Company Performance - Huntington Ingalls (HII) reported quarterly earnings of $3.86 per share, exceeding the Zacks Consensus Estimate of $3.23 per share, but down from $4.38 per share a year ago, representing an earnings surprise of +19.50% [1] - The company posted revenues of $3.08 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.22%, compared to $2.98 billion in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates once [2] Stock Performance - Huntington Ingalls shares have increased approximately 36.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 8.2% [3] - The current consensus EPS estimate for the upcoming quarter is $3.47 on revenues of $2.98 billion, and for the current fiscal year, it is $14.42 on revenues of $11.91 billion [7] Industry Outlook - The Aerospace - Defense industry, to which Huntington Ingalls belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the industry outlook can materially impact stock performance [5][8]

Financial Performance - HII reported Q2 2025 consolidated revenue of $3082 million, a 3.5% increase compared to $2977 million in Q2 2024[19] - The company's Q2 2025 segment operating income was $172 million, a 15.3% decrease from $203 million in Q2 2024[23] - Free cash flow for Q2 2025 was $730 million, significantly higher than the negative $99 million in Q2 2024[26] - Capital expenditures in Q2 2025 were $93 million, representing 3.0% of revenues[27] Segment Performance - Newport News Shipbuilding's revenue increased by 4.4% to $1603 million in Q2 2025[19] - Ingalls Shipbuilding's revenue increased by 1.7% to $724 million in Q2 2025[19] - Mission Technologies revenue increased by 3.4% to $791 million in Q2 2025[19] Future Outlook - HII reaffirms its 2025 segment revenue and operating margin guidance[31] - The company is increasing its 2025 free cash flow guidance to between $500 million and $600 million[31] - Shipbuilding revenue for FY25 is projected to be between $8.9 billion and $9.1 billion, with an operating margin between 5.5% and 6.5%[32] - Mission Technologies revenue for FY25 is expected to be between $2.9 billion and $3.1 billion, with an operating margin between 4.0% and 4.5%[32]

```markdown [Financial Highlights](index=1&type=section&id=Financial%20Highlights) HII reported second quarter 2025 revenues of $3.1 billion, a 3.5% increase year-over-year, driven by growth across all segments, though net earnings declined to $152 million, or $3.86 per diluted share, while achieving a record backlog of $56.9 billion and reaffirming full-year 2025 financial guidance Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $3.1 billion | $2.98 billion | +3.5% | | **Net Earnings** | $152 million | $173 million | -12.1% | | **Diluted EPS** | $3.86 | $4.38 | -11.9% | | **New Contract Awards** | $11.9 billion | N/A | N/A | | **Total Backlog** | $56.9 billion | N/A | N/A | - Entered into a strategic partnership with C3 AI to expand the use of digital technologies and apply artificial intelligence to accelerate shipbuilding throughput[3](index=3&type=chunk) - Reaffirmed its fiscal year 2025 guidance for segment revenue and operating margin[3](index=3&type=chunk) - Generated strong free cash flow of **$730 million**, a significant improvement from a negative **$99 million** in Q2 2024[5](index=5&type=chunk) [Consolidated Results of Operations](index=1&type=section&id=Consolidated%20Results%20of%20Operations) For the second quarter of 2025, consolidated revenues grew 3.5% to $3.1 billion, but operating income fell 13.8% to $163 million, with operating margin compressing by 106 basis points to 5.3%, primarily due to less favorable results at Newport News Shipbuilding, leading to a 12.1% decrease in net earnings to $152 million Consolidated Performance Summary | ($ in millions, except per share) | Q2 2025 | Q2 2024 | % Change | Six Months 2025 | Six Months 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Sales and service revenues** | $3,082 | $2,977 | 3.5% | $5,816 | $5,782 | 0.6% | | **Operating income** | $163 | $189 | (13.8)% | $324 | $343 | (5.5)% | | **Operating margin %** | 5.3% | 6.3% | (106) bps | 5.6% | 5.9% | (36) bps | | **Net earnings** | $152 | $173 | (12.1)% | $301 | $326 | (7.7)% | | **Diluted earnings per share** | $3.86 | $4.38 | (11.9)% | $7.66 | $8.25 | (7.2)% | [Segment Operating Results](index=2&type=section&id=Segment%20Operating%20Results) In Q2 2025, all three segments reported revenue growth, with Newport News Shipbuilding leading at 4.4%, followed by Mission Technologies at 3.4% and Ingalls Shipbuilding at 1.7%, though profitability varied, with Newport News experiencing a significant drop in operating margin, while Ingalls saw a smaller decline and Mission Technologies remained relatively stable [Ingalls Shipbuilding](index=2&type=section&id=Ingalls%20Shipbuilding) Ingalls Shipbuilding's Q2 revenue increased by 1.7% to $724 million, driven by higher volumes in surface combatants, while segment operating income decreased slightly to $54 million, and the operating margin contracted to 7.5% due to lower performance and the absence of a prior-year delivery incentive on amphibious assault ships Ingalls Shipbuilding