By Saabira Chaudhuri
Huntington Ingalls Industries Inc. (HII) swung to a modest
third-quarter profit as the military shipbuilder benefited from a
comparison with a year-ago period bogged down by a large goodwill
impairment charge.
However, core earnings declined and results missed Wall Street
estimates.
Huntington Ingalls was spun out of Northrop Grumman Corp. (NOC)
last year and is viewed as more resilient to budget cuts than its
peers because the Pentagon prioritized many naval projects as part
of efforts to boost the U.S. military presence in the Pacific.
The largest military shipbuilder in the U.S. had recently seen
strong revenue growth amid higher sales of amphibious assault
ships, aircraft carriers and submarines. However, in the latest
period, it noted that sales of the assault ships fell, primarily
due to the deliveries of LPD-22 USS San Diego in 2011 and LPD-23
Anchorage in 2012.
The company also said Thursday its board has approved its first
quarterly cash dividend, of 10 cents a share. It also said the
board has authorized a $150 million share buyback program, to be
deployed over the next three years.
"Distributing cash to shareholders is a key component of our
disciplined capital allocation strategy, which also includes
investment in organic and other growth opportunities, pension
funding and debt service," Chief Executive Mike Petters said.
Huntington Ingalls reported a profit of $13 million, or 26 cents
a share, versus a year-ago loss of $248 million, or $5.07 a share.
The most recent period included a $24 million non-cash worker's
compensation charge, while the year-ago period included a $300
million goodwill impairment charge. Excluding one-time items,
earnings were 74 cents versus $1.05 a year ago.
Revenue was virtually flat at $1.6 billion. Analysts polled by
Thomson Reuters had most recently forecast earnings of 80 cents on
revenue of $1.64 billion.
Still, Mr. Petters noted that core operating performance at the
company continues to improve and it remains on pace to deliver
operating margins over 9% by 2015.
"Although the underperforming ships at Ingalls continue to prove
challenging, we delivered LPD-23 Anchorage during the third
quarter, and we expect to deliver LPD-24 Arlington by the end of
this year," he said. "Our backlog remains healthy at $16.4 billion
and we are working diligently with our Navy and Coast Guard
customers to provide affordable and high-quality warships."
Operating margin swung to positive 4.1% from negative 11.9%.
Shares closed Wednesday at $43.46 and were inactive in recent
premarket trading. The stock has risen 44% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires