HUNTINGTON INGALLS INDUSTRIES, INC. (HII): Results of Operations and Financial Condition
HUNTINGTON INGALLS INDUSTRIES, INC. (HII) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 News Release Contacts: Brooke Hart (Media) brooke.hart@hii.com 202-264-7108 Christie Thomas (Investors) christie.thomas@hii-co.com 757-380-2104 HII Reports Second Quarter 2026 Results NEWPORT NEWS, Va. (July 30, 2026) - HII (NYSE: HII) today reported results for the
How this was made
The 30-second read
Why it matters
The key tradable update is the raised FY26 shipbuilding revenue guidance range and the lifted low end of the operating margin guidance, supported by higher Q2 revenues and net earnings. However, the quarter’s operating cash flow was negative and free cash flow was negative, which can moderate valuation support until cash conversion improves.
Market read
Traders can reprice HII on the same-day guidance update (revenue range and margin range) while monitoring cash flow conversion given negative free cash flow in the quarter.
What to watch
The guidance lift is paired with a margin range change (low end only) and segment margin divergence (Ingalls margin down, Newport News margin up), so investors may focus on sustainability by program mix and contract adjustments.
HII Reports Second Quarter 2026 Results
Sales and service revenues, operating income, net earnings and diluted earnings per share increased from the second quarter of 2025, supported by growth at both shipbuilding businesses and higher Mission Technologies profitability. The company raised FY26 shipbuilding revenue and the low end of shipbuilding operating-margin guidance, while quarterly operating cash flow and free cash flow were negative.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Sales and service revenues, three months ended June 30GAAP | $ 3,418 | – | 10.9 % |
| Operating income, three months ended June 30GAAP | 210 | – | 28.8 % |
| Operating margin, three months ended June 30GAAP | 6.1 % | – | 86 bps |
| Segment operating income, three months ended June 30non-GAAP | 224 | – | 30.2 % |
| Segment operating margin, three months ended June 30non-GAAP | 6.6 % | – | 97 bps |
| Net earnings, three months ended June 30GAAP | 208 | – | 36.8 % |
| Diluted earnings per share, three months ended June 30GAAP | $ 5.27 | – | 36.5 % |
| Sales and service revenues, six months ended June 30GAAP | $ 6,517 | – | 12.1 % |
| Operating income, six months ended June 30GAAP | 365 | – | 12.7 % |
| Operating margin, six months ended June 30GAAP | 5.6 % | – | 3 bps |
| Segment operating income, six months ended June 30non-GAAP | 396 | – | 15.5 % |
| Segment operating margin, six months ended June 30non-GAAP | 6.1 % | – | 18 bps |
| Net earnings, six months ended June 30GAAP | 357 | – | 18.6 % |
| Diluted earnings per share, six months ended June 30GAAP | $ 9.06 | – | 18.3 % |
| Ingalls Shipbuilding segment operating income, three months ended June 30other | 58 | – | 7.4 % |
| Ingalls Shipbuilding segment operating margin, three months ended June 30other | 6.9 % | – | (59) bps |
| Ingalls Shipbuilding segment operating income, six months ended June 30other | 107 | – | 7.0 % |
| Ingalls Shipbuilding segment operating margin, six months ended June 30other | 6.8 % | – | (53) bps |
| Newport News Shipbuilding segment operating income, three months ended June 30other | 111 | – | 35.4 % |
| Newport News Shipbuilding segment operating margin, three months ended June 30other | 6.0 % | – | 89 bps |
| Newport News Shipbuilding segment operating income, six months ended June 30other | 199 | – | 19.2 % |
| Newport News Shipbuilding segment operating margin, six months ended June 30other | 5.7 % | – | 9 bps |
| Mission Technologies segment operating income, three months ended June 30other | 55 | – | 52.8 % |
| Mission Technologies segment operating margin, three months ended June 30other | 7.2 % | – | 269 bps |
| Mission Technologies EBITDA margin, three months ended June 30non-GAAP | 10.1% | – | – |
| Mission Technologies purchased intangible assets amortization, three months ended June 30other | approximately $17 million | – | – |
| Mission Technologies segment operating income, six months ended June 30other | 90 | – | 18.4 % |
| Mission Technologies segment operating margin, six months ended June 30other | 6.0 % | – | 99 bps |
| New contract awards, second quarter of 2026other | $6.7 billion | – | – |
| Total backlog, as of June 30, 2026other | $57.3 billion | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Ingalls ShipbuildingPrimarily driven by higher volumes in amphibious assault ships. | $845 million | – | 16.7% |
| Newport News ShipbuildingPrimarily driven by higher volumes in aircraft carriers and submarines. | $1.8 billion | – | 15.3% |
| Mission TechnologiesLower volumes in All-Domain Operations, largely related to the impact of a favorable non-recurring settlement in the second quarter of 2025, and lower volumes in Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems. | $760 million | – | (3.9)% |
FY26 outlook
- RevenueShipbuilding Revenue $10.2B - $10.4B
- Tax rate~17%
- NoteShipbuilding Operating Margin 6.0% - 6.5%
- NoteMission Technologies Revenue $3.0B - $3.2B
- NoteMission Technologies Segment Operating Margin ~5%
- NoteMission Technologies EBITDA Margin 8.4% - 8.6%
- NoteOperating FAS/CAS Adjustment ($44M)
- NoteNon-current State Income Tax Expense ~($20M)
- NoteInterest Expense ($105M)
- NoteNon-operating Retirement Benefit $213M
- NoteDepreciation & Amortization ~$330M
- NoteCapital Expenditures 4% - 5% of Sales
- NoteFree Cash Flow $500M - $600M
What drove it
- Second quarter revenues were driven by growth at Newport News Shipbuilding and Ingalls Shipbuilding.
- Ingalls Shipbuilding operating-income growth was driven by higher volumes in amphibious assault ships, partially offset by favorable contract adjustments in surface combatants in the second quarter of 2025.
- Newport News Shipbuilding operating-income growth was driven by contract adjustments and incentives in aircraft carriers and higher volumes, partially offset by lower performance in aircraft carriers.
- Mission Technologies operating-income growth was primarily due to higher equity income from nuclear and environmental joint ventures.
- The company cited plans to achieve its shipbuilding throughput improvement goal of 15%.
Concerns
- Mission Technologies revenue decreased due to lower volumes in All-Domain Operations and Global Security.
- Ingalls Shipbuilding segment operating margin was 6.9%, compared to 7.5% in the same period last year.
- Newport News Shipbuilding results were partially offset by lower performance in aircraft carriers.
- Quarterly net cash used in operating activities was $31 million and free cash flow was negative $150 million.
What to watch
- Execution against the shipbuilding throughput improvement goal of 15%.
- Delivery of FY26 shipbuilding revenue of $10.2B - $10.4B and shipbuilding operating margin of 6.0% - 6.5%.
- Mission Technologies revenue performance following lower All-Domain Operations and Global Security volumes.
- FY26 free cash flow of $500M - $600M following negative $150 million in the quarter.
- Conversion of $6.7 billion in new contract awards and the $57.3 billion backlog into revenue.
Balance sheet and cash flow
- Net cash used in operating activities in the quarter was $31 million, compared to net cash provided by operating activities of $823 million in the second quarter of 2025.
- Free cash flow was negative $150 million, compared to free cash flow of $730 million in the second quarter of 2025.
- Total backlog was $57.3 billion as of June 30, 2026.
Analysis
HII reported broad second-quarter operating growth. Sales and service revenues were $3,418, up 10.9 %, while operating income rose to 210 from 163 and operating margin increased to 6.1 % from 5.3 %. Net earnings were 208 versus 152, and diluted earnings per share were $ 5.27 versus $ 3.86. For the six months ended June 30, sales and service revenues were $ 6,517 and net earnings were 357.
Shipbuilding was the principal source of growth. Ingalls Shipbuilding revenue was $845 million, up 16.7%, driven by higher amphibious assault ship volumes, although its segment operating margin declined to 6.9% from 7.5%. Newport News Shipbuilding revenue was $1.8 billion, up 15.3%, on higher aircraft-carrier and submarine volumes. Its segment operating margin rose to 6.0% from 5.1%, helped by contract adjustments and incentives in aircraft carriers, though lower aircraft-carrier performance partially offset the improvement.
