Consulting firm McAleese & Associates has issued a report saying Huntington Ingalls Industries (NYSE: HII) is “ecstatic†about the Bipartisan Budget Act’s shipbuilding funds for fiscal years 2018 and 2019.
“[W]e are in a great spot because ships have been authorized and appropriated in the 2018-2019 window, which takes a lot of uncertainty about 2020-2021 out of our business,†HII CEO Mike Petters said during the company’s third-quarter earnings call on Thursday, Nov. 8.
Petters told analysts that he is sticking to his 3 percent annual sales growth figure as the Defense Department plans to present two budgets for FY 2020, which he said indicates “uncertainty,†Jim McAleese, founder and principal at McAleese & Associates, wrote in the report.
McAleese cited that HII believes DoD will support a contract for two aircraft carriers “on net-neutral funding basis.â€
“When we looked…at the five-year plan…for aircraft carriers, it was our view that you could reapportion that funding between the two ships, and actually generate the savings, and that you wouldn’t need to actually add any funding to make that happen,†Petters said.
According to the report, HII will benefit from Navy shipbuilding funds worth $24B in the FY 2019 minibus measure, which authorizes the two-carrier contract and LPD Flight II amphibious ship advance procurement.
