OREANDA-NEWS. Huntington Ingalls Industries (NYSE:HII) reported second quarter 2013 revenues of USD 1.68 billion, down 2.2 percent from the same period last year. Segment operating income for the second quarter was USD 136 million, compared to USD 127 million in the same period last year. Total operating income for the quarter was USD 116 million, up 9.4 percent from USD 106 million in the same period last year. Pension-adjusted operating income for the second quarter was USD 134 million, or 8.0 percent of revenue, up from USD 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 USD 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 USD 1.12, compared to USD 1.00 in the same period of 2012. Pension-adjusted diluted earnings per share for the quarter was USD 1.36, compared to USD 1.24 in the comparable period of 2012.

 New business awards for the quarter were USD 5.3 billion, bringing total backlog at the end of the quarter to USD 20.7 billion, of which USD 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."
Ingalls revenues for the second quarter decreased USD 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 USD 35 million, a decrease of USD 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 USD 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 USD 3.3 billion fixed-price incentive, multi-year contract for construction of five Arleigh Burke-class destroyers (DDG 51s)
 Awarded a USD 487 million, fixed-price-incentive fee contract to build NSC-6 Munro
 Awarded a USD 76.8 million fixed-price contract for long-lead materials on NSC-7 Kimball
 Authenticated the keel for NSC-5 James
Newport News revenues for the second quarter increased USD 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 USD 101 million, a USD 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.