QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated Filer | ☐ | |||||||||||||||||||||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||||||||
Emerging Growth Company |
PART I – FINANCIAL INFORMATION | Page | ||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II – OTHER INFORMATION | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
Three Months Ended March 31 | ||||||||||||||
(in millions, except per share amounts) | 2023 | 2022 | ||||||||||||
Sales and service revenues | ||||||||||||||
Product sales | $ | $ | ||||||||||||
Service revenues | ||||||||||||||
Sales and service revenues | ||||||||||||||
Cost of sales and service revenues | ||||||||||||||
Cost of product sales | ||||||||||||||
Cost of service revenues | ||||||||||||||
Income from operating investments, net | ||||||||||||||
Other income and gains (losses), net | ( | ( | ||||||||||||
General and administrative expenses | ||||||||||||||
Operating income | ||||||||||||||
Other income (expense) | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Non-operating retirement benefit | ||||||||||||||
Other, net | ( | |||||||||||||
Earnings before income taxes | ||||||||||||||
Federal and foreign income tax expense | ||||||||||||||
Net earnings | $ | $ | ||||||||||||
Basic earnings per share | $ | $ | ||||||||||||
Weighted-average common shares outstanding | ||||||||||||||
Diluted earnings per share | $ | $ | ||||||||||||
Weighted-average diluted shares outstanding | ||||||||||||||
Dividends declared per share | $ | $ | ||||||||||||
Net earnings from above | $ | $ | ||||||||||||
Other comprehensive income (loss) | ||||||||||||||
Change in unamortized benefit plan costs | ( | |||||||||||||
Tax benefit (expense) for items of other comprehensive income | ( | |||||||||||||
Other comprehensive income (loss), net of tax | ( | |||||||||||||
Comprehensive income | $ | $ |
($ in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Current Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||||||||
Contract assets | ||||||||||||||
Inventoried costs | ||||||||||||||
Income taxes receivable | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $ | ||||||||||||||
Operating lease assets | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets, net of accumulated amortization of $ | ||||||||||||||
Pension plan assets | ||||||||||||||
Miscellaneous other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current Liabilities | ||||||||||||||
Trade accounts payable | $ | $ | ||||||||||||
Accrued employees’ compensation | ||||||||||||||
Current portion of long-term debt | ||||||||||||||
Current portion of postretirement plan liabilities | ||||||||||||||
Current portion of workers’ compensation liabilities | ||||||||||||||
Contract liabilities | ||||||||||||||
Other current liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Pension plan liabilities | ||||||||||||||
Other postretirement plan liabilities | ||||||||||||||
Workers’ compensation liabilities | ||||||||||||||
Long-term operating lease liabilities | ||||||||||||||
Deferred tax liabilities | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and Contingencies (Note 10) | ||||||||||||||
Stockholders’ Equity | ||||||||||||||
Common stock, $0.01 par value; 150 million shares authorized; | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Treasury stock | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Operating Activities | ||||||||||||||
Net earnings | $ | $ | ||||||||||||
Adjustments to reconcile to net cash used in operating activities | ||||||||||||||
Depreciation | ||||||||||||||
Amortization of purchased intangibles | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Provision for doubtful accounts | — | ( | ||||||||||||
Stock-based compensation | ||||||||||||||
Deferred income taxes | ( | |||||||||||||
Loss (gain) on investments in marketable securities | ( | |||||||||||||
Change in | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Contract assets | ( | ( | ||||||||||||
Inventoried costs | ( | ( | ||||||||||||
Prepaid expenses and other assets | ||||||||||||||
Accounts payable and accruals | ( | — | ||||||||||||
Retiree benefits | ( | ( | ||||||||||||
Other non-cash transactions, net | ( | |||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
Investing Activities | ||||||||||||||
Capital expenditures | ||||||||||||||
Capital expenditure additions | ( | ( | ||||||||||||
Grant proceeds for capital expenditures | — | |||||||||||||
Investment in affiliates | ( | — | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing Activities | ||||||||||||||
Repayment of long-term debt | ( | ( | ||||||||||||
Dividends paid | ( | ( | ||||||||||||
Repurchases of common stock | ( | ( | ||||||||||||
Employee taxes on certain share-based payment arrangements | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Change in cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ | ||||||||||||
Supplemental Cash Flow Disclosure | ||||||||||||||
Cash paid for interest | $ | $ | ||||||||||||
Non-Cash Investing and Financing Activities | ||||||||||||||
Capital expenditures accrued in accounts payable | $ | $ | ||||||||||||
Three Months Ended March 31, 2023 and 2022 ($ in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Treasury stock activity | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | ( | — | — | — | |||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
Treasury stock activity | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ |
($ in millions) | Benefit Plans | Other | Total | |||||||||||||||||
Balance as of December 31, 2021 | $ | ( | $ | — | $ | ( | ||||||||||||||
Other comprehensive loss before reclassifications | ( | — | ( | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
Amortization of prior service cost1 | — | |||||||||||||||||||
Amortization of net actuarial loss1 | — | |||||||||||||||||||
Tax benefit for items of other comprehensive loss | — | |||||||||||||||||||
Net current period other comprehensive loss | ( | — | ( | |||||||||||||||||
Balance as of March 31, 2022 | $ | ( | $ | — | $ | ( | ||||||||||||||
Balance as of December 31, 2022 | $ | ( | $ | — | $ | ( | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
Amortization of prior service cost1 | — | |||||||||||||||||||
Amortization of net actuarial loss1 | — | |||||||||||||||||||
Tax expense for items of other comprehensive income | ( | — | ( | |||||||||||||||||
Net current period other comprehensive income | — | |||||||||||||||||||
Balance as of March 31, 2023 | $ | ( | $ | — | $ | ( | ||||||||||||||
Three Months Ended March 31 | ||||||||||||||
(in millions, except per share amounts) | 2023 | 2022 | ||||||||||||
Net earnings | $ | $ | ||||||||||||
Weighted-average common shares outstanding | ||||||||||||||
Net dilutive effect of stock awards | — | — | ||||||||||||
Dilutive weighted-average common shares outstanding | ||||||||||||||
Earnings per share - basic | $ | $ | ||||||||||||
Earnings per share - diluted | $ | $ |
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||
($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
Revenue Type | ||||||||||||||||||||||||||||||||
Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
Service revenues | — | |||||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Customer Type | ||||||||||||||||||||||||||||||||
Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
Commercial | — | — | — | |||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Contract Type | ||||||||||||||||||||||||||||||||
Firm fixed-price | $ | $ | — | $ | $ | — | $ | |||||||||||||||||||||||||
Fixed-price incentive | — | — | ||||||||||||||||||||||||||||||
Cost-type | — | |||||||||||||||||||||||||||||||
Time and materials | — | — | — | |||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ |
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||
($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
Revenue Type | ||||||||||||||||||||||||||||||||
Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
Service revenues | — | |||||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Customer Type | ||||||||||||||||||||||||||||||||
Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
Commercial | — | — | — | |||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Contract Type | ||||||||||||||||||||||||||||||||
Firm fixed-price | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
Fixed-price incentive | — | — | ||||||||||||||||||||||||||||||
Cost-type | — | |||||||||||||||||||||||||||||||
Time and materials | — | — | — | |||||||||||||||||||||||||||||
Intersegment | ( | — | ||||||||||||||||||||||||||||||
Sales and service revenues | $ | $ | $ | $ | ( | $ |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Major Programs | ||||||||||||||
Amphibious assault ships | $ | $ | ||||||||||||
Surface combatants and coast guard cutters | ||||||||||||||
Other | ||||||||||||||
Total Ingalls | ||||||||||||||
Aircraft carriers | ||||||||||||||
Submarines | ||||||||||||||
Other | ||||||||||||||
Total Newport News | ||||||||||||||
Mission based solutions | ||||||||||||||
Other | ||||||||||||||
Total Mission Technologies | ||||||||||||||
Intersegment eliminations | ( | ( | ||||||||||||
Sales and service revenues | $ | $ |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Sales and Service Revenues | ||||||||||||||
Ingalls | $ | $ | ||||||||||||
Newport News | ||||||||||||||
Mission Technologies | ||||||||||||||
Intersegment eliminations | ( | ( | ||||||||||||
Sales and service revenues | $ | $ | ||||||||||||
Operating Income | ||||||||||||||
Ingalls | $ | $ | ||||||||||||
Newport News | ||||||||||||||
Mission Technologies | ||||||||||||||
Segment operating income | ||||||||||||||
Non-segment factors affecting operating income | ||||||||||||||
Operating FAS/CAS Adjustment | ( | ( | ||||||||||||
Non-current state income taxes | ( | |||||||||||||
Operating income | $ | $ |
($ in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Ingalls | $ | $ | ||||||||||||
Newport News | ||||||||||||||
Mission Technologies | ||||||||||||||
Corporate | ||||||||||||||
Total assets | $ | $ |
Three Months Ended March 31 | ||||||||||||||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Components of net periodic benefit cost | ||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | — | — | ||||||||||||||||||||||
Amortization of prior service cost (credit) | ( | ( | ||||||||||||||||||||||||
Amortization of net actuarial loss (gain) | ( | ( | ||||||||||||||||||||||||
Net periodic benefit (income) cost | $ | ( | $ | ( | $ | $ |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Pension plans | ||||||||||||||
Discretionary | ||||||||||||||
Qualified | $ | — | $ | — | ||||||||||
Non-qualified | ||||||||||||||
Other benefit plans | ||||||||||||||
Total contributions | $ | $ |
Stock Awards (in thousands) | Weighted-Average Grant Date Fair Value | Weighted-Average Remaining Contractual Term (in years) | ||||||||||||||||||
Total stock awards | $ |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Sales and service revenues | $ | 2,674 | $ | 2,576 | $ | 98 | 4 | % | ||||||||||||||||||
Cost of product sales and service revenues | 2,324 | 2,227 | 97 | 4 | % | |||||||||||||||||||||
Income from operating investments, net | 12 | 7 | 5 | 71 | % | |||||||||||||||||||||
Other income and gains (losses), net | (1) | (1) | — | — | % | |||||||||||||||||||||
General and administrative expenses | 220 | 217 | 3 | 1 | % | |||||||||||||||||||||
Operating income | 141 | 138 | 3 | 2 | % | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||
Interest expense | (24) | (26) | 2 | 8 | % | |||||||||||||||||||||
Non-operating retirement benefit | 37 | 71 | (34) | (48) | % | |||||||||||||||||||||
Other, net | 9 | (7) | 16 | 229 | % | |||||||||||||||||||||
Federal and foreign income taxes | 34 | 36 | (2) | (6) | % | |||||||||||||||||||||
Net earnings | $ | 129 | $ | 140 | $ | (11) | (8) | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Operating income | $ | 141 | $ | 138 | $ | 3 | 2 | % | ||||||||||||||||||
Operating FAS/CAS Adjustment | 19 | 37 | (18) | (49) | % | |||||||||||||||||||||
Non-current state income taxes | (4) | 1 | (5) | (500) | % | |||||||||||||||||||||
Segment operating income | $ | 156 | $ | 176 | $ | (20) | (11) | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
FAS benefit | $ | 8 | $ | 24 | $ | (16) | (67) | % | ||||||||||||||||||
CAS cost | 10 | 10 | — | — | % | |||||||||||||||||||||
FAS/CAS Adjustment | 18 | 34 | (16) | (47) | % | |||||||||||||||||||||
Non-operating retirement benefit | (37) | (71) | 34 | 48 | % | |||||||||||||||||||||
Operating FAS/CAS Adjustment | $ | (19) | $ | (37) | $ | 18 | 49 | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Sales and Service Revenues | ||||||||||||||||||||||||||
Ingalls | $ | 577 | $ | 631 | $ | (54) | (9) | % | ||||||||||||||||||
Newport News | 1,506 | 1,390 | 116 | 8 | % | |||||||||||||||||||||
Mission Technologies | 624 | 590 | 34 | 6 | % | |||||||||||||||||||||
Intersegment eliminations | (33) | (35) | 2 | 6 | % | |||||||||||||||||||||
Sales and service revenues | $ | 2,674 | $ | 2,576 | $ | 98 | 4 | % | ||||||||||||||||||
Operating Income | ||||||||||||||||||||||||||
Ingalls | $ | 55 | $ | 86 | $ | (31) | (36) | % | ||||||||||||||||||
Newport News | 84 | 81 | 3 | 4 | % | |||||||||||||||||||||
Mission Technologies | 17 | 9 | 8 | 89 | % | |||||||||||||||||||||
Segment operating income | 156 | 176 | (20) | (11) | % | |||||||||||||||||||||
Non-segment factors affecting operating income | ||||||||||||||||||||||||||
Operating FAS/CAS Adjustment | (19) | (37) | 18 | 49 | % | |||||||||||||||||||||
Non-current state income taxes | 4 | (1) | 5 | 500 | % | |||||||||||||||||||||
Operating income | $ | 141 | $ | 138 | $ | 3 | 2 | % |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Gross favorable adjustments | $ | 64 | $ | 107 | ||||||||||
Gross unfavorable adjustments | (55) | (62) | ||||||||||||
Net adjustments | $ | 9 | $ | 45 |
Three Months Ended March 31 | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Ingalls | $ | 14 | $ | 41 | ||||||||||
Newport News | (9) | — | ||||||||||||
Mission Technologies | 4 | 4 | ||||||||||||
Net adjustments | $ | 9 | $ | 45 |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Sales and service revenues | $ | 577 | $ | 631 | $ | (54) | (9) | % | ||||||||||||||||||
Segment operating income | 55 | 86 | (31) | (36) | % | |||||||||||||||||||||
As a percentage of segment sales | 9.5 | % | 13.6 | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Sales and service revenues | $ | 1,506 | $ | 1,390 | $ | 116 | 8 | % | ||||||||||||||||||
Segment operating income | 84 | 81 | 3 | 4 | % | |||||||||||||||||||||
As a percentage of segment sales | 5.6 | % | 5.8 | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2023 vs. 2022 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | Percent | ||||||||||||||||||||||
Sales and service revenues | $ | 624 | $ | 590 | $ | 34 | 6 | % | ||||||||||||||||||
Segment operating income | 17 | 9 | 8 | 89 | % | |||||||||||||||||||||
As a percentage of segment sales | 2.7 | % | 1.5 | % |
Three Months Ended March 31 | ||||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||||||||||||||
Segment Information | Sales and service revenues | Segment cost of product sales and service revenues | Sales and service revenues | Segment cost of product sales and service revenues | ||||||||||||||||||||||
Ingalls | ||||||||||||||||||||||||||
Product | $ | 534 | $ | 440 | $ | 578 | $ | 457 | ||||||||||||||||||
Service | 41 | 34 | 50 | 43 | ||||||||||||||||||||||
Intersegment | 2 | 2 | 3 | 3 | ||||||||||||||||||||||
Total Ingalls | 577 | 476 | 631 | 503 | ||||||||||||||||||||||
Newport News | ||||||||||||||||||||||||||
Product | 1,271 | 1,092 | 1,121 | 959 | ||||||||||||||||||||||
Service | 234 | 198 | 267 | 225 | ||||||||||||||||||||||
Intersegment | 1 | 1 | 2 | 2 | ||||||||||||||||||||||
Total Newport News | 1,506 | 1,291 | 1,390 | 1,186 | ||||||||||||||||||||||
Mission Technologies | ||||||||||||||||||||||||||
Product | 24 | 20 | 25 | 21 | ||||||||||||||||||||||
Service | 570 | 521 | 535 | 485 | ||||||||||||||||||||||
Intersegment | 30 | 30 | 30 | 30 | ||||||||||||||||||||||