Performance | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $724 | $712 | 1.7% | | **Segment operating income** | $54 | $56 | (3.6)% | | **Segment operating margin %** | 7.5% | 7.9% | (41) bps | - Revenue growth was driven by higher volumes in surface combatants, partially offset by lower volumes in amphibious assault ships[9](index=9&type=chunk) - Key milestones included the christening of guided missile destroyer Jeremiah Denton (DDG 129) and signing an MOU with HD Hyundai Heavy Industries to collaborate on accelerating ship production[11](index=11&type=chunk) [Newport News Shipbuilding](index=4&type=section&id=Newport%20News%20Shipbuilding) Newport News Shipbuilding's Q2 revenue grew 4.4% to $1.6 billion, primarily from higher volumes in the Columbia-class and Virginia-class submarine programs, yet segment operating income fell sharply by 26.1% to $82 million, and the operating margin decreased significantly to 5.1% from 7.2% a year ago, attributed to lower performance in the Virginia-class submarine and aircraft carrier construction programs Newport News Shipbuilding Performance | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $1,603 | $1,535 | 4.4% | | **Segment operating income** | $82 | $111 | (26.1)% | | **Segment operating margin %** | 5.1% | 7.2% | (212) bps | - Margin decreases were driven by lower performance in the Virginia-class submarine program and aircraft carrier construction[14](index=14&type=chunk) - Key milestones included a contract modification for two additional Block V Virginia-class submarines and the launch of the Virginia-class submarine Arkansas (SSN 800)[19](index=19&type=chunk) [Mission Technologies](index=4&type=section&id=Mission%20Technologies) Mission Technologies' Q2 revenue increased 3.4% to $791 million, due to higher volumes in C5ISR and live, virtual, and constructive training solutions, with segment operating income flat at $36 million and the operating margin slightly down at 4.6% as changes in contract mix offset the benefit of higher volumes, resulting in an EBITDA margin of 8.1% for the quarter Mission Technologies Performance | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $791 | $765 | 3.4% | | **Segment operating income** | $36 | $36 | 0.0% | | **Segment operating margin %** | 4.6% | 4.7% | (15) bps | - Key milestones included delivering initial Lionfish small uncrewed undersea vehicles (SUUVs) to the U.S. Navy and an order for over a dozen REMUS 300 SUUVs by Hitachi[20](index=20&type=chunk) - EBITDA margin was **8.1%** in Q2 2025, compared to **8.5%** in Q2 2024[19](index=19&type=chunk) [HII Financial Outlook](index=8&type=section&id=HII%20Financial%20Outlook) HII reaffirmed its full-year 2025 guidance for segment revenues and operating margins, anticipating Shipbuilding revenue between $8.9 and $9.1 billion with an operating margin of 5.5% to 6.5%, and Mission Technologies revenue projected between $2.9 and $3.1 billion, while notably increasing its FY25 free cash flow guidance to a range of $500 to $600 million FY25 Financial Outlook | FY25 Outlook | Value | | :--- | :--- | | **Shipbuilding Revenue** | $8.9B - $9.1B | | **Shipbuilding Operating Margin** | 5.5% - 6.5% | | **Mission Technologies Revenue** | $2.9B - $3.1B | | **Mission Technologies Segment Operating Margin** | 4.0% - 4.5% | | **Free Cash Flow** | $500M - $600M | - The company increased its FY25 free cash flow guidance to between **$500** and **$600 million**[25](index=25&type=chunk) [Exhibit A: Financial Statements](index=10&type=section&id=Exhibit%20A%3A%20Financial%20Statements) The financial statements detail HII's performance, with the income statement showing a year-over-year decline in net earnings for the first six months, the balance sheet indicating a stable asset base and a reduction in total liabilities leading to an increase in stockholders' equity, and the cash flow statement highlighting a significant improvement in cash from operations, driving positive free cash flow [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2025, HII's revenues were $5.82 billion, a marginal increase from $5.78 billion in the prior year, while net earnings decreased to $301 million from $326 million in 2024, resulting in a diluted EPS of $7.66 compared to $8.25, and dividends declared per share increased to $1.35 for the quarter Condensed Consolidated Statements of Operations | ($ in millions, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Sales and service revenues** | $5,816 | $5,782 | | **Operating income** | $324 | $343 | | **Net earnings** | $301 | $326 | | **Diluted earnings per share** | $7.66 | $8.25 | | **Dividends declared per share** | $2.70 | $2.60 | [Condensed Consolidated Statements of Financial Position](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2025, HII's total assets stood at $12.1 billion, nearly flat compared to year-end 2024, with total liabilities decreasing to $7.2 billion from $7.5 billion mainly due to a reduction in short-term debt, which resulted in an increase in total stockholders' equity to $4.88 billion from $4.67 billion Condensed Consolidated Statements of Financial Position | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $343 | $831 | | **Total current assets** | $2,973 | $3,228 | | **Total assets** | $12,098 | $12,141 | | **Total current liabilities** | $2,750 | $2,991 | | **Total liabilities** | $7,216 | $7,475 | | **Total stockholders' equity** | $4,882 | $4,666 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash provided by operating activities was $428 million, a significant turnaround from a $211 million use of cash in the same period of 2024, with net cash used in investing activities at $291 million and financing activities using $625 million, largely due to a $500 million repayment of long-term debt, ending the period with cash and cash equivalents of $343 million Condensed Consolidated Statements of Cash Flows | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $428 | ($211) | | **Net cash used in investing activities** | ($291) | ($162) | | **Net cash used in financing activities** | ($625) | ($46) | | **Change in cash and cash equivalents** | ($488) | ($419) | | **Cash and cash equivalents, end of period** | $343 | $11 | [Exhibit B: Non-GAAP Measures Definitions & Reconciliations](index=13&type=section&id=Exhibit%20B%3A%20Non-GAAP%20Measures%20Definitions%20%26%20Reconciliations) This section defines and reconciles non-GAAP financial measures used by HII management, including Segment Operating Income, Segment Operating Margin, and Free Cash Flow, which are utilized to evaluate core operating performance by excluding certain items like the FAS/CAS adjustment and non-current state income taxes, or by adjusting for capital expenditures - Segment operating income is defined as operating income before the Operating FAS/CAS Adjustment and non-current state income taxes[34](index=34&type=chunk) - Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds[40](index=40&type=chunk) [Reconciliation of Segment Operating Income and Segment Operating Margin](index=14&type=section&id=Reconciliation%20of%20Segment%20Operating%20Income%20and%20Segment%20Operating%20Margin) For Q2 2025, HII's GAAP operating income of $163 million was reconciled to a non-GAAP segment operating income of $172 million, primarily accounting for a $6 million Operating FAS/CAS Adjustment and $3 million in non-current state income taxes, resulting in a segment operating margin of 5.6% Segment Operating Income and Margin Reconciliation | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Operating Income (GAAP)** | $163 | $189 | | Operating FAS/CAS Adjustment | $6 | $15 | | Non-current state income taxes | $3 | ($1) | | **Segment Operating Income (Non-GAAP)** | $172 | $203 | [Reconciliation of Free Cash Flow](index=14&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) HII generated $730 million of free cash flow in Q2 2025, a substantial improvement from a negative $99 million in Q2 2024, calculated by taking net cash from operating activities of $823 million and subtracting net capital expenditures of $93 million Free Cash Flow Reconciliation | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $823 | ($9) | | Less: Capital expenditures (net) | ($93) | ($90) | | **Free cash flow (Non-GAAP)** | $730 | ($99) | [Reconciliation of Mission Technologies EBITDA and EBITDA Margin](index=16&type=section&id=Reconciliation%20of%20Mission%20Technologies%20EBITDA%20and%20EBITDA%20Margin) For Q2 2025, Mission Technologies' segment operating income of $36 million was reconciled to an EBITDA of $64 million by adding back $3 million in depreciation, $23 million in amortization, and $2 million in state tax expense, resulting in an EBITDA margin of 8.1% Mission Technologies EBITDA Reconciliation | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Mission Technologies segment operating income** | $36 | $36 | | Add: Depreciation & Amortization | $26 | $27 | | Add: State tax expense | $2 | $2 | | **Mission Technologies EBITDA** | $64 | $65 | | **Mission Technologies EBITDA margin** | 8.1% | 8.5% | ```

Core Insights - HII reported second quarter 2025 revenues of $3.1 billion, a 3.5% increase from the same period in 2024, driven by growth in Newport News Shipbuilding, Mission Technologies, and Ingalls Shipbuilding [3][9] - Operating income for the second quarter was $163 million with an operating margin of 5.3%, down from $189 million and 6.3% in the same quarter of 2024 [3][5] - Net earnings decreased to $152 million, or $3.86 diluted earnings per share, compared to $173 million and $4.38 in the prior year [5][9] - New contract awards totaled $11.9 billion, resulting in a record backlog of $56.9 billion as of June 30, 2025 [6][9] Financial Performance - Segment operating income for the second quarter was $172 million with a margin of 5.6%, down from $203 million and 6.8% in the same quarter of 2024 [4][9] - Net cash provided by operating activities was $823 million, compared to a net cash used of $9 million in the second quarter of 2024 [5][49] - Free cash flow for the quarter was $730 million, a significant improvement from negative $99 million in the same period last year [5][49] Segment Analysis Ingalls Shipbuilding - Revenues increased to $724 million, up 1.7% from $712 million in the same quarter of 2024, primarily due to higher volumes in surface combatants [11][12] - Segment operating income was $54 million, a decrease from $56 million in the prior year, with a margin of 7.5% compared to 7.9% [12][11] Newport News Shipbuilding - Revenues rose to $1.6 billion, a 4.4% increase from $1.5 billion in the same quarter of 2024, driven by higher volumes in submarine programs [13][15] - Segment operating income fell to $82 million from $111 million, with a margin of 5.1% compared to 7.2% in the previous year [15][13] Mission Technologies - Revenues for the segment were $791 million, a 3.4% increase from $765 million in the same quarter of 2024 [16][17] - Segment operating income remained stable at $36 million, with a margin of 4.6%, slightly down from 4.7% [17][16] Strategic Developments - The company entered a strategic partnership with C3 AI to enhance the use of digital technologies and artificial intelligence in shipbuilding [9] - HII reaffirmed its fiscal year 2025 segment revenue and operating margin guidance, projecting shipbuilding revenue between $8.9 billion and $9.1 billion [29][21]

Core Insights - HII has elected Nick Stanage, former chairman, CEO, and president of Hexcel Corporation, to its board of directors, enhancing its leadership team for future growth [1][2]. Company Overview - HII is a global, all-domain defense provider focused on delivering powerful ships and solutions to support national security [6]. - The company has a history of over 135 years in advancing U.S. national security and is the largest military shipbuilder in the nation [7]. - HII employs a workforce of 44,000 and offers capabilities ranging from ships to uncrewed systems, cyber, ISR, AI/ML, and synthetic training [7]. Leadership Experience - Nick Stanage brings decades of experience in industrial manufacturing, particularly in aerospace, automotive, and construction equipment [2]. - His previous roles include president and CEO of Hexcel Corporation, where he served from 2013 until his retirement in May 2024 [2][4]. - Stanage has also held leadership positions at Honeywell Aerospace and Dana Holding Corporation, focusing on technology, operations, and supply chain management [4]. Educational Background - Stanage holds a Bachelor of Science degree in mechanical engineering from Western Michigan University and an MBA from the University of Notre Dame [5].

Core Insights - Huntington Ingalls Industries, Inc. (HII) is expected to report second-quarter 2025 earnings on July 31, 2025, before market open, with a four-quarter average negative earnings surprise of 4.20% [1] Revenue Performance - The Ingalls unit is projected to experience a revenue decline of 2.5% year-over-year, with estimates at $0.69 billion due to lower sales volume from amphibious assault ships [2] - The Newport News segment is also expected to see a revenue drop of 0.5% year-over-year, with estimates at $1.53 billion, impacted by lower sales volumes in aircraft carriers and submarines [3] - The Mission Technologies unit is anticipated to report a revenue decline of 2.8% year-over-year, with estimates at $0.74 billion, primarily due to lower sales volumes from C5ISR [4] - Overall, HII's second-quarter sales are estimated to decline by 1.6% year-over-year to $2.93 billion, reflecting sales declines across all major segments [5][7] Earnings Expectations - HII's second-quarter earnings per share (EPS) estimate is pegged at $3.23, indicating a significant year-over-year decline of 26.3% [6][7] - The lower operating margin in the Ingalls segment, attributed to poor performance and supply-chain disruptions, is expected to negatively impact earnings [6] Earnings Prediction Model - The Zacks model indicates that HII does not conclusively predict an earnings beat this time, with an Earnings ESP of -0.29% [8] - HII currently holds a Zacks Rank of 2, indicating a "Buy" rating [9]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Huntington Ingalls (HII) due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Huntington Ingalls is expected to report quarterly earnings of $3.23 per share, reflecting a year-over-year decrease of 26.3% [3]. - Revenue projections stand at $2.93 billion, indicating a decline of 1.6% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.56% higher in the last 30 days, suggesting a slight positive reassessment by analysts [4]. - The Most Accurate Estimate for Huntington Ingalls is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.29%, indicating a bearish outlook from analysts [10]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [7]. - Stocks with a positive Earnings ESP and a solid Zacks Rank have historically produced a positive surprise nearly 70% of the time [7]. Historical Performance - In the last reported quarter, Huntington Ingalls exceeded expectations by delivering earnings of $3.79 per share against an expected $2.90, resulting in a surprise of +30.69% [11]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [12]. Conclusion - Despite the potential for an earnings beat, Huntington Ingalls does not appear to be a compelling candidate for such an outcome based on current estimates and revisions [15].

