Huntington Ingalls Industries Thursday reported a steep fourth-quarter decline in earnings driven by lower performance in construction of attack submarines and new aircraft carriers.
Net income in the quarter tumbled 55% to $123 million, $3.15 earnings per share, from $274 million ($6.90 earnings per share) a year ago, short of consensus estimates by 13 cents per share.
Those estimates were already depressed following a difficult third quarter when Huntington Ingalls Industries (HII) said delays in an omnibus submarine building contract that factors in post-COVID labor and wage-related realities had been stalled, combined with a less experienced workforce and infrastructure constraints cut into the bottom-line.
Sales in the fourth quarter were down about 5% to $3 billion from $3.2 billion a year ago. For the year, sales increased less than 1% to $11.5 billion. Net income in 2024 fell 19% to $550 million ($13.96 earnings per share) from $681 million ($17.07 earnings per share) in 2023.
HII introduced expectations for 2025, with shipbuilding sales between $8.9 billion and $9.1 billion versus $8.7 billion in 2024. The outlook at Mission Technologies is $2.9 billion to $3.1 billion versus just over $2.9 billion in 2024.
Operating margin the Ingalls and Newport News Shipbuilding segments combined is expected to be between 5.5% and 6.5% in 2025. Margin at Mission Technologies is expected in the 4% to 4.5% range. Free cash flow in 2025 is projected at between $300 million and $500 million, versus $40 million in 2024.
HII tallied $12.1 billion in orders in 2024 and backlog stood at $48.7 billion, up 1% from $48.1 billion at the end of 2023.
Sales also fell across the company’s operating segments, with shipbuilding revenue down on lower volume on amphibious assault ships and aircraft carrier refueling and overhauls, less revenue from contract adjustments on attack submarine and carrier construction, and less nuclear support work for the Navy.
HII is an integrated subcontractor to Los Alamos National Laboratory prime Triad Nuclear Security, providing personnel for nuclear operations and manufacturing at the New Mexico nuclear-weapons design lab.
A version of this story was first published by Exchange Monitor affiliate Defense Daily.
