OREANDA-NEWS. Huntington Ingalls Industries (NYSE:HII) reported first quarter 2014 revenues of USD 1.59 billion, up 2.0 percent compared to the same period last year. First quarter diluted earnings per share was USD 1.81, compared to diluted earnings per share of USD 0.87 in the same period of 2013. Adjusted diluted earnings per share for the quarter was USD 1.53, compared to USD 1.17 in the comparable period of 2013.

Segment operating income for the first quarter was USD 137 million, compared to USD 120 million in the same period last year. Total operating income for the quarter was USD 159 million, compared to USD 95 million in the same period last year. Adjusted operating income for the first quarter, which excludes the FAS/CAS Adjustment, was USD 137 million, or 8.6 percent of revenue, compared to USD 118 million, or 7.6 percent of revenue, in the comparable period of 2013. The increase in adjusted operating income was primarily attributable to risk retirement at Ingalls on the LPD-17 San Antonio-class (LPD) program and National Security Cutter (NSC) program and at Newport News on the CVN-78 Gerald R. Ford construction contract.

New business awards for the quarter were approximately USD 2.2 billion, consisting primarily of contracts for continued construction preparation for CVN-79 John F. Kennedy and construction of NSC-7 Kimball. Total backlog at the end of Q1 2014 was USD 18.7 billion, of which USD 13.0 billion was funded.

"Notwithstanding continued debate surrounding the defense budget and the impact of sequestration, HII has continued to maintain a healthy backlog and strong operating performance at both segments," said Mike Petters, HII's president and chief executive officer. "With the delivery of LHA-6 America in April 2014, HII has reached a significant milestone on its path to 9 plus percent margins in 2015."
Ingalls revenues for the first quarter decreased USD 3 million, or 0.5 percent, from the same period in 2013, 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 ships revenues was due to lower volumes on LHA-6 America and LPD-25 USS Somerset, partially offset by higher volumes on LPD-27 Portland. Revenues on the NSC program were higher due to higher volumes on NSC-5 James and NSC-6 Munro construction contracts. Surface combatants revenues were higher due to higher volumes on DDG-117 Paul Ignatius and DDG-114 Ralph Johnson construction contracts.

Ingalls operating income for the quarter was USD 43 million, an increase of USD 19 million over the same period in 2013. Ingalls operating margin was 7.9 percent for the quarter as compared to 4.4 percent in Q1 2013. These increases were primarily due to risk retirement on the LPD and NSC programs.
Newport News revenues for the first quarter increased USD 35 million, or 3.5 percent, from the same period in 2013, primarily driven by higher sales in aircraft carriers and the acquisition of The S.M. Stoller Corp. Higher revenues in aircraft carriers were primarily due to increased volumes on the execution contract for the CVN-72 USS Abraham Lincoln refueling and complex overhaul (RCOH) and the inactivation contract for CVN-65 USS Enterprise, partially offset by lower volumes on the execution contract for the CVN-71 USS Theodore Roosevelt RCOH and the construction contract for CVN-78 Gerald R. Ford. Submarine revenues related to the SSN-774 Virginia-class submarine (VCS) program remained stable as lower volumes on Block II boats following the delivery of SSN-783 USS Minnesota were offset by higher volumes on Block III construction and Block IV advance procurement.

Newport News operating income for the quarter was USD 94 million, a USD 2 million decrease from the same period in 2013. Newport News operating margin was 9.0 percent for the quarter, down from 9.5 percent in Q1 2013. These decreases were mainly related to lower risk retirement on the VCS program and the execution contract for CVN-71 USS Theodore Roosevelt RCOH, partially offset by risk retirement on the construction contract for CVN-78 Gerald R. Ford.