Huntington Ingalls Industries, Inc.’s HII third-quarter 2024 earnings of $2.56 per share declined 30.8% from $3.70 reported in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of $3.84 by 33.3%.

The year-over-year decline can be attributed to poor sales as well as operating income delivered by HII in the third quarter.

Total Revenues

Revenues for the quarter totaled $2.75 billion, which missed the Zacks Consensus Estimate of $2.88 billion by 4.5%. The top line also declined 2.4% from $2.82 billion recorded in the year-ago quarter due to lower sales volume from its Ingalls and Newport News business segments.

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise

Huntington Ingalls Industries, Inc. price-consensus-eps-surprise-chart | Huntington Ingalls Industries, Inc. Quote

Operational Performance

Huntington Ingalls reported segment operating income of $97 million compared with $187 million in the third quarter of 2023. The metric expanded 310 basis points from the prior-year figure to 3.5%. The deterioration in operating income was primarily due to dismal performance at Newport News Shipbuilding unit, which included a net unfavorable cumulative adjustment of $78 million, as well as lower performance at Ingalls Shipbuilding unit.

HII received orders worth $3.6 billion in the reported quarter. As a result, its total backlog reached $49.4 billion as of Sept. 30, 2024, compared with $48.5 billion as of June 30, 2024.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1.41 billion in this segment, down 2.8% year over year. The deterioration was on account of lower volumes from naval nuclear support services and unfavorable cumulative adjustments on the Virginia-class submarine program and aircraft carriers.

The segment reported operating earnings of $15 million, down 83.3% year over year. This was due to poor performance from the Virginia-class submarine program and aircraft carriers. Unfavorable cumulative adjustment, including $34 million on Block IV of the Virginia-class submarine program, also affected this unit’s operating earnings. 

Ingalls Shipbuilding: Revenues in this segment totaled $664 million, down 6.6% year over year, primarily due to lower volumes in amphibious assault ships and the Legend-class National Security Cutter program.

The segment’s operating income of $49 million dropped 32.9% year over year due to lower performance from amphibious assault ships and surface combatants.

Mission Technologies: Revenues in this segment totaled $709 million, up 3.5% year over year. The upside was primarily driven by higher volumes from cyber, electronic warfare and space programs.

The operating income soared 37.5% year over year to $33 million, driven by higher volumes and improved equity income from nuclear and environmental joint ventures.

Financial Update

The company’s cash and cash equivalents as of Sept. 30, 2024, totaled $10 million, significantly down from $430 million recorded as of Dec. 31, 2023.

The long-term debt as of Sept. 30, 2024, totaled $1.71 billion compared with the 2023-end level of $2.21 billion.

The cash flow from operating activities amounted to $2 million compared with $408 million a year ago.

HII generated a free cash outflow worth $273 million in the first nine months of 2024 against a free cash inflow of $258 million in the prior-year period.

Guidance

Huntington Ingalls updated its 2024 guidance. The company now expects its 2024 shipbuilding revenues to be approximately $8.8 billion compared with the prior guidance of $8.8-$9.1 billion.

For Mission Technologies, HII now expects revenues to be in the range of $2.80-$2.85 billion, up from the prior guidance of $2.75-$2.80 billion.

The company now expects free cash flow to be in the band of $0-$100 million for 2024 compared with the previous projection of $600-$700 million.

Zacks Rank

Huntington Ingalls currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Hexcel Corporation HXL reported third-quarter 2024 adjusted earnings of 47 cents per share, which improved 23.7% from the year-ago figure of 38 cents. The bottom line also surpassed the Zacks Consensus Estimate by 2.2%.

Net sales totaled $456.5 million, which beat the Zacks Consensus Estimate of $456.2 million by 0.1%. The top line also witnessed an improvement of 8.8% from the year-ago reported sales of $419.5 million.

RTX Corporation’s RTX third-quarter 2024 adjusted earnings per share (EPS) of $1.45 beat the Zacks Consensus Estimate of $1.33 by 9%. The bottom line also improved 16% from the year-ago level of $1.25, driven by growth in adjusted segment operating profit and a lower effective tax rate.

Its third-quarter sales totaled $20.09 billion, which surpassed the Zacks Consensus Estimate of $19.91 billion by 0.9%. The top line also surged a solid 49.2% from $13.46 billion recorded in the third quarter of 2023.

Textron Inc. TXT reported third-quarter 2024 adjusted earnings of $1.40 per share, which missed the Zacks Consensus Estimate of $1.46 by 4.1%. The bottom line also declined 6% from $1.49 in the year-ago quarter.

TXT reported total revenues of $3.43 billion, which missed the Zacks Consensus Estimate of $3.51 billion by 2.3%. However, revenues increased 2.5% from the year-ago level of $3.34 billion.

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