hii-20210211
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________ 
FORM 8-K
 _____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 11, 2021
  _____________________________________
HUNTINGTON INGALLS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 _____________________________________
Delaware001-3491090-0607005
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
4101 Washington Avenue
Newport NewsVirginia23607
(Address of principal executive offices) (Zip Code)
(757) 380-2000
(Registrant’s telephone number, including area code)
 (Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockHIINew York Stock Exchange
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02.Results of Operations and Financial Condition.
On February 11, 2021, Huntington Ingalls Industries, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2020. A copy of the press release is furnished as Exhibit 99.1 hereto. Also furnished as Exhibit 99.2 is the corporation’s earnings presentation for the fourth quarter 2020 earnings release conference call.
 
Item 9.01.Financial Statements and Exhibits.
(d)Exhibits.

Exhibit No.  Description
99.1   
99.2   
104 Cover Page Interactive Data File (embedded within Inline XBRL document)




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  HUNTINGTON INGALLS INDUSTRIES, INC.
Date: February 11, 2021  By: /s/ Christopher D. Kastner
   Christopher D. Kastner
   Executive Vice President and Chief Financial Officer


image0a161.jpg
EXHIBIT 99.1

News Release
Contacts:

Jerri Fuller Dickseski (Media)
[email protected]
757-380-2341

Dwayne Blake (Investors)
[email protected]
757-380-2104

Huntington Ingalls Industries Reports Fourth Quarter and Full Year 2020 Results

•Revenues were $2.8 billion in the quarter; $9.4 billion in 2020
•Operating margin was 11.1% in the quarter; 8.5% in 2020
•Diluted earnings per share was $6.15 in the quarter, $17.14 in 2020
•Cash from operations was $1.1 billion, and free cash flow1 was $757 million in 2020
•Backlog of $46.0 billion at year end

NEWPORT NEWS, Va. (Feb. 11, 2021) - Huntington Ingalls Industries (NYSE:HII) reported fourth quarter 2020 revenues of $2.8 billion, up 14.3% from the fourth quarter of 2019. Operating income in the quarter was $305 million and operating margin was 11.1%, compared to $186 million and 7.7%, respectively, in the fourth quarter of 2019. Diluted earnings per share in the quarter was $6.15, compared to $3.61 in the same period of 2019.

For the full year, revenues of $9.4 billion increased 5.2% over 2019. Operating income in 2020 was $799 million and operating margin was 8.5%, compared to $736 million and 8.3%, respectively, in 2019. Diluted earnings per share for the full year was $17.14, compared to $13.26 in 2019.

Cash from operations in 2020 was $1.1 billion and free cash flow1 was $757 million, compared to $896 million and $460 million, respectively, in 2019.

New contract awards in the quarter were approximately $3.5 billion, bringing total backlog to approximately $46.0 billion as of Dec. 31, 2020.

“2020 will be remembered as one of the most challenging business environments that we have
ever had to navigate. Throughout the COVID-19 pandemic, we have made decisions that are focused on the safety and well being of our employees, and I could not be prouder of the way our team responded to the challenges. We enter 2021 as a stronger and more agile company with positive momentum and an enormous opportunity in front of us to leverage our $46 billion backlog to drive long-term, sustainable value creation,” said Mike Petters, HII’s president and CEO.

2021 Financial Outlook

•Expect FY21 shipbuilding revenue1 between $8.2 and $8.4 billion; and shipbuilding operating margin1 between 7.0% and 8.0%
•Expect FY21 Technical Solutions revenue of approximately $1.0 billion and segment operating margin1 between 3.0% and 5.0%
•Expect FY21 free cash flow1 between $150 and $250 million
•Expect cumulative FY20-FY24 free cash flow1 of approximately $3 billion


1Non-GAAP measure. See Exhibit B for definition and reconciliation.

Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com

Page 1 of 15


Results of Operations
Three Months EndedYear Ended
December 31December 31
($ in millions, except per share amounts)20202019$ Change% Change20202019$ Change% Change
Sales and service revenues$2,757 $2,412 $345 14.3 %$9,361 $8,899 $462 5.2 %
Operating income305 186 119 64.0 %799 736 63 8.6 %
  Operating margin %11.1 %7.7 %335 bps8.5 %8.3 %26 bps
Segment operating income1
242 173 69 39.9 %555 631 (76)(12.0)%
  Segment operating margin %1
8.8 %7.2 %161 bps5.9 %7.1 %(116) bps
Net earnings249 149 100 67.1 %696 549 147 26.8 %
Diluted earnings per share$6.15 $3.61 $2.54 70.4 %$17.14 $13.26 $3.88 29.3 %
Pension Adjusted Figures
Net earnings2
176 122 54 44.3 %406 442 (36)(8.1)%
Diluted earnings per share2
$4.35 $2.96 $1.39 47.0 %$10.00 $10.66 $(0.66)(6.2)%
1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.
2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. See Exhibit B for reconciliation.

Segment Operating Results
Ingalls Shipbuilding
Three Months EndedYear Ended
December 31December 31
($ in millions)20202019$ Change% Change20202019$ Change% Change
Revenues$752 $702 $50 7.1 %$2,678 $2,555 $123 4.8 %
Segment operating income1
96 59 37 62.7 %281 235 46 19.6 %
Segment operating margin %1
12.8 %8.4 %436 bps10.5 %9.2 %130 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Ingalls Shipbuilding revenues for the fourth quarter of 2020 were $752 million, an increase of $50 million, or 7.1%, from the same period in 2019, primarily driven by higher revenues in surface combatants and amphibious assault ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. Surface combatant revenues increased due to higher volumes on Jeremiah Denton (DDG 129), Ted Stevens (DDG 128), Sam Nunn (DDG 133), and John F. Lehman (DDG 137), partially offset by lower volumes on the re-delivered USS Fitzgerald (DDG 62) restoration and modernization. Amphibious assault ship revenues increased as a result of higher volumes on Pittsburgh (LPD 31) and Harrisburg (LPD 30), partially offset by lower volume on the delivered USS Tripoli (LHA 7). Revenues on the Legend-class NSC program decreased due to lower volumes on Friedman (NSC 11) and Calhoun (NSC 10), partially offset by higher volume on the delivered Stone (NSC 9).

