Huntington Ingalls Industries : First Quarter 2026 Q1 2026 Earnings Release

Published: 2026-05-05 07:23:28 ET HII

Published on 05/05/2026 at 07:23 am EDT

‌Contacts:

Brooke Hart (Media) [email protected] 202-264-7108

News Release

Christie Thomas (Investors) [email protected] 757-380-2104

HII Reports First Quarter 2026 Results

NEWPORT NEWS, Va. (May 5, 2026) - HII (NYSE: HII) today reported results for the first quarter of fiscal 2026.

Highlights

First quarter revenues were $3.1 billion

First quarter net earnings were $149 million or $3.79 diluted earnings per share

Completed builder's sea trials for aircraft carrier John F. Kennedy (CVN 79)

New collective bargaining agreements ratified at Ingalls Shipbuilding that extend through 2031

Company reaffirms previously issued FY26 financial guidance1

First Quarter Results

First quarter 2026 revenues of $3.1 billion were up 13.4% from the first quarter of 2025, driven by growth at Newport News Shipbuilding, Ingalls Shipbuilding and Mission Technologies.

Operating income in the first quarter of 2026 was $155 million and operating margin was 5.0%, compared to $161 million and 5.9%, respectively, in the first quarter of 2025.

Segment operating income2 in the first quarter of 2026 was $172 million and segment operating margin2 was 5.6%, compared to $171 million and 6.3%, respectively, in the first quarter of 2025.

Net earnings in the first quarter of 2026 were $149 million, compared to $149 million in the first quarter of 2025. Diluted earnings per share in the quarter was $3.79, compared to $3.79 in the first quarter of 2025.

Net cash used in operating activities in the quarter was $390 million and free cash flow2 was negative

$461 million, compared to net cash used in operating activities of $395 million and free cash flow2 of negative $462 million in the first quarter of 2025.

New contract awards in the first quarter of 2026 were $4.0 billion, bringing total backlog to 54.0 billion as of March 31, 2026.

"We made good progress on our 2026 operational initiatives in the first quarter. Shipbuilding throughput has continued to improve with meaningful year over year growth in the first quarter as our team remains focused on driving efficiency and expanding the industrial base network," said Chris Kastner, HII's president and CEO.

1The financial outlook, expectations and other forward looking statements provided by the company for 2026 and beyond reflect the company's judgment based on information available at the time of this release. Please see the "Forward-looking Statements" section in this release and our Form 10-Q for factors that may impact the company's ability to meet expectations.

2Non-GAAP measures. See Exhibit B for definitions and reconciliations.

($ in millions, except per share amounts)

2026

2025

$ Change

% Change

Sales and service revenues

$ 3,099

$ 2,734

$ 365

13.4 %

Operating income

155

161

(6)

(3.7)%

Operating margin %

5.0 %

5.9 %

(89) bps

Segment operating income1

172

171

0.6 %

Segment operating margin %1

5.6 %

6.3 %

(70) bps

Net earnings

149

- %

Diluted earnings per share

$ 3.79

$ -

- %

1 Non-GAAP measures that exclude non-segment factors affecting operating income. See Exhibit B for definitions and reconciliations.

Ingalls Shipbuilding

($ in millions)

2026

2025

$ Change

% Change

Revenues

$ 725

$ 637

$ 88

13.8 %

Segment operating income

6.5 %

Segment operating margin %

6.8 %

7.2 %

(46) bps

Ingalls Shipbuilding revenues for the first quarter of 2026 were $725 million, an increase of $88 million, or 13.8%, from the same period in 2025, primarily driven by higher volumes in surface combatants.

Ingalls Shipbuilding segment operating income for the first quarter of 2026 was $49 million, an increase of $3 million from the same period in 2025. Segment operating margin in the first quarter of 2026 was 6.8%, compared to 7.2% in the same period last year. The increase in segment operating income was driven by higher volumes in surface combatants, partially offset by lower performance in amphibious assault ships.

Key Ingalls Shipbuilding milestone for the quarter:

Completed builder's sea trials for USS Zumwalt (DDG 1000)

Authenticated the keel of amphibious transport dock Philadelphia (LPD 32)

Ratified new collective bargaining agreements that extend through 2031

Newport News Shipbuilding

($ in millions)

2026

2025

$ Change

% Change

Revenues

$ 1,665

$ 1,396

$ 269

19.3 %

Segment operating income

3.5 %

Segment operating margin %

5.3 %

6.1 %

(80) bps

Newport News Shipbuilding revenues for the first quarter of 2026 were $1.7 billion, an increase of $269 million, or 19.3%, from the same period in 2025. The increase was primarily driven by higher volumes in aircraft carriers, submarines and naval nuclear support services.

