- Revenues were $1.60 billion for the third quarter 2012
- Diluted earnings per share was $0.26 for the quarter
- Adjusted diluted earnings per share, which excludes a non-cash workers' compensation charge and the impact of a non-cash tax expense, was $0.74
- Cash and cash equivalents were $766 million at quarter-end
NEWPORT NEWS, Va., Nov. 8, 2012 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported third quarter 2012 revenues of $1.60 billion, up 0.2 percent from the same period last year. Third quarter diluted earnings per share was $0.26, compared with a $5.07 loss per share in the same period of 2011.
Segment operating income in the quarter was $89 million, with a segment operating margin of 5.6 percent, compared to a loss of $187 million in the same period last year. Total operating income for the quarter was $66 million, compared to a loss of $190 million in the same period of 2011. The increase was primarily attributable to the absence in 2012 of the goodwill impairment charge recorded in 2011. Total operating margin was 4.1 percent for the quarter.
Cash provided by operating activities in the third quarter was $137 million, down $95 million from the same period last year. New business awards for the quarter were$1.7 billion, bringing total backlog to $16.4 billion as of Sept. 30, of which $12.9 billion is funded.
"Core operating performance at HII continues to improve, and the company remains on pace to deliver 9 percent plus operating margins by 2015," said Mike Petters, HII's president and chief executive officer. "Although the underperforming ships at Ingalls continue to prove challenging, we delivered LPD-23
Anchorage during the third quarter, and we expect to deliver LPD-24
Arlington by the end of this year. Our backlog remains healthy at $16.4 billion and we are working diligently with our Navy andCoast Guard customers to provide affordable and high-quality warships."
Results of Operations
The company maintains self-insured workers' compensation plans that require an estimation of liabilities for such claims based on certain actuarial and discount rate assumptions that are evaluated at least annually. During Q3 2012, the decline in discount rates from 2011 resulted in a $24 million non-cash workers' compensation charge to segment operating income.
Three Months Ended
September 30,
(In millions, except per share amounts)
2012
As Adjusted1
2012
2011
As Adjusted2
2011
$ Change3
% Change3
Revenues
$ 1,596
$ 1,596
$ 1,593
$ 1,593
$ 3
0.2%
Total segment operating income (loss)
89
113
(187)
113
--
.0%
Segment operating margin %
5.6%
7.1%
nm
7.1%
(1) bps
Total operating income (loss)
66
90
(190)
110
(20)
(18.2)%
Operating margin %
4.1%
5.6%
nm
6.9%
(127) bps
Net earnings (loss)
13
37
(248)
52
(15)
(28.8)%
Diluted earnings per share
$ 0.26
$ 0.74
$ (5.07)
$ 1.05
$ (0.31)
(29.5)%
Weighted average diluted shares outstanding
50.3
50.3
48.9
49.5
1Non-GAAP metrics that exclude the impact of the non-cash workers' compensation charge and a non-cash tax expense related to the Tax Matters Agreement. See Exhibit B for reconciliation.
2Non-GAAP metrics that exclude the non-cash goodwill impairment charge. See Exhibit B for reconciliation.
3Comparison of "As Adjusted 2012" to "As Adjusted 2011" figures. On an unadjusted basis, total segment operating income (loss) increased by $276 million, total operating income (loss) increased by $256 million, net earnings (loss) increased by $261 million and diluted earnings per share increased by $5.33.
Adjusting for the 2012 non-cash workers' compensation charge and a non-cash goodwill impairment charge in 2011, adjusted segment operating income was $113 million in Q3 2012, flat compared to Q3 2011 on an adjusted basis. Adjusted segment operating margin was 7.1 percent in the third quarter, flat compared with the same period in 2011 on an adjusted basis.
Operating income in Q3 2012 was $66 million, whereas adjusted total operating income was $90 million, a decrease of $20 million, or 18.2 percent, from the same period of 2011 on an adjusted basis, primarily as a result of a higher FAS/CAS Adjustment. Operating margin in the third quarter was 4.1 percent, while adjusted total operating margin was 5.6 percent, a decline of 127 basis points from Q3 2011 on an adjusted basis.
Additionally, excluding an $8 million non-cash tax expense in 2012 related to the spin-off Tax Matters Agreement with Northrop Grumman, adjusted diluted earnings per share was $0.74 in the third quarter, compared with $1.05 in the same period of 2011 on an adjusted basis. Reported diluted earnings per share was $0.26 for Q3 2012.
Awards
The value of new contract awards during the three months ended Sept. 30 was approximately $1.7 billion. Significant new awards during this period included the construction contract for LPD-27 (unnamed) and continued long-lead-time procurement and construction preparation for CVN-79
John F. Kennedy.
Operating Segment Results
Ingalls Shipbuilding
Three Months Ended
September 30,
($ in millions)
2012
As Adjusted1
2012
2011
As Adjusted2
2011
$ Change3
% Change3
Revenues
$ 670
$ 670
$ 740
$ 740
$ (70)
(9.5)%
Operating income (loss)
1
10
(281)
19
(9)
(47.4)%
Operating margin %
0.1%
1.5%
nm
2.6%
(108) bps
1Non-GAAP metrics that exclude the impact of the non-cash workers' compensation charge. See Exhibit B for reconciliation.
