GlobeNewswire Inc | Aug 5, 2021 07:15AM EDT

August 05, 2021

-- Revenues were $2.2 billion in the quarter -- Operating margin was 5.7% and segment operating margin1 was 7.6% -- Diluted earnings per share was $3.20 -- Pension adjusted diluted earnings per share1 was $3.05

NEWPORT NEWS, Va., Aug. 05, 2021 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported second quarter 2021 revenues of $2.2 billion, up 10.1% from the second quarter of 2020.

Operating income in the second quarter of 2021 was $128 million and operating margin was 5.7%, compared to $57 million and 2.8%, respectively, in the second quarter of 2020. The increases in operating income and operating margin were primarily the result of stronger segment operating results compared to the prior year, partially offset by a less favorable operating FAS/CAS adjustment. The prior year period included unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19.

Segment operating income1 in the second quarter of 2021 was $169 million and segment operating margin1 was 7.6%, compared to a segment operating loss of $5 million and (0.2)%, respectively, in the second quarter of 2020. The increases in segment operating income1 and segment operating margin1 were primarily the result of the unfavorable segment operating income1 impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.

Net earnings in the second quarter of 2021 were $129 million, compared to $53 million in the second quarter of 2020. Diluted earnings per share in the second quarter of 2021 was $3.20, compared to $1.30 in the same period of 2020. Excluding the impacts of pension, adjusted earnings per share1 in the quarter was $3.05, compared to $(0.49) in the same period of 2020.

Second quarter cash from operations was $96 million and free cash flow1 was $23 million, compared to $201 million and $126 million, respectively, in the second quarter of 2020.

New contract awards in the second quarter of 2021 were approximately $1.2 billion, bringing total backlog to approximately $47.7 billion as of June 30, 2021.

We are pleased with second quarter results that demonstrate another quarter of consistent program execution, said Mike Petters, HIIs president and CEO. We recently announced the agreement to acquire Alion Science and Technology, which we believe is a perfect complement to our existing capabilities in the technology-driven defense solutions space. We believe Alion offers significant growth potential and represents an investment in capabilities that are critical to national security now and into the future and will generate significant value for our stakeholders over the long term.

Results of Operations

Three Months Ended Six Months Ended June 30 June 30 ($ inmillions,except 2021 2020 $ Change % Change 2021 2020 $ Change % Changeper shareamounts)Sales andservice $ 2,231 $ 2,027 $ 204 10.1 % $ 4,509 $ 4,290 $ 219 5.1 %revenuesOperating 128 57 71 124.6 % 275 272 3 1.1 %incomeOperating 5.7 % 2.8 % 293 bps 6.1 % 6.3 % (24) margin % bpsSegmentoperating 169 (5 ) 174 3,480.0 % 360 151 209 138.4 %income(loss)^1Segmentoperating 7.6 % (0.2 ) % 782 bps 8.0 % 3.5 % 446 margin %^ bps1Net 129 53 76 143.4 % 277 225 52 23.1 %earningsDilutedearnings $ 3.20 $ 1.30 $ 1.90 146.2 % $ 6.87 $ 5.54 $ 1.33 24.0 %per share PensionAdjusted FiguresNetearnings^ 123 (20 ) 143 715.0 % 267 78 189 242.3 %2Dilutedearnings $ 3.05 $ (0.49 ) $ 3.54 722.4 % $ 6.62 $ 1.92 $ 4.70 244.8 %per share^2^1 Non-GAAP measures that exclude non-segment factors affecting operatingincome. See Exhibit B for definitions and reconciliations.^2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. SeeExhibit B for definition and reconciliation.

