Revenues were $1.68 billion for the second quarter of 2013
- Segment operating margin was 8.1 percent, a 70 bps improvement over Q2 2012
- Total operating margin was 6.9 percent, up from 6.2 percent in the same period last year
- Diluted earnings per share was $1.12 for the quarter; pension-adjusted diluted earnings per share was $1.36
- Cash and cash equivalents at the end of the quarter were $623 million
NEWPORT NEWS, Va., Aug. 7, 2013 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported second quarter 2013 revenues of $1.68 billion, down 2.2 percent from the same period last year. Segment operating income for the second quarter was $136 million, compared to $127 million in the same period last year. Total operating income for the quarter was $116 million, up 9.4 percent from $106 million in the same period last year. Pension-adjusted operating income for the second quarter was $134 million, or 8.0 percent of revenue, up from $125 million, or 7.3 percent of revenue, in the comparable period of 2012. The income increases were primarily attributable to additional risk retirement on the SSN-774
Virginia-class (VCS) and National Security Cutter (NSC) programs, partially offset by lower volumes on amphibious assault ships and the receipt of $7 million for resolution of a contract dispute with a private party in the same period last year.
Second quarter diluted earnings per share was $1.12, compared to $1.00 in the same period of 2012. Pension-adjusted diluted earnings per share for the quarter was $1.36, compared to $1.24 in the comparable period of 2012.
New business awards for the quarter were $5.3 billion, bringing total backlog at the end of the quarter to $20.7 billion, of which $13.7 billion is funded. Significant new awards during the period included contracts for the construction of five DDG-51
Arleigh Burke-class destroyers, the inactivation of CVN-65 USS
Enterprise and the construction of NSC-6
Munro.
"I am very pleased with the program execution at both Ingalls and Newport News as we drive performance toward our 2015 target of 9-plus percent operating margin," said Mike Petters, HII's president and chief executive officer. "We also continue to strengthen our backlog and long-term revenue visibility through the receipt of major new contract awards."
Second Quarter 2013 Highlights
Three Months Ended
June 30
($ in millions, except per share amounts)
2013
2012
$ Change
% Change
Revenues
$ 1,683
$ 1,721
$ (38)
(2.2)%
Segment operating income1
136
127
9
7.1%
Segment operating margin %1
8.1%
7.4%
70 bps
Total operating income
116
106
10
9.4%
Total operating margin %
6.9%
6.2%
73 bps
Net earnings
57
50
7
14.0%
Diluted earnings per share
$ 1.12
$ 1.00
$ 0.12
12.0%
Weighted-average diluted shares outstanding
50.7
50.1
Pension-adjusted Operating Highlights
Total operating income
116
106
FAS/CAS Adjustment
18
19
Pension-adjusted operating income2
134
125
9
7.2%
Pension-adjusted operating margin %2
8.0%
7.3%
70 bps
Pension-adjusted Net Earnings
Net earnings
57
50
After-tax FAS/CAS Adjustment3
12
12
Pension-adjusted net earnings2
69
62
Weighted-average diluted shares outstanding
50.7
50.1
Pension-adjusted diluted earnings per share2
$ 1.36
$ 1.24
$ 0.12
9.7%
1 Non-GAAP metrics that exclude non-segment factors affecting operating income. See Exhibit B for definition and reconciliation.
2 Non-GAAP metrics - 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)
2013
2012
$ Change
% Change
Revenues
$672
$756
$(84)
(11.1)%
Operating income (loss)
35
38
(3)
(7.9)%
Operating margin %
5.2%
5.0%
18 bps
Ingalls revenues for the second quarter decreased $84 million, or 11.1 percent, from the same period in 2012, 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 ship revenues was due to lower sales on LPD-23 USS
Anchorage, LPD-24 USS
Arlington, LPD-25
Somerset and LHA-6
America, partially offset by higher sales on LPD-26
John P. Murtha, LPD-27
Portland and LHA-7
Tripoli. Revenues on the NSC program were higher due to higher sales on the construction contracts of NSC-4
Hamilton, NSC-5
James and NSC-6
Munro. Surface combatants revenues were higher because of higher sales on DDG-113
John Finn and DDG-114
Ralph Johnson, partially offset by lower volumes on the DDG-1000
Zumwalt-class destroyer program.
Ingalls operating income for the quarter was $35 million, a decrease of $3 million from the same period in 2012. Operating margin was 5.2 percent, up 18 bps from the comparable period last year. This increase was primarily due to risk retirement on the amphibious assault ships and NSC program, partially offset by the receipt of $7 million for resolution of a contract dispute with a private party in the same period last year.
Key Ingalls program milestones for the quarter:
- Awarded a $3.3 billion fixed-price incentive, multi-year contract for construction of five Arleigh Burke-class destroyers (DDG 51s)
- Awarded a $487 million, fixed-price-incentive fee contract to build NSC-6 Munro
- Awarded a $76.8 million fixed-price contract for long-lead materials on NSC-7 Kimball
- Authenticated the keel for NSC-5 James
Newport News Shipbuilding
Three Months Ended
June 30
($ in millions)
2013
2012
$ Change
% Change
Revenues
$ 1,031
$ 979
$ 52
5.3%
Operating income (loss)
101
89
12
13.5%
Operating margin %
9.8%
9.1%
71 bps
Newport News revenues for the second quarter increased $52 million, or 5.3 percent, from the same period in 2012, primarily driven by higher sales in fleet support services, aircraft carriers and submarines. Higher revenues in fleet support services were primarily the result of volume associated with repair work on SSN-765 USS
Montpelier. Aircraft carrier revenues were higher from the comparable period in 2012 due to increased volume on the CVN-72 USS
Abraham Lincoln refueling and complex overhaul (RCOH), the construction preparation contract for CVN-79
John F. Kennedy and the inactivation of CVN-65 USS
Enterprise. These increases were offset by lower volumes on the CVN-71 USS
Theodore Roosevelt RCOH and the construction of CVN-78
Gerald R. Ford. Submarine revenues increased due to higher sales on the VCS program, primarily driven by risk retirement and higher volumes on Block III and the advance procurement of Block IV, partially offset by lower volumes on Block II following the delivery of SSN-783
Minnesota.
Newport News operating income for the quarter was $101 million, a $12 million increase over the same period in 2012. Operating margin was 9.8 percent, up 71 bps from the comparable period in the prior year, primarily driven by risk retirement and performance improvement on the VCS program.
Key Newport News program milestones for the quarter:
- Delivered SSN-783 Minnesota, the last of the Block II Virginia-class submarines, nearly 11 months ahead of schedule
- Awarded a $745 million cost-plus-incentive fee contract for the inactivation of CVN-65 USS Enterprise
- CVN-78 Gerald R. Ford's primary hull structure reached 100 percent completion
- Received a $60.8 million modification to a previously awarded construction preparation contract for purchase of materials in support of CVN-79 John F. Kennedy construction
The Company
Huntington Ingalls Industries (HII) designs, builds and maintains nuclear and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. For more than a century, HII has built more ships in more ship classes than any other U.S. naval shipbuilder at its Newport News Shipbuilding and Ingalls Shipbuilding divisions. Employing about 37,000 in Virginia, Mississippi, Louisiana and California, HII also provides a wide variety of products and services to the commercial energy industry and other government customers, including the Department of Energy. For more information, please visit
Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. EDT on Aug. 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: 
