HUNTINGTON INGALLS INDUSTRIES REPORTS SECOND QUARTER 2014 RESULTS

• Revenues were $1.72 billion for the second quarter of 2014
• Segment operating margin was 9.5 percent, a 140 bps improvement over Q2 2013
• Total operating margin was 10.5 percent, up from 6.9 percent in the same period last year
• Diluted earnings per share was $2.04 for the quarter
• Pension-adjusted diluted earnings per share was $1.75 for the quarter
• Cash and cash equivalents at the end of the quarter were $592 million

NEWPORT NEWS, Va., Aug. 7, 2014 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported second quarter 2014 revenues of $1.72 billion, up 2.1 percent compared to the same period last year. Second quarter diluted earnings per share was $2.04, compared to diluted earnings per share of $1.12 in the same period of 2013. Pension-adjusted diluted earnings per share for the quarter was $1.75, compared to $1.36 in the same period of 2013.

Segment operating income for the second quarter was $163 million, compared to $136 million in the same period last year. Total operating income for the quarter was $181 million, compared to $116 million in the same period last year. The increase in operating income was primarily attributable to risk retirement at Ingalls on the National Security Cutter (NSC) program and ships delivered under the LPD-17 San Antonio-class (LPD) program, a $6 million favorable overhead adjustment at Ingalls resulting from a change in non-income based tax liabilities, as well as the favorable FAS/CAS Adjustment.

New business awards for the quarter were approximately $7.0 billion, consisting primarily of the contract for Block IV of the SSN-774 Virginia-class submarine (VCS) program. Total backlog at the end of Q2 2014 was $24.2 billion, of which $14.4 billion was funded.

On May 30, 2014, HII completed the acquisition of UniversalPegasus International Holdings (UPI). HII reported the post-acquisition results of UPI as part of its newly created Other segment. Revenues of the Other segment were $20 million, and Other operating income was less than $1 million for the quarter, primarily due to the acquisition of UPI.

"With the acquisition of UniversalPegasus, HII is leveraging its engineering and program management core competencies in the energy market, while remaining focused on our Navy program execution to reach 9-plus percent margins in 2015," said Mike Petters, HII's president and chief executive officer.

Second Quarter 2014 Highlights Three Months Ended June 30 (In millions, except per share amounts)20142013$ Change% ChangeRevenues$ 1,719$ 1,683$ 362.1%Segment operating income11631362719.9%Segment operating margin %19.5%8.1% 140 bpsTotal operating income1811166556.0%Total operating margin %10.5%6.9% 364 bpsNet earnings100574375.4%Diluted earnings per share$ 2.04$ 1.12$ 0.9282.1%Weighted-average diluted shares outstanding49.150.7 Pension-adjusted Operating Highlights Total operating income1811166556.0%FAS/CAS Adjustment(21)18(39)(216.7)%Pension-adjusted operating income21601342619.4%Pension-adjusted operating margin %29.3%8.0% 135 bps Pension-adjusted Net Earnings Net earnings100574375.4%After-tax FAS/CAS Adjustment3(14)12(26)(216.7)%Pension-adjusted net earnings286691724.6%Weighted-average diluted shares outstanding49.150.7 Pension-adjusted diluted earnings per share2$ 1.75$ 1.36$ 0.3928.7%1 Non-GAAP metric that excludes non-segment factors affecting operating income. See Exhibit B for definition and reconciliation.2 Non-GAAP metric - see Exhibit B for definition.3 Tax effected at 35% federal statutory tax rate.

Operating Segment Results Ingalls Shipbuilding Three Months Ended June 30 ($ in millions)20142013$ Change% ChangeRevenues$ 572$ 592$ (20)(3.4)%Operating income (loss)59312890.3%Operating margin %10.3%5.2% 508 bps

Ingalls revenues for the second quarter decreased $20 million, or 3.4 percent, from the same period in 2013, driven by lower sales in amphibious assault ships, partially offset by higher sales in the NSC program and surface combatants. The decrease in amphibious assault ships revenues was due to lower volumes on LHA-6America and LPD-25 USS Somerset, partially offset by higher volumes on LHA-7 Tripoli. Revenues on the NSC program were higher due to higher volumes on NSC-6 Munro, NSC-7 Kimball, NSC-5 James and NSC-4Hamilton construction contracts. Surface combatants revenues were higher due to higher volumes on DDG-117Paul Ignatius, DDG-119 (unnamed) and DDG-114 Ralph Johnson construction contracts, partially offset by lower volumes on the DDG-1000 Zumwalt-class program.

Ingalls operating income for the quarter was $59 million, an increase of $28 million over the same period in 2013. Ingalls operating margin was 10.3 percent for the quarter, compared to 5.2 percent in Q2 2013. These increases were primarily due to risk retirement on the NSC program and ships delivered under the LPD program, as well as a $6 million favorable overhead adjustment resulting from a change in non-income based tax liabilities.

Key Ingalls highlights for the quarter:

• Delivered LHA-6 America to the U.S. Navy
• Launched NSC-5 James
• Authenticated the keel for LHA-7 Tripoli
• Received a $76.5 million fixed-price contract to purchase long-lead materials for NSC-8 Midgett

Newport News Shipbuilding Three Months Ended June 30 ($ in millions)20142013$ Change% ChangeRevenues$ 1,129$ 1,092$ 373.4%Operating income (loss)104105(1)(1.0)%Operating margin %9.2%9.6% -40 bps

Newport News revenues for the second quarter increased $37 million, or 3.4 percent, from the same period in 2013, primarily driven by the acquisition of The S.M. Stoller Corp., which was completed in January 2014, and higher revenues in submarines and energy, offset by lower revenues in fleet support services. Submarines revenues related to the SSN-774 Virginia-class submarine program were higher due to higher volumes on Block III construction and Block IV advance procurement contracts, partially offset by lower volumes on Block II boats following the delivery of SSN-783 USS Minnesota, the last ship of the block. Higher energy revenues were primarily driven by commercial volumes. Lower revenues in fleet support services were primarily due to the redelivery of SSN-765 USS Montpelier.

Newport News operating income for the quarter was $104 million, a $1 million decrease from the same period in 2013. Newport News operating margin was 9.2 percent for the quarter, down from 9.6 percent in Q2 2013. These decreases were mainly related to lower risk retirement on the VCS program and the execution contract for the CVN-71 USS Theodore Roosevelt refueling and complex overhaul (RCOH), partially offset by higher risk retirement on the construction contract for CVN-78 Gerald R. Ford.

Key Newport News highlights for the quarter:

• Reached pressure hull complete construction milestone on SSN-785 John Warner
• AMSEC received an indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee contract to provide engineering, technical, repair and logistics support to the U.S. Navy's Carrier Engineering Maintenance Assist Team (CEMAT) and Surface Ship Engineering Maintenance Assist Team (SEMAT) programs. The cumulative value of the contract, if all options are exercised, is $187 million.
• Placed the new upper-level structure on CVN-72 USS Abraham Lincoln's island

The Company

Huntington Ingalls Industries designs, builds and manages the life-cycle of the most complex nuclear and conventionally-powered ships for the U.S. Navy and Coast Guard. 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. HII also provides engineering and project management services expertise to the commercial energy industry, the Department of Energy and other government customers. Headquartered in Newport News, Virginia, HII employs more than 39,000 people operating both domestically and internationally. For more information, please visit: Ingalls Industries will webcast its earnings conference call at 9 a.m. ET on August 7. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website: