May 6, 2021
NEWPORT NEWS, Va., May 06, 2021 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported first quarter 2021 revenues of $2.3 billion, up less than 1% from the first quarter of 2020.
Operating income in the quarter was $147 million and operating margin was 6.5%, compared to $215 million and 9.5%, respectively, in the first quarter of 2020. The decreases in operating income and operating margin were primarily the result of a less favorable operating FAS/CAS adjustment, partially offset by stronger segment operating results compared to the prior year.
Segment operating income1 in the quarter was $191 million and segment operating margin1 was 8.4%, compared to $156 million and 6.9%, respectively, in the first quarter of 2020. The increases in segment operating income1 and segment operating margin1 were primarily the result of higher risk retirement at Ingalls Shipbuilding and improved performance at Technical Solutions.
Net earnings in the quarter were $148 million, compared to $172 million in the first quarter of 2020. Diluted earnings per share in the quarter was $3.68, compared to $4.23 in the same period of 2020. Excluding the impacts of pension, adjusted earnings per share1 in the quarter was $3.56, compared to $2.43 in the same period of 2020.
First quarter cash from operations was $43 million and free cash flow1 was negative $16 million, compared to $68 million and $2 million, respectively, in the first quarter of 2020.
New contract awards in the quarter were approximately $5.3 billion, bringing total backlog to approximately $48.8 billion as of March 31, 2021.
“We are pleased with first quarter results that demonstrate another quarter of consistent program execution,” said Mike Petters, HII’s president and CEO. "We are well positioned to drive long-term value creation, with an unprecedented level of backlog in-hand and a workforce that has become more capable while working through the challenges posed by COVID-19."
1Non-GAAP measure. See Exhibit B for definition and reconciliation.
Results of Operations
Three Months Ended March 31 ($ in millions, except per share amounts) 20212020$ Change% ChangeSales and service revenues $2,278 $2,263 $15 0.7% Operating income 147 215 (68) (31.6)% Operating margin % 6.5 %9.5% (305) bps Segment operating income1 191 156 35 22.4% Segment operating margin %1 8.4 %6.9% 149 bps Net earnings 148 172 (24) (14.0)% Diluted earnings per share $3.68 $4.23 $(0.55) (13.0)% Pension Adjusted Figures Net earnings2 143 99 44 44.4% Diluted earnings per share2 $3.56 $2.43 $1.13 46.5% 1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.2 Non-GAAP measures that exclude the impacts of the FAS/CAS Adjustment. See Exhibit B for reconciliation.Segment Operating Results
Ingalls Shipbuilding
Three Months Ended March 31 ($ in millions) 20212020$ Change% ChangeRevenues $649 $629 $20 3.2%Segment operating income1 91 68 23 33.8%Segment operating margin %1 14.0 %10.8% 321 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Ingalls Shipbuilding revenues for the first quarter of 2021 were $649 million, an increase of $20 million, or 3.2%, from the same period in 2020, primarily driven by higher revenues in the Arleigh Burke-class DDG program, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. DDG program revenues increased due to higher volumes on George M. Neal (DDG 131), Jeremiah Denton (DDG 129) and Jack H. Lucas (DDG 125), partially offset by lower volumes on USS Fitzgerald (DDG 62) restoration and modernization following its redelivery and Delbert D. Black (DDG 119) following its delivery. Revenues on the NSC program decreased due to lower volume on Stone (NSC 9) following its delivery. Amphibious assault ship revenues were flat as a result of higher volumes on Pittsburgh (LPD 31), Bougainville (LHA 8) and LHA 9 (unnamed), partially offset by lower volumes on Richard M. McCool Jr. (LPD 29), Fort Lauderdale (LPD 28) and USS Tripoli (LHA 7).
Ingalls Shipbuilding segment operating income for the first quarter was $91 million, an increase of $23 million from the same period last year. Segment operating margin in the quarter was 14.0%, compared to 10.8% in the same period last year. The increases were primarily driven by higher risk retirement on Bougainville (LHA 8).
Key Ingalls Shipbuilding milestones for the quarter:
Newport News Shipbuilding
Three Months Ended March 31 ($ in millions) 20212020$ Change% ChangeRevenues $1,407 $1,341 $66 4.9% Segment operating income1 93 95 (2) (2.1)% Segment operating margin %1 6.6 %7.1% (47) bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Newport News Shipbuilding revenues for the first quarter of 2021 were $1.4 billion, an increase of $66 million, or 4.9%, from the same period in 2020, driven primarily by higher revenues in aircraft carriers, naval nuclear support services, and submarines. 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). Naval nuclear support services revenues increased primarily as a result of higher volumes in carrier and submarine fleet support services, offset by lower volume in facility maintenance services. Submarine revenues increased primarily as a result of higher volumes on the Columbia-class submarine program and the Virginia-class submarine (VCS) program. The higher volume on the VCS program was due to higher volumes on Block V boats, offset by lower volumes on Block IV boats.
Newport News Shipbuilding segment operating income for the first quarter was $93 million, compared to operating income of $95 million for the same period last year. Segment operating margin in the quarter was 6.6%, compared to 7.1% in the same period last year. The decreases were primarily due to lower risk retirement on the RCOH of USS George Washington (CVN 73), partially offset by higher risk retirement on Block IV of the VCS program.
Key Newport News Shipbuilding milestones for the quarter:
Technical Solutions
Three Months Ended March 31 ($ in millions) 20212020$ Change% ChangeRevenues $259 $317 (58) (18.3)% Segment operating income1 7 (7) 14 200.0% Segment operating margin %1 2.7 %(2.2)% 491 bps 1 Non-GAAP measures. See Exhibit B for definitions and reconciliations.Technical Solutions revenues for the first quarter of 2021 were $259 million, a decrease of $58 million from the same period in 2020, primarily due to the divestitures of our oil and gas business and the San Diego Shipyard, as well as lower volumes in Defense & Federal Solutions, partially offset by the acquisition of Hydroid in March of 2020.
Technical Solutions segment operating income for the first quarter was $7 million, compared to a segment operating loss of $7 million in the first quarter of 2020. The increase was primarily driven by improved performance in Defense & Federal Solutions and Nuclear & Environmental Services, as well as a gain on the sale of our oil and gas business.
Key Technical Solutions milestones for the quarter:
HII is a global, all-domain defense provider. HII's mission is to deliver the world's most powerful ships and all-domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world.
As the nation's largest military shipbuilder, and with a more than 135-year history of advancing U.S. national security, HII delivers critical capabilities extending from ships to unmanned systems, cyber, ISR, AI/ML and synthetic training. Headquartered in Virginia, HII's workforce is 44,000 strong.
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