Record first quarter revenues of $2.8 billion, up 4.9% compared to first quarter 2023 Operating income of $154 million, up 9.2% compared to first quarter 2023 Net earnings of $153 million or $3.87 diluted earnings per share New contract awards of $3.1 billion, resulting in backlog of $48.4 billion Company reaffirms previously issued financial guidance1 NEWPORT NEWS, Va., May 02, 2024 (GLOBE NEWSWIRE) -- HII (NYSE:HII) reported first quarter 2024 revenues of $2.8 billion, up 4.9% from the first quarter of 2023, driven primarily by growth at its Mission Technologies segment. Operating income in the first quarter of 2024 was $154 million and operating margin was 5.5%, compared to $141 million and 5.3%, respectively, in the first quarter of 2023. The increases were primarily driven by higher segment operating income2 compared to the prior year. Segment operating income2 in the first quarter of 2024 was $170 million and segment operating margin2 was 6.1%, compared to $156 million and 5.8%, respectively, in the first quarter of 2023. The increases were primarily driven by higher volumes at the Mission Technologies and Ingalls segments. Net earnings in the quarter were $153 million, compared to $129 million in the first quarter of 2023. Diluted earnings per share in the quarter was $3.87, compared to $3.23 in the first quarter of 2023. Net cash used in operating activities in the quarter was $202 million and free cash flow1 was negative $274 million, compared to cash used in operating activities of $9 million and free cash flow1 of negative $49 million in the first quarter of 2023. New contract awards in the first quarter of 2024 were $3.1 billion, bringing total backlog to approximately $48.4 billion as of March 31, 2024. "The first quarter was a good start to the year," said Chris Kastner, HII's president and CEO. "Strong growth in Mission Technologies and stable shipbuilding progress provide a solid foundation for the balance of 2024 and beyond." 1The financial outlook, expectations and other forward looking statements provided by the company for 2024 and beyond reflect the company's judgment based on information available at the time of this release.2Non-GAAP measures. See Exhibit B for definitions and reconciliations. Results of Operations     Three Months Ended             March 31         ($ in millions, except per share amounts)     2024       2023     $ Change   % Change Sales and service revenues   $ 2,805     $ 2,674     $ 131   4.9 % Operating income     154       141       13   9.2 % Operating margin %     5.5 %     5.3 %       22 bps Segment operating income1     170       156       14   9.0 % Segment operating margin %1     6.1 %     5.8 %       23 bps Net earnings     153       129       24   18.6 % Diluted earnings per share   $ 3.87     $ 3.23     $ 0.64   19.8 % 1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations. Segment Operating Results Ingalls Shipbuilding     Three Months Ended             March 31         ($ in millions)     2024       2023     $ Change   % Change Revenues   $ 655     $ 577     $ 78   13.5 % Segment operating income1     60       55       5   9.1 % Segment operating margin %1     9.2 %     9.5 %       (37) bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations. Ingalls Shipbuilding revenues for the first quarter of 2024 were $655 million, an increase of $78 million, or 13.5%, from the same period in 2023, primarily driven by higher volumes in surface combatants and amphibious assault ships, partially offset by lower volumes in the Legend class National Security Cutter program. Ingalls Shipbuilding segment operating income1 for the first quarter of 2024 was $60 million, an increase of $5 million from the same period in 2023. Segment operating margin1 in the first quarter of 2024 was 9.2% compared to 9.5% in the same period last year. The increase in operating income and decrease in operating margin was primarily driven by the changes in volumes described above. Key Ingalls Shipbuilding milestones for the quarter: Completed Builder's and Acceptance trials for Richard M. McCool Jr. (LPD 29) 1Non-GAAP measures. See Exhibit B for definitions and reconciliations. Newport News Shipbuilding     Three Months Ended               March 31           ($ in millions)     2024       2023     $ Change   % Change   Revenues   $ 1,434     $ 1,506     $ (72 )   (4.8 )% Segment operating income1     82       84       (2 )   (2.4 )% Segment operating margin %1     5.7 %     5.6 %       14 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.   Newport News Shipbuilding revenues for the first quarter of 2024 were $1.4 billion, a decrease of $72 million or 4.8%, from the same period in 2023, primarily driven by lower volumes in aircraft carriers and the Virginia class submarine program. Newport News Shipbuilding segment operating income1 and segment operating margin1 were primarily driven by the lower volumes described above. Key Newport News Shipbuilding milestones for the quarter: Floated off Massachusetts (SSN 798) Completed acceptance trials for New Jersey (SSN 796) Awarded advance planning contract for the refueling and complex overhaul of USS Harry S. Truman (CVN 75) 1Non-GAAP measures. See Exhibit B for definitions and reconciliations. Mission Technologies     Three Months Ended             March 31         ($ in millions)     2024       2023     $ Change   % Change Revenues   $ 750     $ 624     $ 126   20.2 % Segment operating income1     28       17       11   64.7 % Segment operating margin %1     3.7 %     2.7 %       101 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.               