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Jun 30, 2020
Huntington Ingalls Q2 2020 Earnings Report
Huntington Ingalls Industries' performance was impacted by COVID-19 and program adjustments, resulting in decreased revenues and earnings compared to the previous year.
Key Takeaways
Huntington Ingalls Industries reported a decrease in revenues and operating income for the second quarter of 2020, primarily due to unfavorable cumulative catch-up adjustments and COVID-19 related impacts. Despite these challenges, new contract awards were approximately $2.9 billion, bringing total backlog to approximately $46.1 billion.
Revenues decreased by 7.4% to $2.0 billion due to unfavorable cumulative catch-up adjustments and COVID-19 impacts.
Operating income significantly decreased to $57 million, with an operating margin of 2.8%.
Diluted earnings per share was $1.30, a decrease from $3.07 in the same period of 2019.
New contract awards in the quarter were approximately $2.9 billion, resulting in a total backlog of $46.1 billion.
Revenue by Segment
Forward Guidance
Huntington Ingalls Industries revised its 2020 outlook to reflect updated cost and schedule assumptions across its programs, taking into account the ongoing COVID-19 pandemic.
Positive Outlook
- Expect shipbuilding revenue between $7.6 billion and $7.9 billion.
- Expect shipbuilding operating margin between 5.5% and 6.5%.
- Expect Technical Solutions revenue between $1.2 billion and $1.25 billion.
- Expect Technical Solutions operating margin between 2.0% and 2.4%.
- Expect 2020 free cash flow in excess of $500 million.
Challenges Ahead
- Assumes San Diego Shipyard closing occurs in Q3 2020, and UPI closing occurs in Q4 2020.
- Assumes limited relief for costs directly related to our pandemic response but have made no assumption for equitable adjustments for the delay and disruption caused by COVID-19.
- Guidance assumes an orderly recovery to normalized attendance levels at both shipyards.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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