August 5, 2021
NEWPORT NEWS, Va., (Aug. 05, 2021) -- Huntington Ingalls Industries (NYSE:HII) reported second quarter 2021 revenues of $2.2 billion, up 10.1% from the second quarter of 2020.
Operating income in the second quarter of 2021 was $128 million and operating margin was 5.7%, compared to $57 million and 2.8%, respectively, in the second quarter of 2020. The increases in operating income and operating margin were primarily the result of stronger segment operating results compared to the prior year, partially offset by a less favorable operating FAS/CAS adjustment. The prior year period included unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19.
Segment operating income1 in the second quarter of 2021 was $169 million and segment operating margin1 was 7.6%, compared to a segment operating loss of $5 million and (0.2)%, respectively, in the second quarter of 2020. The increases in segment operating income1 and segment operating margin1 were primarily the result of the unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.
Net earnings in the second quarter of 2021 were $129 million, compared to $53 million in the second quarter of 2020. Diluted earnings per share in the second quarter of 2021 was $3.20, compared to $1.30 in the same period of 2020. Excluding the impacts of pension, adjusted earnings per share1 in the quarter was $3.05, compared to $(0.49) in the same period of 2020.
Second quarter cash from operations was $96 million and free cash flow1 was $23 million, compared to $201 million and $126 million, respectively, in the second quarter of 2020.
New contract awards in the second quarter of 2021 were approximately $1.2 billion, bringing total backlog to approximately $47.7 billion as of June 30, 2021.
“We are pleased with second quarter results that demonstrate another quarter of consistent program execution,” said Mike Petters, HII’s president and CEO. “We recently announced the agreement to acquire Alion Science and Technology, which we believe is a perfect complement to our existing capabilities in the technology-driven defense solutions space. We believe Alion offers significant growth potential and represents an investment in capabilities that are critical to national security now and into the future and will generate significant value for our stakeholders over the long term.”
Results of Operations
Three Months Ended Six Months Ended June 30 June 30 ($ in millions, except per share amounts)20212020$ Change% Change 20212020$ Change% ChangeSales and service revenues$2,231 $2,027 $204 10.1% $4,509 $4,290 $219 5.1%Operating income128 57 71 124.6% 275 272 3 1.1%Operating margin %5.7 %2.8 % 293 bps 6.1 %6.3 % (24) bps Segment operating income (loss)1169 (5) 174 3,480.0% 360 151 209 138.4%Segment operating margin %17.6 %(0.2)% 782 bps 8.0 %3.5 % 446 bps Net earnings129 53 76 143.4% 277 225 52 23.1%Diluted earnings per share$3.20 $1.30 $1.90 146.2% $6.87 $5.54 $1.33 24.0% Pension Adjusted Figures Net earnings2123 (20) 143 715.0% 267 78 189 242.3%Diluted earnings per share2$3.05 $(0.49) $3.54 722.4% $6.62 $1.92 $4.70 244.8%1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. See Exhibit B for definition and reconciliation.Segment Operating Results
Ingalls Shipbuilding
Three Months Ended Six Months Ended June 30 June 30 ($ in millions)20212020$ Change% Change 20212020$ Change% ChangeRevenues$670 $622 $48 7.7% $1,319 $1,251 $68 5.4%Segment operating income180 55 25 45.5% 171 123 48 39.0%Segment operating margin %111.9 %8.8 % 310 bps 13.0 %9.8 % 313 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Ingalls Shipbuilding revenues for the second quarter of 2021 were $670 million, an increase of $48 million, or 7.7%, from the same period in 2020, primarily driven by higher revenues in the Arleigh Burke-class guided missile (DDG) program and amphibious assault ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. DDG program revenues increased due to higher volumes on Jack H. Lucas (DDG 125), Jeremiah Denton (DDG 129) and Ted Stevens (DDG 128), partially offset by lower volumes on USS Delbert D. Black (DDG 119) following its delivery and USS Fitzgerald (DDG 62) restoration and modernization following its redelivery. Amphibious assault ship revenues increased due to higher volumes on Pittsburgh (LPD 31), LHA 9 (unnamed) and Bougainville (LHA 8), partially offset by lower volume on Fort Lauderdale (LPD 28). Revenues on the NSC program decreased due to lower volumes on Stone (NSC 9) following its delivery and Calhoun (NSC 10).
