Huntington Ingalls (HII) Wins $90M Submarine Maintenance Deal
Huntington Ingalls Industries, Inc.’s HII Newport News Shipbuilding division recently secured a $90 million modification contract for submarine maintenance. The contract has been awarded by the Naval Sea Systems Command, Washington, D.C.
Per the terms, Huntington’s Newport News division will provide planning yard services, engineering, technical and program management support of industrial type work for submarine availabilities, facilities, and conversion.
Majority of the deal related work will be performed in Newport News, VA. The entire task is expected to be completed by September 2023.
Huntington’s Strong Presence in Submarine Industry
Huntington Ingalls operates as one of the two companies currently designing and building nuclear-powered submarines for the U.S. Navy. Naturally, this gives the company a dominant position in the submarine industry, with the United States being a stalwart in the global defense space.
Lately, this shipbuilder has been making significant progress in its submarine programs, which should boost its overall growth. As of March 2021, Huntington Ingalls’ SSN 794 Montana is approximately 92% complete and scheduled for delivery in late 2021. SSN 796 New Jersey is approximately 72% complete and is scheduled for delivery to the Navy in 2022. Such innovations should usher in more contracts for Huntington Ingalls unit in the coming days.
Huntington’s Newport News unit is a major contractor and shipbuilding partner in the Columbia-class program. The unit began advance construction activities on the lead ballistic missile submarine in May 2019, under contract with General Dynamics' GD Electric Boat.
Alongside building Columbia and Virginia-class submarines — two of the world’s newest ballistic missile submarines developed in partnership with General Dynamics — Huntington Ingalls offers submarine modernization and repair services at naval shipyards, fleet homeports and other locations globally. This, in turn, ushers in a smooth flow of contracts, for the company, involving submarine construction and associated maintenance and upgrades, like the latest one.
Growth Prospects in the Submarine Market
The United States along with several other nations is strategically strengthening its naval power by upgrading a vast number of submarines due to rising geopolitical tensions worldwide. In this backdrop, Huntington Ingalls enjoys a dominant position as a Navy contractor in the United States, with growing demand for submarines. In fact, more than 70% of the active U.S. Navy fleet comprises Huntington Ingalls ships and the shipbuilding giant is one of the only two contractors in the world equipped to build nuclear-powered submarines.
Per a latest report by Research and Markets firm, the global submarine market is expected to see a CAGR of 4.36% from 2021 to 2031. This indicates increased demand for different variants of submarines and their associated services, including the Columbia and Virginia-class submarines. Such growth prospect of the global submarine market should benefit Huntington Ingalls, along with other submarine makers like General Dynamics, BAE Systems Plc BAESY and MitsuBishi Heavy Industries MHVYF.
Zacks Rank & Price Movement
In the year-to-date period, shares of Huntington Ingalls, which carries a Zacks Rank #3 (Hold), have gained 19.4% compared with the industry’s growth of 12.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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