Huntington Ingalls Industries (HII) 8-K Huntington Ingalls Industries Reports Strong Fourth Quarter and 2011 Results; On Track to Deliver Long Term Performance Targets

Q4 2011 Earnings Presentation

March 28, 2012

Mike Petters

President and Chief Executive Officer

Barb Niland

Corporate Vice President, Business Management

& Chief Financial Officer

Exhibit 99.2

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

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); 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.

This

presentation

also

contains

non-GAAP financial measures and includes a GAAP reconciliation of these financial

measures. Non-GAAP financial measures should not be construed as being more

important than comparable GAAP measures.

Safe Harbor

2

Highlights from the Quarter and FY 2011

3

Adjusted diluted EPS* of $1.19 for the fourth quarter and $3.97 for the year

Total

adjusted

operating

margin*

for

the

fourth

quarter

improved

to

6.6%

from

6.0%

in Q4 2010;  full year adjusted operating margin* increased to 6.1% from 3.7% in

2010

Q4 Newport News operating margin was 9.5%, down 0.9% from Q4 2010; for 2011,

operating margin was 9.1%, down 0.3% from 2010

Q4 Ingalls adjusted operating margin* was 2.2%, up from 1.4% in Q4 2010; for

2011,

adjusted

operating

margin*

was

2.4%,

up

significantly

over

last

year

Operating cash flow was $474 million for the quarter and $528 million for the year

Delivered LPD-22 San Diego, marking a major milestone towards completing the

turnaround at Ingalls

Announced $0.8 billion of new contract awards during Q4 2011 including advance

construction for Kennedy, engineering and support services on the LPD San

Antonio

-class

ships

and

continued

work

on

the

DDG-1000

class

of

destroyers

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

under GAAP

Fourth Quarter and FY 2011 Consolidated

Results

4

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

per share determined under GAAP

Ingalls Shipbuilding

5

Ingalls Q4 sales were down YoY due to

lower volumes on DDG-51 program and

LPD program, partially offset by higher

volume on NSC and LHA programs, and

LPD-27

Q4 adjusted segment operating income*

was up YoY driven by improved

performance on the LPD program and

new contracts

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

under GAAP

Newport News Shipbuilding

6

Newport News sales were up in Q4 as

compared to Q4 2010 due to higher

volumes

on

Ford,

Kennedy,

Lincoln

RCOH

planning effort & the VCS program,

partially

offset

by

Roosevelt

RCOH,

the

Enterprise

EDSRA

and

the

PSA

for

Bush

Segment operating income and margin

decreased due to contract mix and 2010

risk retirement on the carrier programs,

partially offset by risk retirement on the

VCS

program in 2011

2012 Pension Assumptions

7

($ in millions)

2011

2012

Discount Rate

5.84%

5.23%

Asset Returns

8.50%

8.00%

Cash Contributions

(1)(2)

$36

$254

Net FAS/CAS Adjustment

(1)(2)

($13)

($77)

CAS

(1)(2)

$144

$143

FAS

(1)

($157)

($220)

(1)

Includes pension and other post retirement benefits.

(2)

Projection; subject to change during 2012.

Appendix

Reconciliations

9

We

make

reference

to

“free

cash

flow,”

“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.”

Free cash flow represents cash provided by (used in)

operating activities less capital expenditures.  Segment operating income is defined as operating income before

net pension and post-retirement benefits adjustment and deferred state income taxes. Adjusted measures for

the fiscal year 2011 exclude the $290 million non-cash goodwill impairment charge in the Ingalls segment;

adjusted measures for the fourth quarter of 2011 exclude a $10 million reversal of a portion of the charge taken

in

the

third

quarter

of

2011

(together,

we

refer

to

these

as

the

“goodwill

impairment

charge”).

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.

