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HUNTINGTON INGALLS INDUSTRIES, INC.

HII
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Business Summary

Huntington Ingalls Industries, Inc. operates as a global, all-domain defense partner, building and delivering naval ships and technologies that safeguard America's seas, sky, land, space, and cyber. The company conducts most of its business with the U.S. Government, primarily the Department of War, and its revenues are primarily derived from the U.S. Navy, which accounted for approximately 81% of revenues in 2025, 80% in 2024, and 81% in 2023. The shipbuilding defense industry is both capital- and skilled labor-intensive, dominated by a single large customer, the U.S. Navy, and served by a fragile supplier base that has trended toward exclusive providers. The U.S. Government has the ability to terminate contracts for convenience or default, and programs are subject to annual congressional budget authorization and appropriation processes.

The company's Newport News and Ingalls segments compete primarily with General Dynamics Corporation and, for certain non-nuclear shipbuilding programs, smaller shipyards. For certain ships and nuclear-powered submarines, the company is currently the only, or one of the only, companies capable of building such vessels, including large deck amphibious assault ships (LHAs), amphibious transport dock ships (LPDs), and national security cutters (NSCs). The company is one of only two companies currently capable of designing and building nuclear-powered submarines for the U.S. Navy and is the only company currently capable of building, refueling, and inactivating the U.S. Navy's nuclear-powered aircraft carriers. The Mission Technologies segment competes domestically and internationally against midsized to large traditional aerospace and defense companies and non-traditional defense technology companies.

The company generates most of its revenues from long-term U.S. Government contracts for the production of goods and services, with revenue recognized over time using a cost-to-cost measure of progress. In 2025, approximately 46% of revenues were generated under fixed-price incentive contracts, approximately 50% under cost-type contracts, approximately 1% under time and material contracts, and approximately 3% under firm fixed-price contracts. The company's customer base is overwhelmingly the U.S. Government, with substantially all of its revenues derived from products and services sold to the U.S. Government.

The Ingalls segment designs and constructs non-nuclear ships for the U.S. Navy and U.S. Coast Guard, including amphibious assault ships, surface combatants, and national security cutters. The segment is the sole builder of amphibious assault ships and one of two builders of surface combatants for the U.S. Navy. In 2025, Ingalls generated sales and service revenues of $3,078 million and segment operating income of $233 million . The Newport News segment designs and constructs nuclear-powered aircraft carriers and submarines, and performs refueling and complex overhaul and inactivation of nuclear-powered aircraft carriers. In 2025, Newport News generated sales and service revenues of $6,507 million and segment operating income of $331 million . The Mission Technologies segment provides a wide range of services and products, including C5ISR systems, artificial intelligence and machine learning applications, cyberspace strategies, unmanned autonomous systems, training solutions, platform modernization, and critical nuclear operations. In 2025, Mission Technologies generated sales and service revenues of $3,044 million and segment operating income of $153 million .

In January 2025, the company acquired substantially all of the assets of W International SC, LLC and Vivid Empire SC, LLC, a South Carolina-based complex metal fabricator, for a purchase price of $132 million . In May 2025, the company repaid $500 million aggregate principal amount of its 3.844% senior notes upon their maturity. In November 2024, the company issued $500 million aggregate principal amount of 5.353% senior notes due 2030 and $500 million aggregate principal amount of 5.749% senior notes due 2035. In September 2024, the company amended and restated its existing $1.5 billion credit facility, increasing the capacity to $1.7 billion and extending the maturity date to September 2029. In November 2025, the board of directors authorized an increase in the quarterly cash dividend to $1.38 per share. For the year ended December 31, 2025, the company did not repurchase any shares. As of December 31, 2025, the company had $1,352.3 million remaining under its stock repurchase program.

For the year ended December 31, 2025, total sales and service revenues were $12,484 million , compared to $11,535 million in 2024 and $11,454 million in 2023. Net earnings were $605 million in 2025, compared to $550 million in 2024 and $681 million in 2023. Diluted earnings per share were $15.39 in 2025, compared to $13.96 in 2024 and $17.07 in 2023. Operating income was $657 million in 2025, compared to $535 million in 2024 and $781 million in 2023. Net cash provided by operating activities was $1,196 million in 2025, compared to $393 million in 2024 and $970 million in 2023.

Business Outlook

The company expects the FAS/CAS Adjustment in 2026 to be a net benefit of approximately $169 million , with an Operating FAS/CAS Adjustment net expense of approximately $44 million . The company expects its 2026 cash contributions to its qualified defined benefit pension plans to be approximately $2 million , all of which is anticipated to be discretionary. The company expects 2026 contributions to its other postretirement benefit plans to be approximately $35 million .

