Huntington Ingalls Industries Reports Q1 Results

Press Release
Wednesday, May 11, 2011
  • Successfully spun off as independent company on March 31, 2011
  • Sales were $1.68 billion for the first quarter 2011
  • Diluted EPS for the quarter was $0.92
  • Significant milestones achieved on major programs in each segment
  • Backlog steady at $17.4 billion

NEWPORT NEWS, Va., May 11, 2011 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries, Inc. (NYSE:HII) reported first quarter 2011 sales of $1.68 billion, down 1.6 percent from the same period last year, and operating margin of 5.0 percent, essentially flat year over year. First quarter earnings per share was $0.92, up from $0.85 in 2010. New business awards for the 2011 first quarter totaled $1.7 billion, bringing total backlog to $17.4 billion as of March 31, 2011.

"As a newly independent company, we are focused on providing high-quality products and services to our customers, the U.S. Navy and Coast Guard," said Mike Petters, HII's president and chief executive officer. "We remain committed to maintaining our strong performance in our Newport News business and continuing our actions at Ingalls Shipbuilding to improve profitability. During the first quarter we hit several major milestones on key programs, and we expect to maintain this momentum throughout the remainder of the year."

First Quarter Highlights

 

Three Months Ended

 

 

 

March 31,

 

 

(In millions, except per share amounts)

2011

2010

$ Change

% Change

Sales

 $ 1,684

 $ 1,712

 $ (28)

 (1.6)%

Total segment operating income

 84

 99

 (15)

 (15.2)%

Total operating income

 85

 87

 (2)

 (2.3)%

Operating margin %

5.0%

5.1%

 

 

Net income

 45

 41

 4

9.8%

Diluted EPS

 $ 0.92

 $ 0.85

 $ 0.07

8.2%

Weighted average diluted shares outstanding

 49

 49

 

 

First quarter consolidated sales decreased $28 million from the same period in 2010, driven by higher sales volume on the CVN-78 Gerald R. Ford, CVN-71 USS Theodore Roosevelt, National Security Cutter (NSC) and SSN-774 Virginia-class submarine construction programs, which were more than offset by lower sales volume on the LPD and DDG-51 programs and the completion of the CVN-65 USS Enterprise drydocking and selected maintenance in 2010.

Segment operating income in the quarter was $84 million, down $15 million from the year earlier period. Total operating income was $85 million, down from $87 million last year. The results for the first quarter of 2010 include $17 million of business interruption insurance recovery related to Hurricane Ike, which was partially offset by unfavorable performance in the LPD program, and 2011 includes the impact of lower margins on CVN-78 Gerald R. Ford.

Awards

The value of new contract awards during the three months ended March 31, 2011, was approximately $1.7 billion, for a total company backlog of $17.4 billion at the end of the quarter. New awards included $1.1 billion for construction of LPD-26, $206 million for continuation of advance planning efforts for the CVN-72 USS Abraham Lincoln Refueling and Complex Overhaul (RCOH), and $90 million for long-lead material procurement activities for the U.S. Coast Guard's fifth National Security Cutter. The company also received a $25 million award for maintenance and repair work to be performed on submarine SSN-753 USS Albany.

Operating Segment Results

Ingalls Shipbuilding

 

Three Months Ended
March 31,

 

 

 

($ in millions)

2011

2010

$ Change

% Change

 

Sales

$ 761

$ 827

$ (66)

 (8.0)%

 

Operating income

 17

 24

 (7)

 (29.2)%

 

Operating margin %

2.2%

2.9%

 

 

 

Ingalls revenues for the quarter decreased $66 million, or 8.0 percent, from the same period in 2010, primarily driven by lower volume on DDGs and the LPD program, partially offset by higher sales in the NSC program. The decrease in DDGs was primarily due to lower sales volume following delivery of DDG-107 in the third quarter of 2010 and DDG-110 in the first quarter of 2011. The increase in NSC volume was primarily due to NSC-4, awarded in the fourth quarter of 2010.

Operating income for the quarter was $17 million compared with $24 million in the same period in 2010. The results for the first quarter of 2010 include $17 million of business interruption insurance recovery related to Hurricane Ike, which was partially offset by unfavorable performance in the LPD program.

Key Ingalls program milestones for the quarter:

  •  Launched LPD-23 Anchorage at the Avondale shipyard
  •  Delivered DDG-110 USS William P. Lawrence, the latest ship in the DDG-51 destroyer class
  •  Christened LPD-24  Arlington at the Pascagoula shipyard
  •  Awarded the contract for the construction of LPD-26 John P. Murtha, worth approximately $1.5 billion, including $398 million of long-lead material   previously awarded

Newport News Shipbuilding

 

Three Months Ended
March 31,

 

 

 

($ in millions)

2011

2010

$ Change

% Change

 

Sales

$ 940

$ 907

$ 33

3.6%

 

Operating income

 67

 75

 (8)

 (10.7)%

 

Operating margin %

7.1%

8.3%

 

 

 

Newport News revenues for the three months ended March 31, 2011, increased $33 million, or 3.6 percent, from the same period in 2010, primarily driven by higher volume on aircraft carrier construction and RCOH programs and the SSN-774 Virginia-class submarine construction program, offset by lower volume on CVN-65 USS Enterprise due to redelivery in 2010.

Newport News operating income for the quarter was $67 million compared with $75 million in the same period 2010. The decrease was primarily due to the impact of lower margins on CVN-78 Gerald R. Ford.

Key Newport News program milestones for the quarter:

  • Cut the first steel and began unit fabrication work on CVN-79, the second in the Ford class of aircraft carriers
  • Along with Gamesa Technology Corp., a global leader in wind energy, launched the Offshore Wind Technology Center to jointly develop the next generation of offshore wind systems
  • Awarded a $25 million firm-fixed-price contract for submarine SSN-753 USS Albany for maintenance, repair, alterations and testing

Source: www.huntingtoningalls.com

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