It's been six weeks since Huntington Ingalls Industries
Good news first
The good news here is that Huntington grew its profits 8% year over year, earning $0.92 in the first quarter, versus the $0.85 it says it would have earned in last year's Q1 (had it been independent at the time). The bad news is that this was less than analysts had hoped for, and came with declines in sales and operating income.
Three other things grew at Huntington last quarter. Again, good news first: Backlog was up significantly, as Huntington landed several new Navy and Coast Guard contracts. With $17.4 billion in backlog, Huntington already has enough work to keep it busy for nearly three years.
Bad news: The rate at which the company burns cash fulfilling such contracts nearly tripled. Negative free cash flow leapt from last year's $117 million to $364 million cash burned in Q1 2011. Complicating matters, Northrop gave Huntington a parting "gift" when it spun off the company -- $1.8 billion in long-term debt, or $1.7 billion more than was attributable to the division pre-spinoff …
That's great news for Northrop, which finds its balance sheet considerably less leveraged without Huntington than with. It's pretty good news for Lockheed Martin
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Fool contributor Rich Smith has no position in any stocks named above. The Motley Fool has a disclosure policy. The Fool owns shares of General Dynamics, Lockheed Martin, and Northrop Grumman. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.