Total Mission Technologies | 624 | 571 | 590 | 536 | ||||||||||||||||||||||
Segment Totals | ||||||||||||||||||||||||||
Product | 1,829 | 1,552 | 1,724 | 1,437 | ||||||||||||||||||||||
Service | 845 | 753 | 852 | 753 | ||||||||||||||||||||||
Total Segment (1) | $ | 2,674 | $ | 2,305 | $ | 2,576 | $ | 2,190 |
March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||||||||||||||||
($ in millions) | Funded | Unfunded | Backlog | Funded | Unfunded | Backlog | ||||||||||||||||||||||||||||||||
Ingalls | $ | 10,852 | $ | 2,786 | $ | 13,638 | $ | 9,231 | $ | 3,546 | $ | 12,777 | ||||||||||||||||||||||||||
Newport News | 13,579 | 15,069 | 28,648 | 11,665 | 17,742 | 29,407 | ||||||||||||||||||||||||||||||||
Mission Technologies | 1,332 | 3,390 | 4,722 | 1,317 | 3,622 | 4,939 | ||||||||||||||||||||||||||||||||
Total backlog | $ | 25,763 | $ | 21,245 | $ | 47,008 | $ | 22,213 | $ | 24,910 | $ | 47,123 |
Three Months Ended March 31 | 2023 vs. 2022 | |||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | |||||||||||||||||
Net earnings | $ | 129 | $ | 140 | $ | (11) | ||||||||||||||
Depreciation and amortization | 89 | 89 | — | |||||||||||||||||
Provision for doubtful accounts | — | (7) | 7 | |||||||||||||||||
Stock-based compensation | 12 | 9 | 3 | |||||||||||||||||
Deferred income taxes | (30) | 2 | (32) | |||||||||||||||||
Loss (gain) on investments in marketable securities | (8) | 9 | (17) | |||||||||||||||||
Retiree benefits | (18) | (34) | 16 | |||||||||||||||||
Trade working capital increase | (183) | (291) | 108 | |||||||||||||||||
Net cash used in operating activities | $ | (9) | $ | (83) | $ | 74 |
Three Months Ended March 31 | 2023 vs. 2022 | |||||||||||||||||||
($ in millions) | 2023 | 2022 | Dollars | |||||||||||||||||
Net cash used in operating activities | $ | (9) | $ | (83) | $ | 74 | ||||||||||||||
Less capital expenditures: | ||||||||||||||||||||
Capital expenditure additions | (43) | (43) | — | |||||||||||||||||
Grant proceeds for capital expenditures | 3 | — | 3 | |||||||||||||||||
Free cash flow | $ | (49) | $ | (126) | $ | 77 |
Program Name | Program Description | |||||||
America class (LHA 6) amphibious assault ships | Design and build large deck amphibious assault ships that provide forward presence and power projection as an integral part of joint, interagency and multinational maritime expeditionary forces. The America class (LHA 6) ships, together with the Wasp class (LHD 1) ships, are the successors to the decommissioned Tarawa class (LHA 1) ships. The America class (LHA 6) ships optimize aviation operations and support capabilities. In 2020, we delivered USS Tripoli (LHA 7), and, in 2022, we were awarded a long-lead-time material and construction contract for Fallujah (LHA 9). We are currently constructing Bougainville (LHA 8) and Fallujah (LHA 9). | |||||||
Arleigh Burke class (DDG 51) destroyers | Build guided missile destroyers designed for conducting anti-air, anti-submarine, anti-surface, and strike operations. The Aegis-equipped Arleigh Burke class (DDG 51) destroyers are the U.S. Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction. We delivered USS Paul Ignatius (DDG 117), USS Delbert D. Black (DDG 119), USS Frank E. Petersen Jr. (DDG 121), and Lenah H. Sutcliffe Higbee (DDG 123) in 2019, 2020, 2021, and 2022, respectively. We have contracts to construct the following Arleigh Burke class (DDG 51) destroyers: USS Jack H. Lucas (DDG 125), Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), George M. Neal (DDG 131), Sam Nunn (DDG 133), Thad Cochran (DDG 135), John F. Lehman (DDG 137), and Telesforo Trinidad (DDG 139). | |||||||
Carrier RCOH | Perform refueling and complex overhaul ("RCOH") of nuclear-powered aircraft carriers, which is required at the mid-point of their 50-year life cycle. USS George Washington (CVN 73) arrived at Newport News for the start of its RCOH in August 2017, and USS John C. Stennis (CVN 74) arrived at Newport News for the start of its RCOH in May 2021. | |||||||
Columbia class (SSBN 826) submarines | Design and construct modules for Columbia class (SSBN 826) nuclear ballistic missile submarines ("SSBNs") as a subcontractor to Electric Boat. SSBNs are the most secure and survivable of our nation’s nuclear deterrent triad. Columbia class SSBNs will carry approximately 70 percent of the nation’s nuclear arsenal. The Columbia class (SSBN 826) program plan of record is to construct 12 new SSBNs to replace the current aging Ohio class. We have a teaming agreement with Electric Boat to build modules for the entire Columbia class (SSBN 826) submarine program that leverages our Virginia class (SSN 774) experience. We have been awarded contracts from Electric Boat for integrated product and process development, providing long–lead–time material and advance construction, and construction of the first two boats of the Columbia class (SSBN 826) submarine program. Construction of the first Columbia class (SSBN 826) submarine began in 2020. In 2023, we received initial authorization to begin advance procurement and advance construction for the third and fourth boats. | |||||||
Fleet sustainment | Maintains and modernizes a significant majority of the U.S. Navy fleet, from small watercraft to submarines, combatants, and aircraft carriers, our systems and maintenance experts help the Navy maintain a high state of readiness. Ensures effective system operation and sustainment by actively supporting design and decision–making processes through studies, analyses, and reviews of program documents, and provides a wide range of logistics products. | |||||||
USS Gerald R. Ford class (CVN 78) aircraft carriers | Design and construction for the Ford class program, which is the aircraft carrier replacement program for the decommissioned Enterprise (CVN 65) and Nimitz class (CVN 68) aircraft carriers. USS Gerald R. Ford (CVN 78), the first ship of the Ford class, was delivered to the U.S. Navy in the second quarter of 2017. In June 2015, we were awarded a contract for the detail design and construction of John F. Kennedy (CVN 79), following several years of engineering, advance construction, and purchase of long-lead-time components and material. In addition, we have received awards for detail design and construction of Enterprise (CVN 80) and Doris Miller (CVN 81). This category also includes the class' non-recurring engineering. The class is expected to bring improved warfighting capability, quality of life improvements for sailors, and reduced life cycle costs. | |||||||
Legend class National Security Cutter | Design and build the U.S. Coast Guard's National Security Cutters ("NSCs"), the largest and most technically advanced class of cutter in the U.S. Coast Guard. The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility, and national defense missions. The plan is for a total of 11 ships, of which the first nine ships have been delivered. Calhoun (NSC 10) and Friedman (NSC 11) are currently under construction. | |||||||
Mission based solutions | Develops integrated solutions that enable today's connected, all– domain force. Capabilities include: command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defensive and offensive cyberspace strategies and electronic warfare ("CEWS"); and live, virtual, and constructive ("LVC") solutions. | |||||||
Naval nuclear support services | Provide services to and in support of the U.S. Navy, ranging from services supporting the Navy's carrier and submarine fleets to maintenance services at U.S. Navy training facilities. Naval nuclear support services include design, construction, maintenance, and disposal activities for in-service U.S. Navy nuclear ships worldwide through mobile and in-house capabilities. Services include maintenance services on nuclear reactor prototypes. | |||||||
