On February 6, 2025, Huntington Ingalls Industries Inc (HII, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full year of 2024. The company, the largest independent military shipbuilder in the US, reported a decline in both revenue and earnings compared to the previous year, missing analyst estimates.
Company Overview
Huntington Ingalls Industries Inc (HII, Financial) operates through three segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies. Ingalls focuses on non-nuclear-powered ships, while Newport News is the sole producer of nuclear-powered ships like the Gerald Ford-class aircraft carriers. The Mission Technologies segment provides IT and other services to US government agencies.
Financial Performance and Challenges
HII reported fourth-quarter revenues of $3.0 billion, falling short of the analyst estimate of $3.054 billion and down from $3.2 billion in the same quarter of 2023. The company's diluted earnings per share (EPS) for the quarter was $3.15, below the estimated $3.31. The decline in revenue was attributed to lower volumes across all segments, particularly at Newport News Shipbuilding.
Key Financial Achievements
Despite the challenges, HII achieved several critical milestones in 2024, including the delivery of the Virginia-class submarine New Jersey (SSN 796) and the amphibious transport dock Richard M. McCool Jr. (LPD 29). The Mission Technologies segment secured contracts valued at over $12 billion, highlighting its growth potential in the defense sector.
Income Statement Highlights
For the full year, HII's revenues were $11.5 billion, slightly up from $11.454 billion in 2023. However, the operating income decreased to $535 million from $781 million in the previous year, reflecting a drop in operating margin from 6.8% to 4.6%. The annual diluted EPS was $13.96, down from $17.07 in 2023.
Balance Sheet and Cash Flow
HII's net cash provided by operating activities in 2024 was $393 million, a significant decrease from $970 million in 2023. Free cash flow also dropped to $40 million from $692 million, indicating challenges in cash generation despite ongoing operations.
Segment Performance
| Segment | Q4 2024 Revenue ($M) | Q4 2023 Revenue ($M) | Change (%) |
|---|---|---|---|
| Ingalls Shipbuilding | 736 | 800 | -8.0% |
| Newport News Shipbuilding | 1,588 | 1,665 | -4.6% |
| Mission Technologies | 713 | 745 | -4.3% |
Analysis and Outlook
The decline in HII's financial performance is primarily due to reduced volumes and operational challenges at Newport News Shipbuilding. The company's backlog of $48.7 billion at year-end provides a cushion for future growth, but the current performance highlights the need for strategic adjustments to improve efficiency and profitability.
Chris Kastner, HII’s president and CEO, stated, “We continue to make progress on ships put under contract pre-COVID, and are working diligently with our customers to put over $50 billion of new work under contract.”
HII's focus on securing new contracts and enhancing its Mission Technologies segment could drive future growth, but the company must address its operational inefficiencies to meet investor expectations and improve financial outcomes.
Explore the complete 8-K earnings release (here) from Huntington Ingalls Industries Inc for further details.
