Huntington Ingalls says it is restructuring maintenance program at San Diego shipyard

Huntington Ingalls Industries said today it is restructuring and adding capabilities to its San Diego shipyard, following a $12 million forward loss related to a maintenance availability for the Chosin (CG-65) Aegis missile cruiser.

In a call with analysts this morning, Mike Petters, Huntington Ingalls' chief executive, said the loss "was primarily due to unanticipated additional cost required to complete aluminum repair work in the superstructure and topside area of the ship."

"This issue was discovered during our quarterly [estimate-at-completion] process, and that process also revealed that the team was not making the operational progress consistent with the remaining work scope on the ship," Petters added. "So we sent some of our most experienced shipbuilders to review the situation, and we discovered a deficit in the capabilities to manage and execute the work."

Following the review, the company recognized the forward loss and is restructuring and "adding talent to the program," Petters said.

Meanwhile, Huntington Ingalls said today sales in its most recent quarter reached $2.2 billion, up about 8% from the same three-month period a year earlier. The company said the increase was partly driven by acquisitions in its technical solutions division; the unit has added G2 and Fulcrum IT Services.

However, the company's quarterly profit hit $128 million, down about 46% from the prior year.

All three business units reported lower profit in the quarter. Ingalls Shipbuilding's decline was a result of lower risk retirement on the LPD program and recoveries related to a settlement agreement in 2018, while Newport News Shipbuilding's decrease was primarily related to "lower performance" on the Virginia-class submarine program, according to HII.