Huntington Ingalls Industries (HII) 8-K Huntington Ingalls Industries Reports Third Quarter Results

Q3 2011 Earnings Presentation

November 10, 2011

Mike Petters

President and Chief Executive Officer

Barb Niland

Corporate Vice President, Business Management

& Chief Financial Officer

Exhibit 99.2

2

Safe Harbor

2

Statements in this release, 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

constraints, 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 leverage); risks related to the amount of the estimated

goodwill impairment charge versus the final amount and any additional impairment

charges; our ability to realize the expected benefits from consolidation of our Gulf

Coast facilities; natural disasters; adverse economic conditions

in the United States

and globally; and other risk factors discussed in our filings with the U.S. 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.

3

Highlights from the Quarter

Adjusted diluted EPS* of $1.05

Total adjusted operating margin* improved to 6.9% from 4.6% last

year and up

sequentially from 5.8%

Newport News operating margin was 10.7%, up 1.0% over last year and up

sequentially from 9.1%

Ingalls adjusted operating margin* was 2.6% up from last year and flat sequentially

from 2.7%

Operating cash flow was $232 million for the quarter

Announced contract for DDG-114, the fifth National Security Cutter and several U.S.

Navy support services contracts

Delivered the third U.S. Coast Guard National Security Cutter (WMSL 752)

Delivered the SSN-781 USS California

* Adjusted for non-cash goodwill impairment charge.  See Appendix for reconciliation to the net loss per share and operating margin determined

under GAAP

4

Third Quarter 2011 Consolidated Results

* Adjusted for non-cash goodwill impairment charge.  See Appendix for reconciliation to the operating income, operating margin and net loss per

share determined under GAAP

Ingalls Shipbuilding

5

Ingalls sales were down YoY due to

lower volumes on DDG-51 program,

partially offset by higher volume on NSC

program

Adjusted segment operating income*

improved over last year due to lower net

unfavorable performance adjustments in

2011

* Adjusted for non-cash goodwill impairment charge.  See Appendix for reconciliation to the operating income and operating margin determined

under GAAP

6

6

Newport News Shipbuilding

6

Newport News sales were down YoY due

to lower volumes on Ford

& Roosevelt

RCOH, partially offset by Lincoln RCOH

planning effort & construction contract for

Kennedy

Segment operating income and operating

margin increased due to positive

performance adjustments on Virginia-class

submarines

2012 Net Pension Adjustment

7

2011 YTD actual return on plan assets is 6.5% as of October 31, 2011

Based on the current environment, for 2012, we expect:

o

FAS discount rate of 5.25% to 5.50%

o

Net OPEB expense of approximately $15 million

o

Net cash pension contributions of $75 million to $100 million

-10.00%

(193)

(173)

(154)

(136)

(118)

(100)

-5.00%

(176)

(157)

(138)

(119)

(101)

(84)

0.00%

(151)

(132)

(113)

(94)

(76)

(58)

5.00%

(127)

(107)

(88)

(69)

(51)

(33)

8.00%

(112)

(92)

(73)

(54)

(36)

(18)

8.50%

(109)

(89)

(70)

(51)

(33)

(15)

2012 FAS / CAS Pension Income / (Expense) ($M)

Actual

2011

Asset

Return

FAS Discount Rate

4.50%

4.75%

5.00%

5.25%

5.50%

5.75%

The FAS/CAS pension adjustment is equal to the pension cost recorded under U.S. Government Cost Accounting Standards (CAS) less the pension costs required to be

recognized in accordance with the Financial Accounting Standards (FAS) under US GAAP.  The above chart shows the impact of changes in the FAS discount rate

assumption and 2011 actual plan asset rates of return on the 2012 FAS/CAS pension adjustment.  The final FAS discount rate and the actual rate of return on plan assets

will be determined at 12/31/11.  The above is not meant to represent the range of all possible outcomes.  Additional factors including changes in census data will impact

the actual 2012 FAS/CAS pension adjustment.  The amounts shown above are based on a long term expected return on asset assumption of 8.0%.  As noted, the 2012

FAS/CAS adjustment will be based on market conditions at 12/31/2011.

Appendix

9

Reconciliations

We

make

reference

to

“segment

operating

income,”

“adjusted

segment

operating

income,”

“adjusted

segment

operating

margin,”

“adjusted

operating

income,”

adjusted

operating

margin,”

“adjusted

net

earnings,”

and

“adjusted

diluted

earnings

per

share.”

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 goodwill impairment charge, and adjusted segment

operating margin is defined as adjusted segment operating income

as a percentage of segment

sales and service revenues. Adjusted operating income is defined

as operating income adjusted

for the impact of the goodwill impairment charge, and adjusted operating margin is defined as

adjusted operating income as a percentage of total sales and service revenues. Adjusted net

earnings is defined as net income adjusted for the impact of the

goodwill impairment charge. 

Adjusted diluted earnings per share is defined as diluted earnings per share adjusted for the

impact of the goodwill impairment charge.  

Segment operating income is one of the key metrics we use to evaluate operating performance

because it excludes items that do not affect segment performance. We believe adjusted segment

operating income, adjusted segment operating margin, adjusted operating income, adjusted

operating margin, adjusted net earnings and adjusted diluted earnings per share are useful

because they exclude the goodwill impairment charge, a non-recurring item 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. 

10

10

Reconciliation of Non-GAAP Measure –

Segment Operating Income

Three Months Ended

September 30

$ in millions

2011

2010

Sales and Service Revenues

Ingalls

740

$    

759

$     

Newport News

876

928

$     

Intersegment eliminations

(23)

(22)

Total sales and service revenues

1,593

$ 

1,665

$  

Operating Income (Loss)

Ingalls

(281)

$   

(1)

$        

  As a percentage of sales

-38.0%

-0.1%

Newport News

94

90

  As a percentage of sales

10.7%

9.7%

Total Segment Operating Income (Loss)

(187)

89

As a percentage of sales

-11.7%

5.3%

Non-segment factors affecting operating income

Net pension and post-retirement benefits adjustment

(1)

(7)

Deferred state income taxes

(2)

(5)

Total operating income (loss)

(190)

$   

77

$       

Interest expense

(30)

(10)

Federal income taxes

(28)

(25)

Total net earnings (loss)

(248)

$   

42

$       

Reconciliation of Non-GAAP Measure –

Adjusted Figures

11

1)

Adjusted diluted average common shares outstanding is a non-GAAP measure defined as weighted average common shares outstanding plus the dilutive effect of stock options and stock awards. This measure has been provided for consistency and

comparability of the 2011 results with earnings per share from prior periods.

2)

Adjusted diluted EPS is a non-GAAP measure defined as earnings per share before the per share 2011 goodwill impairment charge impact. Adjusted diluted EPS from continuing operations has been provided for consistency and comparability of the 2011

results  with results of operations from prior periods.

3)

Per share amounts are based on basic weighted average shares outstanding, as use of dilutive securities (ie. stock options and stock awards) would result in a lesser per share loss.

Three Months Ended

September 30

$ in millions

2011

2010

Sales and Service Revenues

Ingalls

740

$    

759

$     

Newport News

876

928

$     

Intersegment eliminations

(23)

(22)

Total sales and service revenues

1,593

$ 

1,665

$  

Adjusted Operating Income (Loss)

Ingalls

(281)

$   

(1)

$        

Adjustment for goodwill impairment

300

-

Adjusted Ingalls

19

(1)

As a % of sales

2.6%

-0.1%

Newport News

94

90

Total Adjusted Segment Operating Income (Loss)

113

89

As a % of sales

7.1%

5.3%

Non-segment factors affecting adjusted operating income

Net pension and post-retirement benefits adjustment

(1)

(7)

Deferred state income taxes

(2)

(5)

Total adjusted operating income (loss)

110

$    

77

$       

As a % of sales

6.9%

4.6%

Non-operating factors affecting adjusted net income

Interest expense

(30)

(10)

Federal income taxes

(28)

(25)

Total adjusted net earnings (loss)

52

$      

42

$       

Per Share Amounts

Weighted average common shares outstanding

48.9

48.8

Dilutive effect of stock options and stock awards

0.6

-

Adjusted diluted average common shares outstanding

(1)

49.5

48.8

Earnings Per Share (EPS) Calculations

Adjusted net earnings from above

52

$      

42

$       

Adjusted diluted average common shares outstanding

(1)

49.5

48.8

Adjusted diluted EPS

(2)

1.05

$   

0.86

$    

Reported net loss

(248)

$   

Weighted average common shares outstanding

(3)

48.9

Net loss per share

(5.07)

$