Huntington Ingalls Industries, Inc.’s HII third-quarter 2022 earnings of $3.44 per share declined 5.8% from $3.65 reported in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of $3.53 by 2.5%.

The year-over-year downside in earnings was mainly due to a significant tax benefit in the prior year and negative impacts related to equity investments in the current quarter.

Total Revenues

Total revenues came in at $2,626 million, missing the Zacks Consensus Estimate of $2,685.6 million by 2.2%. However, the top line improved 12.3% from $2,338 million in the year-ago quarter.

Huntington Ingalls Industries, Inc. Price, Consensus and EPS Surprise

Huntington Ingalls Industries, Inc. price-consensus-eps-surprise-chart | Huntington Ingalls Industries, Inc. Quote

Operational Performance

Huntington Ingalls reported an operating income of $131 million compared with $118 million in the third quarter of 2021. The company’s operating margin was 5%, in line with the prior-year quarter’s figure.

Huntington Ingalls received orders worth $2.1 billion in the third quarter. As a result, the company’s total backlog reached $46.7 billion as of Sep 30, 2022.

Segmental Performance

Newport News Shipbuilding: Revenues totaled $1,445 million in this segment, up 6.7% year over year due to higher revenues in naval nuclear support services, submarines and aircraft carriers.

The segment reported operating earnings of $102 million in the quarter, which improved 15.9% year over year. The increase was primarily due to contract incentives on the Columbia-class submarine program.

Ingalls Shipbuilding: Revenues in this segment totaled $623 million, down 5% year over year due to lower revenues in the Legend-class National Security Cutter program and amphibious assault ships.

The segment’s operating income of $50 million declined 12% year over year. The decrease was primarily driven by lower-risk retirement on Ted Stevens (DDG 128) and USS Delbert D. Black (DDG 119).

Mission Technologies: Revenues in this segment totaled $595 million, up a solid 51% year over year. The upside was primarily driven by higher volumes from Defense & Federal Solutions, attributable to the acquisition of Alion.

The operating income improved 7.7% year over year to $14 million.

Financial Update

The company’s cash and cash equivalents at the end of the third quarter of 2022 were $117 million, down from $627 million as of Dec 31, 2021.

The long-term debt at the end of the third quarter of 2022 was $2,605 million compared with the 2021-end level of $3,298 million.

Cash outflow from operating activities during the first nine months of 2022 was $165 million compared to cash flow of $489 million during the first nine months of 2021.

Guidance

Huntington Ingalls updated its 2022 guidance. The company now expects 2022 shipbuilding revenues in the range of $8.2-$8.3 billion compared with the prior range of $8.2-$8.5 billion.

For Mission Technologies, it now expects revenues to be approximately $2.4 billion compared to the prior guidance range of $2.4-$2.6 billion.

The company now expects free cash flow of approximately $350 million compared with the prior guidance range of $200-$250 million.

Zacks Rank

Huntington Ingalls currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Defense Releases

Leidos Holdings, Inc.’s LDOS third-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.56 by 1.9%. However, the bottom line declined 11.7% from the $1.80 per share registered a year ago.

Leidos Holdings generated total revenues of $3,600 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,543.9 million by 1.6%. The top line also improved 4% year over year.

Northrop Grumman Corporation NOC reported third-quarter 2022 earnings of $5.89 per share, which missed the Zacks Consensus Estimate of $6.09 by 3.3%. The bottom line declined by 11.2% from the $6.63 reported in the year-ago quarter.

In the third quarter of 2022, Northrop Grumman reported total sales of $9 billion, which missed the Zacks Consensus Estimate of $9.15 billion by 1.6%. However, sales increased by 3% from the year-ago quarter’s $8.7 billion.

Teledyne Technologies Inc. TDY reported third-quarter 2022 adjusted earnings of $4.54 per share, which surpassed the Zacks Consensus Estimate of $4.30 by 5.6%. The bottom line improved 4.6% from the year-ago quarter’s $4.34 per share.

Total sales in the third quarter amounted to $1,363.3 million, which came in line with the Zacks Consensus Estimate. The top line improved 3.9% from the $1,311.9 million reported a year ago.

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