Huntington Ingalls Industries, Inc. (HII) Earnings & Analysis

Latest quarter

Huntington Ingalls reported Q3 FY2026 revenue of $3.5 billion, above the $3.4 billion consensus. Adjusted earnings per share of $5.48 also exceeded the consensus estimate of $4.41. Revenue rose from $3.2 billion a year earlier, while diluted earnings per share increased from $3.68.

HII’s filing attributed the revenue increase primarily to higher volumes at Newport News and Ingalls. Newport News benefited from more submarine and aircraft carrier work, while Ingalls had higher amphibious assault ship volumes. The filing said Mission Technologies revenue rose slightly as higher unmanned systems volume was partly offset by lower global security volume.

The filing attributed higher Newport News operating income to submarine contract adjustments and incentives as well as increased volume; at Ingalls, operating income declined because of lower surface combatant performance. HII’s consolidated operating margin rose to 6.96% from 5.04% a year earlier.

Quarterly free cash flow was $425.0 million, up from $13.0 million a year earlier and above HII’s $100.0 million quarterly guide.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Chris Kastner said approximately 90% of expected shipbuilding revenue through 2030 was already under contract. CFO Tom Stiehle said third-quarter awards totaled $32.4 billion and brought backlog to $86.2 billion, excluding the $5.1 billion USS Harry S. Truman overhaul contract that HII expects to recognize in fourth-quarter results.

Stiehle said shipbuilding revenue benefited from higher-than-expected material receipts, wage investments and efforts to increase throughput, including outsourcing. Kastner said shipbuilding throughput had risen approximately 9% year to date, but Ingalls had experienced a slower labor recovery after wage increases were put in place near the end of the first quarter. He said HII had hired over 6,000 shipbuilders across both yards year to date.

On margins, Stiehle said Newport News benefited from Virginia-class submarine contract adjustments and incentives. He said its gross contract-estimate adjustments in the second and third quarters were larger than the historical norm as HII updated assumptions about incentives, scope, settlements and risks. At Mission Technologies, he attributed higher operating income partly to a successful unmanned vessel testing milestone and higher unmanned systems volumes.

In the discussion of revenue growth, Kastner said, “We have to execute on both our throughput increases as well as our distributed shipbuilding increases.” Asked about margin improvement, he declined to give a specific rate but said he expected margin and cash to improve incrementally each year.

Stiehle said HII had guided to $500 million of capital expenditure for 2026 and expected working capital to continue unwinding in the fourth quarter. Andy Green said HII had 10 medium unmanned surface vessels to deliver over the next couple of years and was pursuing other opportunities involving different vessel sizes and capabilities.

Guidance

HII raised its FY2026 shipbuilding revenue outlook to $10.5 billion–$10.7 billion from $10.2 billion–$10.4 billion. Stiehle also raised the Mission Technologies operating-margin expectation to approximately 6% from approximately 5%, and its EBITDA-margin expectation to approximately 9% from 8.4%–8.6%.