The fiscal year 2026 National Defense Authorization Act authorizes $900.6 billion in national security funding, with a total authorization of $26 billion for shipbuilding programs. This includes procurement authorization for the third Columbia class (SSBN 826) submarine, one Virginia class (SSN 774) fast attack submarine, advance procurement for future Arleigh-Burke class (DDG 51) destroyers, and full funding for the Gerald R. Ford class (CVN 78) aircraft carrier program. The Act also provides authorization for William J. Clinton (CVN 82) and George W. Bush (CVN 83), including incremental funding, advance construction, and advance procurement authorities. Additionally, the Act provides mandatory funding of more than $29 billion for Shipbuilding and the Maritime Industrial Base, including one Virginia class (SSN 774) fast attack submarine and two Arleigh-Burke class (DDG 51) guided-missile destroyers.

The company is working with the U.S. Navy to align schedules as a result of late material on Enterprise (CVN 80) and assess technical baseline changes and upgrades for potential incorporation into Enterprise (CVN 80), Doris Miller (CVN 81), and William J. Clinton (CVN 82). The company expects that it will need to increase its shipbuilding capacity to meet current and future production demands and is utilizing or may utilize strategies including increasing investment in current shipyards, identifying additional qualified personnel, utilizing third parties, and identifying efficiencies. The company also may seek to increase capacity through acquisitions, partnerships, or other arrangements.

For 2026, the company expects its capital expenditures for maintenance and sustainment to be approximately 1.0% to 1.5% of annual revenues and its discretionary capital expenditures to be approximately 3.0% to 3.5% of annual revenues. Capital expenditures are expected to increase due to investments to expand shipbuilding capacity.

The company expects cash generated from operations in 2026, in combination with current cash and cash equivalents and existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next 12 calendar months beginning January 1, 2026 and beyond.

The company expects to continue to face challenges in the labor market, which directly impacts its ability to increase throughput and meet production schedules. The company also expects supply chain challenges to continue, including delivery delays, raw materials shortages, and price increases caused by continued inflationary pressures. The company faces uncertainty regarding the impact of changes in trade policy, including tariffs, and the potential for continued inflationary pressures on raw materials, components, and supplies.

Risk Factors

The company depends on the U.S. Government for substantially all of its business, and changes in government priorities, defense spending levels, or budget appropriations could have a material adverse effect. Cost growth on flexibly priced contracts, particularly the approximately 46% of revenues generated under fixed-price incentive contracts and approximately 3% under firm fixed-price contracts, could reduce profitability if costs exceed estimates. The company faces significant challenges in attracting, training, and retaining qualified personnel, with approximately 44,000 employees and a growing portion of the workforce nearing retirement. Cybersecurity threats pose a material risk, as the company relies on information technology infrastructure to process classified and sensitive U.S. Government information. The company's nuclear operations subject it to environmental, regulatory, and financial risks, including potential liabilities from nuclear incidents, though contracts with the U.S. Navy and Department of Energy generally provide for indemnity by the U.S. Government for losses resulting from nuclear operations.