Segment Operating Results

Ingalls Shipbuilding

Three Months Ended Six Months Ended June 30 June 30 ($ in 2021 2020 $ % 2021 2020 $ %millions) Change Change Change ChangeRevenues $ 670 $ 622 $ 48 7.7 % $ 1,319 $ 1,251 $ 68 5.4 %Segmentoperating 80 55 25 45.5 % 171 123 48 39.0 %income^1Segmentoperating 11.9 % 8.8 % 310 13.0 % 9.8 % 313 margin %^ bps bps1^1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Ingalls Shipbuilding revenues for the second quarter of 2021 were $670 million, an increase of $48 million, or 7.7%, from the same period in 2020, primarily driven by higher revenues in the Arleigh Burke-class guided missile (DDG) program and amphibious assault ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. DDG program revenues increased due to higher volumes on Jack H. Lucas (DDG 125), Jeremiah Denton (DDG 129) and Ted Stevens (DDG 128), partially offset by lower volumes on USS Delbert D. Black (DDG 119) following its delivery and USS Fitzgerald (DDG 62) restoration and modernization following its redelivery. Amphibious assault ship revenues increased due to higher volumes on Pittsburgh (LPD 31), LHA 9 (unnamed) and Bougainville (LHA 8), partially offset by lower volume on Fort Lauderdale (LPD 28). Revenues on the NSC program decreased due to lower volumes on Stone (NSC 9) following its delivery and Calhoun (NSC 10).

Ingalls Shipbuilding segment operating income1 for the second quarter of 2021 was $80 million, an increase of $25 million from the same period last year. Segment operating margin1 in the second quarter of 2021 was 11.9%, compared to 8.8% in the same period last year. The increases were primarily driven by the recognition of a capital investment related incentive for the DDG program on Jack H. Lucas (DDG 125) and higher risk retirement on Bougainville (LHA 8), Richard M. McCool Jr. (LPD 29) and Fort Lauderdale (LPD 28), partially offset by lower risk retirement on USS Delbert D. Black (DDG 119) following its delivery.

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

Key Ingalls Shipbuilding milestones for the quarter:

-- Launched the first Flight III Arleigh Burke-class guided missile destroyer Jack H. Lucas (DDG 125) -- Christened guided missile destroyer Lenah Sutcliffe Higbee (DDG 123) -- Began fabrication of National Security Cutter Friedman (NSC 11) -- Awarded $107 million advance procurement contract for amphibious assault ship LHA 9 (unnamed) -- Awarded a contract for planning yard services in support of in-service amphibious ships with a potential total value of $724 million

Newport News Shipbuilding

Three Months Ended Six Months Ended June 30 June 30 ($ in 2021 2020 $ Change % Change 2021 2020 $ Change % Changemillions)Revenues $ 1,363 $ 1,122 $ 241 21.5 % $ 2,770 $ 2,463 $ 307 12.5 %Segmentoperating 76 (69 ) 145 210.1 % 169 26 143 550.0 %income(loss)^1Segmentoperating 5.6 % (6.1 ) % 1173 6.1 % 1.1 % 505 margin %^ bps bps1^1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Newport News Shipbuilding revenues for the second quarter of 2021 were $1.4 billion, an increase of $241 million, or 21.5%, from the same period in 2020, driven primarily by higher revenues in submarine and aircraft carrier construction. Submarine revenues increased primarily as a result of higher volumes on Block IV and Block V boats of the Virginia-class submarine program and the Columbia-class submarine program. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the refueling and complex overhaul (RCOH) of USS John C. Stennis (CVN 74) and Doris Miller (CVN 81), partially offset by lower volumes on the John F.Kennedy (CVN 79) and the RCOH of USS George Washington (CVN 73).

Newport News Shipbuilding segment operating income1 for the second quarter of 2021 was $76 million, compared to a segment operating loss1 of $69 million for the same period last year. Segment operating margin1 in the second quarter of 2021 was 5.6%, compared to (6.1)% in the same period last year. The increases were primarily due to impacts related to Virginia-class submarine program performance and COVID-19 in the prior year period.

