Huntington Ingalls Industries (NYSE: HII) reported first quarter 2019 revenues of $2.1 billion, up 11.0 percent from the first quarter of 2018. The increase was driven primarily by higher volume at HII’s Newport News Shipbuilding division and growth at HII’s Technical Solutions division from recent acquisitions.
New contract awards in the quarter were approximately $19.6 billion, primarily driven by an award for the detail design and construction of two Gerald R. Ford-class aircraft carriers, Enterprise (CVN 80) and the unnamed CVN 81, bringing total backlog to approximately $41 billion as of March 31.
Operating income in the quarter was $161 million and operating margin was 7.7 percent, compared to $191 million and 10.2 percent, respectively, in the first quarter of 2018. The decreases in operating income and operating margin were mainly the result of an unfavorable change in the operating FAS/CAS adjustment and lower risk retirement at HII’s Ingalls Shipbuilding division compared to the prior year.
Diluted earnings per share in the quarter was $2.85, compared to $3.48 in the same period of 2018. The decrease was predominantly due to lower operating income and an unfavorable change in the non-operating portion of retirement benefit expense.
First quarter cash from operations was $11 million and free cash flow was negative $63 million, compared to $120 million and positive $47 million, respectively, in the first quarter of 2018.
“The first quarter was highlighted by the historic $15.2 billion contract for the detail design and construction of two aircraft carriers,” said Mike Petters, HII’s president and CEO. “With the Navy’s commitment to the two-carrier buy and more than $40 billion in contracted backlog overall, HII is well-positioned to continue creating long-term, sustainable value for our shareholders, customers and employees.”