Nuclear and environmental services | Supports the national security mission of the Department of Energy ("DoE") through the management and operation of DOE sites, as well as the safe cleanup of legacy waste across the country. We meet our clients' toughest nuclear and environmental challenges and are positioned to serve the growing commercial nuclear power plant decommissioning market. We participate in several joint ventures, including Newport News Nuclear BWXT Los Alamos, LLC (" N3B"), Mission Support and Test Services, LLC ("MSTS"), and Savannah River Nuclear Solutions, LLC ("SRNS"), and we are an integrated subcontractor to Triad National Security. N3B was awarded the Los Alamos Legacy Cleanup Contract at the DoE/National Nuclear Security Administration’s Los Alamos National Laboratory. MSTS was awarded a contract for site management and operations at the Nevada National Security Site. SRNS provides site management and operations at the DoE’s Savannah River Site near Aiken, South Carolina. Triad provides site management and operations at the DoE’s Los Alamos National Laboratory. | |||||||
San Antonio class (LPD 17) amphibious transport dock ships | Design and build amphibious transport dock ships, which are warships that embark, transport, and land elements of a landing force for a variety of expeditionary warfare missions, and also serve as the secondary aviation platform for Amphibious Readiness Groups. The San Antonio class (LPD 17) is the newest addition to the U.S. Navy's 21st century amphibious assault force, and these ships are a key element of the U.S. Navy's seabase transformation. In 2022, we delivered USS Fort Lauderdale (LPD 28), and we were awarded a long-lead-time material contract for LPD 32 (unnamed). In 2023, we received an award modification for the detail design and construction of LPD 32 (unnamed). We are currently constructing Richard M. McCool Jr. (LPD 29), Harrisburg (LPD 30), and Pittsburgh (LPD 31). | |||||||
Unmanned systems | Creates advanced unmanned maritime solutions for defense, marine research, and commercial applications. Serving customers in more than 30 countries, unmanned systems provides design, autonomy, manufacturing, testing, operations, and sustainment of unmanned systems, including unmanned underwater vehicles and unmanned surface vessels. | |||||||
Virginia class (SSN 774) fast attack submarines | Construct attack submarines as the principal subcontractor to Electric Boat. The Virginia class (SSN 774) is a post-Cold War design tailored to excel in a wide range of warfighting missions, including anti-submarine and surface ship warfare; special operation forces; strike; intelligence, surveillance, and reconnaissance; carrier and expeditionary strike group support; and mine warfare. | |||||||
Period | Total Number of Shares Purchased1 | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)2, 3 | ||||||||||||||||||||||
January 1, 2023 to January 31, 2023 | 7,837 | $ | 221.11 | 7,570 | $ | 987.0 | ||||||||||||||||||||
February 1, 2023 to February 28, 2023 | 6,005 | 217.59 | 6,005 | 985.7 | ||||||||||||||||||||||
March 1, 2023 to March 31, 2023 | 81,548 | 212.53 | 25,750 | 980.3 | ||||||||||||||||||||||
Total | 95,390 | $ | 213.55 | 39,325 | $ | 980.3 |
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
3.5 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101 | The following financial information for the Company, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Statements of Financial Position, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in Equity, and (v) the Notes to Condensed Consolidated Financial Statements. | |||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q, formatted in Inline XBRL and contained in Exhibit 101. |
Date: | May 4, 2023 | Huntington Ingalls Industries, Inc. | |||||||||
(Registrant) | |||||||||||
By: | /s/ Nicolas Schuck | ||||||||||
Nicolas Schuck | |||||||||||
Corporate Vice President, Controller and Chief Accounting Officer | |||||||||||
(Duly Authorized Officer and Principal Accounting Officer) |
/s/ Christopher D. Kastner | |||||
Christopher D. Kastner | |||||
President and Chief Executive Officer |
/s/ Thomas E. Stiehle | |||||
Thomas E. Stiehle | |||||
Executive Vice President and Chief Financial Officer |
/s/ Christopher D. Kastner | |||||
Christopher D. Kastner | |||||
President and Chief Executive Officer |
/s/ Thomas E. Stiehle | |||||
Thomas E. Stiehle | |||||
Executive Vice President and Chief Financial Officer |
Condensed Consolidated Statements Of Financial Position (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 2 | $ 2 |
Accumulated depreciation | 2,351 | 2,319 |
Accumulated amortization | $ 913 | $ 881 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 53,600,000 | 53,500,000 |
Common stock, shares outstanding (in shares) | 39,900,000 | 39,900,000 |
Condensed Consolidated Statements Of Changes In Equity (Unaudited) - USD ($) $ in Millions |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
---|---|---|---|---|---|---|
Balance at Dec. 31, 2021 | $ 2,808 | $ 1 | $ 1,998 | $ 3,891 | $ (2,159) | $ (923) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings (loss) | 140 | 140 | ||||
Dividends declared | (47) | (47) | ||||
Stock-based compensation | (5) | (3) | (2) | |||
Other comprehensive income (loss), net of tax | (64) | (64) | ||||
Treasury stock activity | (10) | (10) | ||||
Balance at Mar. 31, 2022 | 2,822 | 1 | 1,995 | 3,982 | (2,169) | (987) |
Balance at Dec. 31, 2022 | 3,489 | 1 | 2,022 | 4,276 | (2,211) | (599) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings (loss) | 129 | 129 | ||||
Dividends declared | (49) | (49) | ||||
Stock-based compensation | 2 | (2) | ||||
Other comprehensive income (loss), net of tax | 3 | 3 | ||||
Treasury stock activity | (9) | (9) | ||||
Balance at Mar. 31, 2023 | $ 3,563 | $ 1 | $ 2,024 | $ 4,354 | $ (2,220) | $ (596) |
Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Dividends declared per share | $ 1.24 | $ 1.18 |
Description of Business |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | DESCRIPTION OF BUSINESSHuntington Ingalls Industries, Inc. ("HII" or the "Company") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. HII is organized into three reportable segments: Ingalls Shipbuilding ("Ingalls"), Newport News Shipbuilding ("Newport News"), and Mission Technologies. For more than a century, the Company's Ingalls segment in Mississippi and Newport News segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making HII America's largest shipbuilder. The Mission Technologies segment delivers high-value engineering and technology solutions to enable multi-domain distributed operations in the government and commercial services markets. |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION Principles of Consolidation - The unaudited condensed consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Condensed Consolidated Financial Statements (Unaudited), the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's 2022 Annual Report on Form 10-K. The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is management's long-standing practice to establish interim closing dates using a "fiscal" calendar, which requires the businesses to close their books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. The effects of this practice only exist for interim periods within a reporting year. Accounting Estimates - The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates. Fair Value of Financial Instruments - Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties. The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. These trusts were valued at $215 million and $209 million as of March 31, 2023, and December 31, 2022, respectively, and are presented within miscellaneous other assets within the unaudited condensed consolidated statements of financial position. These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy. The estimated fair values of the Company's total long-term debt (including current portion) as of March 31, 2023, and December 31, 2022, were $2,747 million and $2,703 million, respectively. The estimated fair values of the current portion of the Company's long-term debt were $393 million and $390 million as of March 31, 2023 and December 31, 2022, respectively. The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 under the fair value hierarchy.
