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Huntington Ingalls Industries Reports Third Quarter Results

  • Revenues were $1.64 billion for the third quarter of 2013
  • Diluted earnings per share was $1.36 for the quarter
  • Adjusted diluted earnings per share, which excludes the impact of hurricane insurance recoveries and the Gulfport closure and the FAS/CAS Adjustment, was $1.17
  • Cash and cash equivalents at the end of the quarter were $895 million

NEWPORT NEWS, Va., Nov. 7, 2013 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported third quarter 2013 revenues of $1.64 billion, up 2.6 percent from the same period last year. Third quarter diluted earnings per share was $1.36, compared to $0.26 in the same period of 2012.

Segment operating income in the third quarter was $142 million, compared to $89 million in the same period last year. Total operating income for the quarter was $127 million, compared to $66 million in the same period of 2012. The increases were primarily attributable to the impact of hurricane insurance recoveries and the absence in 2013 of the workers' compensation expense adjustment, partially offset by the impact of closing the Gulfport Composite Center of Excellence (the "Gulfport facility") and the favorable resolution last year of outstanding contract changes. Total operating margin was 7.8 percent for the quarter compared to 4.1 percent in the third quarter of 2012.

Cash provided by operating activities in the third quarter was $281 million, up $144 million from the same period last year. New business awards for the quarter were $0.2 billion, bringing total backlog to $19.3 billion as of the end of the quarter, of which $12.8 billion is funded.

"During this uncertain budget environment, our healthy backlog continues to support our programs, and we remain confident in our ability to deliver 9 plus percent operating margin by 2015," said Mike Petters, HII's president and chief executive officer. "Despite challenges encountered during the test programs for the last two underperforming ships, we delivered LPD-25 Somerset shortly after the quarter end and are on a path to deliver LHA-6 America at the end of the first quarter of 2014."

Results of Operations
  Three Months Ended    
  September 30    
(in millions, except per share amounts) 2013 2012 $ Change % Change
Sales and service revenues $ 1,637 $ 1,596 $ 41 2.6%
Segment operating income 1 142 89 53 59.6%
Segment operating margin % 1 8.7% 5.6%   310 bps
Total operating income 127 66 61 92.4%
Operating margin % 7.8% 4.1%   362 bps
Net earnings 69 13 56 430.8%
Diluted earnings per share $ 1.36 $ 0.26 $1.10 423.1%
Weighted-average diluted shares outstanding 50.6 50.3    
Adjusted Figures        
Sales and service revenues 2 $ 1,665 $ 1,596 $ 69 4.3%
Segment operating income 1,3 $ 113 $ 113 —%
Segment operating margin % 1,3 6.8% 7.1%   -29 bps
Total operating income 3 $ 98 $ 90 8 8.9%
Operating margin % 3 5.9% 5.6%   25 bps
Net earnings 3,4 59 49 10 20.4%
Diluted earnings per share 3,4 $ 1.17 $ 0.98 $ 0.19 19.4%
Weighted-average diluted shares outstanding 50.6 50.3    
1 Non-GAAP metrics that exclude non-segment factors affecting operating income. See Exhibit B for reconciliation.
2 Non-GAAP metrics that exclude the impact of hurricane insurance recoveries and the Gulfport closure in 2013. See Exhibit B for reconciliation.
3 Non-GAAP metrics that exclude the impact of hurricane insurance recoveries and the Gulfport closure in 2013 and the impact of the non-cash workers' compensation charge in 2012. See Exhibit B for reconciliation.
4 Non-GAAP metrics that exclude the non-cash tax expense related to the Tax Matters Agreement in 2012 and the after-tax FAS/CAS Adjustment. See Exhibit B for reconciliation.

During the third quarter of 2013, the company settled hurricane-related insurance claims for its Ingalls segment and received $180 million in cash. This settlement decreased Ingalls revenues by $37 million due to lower overhead costs and increased Ingalls operating income by $46 million, reflecting the economic position of the customer's recent direction for the treatment of the insurance-related cost and recoveries. Also during the quarter, the company announced its plan to close the Gulfport facility as a result of the Navy's decision to proceed with a steel deckhouse on DDG-1002 Lyndon B. Johnson, instead of a composite deckhouse. Ingalls revenues increased by $9 million due to the overhead impact of this decision, and the resulting Gulfport closure charge decreased Ingalls operating income by $17 million (together, the "Gulfport closure impact").

Reported revenues for the third quarter were $1.6 billion, a 2.6 percent increase over the same period prior year. Adjusted for the hurricane insurance recoveries and the Gulfport closure impact in 2013, third quarter revenues were $1.7 billion, an increase of $69 million or 4.3 percent over Q3 2012. 

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