec. 31, 2021.
1Non-GAAP measures. See Exhibit B for definitions and reconciliations. Reconciliations of forward–looking GAAP and non–GAAP measures are not provided because we are unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the future occurrence and financial impact of certain elements of GAAP and non–GAAP measures.
2 Free cash flow outlook assumes the legislation requiring capitalization of R&D expenditures for tax purposes is deferred. See Exhibit B for additional information.
“We are pleased with another year of consistent program execution in the face of a challenging operational environment on multiple fronts,” said Mike Petters, HII’s president and CEO. "Over the course of 2021 we completed transformational changes in our Technical Solutions division, and we believe we have positioned the enterprise for sustainable, long-term value creation as we move forward."
2022 Financial Outlook
- Expect FY22 shipbuilding revenue1 between $8.2 and $8.5 billion; expect shipbuilding operating margin1 between 8.0% and 8.1%
- Expect FY22 Technical Solutions revenue of approximately $2.6 billion, segment operating margin1 of approximately 2.5%; and EBITDA margin1 of between 8.0% and 8.5%
- Expect FY22 free cash flow1 of between $300 and $350 million2
- Expect cumulative FY20-FY24 free cash flow1 of approximately $3.2 billion2
Results of Operations
Three Months Ended
Year Ended
December 31
December 31
($ in millions, except per share amounts)
2021
2020
$ Change
% Change
2021
2020
$ Change
% Change
Sales and service revenues
$
2,677
$
2,757
$
(80
)
(2.9
)%
$
9,524
$
9,361
$
163
1.7
%
Operating income
120
305
(185
)
(60.7
)%
513
799
(286
)
(35.8
)%
Operating margin %
4.5
%
11.1
%
(658) bps
5.4
%
8.5
%
(315) bps
Segment operating income1
160
242
(82
)
(33.9
)%
683
555
128
23.1
%
Segment operating margin %1
6.0
%
8.8
%
(280) bps
7.2
%
5.9
%
124 bps
Net earnings
120
249
(129
)
(51.8
)%
544
696
(152
)
(21.8
)%
Diluted earnings per share
$
2.99
$
6.15
$
(3.16
)
(51.4
)%
$
13.50
$
17.14
$
(3.64
)
(21.2
)%
Pension Adjusted Earnings
Adjusted Net earnings2
114
176
(62
)
(35.2
)%
525
406
119
29.3
%
Adjusted Diluted earnings per share2
$
2.84
$
4.35
$
(1.51
)
(34.7
)%
$
13.03
$
10.00
$
3.03
30.3
%
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 definitions and reconciliations.
Segment Operating Results
Ingalls Shipbuilding
Three Months Ended
Year Ended
December 31
December 31
($ in millions)
2021
2020
$ Change
% Change
2021
2020
$ Change
% Change
Revenues
$
581
$
752
$
(171
)
(22.7)%
$
2,528
$
2,678
$
(150
)
(5.6)%
Segment operating income1
48
96
(48
)
(50.0)%
281
281
—
—%
Segment operating margin %1
8.3
%
12.8
%
(450) bps
11.1
%
10.5
%
62 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.
Ingalls Shipbuilding revenues for the fourth quarter of 2021 were $581 million, a decrease of $171 million, or 22.7%, from the same period in 2020, primarily driven by lower revenues in amphibious assault ships, the
Arleigh Burke-class guided missile destroyer (DDG) program and the
Legend-class National Security Cutter (NSC) program. Revenues on amphibious assault ships decreased due to lower volumes on
Bougainville (LHA 8),
Fort Lauderdale (LPD 28) and
Harrisburg (LPD 30), partially offset by higher volume on LHA 9 (unnamed). DDG program revenues decreased due to lower volumes on
Ted Stevens (DDG 128) and
Frank E. Petersen Jr. (DDG 121), partially offset by higher volume on
George M. Neal (DDG 131). Revenues on the NSC program decreased due to lower volume on USCGC
Stone (NSC 9) following its delivery in the prior year, partially offset by higher volume on
Friedman (NSC 11).
Ingalls Shipbuilding segment operating income1 for the fourth quarter of 2021 was $48 million, a decrease of $48 million from the same period in 2020. Segment operating margin1 in the fourth quarter of 2021 was 8.3%, compared to 12.8% in the same period last year. The decrease in segment operating margin1 was primarily driven by the recognition of a contract action and incentive on the DDG program in the prior year period, lower risk retirement on the NSC program following the delivery of USCGC
Stone (NSC 9) in the prior year, as well as lower risk retirement on the amphibious assault ship programs.
