By Tess Stynes
Huntington Ingalls Industries Inc.'s (HII) third-quarter
earnings soared with a boost from a recent insurance recovery,
while the military shipbuilder's revenue and margins also
strengthened.
Like other defense companies, Huntington Ingalls also has been
under pressure from shrinking U.S. military spending, which was
stepped up by further cuts earlier this year.
This year also marks a milestone for Huntington Ingalls in its
transition from a former division of defense giant Northrop Grumman
Corp. (NOC), as the company comes closer to completing production
of legacy ships, Bernstein analysts said ahead of the report. The
legacy ships, which had been under unfavorable contracts, had
weighed on the companies margins, the analysts said.
"During this uncertain budget environment, our healthy backlog
continues to support our programs, and we remain confident in our
ability to deliver 9 plus percent operating margin by 2015,"
President and Chief Executive Mike Petters said.
"Despite challenges encountered during the test programs for the
last two underperforming ships, we delivered LPD-25 Somerset
shortly after the quarter end and are on a path to deliver LHA-6
America at the end of the first quarter of 2014," Mr. Petters
added.
Huntington Ingalls reported a profit of $69 million, or $1.36 a
share, up from $13 million, or 26 cents a share, a year earlier.
Excluding the impact of hurricane insurance recoveries, the closing
of its Gulfport facility, pension-accounting adjustments and other
items, adjusted earnings were up at $1.17 from 98 cents.
Revenue increased 2.6% to $1.64 billion.
Analysts polled by Thomson Reuters recently expected per-share
earnings of 82 cents and revenue of $1.64 billion.
Operating margin rose to 7.8% from 4.1%.
Shares closed Wednesday at $72.65 and were inactive in recent
premarket trading. Through the close, the stock was up 68% this
year.
Write to Tess Stynes at tess.stynes@wsj.com
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