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Accounting Standards Updates |
3 Months Ended |
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Mar. 31, 2023 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Standards Updates | ACCOUNTING STANDARDS UPDATESAccounting pronouncements issued but not effective until after December 31, 2023, are not expected to have a material impact on the Company's consolidated financial position, results of operations, and cash flows. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Text Block] | STOCKHOLDERS' EQUITY Treasury Stock - In November 2019, the Company's board of directors authorized an increase in the Company's stock repurchase program from $2.2 billion to $3.2 billion and an extension of the term of the program to October 31, 2024. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. For the three months ended March 31, 2023, the Company repurchased 39,325 shares at an aggregate cost of $9 million. For the three months ended March 31, 2022, the Company repurchased 50,549 shares at an aggregate cost of $10 million. The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position. Dividends - The Company paid cash dividends totaling $49 million and $47 million for the three months ended March 31, 2023 and 2022, respectively. Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings. The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $596 million and $599 million as of March 31, 2023 and December 31, 2022, respectively. The changes in accumulated other comprehensive loss by component for the three months ended March 31, 2023 and 2022, were as follows:
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Earnings Per Share |
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Earnings Per Share | EARNINGS PER SHARE Basic and diluted earnings per common share were calculated as follows:
Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.5 million and 0.4 million Restricted Performance Stock Rights ("RPSRs") for the three months ended March 31, 2023 and 2022, respectively.
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Revenue |
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Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer | REVENUE Disaggregation of Revenue The Company's contracts with customers typically fall into one of four categories: firm fixed-price, fixed-price incentive, cost-type, and time and materials. For more information on the Company's contracts, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's 2022 Annual Report on Form 10-K. The following tables present revenues on a disaggregated basis:
As of March 31, 2023, the Company had $47.0 billion of remaining performance obligations. The Company expects to recognize approximately 40% of its remaining performance obligations as revenue through 2024, an additional 25% through 2026, and the balance thereafter. Cumulative Catch-up Revenue Adjustments For the three months ended March 31, 2023, net cumulative catch-up revenue adjustments increased operating income and increased diluted earnings per share by $9 million and $0.17, respectively. For the three months ended March 31, 2022, net cumulative catch-up revenue adjustments increased operating income and increased diluted earnings per share by $45 million and $0.89, respectively. Cumulative catch-up revenue adjustments for the three months ended March 31, 2023, included a favorable adjustment of $15 million on a contract at the Company's Newport News segment, which increased diluted earnings per share by $0.30. Cumulative catch-up revenue adjustments for the three months ended March 31, 2023, included an unfavorable adjustment of $14 million on a contract at the Company's Newport News segment, which decreased diluted earnings per share by $0.28. Cumulative catch-up revenue adjustments for the three months ended March 31, 2022, included a favorable adjustment of $17 million on a contract at the Company's Ingalls segment, which increased diluted earnings per share by $0.34. For the three months ended March 31, 2022, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income. Contract Balances The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. The Company’s net contract assets increased $14 million from December 31, 2022, to March 31, 2023, primarily resulting from an increase in contract assets related to revenue on certain U.S. Navy contracts. For the three months ended March 31, 2023, the Company recognized revenue of $551 million related to its contract liabilities as of December 31, 2022. For the three months ended March 31, 2022, the Company recognized revenue of $379 million related to its contract liabilities as of December 31, 2021.
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Segment Information |
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Segment Information | SEGMENT INFORMATION The following table presents segment results for the three months ended March 31, 2023 and 2022:
Operating FAS/CAS Adjustment - The Operating FAS/CAS Adjustment represents the difference between the service cost component of our pension and other postretirement benefit plan expense determined in accordance with U.S. GAAP Financial Accounting Standards ("FAS") and our pension and other postretirement expense under U.S. Government Cost Accounting Standards ("CAS"). The following table presents the Company's assets by segment:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended March 31, 2023 and 2022, were 20.9% and 20.5%, respectively, which did not differ materially from the federal statutory corporate income tax rate of 21%. The Company's unrecognized tax benefits increased by $2 million during the three months ended March 31, 2023. As of March 31, 2023, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $92 million. Assuming a sustainment of these tax positions, a reversal of $70 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. For the three months ended March 31, 2023, interest resulting from the unrecognized tax benefits noted above increased income tax expense by $1 million. Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities, and the tax expense or benefit associated with changes in unrecognized state tax benefits in the relevant period. These amounts are recorded within operating income. Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income.
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Investigations, Claims, and Litigation |
3 Months Ended |
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Mar. 31, 2023 | |
Investigations, Claims, And Litigation [Abstract] | |
Investigations, Claims, And Litigation | INVESTIGATIONS, CLAIMS, AND LITIGATION The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations. Pursuant to FASB Accounting Standards Codification 450 Contingencies, the Company has accrued for losses associated with investigations, claims, and litigation when, and to the extent that, loss amounts related to the investigations, claims, and litigation are probable and can be reasonably estimated. The actual losses that might be incurred to resolve such investigations, claims, and litigation may be higher or lower than the amounts accrued. The Company has also provided footnote disclosure for matters for which a material loss is reasonably possible but a reserve has not been accrued because the likelihood of a material loss is not probable. False Claims Act Complaint - In 2016, the Company was made aware that it is a defendant in a qui tam False Claims Act lawsuit pending in the U.S. District Court for the Middle District of Florida related to the Company’s purchases of allegedly non-conforming parts from a supplier for use in connection with U.S. Government contracts. In August 2019, the Department of Justice (“DoJ”) declined to intervene in the lawsuit, and the lawsuit was unsealed. The court dismissed the complaint in September 2021, and the plaintiff has appealed the dismissal to the United States Court of Appeals for the 11th Circuit. Insurance Claims - In September 2020, the Company filed a complaint against 32 reinsurers in the Superior Court, State of Vermont, Franklin Unit, seeking a judgment declaring that the Company's business interruption and other losses associated with COVID-19 are covered by the Company's property insurance program. The Company also has initiated arbitration proceedings against six other reinsurers seeking similar relief. In July 2021, the Vermont court granted the reinsurers’ motion for judgment on the pleadings, which would have ended the Company’s claim. The Company appealed the decision to the Vermont Supreme Court, which reversed and remanded the lower court’s decision in September 2022, allowing the Company’s claim to proceed. No assurances can be provided regarding the ultimate resolution of this matter. In September 2021, the Company filed a complaint in the Superior Court of Delaware, seeking a judgment against certain insurers for breach of contract and breach of the implied covenant of good faith and fair dealing under three representations and warranties insurance policies purchased in connection with the Company’s acquisition of Hydroid. The policies insure the Company against losses relating to the seller’s breach of certain representations and warranties in the Hydroid acquisition agreement. The coverage limit under the insurance policies is $70 million, and the Company believes it has incurred losses equal to at least that amount as a result of breaches of the acquisition agreement. No assurances can be provided regarding the ultimate resolution of this matter. U.S. Government Investigations and Claims - Departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil, or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory, treble, or other damages. U.S. Government regulations provide that certain findings against a contractor may also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. Any suspension or debarment would have a material effect on the Company because of its reliance on government contracts. Asbestos Related Claims - HII and its predecessors-in-interest are defendants in a longstanding series of cases that have been and continue to be filed in various jurisdictions around the country, wherein former and current employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII. In some instances, partial or full insurance coverage is available for the Company's liabilities. The costs to resolve cases during the three months ended March 31, 2023 and 2022, were not material individually or in the aggregate. The Company’s estimate of asbestos-related liabilities is subject to uncertainty because liabilities are influenced by many variables that are inherently difficult to predict. Although the Company believes the ultimate resolution of current cases will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows, it cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of asbestos related litigation. Other Litigation - The Company and its predecessor-in-interest have been in litigation with the Bolivarian Republic of Venezuela (the "Republic") since 2002 over a contract for the repair, refurbishment, and modernization at Ingalls of two foreign-built frigates. Following an arbitration proceeding between the parties, in February 2018, the arbitral tribunal awarded the Company approximately $151 million on its claims and awarded the Republic approximately $22 million on its counterclaims. The Company is seeking to enforce and execute upon the award in multiple jurisdictions. No assurances can be provided regarding the ultimate resolution of this matter. The Company is party to various other claims, legal proceedings, and investigations that arise in the ordinary course of business, including U.S. Government investigations that could result in administrative, civil, or criminal proceedings involving the Company. The Company is a contractor with the U.S. Government, and such proceedings can therefore include False Claims Act allegations against the Company. Although the Company believes that the resolution of these other claims, legal proceedings, and investigations will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows, the Company cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of these matters.