1Non-GAAP measures. See Exhibit B for definitions and reconciliations.
For the full year, Ingalls Shipbuilding revenues were $2.5 billion, a decrease of $150 million, or 5.6%, from 2020,
primarily driven by lower revenues in the NSC program and amphibious assault ships, partially offset by higher revenues in the DDG program. Revenues on the NSC program decreased due to lower volume on
Stone (NSC 9) following its delivery. Amphibious assault ship revenues decreased due to lower volumes on
Fort Lauderdale (LPD 28),
Richard M. McCool Jr. (LPD 29),
Harrisburg (LPD 30) and USS
Tripoli (LHA 7), partially offset by higher volumes on
Pittsburgh (LPD 31) and LHA 9 (unnamed). DDG program revenues increased due to higher volumes on
Jack H. Lucas (DDG 125),
George M. Neal (DDG 131),
Jeremiah Denton (DDG 129) and
Sam Nunn (DDG 133), partially offset by lower volumes on USS
Delbert D. Black (DDG 119) following its delivery and USS
Fitzgerald (DDG 62) following its redelivery.
For the full year, Ingalls Shipbuilding segment operating income1 was $281 million, flat with 2020 results. Higher risk retirement on
Bougainville (LHA 8) and a contract incentive on
Jack H. Lucas (DDG 125) were offset by lower risk retirement on USCGC
Stone (NSC 9) and USS
Delbert D. Black (DDG 119) following their deliveries.
Key Ingalls Shipbuilding milestones for the quarter:
- Completed builder's trials for amphibious transport dock Fort Lauderdale (LPD 28)
- Delivered guided missile destroyer Frank E. Petersen Jr. (DDG 121)
- Began fabrication of guided missile destroyer George M. Neal (DDG 131)
- Awarded incremental $114 million advance procurement contract for amphibious assault ship LHA 9
Newport News Shipbuilding
Three Months Ended
Year Ended
December 31
December 31
($ in millions)
2021
2020
$ Change
% Change
2021
2020
$ Change
% Change
Revenues
$
1,539
$
1,750
$
(211
)
(12.1)%
$
5,663
$
5,571
$
92
1.7%
Segment operating income1
95
128
(33
)
(25.8)%
352
233
119
51.1%
Segment operating margin %1
6.2
%
7.3
%
(114) bps
6.2
%
4.2
%
203 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.
Newport News Shipbuilding revenues for the fourth quarter of 2021 were $1.5 billion, a decrease of $211 million, or 12.1%, from the same period in 2020, primarily driven by lower revenues in aircraft carriers and submarines. Aircraft carrier revenues decreased primarily as a result of lower volumes on the refueling and complex overhaul (RCOH) of USS
George Washington (CVN 73), the construction of
John F. Kennedy (CVN 79), as well as lower material volume related to the construction of
Enterprise (CVN 80) and
Doris Miller (CVN 81), partially offset by higher volume on the RCOH of USS
John C. Stennis (CVN 74). Submarine revenues decreased due to lower volumes on Block IV boats of the
Virginia-class submarine (VCS) program, partially offset by higher volumes on Block V boats of the VCS program and the
Columbia-class submarine program.
Newport News Shipbuilding segment operating income1 for the fourth quarter of 2021 was $95 million, a decrease of $33 million from the same period in 2020. Segment operating margin1 in the fourth quarter of 2021 was 6.2%, compared to 7.3% in the same period last year. The decreases were primarily due to lower risk retirement on naval nuclear support services, including submarine fleet support.
1Non-GAAP measures. See Exhibit B for definitions and reconciliations.
For the full year, Newport News Shipbuilding revenues were $5.7 billion, an increase of $92 million, or 1.7%, from 2020, primarily driven by higher revenues in submarines and aircraft carriers, partially offset by lower revenues in
naval nuclear support services. Submarine revenues increased primarily as a result of higher volumes on Block V
boats of the VCS program and the
Columbia-class submarine program, partially offset by lower volumes on Block IV boats of the VCS program. Aircraft carrier revenues increased primarily as a result of higher volumes on the RCOH of USS
John C. Stennis (CVN 74), the construction of
Enterprise (CVN 80) and the construction of
Doris Miller (CVN 81), partially offset by lower volumes on the construction of
John F. Kennedy (CVN 79) and the RCOH of USS
George Washington (CVN 73). Naval nuclear support service revenues decreased primarily as a result of lower volumes in submarine fleet support services and facility maintenance services, partially offset by higher volumes in carrier fleet support services.