Ingalls Shipbuilding segment operating income for the fourth quarter was $96 million, an increase of $37 million from the same period last year. Segment operating margin in the quarter was 12.8%, compared to 8.4% in the same period last year. These increases were primarily driven by higher risk retirement across all programs.

For the full year, Ingalls Shipbuilding revenues were $2.7 billion, an increase of $123 million, or 4.8%, from 2019, primarily driven by higher revenues in surface combatants and amphibious assault ships, partially offset by lower revenues in the Legend-class NSC program. Surface combatant revenues increased due to higher volumes on Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), Delbert D. Black (DDG 119), Sam Nunn (DDG 133),









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 2 of 15



George M. Neal (DDG 131), and Thad Cochran (DDG 135), partially offset by lower volumes on USS Fitzgerald (DDG 62) restoration and modernization, Paul Ignatius (DDG 117), Frank E. Petersen Jr. (DDG 121), and Jack H. Lucas (DDG 125). Amphibious assault ship revenues increased as a result of higher volumes on Harrisburg (LPD 30), Pittsburgh (LPD 31), LHA 9 (unnamed), Fort Lauderdale (LPD 28), and Richard M. McCool Jr. (LPD 29), partially offset by lower volumes on Tripoli (LHA 7), LPD life cycle services, and Bougainville (LHA 8). Revenues on the Legend-class NSC program decreased due to lower volumes on Midgett (NSC 8) and Friedman (NSC 11), partially offset by higher volume on Calhoun (NSC 10).

For the full year, Ingalls Shipbuilding segment operating income was $281 million, compared to $235 million in 2019. The increase was primarily driven by higher risk retirement on Delbert D. Black (DDG 119) in connection with its delivery and a capital expenditure contract incentive, as well as higher risk retirement and improved performance on Tripoli (LHA 7) and Richard M. McCool Jr. (LPD 29), partially offset by unfavorable adjustments across programs, including delay and disruption related to COVID-19.

Key Ingalls Shipbuilding milestones for the quarter:
•Delivered Legend-class National Security Cutter Stone (NSC 9)



Newport News Shipbuilding
Three Months EndedYear Ended
December 31December 31
($ in millions)20202019$ Change% Change20202019$ Change% Change
Revenues$1,750 $1,399 $351 25.1 %$5,571 $5,231 $340 6.5 %
Segment operating income1
128 137 (9)(6.6)%233 410 (177)(43.2)%
Segment operating margin %1
7.3 %9.8 %(248) bps4.2 %7.8 %(366) bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Newport News Shipbuilding revenues for the fourth quarter of 2020 were $1.8 billion, an increase of $351 million, or 25.1%, from the same period in 2019, driven primarily by higher revenues in aircraft carrier construction and refueling and complex overhaul (RCOH), and submarine construction, as well as fleet support services. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80) and Doris Miller (CVN 81), and the advance planning contract for the RCOH of USS John C. Stennis (CVN 74), partially offset by lower volumes on John F. Kennedy (CVN 79), USS Gerald R. Ford (CVN 78), and the RCOH of USS George Washington (CVN 73). Submarine revenues increased primarily as a result of higher volumes on Block V boats of the Virginia-class program (VCS) and the Columbia-class program, partially offset by lower volumes on Block III and Block IV boats of the Virginia-class program.

Newport News Shipbuilding segment operating income for the fourth quarter was $128 million, compared to operating income of $137 million for the same period last year. Segment operating margin was 7.3% for the quarter, compared to 9.8% in the same period last year, primarily due to lower risk retirement on the Virginia-class submarine program. Additionally, results in the same period last year benefited from the award of the VCS Block V contract, as well as contract actions related to work on Los Angeles-class submarines.

For the full year, Newport News Shipbuilding revenues were $5.6 billion, an increase of $340 million, or 6.5%, from 2019, primarily driven by higher revenues in aircraft carriers, submarines, and naval nuclear support services. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the RCOH of USS John C. Stennis (CVN 74), and Doris Miller (CVN 81), partially offset by lower volumes on the RCOH of USS George Washington (CVN 73), John F. Kennedy (CVN 79), and USS Gerald R. Ford (CVN 78). Submarine revenues increased primarily as a result of higher volumes on the Virginia-class submarine program and the Columbia-class submarine program. The higher volume on the Virginia-class submarine program was due to higher volumes on Block V boats, partially offset by lower volumes on Block III and Block IV boats. Naval nuclear support service revenues increased primarily as a result of higher volumes in carrier fleet support services.










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 3 of 15



For the full year, Newport News Shipbuilding segment operating income was $233 million, a decrease of $177 million from 2019, primarily due to unfavorable cumulative catch-up adjustments in the second quarter on Block IV
boats of the Virginia-class submarine program.

