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d04ee7caa6fd9bde8df5fdfabf1846b787eeb6cd648f847beb5400daa427e15f

The low **cash and cash equivalents** in Q1 2024, which dropped to **$10 million** from **$430 million** at the end of December 2023, resulted from several factors. **Operating activities** saw a dramatic net cash outflow of **$202 million** in Q1 2024 compared to **$9 million** in Q1 2023, driven by timing differences in collections and working capital adjustments such as increases in accounts receivable and contract assets. Additionally, the negative **free cash flow** of **$274 million** (as opposed to **$49 million** negative free cash flow in Q1 2023) significantly impacted the overall cash position. The company also made a **$145 million** debt repayment related to the Alion acquisition, and further reduced cash through **dividend payments** of **$51 million** and a **share repurchase** costing **$62 million**.  **[0001501585-24-000011_hii2024q1earningsrelease.htm:0]** **[HII_3382117_3]** **[HII_3382117_19]** 

Why was Cash and cash equivalents so low in Q1 2024?

The spike in **Cash and cash equivalents** in Q4 2024 was primarily driven by **strong operating cash flows**—with HII generating **$393 million in net cash from operating activities**—combined with disciplined **capital expenditures** of **$353 million**, managed **shareholder distributions** totaling **$368 million**, and controlled **pension contributions** of **$47 million**. These factors, along with a positive **free cash flow** of **$40 million**, collectively enabled the company to significantly boost its cash reserves from **$430 million** at the end of 2023 to **$831 million** at the end of 2024.  **[0001501585-25-000004_hii2024q4earningsrelease.htm:8]** **[HII_3414711_7]** **[0001501585-25-000004_hiiq42024earningspresent.htm:2]** **[0001501585-25-000004_hiiq42024earningspresent.htm:7]** 

What drove the spike in Cash and cash equivalents in Q4 2024?

The increase appears to be linked to the reclassification of portions of long-term debt that are due within the next 12 months—this typically happens when scheduled repayments or maturities of debt instruments are approaching. However, the documents do not offer further specific explanations for the sharp change in Q2 2024.  **[0001501585-24-000034_hii2024q2earningsrelease.htm:6]** **[0001501585-24-000036_hii-20240630.htm:2]** 

Why did the current portion of long-term debt sharply increase in Q2 2024?

The jump in **long-term debt in Q4 2024** was driven by a mix of strategic financing and debt management activities. In November 2024, HII issued **$500 million** senior notes due 2030 and another **$500 million** senior notes due 2035 for general corporate purposes. In addition, the company repaid **$84 million** in May 2024 related to Mississippi Economic Development Revenue Bonds and prepaid the remainder of a Term Loan amounting to **$145 million** in January 2024. Furthermore, in September 2024, HII amended its credit facility—expanding it from **$1.5 billion** to **$1.7 billion** and extending the maturity by five years—which also contributed to the overall increase, moving from **$2,214 million** at the end of 2023 to **$2,700 million** by the end of 2024.  **[0001501585-25-000006_hii-20241231.htm:120]** **[0001501585-25-000006_hii-20241231.htm:121]** **[0001501585-25-000004_hii2024q4earningsrelease.htm:8]** 

What caused the jump in long-term debt in Q4 2024?

The increase in total assets in Q4 2024 was primarily driven by **a significant rise in cash and cash equivalents** (increasing from **$430 million** to **$831 million**), **growth in pension plan assets** (which increased from **$888 million** to **$1,422 million**), and **an increase in property, plant, and equipment (net)** (growing from **$3,296 million** to **$3,450 million**). These factors contributed to the overall growth despite partial offsets from declines in accounts receivable and other intangible assets.  **[0001501585-25-000004_hii2024q4earningsrelease.htm:8]** 

What factors contributed to the increase in total assets in Q4 2024?

f37efbcf8f8229915f8b6e3b2ba4df5d68f2b01666ec51b1740d6d01e2a5a853

Operating income in Q3 2024 was notably low at **$82 million** due to several factors. The primary reason was **unfavorable cumulative adjustments at Newport News Shipbuilding**, which included a **$78 million net unfavorable adjustment** composed of **$34 million** related to Block IV of the Virginia-class submarine program, **$16 million** on the Enterprise CVN 80 and Doris Miller CVN 81 two-carrier contract, and **$14 million** on the refueling and complex overhaul of the USS John C. Stennis CVN 74. Additionally, **lower performance at Ingalls Shipbuilding** on amphibious assault ships and surface combatants further affected results, and overall segment operating income declined significantly from **$187 million** in Q3 2023 to **$97 million** in Q3 2024, with a reduced operating margin of **3.0%** compared to **6.1%** previously.  **[0001501585-24-000040_hii2024q3earningsrelease.htm:3]** **[HII_3405168_4]** **[HII_3405168_5]** 

Why was Operating Income so low in Q3 2024?