Newport News Shipbuilding segment operating income for the first quarter of 2026 was $88 million, an increase of

$3 million from the same period in 2025. Segment operating margin in the first quarter of 2026 was 5.3% compared to 6.1% in the same period last year. The increase in segment operating income was primarily driven by the higher volumes described above, partially offset by contract adjustments and incentives in the first quarter of 2025 on the Virginia-class submarine program, as well as lower performance in aircraft carrier construction.

Key Newport News Shipbuilding milestones for the quarter:

Completed builder's sea trials for aircraft carrier John F. Kennedy (CVN 79)

Mission Technologies

($ in millions)

2026

2025

$ Change

% Change

Revenues

$ 748

$ 735

$ 13

1.8 %

Segment operating income

(5)

(12.5)%

Segment operating margin %

4.7 %

5.4 %

(76) bps

Mission Technologies revenues for the first quarter of 2026 were $748 million, an increase of $13 million, or 1.8%, from the same period in 2025. The increases were primarily due to higher volumes in All-Domain Operations, Unmanned Systems, and Global Security, partially offset by lower volumes in Warfare Systems.

Mission Technologies segment operating income for the first quarter of 2026 was $35 million, a decrease of $5 million from the same period in 2025. Segment operating margin in the first quarter of 2026 was 4.7%, compared to 5.4% in the same period last year. The decrease in segment operating income was primarily due to lower equity income from nuclear and environmental joint ventures, partially offset by higher performance in Warfare Systems.

Mission Technologies results included approximately $18 million of amortization of purchased intangible assets in the first quarter of 2026, compared to approximately $22 million in the same period last year.

Mission Technologies EBITDA margin1 in the first quarter of 2026 was 7.8%, compared to 9.1% in the first quarter of 2025.

Key Mission Technologies milestones for the quarter:

Completed the expansion of our U.K. unmanned operations facility, which significantly enhances and strengthens the company's presence in the U.K. and increases capacity and support for the U.K. Royal Navy and European partners

Selected to compete on $25.4 billion Advanced Technology Support Program V (ATSP5) microelectronics multi-award contract

1Non-GAAP measures. See Exhibit B for definitions and reconciliations.

Reaffirming FY26 and medium term outlook

Medium term2 HII revenue growth of approximately 6%

Medium term2 shipbuilding revenue growth of approximately 6%

Medium term2 Mission Technologies revenue growth of approximately 5%

FY26 shipbuilding revenue between $9.7 and $9.9 billion; expect shipbuilding operating margin3 between

5.5% and 6.5%

FY26 Mission Technologies revenue between $3.0 and $3.2 billion,

FY26 Mission Technologies segment operating margin of approximately 5%; and Mission Technologies EBITDA margin3 between 8.4% and 8.6%

FY26 free cash flow3 between $500 and $600 million

Shipbuilding Revenue $9.7B - $9.9B

Shipbuilding Operating Margin3 5.5% - 6.5%

Mission Technologies Revenue $3.0B - $3.2B

Mission Technologies Segment Operating Margin ~5%

Mission Technologies EBITDA Margin3 8.4% - 8.6%

Operating FAS/CAS Adjustment ($44M)

Non-current State Income Tax Expense4 ~($20M)

Interest Expense ($105M)

Non-operating Retirement Benefit $213M

Effective Tax Rate ~17%

Depreciation & Amortization ~$330M

Capital Expenditures 4% - 5% of Sales

Free Cash Flow3 $500M - $600M

1The financial outlook, expectations, and other forward-looking statements provided by the company for 2026 and beyond reflect the company's judgment based on the information available at the time of this release. Please see the "Forward-looking Statements" section in this release and our Form 10-Q for factors that may impact the company's ability to meet expectations.

2Medium term growth represents our expected compound annual growth rate over the next three to five years.

3Non-GAAP measures. See Exhibit B for definitions. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results.

4Outlook is based on current tax law. Variability exists based on how and when individual states conform to recent federal tax law changes.

HII is America's largest shipbuilder, delivering the world's most powerful ships and all-domain mission technologies, including unmanned systems, to U.S. and allied defense customers. HII is the largest producer of unmanned underwater vehicles for the U.S. Navy and the world.