Mission Technologies revenue declined to $760 million from the prior-year period, reflecting lower All-Domain Operations and Global Security volumes. The release attributes part of the All-Domain Operations decline to the comparison with a favorable non-recurring settlement in the second quarter of 2025. Despite lower revenue, segment operating income increased to 55 from 36, segment operating margin rose to 7.2% from 4.6%, and EBITDA margin was 10.1% versus 8.1%, primarily due to higher equity income from nuclear and environmental joint ventures.
Cash conversion was materially weaker than the prior-year quarter. Net cash used in operating activities was $31 million, compared with net cash provided by operating activities of $823 million, while free cash flow was negative $150 million compared with $730 million. New contract awards were $6.7 billion and backlog was $57.3 billion as of June 30, 2026, providing disclosed demand visibility.
The company raised FY26 shipbuilding revenue guidance to $10.2B - $10.4B from $9.7B - $9.9B and lifted the lower end of shipbuilding operating-margin guidance to 6.0% from 5.5%, retaining the 6.5% upper end. It maintained Mission Technologies revenue, Mission Technologies margin, EBITDA-margin and free-cash-flow outlooks. The unchanged FY26 free cash flow outlook of $500M - $600M places attention on cash conversion after the negative second-quarter result.
Management, verbatim
We continued to make good progress on our 2026 operational initiatives, with plans in place to achieve our shipbuilding throughput improvement goal of 15%.
Chris Kastner, HII’s president and CEO
Given the significant shipbuilding demand and our proven ability to drive higher throughput, we are pleased to increase our top line expectations for the full year while lifting the lower end of our margin expectations as we remain focused on execution,
Chris Kastner, HII’s president and CEO
Not in the filing
stated, not guessed- Gross profit and gross margin
- Operating expenses
- GAAP and non-GAAP tax expense and tax rate for the reported quarter and six-month period
- Cash balance
- Debt balance
- Capital expenditures for the reported quarter and six-month period
- Share repurchases
- Dividends
- Prior-quarter comparisons for reported operating metrics
- Prior-year and prior-quarter comparisons for new contract awards and backlog
- Segment revenue for the six months ended June 30 is not included in the segments field because the segment schema provides one revenue field per segment
- A separately provided previous-release outlook section for actual-versus-prior-guidance comparisons
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This SEC 8-K (Item 2.02) attaches HII’s Q2 FY26 earnings release (Exhibit 99.1) with financial results, backlog, and updated FY26 shipbuilding guidance.
Ticker impact
HII reported Q2 FY26 results and raised FY26 shipbuilding revenue guidance to $10.2 to $10.4 billion, plus lifted the low end of operating margin guidance.
Likely positive bias for shares on guidance/margin lift, with some offset from negative free cash flow and operating cash outflow in the quarter.
The filing includes explicit guidance increases for revenue and operating margin, alongside reported quarterly operating cash used and free cash flow turning negative versus the prior year quarter.
Market effects
Reinforces strength in US naval shipbuilding demand and execution, potentially supporting sentiment across defense shipbuilders and suppliers.
Limited direct regional read-through beyond defense industrial activity in Virginia and shipyard supply chains.
Primarily US defense procurement-driven; limited global spillover unless guidance signals broader NATO/shipbuilding funding trends.
Counterpoint
Negative free cash flow and operating cash outflow in the quarter could indicate working-capital drag or timing of cash receipts, which may delay the translation of higher earnings into cash returns.
Key entities
- companyHuntington Ingalls Industries, Inc.
US defense shipbuilder reporting Q2 FY26 results and raising FY26 shipbuilding revenue and operating margin guidance.
- segmentNewport News Shipbuilding
HII shipbuilding segment; Q2 revenues and segment operating income increased, with margin improving year over year.
- segmentIngalls Shipbuilding
HII shipbuilding segment; Q2 revenues rose on higher amphibious assault ship volumes, while segment operating margin declined year over year.
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