For the full year, Newport News Shipbuilding segment operating income1 was $352 million, an increase of $119 million from 2020. The increase was primarily due to impacts related to VCS program performance and COVID-19 in the prior year.
Key Newport News Shipbuilding milestones for the quarter:
- Christened Virginia-class submarine New Jersey (SSN 796)
- Reached approximate 94% completion of RCOH of USS George Washington (CVN 73)
- Reached approximate 83% completion of John F. Kennedy (CVN 79), which now includes single-phase delivery SOW
Technical Solutions
Three Months Ended
Year Ended
December 31
December 31
($ in millions)
2021
2020
$ Change
% Change
2021
2020
$ Change
% Change
Revenues
$
586
$
311
$
275
88.4%
$
1,476
$
1,268
208
16.4%
Segment operating income1
17
18
$
(1
)
(5.6)%
50
41
9
22.0%
Segment operating margin %1
2.9
%
5.8
%
(289) bps
3.4
%
3.2
%
15 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.
Technical Solutions revenues for the fourth quarter of 2021 were $586 million, an increase of $275 million from the same period in 2020. The increase was due primarily to the acquisition of Alion Science and Technology (Alion), partially offset by the divestiture of our oil and gas business and contribution of the San Diego Shipyard to a joint venture in the first quarter of 2021. Fourth quarter 2021 results include approximately $343 million of revenue attributable to Alion.
Technical Solutions segment operating income1 for the fourth quarter of 2021 was $17 million, compared to $18 million in the fourth quarter of 2020. Segment operating margin1 in the fourth quarter of 2021 was 2.9%, compared to 5.8% in the same period last year. The decrease in segment operating margin1 was primarily driven by approximately $25 million of amortization of Alion related purchased intangible assets, lower equity income from nuclear and environmental joint ventures, as well as the divestiture of our oil and gas business and contribution of our San Diego Shipyard to a joint venture in the first quarter of 2021. Fourth quarter 2021 results include approximately $6 million of segment operating income1 attributable to Alion, net of the purchased intangible asset amortization. Technical Solutions EBITDA margin1 in the fourth quarter of 2021 was 9.0%.
1Non-GAAP measures. See Exhibit B for definitions and reconciliations
For the full year, Technical Solutions revenues were $1.5 billion, an increase of $208 million, or 16.4%, from 2020, driven primarily by the acquisition of Alion, partially offset by the divestiture of our oil and gas business and contribution of our San Diego Shipyard to a joint venture. Technical Solutions results for full year 2021 include approximately $506 million of revenue attributable to Alion.
For the full year, Technical Solutions segment operating income1 was $50 million, an increase of $9 million, or 22.0%, from 2020, driven primarily by the acquisition of Alion, as well as equity income from our nuclear and environmental joint ventures and our ship repair and specialty fabrication joint venture, partially offset by lower performance in unmanned systems. 2021 results included approximately $33 million of amortization of purchased intangible assets related to Alion. Technical Solutions results for full year 2021 include approximately $10 million of segment operating income1 attributable to Alion, net of the purchased intangible asset amortization. Technical Solutions EBITDA margin1 in 2021 was 8.6%.
1Non-GAAP measures. See Exhibit B for definitions and reconciliations
2022 Outlook1
- Anticipate continued, steady shipbuilding operating margin2 expansion
- Anticipate strong organic revenue growth in Technical Solutions
- Free cash flow2,3 includes non-recurring items
- ~$160M advance progress repayment
- ~$70M payroll tax (FICA) repayment
- Continue to expect cumulative FY20-FY24 free cash flow2 of approximately $3.2B3
2022
Outlook
Shipbuilding Revenue2
$8.2B - $8.5B
Shipbuilding Operating Margin2
8.0% - 8.1%
~$2.6B
Technical Solutions Segment Operating Margin2
~2.5%
Technical Solutions EBITDA Margin2
8.0% - 8.5%
Operating FAS/CAS Adjustment
($142M)
Non-current State Income Tax Expense
($5M)
($102M)
Non-operating Retirement Benefit
$294M
~21%
Depreciation & Amortization
$365M
2.5% - 3.0%
of Sales
Free Cash Flow2,3
$300M - $350M
