Huntington Ingalls Cruises Past Forecasts: Q4 Sales And Earnings Spike, 2024 Outlook Fuel Optimism

Huntington Ingalls Industries Inc HII reported a fourth-quarter FY23 sales and service revenue increase of 13% year-over-year to $3.18 billion, beating the consensus of $2.78 billion.

EPS of $6.90 beat the consensus of $4.28. The stock gained after the results.

Operating income jumped to $312 million from $105 million last year, and the margin expanded by 609 bps to 9.8%.

Segment operating income was $330 million (+127.6% Y/Y), and the margin was 10.4%, up 523 bps.

Revenues by segments: Ingalls Shipbuilding $800 million (+21.6% Y/Y), Newport News Shipbuilding $1.67 billion (+5.1% Y/Y), and Mission Technologies $745 million (+23.8% Y/Y).

Huntington Ingalls’s operating cash flow for the quarter totaled $562 million, compared to $601 million a year ago.

New contract awards for 2023 were $12.5 billion, bringing the total backlog to approximately $48.1 billion as of December 31, 2023.

“We continue to invest both in our shipyards and in IRAD to both expand capacity and develop new products and solutions for our customers,” said Chris Kastner, HII’s president and CEO. “Looking ahead, over the next 5 years we expect growth of over 4% and cash generation of $3.6B.”

FY24 Outlook: Huntington Ingalls Industries sees Shipbuilding revenue of $8.8 billion-$9.1 billion, and the corresponding operating margin of 7.6%-7.8%

HII sees Mission Technologies revenue of $2.70 billion – $2.75 billion, with an operating margin of 3.0%-3.5% and Mission Technologies EBITDA margin of 8.0%-8.5%

Huntington Ingalls Industries expects a free cash flow of $600 million-$700 million.

The company expects FY20-FY24 free cash flow of $3.0 billion and FY24-FY28 free cash flow of $3.6 billion.

Price Action: HII shares are trading higher by 1.26% at $262.19 on the last check Thursday.