Shipbuilding Giant Huntington Ingalls Charts Successful Course In Q3: Sales Climb, Margins Expand, And More

Huntington Ingalls Industries Inc HII reported a third-quarter FY23 sales and service revenue increase of 7.2% year-over-year to $2.82 billion, beating the consensus of $2.71 billion.

EPS was $3.70 compared to $3.44 in 3Q22, beating the consensus of $3.41.

Operating income improved by 31.3% Y/Y to $172 million, and the margin expanded by 112 bps to 6.1%.

Segment operating income was $187 million (+12.7% Y/Y), and the margin was 6.6%, up 32 bps.

Revenues by segments: Ingalls Shipbuilding $711 million (+14.4% Y/Y), Newport News Shipbuilding $1.45 billion (+0.6% Y/Y), and Mission Technologies $685 million (+15.1% Y/Y).

Huntington Ingalls's operating cash flow for the nine months ended Sept. 30, 2023, totaled $408 million, compared to $165 million a year ago.

New contract awards 3Q23 were $5.4 billion, bringing the total backlog to approximately $49 billion as of Sept. 30, 2023.

HII declared a quarterly cash dividend of $1.30 per share, a $0.06 increase over the $1.24 per share dividend paid in each of the prior four quarters. The $1.30 per share dividend will be payable on Dec. 8, 2023, to shareholders of record as of the close of business on Nov. 24, 2023.

FY23 Outlook updated: Huntington Ingalls Industries sees Shipbuilding revenue of $8.5 billion-$8.6 billion (prior $8.4 billion-$8.6 billion), and the corresponding operating margin of 7.7%-8.0%

HII sees Mission Technologies revenue of ~$2.55 billion (prior ~$2.5 billion), with operating margin of 2.5%-3.0%, and Mission Technologies EBITDA margin of 8.0%-8.5%

HII expects a free cash flow of ~$500 million (prior $400 million-$450 million) and continues to expect cumulative FY20-FY24 free cash flow of ~$2.9 billion.

Price Action: HII shares are trading higher by 4.86% at $231.74 on the last check Thursday. 

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