Second-quarter earnings fell at Huntington Ingalls Industries, the shipbuilder that also helps manage several National Nuclear Security Administration’s properties, even as sales rose.
The Newport News, Va., company booked some losses in its shipbuilding business for the U.S. Navy, mostly on a contract for fleet support services. Lower performance on the Virginia-class attack submarine program, due to lower booking rates, also took a toll.
Overall, net income fell 46% to $128 million, or $3.07 a share, from $239 million, or $5.40 per share, in the year-ago quarter. That missed the Wall Street’s consensus by $0.48 per share. Sales in the quarter increased 8% to $2.2 billion from $2 billion a year ago, driven by in part recent acquisitions in the Technical Solutions business: the segment that employs the people who work in the nuclear security enterprise.
The company previously acquired government consulting firm Fulcrum IT Services for $195 million and cybersecurity shop G2 Inc. for $77 million.
Huntington Ingalls has had recent wins in the National Nuclear Security Administration (NNSA) market, where it has cemented a presence for the better part of the next 10 years.
The company is one of two integrated industry subcontractors on Triad National Security: the not-for-profit managing the Los Alamos National Laboratory in New Mexico under a contract that began in November and is potentially worth some $20 billion over a decade.
Huntington Ingalls is also part of the management teams at the Nevada National Security Site, run by the Honeywell-led Mission Support and Test Services, and the Savannah River Site, managed by the Fluor-led Savannah River Nuclear Solutions.
Savannah River Nuclear Solutions is on the job at least through Sept. 30, 2020, and possibly through Sept. 2022, under a contract extension announced last week. The deal includes $1.5 billion in firm money, with a pair of one-year options. The company had been working under a $1 billion extension that ran out July 31. The NNSA awarded the company’s 10-year Savannah River management contract in 2008, when it was valued at $9.5 billion.
The Nevada site management contract, awarded in 2017, is worth $5 billion over 10 years, with options.
Technical Solutions posted a $1 million operating loss in the quarter, down from an operating profit of $7 million in the 2018 quarter. The segment’s quarterly sales rose to $336 million from $243 million a year ago.
The quarterly loss was mostly due to the poorly performing fleet services contract, the company said in its latest 10-Q filing. Huntington Ingalls actually booked higher equity income from its stakes in joint ventures performing Department of Energy work.