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs. These estimates are based upon management's best assessment of the underlying causal events and circumstances and recognized to the extent of expected recovery based upon contractual entitlements and the probability of successful negotiation with the customer. As of March 31, 2023, amounts recognized in connection with claims and requests for equitable adjustment were not material individually or in the aggregate. Environmental Matters - The estimated cost to complete environmental remediation has been accrued when it is probable that the Company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by another environmental agency, and the related costs can be estimated by management. These accruals do not include any litigation costs related to environmental matters, nor do they include amounts recorded as asset retirement obligations. Management estimates that as of March 31, 2023, the probable estimable future cost for environmental remediation was not material. Although management cannot predict whether new information gained as remediation progresses or the Company incurs additional remediation obligations will materially affect the estimated liability accrued, management does not believe that future remediation expenditures will have a material effect on the Company's consolidated financial position, results of operations, or cash flows. Financial Arrangements - In the ordinary course of business, HII uses letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support the Company's self-insured workers' compensation plans. As of March 31, 2023, the Company had $14 million in issued but undrawn letters of credit and $360 million of surety bonds outstanding. U.S. Government Claims - From time to time, the U.S. Government communicates to the Company potential claims, disallowed costs, and penalties concerning prior costs incurred by the Company with which the U.S. Government disagrees. When such preliminary findings are presented, the Company and U.S. Government representatives engage in discussions, from which the Company evaluates the merits of the claims and assesses the amounts being questioned. Although the Company believes that the resolution of any of these matters will not have a material effect on its consolidated financial position, results of operations, or cash flows, it cannot predict the ultimate outcome of these matters. Other Matters - In 1985, the Company and the U.S. Navy entered into a settlement agreement to resolve disputes associated with billing and allocating to contracts the cost of workers’ compensation self-insurance, among other matters. Consistent with the 1985 settlement agreement, the Company has not recovered cumulative billable costs resulting from the different treatment of workers' compensation costs between CAS and FAS. Under the 1985 settlement agreement, these costs would be recovered in future periods. In December 2020, a U.S. Navy Contracting Officer issued a determination that the 1985 settlement agreement did not comply with CAS and directed the Company to develop and implement a different process to bill and allocate the cost of workers’ compensation self-insurance. The Company believes the 1985 settlement agreement is CAS-compliant and cannot be unilaterally terminated, but the Company is continuing to negotiate a resolution of the matter with the Contracting Officer. In August 2022, the Navy Contracting Officer issued a written determination that the Ingalls Shipbuilding Property Management System had a significant deficiency, resulting in a 2% withhold of payments on certain invoices issued under one contract. In response, the Company proposed a corrective action plan, which the Navy approved. Subsequently, the Navy terminated the withhold and released withheld funds to the Company. In January 2023, the Company entered into discussions with a Mission Technologies' customer to amend an existing contract to address manufacturing issues. Although final agreement has not been reached, the Company recorded during the period ended March 31, 2023, a provision for contract loss that was not material to the financial statements as a whole. National Security Cutter (“NSC”) 11 Steel Plates Issue - After the Company’s Ingalls Shipbuilding segment began fabrication of Friedman (NSC 11) for the U.S. Coast Guard, the Coast Guard initiated communications with Ingalls about the degree of corrosion of certain steel plates Ingalls was using to fabricate Friedman (NSC 11), as well as the process Ingalls was using to remediate the corrosion. The Coast Guard subsequently informed Ingalls of its objection to the process Ingalls was using to remediate corrosion in Friedman (NSC 11) steel plates and requested that Ingalls follow a different remediation process or, alternatively, reconstruct affected fabricated units with new steel. Ingalls and the Coast Guard are continuing to seek a resolution of the matter. The Company has included estimates of the financial impact of the Friedman (NSC 11) matter into its contract cost estimates and revenue recognition processes. The variability of the scope of work the Company will perform to resolve the matter and the extent to which the Company will recover increased costs to resolve the matter could impact those estimates in the future. The ultimate resolution of the Friedman (NSC 11) steel plates issue, including the scope of remediation work and recovery of associated costs, could result in an adverse effect on the Company's condensed consolidated financial position, results of operations, or cash flows. Collective Bargaining Agreements - Of the Company's approximately 43,000 employees, approximately 45% are covered by a total of nine collective bargaining agreements and one site stabilization agreement. The Company believes its relationship with its employees is satisfactory.
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Employee Pension And Other Postretirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Pension and Other Postretirement Benefits | EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS The Company provides eligible employees defined benefit pension plans, other postretirement benefit plans, and defined contribution pension plans. The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2023 and 2022, were as follows:
The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2023 and 2022:
As of March 31, 2023, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2023.
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Stock Compensation Plans |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Plans | STOCK COMPENSATION PLANS During the three months ended March 31, 2023 and 2022, the Company issued new stock awards as follows: Restricted Performance Stock Rights - For the three months ended March 31, 2023, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $215.20. These rights are subject to cliff vesting on December 31, 2025. For the three months ended March 31, 2022, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $204.10. These rights are subject to cliff vesting on December 31, 2024. All of the RPSRs are subject to the achievement of performance-based targets at the end of the respective vesting periods and will ultimately vest between 0% and 200% of grant date value. For the three months ended March 31, 2023 and 2022, awards of approximately 0.1 million and 0.2 million shares of stock vested, respectively, of which less than 0.1 million for each period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations. The following table summarizes the status of the Company's outstanding stock awards as of March 31, 2023:
Compensation Expense The Company recorded stock-based compensation for the value of awards granted to Company employees and non-employee members of the board of directors of $12 million and $9 million for the three months ended March 31, 2023 and 2022, respectively. The Company recorded tax benefits related to stock awards of $2 million and $1 million for the three months ended March 31, 2023 and 2022, respectively. The Company recognized tax benefits associated with the issuance of stock in settlement of stock awards of $3 million and $4 million for the three months ended March 31, 2023 and 2022, respectively. Unrecognized Compensation Expense As of March 31, 2023, the Company had $2 million of unrecognized compensation expense associated with Restricted Stock Rights granted in 2023, 2022, and 2021, which will be recognized over a weighted average period of 0.9 years, and $57 million of unrecognized compensation expense associated with RPSRs granted in 2023, 2022, and 2021, which will be recognized over a weighted average period of 1.7 years.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSIn April 2023, the Company amended its existing $1.5 billion credit facility (the "Revolving Credit Facility") and $650 million term loan due August 19, 2024 (the "Term Loan") to change the benchmark interest rate from the London Interbank Offered Rate to the Secured Overnight Financing Rate (“SOFR”). The new interest rate will be based on SOFR plus an interest spread based on the Company's credit rating, plus an additional 0.10%. The Company does not expect the transition to the SOFR benchmark to materially impact its financial results. For further information on the Company's debt, see the Company's 2022 Annual Report on Form 10-K. |
Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation - The unaudited condensed consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Condensed Consolidated Financial Statements (Unaudited), the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's 2022 Annual Report on Form 10-K.
