- Diluted earnings per share (EPS) of
$0.50 for the quarter increased 14% over first quarter 1998 EPS of $0.44.
- EBIT of $44 million compares favorably
to EBIT of $40 million for the same period last year.
- Quarterly revenues were $430 million,
an increase of $33 million from the first quarter of 1998.
- Strategic initiatives build on core
Navy business and broaden product mix and geographic reach.
NEWPORT NEWS, Va., April
13, 1999 – Newport News Shipbuilding (NYSE: NNS) today reported net earnings
of $18 million, or $0.50 per diluted share, for the first quarter of 1999.
Earnings before interest and taxes (EBIT) for the quarter were $44 million,
up 10% from EBIT of $40 million in last year’s first quarter.
"This was another strong
quarter for Newport News," commented William P. Fricks, Chairman and Chief
Executive Officer. Revenues, earnings and cash flow all showed solid gains
over 1998. "These results once again demonstrate the Company’s ability
to deliver steady year-over-year growth through a balanced business portfolio
of Navy construction and services."
First Quarter Results
Newport News posted first
quarter revenues of $430 million, up $33 million from the same period
in 1998. The quarter’s revenue growth was attributable to Fleet Services,
reflecting increased work on the refueling and complex overhaul of the
aircraft carrier Nimitz. The higher volume drove the growth in
the quarter’s EBIT to $44 million from $40 million in 1998.
Free cash flow totaled
$52 million for the quarter based on strong pre-tax earnings, and low
cash interest and taxes, coupled with limited working capital and capital
spending requirements. The free cash flow, combined with the issuance
of shares for benefit plans, enabled the Company to reduce debt by $75
million in the first quarter.
Carrier Programs Strengthened
The Navy awarded a contract
modification in February valued at $170 million for advance planning and
procurement for the complex overhaul and refueling of Dwight D. Eisenhower,
scheduled to arrive in 2000. Eisenhower will be the second ship
in the Nimitz class to be refueled at Newport News.
In March, the Navy exercised
a $56 million option for advance procurement and manufacturing on CVN
77, the final Nimitz class carrier and transition ship to the next
generation carrier – CVN (X). This option brings the total contract value
to $162 million and follows an earlier option exercised by the Navy for
engineering work. Full funding of CVN 77 is expected in 2001.
Newport News was also
awarded a $30 million contract for Post Shakedown Availability (PSA) work
on Truman. PSA contracts typically span five months and focus on
technological insertion and upgrades to the ship’s information and combat
systems.
Strategic Initiatives
Update
During the quarter, the
Company announced a proposed merger with Avondale Industries. The proposed
all-stock transaction received regulatory approval in February. Also in
the quarter, the Company received an unsolicited offer to be acquired
in an all-cash transaction by General Dynamics. This proposal is currently
under regulatory review.
In March, the Company
announced a proposed joint venture with SAIC, which would create a worldwide
business partnership offering a range of competitively priced fleet services
to the Navy from over 20 locations. The new company, AMSEC LLC, would
provide logistics and lifecycle services for aircraft carriers, submarines,
surface combatants, and amphibious and auxiliary ships.
"We are committed to actions
that deliver shareholder value," said Fricks. "The initiatives we announced
in the quarter all build on our core Navy business, expand our product
breadth and geographic reach and have the ability to drive higher earnings
and cash flow."
Newport News Shipbuilding
designs and constructs nuclear powered aircraft carriers and submarines
for the U.S. Navy and provides lifecycle services for ships in the Navy
fleet. The Company employs about 18,400 people, and has revenues of approximately
$1.8 billion.
