May 5, 2016
NEWPORT NEWS, Va., May 05, 2016 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported first quarter 2016 revenues of $1.76 billion, up 12.3 percent from the same period last year. Diluted earnings per share in the quarter was $2.87, compared to diluted earnings per share of $1.79 in the same period of 2015.
Segment operating income for the first quarter was $166 million and segment operating margin was 9.4 percent, compared to $128 million and 8.2 percent, respectively, in the same period last year. Total operating income for the first quarter was $198 million and total operating margin was 11.2 percent, compared to $156 million and 9.9 percent, respectively, in the same period last year. These increases were primarily driven by strong operating performance at Ingalls Shipbuilding and favorable FAS/CAS Adjustment.
New business awards for the quarter were approximately $1.0 billion, bringing total backlog to $21.3 billion as of March 31, 2016.
“Operating results in the quarter were strong, as Ingalls continued to execute well on its programs,” said Mike Petters, HII’s president and CEO. “As we progress through this challenging period at Newport News, with the impending three carrier deliveries, we are working diligently with our Navy customer to bring these ships to completion.”
Results of Operations
Three Months Ended March 31 ($ in millions, except per share amounts)20162015$ Change% ChangeSales and service revenues$1,763 $1,570 $193 12.3%Segment operating income1166 128 38 29.7% Segment operating margin %19.4%8.2% 126 bps Total operating income198 156 42 26.9% Operating margin %11.2%9.9% 129 bps Net earnings136 87 49 56.3%Diluted earnings per share$2.87 $1.79 $1.08 60.3%Weighted-average diluted shares outstanding47.4 48.7 Adjusted Net Earnings Net earnings$136 $87 $49 56.3%After-tax FAS/CAS Adjustment 2(23)(18)(5)27.8%Adjusted net earnings3$113 $69 $44 63.8% Adjusted Diluted EPS Diluted earnings (loss) per share$2.87 $1.79 $1.08 60.3%After-tax FAS/CAS Adjustment per share(0.49)(0.37)(0.12)32.4%Adjusted Diluted EPS3$2.38 $1.42 $0.96 67.6% 1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definition and reconciliation.2 Tax effected at 35% federal statutory rate.3 Non-GAAP measure - see Exhibit B for definition.Accounting Standard Change
We adopted the new accounting standard for stock compensation as of January 1, 2016. Income tax benefits of approximately $18 million were recognized as income tax benefit in the statements of operations during the three months ended March 31, 2016. These tax benefits were reported as operating activity in the statements of cash flows and prior year tax benefits were adjusted to conform to the current year operating activity presentation.
Segment Operating Results
Ingalls Shipbuilding
Three Months Ended March 31 ($ in millions) 20162015$ Change % ChangeRevenues $586 $469 $117 24.9%Operating income (loss) 82 45 37 82.2%Operating margin % 14.0% 9.6% 440 bpsIngalls revenues for the first quarter increased $117 million, or 24.9 percent, from the same period in 2015 due to higher revenues in Surface Combatants and Amphibious Assault Ships, partially offset by lower revenues in the Legend-class National Security Cutter (NSC) program. Higher Surface Combatant revenues were primarily due to increased volume on DDG-121 Frank E. Petersen, Jr. Higher Amphibious Assault Ships revenues were primarily due to increased volumes on LPD-28 Ft. Lauderdale and LHA-7 Tripoli. Lower NSC program revenues were primarily due to the delivery of NSC-5 USCGC James in 2015, partially offset by increased volume on NSC-8 Midgett.
Ingalls operating income for the first quarter was $82 million, an increase of $37 million from the same period last year. Operating margin was 14.0 percent for the quarter, compared to 9.6 percent in the same period last year. These increases were primarily due to performance improvement and higher risk retirement on the LPD and DDG programs.
Key Ingalls milestones for the quarter:
Newport News Shipbuilding
Three Months Ended March 31 ($ in millions)2016 2015$ Change% ChangeRevenues$1,153 $1,061 $92 8.7%Operating income (loss)89 93 (4)(4.3)%Operating margin %7.7% 8.8% (105) bpsNewport News revenues for the first quarter increased $92 million, or 8.7 percent, from the same period in 2015, primarily driven by higher revenues in Energy and Submarines, partially offset by lower revenues in Aircraft Carriers. Higher Energy revenues were due to increased volumes and the resolution of outstanding contract changes on a commercial contract, partially offset by decreased volumes associated with environmental remediation programs. Higher Submarines revenues related to the SSN-774 Virginia-class submarine (VCS) program were due to increased volumes on Block IV boats, partially offset by decreased volumes on Block III boats. Lower Aircraft Carriers revenues were due to decreased volumes on the construction contract for CVN-78 Gerald R. Ford and the execution contract for the CVN-72 USS Abraham Lincoln refueling and complex overhaul (RCOH), partially offset by increased volume on the construction contract for CVN-79 John F. Kennedy.
Newport News operating income for the first quarter was $89 million, a decrease of $4 million from the same period last year. Operating margin was 7.7 percent for the quarter, compared to 8.8 percent in the same period last year. These decreases were primarily due to lower risk retirement on the VCS program, lower volume on the execution contract for the CVN-72 USS Abraham Lincoln RCOH and lower performance on CVN-78 Gerald R. Ford, partially offset by higher performance on fleet support services.
Key Newport News milestones for the quarter:
Other
Three Months Ended March 31 ($ in millions) 20162015$ Change% ChangeRevenues $24 $40 $(16) (40.0)%Operating income (loss) (5) (10) $5 (50.0)%Operating margin % (20.8)% (25.0)% 417 bpsRevenues in the Other segment for the first quarter decreased $16 million or 40.0 percent from the same period last year, primarily due to lower volumes in oil and gas services. The operating loss for the quarter was $5 million, compared to an operating loss of $10 million in the same period last year. The decrease in the operating loss was driven by significantly lower restructuring costs in the quarter compared to the restructuring costs in first quarter 2015.
The Company
Huntington Ingalls Industries is America’s largest military shipbuilding company and a provider of manufacturing, engineering and management services to the nuclear energy, oil and gas markets. For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. Headquartered in Newport News, Virginia, HII employs nearly 36,000 people operating both domestically and internationally. For more information, please visit
Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. ET today. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website:
HII is America’s largest shipbuilder, delivering the world’s most powerful ships and all-domain mission technologies, including unmanned systems, to U.S. and allied defense customers. HII is the largest producer of unmanned underwater vehicles for the U.S. Navy and the world.
With a more than 140-year history of advancing U.S. national security, HII builds and integrates defense capabilities extending from the core fleet to C6ISR, AI/ML, EW and synthetic training. Headquartered in Virginia, HII’s workforce is 44,000 strong.
Sign Up for Updates
Enter your email to receive news updates and insights.
By subscribing you agree to our Privacy Policy and provide consent to receive updates from HII.