HII’s **net earnings** dropped in Q3 2024 primarily due to a significant decline in **operating income**, which fell by **$90 million** (a 52.3% decrease) compared to Q3 2023. This reduction was largely driven by **unfavorable cumulative adjustments** at Newport News Shipbuilding amounting to **$78 million** (including specific issues with the Block IV of the Virginia-class program, and the Enterprise CVN 80 and Doris Miller CVN 81 two-carrier contract, as well as adjustment costs related to the USS John C. Stennis CVN 74). Additionally, lower performance at Ingalls Shipbuilding, a **2.4% decline in consolidated revenues**, and reduced segment operating margins (dropping from **6.6%** to **3.5%**) further contributed to the net earnings decline.  **[0001501585-24-000040_hii2024q3earningsrelease.htm:0]** **[HII_3405168_4]** **[0001501585-24-000040_hii2024q3earningsrelease.htm:3]** 

What drove the drop in Net Earnings in Q3 2024?

EPS declined significantly in Q3 2024 due to several factors. **Lower operating income** was a major contributor, with a drop from **$172 million in Q3 2023 to $82 million in Q3 2024**, largely driven by **unfavorable cumulative adjustments**—including a **$78 million net unfavorable adjustment** at Newport News Shipbuilding tied to the Virginia-class submarine program and aircraft carriers—and **lower performance** at Ingalls Shipbuilding.  **[0001501585-24-000040_hii2024q3earningsrelease.htm:0]** **[HII_3405168_4]** **[0001501585-24-000040_hii2024q3earningsrelease.htm:3]**  Additionally, a **2.4% year-over-year decrease in total revenues**, driven by reduced volumes at key shipbuilding segments, coupled with **higher cost pressures** from workforce inexperience, supply chain delays, and a slight increase in interest expense (from **$22 million** to **$23 million**), further eroded net earnings, which fell from **$148 million in Q3 2023 to $101 million in Q3 2024**.  **[0001501585-24-000042_hii-20240930.htm:2]** **[0001501585-24-000040_hii2024q3earningsrelease.htm:0]** **[HII_3405168_4]** **[0001501585-24-000040_hii2024q3earningsrelease.htm:3]** **[HII_3405168_6]** 

Why did EPS decline significantly in Q3 2024?

The jump in **Service Revenues in Q1 2024** was primarily driven by **higher volumes at Mission Technologies**. This increase was notably impacted by growth in areas including **C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance)** and **CEW&S (Cyber, Electronic Warfare, and Space)**, contributing to an overall rise of **$173 million** or **20%** compared to Q1 2023.  **[0001501585-24-000013_hii-20240331.htm:26]** 

What factors led to the jump in Service Revenues in Q1 2024?

HII’s full-year decline in net earnings for FY 2024 was driven by several key factors. **Lower segment operating income** across its major segments was a major contributor, with significant declines such as a **$133 million drop for Newport News Shipbuilding** and a **$151 million drop for Ingalls Shipbuilding**, partially offset by a modest increase at Mission Technologies.  **[HII_3414711_6]** **[0001501585-25-000004_hii2024q4earningsrelease.htm:2]**  Additionally, the **absence of one-time favorable items**—including a **favorable court judgment sale at Ingalls Shipbuilding** and a **favorable insurance claim settlement at Mission Technologies**—that benefited FY 2023 exacerbated the decline.  **[HII_3414711_6]** **[0001501585-25-000004_hii2024q4earningsrelease.htm:0]**  **Higher costs and lower margins**, as indicated by the operating margin falling from **6.8% in 2023 to 4.6% in 2024**, along with **negative cumulative adjustments** (notably **$154 million on the Virginia-class submarine program**) and **increased general and administrative expenses** (up to **$973 million in FY 2024**) further compounded the reduction in net earnings.  **[0001501585-25-000006_hii-20241231.htm:87]** **[0001501585-25-000004_hii2024q4earningsrelease.htm:7]** 

What contributed to the full-year decline in Net Earnings in FY 2024?

6efdc6f965d1b7375c8e61669cf95e1af07df5f4404d4ca282eded08e76da6ca

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736ea22deb5e36352f9b581680e27f5f00904025a784701bea6c4da629de60fe

HUNTINGTON INGALLS INDUSTRIES (HII)

Financials