With a more than 140-year history of advancing U.S. national security, HII builds and integrates defense capabilities extending from the core fleet to C6ISR, AI/ML, EW and synthetic training. Headquartered in Virginia, HII's workforce is 44,000 strong. For more information, visit https://www.HII.com.

HII will webcast its earnings conference call at 9 a.m. Eastern time today. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company's website: https://www.HII.com. A replay of the call will be available on the website for a limited time.

Statements in this earnings release and in our other filings with the SEC, as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance," "outlook," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to:

our dependence on the U.S. Government for substantially all of our business;

significant delays or reductions in appropriations for our programs and/or changes in customer priorities and requirements (including government budgetary constraints, government shutdowns, shifts in defense spending, and changes in customer short-range and long-range plans);

our ability to estimate our future contract costs, including cost increases due to inflation, labor challenges, changes in trade policy, or other factors and our efforts to recover or offset such costs and/or changes in estimated contract costs, and perform our contracts effectively;

changes in business practices, procurement processes and government regulations, including changes through executive orders, contract terms, or other policies or practices applicable to our industry, and our ability to comply with such requirements;

adverse economic conditions in the United States and globally;

our level of indebtedness and ability to service our indebtedness;

our ability to deliver our products and services at an affordable life cycle cost and compete within our markets;

our ability to attract, retain, and train a qualified workforce;

subcontractor and supplier performance and the availability and pricing of raw materials and components;

our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures, and strategic acquisitions;

investigations, claims, disputes, enforcement actions, litigation (including criminal, civil, and administrative), and/or other legal proceedings, and improper conduct of employees, agents, subcontractors, suppliers, business partners, or joint ventures in which we participate, including the impact on our reputation or ability to do business;

changes in key estimates and assumptions regarding our pension and retiree health care costs;

security threats, including cyber security threats, and related disruptions;

natural and environmental disasters and political instability;

health epidemics, pandemics and similar outbreaks; and

other risk factors discussed herein and in our other filings with the SEC.

There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update or revise any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make.

This release also contains non-GAAP financial measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures.

(in millions, except per share amounts)

2026

2025

Sales and service revenues

Product sales

$ 2,004

$ 1,713

Service revenues

1,095

1,021

Sales and service revenues

3,099

2,734

Cost of sales and service revenues

Cost of product sales

1,741

1,451

Cost of service revenues

950

889

Income from operating investments, net

General and administrative expenses

258

246

Operating income

155

161

Other income (expense)

Interest expense

(22)

(28)

Non-operating retirement benefit

Other, net

Earnings before income taxes

188

187

Federal and foreign income tax expense

Net earnings

$ 149

Basic earnings per share

$ 3.79

Weighted-average common shares outstanding

39.3

Diluted earnings per share

$ 3.79

Weighted-average diluted shares outstanding

39.3

Dividends declared per share

$ 1.38

$ 1.35

Net earnings from above

$ 149

Other comprehensive income

Change in unamortized benefit plan costs

Tax expense for items of other comprehensive income

(1)

Other comprehensive income, net of tax

Comprehensive income

$ 150

($ in millions) March 31, 2026

Assets

Current Assets

Cash and cash equivalents

$ 216

$ 774

Accounts receivable, net of allowance for expected credit losses of $3 million as of 2026 and $2 million as of 2025

406

339

Contract assets

1,989

1,758

Inventoried costs

230

219

Income taxes receivable

278

284

Prepaid expenses and other current assets

Total current assets

3,217

3,451

Property, Plant, and Equipment, net of accumulated depreciation of $2,799 million as of 2026 and $2,754 million as of 2025

3,742

3,726

Operating lease assets

274

267

Goodwill

2,650

Other intangible assets, net of accumulated amortization of $1,243 million as of 2026 and $1,222 million as of 2025

673

694

Pension plan assets

1,586

1,544

Miscellaneous other assets

391

417

Total assets

$ 12,533

$ 12,749

Liabilities and Stockholders' Equity

Current Liabilities

Trade accounts payable

692

556

Accrued employees' compensation

345

443

Current portion of postretirement plan liabilities

119

Current portion of workers' compensation liabilities

219

217

Contract liabilities

822

1,220

Other current liabilities

505

490

Total current liabilities

2,702

3,045

Long-term debt

2,701

2,700

Pension plan liabilities

155