NEWPORT NEWS, Va., Feb. 13, 2020 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE: HII) reported fourth quarter 2019 revenues of $2.4 billion, up 9.7% from the fourth quarter of 2018. Operating income in the quarter was $186 million and operating margin was 7.7%, compared to $213 million and 9.7%, respectively, in the fourth quarter of 2018. Diluted earnings per share in the quarter was $3.61, compared to $4.94 in the same period of 2018.

For the full year, revenues of $8.9 billion increased 8.8% over 2018. Operating income in 2019 was $736 million and operating margin was 8.3%, compared to $951 million and 11.6%, respectively, in 2018. Diluted earnings per share for the full year was $13.26, compared to $19.09 in 2018.

Non-cash asset impairment charges totaling $35 million, primarily related to goodwill, were recorded in the fourth quarter of 2019 as a result of the company's decision to divest its oil and gas business. Excluding these charges, adjusted diluted earnings per share¹ in the quarter was $4.36 and $14.01 for 2019. The oil and gas business is reflected as an asset held for sale on the company's balance sheet.

Cash from operations in 2019 was $896 million and free cash flow¹ was $460 million, compared to $914 million and $512 million, respectively, in 2018.

New contract awards in the fourth quarter of 2019 totaled $9.7 billion, bringing total backlog to $46.5 billion as of Dec. 31, 2019. Awards in the fourth quarter included a $7.7 billion contract for the construction of Block V boats of the Virginia-class submarine (VCS) program. Other major contract awards in 2019 included the $15.2 billion contract for the detail design and construction of two Gerald R. Ford-class aircraft carriers, and the $1.5 billion contract for the detail design and construction of the amphibious transport dock Harrisburg (LPD 30).

“Our 2019 shipbuilding results were in line with our expectations, and we have entered 2020 with very positive operating momentum after achieving a number of key program milestones across both shipyards. Additionally, we are continuing to refine our focus in Technical Solutions as we invest in markets that are aligned with Navy and broader customer priorities,” said Mike Petters, HII president and CEO. “With an unprecedented backlog of shipbuilding work serving as a strong foundation, we are actively shaping our business portfolio to optimize long-term value creation for our shareholders, customers and employees.”

Ingalls Shipbuilding revenues for the fourth quarter of 2019 were $702 million, an increase of $3 million, or 0.4%, from the same period in 2018, due to higher revenues on the San Antonio-class LPD program and Legend-class National Security Cutter (NSC) program, largely offset by lower revenues on the America-class LHA program. Higher LPD program revenues were primarily due to increased volume on Harrisburg (LPD 30), partially offset by lower volume on Fort Lauderdale (LPD 28). Higher NSC program revenues were primarily due to increased volumes on Calhoun (NSC 10) and NSC 11 (unnamed), partially offset by lower volumes on the delivered USCGC Midgett (NSC 8) and Stone (NSC 9). Lower LHA program revenues were primarily due to decreased volume on Tripoli (LHA 7).

Ingalls Shipbuilding segment operating income for the fourth quarter was $59 million, a decrease of $25 million from the same period last year. Segment operating margin in the quarter was 8.4%, compared to 12.0% in the same period last year. These decreases were primarily due to lower risk retirement on the LHA and LPD programs, as well as recoveries related to a 2018 settlement agreement, partially offset by higher risk retirement on the Arleigh Burke-class DDG program.

For the full year, Ingalls Shipbuilding revenues were $2.6 billion, a decrease of $52 million, or 2.0%, from 2018, primarily driven by lower revenues in the NSC program, surface combatants, and amphibious assault ships. Revenues on the NSC program decreased due to lower volumes on USCGC Kimball (NSC 7), USCGC Midgett (NSC 8), and Stone (NSC 9), partially offset by higher volumes on NSC 11 (unnamed) and Calhoun (NSC 10). Surface combatant revenues decreased as a result of lower volumes on Delbert D. Black (DDG 119), Paul Ignatius (DDG 117), Frank E. Petersen Jr. (DDG 121), and Lenah H. Sutcliffe Higbee (DDG 123), partially offset by higher volumes on Ted Stevens (DDG 128), USS Fitzgerald (DDG 62) repair and restoration, Jeremiah Denton (DDG 129), Jack H. Lucas (DDG 125), and George M. Neal (DDG 131). Amphibious assault ship revenues decreased as a result of lower volumes on Tripoli (LHA 7), Fort Lauderdale (LPD 28), and the delivered USS Portland (LPD 27), partially offset by higher volumes on Bougainville (LHA 8), Harrisburg (LPD 30), Richard M. McCool Jr. (LPD 29), and LPD Life Cycle Engineering and Services.

