HII ‘disappointed’ over FFG(X) loss

Huntington Ingalls Industries (HII) had a mix of emotions and some good financials for the first quarter, according to company officials at May 7’s business report conference call. A pension benefit combined with strong operating results in shipbuilding businesses sailed some of the positive data. Net income increased 46 percent to $172M. Sales increased 9 percent to a record $2.3B. There was no material impacts from COVID-19 in the quarter, but there was lower employee attendance at its shipyards in Mississippi and Virginia. Shipbuilding sales are now forecast to be around 3 percent higher in 2020 versus an earlier projected outlook of 3-to-5 percent growth. HII is holding to its forecast of 9 percent shipbuilding operating margin for the year, but cautioned factors could impact profits. On the minus side is the labor challenges and uncertainty whether disruptions and delays due to the virus will be recoverable, according to executives. HII executives are still reeling after the Navy awarded a potential $5.58B frigate (FFG-X) contract to Italian shipbuilder Fincantieri and Marinette (Wis.) Marine. “We’re obviously very disappointed in the way it came out,” Mike Petters, chief executive of HII, told reporters, “but we’ll get a debrief from the Navy on what happened and how it could have gone better, and we’ll go forward from there.” The Navy awarded Fincantieri the $795M first-in-class guided-missile frigate contract. It had options in it for nine more ships ($5.58B potential). HII has a backlog of work worth $45B that keeps it in a strong financial position. However, there’s no denying HII wanted the FFG(X). There were two other bidders for the contract: Mobile, Ala.-based Austal USA, and a partnership between General Dynamics’ Bath (Maine) Iron Works and Spanish shipbuilder Navantia. (Source: USNI News 05/07/20) https://news.usni.org/2020/05/07/huntington-ingalls-industries-execs-disappointed-over-ffgx-loss