Management Priorities

Management's message emphasizes the company's position as a global, all-domain defense partner and America's largest shipbuilder, with a focus on operational execution and delivering strong financial performance. The company's strategic priorities include increasing shipbuilding capacity to meet current and future production demands, investing in workforce development through apprentice schools and partnerships, and maintaining a strong capital structure to support shareholder returns through dividends and share repurchases. Management highlights the fiscal year 2026 NDAA authorization of $900.6 billion in national security funding and $26 billion for shipbuilding programs as supportive of the company's priorities. The company expects the FAS/CAS Adjustment in 2026 to be a net benefit of approximately $169 million and the Operating FAS/CAS Adjustment to be a net expense of approximately $44 million .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Customers
  2. [2] Item 1, Business — Customers
  3. [3] Item 1, Business — Customers
  4. [4] Item 7, MD&A — Contracts
  5. [5] Item 7, MD&A — Contracts
  6. [6] Item 7, MD&A — Contracts
  7. [7] Item 7, MD&A — Contracts
  8. [8] Item 7, MD&A — Segment Operating Results
  9. [9] Item 7, MD&A — Segment Operating Results
  10. [10] Item 7, MD&A — Segment Operating Results
  11. [11] Item 7, MD&A — Segment Operating Results
  12. [12] Item 7, MD&A — Segment Operating Results
  13. [13] Item 7, MD&A — Segment Operating Results
  14. [14] Item 8, Note 4 — Acquisitions
  15. [15] Item 7, MD&A — Other Sources and Uses of Capital
  16. [16] Item 7, MD&A — Other Sources and Uses of Capital
  17. [17] Item 7, MD&A — Other Sources and Uses of Capital
  18. [18] Item 7, MD&A — Other Sources and Uses of Capital
  19. [19] Item 7, MD&A — Other Sources and Uses of Capital
  20. [20] Item 7, MD&A — Other Sources and Uses of Capital
  21. [21] Item 7, MD&A — Other Sources and Uses of Capital
  22. [22] Item 7, MD&A — Other Sources and Uses of Capital
  23. [23] Item 8, Note 5 — Stockholders' Equity
  24. [24] Item 5, Purchases of Equity Securities
  25. [25] Item 8, Consolidated Statements of Operations
  26. [26] Item 8, Consolidated Statements of Operations
  27. [27] Item 8, Consolidated Statements of Operations
  28. [28] Item 8, Consolidated Statements of Operations
  29. [29] Item 8, Consolidated Statements of Operations
  30. [30] Item 8, Consolidated Statements of Operations
  31. [31] Item 8, Consolidated Statements of Operations
  32. [32] Item 8, Consolidated Statements of Operations
  33. [33] Item 8, Consolidated Statements of Operations
  34. [34] Item 8, Consolidated Statements of Operations
  35. [35] Item 8, Consolidated Statements of Operations
  36. [36] Item 8, Consolidated Statements of Operations
  37. [37] Item 8, Consolidated Statements of Cash Flows
  38. [38] Item 8, Consolidated Statements of Cash Flows
  39. [39] Item 8, Consolidated Statements of Cash Flows
  40. [40] Item 7, MD&A — FAS/CAS Adjustment
  41. [41] Item 7, MD&A — FAS/CAS Adjustment
  42. [42] Item 7, MD&A — Retirement Related Benefit Plan Contributions
  43. [43] Item 7, MD&A — Retirement Related Benefit Plan Contributions
  44. [44] Item 7, MD&A — Defense Spending Environment
  45. [45] Item 7, MD&A — Defense Spending Environment
  46. [46] Item 7, MD&A — Defense Spending Environment
  47. [47] Item 7, MD&A — Investing Activities
  48. [48] Item 7, MD&A — Investing Activities
  49. [49] Item 7, MD&A — Contracts
  50. [50] Item 7, MD&A — Contracts
  51. [51] Item 1, Business — Human Capital Resources
  52. [52] Item 7, MD&A — Defense Spending Environment
  53. [53] Item 7, MD&A — Defense Spending Environment
  54. [54] Item 7, MD&A — FAS/CAS Adjustment
  55. [55] Item 7, MD&A — FAS/CAS Adjustment
  56. [56] Item 8, Consolidated Statements of Operations
  57. [57] Item 8, Consolidated Statements of Operations
  58. [58] Item 8, Consolidated Statements of Operations
  59. [59] Item 8, Consolidated Statements of Operations
  60. [60] Item 8, Consolidated Statements of Operations
  61. [61] Item 8, Consolidated Statements of Operations
  62. [62] Item 8, Consolidated Statements of Operations
  63. [63] Item 8, Consolidated Statements of Operations
  64. [64] Item 8, Consolidated Statements of Cash Flows
  65. [65] Item 8, Consolidated Statements of Cash Flows
  66. [66] Item 7, MD&A — Free Cash Flow
  67. [67] Item 7, MD&A — Free Cash Flow
  68. [68] Item 7, MD&A — Federal and Foreign Income Taxes
  69. [69] Item 7, MD&A — Federal and Foreign Income Taxes
  70. [70] Item 8, Note 7 — Revenue
  71. [71] Item 8, Note 7 — Revenue
  72. [72] Item 7, MD&A — Segment Operating Income
  73. [73] Item 7, MD&A — Segment Operating Income
  74. [74] Item 7, MD&A — Ingalls
  75. [75] Item 7, MD&A — Ingalls
  76. [76] Item 7, MD&A — Newport News
  77. [77] Item 7, MD&A — Newport News
  78. [78] Item 7, MD&A — Mission Technologies
  79. [79] Item 7, MD&A — Mission Technologies
  80. [80] Item 7, MD&A — Backlog
  81. [81] Item 7, MD&A — Backlog

Analysis on 6/8/2026