Lower taxes, the gift that just keeps giving this year for corporations, combined with a pension benefit, propelled Huntington Ingalls Industries to a hefty increase in earnings despite a dip in operating profit at the segment level.
Net income soared 63 percent to $239 million, or $5.40 a share, from $147 million, or $3.21 a share, last year. A lower tax rate, which was lower than expected due to a claim for prior year research and development tax credits, drove the gain.
Huntington Ingalls Industries is one of the teammates on the Fluor-led Savannah River Nuclear Solutions: management and operations contract for the Department of Energy’s Savannah River Site in South Carolina. The contract, which includes the National Nuclear Security Administration’s roughly $300-million-a-year tritium processing mission, was renewed this week for another year, through July 31. That added $1 billion to the previous $9.5 billion contract value.
Huntington Ingalls is also poised to become the lead for nuclear operations at DOE’s Los Alamos National Laboratory in New Mexico as an integrated subcontractor for Triad National Security: the nonprofit prime taking over management of the nation’s first nuclear weapons lab on Nov. 1. Triad’s contract is worth more than $20 billion over 10 years, with options.
The Newport News, Va.-based shipbuilder is also one of the partners on Mission Support and Test Services, which since 2017 has run the Nevada National Security Site for the National Nuclear Security Administration under a contract worth $5 billion over 10 years, with options.
“At each of these sites whether we are the lead, minority partner or significant subcontractor we bring an unmatched level of nuclear expertise and complex project management skills to the team,” Huntington Ingalls President and CEO Mike Petters said during the company’s quarterly earnings call.
Sales for the company increased nearly 9 percent to $2 billion from $1.9 billion a year ago, driven by work on aircraft carriers and nuclear support services at the Newport News Shipbuilding segment. In the Technical Services segment, which includes the company’s work across the Department of Energy nuclear weapons complex, operating income fell 22 percent to about $7 million, while segment revenue was basically flat at $243 million in the quarter.
The decrease in operating income was primarily due to the segment’s non-Department of Energy businesses, Huntington Ingalls said in its latest 10-Q filing with the U.S. Securities and Exchange Commission.
Company backlog stood at around $21 billion at the end of the quarter, of which $15 billion is funded, down from $21.4 billion since the end of 2017, Huntington Ingalls said Thursday.