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Fiscal Period Policy | The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is management's long-standing practice to establish interim closing dates using a "fiscal" calendar, which requires the businesses to close their books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. The effects of this practice only exist for interim periods within a reporting year. |
Accounting Estimates | Accounting Estimates - The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties. The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. These trusts were valued at $215 million and $209 million as of March 31, 2023, and December 31, 2022, respectively, and are presented within miscellaneous other assets within the unaudited condensed consolidated statements of financial position. These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy. The estimated fair values of the Company's total long-term debt (including current portion) as of March 31, 2023, and December 31, 2022, were $2,747 million and $2,703 million, respectively. The estimated fair values of the current portion of the Company's long-term debt were $393 million and $390 million as of March 31, 2023 and December 31, 2022, respectively. The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 under the fair value hierarchy.
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss by component for the three months ended March 31, 2023 and 2022, were as follows:
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Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | Basic and diluted earnings per common share were calculated as follows:
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Revenue (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The following tables present revenues on a disaggregated basis:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment operating results | The following table presents segment results for the three months ended March 31, 2023 and 2022:
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Segment assets | The following table presents the Company's assets by segment:
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Employee Pension and Other Postretirement Benefits (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2023 and 2022, were as follows:
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Schedule of Defined Benefit Plans Disclosures, Cash Contributions | The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2023 and 2022:
|
Stock Compensation Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Status of Stock Awards | The following table summarizes the status of the Company's outstanding stock awards as of March 31, 2023:
|
Description of Business (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
segments
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 3 |
Basis of Presentation (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Assets held in rabbi trusts | $ 215 | $ 209 |
Fair value of total long term debt | 2,747 | 2,703 |
Fair value of current portion of long-term debt | $ 393 | $ 390 |
Stockholders' Equity (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Nov. 05, 2019 |
Nov. 07, 2017 |
|
Stockholders' Equity [Line Items] | ||||||
Amount authorized for stock repurchase program | $ 3,200 | $ 2,200 | ||||
Repurchased shares of treasury stock | 39,325 | 50,549 | ||||
Treasury stock activity | $ 9 | $ 10 | ||||
Dividends paid | 49 | 47 | ||||
Accumulated other comprehensive income (loss) | (596) | (987) | $ (599) | $ (923) | ||
Benefit Plans | ||||||
Stockholders' Equity [Line Items] | ||||||
Accumulated other comprehensive income (loss) | $ (596) | $ (987) | $ (599) | $ (923) |
Basic and Diluted Earnings Per Share (Table) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Net earnings (loss) | $ 129 | $ 140 |
Weighted-average common shares outstanding (in shares) | 39.9 | 40.0 |
Dilutive weighted-average common shares outstanding (in shares) | 39.9 | 40.0 |
Earnings (loss) per share - basic (in dollars per share) | $ 3.23 | $ 3.50 |
Earnings (loss) per share - diluted (in dollars per share) | $ 3.23 | $ 3.50 |
Earnings Per Share (Narrative) (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restricted performance stock rights | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Number of shares from stock awards excluded from computation of earnings per share | 0.5 | 0.4 |
Revenue (Table) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | $ 2,674 | $ 2,576 |
Intersegment Elimination | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | (33) | (35) |
Firm fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 77 | 74 |
Fixed-price incentive | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,362 | 1,279 |
Cost-type | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,183 | 1,152 |
Time-and-materials | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 52 | 71 |
Federal | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 2,661 | 2,563 |
Commercial | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 13 | 13 |
Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,829 | 1,724 |
Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 845 | 852 |
Ingalls | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 577 | 631 |
Ingalls | Amphibious assault ships | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 323 | 363 |
Ingalls | Surface combatants and coast guard cutters | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 253 | 265 |
Ingalls | Other programs | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1 | 3 |
Ingalls | Firm fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 2 | 2 |
Ingalls | Fixed-price incentive | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 533 | 576 |
Ingalls | Cost-type | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 40 | 50 |
Ingalls | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 2 | 3 |
Ingalls | Federal | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 575 | 628 |
Ingalls | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 2 | 3 |
Ingalls | Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 534 | 578 |
Ingalls | Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 41 | 50 |
Newport News | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,506 | 1,390 |
Newport News | Aircraft carriers | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 837 | 742 |
Newport News | Submarines | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 540 | 470 |
Newport News | Other programs | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 129 | 178 |
Newport News | Firm fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 8 | |
Newport News | Fixed-price incentive | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 829 | 703 |
Newport News | Cost-type | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 676 | 677 |
Newport News | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1 | 2 |
Newport News | Federal | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,505 | 1,388 |
Newport News | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1 | 2 |
Newport News | Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 1,271 | 1,121 |
Newport News | Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 234 | 267 |
Mission Technologies | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 624 | 590 |
Mission Technologies | Mission based solutions | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 518 | 491 |
Mission Technologies | Other programs | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 106 | 99 |
Mission Technologies | Firm fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 75 | 64 |
Mission Technologies | Cost-type | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 467 | 425 |
Mission Technologies | Time-and-materials | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 52 | 71 |
Mission Technologies | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 30 | 30 |
Mission Technologies | Federal | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 581 | 547 |
Mission Technologies | Commercial | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 13 | 13 |
Mission Technologies | Intersegment | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 30 | 30 |
Mission Technologies | Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | 24 | 25 |
Mission Technologies | Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Sales and service revenues | $ 570 | $ 535 |
Revenue (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Abstract] | ||