Reconciliation of Non-GAAP Measure –

Free Cash Flow

10

Three Months Ended

Year Ended

December 31

December 31

$ in millions

2011

2010

2011

2010

Net cash provided by (used in) operating activities

474

$    

208

$     

528

$    

359

$     

Less: Capital expenditures

(78)

(95)

$      

(197)

(191)

$    

Free cash flow from operations

396

$    

113

$     

331

$    

168

$     

Reconciliation of Non-GAAP Measure –

Segment Operating Income

11

Three Months Ended

Year Ended

December 31

December 31

$ in millions

2011

2010

2011

2010

Sales and Service Revenues

Ingalls

676

$    

727

$     

2,885

$ 

3,027

$  

Newport News

1,078

1,027

3,766

$ 

3,775

$  

Intersegment eliminations

(19)

(18)

(76)

(79)

Total sales and service revenues

1,735

$ 

1,736

$  

6,575

$ 

6,723

$  

Operating Income (Loss)

Ingalls

25

$      

10

$       

(220)

$   

(61)

$      

  As a percentage of sales

3.7%

1.4%

-7.6%

-2.0%

Newport News

102

106

342

355

  As a percentage of sales

9.5%

10.3%

9.1%

9.4%

Total Segment Operating Income (Loss)

127

116

122

294

As a percentage of sales

7.3%

6.7%

1.9%

4.4%

Non-segment factors affecting operating income

Net pension and post-retirement benefits adjustment

(4)

(15)

(13)

(49)

Deferred state income taxes

1

3

1

3

Total operating income (loss)

124

$    

104

$     

110

$    

248

$     

Interest expense

(29)

(10)

(104)

(40)

Federal income taxes

(26)

(29)

(100)

(71)

Other, Net

-

(2)

-

(2)

Total net earnings (loss)

69

$      

63

$       

(94)

$     

135

$     

Reconciliation of Non-GAAP Measure –

Adjusted Figures

12

(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-GAAPmeasure

defined

as

earnings

per

share

before

the

per

share

2011

goodwill

impairmentcharge

impact.

Adjusted

diluted

EPS

has

been

provided

forconsistencyand

comparability

of

theresults

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 for 2011.

Three Months Ended

Year Ended

December 31

December 31

$ in millions

2011

2010

2011

2010

Sales and Service Revenues

Ingalls

676

$   

727

$    

2,885

$

3,027

$ 

Newport News

1,078

1,027

$ 

3,766

3,775

$ 

Intersegment eliminations

(19)

(18)

(76)

(79)

Total sales and service revenues

1,735

$

1,736

$ 

6,575

$

6,723

$ 

Adjusted Operating Income (Loss)

Ingalls

25

$     

10

$      

(220)

$  

(61)

$     

Adjustment for goodwill impairment

(10)

-

290

-

Adjusted Ingalls

15

10

70

(61)

As a % of sales

2.2%

1.4%

2.4%

-2.0%

Newport News

102

106

342

355

Total Adjusted Segment Operating Income (Loss)

117

116

412

294

As a % of sales

6.7%

6.7%

6.3%

4.4%

Non-segment factors affecting adjusted operating income

Net pension and post-retirement benefits adjustment

(4)

(15)

(13)

(49)

Deferred state income taxes

1

3

1

3

Total adjusted operating income (loss)

114

$   

104

$    

400

$   

248

$    

As a % of sales

6.6%

6.0%

6.1%

3.7%

Non-operating factors affecting adjusted net income

Interest expense

(29)

(10)

(104)

(40)

Federal income taxes

(26)

(29)

(100)

(71)

Other, Net

-

(2)

-

(2)

Total adjusted net earnings (loss)

59

$     

63

$      

196

$   

135

$    

Per Share Amounts

Weighted average common shares outstanding

48.9

48.8

48.8

48.8

Dilutive effect of stock options and stock awards

0.8

-

0.6

-

Adjusted diluted average common shares outstanding

(1)

49.7

48.8

49.4

48.8

Earnings Per Share (EPS) Calculations

Adjusted net earnings from above

59

$     

63

$      

196

$   

135

$    

Adjusted diluted average common shares outstanding

(1)

49.7

48.8

49.4

48.8

Adjusted diluted earnings per share

(2)

1.19

$  

1.29

$   

3.97

$  

2.77

$   

Reported net income (loss)

69

$     

(94)

$    

Weighted average common shares outstanding

(3)

48.9

48.8

Basic earnings (loss) per share

1.41

$  

(1.93)

$ 

Diluted average common shares outstanding

49.7

48.8

Diluted earnings (loss) per share

1.39

$  

(1.93)

$