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 third 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 six. Our third quarter revenues of $2.6 billion increased approximately 12% compared to the same period last year. This increased revenue was attributable to the acquisition of Alion in the third quarter of 2021 as well as growth at Newport News Shipbuilding. Operating income for the quarter of $131 million increased by $13 million or 11% from the third quarter of 2021 and operating margin of 5% was essentially flat from the prior year period. The increase in operating income was primarily due to more favorable non-current state income taxes and operating fast cash adjustment compared to the prior year period as well as improved results at Newport News Shipbuilding. Other net expense was $13 million in the quarter, which was primarily driven by losses on equity investments given market volatility in the quarter.
Our effective tax rate in the quarter was approximately 14.8% compared to negative 4.3% in the third quarter of last year, which included research and development tax credits for tax years 2016 through 2020. Net earnings in the quarter were $138 million compared to $147 million in the third quarter of 2021. Diluted earnings per share in the quarter was $3.44 compared to $3.65 in the third quarter of the previous year. Moving on to slide seven. Ingall's revenues of $623 million in the quarter decreased to $5 million or less than 1% from the same period last year, driven primarily by lower revenues on the NSE and LPD programs and partially offset by higher DDG program revenues. Ingall's operating income of $50 million and margin at 8% in the quarter declined from last year, primarily due to lower risk retirement on the DDG program, partially offset by higher LPD risk retirement.
At Newport News, revenues of $1.4 billion increased by $91 million or a robust 6.7% from the same period last year due to higher naval nuclear support services as well as submarine and aircraft carrier revenues compared to the previous year. Newport News operating income of $102 million and margin of 7.1% were up from the last year due to contract incentives on the Columbia-class submarine program, partially offset by lower risk retirement on the VCS program. The Columbia-class contract incentives are related to Newport News support of continued growth in the submarine construction enterprise. At Mission Technologies, revenues of $595 million, increased $201 million compared to the third quarter of 2021, primarily driven by the acquisition of Alion in the third quarter of last year. Mission Technologies operating income of $14 million compared to operating income of $13 million in the third quarter of last year.
Current results included approximately $24 million of amortization of Alion-related purchase intangible assets compared to $8 million in the third quarter of last year. Mission Technologies' EBITDA margin in the third quarter was 8.4% and 8.7% year-to-date. Turning to slide eight. Cash used by operations was $19 million in the quarter, and net capital expenditures were $77 million or 2.9% of revenues, resulting in free cash flow of negative $96 million. This compares to cash from operations of $350 million, net capital expenditures of $73 million or 3.1% of revenues and free cash flow of $277 million in the third quarter of 2021. While third quarter free cash flow was below the projection we provided on our last earnings call, this is simply a function of timing as well as a tax payment of approximately $80 million that we elected to make in the third quarter given the lower probability of delay and deferral of changes to the R&D tax treatment. In fact, we are increasing our overall free cash flow outlook for fiscal year 2022, which I'll discuss in more detail in a moment.
Cash contributions to our pension and other post-retirement benefit plans were $11 million in the quarter, of which less than $1 million were discretionary contributions to our qualified pension plan. During the third quarter, we paid dividends of $1.18 per share or $48 million. We also repurchased approximately 66,000 shares during the quarter at an aggregate cost of approximately $14 million. Moving on to slide nine and our updated outlook for the 2022 and 2023 pension and post-retirement benefits. First, I would like to highlight that our funded status remained strong and has improved year-to-date. Additionally, I will note that the cash flow impacts related to the pension changes remain muted. For 2023, the FAS benefit has come down considerably from our last update, given the more immediate recognition of the negative asset returns experienced thus far in 2022. While the increase in the discount rate does partially offset the impact of asset returns, the magnitude of the impact related to lower asset returns is clearly more significant. Please remember that pension-related numbers are subject to year-end performance and measurement criteria. We will provide a multiyear update of pension estimates on our fourth quarter earnings call in February.
Turning to slide 10. We are narrowing our 2022 Shipbuilding and Mission Technologies revenue guidance to the lower end of our prior guidance ranges, given results through the third quarter and the current operating environment. We are now expecting shipbuilding revenue to be between $8.2 billion and $8.3 billion and expect Mission Technologies revenues to be approximately $2.4 billion. The narrowing of the shipbuilding revenue guidance is a function of the challenging labor environment that we have frequently discussed as well as our expectations for the timing of the material as we near year-end. The Mission Technologies revenue is a reflection of the slower start of the year as well as the current hiring environment. As Chris noted, third quarter book-to-bill ratio exceeded 2.0, a very positive indicator as we move forward, and we remain very enthusiastic about the growth opportunities at Mission Technologies. We are reaffirming our shipbuilding operating margin guidance range of 8% to 8.1%. For Mission Technologies, we are slightly revising our margin guidance to approximately 2.3%, which is largely a function of the lower volume of work in the year. Moving to free cash flow. We are increasing our guidance for 2022. Under current Section 174 R&D Tax Law, the midpoint of our prior guidance was $225 million, which has now been raised to approximately $350 million.
The most significant driver of that increase is the COVID progress repayment which we initially expected in 2022, moving to 2023. Given our free cash flow through the third quarter, we are expecting very strong free cash flow generation in the fourth quarter. On slide 11, we have provided an updated view of our free cash flow expectations. This outlook assumes the current R&D amortization treatment for tax purposes remain in place. And given that adjustment, our 2020 through 2024 free cash flow expectation is now approximately $2.9 billion. As we have noted before, the impact of the R&D treatment is approximately $250 million over the 2022 through 2024 time frame. We are reaffirming our capital allocation priorities, including our commitment to return substantially all free cash flow after planned debt repayment to shareholders through 2024.
As we have noted, this is a significant commitment, which should result in increased share repurchases, particularly in 2024 after we have reached a designed debt level. I will also note that we have recently announced and increased our quarterly cash dividend to $1.24, a 5% increase over the prior amount. To summarize, the operating environment remains challenging, and we were not able to overcome the slow start to the services contracting pace, which has resulted in revenue guidance moving to the low end of our prior ranges. We are pleased to reaffirm our shipbuilding margin guidance and increase our free cash flow expectations as we aggressively manage through current business conditions. Regarding fiscal year 2023, we plan to provide detailed guidance on our fourth quarter call, consistent with our normal cadence. With that said, we continue to view a long-term shipbuilding revenue CAGR of 3% as appropriate and we are pleased to reaffirm our long-term free cash flow target through 2024, as I have discussed. We would normally expect incremental shipbuilding operating margin improvement in 2023. However, given the current economic environment, we'll need to close out the year to assess risk retirement and operational efficiencies before we can provide more insight. We will finish the year just as we've started focused on execution, and we'll provide a more comprehensive update on our view for 2023 in February.
With that, I'll turn the call back over to Chris for some final remarks before we take your questions.