Key Newport News Shipbuilding milestones for the quarter:

-- Arrival of USS John C. Stennis (CVN 74) to begin its RCOH -- Began crew move aboard on USS George Washington (CVN 73) as it continues to progress through its RCOH, now approximately 90% complete -- John F. Kennedy (CVN 79) is approximately 83% complete

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

Technical Solutions

Three Months Ended Six Months Ended June 30 June 30 ($ in 2021 2020 $ Change % Change 2021 2020 $ Change % Changemillions)Revenues $ 237 $ 320 $ (83 ) (25.9 ) % $ 496 $ 637 (141 ) (22.1 ) %Segmentoperating 13 9 $ 4 44.4 % 20 2 18 900.0 %income^1Segmentoperating 5.5 % 2.8 % 267 4.0 % 0.3 % 372 margin %^ bps bps1^1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Technical Solutions revenues for the second quarter of 2021 were $237 million, a decrease of $83 million from the same period in 2020, due to the divestiture of our oil and gas business and contribution of the San Diego Shipyard to a joint venture earlier this year, as well as lower volumes in Unmanned Systems, partially offset by higher volumes in Defense & Federal Solutions.

Technical Solutions segment operating income1 for the second quarter of 2021 was $13 million, compared to $9 million in the second quarter of 2020. Segment operating margin1 in the second quarter of 2021 was 5.5%, compared to 2.8% in the same period last year. The increases were primarily driven by higher equity income related to our ship repair joint venture with Titan, as well as improved performance at Defense & Federal Solutions and Nuclear & Environmental Services, partially offset by the lower volume in Unmanned Systems.

Key Technical Solutions milestones for the quarter:

-- Awarded a contract by the U.S. Navy for two REMUS 300 unmanned underwater vehicles (UUVs) -- Awarded first international order for four REMUS 300 UUVs from the Royal New Zealand Navy -- Announced the commercial release of the REMUS 300 UUV

About Huntington Ingalls Industries

Huntington Ingalls Industries is Americas largest military shipbuilding company and a provider of professional services to partners in government and industry. For more than a century, HIIs 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. HIIs 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 approximately 41,000 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 companys website: www.huntingtoningalls.com. A telephone replay of the conference call will be available from noon today through Thursday, Aug. 12 by calling toll-free (877) 344-7529 or (412) 317-0088 and using conference ID 10158203.

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

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; our ability to complete the acquisition of Alion Science and Technology and integrate its operations into our business; 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.

Exhibit A: Financial Statements

HUNTINGTON INGALLS INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended Six Months Ended June 30 June 30(in millions, except per share 2021 2020 2021 2020amounts)Sales and service revenues Product sales $ 1,763 $ 1,420 $ 3,484 $ 3,044 Service revenues 468 607 1,025 1,246 Sales and service revenues 2,231 2,027 4,509 4,290 Cost of sales and service revenues Cost of product sales 1,495 1,253 2,949 2,543 Cost of service revenues 414 510 896 1,060 Income from operating investments, 12 7 20 13 netOther income and gains (2 ) ? 1 ? General and administrative expenses 204 214 410 428 Operating income 128 57 275 272 Other income (expense) Interest expense (18 ) (25 ) (39 ) (41 )Non-operating retirement benefit 44 30 90 60 Other, net 7 3 8 (10 )Earnings before income taxes 161 65 334 281 Federal and foreign income taxes 32 12 57 56 Net earnings $ 129 $ 53 $ 277 $ 225 Basic earnings per share $ 3.20 $ 1.30 $ 6.87 $ 5.54 Weighted-average common shares 40.3 40.7 40.3 40.6 outstanding Diluted earnings per share $ 3.20 $ 1.30 $ 6.87 $ 5.54 Weighted-average diluted shares 40.3 40.7 40.3 40.6 outstanding Dividends declared per share $ 1.14 $ 1.03 $ 2.28 $ 2.06 Net earnings from above $ 129 $ 53 $ 277 $ 225 Other comprehensive income Change in unamortized benefit plan 30 23 59 46 costsOther ? 1 2 (1 )Tax expense for items of other (8 ) (6 ) (15 ) (12 )comprehensive incomeOther comprehensive income , net of 22 18 46 33 taxComprehensive income $ 151 $ 71 $ 323 $ 258