Key Newport News Shipbuilding milestones for the quarter:
•Awarded a $2.2 billion construction contract for six module sections for each of the first two Columbia-class submarines
•Authenticated the keel of Virginia-class submarine Massachusetts (SSN 798)
•John F. Kennedy (CVN 79) is approximately 78% complete
•RCOH of USS George Washington (CVN 73) is approximately 85% complete



Technical Solutions
Three Months EndedYear Ended
December 31December 31
($ in millions)20202019$ Change% Change20202019$ Change% Change
Revenues$311 $350 $(39)(11.1)%$1,268 $1,237 31 2.5 %
Segment operating income1
18 (23)$41 178.3 %41 (14)55 (392.9)%
Segment operating margin %1
5.8 %(6.6)%1236 bps3.2 %(1.1)%437 bps
1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Technical Solutions revenues for the fourth quarter of 2020 were $311 million, a decrease of $39 million from the same period in 2019, primarily driven by lower revenue at our oil and gas reporting unit, as well as lower revenue at the San Diego Shipyard due to the conclusion of several repair contracts, partially offset by the acquisition of Hydroid in March 2020.

Technical Solutions segment operating income for the fourth quarter was $18 million, compared to a segment operating loss of $23 million in the fourth quarter of 2019. The increase was primarily driven by a goodwill impairment at our oil and gas reporting unit and a loss on a fleet support services contract, both recorded in the prior year period.

For the full year, Technical Solutions revenues were $1.3 billion, an increase of $31 million, or 2.5%, from 2019, primarily due to the acquisition of Hydroid in 2020, partially offset by lower volume at our San Diego Shipyard due to the conclusion of several repair contracts.

For the full year, Technical Solutions segment operating income was $41 million, compared to an operating loss of $14 million in 2019. The increase was primarily due to a goodwill impairment at our oil and gas reporting unit and a loss on a fleet support services contract in 2019, as well as higher equity income from our nuclear and environmental joint ventures and improved performance in our Defense and Federal Solutions business unit.

Key Technical Solutions milestones for the quarter:
•Acquired the autonomy business of Spatial Integrated Systems Inc. The acquisition further expands HII’s unmanned systems capabilities with a highly skilled team and proven unmanned surface vessel solutions
•Delivered new REMUS 100 Unmanned Underwater Vehicles to the German Navy. The vehicles will be used to expand the German Navy’s current fleet of REMUS 100 UUVs used for mine countermeasure operations

















Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 4 of 15



2021 Outlook

The financial outlook, expectations and other forward looking statements provided by the company for 2021 and beyond, reflect the company's judgment based on the information available at the time of this release.

The COVID-19 global pandemic has had wide ranging effects on the global health environment and disrupted the global and U.S. economies and financial markets, including impacts to our employees, customers, suppliers, and communities. The pandemic is also impacting our operations, and the full impacts of COVID-19 on our fiscal year 2021 financial results and beyond are uncertain. We believe that the most significant elements of uncertainty are the intensity and duration of the impact on our employees’ ability to work effectively, disruption in our supply chain, disruption of the U.S. Government's and our other customers' abilities to perform their obligations, and impact on pension assets and other investment performance.

We have incurred and expect to continue incurring costs related to our COVID-19 response, including paid leave, quarantining employees and recurring facility cleaning. While our shipyards and other facilities remain
open and productive, we experienced temporary decreases in workforce attendance, which impacted our operations due to delay and disruption from the lack of availability of critical skills and out-of-sequence work. As of December 31, 2020, workforce attendance has returned to standard rates.

For further information on the potential impact of COVID-19 to the company, see “Risk Factors” in our 2020 Form 10-K.



2021
Outlook
Shipbuilding Revenue1
$8.2B - $8.4B
Shipbuilding Operating Margin1
7.0% - 8.0%
Technical Solutions Revenue2
~$1.0B
Technical Solutions Segment Operating Margin1,2
3.0% - 5.0%
Technical Solutions EBITDA Margin1,2
7.0% - 9.0%
Operating FAS/CAS Adjustment($163M)
Non-current State Income Tax Expense~($5M)
Interest Expense($72M)
Non-operating Retirement Benefit$181M
Effective Tax Rate~22%
Depreciation & Amortization~$260M
Capital Expenditures~3.5% of Sales
Free Cash Flow1
$150M - $250M

1 Non-GAAP measures. See Exhibit B for definitions.
2 Includes results for the month of January 2021 for Universal Pegasus International and the San Diego Shipyard.













Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 5 of 15



About Huntington Ingalls Industries

Huntington Ingalls Industries is America’s largest military shipbuilding company and a provider of professional services to partners in government and industry. For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical Solutions division supports national security missions around the globe with unmanned systems, defense and federal solutions, and nuclear and environmental services. Headquartered in Newport News, Virginia, HII employs more than 42,000 people operating both domestically and internationally. For more information, please visit www.huntingtoningalls.com.

Conference Call Information

Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. Eastern time today. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company’s website: www.huntingtoningalls.com. A telephone replay of the conference call will be available from noon today through Thursday, February 18 by calling toll-free (877) 344-7529 or (412) 317-0088 and using conference ID 10150920.

Forward-Looking Statements
Statements in this release, other than statements of historical fact, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans); our ability to estimate our future contract costs and perform our contracts effectively; changes in procurement processes and government regulations and our ability to comply with such requirements; our ability to deliver our products and services at an affordable life cycle cost and compete within our markets; natural and environmental disasters and political instability; our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures and strategic acquisitions; adverse economic conditions in the United States and globally; health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic; changes in key estimates and assumptions regarding our pension and retiree health care costs; security threats, including cyber security threats, and related disruptions; and other risk factors discussed in our filings with the U.S. Securities and Exchange Commission. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make. This release also contains non-GAAP financial measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures.









Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 6 of 15



Exhibit A: Financial Statements

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Year Ended December 31
(in millions, except per share amounts)202020192018
Sales and service revenues
Product sales$6,850 $6,265 $6,023 
Service revenues2,511 2,634 2,153 
Sales and service revenues9,361 8,899 8,176 
Cost of sales and service revenues
Cost of product sales5,621 5,158 4,627 
Cost of service revenues2,070 2,210 1,758 
Income from operating investments, net32 22 17 
Other income and gains1 — 14 
General and administrative expenses904 788 871 
Goodwill impairment— 29 — 
Operating income799 736 951 
Other income (expense)
Interest expense(114)(70)(58)
Non-operating retirement benefit119 12 74 
Other, net6 5 4 
Earnings before income taxes810 683 971 
Federal and foreign income taxes114 134 135 
Net earnings$696 $549 $836 
Basic earnings per share$17.14 $13.26 $19.09 
Weighted-average common shares outstanding40.6 41.4 43.8 
Diluted earnings per share$17.14 $13.26 $19.09 
Weighted-average diluted shares outstanding40.6 41.4 43.8 
Dividends declared per share$4.23 $3.61 $3.02 
Net earnings from above$696 $549 $836 
Other comprehensive income
Change in unamortized benefit plan costs(187)(167)(232)
Other2 3 (2)
Tax expense for items of other comprehensive income47 43 59 
Other comprehensive income (loss), net of tax(138)(121)(175)
Comprehensive income$558 $428 $661 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 7 of 15



HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in millions)December 31,
2020		December 31,
2019
Assets
Current Assets
Cash and cash equivalents$512 $75 
Accounts receivable, net of allowance for doubtful accounts of $2 million as of 2020 and $3 million as of 2019397 318 
Contract assets1,049 989 
Inventoried costs, net137 136 
Income taxes receivable171 148 
Assets held for sale133 95 
Prepaid expenses and other current assets45 24 
Total current assets2,444 1,785 
Property, Plant, and Equipment
Land and land improvements309 282 
Buildings and leasehold improvements2,442 2,384 
Machinery and other equipment2,017 1,909 
Capitalized software costs234 218 
5,002 4,793 
Accumulated depreciation and amortization(2,024)(1,961)
Property, Plant, and Equipment2,978 2,832 
Other Assets
Operating lease assets192 201 
Goodwill1,617 1,373 
Other intangible assets, net of accumulated amortization of $655 million as of 2020 and $599 million as of 2019512 492 
Deferred tax assets133 108 
Miscellaneous other assets281 240 
Total other assets2,735 2,414 
Total assets$8,157 $7,031 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 8 of 15



HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)


($ in millions)December 31,
2020		December 31,
2019
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable$460 $497 
Accrued employees’ compensation293 265 
Current portion of postretirement plan liabilities133 130 
Current portion of workers’ compensation liabilities225 225 
Contract liabilities585 373 
Liabilities held for sale68 77 
Other current liabilities462 323 
Total current liabilities2,226 1,890 
Long-term debt1,686 1,286 
Pension plan liabilities960 975 
Other postretirement plan liabilities401 380 
Workers’ compensation liabilities511 457 
Long-term operating lease liabilities157 164 
Other long-term liabilities315 291 
Total liabilities6,256 5,443 
Commitments and Contingencies
Stockholders’ Equity
Common stock, $0.01 par value; 150 million shares authorized; 53.3 million shares issued and 40.5 million shares outstanding as of December 31, 2020, and 53.2 million shares issued and 40.8 million shares outstanding as of December 31, 20191 1 
Additional paid-in capital1,972 1,961 
Retained earnings3,533 3,009 
Treasury stock(2,058)(1,974)
Accumulated other comprehensive loss(1,547)(1,409)
Total stockholders’ equity1,901 1,588 
Total liabilities and stockholders’ equity$8,157 $7,031 


























Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 9 of 15



HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31
($ in millions)202020192018
Operating Activities
Net earnings$696 $549 $836 
Adjustments to reconcile to net cash provided by (used in) operating activities
Depreciation191 180 167 
Amortization of purchased intangibles56 47 36 
Amortization of debt issuance costs7 3 4 
Provision for doubtful accounts(1)(6)(4)
Stock-based compensation23 30 36 
Deferred income taxes23 97 10 
Goodwill impairment— 29 — 
Loss on early extinguishment of debt21 — — 
Loss (gain) on investments in marketable securities(17)(11)— 
Asset impairments13 6 — 
Change in
Accounts receivable(70)(51)195 
Contract assets22 32 (242)
Inventoried costs11 (11)40 
Prepaid expenses and other assets(62)(93)(40)
Accounts payable and accruals344 4 335 
Retiree benefits(176)80 (454)
Other non-cash transactions, net12 11 (5)
Net cash provided by operating activities1,093 896 914 
Investing Activities
Capital expenditures
Capital expenditure additions
(353)(530)(463)
Grant proceeds for capital expenditures
17 94 61 
Acquisitions of businesses, net of cash received(417)(195)(77)
Investment in affiliates— — (10)
Proceeds from disposition of assets— — 13 
Other investing activities, net(6)4 — 
Net cash used in investing activities(759)(627)(476)

















Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 10 of 15



HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)


Year Ended December 31
($ in millions)202020192018
Financing Activities
Proceeds from issuance of long-term debt1,000 — — 
Repayment of long-term debt(600)— — 
Proceeds from line of credit borrowings
385 5,119 95 
Repayment of line of credit borrowings(385)(5,119)(95)
Debt issuance costs(13)— — 
Premiums and fees related to early extinguishment of debt(15)— — 
Dividends paid(172)(149)(132)
Repurchases of common stock(84)(262)(742)
Employee taxes on certain share-based payment arrangements(13)(23)(25)
Net cash provided by (used in) financing activities103 (434)(899)
Change in cash and cash equivalents437 (165)(461)
Cash and cash equivalents, beginning of period75 240 701 
Cash and cash equivalents, end of period$512 $75 $240 
Supplemental Cash Flow Disclosure
Cash paid for income taxes$155 $137 $142 
Cash paid for interest$89 $75 $62 
Non-Cash Investing and Financing Activities
Capital expenditures accrued in accounts payable$7 $22 $55 
Accrued repurchases of common stock$— $— $48 


Exhibit B: Non-GAAP Measures Definitions & Reconciliations

We make reference to "segment operating income," "segment operating margin," "shipbuilding revenue," "shipbuilding operating margin," "Technical Solutions EBITDA margin," "adjusted net earnings," "adjusted diluted earnings per share" and "free cash flow."

