Ship­yard par­ent com­pany sees jump in third quar­ter earn­ings

Daily Press - - Local News - By Hugh Les­sig Staff writer Hugh Les­sig, 757-247-7821, hlessig@dai­ly­press.com

Third-quar­ter prof­its at Hunt­ing­ton In­galls In­dus­tries jumped 53.7 per­cent from the same time last year, the com­pany said Thurs­day, not­ing higher vol­umes at its Newport News and Gulf Coast ship­yards.

Con­tract awards for the quar­ter in­cluded $187.5 mil­lion for Newport News Ship­build­ing to be­gin ad­vance plan­ning for the midlife over­haul of the air­craft car­rier John C. Sten­nis.

In­galls Ship­build­ing in Pascagoula, Miss., re­ceived a $5.1 bil­lion multi-year deal for six Ar­leigh Burke-class de­stroy­ers; $1.8 bil­lion for the first two ships is cur­rently be­ing ex­er­cised.

Net earn­ings for the quar­ter stood at $229 mil­lion, up from $149 mil­lion from the same three-month pe­riod in 2017, which ac­counts for the nearly 54 per­cent in­crease. Third-quar­ter rev­enues to­taled $2.1 bil­lion, nearly 12 per­cent higher than the third quar­ter a year ago. Op­er­at­ing mar­gin was a healthy 13.9 per­cent.

Earn­ings per share of $5.29 beat Zack’s Con­sen­sus Es­ti­mate by nearly 28 per­cent. The es­ti­mate was $4.14.

At Newport News, the com­pany at­trib­uted higher rev­enues to work on the midlife over­haul of the air­craft car­rier Ge­orge Wash­ing­ton and ad­vance plan­ning for the fu­ture USS En­ter­prise, also known as CVN-80.

In­galls saw in­creased rev­enue from work on am­phibi­ous as­sault ships and Coast Guard cut­ters.

HII’s Tech­ni­cal So­lu­tions divi­sion, which in­cludes a num­ber of non-ship­build­ing units, also ex­pe­ri­enced an uptick in rev­enues: an in­crease of $4 mil­lion for a to­tal $245 mil­lion. High­lights for Tech­ni­cal So­lu­tions’ third quar­ter in­cluded a $34 mil­lion con­tract to pro­vide en­gi­neer­ing, tech­ni­cal, re­pair and lo­gis­ti­cal sup­port to the U.S. Navy’s coastal river­ine forces.

In a con­fer­ence call with Wall Street an­a­lysts, HII Pres­i­dent and CEO Mike Pet­ters said he was “very en­cour­aged” by sup­port for ship­build­ing in a 2019 spend­ing bill signed by Pres­i­dent Don­ald Trump that in­cludes fund­ing for the De­fense De­part­ment.

The Navy is eval­u­at­ing the pos­si­ble sav­ings of a block buy of air­craft car­ri­ers, which would cover the fu­ture En­ter­prise and as-yet-un­named car­rier. Pet­ters de­clined to pre­dict the timetable for that de­ci­sion, but said, “we’re work­ing re­ally hard to do this as soon as we can.”

He cast doubt on an­other strat­egy to ex­pand the car­rier fleet: ex­tend­ing the life of the USS Nimitz.

The Pen­tagon is com­mit­ted to ex­pand­ing its car­rier fleet from 11 to 12 as soon as pos­si­ble. Dis­cus­sion in Con­gress has fo­cused on keep­ing the Nimitz ac­tive for a few more years, which would help with that num­bers game as newer car­ri­ers came on line.

Pet­ters com­pared the idea to main­tain­ing an old car, where main­te­nance costs even­tu­ally be­come coun­ter­pro­duc­tive.

“There is a point where ev­ery time you take the car in, it costs you a whole lot more than you thought it should,” he said.

“I would not be an ad­vo­cate of that,” Pet­ters said, re­fer­ring to the life-ex­ten­sion idea. “I would ar­gue the bet­ter way to in­crease the num­ber of car­ri­ers in the fleet is to build them more fre­quently and ef­fi­ciently.”

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