![]() Q2 2011 Earnings Presentation August 11, 2011 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 restraints, shifts in defense spending, and changes in customer short-range and long-range plans); our ability to obtain new contracts, estimate our costs and perform effectively; risks related to our spin-off from Northrop Grumman (including our increased costs and debt); our ability to realize the expected benefits from the consolidation of our Ingalls facilities; natural disasters; adverse economic conditions in the United States and globally; and other risk factors discussed in our filings with the 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 obligations to update any forward-looking statements. Our registration statement on Form 10 and other filings with the Securities and Exchange Commission contain more information on the types of risks and other factors that could adversely affect these statements. |
![]() Highlights from the Quarter 3 Total operating margin improved to 5.8% from 5.4% last year (after adjusting for the Avondale charge)* and up sequentially from 5.0% Newport News operating margin 9.1%, consistent with last year and up sequentially from 7.1% Ingalls operating margin improved to 2.7%, up year-over-year from 2.3% (after adjusting for the Avondale charge)* and sequentially from 2.2% Operating cash flow was $186 million for the quarter Strong liquidity of $910 billion, including cash of $381 million and $529 million under revolver Announced contract for DDG-113, first ship in the DDG-51 restart Delivered SSN-781 California on Aug 7 th , over eight months ahead of schedule Completed highly successful Builder’s Trials on NSC-3 Stratton * See Appendix for reconciliation to the operating margin determined under GAAP |
![]() Second Quarter 2011 Consolidated Results 4 Impact of Avondale charge* Impact of Avondale charge ($113M)* Impact of Avondale charge ($115M)* * See Appendix for reconciliation to the operating margin determined under GAAP |
![]() Ingalls Shipbuilding 5 Ingalls sales down due to lower volumes on DDG-51 program, partially offset by higher volume on LHA program Segment operating income increase due to $113 million charge last year related to Avondale. Segment operating margin increased even after adjusting for charge last year Impact of Avondale charge ($115M)* Impact of Avondale charge* Impact of Avondale charge ($113M)* * See Appendix for reconciliation to the operating margin determined under GAAP |
![]() Newport News Shipbuilding 6 Newport News sales down YoY due to lower volumes on Ford & Roosevelt RCOH, partially offset by Lincoln RCOH planning effort Segment operating income down due to volume Operating margin consistent with last year |
![]() Capital Structure & Liquidity 7 Cash on hand was $381 million, plus $529 million available under revolving credit facility, for $910 million total liquidity Total debt was $1.87 billion at quarter-end Interest expense was $30 million, up sequentially due to new capital structure 2011 capital expenditures expected to be slightly over 3% of sales As of ($ in millions) June 30, 2011 Cash 381 $ Revolving credit facility* - $ Term loan due March 2016 568 Senior Notes due March 2018 600 Senior Notes due March 2021 600 Other debt 105 Total debt 1,873 $ * $650 million facility, $529 million available after standby letters of credit of $121 million |
![]() Appendix |
![]() Reconciliations 9 We make reference to “segment operating income,” “adjusted segment operating income,” “adjusted operating income” and “adjusted sales and service revenues.” Segment operating income is defined as operating income before net pension and post-retirement benefits adjustment and deferred state income taxes. Adjusted segment operating income is defined as segment operating income as adjusted for the impact of the Avondale wind down. Adjusted operating income is defined as operating income adjusted for the impact of the Avondale wind down. Adjusted sales and service revenues is defined as sales and service revenues adjusted for the impact of the Avondale wind down. Segment operating income is one of the key metrics we use to evaluate operating performance because it excludes items which do not affect segment performance. We believe adjusted segment operating income, adjust operating income and adjusted sales and service revenues are useful because they exclude certain non-recurring 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 Measure – Segment Operating Income 10 Three Months Ended June 30 $ in millions 2011 2010 Sales and Service Revenues Ingalls 708 $ 714 $ Newport News 872 913 $ Intersegment eliminations (17) (17) Total sales and service revenues 1,563 $ 1,610 $ Operating Income (Loss) Ingalls 19 $ (94) $ Newport News 79 84 Total Segment Operating Income (Loss) 98 (10) As a percentage of sales 6.3% -0.6% Non-segment factors affecting operating income Net pension and post-retirement benefits adjustment (4) (14) Deferred state income taxes (3) 4 Total operating income (loss) 91 $ (20) $ |
![]() Reconciliation of Non-GAAP Measure – Adjusted Operating Margin 11 Three Months Ended June 30 $ in millions 2011 2010 Adjusted Sales and Service Revenues Ingalls 708 $ 714 $ Adjustment for Avondale wind down - 115 Adjusted Ingalls 708 829 Newport News 872 913 $ Intersegment eliminations (17) (17) Total adjusted sales and service revenues 1,563 $ 1,725 $ Adjusted Operating Income (Loss) Ingalls 19 $ (94) $ Adjustment for Avondale wind down - 113 Adjusted Ingalls 19 19 As a % of sales 2.7% 2.3% Newport News 79 84 Total Adjusted Segment Operating Income (Loss) 98 103 As a % of sales 6.3% 6.0% Non-segment factors affecting adjusted operating income Net pension and post-retirement benefits adjustment (4) (14) Deferred state income taxes (3) 4 Total adjusted operating income (loss) 91 $ 93 $ As a % of sales 5.8% 5.4% |