Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - HUNTINGTON INGALLS INDUSTRIES, INC. | d8k.htm |
| EX-99.1 - EXHIBIT 99.1 - HUNTINGTON INGALLS INDUSTRIES, INC. | dex991.htm |
 Q2
2011 Earnings Presentation August 11, 2011
Mike Petters
President and Chief Executive Officer
Barb Niland
Corporate Vice President, Business Management
& Chief Financial Officer
Exhibit 99.2 |
 Safe
Harbor 2
Statements in this presentation, other than statements of historical fact, constitute
“forward-looking statements”
within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve risks and uncertainties that
could cause our actual results to differ materially from those expressed in these
statements. Factors that may cause such differences include: changes in government
and customer priorities and requirements (including government budgetary restraints,
shifts in defense spending, and changes in customer short-range and long-range
plans); our ability to obtain new contracts, estimate our costs and perform
effectively; risks related to our spin-off from Northrop Grumman (including our
increased costs and debt); our ability to realize the expected benefits from the
consolidation of our Ingalls facilities; natural disasters; adverse economic conditions
in the United States and globally; and other risk factors discussed in our filings with
the Securities and Exchange Commission. There may be other risks
and uncertainties
that we are unable to predict at this time or that we currently do not expect to have
a material adverse effect on our business, and we undertake no obligations to update
any forward-looking statements. Our registration statement on Form 10 and other
filings
with
the
Securities
and
Exchange
Commission
contain
more
information
on
the
types of risks and other factors that could adversely affect these statements.
|
 Highlights from the Quarter
3
Total operating margin improved to 5.8% from 5.4% last year (after adjusting for
the Avondale charge)* and up sequentially from 5.0%
Newport News operating margin 9.1%, consistent with last year and up sequentially
from 7.1%
Ingalls operating margin improved to 2.7%, up year-over-year from 2.3%
(after adjusting for the Avondale charge)* and sequentially from 2.2%
Operating cash flow was $186 million for the quarter
Strong
liquidity
of
$910
billion,
including
cash
of
$381
million
and
$529
million
under
revolver
Announced contract for DDG-113, first ship in the DDG-51 restart
Delivered SSN-781 California on Aug 7
th
, over eight months ahead of schedule
Completed highly successful Builder’s Trials on NSC-3
Stratton * See Appendix for reconciliation to the operating margin
determined under GAAP |
 Second Quarter 2011 Consolidated Results
4
Impact of
Avondale
charge*
Impact of
Avondale charge
($113M)*
Impact of
Avondale charge
($115M)*
* See Appendix for reconciliation to the operating margin determined under
GAAP |
 Ingalls Shipbuilding
5
Ingalls sales down due to lower volumes
on DDG-51 program, partially offset by
higher volume on LHA program
Segment operating income increase due
to $113 million charge last year related
to Avondale.
Segment operating margin increased
even after adjusting for charge last year
Impact of
Avondale charge
($115M)*
Impact of
Avondale
charge*
Impact of
Avondale charge
($113M)*
* See Appendix for reconciliation to the operating margin determined under
GAAP |
 Newport News Shipbuilding
6
Newport News sales down YoY due to
lower volumes on Ford
& Roosevelt
RCOH, partially offset by Lincoln RCOH
planning effort
Segment operating income down due to
volume
Operating margin consistent with last year |
 Capital Structure & Liquidity
7
Cash
on
hand
was
$381
million,
plus
$529
million
available
under
revolving
credit
facility, for $910 million total liquidity
Total debt was $1.87 billion at quarter-end
Interest expense was $30 million, up sequentially due to new capital
structure 2011 capital expenditures expected to be slightly over 3% of
sales As of
($ in millions)
June 30, 2011
Cash
381
$
Revolving credit facility*
-
$
Term loan due March 2016
568
Senior Notes due March 2018
600
Senior Notes due March 2021
600
Other debt
105
Total debt
1,873
$
* $650 million facility, $529 million available after standby
letters of credit of $121 million |
 Appendix |
 Reconciliations
9
We make reference to “segment operating income,”
“adjusted segment operating
income,”
“adjusted operating income”
and “adjusted sales and service revenues.”
Segment operating income is defined as operating income before net pension and
post-retirement benefits adjustment and deferred state income taxes. Adjusted
segment operating income is defined as segment operating income as adjusted for
the impact of the Avondale wind down. Adjusted operating income is defined as
operating income adjusted for the impact of the Avondale wind down. Adjusted sales
and service revenues is defined as sales and service revenues adjusted for the impact
of the Avondale wind down.
Segment operating income is one of the key metrics we use to evaluate operating
performance because it excludes items which do not affect segment performance. We
believe adjusted segment operating income, adjust operating income and adjusted
sales and service revenues are useful because they exclude certain non-recurring
items that we do not consider indicative of our core operating performance.
Therefore, we believe it is appropriate to disclose these measures to help investors
analyze our operating performance. However, these measures are not measures of
financial performance under GAAP and may not be defined or calculated by other
companies in the same manner. |
 Reconciliation of Non-GAAP Measure –
Segment Operating Income
10
Three Months Ended
June 30
$ in millions
2011
2010
Sales and Service Revenues
Ingalls
708
$
714
$
Newport News
872
913
$
Intersegment eliminations
(17)
(17)
Total sales and service revenues
1,563
$
1,610
$
Operating Income (Loss)
Ingalls
19
$
(94)
$
Newport News
79
84
Total Segment Operating Income (Loss)
98
(10)
As a percentage of sales
6.3%
-0.6%
Non-segment factors affecting operating income
Net pension and post-retirement benefits adjustment
(4)
(14)
Deferred state income taxes
(3)
4
Total operating income (loss)
91
$
(20)
$ |
 Reconciliation of Non-GAAP Measure –
Adjusted Operating Margin
11
Three Months Ended
June 30
$ in millions
2011
2010
Adjusted Sales and Service Revenues
Ingalls
708
$
714
$
Adjustment for Avondale wind down
-
115
Adjusted Ingalls
708
829
Newport News
872
913
$
Intersegment eliminations
(17)
(17)
Total adjusted sales and service revenues
1,563
$
1,725
$
Adjusted Operating Income (Loss)
Ingalls
19
$
(94)
$
Adjustment for Avondale wind down
-
113
Adjusted Ingalls
19
19
As a % of sales
2.7%
2.3%
Newport News
79
84
Total Adjusted Segment Operating Income (Loss)
98
103
As a % of sales
6.3%
6.0%
Non-segment factors affecting adjusted operating income
Net pension and post-retirement benefits adjustment
(4)
(14)
Deferred state income taxes
(3)
4
Total adjusted operating income (loss)
91
$
93
$
As a % of sales
5.8%
5.4% |