We internally manage our operations by reference to segment operating income and segment operating margin, which are not recognized measures under GAAP. When analyzing our operating performance, investors should use segment operating income and segment operating margin in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. They are measures that we use to evaluate our core operating performance. We believe that segment operating income, segment operating margin and shipbuilding operating margin reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. We believe these measures are used by investors and are a useful indicator to measure our performance. Because not all companies use identical calculations, our presentation of segment operating income and segment operating margin may not be comparable to similarly titled measures of other companies.

Adjusted net earnings and adjusted diluted earnings per share are not measures recognized under GAAP. They should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. We believe these measures are useful to investors because they exclude items that do not reflect our core operating performance. They may not be comparable to similarly titled measures of other companies.










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 11 of 15



Shipbuilding revenue, shipbuilding operating margin and Technical Solutions EBITDA margin are not measures recognized under GAAP. They should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. They may not be comparable to similarly titled measures of other companies.

Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. We believe free cash flow is an important measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.

Segment operating income (loss) is defined as operating income (loss) for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes.

Segment operating margin is defined as segment operating income (loss) as a percentage of sales and service revenues.

Shipbuilding revenue is defined as the combined sales and service revenues from our Newport News Shipbuilding segment and Ingalls Shipbuilding segment.

Shipbuilding operating margin is defined as the combined segment operating income of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment as a percentage of shipbuilding revenue.

Technical Solutions EBITDA margin is defined as Technical Solutions segment operating income before interest expense, income taxes, depreciation, and amortization as a percentage of Technical Solutions revenues.

Adjusted net earnings is defined as net earnings adjusted for the after-tax impact of the FAS/CAS Adjustment.

Adjusted diluted earnings per share is defined as adjusted net earnings divided by the weighted-average diluted common shares outstanding.

Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds.

FAS/CAS Adjustment is defined as the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP (FAS) and the expenses determined in accordance with U.S. Cost Accounting Standards (CAS).

Operating FAS/CAS Adjustment is defined as the difference between the service cost component of our pension and other postretirement expense determined in accordance with GAAP (FAS) and our pension and other postretirement expense under U.S. Cost Accounting Standards (CAS).

Non-current state income taxes are defined as 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 state uncertain tax positions 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.

We present financial measures adjusted for the Operating FAS/CAS Adjustment and non-current state income taxes to reflect the company’s performance based upon the pension costs and state tax expense charged to our contracts under CAS. We use these adjusted measures as internal measures of operating performance and for performance-based compensation decisions.











Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 12 of 15



Reconciliations of Segment Operating Income and Segment Operating Margin

Three Months EndedYear Ended
December 31December 31
($ in millions)2020201920202019
Ingalls revenues$752 $702 $2,678 $2,555 
Newport News revenues1,750 1,399 5,571 5,231 
Technical Solutions revenues311 350 1,268 1,237 
Intersegment eliminations(56)(39)(156)(124)
Sales and Service Revenues2,757 2,412 9,361 8,899 
Operating Income305 186 799 736 
Operating FAS/CAS Adjustment(62)(30)(248)(124)
Non-current state income taxes(1)17 4 19 
Segment Operating Income242 173 555 631 
  As a percentage of sales and service revenues8.8 %7.2 %5.9 %7.1 %
Ingalls segment operating income96 59 281 235 
  As a percentage of Ingalls revenues12.8 %8.4 %10.5 %9.2 %
Newport News segment operating income128 137 233 410 
  As a percentage of Newport News revenues7.3 %9.8 %4.2 %7.8 %
Technical Solutions segment operating income18 (23)41 (14)
  As a percentage of Technical Solutions revenues5.8 %(6.6)%3.2 %(1.1)%












Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 13 of 15



Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share

Three Months EndedYear Ended
December 31December 31
($ in millions, except per share amounts)2020201920202019
Net earnings$249 $149 $696 $549 
After-tax FAS/CAS adjustment(1)
(73)(27)(290)(107)
Adjusted Net Earnings $176 $122 $406 $442 
Diluted earnings per share$6.15 $3.61 $17.14 $13.26 
After-tax FAS/CAS adjustment per share(1)
(1.80)(0.65)(7.14)(2.60)
Adjusted Diluted EPS**$4.35 $2.96 $10.00 $10.66 
(1) FAS/CAS Adjustment$(92)$(34)$(367)$(136)
Tax effect*(19)(7)(77)(29)
After-tax impact(73)(27)$(290)$(107)
Weighted-average diluted shares outstanding40.5 41.3 40.6 41.4 
Per share impact**$(1.80)$(0.65)$(7.14)$(2.60)
*The income tax impact is calculated using the tax rate in effect for the relevant non-GAAP adjustment.
**Amounts may not recalculate exactly due to rounding.























Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 14 of 15



Reconciliation of Free Cash Flow
Three Months EndedYear Ended
December 31December 31
($ in millions)2020201920202019
Net cash provided by operating activities$602 $566 $1,093 $896 
Less capital expenditures:
Capital expenditure additions (133)(181)(353)(530)
Grant proceeds for capital expenditures — 23 17 94 
Free cash flow$469 $408 $757 $460 










Huntington Ingalls Industries
4101 Washington Ave. • Newport News, VA 23607
www.huntingtoningalls.com
Page 15 of 15


Q4 2020 Earnings Presentation February 11, 2021 Mike Petters President and Chief Executive Officer Chris Kastner Executive Vice President and Chief Financial Officer Exhibit 99.2

 
HARD STUFF DONE RIGHT Forward-Looking Statements 2 HUNTINGTON INGALLS INDUSTRIES Statements in this presentation, other than statements of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans); our ability to estimate our future contract costs and perform our contracts effectively; changes in procurement processes and government regulations and our ability to comply with such requirements; our ability to deliver our products and services at an affordable life cycle cost and compete within our markets; natural and environmental disasters and political instability; our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures, and strategic acquisitions; adverse economic conditions in the United States and globally; health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic; changes in key estimates and assumptions regarding our pension and retiree health care costs; security threats, including cyber security threats, and related disruptions; and other risk factors discussed in our filings with the U.S. Securities and Exchange Commission. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make. This presentation also contains non-GAAP financial measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures.

 
HARD STUFF DONE RIGHT HII Q4 & FY 2020 Highlights 3 HUNTINGTON INGALLS INDUSTRIES  Entering 2021 with strong operating momentum  Revenues were ~$2.8 billion in the quarter; ~$9.4 billion in 2020  Diluted EPS was $6.15 in the quarter; $17.14 in 2020  Cash from operations was $1.1 billion and free cash flow1 was $757 million in 2020  Total backlog at the end of 2020 was $46.0 billion  Ingalls Shipbuilding o Delivered Legend-class National Security Cutter Stone (NSC 9)  Newport News Shipbuilding o Awarded a $2.2 billion construction contract for six module sections for each of the first two Columbia-class submarines o Authenticated the keel of Virginia-class submarine Massachusetts (SSN 798) o John F. Kennedy (CVN 79) is approximately 78% complete o RCOH of USS George Washington (CVN 73) is approximately 85% complete  Technical Solutions o Acquired the autonomy business of Spatial Integrated Systems Inc., further expanding HII’s unmanned systems capabilities with a highly skilled team and proven unmanned surface vessel solutions o Delivered new REMUS 100 Unmanned Underwater Vehicles to the German Navy Consolidated Revenue ($M) 1Non-GAAP measure. See appendix for definition and reconciliation. $7,068 $7,441 $8,176 $8,899 $9,361 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2016 2017 2018 2019 2020 $20.7 $21.4 $23.0 $46.5 $46.0 $0 $10 $20 $30 $40 $50 2016 2017 2018 2019 2020 Backlog ($B)

 
HARD STUFF DONE RIGHT HII Q4 2020 Consolidated Results 4 HUNTINGTON INGALLS INDUSTRIES Consolidated Revenues ($M) Operating Income ($M) Operating Margin  Revenues improved YoY due primarily to growth at Newport News Shipbuilding  Operating income improved YoY due to higher risk retirement at Ingalls, improved performance in Technical Solutions and a more favorable operating FAS/CAS adjustment $2,412 $2,757 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Q4 2019 Q4 2020 $186 $305 $0 $50 $100 $150 $200 $250 $300 $350 Q4 2019 Q4 2020 7.7% 11.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Q4 2019 Q4 2020

 
HARD STUFF DONE RIGHT HII FY 2020 Consolidated Results 5 HUNTINGTON INGALLS INDUSTRIES Consolidated Revenues ($M) Operating Income ($M) Operating Margin  Revenues improved YoY due to growth at all divisions, particularly Newport News Shipbuilding, which had growth in aircraft carrier, submarine and fleet support  Operating income improved YoY due to a more favorable operating FAS/CAS adjustment, partially offset by lower segment operating income $8,899 $9,361 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2019 2020 $736 $799 $0 $200 $400 $600 $800 $1,000 2019 2020 8.3% 8.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 2019 2020

 
HARD STUFF DONE RIGHT $46 $172 $84 $0 $50 $100 $150 $200 $250 $300 Q4 2020 2020 Dividends Share Repurchases (at cost) Capital Deployment 6 HUNTINGTON INGALLS INDUSTRIES Shareholder Distributions ($M) 12020 operating cash flow reflects the receipt of approximately $160 million of net accelerated progress payments due to the U.S. Government's increase in the progress payment rate from 80 percent to 90 percent and the deferral of approximately $130 million for the employer portion of payroll taxes to 2021 and 2022 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The corporation used the accelerated progress payments from the U.S. Government plus cash on hand to accelerate payments to its suppliers, including payments to i ts small business partners ahead of their terms totaling approximately $420 million in 2020. 2Non-GAAP measure. See appendix for definition and reconciliation. 1 Total $46 Total $256 $602 $1,093 ($133) ($336) $469 $757 -$600 -$400 -$200 $0 $200 $400 $600 $800 $1,000 $1,200 Q4 2020 2020 Cash from Operations CAPEX Free Cash Flow Cash Flow Generation ($M)  Cash balance of $512 million and liquidity of $2.2 billion at year-end 2020  Capital expenditures were 3.6% of revenues in 2020  Cash contributions to pension and other postretirement benefit plans were $246 million in 2020 o $205 million were discretionary contributions to our qualified pension plans  Distributed $256 million to shareholders in 2020 via dividends and share repurchases  No shares repurchased during Q4 2020; reinitiated share repurchases in Q1 2021 21