Ingalls Shipbuilding segment operating income1 for the second quarter of 2021 was $80 million, an increase of $25 million from the same period last year. Segment operating margin1 in the second quarter of 2021 was 11.9%, compared to 8.8% in the same period last year. The increases were primarily driven by the recognition of a capital investment related incentive for the DDG program on Jack H. Lucas (DDG 125) and higher risk retirement on Bougainville (LHA 8), Richard M. McCool Jr. (LPD 29) and Fort Lauderdale (LPD 28), partially offset by lower risk retirement on USS Delbert D. Black (DDG 119) following its delivery.
1Non-GAAP measure. See Exhibit B for definition and reconciliation.
Key Ingalls Shipbuilding milestones for the quarter:
Newport News Shipbuilding
Three Months Ended Six Months Ended June 30 June 30 ($ in millions)20212020$ Change% Change20212020$ Change% ChangeRevenues$1,363 $1,122 $241 21.5 %$2,770 $2,463 $307 12.5 %Segment operating income (loss)176 (69) 145 210.1 %169 26 143 550.0 %Segment operating margin %15.6 %(6.1)% 1173 bps 6.1 %1.1 % 505 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Newport News Shipbuilding revenues for the second quarter of 2021 were $1.4 billion, an increase of $241 million, or 21.5%, from the same period in 2020, driven primarily by higher revenues in submarine and aircraft carrier construction. Submarine revenues increased primarily as a result of higher volumes on Block IV and Block V boats of the Virginia-class submarine program and the Columbia-class submarine program. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the refueling and complex overhaul (RCOH) of USS John C. Stennis (CVN 74) and Doris Miller (CVN 81), partially offset by lower volumes on the John F. Kennedy (CVN 79) and the RCOH of USS George Washington (CVN 73).
Newport News Shipbuilding segment operating income1 for the second quarter of 2021 was $76 million, compared to a segment operating loss1 of $69 million for the same period last year. Segment operating margin1 in the second quarter of 2021 was 5.6%, compared to (6.1)% in the same period last year. The increases were primarily due to impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.
Key Newport News Shipbuilding milestones for the quarter:
1Non-GAAP measure. See Exhibit B for definition and reconciliation.
Technical Solutions
Three Months Ended Six Months Ended June 30 June 30 ($ in millions)20212020$ Change% Change 20212020$ Change% ChangeRevenues$237 $320 $(83) (25.9)% $496 $637 (141) (22.1)%Segment operating income113 9 $4 44.4 % 20 2 18 900.0 %Segment operating margin %15.5 %2.8 % 267 bps 4.0 %0.3 % 372 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Technical Solutions revenues for the second quarter of 2021 were $237 million, a decrease of $83 million from the same period in 2020, due to the divestiture of our oil and gas business and contribution of the San Diego Shipyard to a joint venture earlier this year, as well as lower volumes in Unmanned Systems, partially offset by higher volumes in Defense & Federal Solutions.
Technical Solutions segment operating income1 for the second quarter of 2021 was $13 million, compared to $9 million in the second quarter of 2020. Segment operating margin1 in the second quarter of 2021 was 5.5%, compared to 2.8% in the same period last year. The increases were primarily driven by higher equity income related to our ship repair joint venture with Titan, as well as improved performance at Defense & Federal Solutions and Nuclear & Environmental Services, partially offset by the lower volume in Unmanned Systems.
Key Technical Solutions milestones for the quarter:
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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