Revenue, Remaining Performance Obligation, Amount | $ 47,000 | |
Revenue, performance obligation, recognition percentage, year two | 40.00% | |
Revenue, performance obligation, recognition percentage, year four | 25.00% | |
Increase (Decrease) in Net Contract Assets | $ 14 | |
Contract with Customer, Liability, Revenue Recognized | 551 | $ 379 |
Contracts Accounted for under Percentage of Completion | ||
Change in Accounting Estimate | ||
Increase (decrease) in operating income due to net cumulative catch-up adjustments | $ 9 | $ 45 |
Increase (decrease) in diluted earnings per share due to net cumulative catch-up adjustments | $ 0.17 | $ 0.89 |
Contracts Accounted for under Percentage of Completion | Newport News contract | ||
Change in Accounting Estimate | ||
Increase (decrease) in operating income due to net cumulative catch-up adjustments | $ 15 | |
Increase (decrease) in diluted earnings per share due to net cumulative catch-up adjustments | $ 0.30 | |
Contracts Accounted for under Percentage of Completion | Newport News contract #2 | ||
Change in Accounting Estimate | ||
Increase (decrease) in operating income due to net cumulative catch-up adjustments | $ (14) | |
Increase (decrease) in diluted earnings per share due to net cumulative catch-up adjustments | $ (0.28) | |
Contracts Accounted for under Percentage of Completion | Ingalls contract | ||
Change in Accounting Estimate | ||
Increase (decrease) in operating income due to net cumulative catch-up adjustments | $ 17 | |
Increase (decrease) in diluted earnings per share due to net cumulative catch-up adjustments | $ 0.34 |
Segment Operating Results (Table) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Sales and Service Revenues | ||
Sales and service revenue | $ 2,674 | $ 2,576 |
Operating Income (Loss) | ||
Operating income (loss) | 141 | 138 |
Intersegment Elimination | ||
Sales and Service Revenues | ||
Sales and service revenue | (33) | (35) |
Operating Segments | ||
Operating Income (Loss) | ||
Operating income (loss) | 156 | 176 |
Ingalls | ||
Sales and Service Revenues | ||
Sales and service revenue | 577 | 631 |
Operating Income (Loss) | ||
Operating income (loss) | 55 | 86 |
Newport News | ||
Sales and Service Revenues | ||
Sales and service revenue | 1,506 | 1,390 |
Operating Income (Loss) | ||
Operating income (loss) | 84 | 81 |
Mission Technologies | ||
Sales and Service Revenues | ||
Sales and service revenue | 624 | 590 |
Operating Income (Loss) | ||
Operating income (loss) | 17 | 9 |
Corporate | ||
Non-segment factors affecting operating income (loss) | ||
Operating FAS/CAS Adjustment | (19) | (37) |
Non-current state income taxes | $ 4 | $ (1) |
Segment Assets (Table) (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Segment Reporting Information | ||
Assets | $ 10,849 | $ 10,857 |
Ingalls | ||
Segment Reporting Information | ||
Assets | 1,615 | 1,633 |
Newport News | ||
Segment Reporting Information | ||
Assets | 4,566 | 4,344 |
Mission Technologies | ||
Segment Reporting Information | ||
Assets | 3,291 | 3,347 |
Corporate | ||
Segment Reporting Information | ||
Assets | $ 1,377 | $ 1,533 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax Contingency [Line Items] | ||
Effective income tax rate | 20.90% | 20.50% |
Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% |
Unrecognized Tax Benefits, Period Increase (Decrease) | $ 2 | |
Unrecognized Tax Benefits | 92 | |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 70 | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 1 |
Investigations, Claims, and Litigation (Narrative) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
numberOfReinsurers
frigates
| |
Loss Contingencies | |
Number of reinsurers/defendants | numberOfReinsurers | 32 |
Representation and warranty insurance policy, coverage limit | $ 70 |
Bolivarian Republic of Venezuela | |
Loss Contingencies | |
Number of Foreign Built Frigates | frigates | 2 |
Arbitral statement claim | $ 151 |
Arbitration | |
Loss Contingencies | |
Number of reinsurers/defendants | numberOfReinsurers | 6 |
Litigation counter claim [Member] | Bolivarian Republic of Venezuela | |
Loss Contingencies | |
Arbitral statement claim | $ 22 |
Commitments and Contingencies (Narrative) (Details) $ in Millions |
3 Months Ended | 5 Months Ended |
---|---|---|
Mar. 31, 2023
USD ($)
|
Dec. 31, 2022 |
|
Commitments and Contingencies | ||
Entity Number of Employees | 43,000 | |
Percentage of workforce subject to Collective Bargaining Arrangements | 45.00% | |
Number of Collective Bargaining Agreements | 9 | |
Number of site stabilization agreements | 1 | |
Surety Bonds Outstanding | ||
Commitments and Contingencies | ||
Surety bonds outstanding | $ 360 | |
Revolving Credit Facility [Member] | ||
Commitments and Contingencies | ||
Letters of credit issued but undrawn | $ 14 | |
Ingalls contract | ||
Commitments and Contingencies | ||
Customer withhold of payment | 2.00% |
Employee Pension and Other Postretirement Benefits Net Benefit Costs (Table) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Pension Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | $ 28 | $ 45 |
Interest cost | 86 | 64 |
Expected return on plan assets | (132) | (150) |
Amortization of prior service cost (credit) | 4 | 4 |
Amortization of net actuarial loss (gain) | 4 | 9 |
Net periodic benefit (income) cost | (10) | (28) |
Other Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | 1 | 2 |
Interest cost | 5 | 4 |
Amortization of prior service cost (credit) | (1) | (1) |
Amortization of net actuarial loss (gain) | (3) | (1) |
Net periodic benefit (income) cost | $ 2 | $ 4 |
Employee Pension and Other Postretirement Benefits Cash Contributions (Table) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Defined Benefit Plan Disclosure | ||
Other benefit plans | $ 8 | $ 7 |
Total contributions | 10 | 10 |
Discretionary Contribution | Non-qualified | ||
Defined Benefit Plan Disclosure | ||
Pension contributions | $ 2 | $ 3 |
Stock Compensation Plans (Narrative) (Details) - $ / shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Stock awards | ||
Stock rights, weighted-average grant date fair value | $ 189.15 | |
Stock awards, vested in the period | 0.1 | 0.2 |
Maximum | ||
Stock awards | ||
Stock awards, transferred for employee withholding taxes | 0.1 | 0.1 |
Restricted performance stock rights | ||
Stock awards | ||
Stock rights, granted | 0.1 | 0.1 |
Stock rights, weighted-average grant date fair value | $ 215.20 | $ 204.10 |
Restricted performance stock rights | Minimum | ||
Stock awards | ||
Restricted performance stock rights ultimate vesting percentage | 0.00% | |
Restricted performance stock rights | Maximum | ||
Stock awards | ||
Restricted performance stock rights ultimate vesting percentage | 200.00% |
Schedule of Status of Stock Awards (Table) (Details) shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Stock awards | |
Stock awards, outstanding | shares | 551 |
Stock awards, weighted-average grant date fair value | $ / shares | $ 189.15 |
Stock awards, weighted-average remaining contractual term | 1 year 6 months |
Stock Compensation Plans Compensation and Unrecognized Compensation Expense (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Compensation Expense [Abstract] | ||
Share-based Payment Arrangement, Expense | $ 12.0 | $ 9.0 |
Tax benefits for stock-based compensation | 2.0 | 1.0 |
Stock Awards [Member] | ||
Compensation Expense [Abstract] | ||
Employee Service Share-Based Compensation, Tax Benefit Realized From Issuance Of Instruments Other Than Options | 3.0 | $ 4.0 |
Restricted Stock [Member] | ||
Unrecognized Compensation Expense [Abstract] | ||
Unrecognized compensation expense | $ 2.0 | |
Unrecognized compensation expense, period for recognition | 10 months 24 days | |
Restricted performance stock rights | ||
Unrecognized Compensation Expense [Abstract] | ||
Unrecognized compensation expense | $ 57.0 | |
Unrecognized compensation expense, period for recognition | 1 year 8 months 12 days |
Subsequent Events (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Aug. 02, 2021 |
|
Term loan due August 19, 2024 | Term Loan | ||
Subsequent Event [Line Items] | ||
Long-term Debt | $ 650 | |
Revolving Credit Facility [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility revolver | $ 1,500 | |
Revolving Credit Facility [Member] | Term loan due August 19, 2024 | Term Loan | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||
Subsequent Event [Line Items] | ||
Additional spread on variable rate | 0.10% |
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