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

June 30, December($ in millions) 2021 31, 2020Assets Current Assets Cash and cash equivalents $ 348 $ 512 Accounts receivable, net of allowance for doubtful 443 397 accounts of $2 million as of 2021 and 2020Contract assets 1,182 1,049 Inventoried costs, net 139 137 Income taxes receivable 141 171 Assets held for sale ? 133 Prepaid expenses and other current assets 64 45 Total current assets 2,317 2,444 Property, Plant, and Equipment, net of accumulateddepreciation of $2,075 million as of 2021 and 3,004 2,978 $2,024 million as of 2020Other Assets Operating lease assets 208 192 Goodwill 1,604 1,617 Other intangible assets, net of accumulatedamortization of $681 million as of 2021 and $655 499 512 million asof 2020Deferred tax assets 86 133 Miscellaneous other assets 414 281 Total other assets 2,811 2,735 Total assets $ 8,132 $ 8,157

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

June 30, December($ in millions) 2021 31, 2020Liabilities and Stockholders' Equity Current Liabilities Trade accounts payable $ 349 $ 460 Accrued employees? compensation 305 293 Current portion of postretirement plan liabilities 133 133 Current portion of workers? compensation liabilities 229 225 Contract liabilities 660 585 Liabilities held for sale ? 68 Other current liabilities 447 462 Total current liabilities 2,123 2,226 Long-term debt 1,689 1,686 Pension plan liabilities 853 960 Other postretirement plan liabilities 393 401 Workers? compensation liabilities 519 511 Long-term operating lease liabilities 170 157 Other long-term liabilities 318 315 Total liabilities 6,065 6,256 Commitments and Contingencies Stockholders? Equity Common stock, $0.01 par value; 150 million sharesauthorized; 53.4 million shares issued and 40.2million shares outstanding as of June 30, 2021, and 1 1 53.3 million shares issued and 40.5 million sharesoutstanding as of December 31, 2020Additional paid-in capital 1,977 1,972 Retained earnings 3,718 3,533 Treasury stock (2,128 ) (2,058 )Accumulated other comprehensive loss (1,501 ) (1,547 )Total stockholders? equity 2,067 1,901 Total liabilities and stockholders? equity $ 8,132 $ 8,157

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

Six Months Ended June 30($ in millions) 2021 2020Operating Activities Net earnings $ 277 $ 225 Adjustments to reconcile to net cash provided by (used in) operating activitiesDepreciation 102 92 Amortization of purchased intangibles 26 26 Amortization of debt issuance costs 3 3 Provision for doubtful accounts ? 6 Stock-based compensation 12 13 Deferred income taxes 31 21 Loss (gain) on investments in marketable securities (12 ) 5 Change in Accounts receivable (45 ) (167 )Contract assets (127 ) (63 )Inventoried costs (3 ) (13 )Prepaid expenses and other assets (29 ) (4 )Accounts payable and accruals (32 ) 172 Retiree benefits (70 ) (50 )Other non-cash transactions, net 6 3 Net cash provided by operating activities 139 269 Investing Activities Capital expenditures

Capital expenditure additions (134 ) (150 )

Grant proceeds for capital expenditures 2 9

Acquisitions of businesses, net of cash received ? (378 )Investment in affiliates (22 ) ? Proceeds from disposition of business 20 ? Net cash used in investing activities (134 ) (519 )

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

Six Months Ended June 30($ in millions) 2021 2020Financing Activities Proceeds from issuance of long-term debt ? 1,000 Proceeds from revolving credit facility borrowings ? 385

