Shipbuilder Huntington Ingalls Industries on Thursday reported revenue of $1.72 billion in the first quarter of 2017, a 2.2 percent decrease from the same period last year, and operating income of $164 million, down from $198 million year over year. Diluted earnings per share dropped from $2.87 in 2016 to $2.56 in the latest quarter.
“These decreases were driven by lower volumes and risk retirements in our shipbuilding segments and the establishment of a $29 million reserve against accounts receivable at Technical Solutions related to Westinghouse Electric Company’s bankruptcy filing,” the company said in an earnings release.
Huntington Ingalls said it received roughly $600 million in new business awards in the quarter. This included contracts to provide engineering and technical services to the Naval Sea System Command’s Naval Surface Warfare Center Philadelphia Division; acquisition technical services to the Defense Department’s Joint Program Executive Office for Chemical and Biological Defense; and maintenance and modernization work on U.S. Navy amphibious-class ships.
The Newport News Shipbuilding business segment reported $971 million in revenue, down by $22 million from the same period of last year, “driven by lower revenues in submarines, partially offset by higher revenues in aircraft carriers,” the company said. The segment also reported $72 million in first-quarter operating income, a $9 million decrease from the same time last year.
The company announced Wednesday that Matt Mulherin, Newport News Shipbuilding president since 2011, is retiring and will be replaced by Jennifer Boykin as of July 1. Boykin has since 2012 been the division’s vice president of engineering and design.
Last December, Huntington Ingalls formed a new reporting segment, Technical Solutions, which includes Stoller Newport News Nuclear, a subsidiary that provides nuclear waste management and environmental services and is one of the parent companies for Savannah River Nuclear Solutions, the contractor managing the Department of Energy’s Savannah River Site in South Carolina.
The Technical Solutions business segment reported quarterly revenue of $225 million, a $17 million increase from the same quarter last year, which the company attributed to the acquisition of Camber Corp., a government services company with customers that include the U.S. Navy and Army.
The segment also reported an operating loss of $18 million, a $21 million drop from the same time last year. This decrease was attributed to the “establishment of a $29 million reserve against accounts receivable on a nuclear and environmental commercial contract in the first quarter of 2017 and the resolution of outstanding contract changes on a nuclear and environmental commercial contract in the first quarter of 2016,” the company said.
Chris Kastner, Huntington Ingalls’ executive vice president for business management and chief financial officer, said during a Thursday earnings call that this involved “a $29 million reserve we booked in our technical solution segment as a result of Westinghouse Electric Company filing for bankruptcy protection on March 29.”
The Technical Solutions business segment fabricates equipment for Westinghouse AP 1000 reactor shield buildings, Kastner said. “Due to the bankruptcy filing, we decided to reserve for all accounts receivable due from Westinghouse.”
Stoller Newport News Nuclear has performed DOE waste management services at the Hanford Site in Washington state, the Idaho national laboratory, the Paducah Gaseous Diffusion Plant in Kentucky, and the Waste Isolation Pilot Plant in New Mexico.
