PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025 Condensed Consolidated Statements of Operations and Comprehensive Income The company reported Q2 2025 revenues of $3.08 billion and net earnings of $152 million, reflecting a slight revenue increase but a decrease in net earnings year-over-year Consolidated Statements of Operations Highlights (Unaudited) | (in millions, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales and service revenues | $3,082 | $2,977 | $5,816 | $5,782 | | Operating income | $163 | $189 | $324 | $343 | | Net earnings | $152 | $173 | $301 | $326 | | Diluted earnings per share | $3.86 | $4.38 | $7.66 | $8.25 | Condensed Consolidated Statements of Financial Position Total assets slightly decreased to $12.10 billion as of June 30, 2025, marked by a significant drop in cash and an increase in stockholders' equity Condensed Consolidated Statements of Financial Position Highlights (Unaudited) | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 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 Net cash from operations improved significantly to $428 million for the first half of 2025, though overall cash decreased due to investing and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | ($ 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 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, segment performance, a recent acquisition, backlog status, and significant legal proceedings - The company is organized into three reportable segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies, making it America's largest shipbuilder14 - In January 2025, the company acquired W International for $133 million in cash to expand its shipbuilding capacity, resulting in $33 million of tax-deductible goodwill26 - As of June 30, 2025, the company had $56.9 billion of remaining performance obligations (backlog), with approximately 35% expected to be recognized as revenue through 202634 - The company is involved in a class action antitrust lawsuit alleging a "gentlemen's agreement" not to recruit naval engineers from other defendants, which was remanded for further proceedings53 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 4% YoY revenue increase to $3.1 billion in Q2 2025, offset by a 14% decrease in operating income due to segment performance issues - The federal government is operating under a full-year Continuing Resolution for fiscal year 2025, creating uncertainty, while the proposed FY2026 budget recommends a $1.01 trillion National Defense budget7879 - Total backlog increased to $56.9 billion as of June 30, 2025, from $48.7 billion at year-end 2024, driven by $14.0 billion in new contract awards in the first half of 2025149151 - Free cash flow for the first six months of 2025 was $268 million, a $641 million improvement from the negative $373 million in the same period of 2024160 Consolidated Operating Results Summary | ($ in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales and service revenues | $3,082 | $2,977 | 4% | | Operating income | $163 | $189 | (14)% | | Net earnings | $152 | $173 | (12)% | Ingalls Segment The Ingalls segment reported a 2% revenue increase to $724 million in Q2 2025, with a slight decrease in operating income and margin Ingalls Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales and service revenues | $724 | $712 | 2% | | Segment operating income | $54 | $56 | (4)% | | Operating Margin | 7.5% | 7.9% | - | Newport News Segment Newport News revenue grew 4% to $1.60 billion in Q2 2025, but operating income fell 26% due to performance challenges on key programs - The Newport News segment continues to face performance challenges in the construction of aircraft carriers and the Virginia class (SSN 774) submarine program123 Newport News Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales and service revenues | $1,603 | $1,535 | 4% | | Segment operating income | $82 | $111 | (26)% | | Operating Margin | 5.1% | 7.2% | - | Mission Technologies Segment The Mission Technologies segment revenue rose 3% to $791 million in Q2 2025, while operating income remained flat at $36 million Mission Technologies Segment Performance (Q2 2025 vs Q2 2024) | ($ in millions) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales and service revenues | $791 | $765 | 3% | | Segment operating income | $36 | $36 | 0% | | Operating Margin | 4.6% | 4.7% | - | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks from inflation, while interest rate risk is currently mitigated by no outstanding floating-rate debt - The company had no outstanding balances on its $1.7 billion revolving credit facility or its $1.7 billion commercial paper program as of June 30, 2025, mitigating short-term floating interest rate risk172 - Persistent cost inflation for raw materials, components, and supplies is a key risk that may not be fully covered by mitigation measures173 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective174 - No changes occurred in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls175 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to legal proceeding disclosures in Part I, Item 1, noting no other material matters and a $1 million disclosure threshold for environmental cases - Information on legal proceedings is incorporated by reference from the notes to the financial statements in Part I, Item 1178 - The company's disclosure threshold for environmental legal proceedings with governmental authorities is potential monetary sanctions over $1 million179 Item 1A. Risk Factors This section refers readers to the comprehensive risk factors detailed in the company's 2024 Annual Report on Form 10-K - The report refers to the risk factors detailed in the 2024 Annual Report on Form 10-K for a comprehensive understanding of potential risks180 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock in Q2 2025, with approximately $1.35 billion remaining under its authorized repurchase program - The board of directors authorized an increase in the stock repurchase program to $3.8 billion and extended its term to December 31, 202828182 Share Repurchase Activity (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $1,352.3 | | May 2025 | — | $— | $1,352.3 | | June 2025 | — | $— | $1,352.3 | | Total | — | $— | $1,352.3 | Item 5. Other Information No company directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter185 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files - Key exhibits filed include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial statements formatted in XBRL186
Huntington Ingalls Industries(HII) - 2025 Q2 - Quarterly Report