Thomas E. Stiehle
Executive Vice President and Chief Financial Officer at Huntington Ingalls Industries
Thanks, Chris, and good morning. Today, I'll briefly review our second quarter results. For more detail on the segment results, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on Slide five of the presentation, our second quarter revenues of $2.8 billion, increased approximately 4.7% compared to the same period last year and represents a record second quarter result for HII. This increased revenue was largely attributable to growth at Newport News Shipbuilding and Mission Technologies. Operating income for the quarter of $156 million, decreased by $35 million or 18% from the second quarter of 2022, and operating margin of 5.6% compared to operating margin of 7.2% in the same period last year. The decrease in operating income was primarily due to lower segment operating income, partially offset by a more favorable operating FAS/CAS adjustment and more favorable noncurrent state income taxes compared to the prior year period. Net earnings in the quarter were $130 million, compared to $178 million in the second quarter of 2022.
Diluted earnings per share in the quarter was $3.27, compared to $4.44 in the second quarter of the previous year. Shipbuilding results in the quarter were in line with our expectations and slightly stronger than the outlook we provided on our first quarter call. Segment operating income in the second quarter of 2022 benefited significantly from favorable adjustments from facilities capital and economic price adjustment clauses at both Ingalls and Newport News, making for a difficult comparison year-over-year as expected. Moving on to Slide 6. Ingalls revenues of $664 million in the quarter, increased $6 million or about 1% from the same period last year, driven primarily by higher revenues on the DDG program, partially offset by lower NSC program revenues. Ingalls operating income of $65 million and operating margin of 9.8% in the quarter declined from last year as expected, primarily due to lower favorable changes in contract estimates from facilities capital and economic price adjustment clauses, as well as lower risk retirement on LPD 30 Harrisburg. At Newport News, revenues of $1.5 billion, increased by $76 million or 5.3% from the same period last year due to growth in both aircraft carrier and submarine construction revenues.
Newport News operating income in the second quarter of 2023 was $95 million, an increase of $1 million or 1.1% compared to the second quarter of last year. Operating income was largely consistent year-over-year as favorable VCS program adjustments were offset by lower favorable changes in contract estimates from facilities capital and economic price adjustment clauses. Shipbuilding operating margin in the second quarter was 7.4%, above the 7% outlook we had previously provided for the quarter. Our shipbuilding operating margin outlook for the full year is unchanged. We have noted previously that our expected milestones for 2023 are concentrated in the second half of the year and largely in the fourth quarter. At Mission Technologies, revenues of $645 million, increased $45 million or 7.5% compared to the second quarter of 2022, primarily driven by higher volumes in mission-based solutions, which includes our C5ISR, cyber, electronic warfare and live, virtual and constructive training capabilities. Mission Technologies operating income of $9 million compares to operating income of $25 million in the second quarter of last year. The second quarter of 2022 included additional nonrecurring equity income of approximately $15 million for an equity method investment in a ship repair joint venture, which was sold in the second quarter of 2023. Cash proceeds of $61 million from the sale are included in investing cash flows. Additionally, a negative equity method adjustment of $6 million was recorded from the sale of the ship repair joint venture. Current results for Mission Technologies included approximately $28 million of amortization of purchased intangible assets. Mission Technologies EBITDA margin in the second quarter was 6.7%. Turning to Slide 7. Cash from operations was $82 million in the quarter.
Net capital expenditures were $68 million, or 2.4% of revenues. Free cash flow in the quarter was $14 million. This compares to cash from operations of $267 million, net capital expenditures of $59 million, or 2.2% of revenues, and free cash flow of $208 million in the second quarter of 2022. Cash contributions to our pension and other post-retirement benefit plans were $11 million in the quarter. During the second quarter, we paid dividends of $1.24 per share, or $50 million in aggregate. We also repurchased approximately 37,000 shares during the quarter at an aggregate cost of approximately $7 million. Year-to-date through the second quarter, we repurchased approximately 76,000 shares at an aggregate cost of approximately $16 million. Moving on to Slide 8. Our free cash flow outlook through 2024 remains unchanged, as do our capital allocation priorities. Regarding 2023 free cash flow guidance, we continue to see $400 million to $450 million as the most likely range. We continue to work with our customer on the timing and mechanics regarding the repayment of COVID-related advances, which is currently forecasted to occur in 2023. At this time, we do not have an agreement in place that would increase our free cash flow above the guidance range we have provided.
I'll highlight that we continue to expect to distribute substantially all free cash flow to our shareholders through 2024 after planned debt repayment, which is on track. Turning to Slide 9. We are reaffirming our 2023 segment guidance. I will also provide some color on how we see the third quarter and the remainder of the year. Regarding the third quarter, we expect shipbuilding revenue to be approximately $2.1 billion and shipbuilding operating margin to be consistent with the second quarter's result of 7.4%. This expectation does imply a meaningful improvement in the fourth quarter results, which is consistent with when we expect our most impactful shipbuilding milestones to occur. For Mission Technologies, we expect third quarter revenue to be similar to the second quarter results and expect third quarter operating margin of approximately 2.5%. Given second quarter results and the impact of the equity method accounting adjustment I referenced earlier, we currently believe that Mission Technologies' 2023 operating and EBITDA margins are likely to be closer to the low end of the guidance ranges we have provided. We expect third quarter free cash flow to be approximately $100 million. Again, there is no change to our guidance for the year. We expect our cash flow generation will fall predominantly in the fourth quarter. Our cash expectation is consistent with both our expected timing for milestones and our normal cash cadence of the calendar year.
To summarize, the second quarter shipbuilding results were largely in line with the expectations we provided on our first quarter call. Newport News and Ingalls continued to hit critical shipbuilding milestones. Mission Technologies delivered impressive year-over-year revenue growth. The Mission Technologies team continues to capture meaningful contract wins and maintains a very robust pipeline. We have great confidence in their future and the long-term value creation opportunity. Finally, we are pleased to reaffirm our full year segment guidance as we remain focused on executing the milestones and commitments that we've laid out. With that, I'll turn the call back over to Christie to manage the Q&A.