HUNTINGTON INGALLS INDUSTRIES REPORTS FIRST QUARTER 2015 RESULTS

• Revenues were $1.57 billion for the quarter


• Segment operating margin was 8.2 percent


• Total operating margin was 9.9 percent


• Diluted earnings per share was $1.79 for the quarter


• Cash and cash equivalents at the end of the quarter were $904 million

NEWPORT NEWS, Va., May 7, 2015 (GLOBE NEWSWIRE) -- Huntington Ingalls Industries (NYSE:HII) reported first quarter 2015 revenues of $1.57 billion, down 1.5 percent compared to the same period last year. Diluted earnings per share in the quarter was $1.79, compared to diluted earnings per share of $1.81 in the same period of 2014.

Segment operating income was $128 million and segment operating margin was 8.2 percent in the first quarter of 2015, compared to $137 million and 8.6 percent in the same period last year. Total operating income was $156 million and total operating margin was 9.9 percent in the first quarter of 2015, compared to $159 million and 10.0 percent in the same period last year. These decreases were primarily driven by operating performance in the Other segment.

New business awards for the quarter were approximately $1.6 billion, which included contracts for construction of the eighth National Security Cutter (NSC) Midgett, continued construction for CVN-78 Gerald R. Ford and advance planning for the CVN-73 USS George Washington refueling and complex overhaul (RCOH). Total backlog as of March 31, 2015, was approximately $21.5 billion, of which $14.1 billion was funded.

"During the quarter, solid operating performance at both Ingalls and Newport News was impacted by underperformance in the Other segment due to continued weakness in the oil and gas market," said HII President and CEO Mike Petters. "We've taken decisive actions to right-size the Other segment for the current environment, and these actions will position it to be stronger when the market rebounds."

First Quarter 2015 Highlights




Three Months Ended





March 31, 2015




($ In millions, except per share amounts)
2015
2014
$ Change
% Change


Revenues
$ 1,570
$ 1,594
$ (24)
(1.5)%


Segment operating income1
128
137
(9)
(6.6)%


Segment operating margin %1
8.2%
8.6%

-44 bps


Total operating income
156
159
(3)
(1.9)%


Total operating margin %
9.9%
10.0%

-4 bps


Net earnings
87
90
(3)
(3.3)%


Diluted earnings per share
$ 1.79
$ 1.81
$ (0.02)
(1.1)%


Weighted-average diluted shares outstanding
48.7
49.7











Pension-adjusted Operating Highlights






Total operating income
156
159
(3)
(1.9)%


FAS/CAS Adjustment
(27)
(22)
(5)
22.7%


Pension-adjusted operating income2
129
137
(8)
(5.8)%


Pension-adjusted operating margin %2
8.2%
8.6%

-38 bps









Adjusted Net Earnings






Net earnings
87
90
(3)
(3.3)%


After-tax FAS/CAS Adjustment3
(18)
(14)
(4)
28.6%


Adjusted net earnings2
69
76
(7)
(9.2)%


Weighted-average diluted shares outstanding
48.7
49.7




Adjusted diluted earnings per share2
$ 1.42
$ 1.53
$ (0.11)
(7.2)%


1 Non-GAAP metric that excludes non-segment factors affecting operating income. See Exhibit B for definition and reconciliation.


2 Non-GAAP metric - see Exhibit B for definition.


3 Tax effected at 35% federal statutory tax rate.



Operating Segment Results

Ingalls Shipbuilding




Three Months Ended





March 31, 2015




($ In millions)
2015
2014
$ Change
% Change


Revenues
$ 469
$ 547
$ (78)
(14.3)%


Operating income (loss)
45
43
2
4.7%


Operating margin %
9.6%
7.9%

173 bps



Ingalls revenues for the quarter decreased $78 million, or 14.3 percent, from the same period in 2014, driven by lower volumes in amphibious assault ships and the NSC program, partially offset by higher volumes in surface combatants. The decrease in amphibious assault ships revenues was due to lower volumes on LHA-6 USS America, LPD-27 Portland and LPD-26 John P. Murtha,partially offset by higher volumes on LHA-7 Tripoli. The decrease in NSC program revenues was due to lower volume on NSC-4 USCGC Hamilton, partially offset by higher volume on NSC-7 Kimball. The increase in surface combatants revenues was due to higher volumes on DDG-119 Delbert D. Black and DDG-113 John Finn, partially offset by lower volumes on the DDG-1000 Zumwalt-class destroyer program.

Ingalls operating income for the quarter was $45 million, a $2 million increase from the same period in 2014. Ingalls operating margin was 9.6 percent for the quarter, compared to 7.9 percent in Q1 2014. These increases were primarily due to risk retirement on LHA-6 USS America, partially offset by lower revenues.

Key Ingalls highlights for the quarter:

• Christened LPD-26 John P. Murtha


• Began construction on NSC-7 Kimball


• Launched John Finn (DDG 113)


• Received a $604.3 million contract modification to fund construction of the Arleigh Burke-class guided missile destroyer DDG-121


• Received a $499.8 million contract to fund construction of NSC-8 Midgett

Newport News Shipbuilding




Three Months Ended





March 31, 2015




($ In millions)
2015
2014
$ Change
% Change


Revenues
$ 1,061
$ 1,047
$ 14
1.3%


Operating income (loss)
93
94
(1)
(1.1)%


Operating margin %
8.8%
9.0%

-21 bps



Newport News revenues for the first quarter increased $14 million, or 1.3 percent, from the same period in 2014, primarily driven by higher volumes in submarines and fleet support services, partially offset by lower volumes in aircraft carriers. The increase in submarines revenues related to the SSN-774 Virginia-class submarine (VCS) program was due to higher volumes on Block IV boats, partially offset by lower volumes on the Block II and Block III boats. The increase in fleet support services revenues was primarily due to higher volumes on aircraft carriermaintenance. The decrease in aircraft carrier revenues was due to lower volumes on the execution contract for CVN-72 USS Abraham Lincoln RCOH and the construction contract for CVN-78 Gerald R. Ford, partially offset by higher volumes on the construction preparation contract for CVN-79 John F. Kennedy.

Newport News operating income for the quarter was $93 million, a $1 million decrease from the same period in 2014. Newport News operating margin was 8.8 percent for the quarter, down from 9.0 percent in Q1 2014. These decreases were primarily due to lower risk retirement on CVN-78 Gerald R. Ford and lower volumes on aircraft carrier RCOH programs, partially offset by higher risk retirement on the VCS program.

Key Newport News highlights for the quarter:

• Received a $224 million contract modification for advanced planning of the CVN-73 USS George Washington RCOH


• Crew moved aboard Virginia-class submarine John Warner (SSN 785)


• Acquired The Columbia Group's Engineering Solutions Division, a leading designer and builder of unmanned underwater vehicles for domestic and international customers

Other

Revenues in the Other segment were $40 million in the quarter, and the operating loss was $10 million. The operating loss was primarily driven by lower volumes due to project delays and work scope reductions as well as higher operating costs associated with cost measures taken during the quarter.

The Company

Huntington Ingalls Industries is America's largest military shipbuilding company and a provider of engineering, manufacturing and management services to the nuclear energy, oil and gas markets. 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. Headquartered in Newport News, Virginia, HII employs approximately 38,000 people operating both domestically and internationally. For more information, visit:

Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. ET on May 7. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website: