Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - HUNTINGTON INGALLS INDUSTRIES, INC. | d493476d8k.htm |
| EX-99.1 - EXHIBIT 99.1 - HUNTINGTON INGALLS INDUSTRIES, INC. | d493476dex991.htm |
 Q4
2012 Earnings Presentation February 27, 2013
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
constraints, shifts in defense spending, and changes in customer short- range and
long-range plans); our ability to obtain new contracts, estimate our future contract
costs and perform our contracts effectively; changes in government regulations and procurement
processes and our ability to comply with such requirements; our ability to realize the
expected benefits from consolidation of our Ingalls facilities; natural disasters;
adverse economic conditions in the United States and globally; risks related to our
indebtedness and leverage; and other risk factors discussed in our filings with the U.S.
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 obligation to update any
forward-looking statements. This presentation also contains non-GAAP financial
measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial
measures should not be construed as being more important than comparable GAAP measures.
You should not place undue reliance on any forward-looking statements that me may
make. |
 * Adjusted for the FAS/CAS Adjustment. See Appendix for reconciliation to the
comparable GAAP figures. Highlights from the Quarter and FY 2012
3
Revenues were $1.8 billion for Q4 and $6.7 billion for the year
Diluted EPS of $0.98 for Q4 and $2.91 for the year
Pension-adjusted Diluted EPS* of $1.30 for Q4 and $3.95 for the year
Continued strong segment operating performance
Ingalls operating margin was 5.3% for the quarter and 3.4% for the year
Newport News operating margin was 9.1% for the quarter and the year
Continued progress on underperforming ships in FY 2012
Delivered LPD-23 Anchorage and LPD-24 Arlington
On track to deliver LPD-25 Somerset
and LHA-6 America
in 2013
Announced $6 billion of new contract awards in FY 2012 with a $15.5 billion
backlog Detail
design
and
construction
of
LHA-7
Tripoli
and
LPD-27
(unnamed)
Planning efforts for CVN-72 USS Abraham Lincoln and continued
long-lead- time procurement and construction preparation of
CVN-79 John F. Kennedy |
 Fourth Quarter 2012 Consolidated Results
4
* Adjusted for the FAS/CAS Adjustment and the non-cash goodwill
impairment adjustment in 2011. See Appendix for reconciliation to the comparable GAAP figures.
$1,735
$1,823
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
Q4 2011
Q4 2012
Consolidated Revenues
$121
$106
$118
$131
$-
$20
$40
$60
$80
$100
$120
$140
Q4 2011
Q4 2012
Operating Income
GAAP
Pension
-
adjusted*
7.0%
5.8%
6.8%
7.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q4 2011
Q4 2012
Operating Margin
GAAP
Pension-adjusted*
$1.35
$0.98
$1.25
$1.30
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Q4 2011
Q4 2012
Diluted EPS
GAAP
Pension-adjusted* |
 FY
2012 Consolidated Results 5
* Adjusted for the FAS/CAS Adjustment and the non-cash goodwill
impairment charge in 2011. See Appendix for reconciliation to the comparable GAAP figures.
$6,575
$6,708
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
FY 2011
FY 2012
Consolidated Revenues
$100
$358
$413
$438
$-
$100
$200
$300
$400
$500
FY 2011
FY 2012
Operating Income
GAAP
Pension-adjusted*
1.5%
5.3%
6.3%
6.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
FY 2011
FY 2012
Operating Margin
GAAP
Pension-adjusted*
$(2.05)
$2.91
$4.15
$3.95
$(3.00)
$(2.00)
$(1.00)
$-
$1.00
$2.00
$3.00
$4.00
$5.00
FY 2011
FY 2012
Diluted EPS
GAAP
Pension-adjusted* |
 Ingalls Shipbuilding –
Fourth Quarter Results
6
Ingalls Q4 revenues were up YoY due to
higher volume on amphibious assault
ships
Q4 segment operating income and
margin were up YoY due to unfavorable
cumulative adjustments on amphibious
assault ships in 2011
* Adjusted for the non-cash goodwill impairment adjustment in 2011. See
Appendix for reconciliation to the unadjusted figures. $676
$ 722
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
$25
$38
$15
$-
$5
$10
$15
$20
$25
$30
$35
$40
3.7%
5.3%
2.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Q4 2011
Q4 2012
Segment Revenues
Q4 2011
Q4 2012
Operating Income
GAAP
Adjusted*
Q4 2011
Q4 2012
Operating Margin
GAAP
Adjusted* |
 Ingalls Shipbuilding –
FY 2012 Results
7
Ingalls 2012 revenue decreased due to
lower amphibious assault volume
following deliveries of LPD-23 and -24 in
2012 and LPD-22 in 2011
Ingalls 2012 operating income and
margin increased as a result of improved
overall performance
* Adjusted for the non-cash goodwill impairment adjustment in 2011. See
Appendix for reconciliation to the unadjusted figures. $2,885
$2,840
$2,400
$2,500
$2,600
$2,700
$2,800
$2,900
$3,000
FY 2011
FY 2012
Segment Revenues
$(220)
$97
$70
$(250)
$(200)
$(150)
$(100)
$(50)
$
-
$50
$100
$150
FY 2011
FY 2012
Operating Income
GAAP
Adjusted*
nm
3.4%
2.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
FY 2011
FY 2012
Operating Margin
GAAP
Adjusted* |
 Newport News Shipbuilding
8
Newport News revenues were up in Q4 as
compared to Q4 2011 due to higher
volume on aircraft carriers
Segment operating income increased for
the year due to favorable cumulative
adjustments on the CVN-65 EDSRA and
CVN-71 RCOH
Segment operating margin decrease for
the quarter driven by non-cash workers’
compensation expense
$1,078
$ 3,766
$1,122
$ 3,940
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Q4 2011 Q4 2012
2011 2012
Segment Revenues
$102
$342
$102
$360
$-
$50
$100
$150
$200
$250
$300
$350
$400
Q4 2011 Q4 2012
2011 2012
Operating Income
9.5%
9.1%
9.1%
9.1%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
Q4 2011 Q4 2012
2011 2012
Operating Margin |
 2013
Retirement Related Assumptions 9
($ in millions)
2013
2012
Pension Discount Rate
4.24%
5.23%
Expected Return on Assets
7.50%
8.00%
Qualified Pension Contributions
1
$270 –
$330
$236
Cash Contributions, Net of CAS
Recovery
2
$110 –
$185
$122
Net FAS/CAS Adjustment
2
$70 –
$100
$80
CAS Expense
2
$185 –
$200
$148
FAS Expense
2
$270 –
$285
$228
1
2013 amounts are projected and subject to change.
2
Includes pension & other postretirement benefits. 2013 amounts are estimates
and will change upon completion of remeasurement. |
 Appendix |
 Reconciliations
11
We
make
reference
to
“segment
operating
income,”
“segment
operating
margin,”
“adjusted
segment
operating
income,”
“adjusted
segment
operating
margin,”
“pension-adjusted
total
operating
income,”
“pension-adjusted
operating
margin,”
“pension-adjusted
net
earnings,”
“pension-
adjusted
diluted
earnings
per
share,”
and
“free
cash
flow.”
Segment operating income
is defined as operating income before the FAS/CAS Adjustment and deferred state income
taxes. Segment operating margin
is segment operating income as a percentage of total sales and service
revenues. Adjusted
segment
operating
income
is
defined
as
segment
operating
income
as
adjusted
for
the
impact
of
the
goodwill
impairment
charge
in
2011.
Adjusted
segment
operating
margin
is
defined
as
adjusted
segment
operating
income
as
a
percentage
of
segment
sales
and
service
revenues.
Pension-adjusted
total
operating
income
is
defined
as
total
operating
income
adjusted
for
the
impact
of
the
goodwill
impairment
charge
in
2011 and the FAS/CAS Adjustment.
Pension-adjusted
operating
margin
is
defined
as
pension-adjusted
total
operating
income
as
a
percentage
of
total
sales
and
service
revenues.
Pension-adjusted
net
earnings
is
defined
as
net
income
adjusted
for
the
impact
of
the
goodwill
impairment
charge
in
2011
and
the
tax
adjusted FAS/CAS Adjustment.
Pension-adjusted
diluted
earnings
per
share
is
defined
as
pension-adjusted
net
earnings
divided
by
the
adjusted
weighted-average
diluted
common shares outstanding.
Free
cash
flow
represents
cash
provided
by
operating
activities
less
capital
expenditures.
Segment
operating
income
and
segment
operating
margin
are
two
of
the
key
metrics
we
use
to
evaluate
operating
performance
because
they
exclude
items
that
do
not
affect
segment
performance.
