Huntington Ingalls Industries, Inc.
) posted impressive first quarter 2013 results on the back of
solid program execution at Ingalls Shipbuilding and Newport News
The company reported adjusted earnings of $1.17 per share,
beating the Zacks Consensus Estimate of 87 cents by 34.5%. The
reported number climbed 31.5% from the year-ago profit of 89
cents per share.
The company generated total revenues of $1,562.0 million during
the reported quarter that came below our projection of $1,605.0
million as well as the year-earlier level of $1,568.0 million. Of
the total revenues, product sales dipped 2.4% while service sales
Adjusted operating income increased 21.6% to $118.0 million in
the quarter from $97.0 million in the first quarter 2012.
The results were mainly driven by additional risk retirement at
Newport News on the SSN-774 Virginia-class ("VCS") program and
the absence of unfavorable cumulative adjustments on the LPD-17
San Antonio-class ("LPD") program at Ingalls.
Huntington Ingalls' segment operating margin jumped 124 basis
points year over year to 7.7% in the first quarter.
Quarterly Segmental Highlights
Ingalls Shipbuilding: The segment revenue declined 8.8% year over
year to $631.0 million. The lower numbers were driven by lower
sales in amphibious assault programs, which were partially offset
by higher sales in the National Security Cutter ("NSC") program.
However, operating income surged 30.0% year over year to $26.0
million in the first quarter. The improvement was primarily
attributable to the absence of unfavorable cumulative adjustments
on the LPD program.
Newport News Shipbuilding: This division generated $950.0 million
of revenue during the quarter versus $895.0 million in the
year-ago level, thanks to higher sales of submarines and fleet
Operating income in the segment was $94.0 million, an increase of
16.0% from $81.0 million in the first quarter 2012. The
enhancement was mainly associated with the VCS program, for risk
retirement and the favorable resolution of outstanding contract
The cash balance at the end of the first quarter was $652.0
million, down from $1,057.0 million at 2012 end. Long-term debt
(including current portion) at quarter end stood at $1,817.0
million, down from $1,830.0 million at 2012 end. The
debt-to-capitalization ratio was 72.0% in the reported quarter.
Net cash used in operating activities was $362.0 million in the
first quarter of 2013 versus $329.0 million in the first quarter
Huntington Ingalls presently retains a Zacks Rank #1 (Strong
Buy). Apart from Huntington Ingalls, favorably placed stocks in
the sector include
Northrop Grumman Corporation
Wesco Aircraft Holdings, Inc.
), both with a Zacks Rank #2 (Buy).
Huntington Ingalls, originally an affiliate of Northrop Grumman,
was spun off in Mar 2011. It operates major shipyards in La.,
Miss. and Va.
HUNTINGTON INGL (HII): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
WESCO AIRCRAFT (WAIR): Free Stock Analysis
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