Huntington Ingalls Industries (NYSE:HII) Q4 2025 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsChristie Thomas - Head of Investor RelationsChristopher Kastner - President and CEODoug Harned - Managing DirectorMariana Pérez Mora - DirectorMyles Walton - Managing DirectorNoah Poponak - Managing Director of Aerospace and Defense Equity ResearchPete Skibitski - Director of Aerospace and Defense Equity ResearchScott Deuschle - Director of A&D Equity ResearchScott Mikus - Director of Aerospace, ...

Huntington Ingalls Industries (NYSE:HII) Q4 2025 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsChristie Thomas - Head of Investor RelationsChristopher Kastner - President and CEODoug Harned - Managing DirectorMariana Pérez Mora - DirectorMyles Walton - Managing DirectorNoah Poponak - Managing Director of Aerospace and Defense Equity ResearchPete Skibitski - Director of Aerospace and Defense Equity ResearchRobert Stallard - PartnerScott Deuschle - Director of A&D Equity ResearchScott Mikus ...

Huntington Ingalls Industries (NYSE:HII) Q4 2025 Earnings call February 05, 2026 09:00 AM ET Speaker2Welcome, everyone. The fourth quarter 2025 HII earnings call conference will begin shortly. In the meantime, if you would like to preregister to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. Once again, today's call is going to start shortly. Thank you for your patience. Ladies and gentlemen, thank you for standing by and w ...

Core Insights - HII reported a significant increase in revenues and operating income for the fourth quarter and full year of 2025, driven by growth across all business segments [1][2][3] Financial Performance - Fourth quarter 2025 revenues reached $3.5 billion, up 15.7% from $3.0 billion in Q4 2024 [1] - Operating income for Q4 2025 was $172 million, a 56.4% increase from $110 million in Q4 2024, resulting in an operating margin of 4.9% compared to 3.7% in the previous year [1][6] - For the full year 2025, revenues totaled $12.5 billion, an 8.2% increase from $11.5 billion in 2024 [2][7] - Diluted earnings per share for Q4 2025 were $4.04, up 28.3% from $3.15 in Q4 2024, and for the full year, it was $15.39, a 10.2% increase from $13.96 in 2024 [2][3][8] Segment Performance - Segment operating income for Q4 2025 was $195 million, a substantial increase of 89.3% from $103 million in Q4 2024, with a segment operating margin of 5.6% compared to 3.4% [2][6] - Ingalls Shipbuilding revenues for Q4 2025 were $889 million, a 20.8% increase from $736 million in Q4 2024, driven by higher volumes in amphibious assault ships and surface combatants [9][10] - Newport News Shipbuilding revenues for Q4 2025 were $1.9 billion, a 19.1% increase from $1.6 billion in Q4 2024, primarily due to higher volumes in submarines and aircraft carriers [14][15] - Mission Technologies revenues for Q4 2025 were $731 million, a 2.5% increase from $713 million in Q4 2024, attributed to higher volumes in Warfare Systems and Global Security [17][19] Cash Flow and Investments - Net cash provided by operating activities in 2025 was $1,196 million, significantly up from $393 million in 2024 [4] - Free cash flow for 2025 was $800 million, compared to $40 million in 2024 [4] Strategic Initiatives - The company achieved critical shipbuilding milestones in 2025, including the delivery of Virginia-class submarine Massachusetts and guided missile destroyer Ted Stevens [7] - HII invested over $400 million in capital improvements in 2025 and achieved approximately 14% shipbuilding throughput growth, targeting around 15% growth in 2026 [7][5] Financial Outlook - For FY26, HII expects shipbuilding revenue between $9.7 billion and $9.9 billion, with an operating margin between 5.5% and 6.5% [23][26] - Mission Technologies revenue is projected to be between $3.0 billion and $3.2 billion, with an operating margin of approximately 5% [23][26]

Core Insights - Huntington Ingalls Industries (HII) has signed a contract with Babcock International Group to enhance Virginia-class submarine construction throughput at HII's Newport News Shipbuilding division [1][9] - The contract allows Babcock to manufacture complex submarine assemblies at its Rosyth facility in Scotland for Virginia-class Block VI submarines, marking the first time Babcock will support NNS-specific submarine work [2][9] Partnership Benefits - The expanded partnership with Babcock is expected to increase production throughput, reduce workload strain at Newport News, and enhance the resilience of HII's submarine supply chain [3][4] - Leveraging Babcock's expertise will reinforce HII's supplier base and strengthen submarine production in the U.S., positioning HII for future U.S.-U.K. submarine collaborations, including potential AUKUS-related opportunities [4] Market Growth Potential - The submarine market is projected to grow at a compound annual growth rate of 4.17% from 2025 to 2030, indicating substantial growth prospects for HII in the military submarine sector [5] - Other defense players like General Dynamics, BAE Systems, and Northrop Grumman are also positioned to benefit from the expanding submarine market [6][8] Financial Performance - General Dynamics has a long-term earnings growth rate of 12.81%, with 2025 sales estimated at $51.97 billion, reflecting an 8.9% increase [7] - BAE Systems has a long-term earnings growth rate of 14.57%, with 2025 sales projected at $40.68 billion, suggesting a significant increase of 62.9% [9] - Northrop Grumman has a long-term earnings growth rate of 4.16%, with 2025 sales estimated at $41.89 billion, indicating a 2.1% rise [10] Stock Performance - HII shares have increased by 39.3% over the past six months, significantly outperforming the industry average growth of 6% [11]