We
believe
adjusted
segment
operating
income,
adjusted
segment
operating
margin,
pension-adjusted total operating income, pension-adjusted operating margin,
pension-adjusted net earnings, pension-adjusted diluted earnings per share, and
free cash flow are also useful metrics because they exclude non-operating 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 Measures –
Segment
Operating Income and Segment Operating Margin
12
Three Months Ended
Year Ended
December 31
December 31
$ in millions
2012
2011
2012
2011
Sales and Service Revenues
Ingalls
722
$
676
$
2,840
$
2,885
$
Newport News
1,122
1,078
3,940
3,766
Intersegment eliminations
(21)
(19)
(72)
(76)
Total sales and service revenues
1,823
$
1,735
$
6,708
$
6,575
$
Operating Income (Loss)
Ingalls
38
$
25
$
97
$
(220)
$
As a percentage of revenues
5.3%
3.7%
3.4%
nm
Newport News
102
102
360
342
As a percentage of revenues
9.1%
9.5%
9.1%
9.1%
Total Segment Operating Income (Loss)
140
127
457
122
As a percentage of revenues
7.7%
7.3%
6.8%
1.9%
Non-segment factors affecting operating income
FAS/CAS Adjustment
(25)
(7)
(80)
(23)
Deferred state income taxes
(9)
1
(19)
1
Total operating income (loss)
106
$
121
$
358
$
100
$
Interest expense
(29)
(29)
(117)
(104)
Federal income taxes
(27)
(25)
(95)
(96)
Total net earnings (loss)
50
$
67
$
146
$
(100)
$ |
 Reconciliation of Non-GAAP Measures –
Adjusted
Figures
13
Three Months Ended
Year Ended
December 31
December 31
$ in millions
2012
2011
2012
2011
Adjusted Segment Operating Income (Loss)
Operating Income (Loss)
106
$
121
$
358
$
100
$
As a percentage of revenues
5.8%
7.0%
5.3%
1.5%
Non-segment factors affecting operating income
FAS/CAS Adjustment
25
7
80
23
Deferred state income taxes
9
(1)
19
(1)
Total Segment Operating Income (Loss)
140
$
127
$
457
$
122
$
As a percentage of revenues
7.7%
7.3%
6.8%
1.9%
Ingalls
38
$
25
$
97
$
(220)
$
Adjustment for non-cash goodwill impairment
-
(10)
-
290
Adjusted Ingalls
38
15
97
70
As a percentage of revenues
5.3%
2.2%
3.4%
2.4%
Newport News
102
102
360
342
As a percentage of revenues
9.1%
9.5%
9.1%
9.1%
Adjusted Segment Operating Income (Loss)
140
117
457
412
As a percentage of revenues
7.7%
6.7%
6.8%
6.3%
Pension-adjusted Total Operating Income (Loss)
Operating Income (Loss)
106
$
121
$
358
$
100
$
As a percentage of revenues
5.8%
7.0%
5.3%
1.5%
Adjustment for non-cash goodwill impairment
-
(10)
-
290
FAS/CAS Adjustment
25
7
80
23
Pension-adjusted Total Operating Income (Loss)
131
$
118
$
438
$
413
$
As a percentage of revenues
7.2%
6.8%
6.5%
6.3% |
 Reconciliation of Non-GAAP Measures –
Adjusted
Figures (continued)
14
Three Months Ended
Year Ended
December 31
December 31
$ in millions
2012
2011
2012
2011
Pension-adjusted Net Earnings (Loss)
Net Earnings (Loss)
50
$
67
$
146
$
(100)
$
Adjustment for non-cash goodwill impairment
-
(10)
-
290
After-tax FAS/CAS Adjustment
1
16
5
52
15
Pension-adjusted Net Earnings (Loss)
66
62
198
205
Per Share Amounts
Weighted-Average Diluted Shares Outstanding
50.8
49.7
50.1
48.8
Dilutive impact excluded due to net loss position
-
-
-
0.6
Adjusted Weighted-Average Diluted Shares Outstanding
2
50.8
49.7
50.1
49.4
Pension-adjusted Diluted EPS
Diluted earnings (loss) per share
0.98
$
1.35
$
2.91
$
(2.05)
$
Non-cash goodwill impairment per share
-
(0.20)
-
5.94
After-tax FAS/CAS Adjustment per share
0.32
0.10
1.04
0.31
Impact of Adjusted Weighted-Average Diluted Shares Outstanding
-
-
-
(0.05)
Pension-adjusted Diluted EPS
1.30
$
1.25
$
3.95
$
4.15
$
1
Tax effected at 35% federal statutory tax rate.
2
Adjusted diluted average common shares outstanding is a non-GAAP measure defined
as weighted average common shares outstanding plus the dilutive effect of stock
options and stock awards. This measure has been provided for consistency and comparability of the 2011 results with earnings
per share from 2012. |
 Reconciliation of Non-GAAP Measures –
Free Cash
Flow
15
Three Months Ended
Year Ended
December 31
December 31
$ in millions
2012
2011
2012
2011
Net cash provided by (used in) operating activities
373
$
474
$
332
$
528
$
Less: Capital expenditures
(70)
(78)
$
(162)
(197)
$
Free cash flow
303
$
396
$
170
$
331
$ |