For the full year, Ingalls Shipbuilding segment operating income was $235 million, compared to $313 million in 2018. Segment operating margin was 9.2% for 2019, compared to 12.0% in 2018. The decreases were primarily due to lower risk retirement on the LPD and LHA programs and recoveries related to a 2018 settlement agreement.

Newport News Shipbuilding revenues for the fourth quarter of 2019 were $1.4 billion, an increase of $112 million, or 8.8%, from the same period in 2018, due to higher revenues in submarine construction. Higher submarine revenues were primarily due to higher volumes on Virginia-class submarine (VCS) program Block IV and Block V boats, as well as higher volume on Columbia-class, partially offset by lower revenues related to Block III boats of the VCS program.

Newport News Shipbuilding segment operating income for the fourth quarter was $133 million, an increase of $76 million from the same period last year. Segment operating margin was 9.6% for the quarter, compared to 4.5% in the same period last year. These increases were primarily due to award of the VCS Block V contract, as well as contract changes for support services on Los Angeles-class submarines.

For the full year, Newport News Shipbuilding revenues were $5.2 billion, an increase of $464 million, or 9.8%, from 2018, due to higher revenues in aircraft carriers, submarines, and naval nuclear support services. Aircraft carrier revenues increased primarily as a result of higher volumes on Enterprise (CVN 80), the advance planning contract for the RCOH of USS John C. Stennis (CVN 74), and CVN 81 (Doris Miller), partially offset by lower volumes on the RCOH of USS George Washington (CVN 73) and John F. Kennedy (CVN 79). Submarine revenues related to the VCS program increased as a result of higher volumes on Block V and Block IV boats, offset by lower volumes on Block III boats. Naval nuclear support services revenues increased primarily as a result of contract changes on submarine support services and higher volume in facility maintenance services.

For the full year, Newport News Shipbuilding segment operating income was $390 million, an increase of $72 million from 2018. Segment operating margin for 2019 was 7.5%, compared to 6.7% in 2018. These increases were primarily due to contract changes on submarine support services, the higher volumes noted in the preceding paragraph, and higher risk retirement on the RCOH of USS George Washington (CVN 73), partially offset by favorable changes in workers' compensation expense in 2018.

Key Newport News Shipbuilding milestones for the quarter:

• Christened and launched the aircraft carrier John F. Kennedy (CVN 79)
• Delivered Virginia-class submarine Delaware (SSN 791)
• Achieved pressure hull complete on Virginia-class submarine Montana (SSN 794)
• Achieved approximately 68% completion of the RCOH of USS George Washington (CVN 73)
• Awarded a $7.7 billion contract for construction of Virginia-class Block V submarines
• Awarded a contract with a potential value of $454 million for planning yard design services for nuclear-powered submarines

Technical Solutions revenues for the fourth quarter of 2019 were $369 million, an increase of $102 million, or 38.2%, from the same period in 2018, primarily due to higher mission driven innovative solutions (MDIS) revenues attributable to the additions of Fulcrum IT Services (Fulcrum) and G2, Inc. (G2), as well as higher fleet support and oil and gas revenues.

Technical Solutions segment operating loss for the fourth quarter was $19 million, compared to segment operating income of $7 million in fourth quarter 2018. The decrease was primarily due to a goodwill impairment at our oil and gas reporting unit.

For the full year, Technical Solutions revenues were $1.3 billion, an increase of $321 million, or 32.5%, from 2018, primarily due to higher MDIS revenues attributable to the additions of Fulcrum and G2, as well as higher fleet support and oil and gas revenues.

For the full year, Technical Solutions segment operating income was $6 million, compared to $32 million in 2018. The decrease was primarily due to a goodwill impairment at our oil and gas reporting unit and a loss on a fleet support services contract, partially offset by higher equity income from our nuclear and environmental joint ventures and one time employee bonus payments in 2018 related to the U.S. Tax Cuts and Jobs Act of 2017.

Key Technical Solutions milestones for the quarter:

• Awarded a contract to provide broad analytical and technical services to the U.S. Air Force in areas such as network architecture and cybersecurity

About Huntington Ingalls Industries
Huntington Ingalls Industries is America’s largest military shipbuilding company and a provider of professional services to partners in government and industry. For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical Solutions division provides a wide range of professional services through its Fleet Support, Mission Driven Innovative Solutions, Nuclear & Environmental, and Oil & Gas groups. Headquartered in Newport News, Virginia, HII employs more than 42,000 people operating both domestically and internationally. For more information, please visit www.huntingtoningalls.com.