Core Insights - Huntington Ingalls Industries (HII) has delivered the Virginia-class fast-attack submarine Massachusetts (SSN 798) to the U.S. Navy, marking the 12th Virginia-class submarine completed by its Newport News Shipbuilding (NNS) division [1][10] - The Virginia-class submarine program showcases strong collaboration between HII and General Dynamics Electric Boat, producing advanced attack submarines for the U.S. Navy [2][4] Company Overview - Newport News Shipbuilding is one of only two shipyards qualified to design and construct nuclear-powered submarines for the U.S. Navy, leveraging decades of submarine-building expertise [3] - The Virginia-class submarines are designed for post-Cold War mission needs, featuring advanced technologies that enhance firepower, maneuverability, and stealth capabilities [4] Market Growth Potential - The global submarine market is projected to grow at a compound annual growth rate (CAGR) of 4.17% from 2025 to 2030, indicating significant growth opportunities for HII in the military submarine sector [5] - Other defense companies such as General Dynamics, Northrop Grumman, and BAE Systems are also positioned to benefit from the expanding submarine market [6] Financial Performance - General Dynamics' Marine Systems segment has a long-term earnings growth rate of 12.81%, with 2025 sales estimated at $51.97 billion, reflecting an 8.9% increase [7] - Northrop Grumman has a long-term earnings growth rate of 4.16%, with 2025 sales projected at $41.89 billion, indicating a 2.1% rise [8] - BAE Systems has a long-term earnings growth rate of 14.45%, with 2025 sales expected to reach $40.68 billion, suggesting a significant increase of 62.9% [11] Stock Performance - HII shares have increased by 37.9% over the past six months, outperforming the industry growth of 9.2% [12]

Group 1 - General Dynamics Electric Boat has received a $642 million contract modification from the U.S. Department of Defense to support the Virginia-class submarine program [1][2] - The contract amendment is a cost-plus-fixed-fee type and builds on a previous agreement, providing resources for lead yard services, development initiatives, and engineering support [2] - This investment reflects the Navy's commitment to accelerating submarine delivery schedules and enhancing undersea warfare capabilities [3][4] Group 2 - Mark Rayha, president of General Dynamics Electric Boat, stated that the contract modification helps sustain momentum in delivering new submarines [3] - The funding ensures ongoing design and engineering work, maintaining the U.S. Navy's advantage over potential adversaries [4] - General Dynamics Electric Boat is the primary contractor for nuclear-powered submarine construction, employing over 24,000 people [4] Group 3 - General Dynamics, the parent company, operates globally in various sectors including aerospace, shipbuilding, land systems, and defense technology, employing over 110,000 workers and generating $47.7 billion in revenue during 2024 [5] - The defense contracting industry is benefiting from Pentagon modernization priorities, with opportunities also available for peers like Huntington Ingalls Industries and Lockheed Martin [5][6] - GD stock has increased over 10% in the past year, indicating positive market performance [6]

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]

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 Points - Huntington Ingalls Industries, Inc. (HII) reported first-quarter 2025 earnings of $3.79 per share, a decline of 2.1% from $3.87 in the prior-year quarter, but exceeded the Zacks Consensus Estimate of $2.90 by 30.7% [1] - Total revenues for the quarter were $2.73 billion, missing the Zacks Consensus Estimate of $2.79 billion by 2% and declining 2.5% from $2.81 billion in the year-ago quarter due to lower sales volume across all business segments [2] Operational Performance - Segmental operating income was $171 million, slightly up from $170 million in the first quarter of 2024, with an operating margin expansion of 19 basis points to 6.3% [3] - The increase in operating income was mainly driven by better performance in the Newport News Shipbuilding and Mission Technologies units [3] Orders and Backlog - HII received orders worth $2.1 billion in the first quarter of 2025, resulting in a total backlog of $48 billion as of March 31, 2025, down from $48.7 billion as of December 31, 2024 [4] Segmental Performance - Newport News Shipbuilding: Revenues totaled $1.40 billion, down 2.6% year over year, with operating income of $85 million, up 3.7% year over year due to contract incentives from the Virginia-class submarine program [5] - Ingalls Shipbuilding: Revenues were $637 million, down 2.7% year over year, with operating earnings of $46 million, down 23.3% year over year due to lower performance in amphibious assault ships [6] - Mission Technologies: Revenues totaled $735 million, down 2% year over year, with operating income increasing 42.9% year over year to $40 million, driven by higher performance in cyber, electronic warfare & space, and uncrewed systems [6][7] Financial Update - Cash and cash equivalents as of March 31, 2025, were $167 million, significantly down from $831 million as of December 31, 2024 [8] - Long-term debt remained at $2.70 billion as of March 31, 2025, consistent with the end of 2024 [8] - Cash used in operating activities was $395 million compared to $202 million a year ago [8] - Free cash outflow was $462 million in the first quarter of 2025, higher than $274 million in the prior-year period [9] 2025 Guidance - HII reaffirmed its 2025 guidance, expecting shipbuilding revenues in the range of $8.9-$9.1 billion and Mission Technologies revenues in the range of $2.9-$3.1 billion [10] - The company projects free cash flow to be between $300-$500 million [10]