Sales were$1.57 billion for the first quarter 2012 Segment operating margin improved to 6.4 percent from 5.0 percent in Q1 2011 Total operating margin was 5.1 percent, up from 5.0 percent in the same period last year Diluted earnings per share was$0.67 Cash and cash equivalents at the end of the quarter was$551 million
"The end of the first quarter marked our one-year anniversary as an independent, publicly-traded company, and we are on track to deliver the performance targets we laid out at the time of the spin," said
First Quarter Highlights
Three Months Ended March 31, (In millions, except per share amounts) 2012 2011 $ Change % Change Sales $ 1,568 $ 1,684 $ (116) (6.9)% Total segment operating income1 101 84 17 20.2% Segment operating margin %1 6.4% 5.0% 145 bps Total operating income 80 85 (5) (5.9)% Operating margin % 5.1% 5.0% 5 bps Net earnings 33 45 (12) (26.7)% Diluted earnings per share $ 0.67 $ 0.92 $ (0.25) (27.1)% Weighted average diluted shares outstanding 49.5 48.8 1Non-GAAP metric. See Exhibit B for reconciliation.
First quarter consolidated sales decreased
Segment operating income in the quarter was
Awards
The value of new contract awards during the three months ended
Operating Segment Results
Ingalls Shipbuilding
Three Months Ended March 31, ($ in millions) 2012 2011 $ Change % Change Sales $ 692 $ 761 $ (69) (9.1)% Operating income 20 17 3 17.6% Operating margin % 2.9% 2.2% 66 bps
Ingalls revenues for the first quarter decreased
Ingalls operating income for the first quarter was
Key Ingalls program milestones for the quarter:
LPD-22San Diego sailed away from Pascagoula en route to her commissioning site inSan Diego Awarded$70 million additional advance procurement work for LPD-27 (unnamed) Awarded$76 million advance procurement contract for NSC-6 (unnamed)
Newport News Shipbuilding
Three Months Ended March 31, ($ in millions) 2012 2011 $ Change % Change Sales $ 895 $ 940 $ (45) (4.8)% Operating income 81 67 14 20.9% Operating margin % 9.1% 7.1% 192 bps
Key
Reached 75 percent structural completion of CVN-78Gerald R. Ford Awarded$383 million of planning work for the CVN-72 USS Abraham Lincoln RCOH Assumed maintenance responsibilities atKesselring , theNavy's nuclear propulsion facility in upstateNew York
The Company
The
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
Exhibit A: Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31 (in millions, except per share amounts) 2012 2011 Sales and service revenues Product sales $ 1,353 $ 1,466 Service revenues 215 218 Total sales and service revenues 1,568 1,684 Cost of sales and service revenues Cost of product sales 1,152 1,253 Cost of service revenues 186 197 General and administrative expenses 150 149 Operating income (loss) 80 85 Other income (expense) Interest expense (30) (15) Earnings (loss) before income taxes 50 70 Federal income taxes 17 25 Net earnings (loss) $ 33 $ 45 Basic earnings (loss) per share $ 0.67 $ 0.92 Weighted-average common shares outstanding 49.0 48.8 Diluted earnings (loss) per share $ 0.67 $ 0.92 Weighted-average diluted shares outstanding 49.5 48.8 Net earnings (loss) from above $ 33 $ 45 Other comprehensive income (loss) Change in unamortized benefit plan costs 24 28 Tax benefit (expense) on change in unamortized benefit plan costs (9) (11) Other comprehensive income (loss), net of tax 15 17 Comprehensive income (loss) $ 48 $ 62
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) March 31 December 31 ($ in millions) 2012 2011 Assets Current Assets Cash and cash equivalents $ 551 $ 915 Accounts receivable, net 954 711 Inventoried costs, net 384 380 Deferred income taxes 235 232 Prepaid expenses and other current assets 32 30 Total current assets 2,156 2,268 Property, plant, and equipment, net 2,005 2,033 Other Assets Goodwill 844 844 Other purchased intangibles, net of accumulated amortization of $377 in 2012 and $372 in 2011 562 567 Pension plan assets 64 64 Debt issuance costs, net 46 48 Long-term deferred tax asset 99 128 Miscellaneous other assets 48 49 Total other assets 1,663 1,700 Total assets $ 5,824 $ 6,001
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) – CONTINUEDMarch 31 December 31 ($ in millions, except share amounts) 2012 2011 Liabilities and Stockholders' Equity Current Liabilities Trade accounts payable 293 380 Current portion of long-term debt 29 29 Current portion of workers' compensation liabilities 201 201 Current portion of postretirement plan liabilities 172 172 Accrued employees' compensation 189 221 Advance payments and billings in excess of costs incurred 118 101 Provision for contract losses 12 19 Other current liabilities 238 249 Total current liabilities 1,252 1,372 Long-term debt 1,822 1,830 Other postretirement plan liabilities 586 581 Pension plan liabilities 833 936 Workers' compensation liabilities 362 361 Other long-term liabilities 51 49 Total liabilities 4,906 5,129 Commitments and Contingencies -- -- Stockholders' Equity Common stock,$.01 par value; 150,000,000 shares authorized; 49,445,957 issued and outstanding as ofMarch 31, 2012 ; 48,821,563 issued and outstanding as ofDecember 31, 2011 0 0 Additional paid-in capital 1,860 1,862 Retained earnings (deficit) (108) (141) Accumulated other comprehensive income (loss) (834) (849) Total stockholders' equity 918 872 Total liabilities and stockholders' equity $ 5,824 $ 6,001
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31 ($ in millions) 2012 2011 Operating Activities Net earnings (loss) $ 33 $ 45 Adjustments to reconcile to net cash provided by (used in) operating activities Depreciation 42 40 Amortization of purchased intangibles 5 5 Amortization of debt issuance costs 2 0 Stock-based compensation 8 4 Change in Accounts receivable (243) (168) Inventoried costs 5 (110) Prepaid expenses and other assets 2 (38) Accounts payable and accruals (125) (131) Deferred income taxes 17 (33) Retiree benefits (75) 31 Other non-cash transactions, net 0 (9) Net cash provided by (used in) operating activities (329) (364) Investing Activities Additions to property, plant, and equipment (27) (63) Net cash provided by (used in) investing activities (27) (63) Financing Activities Proceeds from issuance of long-term debt 0 1,775 Repayment of long-term debt (8) 0 Debt issuance costs 0 (50) Repayment of notes payable to former parent and accrued interest 0 (954) Dividend to former parent in connection with spin-off 0 (1,429) Net transfers from (to) former parent 0 1,310 Net cash provided by (used in) financing activities (8) 652 Change in cash and cash equivalents (364) 225 Cash and cash equivalents, beginning of period 915 0 Cash and cash equivalents, end of period $ 551 $ 225 Supplemental Cash Flow Disclosure Cash paid for income taxes $ 4 $ 0 Cash paid for interest $ 47 $ 0
Exhibit B: Reconciliations
We make reference to "segment operating income." Segment operating income is defined as operating income before FAS/CAS adjustment and deferred state income taxes.
Segment operating income is one of the key metrics we use to evaluate operating performance because it excludes items that do not affect segment performance. Therefore, we believe it is appropriate to disclose these measures to help investors analyze our operating performance. However, these measures are not measures of financial performance under GAAP and may not be defined or calculated by other companies in the same manner.
Reconciliation of Segment Operating Income
Three Months Ended March 31, $ in millions 2012 2011 Sales and Service Revenues Ingalls $ 692 $ 761 Newport News 895 $ 940 Intersegment eliminations (19) (17) Total sales and service revenues $ 1,568 $ 1,684 Operating Income (Loss) Ingalls $ 20 $ 17 As a percentage of sales 2.9% 2.2% Newport News 81 67 As a percentage of sales 9.1% 7.1% Total Segment Operating Income (Loss) 101 84 As a percentage of sales 6.4% 5.0% Non-segment factors affecting operating income Net pension and post-retirement benefits adjustment (17) (4) Deferred state income taxes (4) 5 Total operating income (loss) $ 80 $ 85 Interest expense (30) (15) Federal income taxes (17) (25) Total net earnings (loss) $ 33 $ 45
CONTACT:Jerri Fuller Dickseski (Media) jerri.dickseski@hii-co.com 757-380-2341Andy Green (Investors) andy.green@hii-co.com 757-688-5572
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Huntington Ingalls Industries, Inc.