Mission Technologies revenues for the first quarter of 2024 were $750 million, an increase of $126 million, or 20.2%, from the same period in 2023. The increase was primarily due to higher volumes in C5ISR and cyber, electronic warfare and space. Mission Technologies segment operating income1 for the first quarter of 2024 was $28 million, compared to $17 million in the first quarter of 2023. Segment operating margin1 in the first quarter of 2024 was 3.7%, compared to 2.7% in the same period last year. The increases were primarily driven by the higher volumes described above. Mission Technologies results included approximately $25 million of amortization of purchased intangible assets in the first quarter of 2024, compared to approximately $27 million in the same period last year. Mission Technologies EBITDA margin1 in the first quarter of 2024 was 7.7%, a decrease from 8.0% in the first quarter of 2023. Key Mission Technologies milestones for the quarter: Awarded $305 million contract to protect U.S. regional interests in the Republic of Korea Awarded $74 million contract to research, analyze and develop enhanced capabilities for vertical launching systems (VLS) onboard U.S. Navy surface ships Awarded an order to build a REMUS 620 unmanned underwater vehicle for an international customer 1Non-GAAP measures. See Exhibit B for definitions and reconciliations HII Financial Outlook1 Reaffirming FY24 outlook Reaffirming 5 year (2024-2028) free cash flow2,3 outlook of $3.6B     FY24 Outlook1     Shipbuilding Revenue2 $8.8B - $9.1B     Shipbuilding Operating Margin2 7.6% - 7.8%     Mission Technologies Revenue $2.7B - $2.75B     Mission Technologies Segment Operating Margin2 3.0% - 3.5%     Mission Technologies EBITDA Margin2 8.0% - 8.5%             Operating FAS/CAS Adjustment ($63M)     Non-current State Income Tax Benefit/Expense4 ~$0M     Interest Expense ($90M)     Non-operating Retirement Benefit $178M     Effective Tax Rate ~21%             Depreciation & Amortization ~$350M     Capital Expenditures ~5.3% of Sales     Free Cash Flow2,3 $600M - $700M   1The financial outlook, expectations and other forward-looking statements provided by the company for 2024 and beyond reflect the company's judgment based on the information available at the time of this release.2Non-GAAP measures. See Exhibit B for definitions. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward–looking GAAP and non–GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results.3Outlook is based on current tax law and assumes the provisions requiring capitalization of R&D expenditures for tax purposes are not deferred or repealed.4Outlook is based on current tax law. Repeal or deferral of provisions requiring capitalization of R&D expenditures would result in elevated non-current state income tax expense. About HII HII is a global, all-domain defense provider. HII's mission is to deliver the world's most powerful ships and all-domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world. As the nation's largest military shipbuilder, and with a more than 135-year history of advancing U.S. national security, HII delivers critical capabilities extending from ships to unmanned systems, cyber, ISR, AI/ML and synthetic training. Headquartered in Virginia, HII's workforce is 44,000 strong. For more information, please visit www.HII.com. Conference Call Information HII will webcast its earnings conference call at 9 a.m. Eastern time today. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website: www.HII.com. A telephone replay of the conference call will be available from noon today through Thursday, May 9th by calling (866) 813-9403 or (929) 458-6194 and using access code 793592. Cautionary Statement Regarding Forward-Looking Statements and Projections Statements in this earnings release and in our other filings with the Securities and Exchange Commission ("SEC"), as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to: 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 estimate our future contract costs, including cost increases due to inflation, and perform our contracts effectively; changes in procurement processes and government regulations and our ability to comply with such requirements; our ability to deliver our products and services at an affordable life cycle cost and compete within our markets; natural and environmental disasters and political instability; our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures and strategic acquisitions; adverse economic conditions in the United States and globally; health epidemics, pandemics and similar outbreaks; our ability to attract, train and retain a qualified workforce; disruptions impacting global supply, including those resulting from the ongoing conflict between Russia and Ukraine and in the Middle East; changes in key estimates and assumptions regarding our pension and retiree health care costs; security threats, including cyber security threats, and related disruptions; and other risk factors discussed in our other filings with the SEC. Additional factors include those described in our 2023 Annual Report on Form 10-K, including under the captions "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business," in our subsequent quarterly reports on Form 10-Q, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in our subsequent filings with the SEC. 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 or revise any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make. This release 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. Exhibit A: Financial Statements HUNTINGTON INGALLS INDUSTRIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)     Three Months Ended March 31 (in millions, except per share amounts)     2024       2023   Sales and service revenues         Product sales   $ 1,787     $ 1,829   Service revenues     1,018       845   Sales and service revenues     2,805       2,674   Cost of sales and service revenues