Core Insights - HII's Mission Technologies division has been awarded a $74 million task order to provide modeling and simulation capabilities to the U.S. Air Force, aimed at informing technology-fielding decisions for the space community [1][2]. Group 1: Contract Details - The task order is part of a five-year effort to support the U.S. Air Force Research Laboratory's Space Vehicles Directorate, providing end-to-end modeling and simulation capabilities to the U.S. Air Force, U.S. Space Force, and strategic partners [2][4]. - Work will be conducted at Kirtland Air Force Base in New Mexico, under the U.S. Department of Defense's Information Analysis Center Multiple Award Contract (IAC MAC) vehicle [4]. Group 2: Technology and Capabilities - The project includes the development of simulations that will allow space units to train from their wartime locations, enhancing operational readiness [2][3]. - HII is also developing decision aid software that utilizes machine-to-machine data collection to support decision-making for space command and control organizations [3]. Group 3: Strategic Importance - Modeling and simulation are critical for the U.S. Air Force to address challenges in the space domain, which is increasingly complex [3]. - HII's ongoing partnership with the AFRL aims to enhance the readiness and survivability of U.S. assets in multi-domain environments [3].

Group 1 - Huntington Ingalls (HII) is currently ranked 7 in the Aerospace sector, which consists of 58 companies [2] - The Zacks Rank system indicates that HII has a strong earnings outlook, currently holding a Zacks Rank of 1 (Strong Buy) [3] - Over the past 90 days, the Zacks Consensus Estimate for HII's full-year earnings has increased by 4.1%, reflecting improved analyst sentiment [4] Group 2 - HII has achieved a year-to-date performance increase of approximately 40.5%, outperforming the average gain of 26.9% in the Aerospace sector [4] - In the Aerospace - Defense industry, which includes 24 stocks, HII is performing better than the average gain of 27.5% this year [6] - Another stock in the Aerospace sector, Safran SA, has a year-to-date return of 53.5% and a Zacks Rank of 2 (Buy) [5][6]

Core Insights - A joint team from HII, Woods Hole Oceanographic Institution, and the U.S. Navy's Naval Undersea Warfare Center has achieved a significant milestone in the U.S. Navy Submarine Force's initiative to launch and recover autonomous undersea vehicles from submarine torpedo tubes [1][2] Group 1: Testing and Development - The recent test confirmed the compatibility of the REMUS 620 with the Virginia-class submarine's weapons handling and torpedo tube systems, paving the way for further testing [2] - HII's next-generation medium uncrewed underwater vehicle, equipped with WHOI's Yellow Moray docking technology, successfully completed a full end-to-end dry checkout of the AUV/SAFECAP in the Virginia-class Cradle Payload Integration Facility [6] - The USS Delaware (SSN 791) successfully completed the first-ever forward-deployed launch and recovery of a UUV via submarine torpedo tube, showcasing the capabilities of the Yellow Moray equipped REMUS 600 UUV [6] Group 2: Strategic Importance - HII is enhancing the U.S. Navy's undersea dominance and operational range through advanced REMUS technology [7] - The REMUS UUV family provides critical advantages in modern naval operations, allowing for independent or crewed platform operations to extend mission range and reduce detection risk [8] - The open-architecture design of REMUS allows for rapid payload integration, ensuring operational relevance and cost efficiency over time [9] Group 3: Market Presence and Performance - HII has sold over 700 REMUS vehicles to more than 30 countries, including 14 NATO members, with over 90% of units delivered in the past 23 years still in service, indicating strong platform durability and lifecycle value [10]