Huntington Ingalls Industries, Inc. (HII - Free Report) recently won an initial $272.5 million fixed-price-incentive firm target contract from the U.S. Navy for the planning, advanced engineering, and procurement of long lead time material for the LHA 8 ship, with full funding to follow.
The assault ship, designated LHA 8, will be built at the Ingalls Shipbuilding yard in Pascagoula, MS, which has produced all previous assault ships for the Navy.
The contract is valued at $3.13 billion on the potential exercise of all options and is slated for completion by Jun 2017. This contract further confirms the expertise and reputation of Huntington Ingalls Industries' Gulf Coast shipyard that is entitled to build the Navy's newest amphibious assault ship.
Ingalls is the sole builder of amphibious assault ships for the U.S. Navy. The division is the only builder of National Security Cutters (“NSCs”) for the U.S. Coast Guard and one of only two companies that builds the Navy's current fleet of DDG-51 Arleigh Burke-class destroyers, while the other being General Dynamics Corp. (GD - Free Report) .
The company’s first-quarter 2016 adjusted earnings surged 60.3% year over year, primarily driven by strong contribution from its Ingalls Shipbuilding division. Segment revenue surged 24.9% year over year. The upside was primarily driven by higher revenues from Surface Combatants and Amphibious Assault Ships.
Given the positive shipbuilding business outlook in the enacted fiscal 2016 and proposed fiscal 2017 budget, companies like Ingalls, Lockheed Martin (LMT - Free Report) and General Dynamics seem to be well poised for further gains.
Huntington Ingalls Industries, originally an affiliate of Northrop Grumman Corp. (NOC - Free Report) , was spun off in Mar 2011. It operates major shipyards in Louisiana, Mississippi and Virginia. The company primarily deals with the supply of nuclear and non-nuclear ships to the U.S. Navy and Coast Guards. The company also provides manufacturing, engineering and management services to the commercial and non-commercial oil, gas and energy markets.
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