Repayment of revolving credit facility borrowings ? (385 )Debt issuance costs ? (13 )Dividends paid (92 ) (84 )Repurchases of common stock (70 ) (84 )Employee taxes on certain share-based payment arrangements (7 ) (13 )Net cash provided by (used in) financing activities (169 ) 806 Change in cash and cash equivalents (164 ) 556 Cash and cash equivalents, beginning of period 512 75 Cash and cash equivalents, end of period $ 348 $ 631 Supplemental Cash Flow Disclosure Cash paid for income taxes (net of refunds) $ 21 $ 23 Cash paid for interest $ 37 $ 32 Non-Cash Investing and Financing Activities Capital expenditures accrued in accounts payable $ 5 $ 5

Exhibit B: Non-GAAP Measures Definitions & Reconciliations

We make reference to "segment operating income (loss)," "segment operating 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 and segment 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.

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.

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 companys 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.

Reconciliations of Segment Operating Income (Loss) and Segment Operating Margin

Three Months Ended Six Months Ended June 30 June 30($ in 2021 2020 2021 2020millions)Ingalls $ 670 $ 622 $ 1,319 $ 1,251 revenuesNewport News 1,363 1,122 2,770 2,463 revenuesTechnicalSolutions 237 320 496 637 revenuesIntersegment (39 ) (37 ) (76 ) (61 ) eliminationsSales andService 2,231 2,027 4,509 4,290 Revenues Operating 128 57 275 272 IncomeOperating FAS/ 37 (63 ) 77 (126 ) CAS AdjustmentNon-currentstate income 4 1 8 5 taxesSegmentOperating 169 (5 ) 360 151 Income (Loss) As apercentage ofsales and 7.6 % (0.2 ) % 8.0 % 3.5 %servicerevenuesIngallssegment 80 55 171 123 operatingincome As apercentage of 11.9 % 8.8 % 13.0 % 9.8 %IngallsrevenuesNewport Newssegment 76 (69 ) 169 26 operatingincome (loss) As apercentage of 5.6 % (6.1 ) % 6.1 % 1.1 %Newport NewsrevenuesTechnicalSolutionssegment 13 9 20 2 operatingincome As apercentage ofTechnical 5.5 % 2.8 % 4.0 % 0.3 %Solutionsrevenues

Reconciliation of Adjusted Net Earnings and Adjusted Diluted Earnings Per Share

Three Months Ended Six Months Ended June 30 June 30($ in millions, except 2021 2020 2021 2020per share amounts) Net earnings $ 129 $ 53 $ 277 $ 225 After-tax FAS/CAS (6 ) (73 ) (10 ) (147 )Adjustment^(1)Adjusted Net Earnings $ 123 $ (20 ) $ 267 $ 78 Diluted earnings per $ 3.20 $ 1.30 $ 6.87 $ 5.54 shareAfter-tax FAS/CASAdjustment per share^ (0.15 ) (1.79 ) (0.25 ) (3.62 )(1)Adjusted Diluted EPS** $ 3.05 $ (0.49 ) $ 6.62 $ 1.92 (1) FAS/CAS Adjustment $ (7 ) $ (93 ) $ (13 ) $ (186 )Tax effect* (1 ) (20 ) (3 ) (39 )After-tax impact (6 ) (73 ) $ (10 ) $ (147 )Weighted-averagediluted shares 40.3 40.7 40.3 40.6 outstandingPer share impact after $ (0.15 ) $ (1.79 ) $ (0.25 ) $ (3.62 )tax-impact** *The income tax impact is calculated using the tax rate in effect for therelevant non-GAAP adjustment.**Amounts may notrecalculate exactly due to rounding.

Reconciliation of Free Cash Flow

Six Months Ended June 30($ in millions) 2021 2020Net cash provided by operating activities $ 139 $ 269 Less capital expenditures: Capital expenditure additions (134 ) (150 )Grant proceeds for capital expenditures 2 9 Free cash flow $ 7 $ 128

Contacts:

Jerri Fuller Dickseski (Media)jerri.dickseski@hii-co.com757-380-2341

Dwayne Blake (Investors)dwayne.blake@hii-co.com757-380-2104