Huntington Ingalls Industries, Inc. (HII) 2024 Q2 Earnings Call Summary
August 1, 2024 
Huntington Ingalls Industries, Inc. (HII)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
Record Revenue and EPS Growth
Record second quarter revenue of $3 billion, up 6.8% from a year ago with diluted earnings per share of $4.38, up from $3.27 in the second quarter of 2023.
Strong Backlog and New Contract Awards
New contract awards during the quarter were $3.1 billion, resulting in a backlog of $48.5 billion, of which $27 billion is currently funded.
Mission Technologies Performance
Mission Technologies had the seventh consecutive quarter of record revenue with sales of $765 million, 19% over the second quarter of 2023.
Shipbuilding Deliveries and Progress
Delivered two ships in the shipbuilding division and made significant progress on various shipbuilding milestones.
Bipartisan Support for Programs
Continued bipartisan support for HII's programs reflected in the fiscal year 2025 defense appropriations and authorization bills.
Pessimistic Highlights
Workforce and Productivity Challenges
Attrition is not materially improving, impacting labor stability and productivity levels compared to pre-pandemic.
Milestone Adjustments
Adjustments to milestones including the launch of DDG 129, Jeremiah Denton, and the delivery of LHA 8 Bougainville due to workforce availability and other factors.
Minor Disruption in SSN 798 Test Program
A minor disruption to Massachusetts test program due to equipment replacement identified during testing, shifting delivery from late 2024 to early 2025.
Company Outlook
Reaffirming Shipbuilding Margin Outlook
Reaffirming the shipbuilding margin outlook for the year despite challenges.
Raising Mission Technologies Revenue Guidance
Raising the Mission Technologies revenue guidance range for the year by $50 million due to strong performance.
Free Cash Flow Outlook
Reiterating the free cash flow outlook for 2024 of $600 million to $700 million, with expectations of strong cash collections in the fourth quarter.
Q & A Highlights
Q: Can you discuss labor attrition and its impact on milestone slip-outs? (Myles Walton, Wolfe Research)
A: Achieving hiring goals, but attrition not materially improving. Focusing on broader labor execution strategies, including attendance and outsourcing programs. Milestone adjustments partly due to workforce limitations. (Chris Kastner)
Q: Can you provide an update on ship and boat contracts over the next 12 to 18 months? (Scott Mikus, Melius Research)
A: Expect to put under contract another 21 boats with pricing reflecting the current macroeconomic environment within the next 6 to 12 months. (Chris Kastner)
Q: What drove the sequential uptick in CapEx, and what portion might be recovered from Navy CapEx incentives? (Jordan Lyonnais, Bank of America)
A: Investments made with the Navy partner, adding value and expected return on capital. Specific recovery from Navy CapEx incentives not detailed. (Tom Stiehle)