 
HARD STUFF DONE RIGHT7 HUNTINGTON INGALLS INDUSTRIES 1 Projected and subject to change. 2 Includes pension and other postretirement benefits. 3 2020 cash contributions of $246 million include $213 million of discretionary pension contributions ($205 million qualified; $8 million non-qualified) and $33 million of other post retirement benefits contributions. 2021 projected cash contributions of $101 million include $68 million of discretionary pension contributions ($60 million qualified; $8 million non-qualified) and $33 million of other post retirement benefits contributions. 2021-2025 Pension Outlook Table1 ($ in millions) 2020 (Actual) 2021 2022 2023 2024 2025 Pension Discount Rate 3.39% 2.80% Change from prior est. (13)bps 2.80% Change from prior est. (59)bps 2.80% Change from prior est. (59)bps 2.80% Change from prior est. (59)bps 2.80% Change from prior est. N/A Expected Long-Term Return on Assets 7.25% 7.25% N/A 7.25% N/A 7.25% N/A 7.25% N/A 7.25% N/A CAS Recoveries over/(under) Cash Contributions2,3 $191 ($55) ($1) $2 ($23) $30 ($11) $18 $6 ($27) N/A FAS Benefit (Expense)2 ($70) ($28) $83 ($12) $37 $18 $39 $44 $37 $72 N/A CAS Expense2 $437 $46 ($1) $46 ($14) $77 ($39) $99 ($28) $53 N/A FAS/CAS Adjustment2 $367 $18 $82 $34 $23 $95 $0 $143 $9 $125 N/A Operating FAS/CAS Adjustment2 $248 ($163) ($5) ($162) ($40) ($125) ($65) ($99) ($56) ($139) N/A Non-Operating Retirement Income2 $119 $181 $87 $196 $63 $220 $65 $242 $65 $264 N/A Pension and Post-retirement Benefits Cash Contributions3 $246 $101 N/A $44 $9 $47 ($28) $81 ($34) $80 N/A

 
HARD STUFF DONE RIGHT Financial Outlook 8 HUNTINGTON INGALLS INDUSTRIES Operating Margin  Q1 2021 Technical Solutions Operating Margin below the low-end of annual guidance range; consistent with normal quarterly pacing Free Cash Flow2  Continue to project ~$3B of FCF FY20-24  FY21 impacted by net pension cash headwind and reversal of FY20 COVID related benefits, including progress payment acceleration and payroll tax deferral COVID-19  No assumption for COVID-19 recovery 2021 Outlook1 1 The financial outlook, expectations and other forward looking statements provided by the company for 2021 and beyond, reflect the company's judgment based on the information available at the time of this release. The COVID-19 global pandemic has had wide ranging effects on the global health environment and disrupted the global and U.S. economies and financial markets, including impacts to our employees, customers, suppliers, and communities. The pandemic is also impacting our operations, and the full impacts of COVID-19 on our fiscal year 2021 financial results and beyond are uncertain. We believe that the most significant elements of uncertainty are the intensity and duration of the impact on our employees’ ability to work effectively, disruption in our supply chain, disruption of the U.S. Government's and our other customers' abilities to perform their obligations, and impact on pension assets and other investment performance. We have incurred and expect to continue incurring costs related to our COVID-19 response, including paid leave, quarantining employees and recurring facility cleaning. While our shipyards and other facilities remain open and productive, we experienced temporary decreases in workforce attendance, which impacted our operations due to delay and disruption from the lack of availability of critical skills and out-of-sequence work. As of December 31, 2020, workforce attendance has returned to standard rates. For further information on the potential impact of COVID-19 to the company, see “Risk Factors” in our 2020 Form 10-K. 2 Non-GAAP measure. See appendix for definition. 3 Includes results for the month of January 2021 for Universal Pegasus International and San Diego Shipyard. 2021 Outlook Shipbuilding Revenue2 $8.2B - $8.4B Shipbuilding Operating Margin2 7.0% - 8.0% Technical Solutions Revenue3 ~$1.0B Technical Solutions Segment Operating Margin2,3 3.0% - 5.0% Technical Solutions EBITDA Margin2,3 7.0% - 9.0% Operating FAS/CAS Adjustment ($163M) Non-current State Income Tax Expense ~($5M) Interest Expense ($72M) Non-operating Retirement Benefit $181M Effective Tax Rate ~22% Depreciation & Amortization ~$260M Capital Expenditures ~3.5% of Sales Free Cash Flow2 $150M - $250M

 
HARD STUFF DONE RIGHT FY20-24 Cumulative Free Cash Flow of ~$3B 9 HUNTINGTON INGALLS INDUSTRIES 1Non-GAAP measure. See appendix for definition and reconciliation. 2See “CAS Recoveries over/(under) Cash Contributions” on slide 7  Consistent top-line growth, combined with margin expansion in both Shipbuilding and Technical Solutions  Long-term ~3% Shipbuilding revenue CAGR  FY22 shipbuilding operating margin expected in the low 8% range with steady improvement in subsequent years as Newport News programs mature  Technical Solutions revenue CAGR of 4-5%, EBITDA margins expand to 8-10% by FY24  Capital expenditures decline to ~3.5% of sales in FY21; ~2.5% of sales in FY22 and beyond  Insignificant net pension cash flow impact in FY22-242  Continued strong working capital management driven by ship deliveries starting in FY22 1

 
HARD STUFF DONE RIGHT Upcoming Program Milestones1 10 HUNTINGTON INGALLS INDUSTRIES  2021 o Ingalls  Complete sea trials DDG 121 (Frank E. Petersen Jr.)  Launch DDG 125 (Jack H. Lucas)  Complete sea trials LPD 28 (Fort Lauderdale) o Newport News  Pier-side system testing on CVN 73 (USS George Washington)  Re-deliver SSN 725 (Helena)  Deliver SSN 794 (Montana)  Float off SSN 796 (New Jersey)  Ship final module of SSN 797 (Iowa) 1All milestones based upon current expectations and subject to change based upon future events. List is alphabetical by program designation.  2022 o Ingalls  Deliver DDG 121 (Frank E. Petersen Jr.)  Complete sea trials and deliver DDG 123 (Lenah H. Sutcliffe Higbee)  Complete sea trials DDG 125 (Jack H. Lucas)  Deliver LPD 28 (Fort Lauderdale)  Launch LPD 29 (Richard M. McCool Jr.) o Newport News  Re-deliver CVN 73 (USS George Washington)  Deliver SSN 796 (New Jersey)

 
Appendix HUNTINGTON INGALLS INDUSTRIES PROPRIETARY

 
HARD STUFF DONE RIGHT Non-GAAP Measures Definitions 12 HUNTINGTON INGALLS INDUSTRIES We make reference to “segment operating income,” “segment operating margin,” “shipbuilding revenue,” “shipbuilding operating margin,” “Technical Solutions EBITDA margin,” and “free cash flow.” We internally manage our operations by reference to segment operating income and segment operating margin, which are not recognized measures under GAAP. When analyzing our operating performance, investors should use segment operating income and segment operating margin in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. They are measures that we use to evaluate our core operating performance. We believe that segment operating income, segment operating margin and shipbuilding operating margin reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. We believe these measures are used by investors and are a useful indicator to measure our performance. Because not all companies use identical calculations, our presentation of segment operating income and segment operating margin may not be comparable to similarly titled measures of other companies. Shipbuilding revenue, shipbuilding operating margin and Technical Solutions EBITDA margin are not measures recognized under GAAP. They should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. They may not be comparable to similarly titled measures of other companies. Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. We believe free cash flow is an important measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.

 
HARD STUFF DONE RIGHT Non-GAAP Measures Definitions Cont’d 13 HUNTINGTON INGALLS INDUSTRIES Segment operating income (loss) is defined as operating income (loss) for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes. Segment operating margin is defined as segment operating income (loss) as a percentage of sales and service revenues. Shipbuilding revenue is defined as the combined sales and service revenues from our Newport News Shipbuilding segment and Ingalls Shipbuilding segment. Shipbuilding operating margin is defined as the combined segment operating income of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment as a percentage of shipbuilding revenue. Technical Solutions EBITDA margin is defined as Technical Solutions segment operating income before interest expense, income taxes, depreciation, and amortization as a percentage of Technical Solutions revenues. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds. Operating FAS/CAS Adjustment is defined as the difference between the service cost component of our pension and other postretirement expense determined in accordance with GAAP (FAS) and our pension and other postretirement expense under U.S. Cost Accounting Standards (CAS). Non-current state income taxes are defined as 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 state uncertain tax positions 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.

 
HARD STUFF DONE RIGHT14 HUNTINGTON INGALLS INDUSTRIES Non-GAAP Reconciliations – Segment Operating Income & Segment Operating Margin ($ in millions) 2020 2019 2020 2019 Ingalls revenues 752 702 2,678 2,555 Newport News revenues 1,750 1,399 5,571 5,231 Technical Solutions revenues 311 350 1,268 1,237 Intersegment eliminations (56) (39) (156) (124) Sales and Service Revenues 2,757 2,412 9,361 8,899 Operating Income 305 186 799 736 Operating FAS/CAS Adjustment (62) (30) (248) (124) Non-current state income taxes (1) 17 4 19 Segment Operating Income 242 173 555 631 As a percentage of sales and service revenues 8.8 % 7.2 % 5.9 % 7.1 % Ingalls segment operating income 96 59 281 235 As a percentage of Ingalls revenues 12.8 % 8.4 % 10.5 % 9.2 % Newport News segment operating income 128 137 233 410 As a percentage of Newport News revenues 7.3 % 9.8 % 4.2 % 7.8 % Technical Solutions segment operating income 18 (23) 41 (14) As a percentage of Technical Solutions revenues 5.8 % (6.6)% 3.2 % (1.1)% Three Months Ended December 31 December 31 Year Ended

 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Shipbuilding Revenues & Operating Margin 15 HUNTINGTON INGALLS INDUSTRIES ($ in millions) 2020 2019 2020 2019 Sales and service revenues 2,757 2,412 9,361 8,899 Technical Solutions (311) (350) (1,268) (1,237) Intersegment eliminations 56 39 156 124 Shipbuilding Revenues 2,502 2,101 8,249 7,786 Operating Income 305 186 799 736 Operating FAS/CAS Adjustment (62) (30) (248) (124) Non-current state income taxes (1) 17 4 19 Segment Operating Income 242 173 555 631 Technical Solutions (18) 23 (41) 14 Shipbuilding Operating Income 224 196 514 645 As a percentage of Shipbuilding revenues 9.0 % 9.3 % 6.2 % 8.3 % Three Months Ended December 31 December 31 Year Ended

 
HARD STUFF DONE RIGHT Non-GAAP Reconciliations – Free Cash Flow 16 HUNTINGTON INGALLS INDUSTRIES ($ in millions) 2020 2019 2020 2019 Net cash provided by operating activities 602 566 1,093 896 Less capital expenditures: Capital expenditure additions (133) (181) (353) (530) Grant proceeds for capital expenditures - 23 17 94 Free cash flow 469 408 757 460 Three Months Ended December 31 Year Ended December 31

 
HARD STUFF DONE RIGHT17 HUNTINGTON INGALLS INDUSTRIES