Huntington Ingalls Industries (HII) 1 Aug 24 2024 Q2 Earnings call transcript
Huntington Ingalls Industries (HII) recently held its second quarter 2024 earnings call, providing investors and stakeholders with valuable insights into the company's performance and future outlook. The call, led by CEO Chris Kastner, CFO Tom Stiehle, and VP of Investor Relations Christie Thomas, highlighted key themes, trends, and developments in the company's shipbuilding and technology sectors.
Financial Highlights
HII reported a record second quarter revenue of $3 billion, marking a 6.8% increase from the previous year. This growth was driven by strong performance in both its shipbuilding and Mission Technologies divisions. The company also achieved a diluted earnings per share of $4.38 for the quarter, up from $3.27 in the same period last year.
Shipbuilding Division Performance
In the shipbuilding sector, HII delivered two ships during the second quarter and achieved another record quarter of strong performance at its Mission Technologies business. The company's alignment with the United States National Security strategy continues to provide strong visibility to its long-term revenue forecast.
HII's shipbuilding division has been focused on meeting its commitments to customers, delivering 2 ships in the second quarter and maintaining a backlog of $48.5 billion at the end of the quarter, of which $27 billion is currently funded. The company is investing heavily in capital and employee development to improve performance and meet scheduled projections and performance goals.
Mission Technologies: A Growth Driver
The Mission Technologies business, which offers leading-edge technologies aligned with customer needs, continues to be a significant growth driver for HII. In the second quarter, it achieved record revenue of $765 million, a 19% increase over the previous year, with a trailing 12-month book-to-bill ratio of 1.15 and a new business opportunity pipeline of over $83 billion.
Labor and Workforce Management
Labor management has been a key focus for HII, with the company hiring over 3,800 craft personnel year-to-date, keeping it on track to achieve its full-year plan of approximately 6,000. The company has also been working to improve labor stability, increase capacity, and create labor stability in its shipyards. These efforts are aimed at meeting its throughput goals and positioning the company for long-term success.
Looking Ahead
HII's outlook for the rest of the year remains positive, with significant contract awards expected by the end of 2024, including Block VI Virginia-class submarines, build 2 Columbia-class submarines, and additional amphibious ships. The company is also anticipating bipartisan support for its programs reflected in the fiscal year 2025 defense appropriations and authorization bills.
Challenges and Uncertainties
Despite the positive outlook, HII faces challenges, including labor management and milestone slippages in its shipbuilding division. The company has been working to address these issues, investing in labor development and optimizing its shipyard operations. The company is also navigating the macroeconomic environment, including inflation and supply chain challenges, which could impact its profitability and cash flow.
Conclusion
Huntington Ingalls Industries' second quarter earnings call provided a comprehensive overview of the company's performance and future outlook. The company's strong financial results, strategic investments in technology and human capital, and focus on meeting customer demands position it well for continued growth and success. However, challenges in labor management and macroeconomic uncertainties could impact the company's performance in the near term. Investors and stakeholders will be closely watching HII's ability to navigate these challenges and capitalize on its growth opportunities.