Friday, December 2, 2022

HII Reports Third Quarter 2021 Revenues

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NEWPORT NEWS—Huntington Ingalls Industries (HII) reported third quarter 2021 revenues of $2.3 billion, up 1.0 percent from the third quarter of 2020.

Operating income in the third quarter of 2021 was $118 million and operating margin was 5.0 percent, compared to $222 million and 9.6 percent, respectively, in the third quarter of 2020. The decreases in operating income and operating margin were primarily the result of a less favorable operating FAS/CAS adjustment—the difference between pension expense or income under Financial Accounting Standards (FAS) requirements and pension costs under the Cost Accounting Standards (CAS).

Segment operating income in the third quarter of 2021 was $163 million and segment operating margin was 7.0 percent, compared to segment operating income of $162 million and segment operating margin of 7.0 percent in the third quarter of 2020.

Net earnings in the third quarter of 2021 were $147 million, compared to $222 million in the third quarter of 2020. Diluted earnings per share in the third quarter of 2021 was $3.65, compared to $5.45 in the same period of 2020. Third quarter 2021 results included approximately $15 million of non-recurring, pre-tax transaction expenses related to the acquisition of Alion. Excluding the impacts of pension, adjusted earnings per share in the quarter was $3.58, compared to $3.73 in the same period of 2020.

Third quarter cash from operations was $350 million and free cash flowwas $277 million, compared to $222 million and $160 million, respectively, in the third quarter of 2020.

New contract awards in the third quarter of 2021 were approximately $600 million, bringing the total backlog to approximately $50.1 billion as of Sept. 30, 2021.

“We are pleased with the third quarter results that represent another quarter of consistent shipbuilding program execution while we continue to navigate the challenges posed by the COVID-19 pandemic,” said Mike Petters, HII’s president and CEO. “During the quarter we closed the acquisition of Alion Science and Technology, and as we work to integrate it into our Technical Solutions division, we remain very excited about the significant growth avenues across the combined business that we believe will drive significant long-term value creation.”

Segment Operating Results:

Ingalls Shipbuilding

Ingalls Shipbuilding revenues for the third quarter of 2021 were $628 million, a decrease of $47 million, or 7.0 percent, from the same period in 2020, primarily driven by lower revenues in the Legend-class National Security Cutter (NSC) program, the Arleigh Burke-class guided missile (DDG) program and amphibious assault ships. Revenues on the NSC program decreased due to lower volumes on Stone (NSC 9) following its delivery. DDG program revenues decreased due to lower volumes on Ted Stevens (DDG 128) and USS Delbert D. Black (DDG 119) following its delivery, partially offset by higher volumes on Jack H. Lucas (DDG 125). Revenues on amphibious assault ships decreased due to lower volumes on Bougainville (LHA 8), partially offset by higher volumes on LHA 9 (unnamed).

Ingalls Shipbuilding segment operating income for the third quarter of 2021 was $62 million, in line with segment operating income of $62 million from the same period in 2020. Segment operating margin in the third quarter of 2021 was 9.9 percent, compared to 9.2 percent in the same period last year. The increase in segment operating margin was primarily driven by the recognition of an incentive on the DDG program, as well as higher risk retirement on the San Antonio-class amphibious transport dock (LPD) program, partially offset by lower risk retirement on the NSC program.

Newport News Shipbuilding

Newport News Shipbuilding revenues for the third quarter of 2021 were $1.4 billion, a decrease of $4 million, or 0.3 percent, from the same period in 2020, primarily driven by lower revenues in naval nuclear support services, partially offset by higher revenues in submarines and aircraft carriers. Naval nuclear support service revenues decreased primarily as a result of lower volumes in submarine fleet support services and facility maintenance services, partially offset by higher volumes in carrier fleet support services. Submarine revenues increased due to higher volumes in Block V boats of the Virginia-class submarine (VCS) program, submarine support services and the Columbia-class submarine program, partially offset by lower volumes in Block IV boats of the VCS program. Aircraft carrier revenues increased primarily as a result of higher volumes on the refueling and complex overhaul (RCOH) of USS John C. Stennis (CVN 74) and the construction of Doris Miller (CVN 81) and Enterprise (CVN 80), partially offset by lower volumes on the RCOH of USS George Washington (CVN 73) and the construction of John F. Kennedy (CVN 79).

Newport News Shipbuilding segment operating income for the third quarter of 2021 was $88 million, an increase of $9 million from the same period in 2020. Segment operating margin in the third quarter of 2021 was 6.5 percent, compared to 5.8 percent in the same period last year. The increases were primarily due to higher risk retirement on the RCOH of USS George Washington (CVN 73), and Block IV boats of the VCS program, partially offset by lower risk retirement on naval nuclear support services.  

Technical Solutions

Technical Solutions revenues for the third quarter of 2021 were $394 million, an increase of $74 million from the same period in 2020. The increase was due primarily to the acquisition of Alion, partially offset by the divestiture of our oil and gas business and contribution of the San Diego Shipyard to a joint venture in the first quarter of this year. The acquisition of Alion closed on Aug. 19, 2021, and third quarter 2021 results include approximately $163 million of revenue attributable to Alion.

Technical Solutions segment operating income for the third quarter of 2021 was $13 million, compared to $21 million in the third quarter of 2020. Segment operating margin in the third quarter of 2021 was 3.3 percent, compared to 6.6 percent in the same period last year. The decrease was primarily driven by the inclusion of approximately $8 million of Alion related purchase intangible amortization, as well as lower performance in Defense and Federal Solutions, the divestiture of our oil and gas business, and the contribution of our San Diego Shipyard to a joint venture in the first quarter of this year. Third quarter 2021 results include approximately $4 million of segment operating income attributable to Alion, net of the aforementioned purchase intangible amortization.

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