NEWPORT NEWS—HII recently reported third quarter 2022 revenues of $2.6 billion, up 12.3 percent from the third quarter of 2021. The figure was primarily driven by revenue attributed to the acquisition of Alion Science and Technology in the third quarter of 2021 as well as revenue growth at Newport News Shipbuilding.
Operating income in the third quarter of 2022 was $131 million and operating margin was 5.0 percent, compared to $118 million and 5.0 percent, respectively, in the third quarter of 2021. The increase in operating income was primarily driven by favorable changes to non-current state income taxes and operating FAS/CAS adjustment compared to the prior year as well as higher segment operating income.
Segment operating income in the third quarter of 2022 was $166 million and segment operating margin was 6.3 percent, compared to $163 million and 7.0 percent in the third quarter of 2021. The increase in segment operating income was driven primarily by improved results at Newport News Shipbuilding.
Net earnings in the quarter were $138 million, compared with $147 million in the third quarter of 2021. Diluted earnings per share in the quarter was $3.44, compared to $365 in the third quarter of 2021. The decrease in diluted earnings per share was driven by a significant tax benefit in the prior year as well as negative impacts related to equity investments in the current quarter, partially offset by a more favorable non-operating retirement benefit in the current quarter.
New cash used in operating activities in the quarter were $19 million and free cash flow was negative $96 million, compared to cash provided by operating activities of $350 million and free cash flow of $277 million the previous year.
New contract awards in the third quarter of 2022 were approximately $2.1 billion, bringing the total backlog to approximately $46.7 billion as of September 30, 2022.
“Notwithstanding a continued challenging economic environment, we remain focused on consistent shipbuilding program execution and capturing contract awards at our Mission Technologies division,” said Chris Kastner, HII’s president and CEO. “We are confident in the positioning of the business for long-term value creation given the tremendous volume of shipbuilding work we have secured in backlog and a Mission Technologies division that is poised for growth in markets of critical importance to our customers.”
Newport News Shipbuilding revenues for the third quarter for 2022 were $1.4 billion, an increase of $91 million, or 6.7 percent from the same period in 2021. These figures were primarily driven by higher revenues in naval nuclear support services, submarines, and aircraft carriers.
Naval nuclear support services revenues increased primarily as a result of higher volumes in submarine and carrier fleet support services. Submarine revenues increased due to higher volumes on the Columbia-class submarine program and Block V boats of the Virginia-class submarine (VCS) program, partially offset by lower volumes on submarine services and 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) for USS John C. Stennis (CVN 74), partially offset by lower volumes on the RCOH of USS George Washington (CVN 73).
The Newport News Shipbuilding segment operating income for the third quarter of 2022 was $102 million, an increase of $14 million from the same period in 2021. Segment operating margin in the third quarter of 2022 was 7.1 percent, compared to 6.5 percent in the same period last year. The increases were primarily due to contract incentives on the Columbia-class submarine program, partially offset by lower risk retirement on the VCS program.
There were several key Newport News Shipbuilding milestones during the quarter as well. Newport News Shipbuilding achieved pressure hull completion on Virginia-class submarine Massachusetts (SSN 798); celebrated the ceremonial keel laying of aircraft carrier Enterprise (CVN 80); reached approximately 98 percent completion of the RCOH of USS George Washington (CVN 73); reached approximately 87 percent completion of the RCOH of John F. Kennedy (CVN 79); and turned over the 1,000th compartment of 2,615 total spaces to the crew of the John F. Kennedy (CVN 79).