Huntington Ingalls Industries said this week its technical solutions unit has agreed to contribute its San Diego shipyard to Titan Acquisition Holdings, which is controlled by private-equity firms the Carlyle Group and Stellex Capital Management.
When the deal is complete, HII said it will hold a minority interest in Titan. The transaction is expected to close in the second quarter of the year.
"The addition of the San Diego Shipyard will expand Titan's ship repair and complex fabrication business with critical mass, expanded capabilities, and strategically located facilities in Norfolk; San Diego; Seattle; Portland, Oregon; Vancouver, Washington; and Ketchikan, Alaska," HII said.
In a call with analysts today, Mike Petters, HII's chief executive, said the company has seen changes in the repair business model and has "struggled with that a little bit."
The deal provides a chance for HII "to keep our hand in that business."
Meanwhile, Huntington Ingalls today reported sales in its most recent quarter of $2.4 billion, up almost 10% from the same three-month period a year earlier. The contractor said quarterly profit totaled $149 million, down almost 30% from the prior year.
HII said it recorded non-cash asset impairment charges totaling $35 million "as a result of the company's decision to divest its oil and gas business." The company said the oil and gas business "is reflected as an asset held for sale" on its balance sheet.
For the year, HII said its sales hit $8.9 billion, up almost 9% from a year earlier. The company said 2019 profit totaled $549 million, down 34% from 2018.
Petters said today the company will have a "sharpened focus" in its technical solutions unit through its portfolio shaping.
Asked about the fiscal year 2021 budget request issued earlier this week, Petters said Congress rarely leaves the submission untouched.
“It's a long process to go from submitting the budget to appropriating,” he said. “I think we're just at the very beginning of the process right now, and it's going to play out over the next several months.”