Huntington Ingalls Industries Reports First Quarter Results

Share
  • 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

The Company

Huntington Ingalls Industries (HII) designs, builds and maintains nuclear and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. For more than a century, HII has built more ships in more ship classes than any other U.S. naval shipbuilder. Employing nearly 38,000 in Virginia, Mississippi, Louisiana and California, its primary business divisions are Newport News Shipbuilding and Ingalls Shipbuilding. For more information, please visit www.huntingtoningalls.com.

The Huntington Ingalls Industries, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9418

Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. EDT on May 11, 2011. A live audio broadcast of the conference call along with a supplemental presentation will be available on the investor relations page of the company's website at www.huntingtoningalls.com.

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 obtain new contracts, estimate our costs and perform effectively; risks related to our spin-off from Northrop Grumman (including our increased costs and leverage); our ability to realize the expected benefits from consolidation of our Gulf Coast facilities; natural disasters; adverse economic conditions in the United States and globally; and other risk factors discussed in our filings with the U.S. Securities and Exchange Commission. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligations to update any forward-looking statements.

Exhibit A: Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31 ------------------- $ in millions, except per share amounts 2011 2010 ------------------------------- --------- -------- Sales and Service Revenues Product sales $ 1,466 $ 1,454 Service revenues 218 258 ------------------------------- --------- -------- Total sales and service revenues 1,684 1,712 ------------------------------- --------- -------- Cost of Sales and Service Revenues Cost of product sales 1,253 1,251 Cost of service revenues 197 220 General and administrative expenses 149 154 ------------------------------- --------- -------- Operating income 85 87 Interest expense (15) (10) Earnings before income taxes 70 77 ------------------------------- --------- -------- Federal income taxes 25 36 ------------------------------- --------- -------- Net earnings $ 45 $ 41 ------------------------------- --------- -------- Basic earnings per share $ 0.92 $ 0.85 ------------------------------- --------- -------- Weighted-average common shares outstanding, in millions 48.8 48.8 ------------------------------- --------- -------- Diluted earnings per share $ 0.92 $ 0.85 Weighted-average diluted shares outstanding, in millions 48.8 48.8 ------------------------------- --------- -------- Net earnings from above $ 45 $ 41 Other comprehensive income Change in unamortized benefit plan costs 28 12 Tax (expense) benefit on change in unamortized benefit plan costs (11) 1 ------------------------------- --------- -------- Other comprehensive income, net of tax 17 13 ------------------------------- --------- -------- Comprehensive income $ 62 $ 54 ------------------------------- --------- --------
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) December March 31 31 $ in millions 2011 2010 ------------------------------- --------- -------- Assets Current Assets Cash and cash equivalents $ 225 $ -- Accounts receivable, net 896 728 Inventoried costs, net 372 293 Deferred income taxes 293 284 Prepaid expenses and other current assets 46 8 ------------------------------- --------- -------- Total current assets 1,832 1,313 ------------------------------- --------- -------- Property, plant, and equipment, net 2,006 1,997 ------------------------------- --------- -------- Other Assets Goodwill 1,134 1,134 Other purchased intangibles, net of accumulated amortization of $357 in 2011 and $352 in 2010 582 587 Pension plan asset 144 131 Debt issuance costs 54 -- Miscellaneous other assets 53 41 ------------------------------- --------- -------- Total other assets 1,967 1,893 ------------------------------- --------- -------- Total assets $ 5,805 $ 5,203 ------------------------------- --------- -------- Liabilities and Equity Current Liabilities Notes payable to former parent $ -- $ 715 Trade accounts payable 252 274 Current portion of long-term debt 29 -- Current portion of workers' compensation liabilities 198 197 Accrued interest on notes payable to former parent -- 239 Current portion of post-retirement plan liabilities 145 146 Accrued employees' compensation 166 203 Advance payments and billings in excess of costs incurred 62 107 Provision for contract losses 61 80 Other current liabilities 211 265 ------------------------------- --------- -------- Total current liabilities 1,124 2,226 ------------------------------- --------- -------- Long-term debt 1,851 105 Other post-retirement plan liabilities 571 567 Pension plan liabilities 393 381 Workers' compensation liabilities 351 351 Deferred tax liabilities 102 99 Other long-term liabilities 51 56 ------------------------------- --------- -------- Total liabilities 4,443 3,785 ------------------------------- --------- -------- Commitments and Contingencies Shareholders' Equity Common stock, $0.01 par value; 150,000,000 shares authorized; issued and outstanding as of March 31, 2011: 48,765,841 -- -- Additional paid-in capital 1,862 -- Former parent's equity in unit -- 1,933 Accumulated deficit (2) -- Accumulated other comprehensive loss (498) (515) ------------------------------- --------- -------- Total shareholders' equity 1,362 1,418 ------------------------------- --------- -------- Total liabilities and shareholders' equity $ 5,805 $ 5,203 ------------------------------- --------- --------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31 ---------------- $ in millions 2011 2010 -------------------------------------- -------- ------ Operating Activities Net Earnings $ 45 $ 41 Adjustments to reconcile to net cash used in operating activities Depreciation 40 41 Amortization of purchased intangibles 5 9 Increase in Accounts receivable (168) (82) Inventoried costs (110) (36) Prepaid expenses and other current assets (38) (4) Increase (decrease) in Accounts payable and accruals (127) (90) Deferred income taxes (33) (26) Retiree benefits 31 35 Other non-cash transactions, net (9) (5) -------------------------------------- -------- ------ Net cash used in operating activities (364) (117) -------------------------------------- -------- ------ Investing Activities Additions to property, plant, and equipment (63) (32) -------------------------------------- -------- ------ Net cash used in investing activities (63) (32) -------------------------------------- -------- ------ Financing Activities Proceeds from issuance of long-term debt 1,775 -- Debt issuance costs (50) -- Repayment of notes payable to former parent and accrued interest (954) -- Dividend to former parent in connection with spin-off (1,429) -- Net transfers from former parent 1,310 149 -------------------------------------- -------- ------ Net cash provided by financing activities 652 149 -------------------------------------- -------- ------ Increase in cash and cash equivalents 225 -- Cash and cash equivalents, beginning of period -- -- -------------------------------------- -------- ------ Cash and cash equivalents, end of period $ 225 $ -- -------------------------------------- -------- ------ Supplemental Cash Flow Disclosure Cash paid for interest $ -- $ -- -------------------------------------- -------- ------ Non-Cash Investing and Financing Activities Capital expenditures accrued in accounts payable $ 1 $ 1 -------------------------------------- -------- ------

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Huntington Ingalls Industries, Inc.

CONTACT: Jerri Fuller Dickseski (Media) jerri.dickseski@hii-co.com 757-380-2341 Andy Green (Investors) andy.green@hii-co.com 757-688-5572

 

Contact information

Huntington Ingalls Industries
Print Friendly Format

Download

Download all assets in a .zip file