Huntington Ingalls Industries, Inc. (NYSE:HII) Q4 2014 Earnings Conference Call - Final Transcript

Feb 19, 2015 • 09:00 am ET


Huntington Ingalls Industries, Inc. (NYSE:HII) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to Huntington Ingalls Industries Inc. Q4 2014 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Mr. Dwayne Blake, Corporate Vice President, Investor Relations. You may begin.

Dwayne Blake

Thank you, Sam. Good morning, and welcome to the Huntington Ingalls Industries' fourth quarter 2014 earnings conference call. With us today are Mike Petters, President and Chief Executive Officer; and Barb Niland, Corporate Vice President, Business Management and Chief Financial Officer.

As a reminder, statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Actual results may differ. Please refer to our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results.

Also in the remarks today, Mike and Barb will refer to certain non-GAAP measures, including certain segment and adjusted financial measures. Reconciliations of these metrics to the comparable GAAP measures are included in the appendix of our earnings presentation that is posted on our website. We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at and click on the Investor Relations link to view the presentation as well as our earnings release.

With that, I will turn the call over to our President and CEO, Mike Petters. Mike.

Mike Petters

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's call. Before we start, I want to express our deepest condolences to the family of Joe Nadol, our friend and colleague from JPMorgan. As you all know, Joe was insightful, accurate and fair and he had a keen understanding of our business and our industry and he will be sorely missed.

This morning, we released fourth quarter and full year 2014 financial results that reflect excellent operating margin performance and cash generation at Ingalls and Newport News. We also had some pressure from UniversalPegasus due to extremely dynamic market conditions and some operational challenges. I want to personally thank each one of the 38,000 employees of Huntington Ingalls for the hard work and dedication that produced these results and for their continuous commitment to safety, quality, cost and schedule.

During the quarter, we had two events that reduced our GAAP earnings. First, we absorbed the $37 million one-time cost to refinance our seven year notes which will significantly reduce our interest costs going forward. Second, our annual goodwill evaluation led to a $47 million non-cash impairment charge in our other segment. This was driven by the recent drop in oil prices and the decline in industry market multiples. In addition, fourth quarter 2013 sales and operating income at Ingalls included the benefits of the favorable resolution of hurricane related insurance claims. 2013 full year results also included the charge for closure of the Gulfport facility. All comparative data that Barb and I