2Non-GAAP metrics that exclude the non-cash goodwill impairment charge. See Exhibit B for reconciliation.
3Comparison of "As Adjusted 2012" to "As Adjusted 2011" figures. On an unadjusted basis, operating income (loss) increased by $282 million.
Ingalls revenues for the third quarter decreased $70 million, or 9.5 percent, from the same period in 2011, driven by lower sales in amphibious assault ships, partially offset by higher sales in surface combatants and the National Security Cutter (NSC) program. The decrease in amphibious assault ships was primarily attributable to the deliveries of LPD-22 USS
San Diego in 2011 and LPD-23
Anchorage in 2012, partially offset by higher sales on LPD-26
John P. Murtha, LPD-27 (unnamed) and LHA-7
Tripoli. Surface combatants sales were higher, primarily driven by increased sales on DDG-114
Ralph Johnson. NSC program sales were higher due to higher sales on NSC-4
Hamilton and NSC-5
Joshua James and the advance procurement contract on NSC-6 (unnamed).
Ingalls operating income for the third quarter was $1 million, compared with a loss of $281 million in Q3 2011. Excluding the $9 million non-cash workers' compensation charge in 2012 and the 2011 non-cash goodwill impairment charge, Ingalls adjusted operating income for the third quarter 2012 was $10 million, compared with $19 million in the same period in 2011. Ingalls adjusted operating margin was 1.5 percent for the quarter, a decline of 108 basis points from the same period prior year on an adjusted basis. The decrease in adjusted operating income was primarily a result of unfavorable cumulative adjustments on the LPD-22 through LPD-25 contract, mainly related to LPD-24
Arlington.
Key Ingalls program milestones for the quarter:
- Delivered LPD-23 Anchorage, the company's seventh amphibious transport dock ship
- Successfully completed builder's trials for LPD-24 Arlington
- Awarded a $1.5 billion fixed-price incentive contract for the construction of LPD-27 (unnamed)
- Started construction on LPD-27 (unnamed)
- Started fabrication on the next Aegis guided missile destroyer, DDG-113 John Finn
- Awarded an $83.3 million contract for continued life-cycle engineering, modernization and support services on the fleet of USS Ticonderoga-class (CG 47) Aegis guided missile cruisers
Newport News Shipbuilding
Three Months Ended
September 30,
($ in millions)
2012
As Adjusted1
2012
2011
$ Change2
% Change2
Revenues
$ 944
$ 944
$ 876
$ 68
7.8%
Operating income
88
103
94
9
9.6%
Operating margin %
9.3%
10.9%
10.7%
18 bps
1Non-GAAP metric that excludes the impact of the non-cash workers' compensation charge. See Exhibit B for reconciliation.
2Comparison of "As Adjusted 2012" to "2011" figures. On an unadjusted basis, operating income declined by $6 million.
Newport News revenues for the third quarter increased $68 million, or 7.8 percent, from the same period in 2011, primarily driven by higher sales in aircraft carriers. The increase in aircraft carriers sales was primarily driven by higher sales on the construction of CVN-78
Gerald R. Ford, construction preparation for CVN-79
John F. Kennedy, and advance planning for the CVN-72 USS
Abraham Lincoln refueling and complex overhaul (RCOH) and a favorable resolution of an outstanding contract adjustment on the CVN-65 USS
Enterprise extended dry-docking selected restricted availability (EDSRA) that was completed in 2010. These increases were partially offset by lower sales on the CVN-71 USS
Theodore Roosevelt RCOH and engineering for CVN-78
Gerald R. Ford. Submarines sales were steady as higher sales on Block III SSN-774
Virginia-class submarines (VCS) were offset by lower sales on Block II. Energy-related service revenues were higher due to maintenance services at theKesselring site.
Newport News operating income for the third quarter was $88 million, compared with $94 million in the same period of 2011, and operating margin was 9.3 percent, down 141 basis points from prior year. Excluding the $15 million non-cash workers' compensation charge in 2012, adjusted operating income was $103 million, an increase of$9 million over Q3 2011. The increase was primarily due to the higher sales volume and the favorable contract resolution described above. Newport News adjusted operating margin was 10.9 percent in Q3 2012, up 18 basis points from the same period prior year.
Key Newport News program milestones for the quarter:
- Reached 87 percent structural completion of CVN-78 Gerald R. Ford
- Awarded a $43.4 million modification to a previously awarded contract for purchase of materials for CVN-79 John F. Kennedy
- Awarded a $296 million contract modification, under a previously awarded contract, for continuation of long-lead-time material procurement and construction preparation of CVN-79 John F. Kennedy
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. Employing more than 37,000 in Virginia, Mississippi, Louisiana and California, its primary business divisions are Newport News Shipbuilding and Ingalls Shipbuilding. For more information, please visit
Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. EST on Nov. 8. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website:
The Huntington Ingalls Industries, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9418
