Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
HII
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☒
Accelerated Filer
☐
Non-Accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 1, 2026, 39,404,029 shares of the registrant's common stock were outstanding.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in millions)
March 31, 2026
December 31, 2025
Assets
Current Assets
Cash and cash equivalents
$
216
$
774
Accounts receivable, net of allowance for expected credit losses of $3 million as of 2026 and $2 million as of 2025
406
339
Contract assets
1,989
1,758
Inventoried costs
230
219
Income taxes receivable
278
284
Prepaid expenses and other current assets
98
77
Total current assets
3,217
3,451
Property, plant, and equipment, net of accumulated depreciation of $2,799 million as of 2026 and $2,754 million as of 2025
3,742
3,726
Operating lease assets
274
267
Goodwill
2,650
2,650
Other intangible assets, net of accumulated amortization of $1,243 million as of 2026 and $1,222 million as of 2025
673
694
Pension plan assets
1,586
1,544
Miscellaneous other assets
391
417
Total assets
$
12,533
$
12,749
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable
$
692
$
556
Accrued employees’ compensation
345
443
Current portion of postretirement plan liabilities
119
119
Current portion of workers’ compensation liabilities
219
217
Contract liabilities
822
1,220
Other current liabilities
505
490
Total current liabilities
2,702
3,045
Long-term debt
2,701
2,700
Pension plan liabilities
155
155
Other postretirement plan liabilities
195
200
Workers’ compensation liabilities
446
442
Long-term operating lease liabilities
230
223
Deferred tax liabilities
615
572
Other long-term liabilities
342
339
Total liabilities
7,386
7,676
Commitments and Contingencies (Note 10)
Stockholders’ Equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 53,962,478 shares issued and 39,377,769 shares outstanding as of 2026, and 53,826,236 shares issued and 39,241,527 shares outstanding as of 2025
1
1
Additional paid-in capital
2,070
2,087
Retained earnings
5,577
5,487
Treasury stock
(2,449)
(2,449)
Accumulated other comprehensive loss
(52)
(53)
Total stockholders’ equity
5,147
5,073
Total liabilities and stockholders’ equity
$
12,533
$
12,749
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. DESCRIPTION OF BUSINESS
Huntington Ingalls Industries, Inc. ("HII" or the "Company") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. HII is organized into three reportable segments: Ingalls Shipbuilding ("Ingalls"), Newport News Shipbuilding ("Newport News"), and Mission Technologies. For more than a century, the Company's Ingalls segment in Mississippi and Newport News segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making HII America's largest shipbuilder. The Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force.
2. BASIS OF PRESENTATION
Principles of Consolidation - The unaudited condensed consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Condensed Consolidated Financial Statements (Unaudited), the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. Additionally, certain prior year amounts have been reclassified to conform to the current year presentation.
These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report on Form 10-K").
The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is management's long-standing practice to establish interim closing dates using a "fiscal" calendar, which requires the businesses to close their books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice only exists for interim periods within a reporting year.
Accounting Estimates - The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates.
Fair Value of Financial Instruments - Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments that are recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties.
The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. These trusts were valued at $244 million and $249 million as of March 31, 2026, and December 31, 2025, respectively, and are presented within miscellaneous other assets on the unaudited condensed consolidated statements of financial position. These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy.
The estimated fair values of the Company's total long-term debt as of March 31, 2026 and December 31, 2025 were $2,688 million and $2,730 million, respectively. The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 of the fair value hierarchy.
There were no new Accounting Standards Updates (“ASU”) adopted during the three months ended March 31, 2026 that had a material impact on the Company’s consolidated financial statements.
Accounting Guidance Issued But Not Adopted as of March 31, 2026
In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance requires, among other things, tabular and qualitative disclosure of disaggregated expense information that is included in certain expense line items presented on the consolidated statement of operations. The new guidance also requires that the total amount and definition of selling expenses be disclosed. The new guidance is effective on a prospective basis for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption and retrospective application permitted. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. Among other targeted improvements, the new guidance amends existing software cost capitalization guidance by removing all references to software project development stages and providing criteria that clarify the threshold for software cost capitalization to begin. The new guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The new guidance may be applied on a prospective basis, retrospective basis, or modified basis for in-process projects. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The new standard establishes authoritative guidance for the recognition, measurement, and presentation of a grant received by a business entity from a government, including guidance for a grant related to an asset and a grant related to income. The new guidance also amends certain existing disclosure requirements for government assistance provided to business entities. The new guidance is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The new guidance may be applied on a modified prospective basis, modified retrospective basis, or full retrospective basis. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.
Other accounting pronouncements issued but not effective until after December 31, 2026, are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.
4. STOCKHOLDERS' EQUITY
Treasury Stock - In January 2024, the Company's board of directors authorized an increase in the Company's stock repurchase program from $3.2 billion to $3.8 billion and an extension of the term of the program to December 31, 2028. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. For each of the three months ended March 31, 2026 and 2025, the Company did not repurchase any shares. The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position.
Dividends - The Company paid cash dividends totaling $54 million and $53 million for the three months ended March 31, 2026 and 2025, respectively.
Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings. The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $52 million and $53 million as of March 31, 2026, and December 31, 2025, respectively.
The changes in accumulated other comprehensive loss by component for the three months ended March 31, 2026 and 2025, were as follows:
($ in millions)
Benefit Plans
Total
Balance as of December 31, 2024
$
(28)
$
(28)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost(1)
4
4
Amortization of net actuarial loss(1)
(3)
(3)
Net current period other comprehensive income
1
1
Balance as of March 31, 2025
$
(27)
$
(27)
Balance as of December 31, 2025
$
(53)
$
(53)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost(1)
4
4
Amortization of net actuarial loss(1)
(2)
(2)
Tax expense for items of other comprehensive income
(1)
(1)
Net current period other comprehensive income
1
1
Balance as of March 31, 2026
$
(52)
$
(52)
(1)These accumulated comprehensive loss components are included in the computation of net periodic benefit cost.
See Note 11: Employee Pension and Other Postretirement Benefits. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2026 and 2025, was $1 million and less than $1 million, respectively.
5. EARNINGS PER SHARE
Basic and diluted earnings per common share were calculated as follows:
Three Months Ended March 31
(in millions, except per share amounts)
2026
2025
Net earnings
$
149
$
149
Weighted-average common shares outstanding
39.3
39.3
Net dilutive effect of stock awards
—
—
Dilutive weighted-average common shares outstanding
39.3
39.3
Earnings per share - basic
$
3.79
$
3.79
Earnings per share - diluted
$
3.79
$
3.79
Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.3 million and 0.4 million Restricted Performance Stock Rights ("RPSRs") for the three months ended March 31, 2026 and 2025, respectively, and 0.1 million and 0.2 million Restricted Stock Rights ("RSRs") for the three months ended March 31, 2026, and 2025, respectively.
As of March 31, 2026, the Company had $54.0 billion of remaining performance obligations. The Company expects to recognize approximately 40% of its remaining performance obligations as revenue through 2027, an additional 35% through 2029, and the balance thereafter.
Cumulative Catch-up Revenue Adjustments
The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share:
Three Months Ended March 31
($ in millions, except per share amounts)
2026
2025
Effect on operating income(1)
$
1
$
—
Effect on diluted earnings per share (net of tax)
$
0.02
$
—
(1)For the three months ended March 31, 2026, the effect of net cumulative catch-up revenue adjustments on
operating income is materially consistent with the effect on revenue.
For the three months ended March 31, 2026, no individual favorable or unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.
For the three months ended March 31, 2025, cumulative catch-up revenue adjustments netted to zero, and did not have an effect on operating income or diluted earnings per share. The Company's Newport News segment experienced performance challenges in the construction of aircraft carriers and Virginia class (SSN 774) submarines. For the three months ended March 31, 2025, cumulative catch-up revenue adjustments included significant unfavorable performance adjustments on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract and the Virginia class (SSN 774) submarine program, which were offset by contract incentives.
Contract Balances
The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Net contract assets were comprised as follows:
The Company’s net contract assets increased $629 million from December 31, 2025 to March 31, 2026, primarily as a result of the timing of billings across programs on certain U.S. Navy contracts. The Company recognized revenue related to its prior year-end contract liabilities of $758 million and $552 million for the three months ended March 31, 2026 and 2025, respectively.
7. SEGMENT INFORMATION
The following tables present the Company's operating results by segment:
Sales transactions between segments are generally recorded at cost.
Other segment items consist of general and administrative expenses.
Other Financial Information
The following tables present the Company's capital expenditures, as presented to the chief operating decision maker, and depreciation and amortization by segment:
Asset information by segment is not disclosed because it is not a key measure of performance used by the chief operating decision maker.
8. INCOME TAXES
The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended March 31, 2026 and 2025, were 20.7% and 20.3%, respectively.
For the three months ended March 31, 2026, the Company’s effective tax rate did not differ materially from the federal statutory corporate income tax rate of 21%.
The Company's unrecognized tax benefits increased by $3 million during the three months endedMarch 31, 2026. As of March 31, 2026, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $108 million. Assuming a sustainment of these tax positions, a reversal of $85 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods.
The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. For the three months ended March 31, 2026, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $2 million.
Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities and the tax expense or benefit associated with changes in state unrecognized tax benefits in the relevant period. These amounts are recorded within operating income. Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income.
Internal Revenue Service ("IRS") Audits - The Company reached an agreement in principle with the IRS on the research and development tax credits for the 2016-2021 tax years in 2025. This resolution was submitted to the Joint Committee on Taxation for approval in March 2026. Also, in the first quarter of 2026, the IRS initiated an audit of the research and development tax credits claimed on the Company's filed returns for the 2022-2023 tax years. The Company believes that its unrecognized tax benefits are adequate and will cover the expected impact of the agreement with the IRS and any adjustments resulting from the IRS audit of the 2022-2023 research and development tax credits.
9. INVESTIGATIONS, CLAIMS, AND LITIGATION
The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations. The Company accrues for losses associated with legal proceedings when, and to the extent that, loss amounts related to the legal proceedings are probable and can be reasonably estimated. The actual losses that might be incurred to resolve such legal proceedings may be higher or lower than the amounts accrued. The Company also provides footnote disclosure for matters for which a material loss is reasonably possible but a reserve has not been accrued because the likelihood of a material loss is not probable.
Antitrust Complaint - In October 2023, a class action antitrust lawsuit was filed against the Company and other defendants in the U.S. District Court for the Eastern District of Virginia. The lawsuit names several HII companies, among other companies, as defendants. The named plaintiffs generally allege that the defendant companies have
adhered to a “gentlemen’s agreement” that prohibits any defendant from actively recruiting naval engineers from other defendants. The complaint seeks class certification, treble damages, and any other relief to which the plaintiffs are entitled. The District Court dismissed the lawsuit against all defendants in April 2024 on statute of limitations grounds without addressing the motions to dismiss filed by the defendants on other grounds. The Fourth Circuit Court of Appeals reversed the dismissal and remanded the case to the District Court for further proceedings. In November 2025, the District Court denied the defendants' remaining motions to dismiss the lawsuit. In March 2026, the Company reached agreement with the plaintiffs to resolve their claims. The Company has recorded a liability related to the agreement that is not material to the Company's consolidated financial position, results of operations, or cash flows.
Insurance Claim - In September 2020, the Company filed a complaint against 32 reinsurers in the Superior Court, State of Vermont, Franklin Unit, seeking a judgment declaring that the Company's business interruption and other losses associated with COVID-19 are covered by the Company's property insurance program. The Company also initiated arbitration proceedings against six other reinsurers seeking similar relief. In July 2021, the Vermont court granted the reinsurers’ motion for judgment on the pleadings, which would have ended the Company’s claim. The Company appealed the decision to the Vermont Supreme Court, which reversed and remanded the lower court’s decision in September 2022, allowing the Company’s claim to proceed. In 2025, the parties filed dispositive motions and await the court’s decision. The Company cannot at this time predict the outcome of this matter.
U.S. Government Investigations and Claims - Departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil, or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory, treble, or other damages. U.S. Government regulations provide that certain findings against a contractor may also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. Any suspension or debarment would have a material effect on the Company because of its reliance on government contracts.
In 2024, the Company identified certain quality issues involving noncompliance with welding procedures at Newport News. The Company commenced an investigation and disclosed the matter to the U.S. Government. The Company continues to work with its U.S. Navy customer to evaluate the full extent of the matter and cannot at this time predict or reasonably estimate the ultimate outcome of this matter.
Asbestos Related Claims - HII and its predecessors-in-interest are defendants in a longstanding series of cases that have been and continue to be filed in various jurisdictions around the country, wherein former and current employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII. In some instances, partial or full insurance coverage is available for the Company's liabilities. The costs to resolve cases during the three months ended March 31, 2026 and 2025, were not material individually or in the aggregate. The Company’s estimate of asbestos-related liabilities is subject to uncertainty because such liabilities are influenced by many variables that are inherently difficult to predict. Although the Company believes the ultimate resolution of current cases will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows, it cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of asbestos related litigation.
Other - The Company is party to various other claims, arbitrations, investigations, and other legal proceedings that arise in the ordinary course of business, including U.S. Government investigations and claims that could result in administrative, civil, or criminal proceedings involving the Company. The Company is a contractor with the U.S. Government, and such proceedings can therefore include False Claims Act allegations against the Company. Based on the information available to the Company to date, the Company believes that the resolution of these other claims, legal proceedings, and investigations will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows. However, the Company cannot predict what new or revised claims, litigation, or other proceedings might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of these matters.
10. COMMITMENTS AND CONTINGENCIES
Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs. These
estimates are based upon management's best assessment of the underlying causal events and circumstances and recognized to the extent of expected recovery based upon contractual entitlements and the probability of successful negotiation with the customer. The Company believes its outstanding customer settlements will be resolved without material impact to its financial position, results of operations, or cash flows.
Environmental Matters - The estimated costs to complete environmental remediation are accrued when it is probable that the Company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by another environmental agency, and the related costs can be reasonably estimated by management. When only a range of costs is established and no amount within the range is more probable than another, the minimum amount in the range is accrued. Environmental liabilities are recorded on an undiscounted basis and are expensed or capitalized as appropriate. Capitalized expenditures, if any, relate to long-lived improvements in currently operating facilities. The Company does not record insurance recoveries before collection is probable. As of March 31, 2026 and December 31, 2025, the Company did not have any accrued receivables related to insurance reimbursements or recoveries for environmental matters.
The Company’s environmental liability accruals do not include any litigation costs related to environmental matters, nor do they include amounts recorded as asset retirement obligations. Management estimates that as of March 31, 2026, the probable estimable future cost for environmental remediation is not material. Although management cannot predict whether new information gained as remediation progresses or the Company incurs additional remediation obligations will materially affect the estimated liability accrued, management does not believe that future remediation expenditures will have a material effect on the Company's consolidated financial position, results of operations, or cash flows.
Financial Arrangements - In the ordinary course of business, HII uses letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support the Company's self-insured workers' compensation plans. As of March 31, 2026, the Company had $11 million in issued but undrawn letters of credit and $368 million of surety bonds outstanding.
U.S. Government Claims - From time to time, the U.S. Government communicates to the Company potential claims, disallowed costs, and penalties concerning prior costs incurred by the Company with which the U.S. Government disagrees. When such preliminary findings are presented, the Company and U.S. Government representatives engage in discussions, from which the Company evaluates the merits of the claims and assesses the amounts being questioned. Although the Company believes that the resolution of any of these matters will not have a material effect on its consolidated financial position, results of operations, or cash flows, it cannot predict the ultimate outcome of these matters.
Collective Bargaining Agreements - Of the Company's approximately 44,000 employees, 45% are covered by a total of 13 collective bargaining agreements. Newport News has three collective bargaining agreements covering represented employees, which expire in February 2030, December 2030 and April 2031. Ingalls has five collective bargaining agreements covering represented employees, all of which expire in March 2031. Mission Technologies has a total of 80 employees covered by five collective bargaining agreements, which expire in September 2026, December 2027, September 2028, and two that expire in August 2027.
Collective bargaining agreements generally expire after three to five years and are subject to renegotiation at that time. The Company believes its relationship with its employees is satisfactory.
Purchase Obligations - Periodically the Company enters into agreements to purchase goods or services that are enforceable and legally binding on the Company and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. These obligations are primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts.
11. EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company provides eligible employees defined benefit pension plans, defined contribution benefit plans, and other postretirement benefit plans.
The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2026 and 2025, were as follows:
Three Months Ended March 31
Pension Benefits
Other Benefits
($ in millions)
2026
2025
2026
2025
Components of net periodic benefit cost
Service cost
$
21
$
22
$
1
$
1
Interest cost
85
84
4
4
Expected return on plan assets
(144)
(137)
—
—
Amortization of prior service cost (credit)
4
4
—
—
Amortization of net actuarial loss (gain)
1
—
(3)
(3)
Net periodic benefit (income) cost
$
(33)
$
(27)
$
2
$
2
The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31
($ in millions)
2026
2025
Pension plans
Discretionary
Qualified
$
1
$
—
Non-qualified
3
4
Other benefit plans
10
9
Total contributions
$
14
$
13
For the year ending December 31, 2026, the Company expects its cash contributions to its qualified defined benefit pension plans to be approximately $2 million, all of which will be discretionary.
12. STOCK COMPENSATION PLANS
During the three months ended March 31, 2026 and 2025, the Company issued new stock awards as follows:
Restricted Performance Stock Rights - For the three months ended March 31, 2026, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $435.58. These rights are subject to cliff vesting on December 31, 2028. For the three months ended March 31, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $168.81. These rights are subject to cliff vesting on December 31, 2027. All of the RPSRs are subject to the achievement of performance-based targets at the end of the respective vesting periods and will ultimately vest between 0% and 200% of grant date value.
Compensation Restricted Stock Rights - For the three months ended March 31, 2026, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $435.58. For the three months ended March 31, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $168.81. These rights vest 33 1/3% upon each of the first, second, and third anniversaries of the grant date.
Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company. For the three months ended March 31, 2026, the Company did not grant any retention stock awards. For the three months ended March 31, 2025, the Company granted approximately 1,300 retention RSRs at a weighted average share price of $189.40, with cliff vesting one to two years from the grant date.
The Company also received transfers of stock awards from employees in satisfaction of tax withholding obligations associated with the vesting of stock awards during the period. Because the stock awards are surrendered in lieu of payments of cash to settle tax obligations and the stock is not issued, the Company does not account for these transfers as treasury stock.
Stock award activity for the three months ended March 31, 2026, and 2025, was as follows:
Stock Awards (in thousands)
Weighted-Average Grant Date Fair Value
Weighted-Average Remaining Contractual Term (in years)
Outstanding at December 31, 2024
550
$
221.59
1.0 year
Granted
301
169.05
Adjusted due to performance
16
169.05
Vested
(191)
215.19
Forfeited
(4)
288.33
Outstanding at March 31, 2025
672
$
199.42
1.6 years
Outstanding at December 31, 2025
663
$
199.43
1.0 year
Granted
116
434.34
Adjusted due to performance
22
434.34
Vested
(235)
214.13
Forfeited
(8)
204.33
Outstanding at March 31, 2026
558
$
242.54
1.4 years
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
Our Business
Huntington Ingalls Industries, Inc. ("HII", "we", "us", or "our") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. For more than a century, our Ingalls Shipbuilding segment ("Ingalls") in Mississippi and Newport News Shipbuilding segment ("Newport News") in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making us America's largest shipbuilder. Our Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force. Headquartered in Newport News, Virginia, we employ approximately 44,000 people domestically and internationally.
We conduct most of our business with the U.S. Government, primarily the Department of War. As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs. Ingalls includes our non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of our nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Our Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; unmanned autonomous systems; live, virtual, and constructive training solutions; platform modernization; and critical nuclear operations.
The following discussion should be read along with the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2025 (our "2025 Annual Report on Form 10-K").
Against a backdrop of heightened geopolitical tension and domestic policy realignment, we continue to see uncertainty in the economy, our industry, and our company. Our customers, suppliers, and subcontractors continue to face challenges. We cannot predict how long these challenges will continue, whether these challenges will change over time, or whether our actions to address these challenges will be successful.
Defense Spending Environment – The fiscal year 2026 budget cycle concluded with the passage of the Consolidated Appropriations Act, 2026, signed into law February 3, 2026. The fiscal year 2026 defense appropriations bill includes continued incremental funding for Enterprise (CVN 80) and Doris Miller (CVN 81), along with advance procurement for William J. Clinton (CVN 82); continued funding for the RCOH of USS John C. Stennis (CVN 74); funding for the Virginia class (SSN 774) and Columbia class (SSBN 826) submarine programs; advanced procurement for the Arleigh Burke class (DDG 51) destroyer program, including additional funding for shipyard infrastructure and wage enhancements; and funding for long-lead-time materials for the new FF(X) frigate program. Additionally, the bill provides funding for the Maritime Industrial Base to invest in critical areas including supplier capacity and capability, strategic outsourcing, workforce training, and technology and infrastructure.
On April 3, 2026, the Trump Administration released the President's topline recommendations on funding levels for fiscal year 2027. The proposed budget recommends $60.2 billion in discretionary funding for the shipbuilding construction account and an additional $5.6 billion in mandatory funding, for a total of $65.8 billion for shipbuilding procurement. Included in the discretionary request is funding for one Columbia class (SSBN 826) submarine, two Virginia class (SSN 774) submarines, one Arleigh Burke class (DDG 51) destroyer, one San Antonio class (LPD 17) amphibious transport dock ship, one America class (LHA 6) amphibious assault ship, and the first FF(X) frigate. The fiscal year 2027 budget request continues funding Gerald R. Ford class (CVN 78) aircraft carriers and aircraft carrier refueling programs, and provides initial advance procurement funding for the lead ship of the Trump class (BBG(X)) battleship program. The fiscal year 2027 budget request also reflects increased investments in capability enablers including unmanned surface and underwater vehicles.
Global Geopolitical and Economic Environment –The global geopolitical and economic environment continues to be impacted by uncertainty, heightened geopolitical tensions, and instability. Geopolitical relationships continue to change, and the U.S. and its allies face a global security environment that includes threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability. These global threats persist across all domains, from undersea to space to cyber, and the global market for defense products, services, and solutions is driven by these complex and evolving security challenges. In addition, changes in the global economic environment, including changes in international trade policies, including those imposing tariffs, could further impact the global market for defense products. Our current operating environment exists in the broader context of political and socioeconomic priorities and reflects, among other things, the continued impact of and uncertainty surrounding geopolitical tensions, financial market volatility, inflation, trade policy, and a challenging labor market.
For further information on our business environment, see the Business Environment section under Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2025 Annual Report on Form 10-K.
Critical Accounting Policies, Estimates, and Judgments
As discussed in our 2025 Annual Report on Form 10-K, we consider our policies relating to the following matters to be critical accounting policies and estimates:
•Revenue recognition;
•Retirement related benefit plans; and
•Workers' compensation.
As of March 31, 2026, there had been no material changes to the foregoing critical accounting policies, estimates, and judgments since December 31, 2025.
For convenience, a brief description of certain programs discussed in this Quarterly Report on Form 10-Q is included in the Glossary of Programs in this section.
CONSOLIDATED OPERATING RESULTS
The following table presents selected financial highlights:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
Sales and service revenues
$
3,099
$
2,734
$
365
13
%
Cost of product sales and service revenues
2,691
2,340
351
15
%
Income from operating investments, net
5
13
(8)
(62)
%
General and administrative expenses
258
246
12
5
%
Operating income
155
161
(6)
(4)
%
Other income (expense)
Interest expense
(22)
(28)
6
21
%
Non-operating retirement benefit
53
48
5
10
%
Other, net
2
6
(4)
(67)
%
Federal and foreign income taxes
39
38
1
3
%
Net earnings
$
149
$
149
$
—
—
%
Operating Performance Assessment and Reporting
We manage and assess the performance of our business based on our performance on individual contracts and programs using the financial measures referred to below, with consideration given to the Critical Accounting Policies, Estimates, and Judgments referred to in this section. Our portfolio of long-term contracts is largely flexibly-priced. Therefore, sales tend to fluctuate in concert with costs across our large portfolio of active contracts, with operating income being a critical measure of operating performance. Under the Federal Acquisition Regulation rules that govern our business with the U.S. Government, most types of costs are allowable, and we do not focus on individual cost groupings, such as cost of sales or general and administrative expenses, as much as we do on total contract costs, which are a key factor in determining contract operating income. As a result, in evaluating our operating performance, we look primarily at changes in sales and service revenues, as well as operating income, including the effects of significant changes in operating income as a result of changes in contract financial estimates and the use of the cumulative catch-up method of accounting in accordance with GAAP. This approach is consistent with the long-term life cycle of our contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance in a similar manner through contract completion. Consequently, our discussion of business segment performance focuses on net sales and operating profit, consistent with our approach for managing our business.
Sales and Service Revenues
Period-to-period revenues reflect performance under new and ongoing contracts. Changes in sales and service revenues are typically expressed in terms of volume. Unless otherwise described, volume generally refers to increases (or decreases) in reported revenues due to varying production activity levels, delivery rates, or service levels on individual contracts. Volume changes will typically carry a corresponding income change based on the profit margin rate for a particular contract.
Sales and service revenues for the three months ended March 31, 2026, increased $365 million, or 13%, compared to the same period in 2025, primarily due to higher volumes at Newport News, Ingalls, and Mission Technologies.
For the three months ended March 31, 2026 and 2025, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:
Three Months Ended March 31
($ in millions)
2026
2025
Gross favorable adjustments
$
66
$
80
Gross unfavorable adjustments
(65)
(80)
Net adjustments
$
1
$
—
See Note 6: Revenue and Segment Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.
Cost of Product Sales and Service Revenues
Cost of sales for both product sales and service revenues consists of materials, labor, and subcontracting costs, as well as an allocation of indirect costs for overhead. We manage the type and amount of costs at the contract level, which is the basis for estimating our total costs at completion of our contracts. Unusual fluctuations in operating performance driven by changes in a specific cost element across multiple contracts are described in our analysis.
Refer to Segment Operating Results and Product and Service Revenues and Cost Analysis in this section for details related to cost of sales for both product sales and service revenues.
Income from Operating Investments, Net
The activities of our operating investments are closely aligned with the operations of the segments holding the investments. We therefore record income related to earnings from equity method investments in our operating income.
Refer to Segment Operating Results in this section for details related to income from operating investments.
General and Administrative Expenses
In accordance with industry practice and the regulations that govern the cost accounting requirements for government contracts, most general and administrative expenses are considered allowable and allocable costs on government contracts. These costs are allocated to contracts in progress on a systematic basis, and contract performance factors include this cost component as an element of cost.
General and administrative expenses for the three months ended March 31, 2026 increased $12 million from the same period in 2025, primarily due to higher non-current state income taxes and higher overhead costs.
Operating Income
We consider operating income an important measure for evaluating our operating performance, and, consistent with industry practice, we define operating income as revenues less the related costs of producing the revenues and general and administrative expenses.
Segment Operating Income
We internally manage our operations by reference to "segment operating income," which is a non-GAAP measure and is defined as operating income before the Operating FAS/CAS Adjustment and non-current state income taxes, neither of which affects contract performance. Segment operating income is a measure we use to evaluate our core operating performance as it reflects the aggregate performance results of contracts within a segment. When analyzing our operating performance, investors should use segment operating income in addition to, and not as an alternative for, operating income or any other performance measure presented in accordance with GAAP. We believe segment operating income reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business. We
believe the measure is used by investors and is a useful indicator to measure our performance. Because not all companies use identical calculations, our presentation of segment operating income may not be comparable to similarly titled measures of other companies.
Changes in segment operating income are typically expressed in terms of volume, as discussed in Sales and Service Revenues above, or performance. Performance refers to changes in contract profit margin rates. These changes typically relate to profit recognition associated with revisions to estimated costs at completion ("EAC"), which reflect improved or deteriorated operating performance on that contract. Operating income changes are accounted for on a cumulative to date basis at the time an EAC change is recorded. Segment operating income may also be affected by, among other things, contract performance, inflationary pressures on our supply chain, the effects of workforce stoppages and other labor-related shortfalls, the availability of raw materials, the effects of natural disasters such as hurricanes, resolution of disputed items with the customer, recovery of insurance proceeds, and other discrete events. At the completion of a long-term contract, any originally estimated costs not incurred or reserves not fully utilized, such as warranty reserves, could also impact contract earnings. Where such items have occurred and the effects are material, a separate description is provided. Refer to Segment Operating Results in this section for activity within each segment.
The following table reconciles operating income to segment operating income:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
Operating income
$
155
$
161
$
(6)
(4)
%
Operating FAS/CAS Adjustment
9
10
(1)
(10)
%
Non-current state income taxes
8
—
8
—
%
Segment operating income
$
172
$
171
$
1
1
%
FAS/CAS Adjustment and Operating FAS/CAS Adjustment
The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP ("FAS") and the expenses for these items included in segment operating income in accordance with U.S. Cost Accounting Standards ("CAS"). The Operating FAS/CAS Adjustment excludes the following components of net periodic benefit costs: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.
The components of the Operating FAS/CAS Adjustment were as follows:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
FAS benefit
$
31
$
25
$
6
24
%
CAS cost
13
13
—
—
%
FAS/CAS Adjustment
44
38
6
16
%
Non-operating retirement benefit
(53)
(48)
(5)
(10)
%
Operating FAS/CAS Adjustment expense
$
(9)
$
(10)
$
1
10
%
The Operating FAS/CAS Adjustment was a net expense of $9 million and $10 million for the three months ended March 31, 2026 and 2025, respectively. The favorable change in the Operating FAS/CAS Adjustment was primarily driven by higher asset returns in 2025.
Non-current State Income Taxes
Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities, and the tax expense or benefit associated with changes in state unrecognized tax benefits in the relevant period. These amounts are recorded within operating income. Current period state income taxes are charged to contract costs and included in cost of sales and service revenues in segment operating income.
Non-current state income tax expense was $8 million for the three months ended March 31, 2026, compared to a non-current state income tax expense of less than $1 million for the three months ended March 31, 2025. The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and a change in state unrecognized tax benefits for the prior period.
SEGMENT OPERATING RESULTS
Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.
The following table presents segment operating results:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
Sales and Service Revenues
Ingalls
$
725
$
637
$
88
14
%
Newport News
1,665
1,396
269
19
%
Mission Technologies
748
735
13
2
%
Intersegment eliminations
(39)
(34)
(5)
(15)
%
Sales and service revenues
$
3,099
$
2,734
$
365
13
%
Operating Income
Ingalls
$
49
$
46
$
3
7
%
Newport News
88
85
3
4
%
Mission Technologies
35
40
(5)
(13)
%
Segment operating income
172
171
1
1
%
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment
(9)
(10)
1
10
%
Non-current state income taxes
(8)
—
(8)
—
%
Operating income
$
155
$
161
$
(6)
(4)
%
Key Segment Financial Measures
Refer to Consolidated Operating Results in this section for details related to sales and service revenues and segment operating income.
Net Cumulative Catch-up Revenue Adjustments by Segment
For the three months ended March 31, 2026 and 2025, net cumulative catch-up revenue adjustments by segment were as follows:
Three Months Ended March 31
($ in millions)
2026
2025
Ingalls
$
(3)
$
—
Newport News
(9)
(6)
Mission Technologies
13
6
Net adjustments
$
1
$
—
See Note 6: Revenue and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.
Ingalls revenues, including intersegment sales, for the three months ended March 31, 2026, increased $88 million, or 14%, from the same period in 2025, primarily driven by higher volumes in surface combatants.
Segment Operating Income
Ingalls segment operating income for the three months ended March 31, 2026, was $49 million, compared to segment operating income of $46 million for the same period in 2025. The increase was primarily driven by higher volumes in surface combatants, partially offset by lower performance in amphibious assault ships.
Newport News
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
Sales and service revenues
$
1,665
$
1,396
$
269
19
%
Segment operating income
88
85
3
4
%
As a percentage of segment sales
5.3
%
6.1
%
Sales and Service Revenues
Newport News revenues, including intersegment sales, for the three months ended March 31, 2026, increased $269 million, or 19%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers, submarines, and naval nuclear support services.
Segment Operating Income
Newport News segment operating income for the three months ended March 31, 2026, was $88 million, compared to segment operating income of $85 million for the same period in 2025. The increase was primarily driven by the higher volumes described above, partially offset by contract adjustments and incentives in 2025 in the Virginia class (SSN 774) submarine program and lower performance in aircraft carrier construction.
Mission Technologies
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Percent
Sales and service revenues
$
748
$
735
$
13
2
%
Segment operating income
35
40
(5)
(13)
%
As a percentage of segment sales
4.7
%
5.4
%
Sales and Service Revenues
Mission Technologies revenues, including intersegment sales, for the three months ended March 31, 2026, increased $13 million, or 2%, from the same period in 2025, primarily due to higher volumes in All-Domain Operations, Unmanned Systems, and Global Security, partially offset by lower volumes in Warfare Systems.
Mission Technologies segment operating income for the three months ended March 31, 2026, was $35 million, compared to segment operating income of $40 million for the same period in 2025. The decrease was primarily due to lower equity income from nuclear and environmental joint ventures, partially offset by higher performance in Warfare Systems.
PRODUCT AND SERVICE REVENUES AND COST ANALYSIS
The following tables present segment sales and service revenues and segment cost of sales and service revenues by both product and service:
Sales and Service Revenues
Segment Cost of Product Sales and Service Revenues
($ in millions)
Three Months Ended March 31
2026 vs. 2025
Three Months Ended March 31
2026 vs. 2025
Segment Information
2026
2025
Dollars
Percent
2026
2025
Dollars
Percent
Ingalls
Product
$
614
$
526
$
88
17
%
$
531
$
452
$
79
17
%
Service
108
107
1
1
%
96
90
6
7
%
Intersegment
3
4
(1)
(25)
%
3
4
(1)
(25)
%
Total Ingalls
725
637
88
14
%
630
546
84
15
%
Newport News
Product
1,364
1,160
204
18
%
1,179
971
208
21
%
Service
301
236
65
28
%
255
193
62
32
%
Total Newport News
1,665
1,396
269
19
%
1,434
1,164
270
23
%
Mission Technologies
Product
26
27
(1)
(4)
%
24
20
4
20
%
Service
686
678
8
1
%
597
604
(7)
(1)
%
Intersegment
36
30
6
20
%
36
30
6
20
%
Total Mission Technologies
748
735
13
2
%
657
654
3
—
%
Segment Totals
Product
$
2,004
$
1,713
$
291
17
%
$
1,734
$
1,443
$
291
20
%
Service
1,095
1,021
74
7
%
948
887
61
7
%
Total Segment(1)
$
3,099
$
2,734
$
365
13
%
$
2,682
$
2,330
$
352
15
%
(1) Operating FAS/CAS Adjustment is excluded from segment cost of product sales and service revenues.
Product Sales and Segment Cost of Product Sales
Product sales for the three months ended March 31, 2026, increased $291 million, or 17%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and surface combatants at Ingalls.
Segment cost of product sales for the three months ended March 31, 2026, increased $291 million, or 20%, compared with the same period in 2025, primarily due to the higher volumes described above.
Service Revenues and Segment Cost of Service Revenues
Service revenues for the three months ended March 31, 2026, increased $74 million, or 7%, from the same period in 2025, primarily due to higher volumes in naval nuclear support services and aircraft carriers at Newport News, and higher volumes in All-Domain Operations at Mission Technologies.
Segment cost of service revenues for the three months ended March 31, 2026, increased $61 million, or 7%, compared with the same period in 2025, primarily due to the higher volumes described above.
Interest expense for the three months ended March 31, 2026, was $22 million, compared with $28 million for the same period in 2025. The decrease in interest expense was driven by a decrease in outstanding long-term debt from the prior period.
Non-Operating Retirement Benefit
The non-operating retirement benefit includes the following components of net periodic benefit costs: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.
For the three months ended March 31, 2026, the non-operating retirement benefit was $53 million, compared with $48 million for the same period in 2025. The favorable change in the non-operating retirement benefit was primarily driven by higher asset returns in 2025.
Other, Net
Other, net income for the three months ended March 31, 2026, was $2 million, compared with other, net income of $6 million for the same period in 2025. The decrease in other, net income was primarily driven by an increase in unrealized losses on investments.
Federal and Foreign Income Taxes
Our effective income tax rates on earnings from operations for the three months ended March 31, 2026 and 2025, were 20.7% and 20.3%, respectively.
For the three months ended March 31, 2026, our effective tax rate did not differ materially from the federal statutory corporate income tax rate of 21%.
In January 2026, the Organization for Economic Co-operation and Development issued administrative guidance on Pillar Two’s 15% global minimum tax, including a “side-by-side" ("SbS") system with permanent and temporary safe harbors. The U.S. is recognized as a qualified SbS regime, which effectively alleviates U.S. based multi-national companies from top-up tax collectible under Pillar Two. We expect that the SbS system or other transitional safe harbor provisions will be broadly applicable to our international operations and, accordingly, do not expect Pillar Two to have a material impact on our effective tax rate, consolidated results of operations, financial position, or cash flows.
BACKLOG
Total backlog as of March 31, 2026, and December 31, 2025, was $54.0 billion and $53.1 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded indefinite delivery/indefinite quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer as of March 31, 2026 and December 31, 2025, respectively.
The following table presents funded and unfunded backlog by segment as of March 31, 2026, and December 31, 2025:
We expect approximately 21% of the $53.1 billion total backlog as of December 31, 2025, to be converted into sales in 2026. U.S. Government orders comprised substantially all of the backlog as of March 31, 2026 and December 31, 2025.
Contract Awards
The value of new contract awards during the three months ended March 31, 2026, was approximately $4.0 billion, primarily driven by awards at Newport News and Ingalls.
LIQUIDITY AND CAPITAL RESOURCES
We seek to efficiently convert operating results into cash for deployment in operating our businesses, implementing our business strategy, and maximizing stockholder value. We use various financial measures to inform our capital deployment strategy, including net cash used in operating activities and free cash flow. We believe these measures are useful to investors in assessing our financial performance.
The following table summarizes key components of cash flow used in operating activities:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Net earnings
$
149
$
149
$
—
Depreciation and amortization of purchased intangibles
76
79
(3)
Stock-based compensation
21
24
(3)
Deferred income taxes
43
(11)
54
Loss (gain) on investments in marketable securities
3
(3)
6
Other non-cash transactions, net
3
3
—
Retiree benefits
(45)
(38)
(7)
Trade working capital increase
(640)
(598)
(42)
Net cash used in operating activities
$
(390)
$
(395)
$
5
We have historically maintained a capital structure comprised of a mix of equity and debt financing. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations, existing borrowing facilities, and/or through refinancing in the debt markets prior to the maturity dates of our debt.
Cash Flows
Operating Activities
Cash used in operating activities for the three months ended March 31, 2026, was $390 million, compared with cash used in operating activities of $395 million for the same period in 2025.
We expect cash generated from operations in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next twelve calendar months beginning April 1, 2026, and beyond such twelve-month period based on our current business plans.
Investing Activities
Cash used in investing activities for the three months ended March 31, 2026, was $71 million, compared to $199 million used in investing activities for the same period in 2025. The change in investing cash was primarily driven by the acquisition of a business in the first quarter of 2025.
For 2026, we expect our capital expenditures for maintenance and sustainment to be approximately 1.0% to 1.5% of annual revenues and our discretionary capital expenditures to be approximately 3.0% to 3.5% of annual revenues. Our capital expenditures are expected to increase due to investments to expand our shipbuilding capacity.
Financing Activities
Cash used in financing activities for the three months ended March 31, 2026, was $97 million, compared with $70 million used in financing activities for the same period in 2025. The change in cash used in financing activities was primarily due to an increase in employee taxes on certain share-based payment arrangements.
Free Cash Flow
Free cash flow represents cash used in operating activities less capital expenditures net of related grant proceeds. Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net earnings as a measure of our performance or net cash used in operating activities as a measure of our liquidity. We believe free cash flow is an important liquidity measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.
The following table reconciles net cash used in operating activities to free cash flow:
Three Months Ended March 31
2026 vs. 2025
($ in millions)
2026
2025
Dollars
Net cash used in operating activities
$
(390)
$
(395)
$
5
Less capital expenditures:
Capital expenditure additions
(74)
(67)
(7)
Grant proceeds for capital expenditures
3
—
3
Free cash flow
$
(461)
$
(462)
$
1
Free cash flow for the three months ended March 31, 2026, increased $1 million from the same period in 2025.
Governmental Regulation and Supervision
The U.S. Government has the ability, pursuant to regulations relating to contractor business systems, to decrease or withhold contract payments if it determines material weaknesses exist in one or more such systems. As of March 31, 2026 and 2025, the cumulative amounts of payments withheld by the U.S. Government under our contracts subject to these regulations were not material to our liquidity or cash flows.
Off-Balance Sheet Arrangements
In the ordinary course of business, we use letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support our self-insured workers' compensation plans. As of March 31, 2026, $11 million in letters of credit were issued but undrawn and $368 million of surety bonds were outstanding. As of March 31, 2026, we had no other significant off-balance sheet arrangements.
ACCOUNTING STANDARDS UPDATES
See Note 3: Accounting Standards Updates for further information.
FORWARD-LOOKING STATEMENTS AND PROJECTIONS
Statements in this Quarterly Report on Form 10-Q and in our other filings with the SEC, as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance," "outlook," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to:
•our dependence on the U.S. Government for substantially all of our business;
•significant delays or reductions in appropriations for our programs and/or changes in customer priorities and requirements (including government budgetary constraints, government shutdowns, shifts in defense spending, and changes in customer short-range and long-range plans);
•our ability to estimate our future contract costs, including cost increases due to inflation, labor challenges, changes in trade policy, or other factors and our efforts to recover or offset such costs and/or changes in estimated contract costs, and perform our contracts effectively;
•changes in business practices, procurement processes and government regulations, including changes through executive orders, contract terms, or other policies or practices applicable to our industry, and our ability to comply with such requirements;
•adverse economic conditions in the United States and globally;
•our level of indebtedness and ability to service our indebtedness;
•our ability to deliver our products and services at an affordable life cycle cost and compete within our markets;
•our ability to attract, retain, and train a qualified workforce;
•subcontractor and supplier performance and the availability and pricing of raw materials and components;
•our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures, and strategic acquisitions;
•investigations, claims, disputes, enforcement actions, litigation (including criminal, civil, and administrative), and/or other legal proceedings, and improper conduct of employees, agents, subcontractors, suppliers, business partners, or joint ventures in which we participate, including the impact on our reputation or ability to do business;
•changes in key estimates and assumptions regarding our pension and retiree health care costs;
•security threats, including cybersecurity threats, and related disruptions;
•natural and environmental disasters and political instability;
•health epidemics, pandemics and similar outbreaks; and
•other risk factors discussed herein and in our other filings with the SEC.
Additional factors include those described in our 2025 Annual Report on Form 10-K, including under the captions Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Business, in our subsequent quarterly reports on Form 10-Q, including under the captions Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in our subsequent filings with the SEC.
There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update or revise any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make.
Included below are brief descriptions of some of the programs discussed in this Quarterly Report on Form 10-Q.
Program Name
Program Description
Aircraft carrier RCOH
Perform refueling and complex overhaul ("RCOH") of nuclear-powered aircraft carriers, which is required at the mid-point of their 50-year life cycle. USS John C. Stennis (CVN 74) arrived at Newport News for the start of its RCOH in May 2021, and USS George Washington (CVN 73) was redelivered to the U.S. Navy in May 2023.
America class (LHA 6) amphibious assault ships
Design and build large deck amphibious assault ships that provide forward presence and power projection as an integral part of joint, interagency and multinational maritime expeditionary forces. The America class (LHA 6) ships, together with the Wasp class (LHD 1) ships, are the successors to the decommissioned Tarawa class (LHA 1) ships. The America class (LHA 6) ships optimize aviation operations and support capabilities. In 2023, we were awarded a long-lead-time material contract for Helmand Province (LHA 10), and in 2024, we were awarded a contract modification for the detail design and construction of Helmand Province (LHA 10). We are currently constructing Bougainville (LHA 8) and Fallujah (LHA 9).
Arleigh Burke class (DDG 51) destroyers
Build guided missile destroyers designed for conducting anti-air, anti-submarine, anti-surface, and strike operations. The Aegis-equipped Arleigh Burke class (DDG 51) destroyers are the U.S. Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction. We delivered USS Jack H. Lucas (DDG 125) and USS Ted Stevens (DDG 128) in 2023 and 2025, respectively. We have contracts to construct the following Arleigh Burke class (DDG 51) destroyers: Jeremiah Denton (DDG 129), George M. Neal (DDG 131), Sam Nunn (DDG 133), Thad Cochran (DDG 135), John F. Lehman (DDG 137), Telesforo Trinidad (DDG 139), Ernest E. Evans (DDG 141), Charles J. French (DDG 142), Richard J. Danzig (DDG 143), Intrepid (DDG 145), and Robert Kerrey (DDG 146).
Columbia class (SSBN 826) submarines
Design and construct modules for Columbia class (SSBN 826) nuclear ballistic missile submarines ("SSBNs") as a subcontractor to Electric Boat. SSBNs are the most secure and survivable of our nation’s nuclear deterrent triad. Columbia class SSBNs will carry approximately 70 percent of the nation’s nuclear arsenal. The Columbia class (SSBN 826) program plan of record is to construct 12 new SSBNs to replace the current aging Ohio class. As a subcontractor to Electric Boat, we leverage our Virginia class (SSN 774) experience to perform design work and build modules for the entire Columbia class (SSBN 826) submarine program. We have been awarded contracts from Electric Boat for integrated product and process development, providing long–lead–time material and advance construction, and construction of the first two boats of the Columbia class (SSBN 826) submarine program. Construction of the first Columbia class (SSBN 826) submarine began in 2020. In 2023, we received an award modification for long-lead-time material and advance construction for the next five boats.
Gerald R. Ford class (CVN 78) aircraft carriers
Design and construction for the Ford class program, which is the aircraft carrier replacement program for the decommissioned Enterprise (CVN 65) and Nimitz class (CVN 68) aircraft carriers. USS Gerald R. Ford (CVN 78), the first ship of the Ford class, was delivered to the U.S. Navy in the second quarter of 2017. In June 2015, we were awarded a contract for the detail design and construction of John F. Kennedy (CVN 79), following several years of engineering, advance construction, and purchase of long-lead-time components and material. In addition, we have received awards for detail design and construction of Enterprise (CVN 80) and Doris Miller (CVN 81). This category also includes the class' non-recurring engineering. The class is expected to bring improved warfighting capability, quality of life improvements for sailors, and reduced life cycle costs.
Design and build the U.S. Coast Guard's National Security Cutters ("NSCs"), the largest and most technically advanced class of cutter in the U.S. Coast Guard. The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility, and national defense missions. There were initially 11 ships for this program, of which the first ten ships have been delivered. In 2025, we reached agreement with the U.S. Coast Guard to terminate production and delivery of the 11th and final ship.
Naval nuclear support services
Provide services to and in support of the U.S. Navy, ranging from services supporting the Navy's carrier and submarine fleets to maintenance services at U.S. Navy training facilities. Naval nuclear support services include design, construction, maintenance, and disposal activities for in-service U.S. Navy nuclear ships worldwide through mobile and in-house capabilities. Services include maintenance services on nuclear reactor prototypes, such as those at the Kenneth A. Kesselring Site, a research and development facility in New York that supports the U.S. Navy, which were completed in 2024.
San Antonio class (LPD 17) amphibious transport dock ships
Design and build amphibious transport dock ships, which are warships that embark, transport, and land elements of a landing force for a variety of expeditionary warfare missions, and also serve as the secondary aviation platform for Amphibious Readiness Groups. The San Antonio class (LPD 17) is the newest addition to the U.S. Navy's 21st century amphibious assault force, and these ships are a key element of the U.S. Navy's seabase transformation. In 2022, we were awarded a long-lead-time material contract for Philadelphia (LPD 32). In 2023, we received an award modification for the detail design and construction of Philadelphia (LPD 32). In 2024, we delivered USS Richard M. McCool Jr. (LPD 29), and we were awarded a multi-ship procurement contract for the construction of Travis Manion (LPD 33), LPD 34 (unnamed), and LPD 35 (unnamed). We are currently constructing Harrisburg (LPD 30), Pittsburgh (LPD 31), and Philadelphia (LPD 32).
Virginia class (SSN 774) fast attack submarines
Construct attack submarines as the principal subcontractor to Electric Boat. The Virginia class (SSN 774) is a post-Cold War design tailored to excel in a wide range of warfighting missions, including anti-submarine and surface ship warfare; special operation forces; strike; intelligence, surveillance, and reconnaissance; carrier and expeditionary strike group support; and mine warfare.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
We are exposed to certain market risks, including those relating to interest rates and inflation.
Interest Rates - Our floating rate financial instruments subject to interest rate risk include a $1.7 billion revolving credit facility and a $1.7 billion commercial paper program. As of March 31, 2026, we had no indebtedness outstanding under our revolving credit facility or our commercial paper program, and therefore had no interest rate risk with respect to these instruments.
Inflation - Macroeconomic factors have contributed, and we expect will continue to contribute, to increasing cost inflation for raw materials, components, and supplies. We mitigate some cost inflation risk by negotiating long-term agreements with certain raw material suppliers and incorporating price escalation provisions in customer contracts to the extent possible. We include assumptions of anticipated cost growth in the development of our cost of completion estimates, but if inflationary conditions continue over the long-term, our cost assumptions may not be sufficient to cover all cost escalation or may impact the availability of resources to execute the respective contracts. Persistent cost inflation over the long-term may have an adverse impact on our financial position, results of operations, or cash flows.
The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of March 31, 2026. Based on that evaluation, the Company's Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that, as of March 31, 2026, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in reports the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to management to allow their timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred in the quarterly period covered by this report that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
We have provided information about legal proceedings in which we are involved in the unaudited condensed consolidated financial statements in Part I, Item 1, which is incorporated herein by reference. In addition to the matters disclosed in Part I, Item 1, we are a party to various investigations, lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business. Based on information available to us, we do not believe at this time that any of such other matters will individually, or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows. For further information on the risks we face from existing and future investigations, lawsuits, claims, and other legal proceedings, please see Risk Factors in Part I, Item 1A in the 2025 Annual Report on Form 10-K.
Consistent with the requirements of SEC Regulation S-K, Item 103, our threshold for disclosing any environmental legal proceeding involving a governmental authority is potential monetary sanctions that our management believes will exceed $1 million.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10–Q, carefully consider the factors discussed in Part I, Item 1A Risk Factors in the 2025 Annual Report on Form 10–K, which could materially affect our business, financial condition, or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases under our stock repurchase program are made from time to time at management's discretion in accordance with applicable federal securities laws. All repurchases of HII common stock have been recorded as treasury stock. The following table summarizes information relating to purchases made by or on behalf of the Company of shares of the Company's common stock during the quarter ended March 31, 2026.
Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)(1),(2)
January 1, 2026 to January 31, 2026
—
$
—
—
$
1,352.3
February 1, 2026 to February 28, 2026
—
—
—
1,352.3
March 1, 2026 to March 31, 2026
—
—
—
1,352.3
Total
—
$
—
—
$
1,352.3
(1) From the stock repurchase program's inception through March 31, 2026, we have purchased 14,584,709 shares
at an average price of $167.82 per share for a total of $2.4 billion.
(2) In November 2012, we announced the establishment of our stock repurchase program. In January 2024, our
board of directors authorized an increase in the stock repurchase program to $3.8 billion and an extension of the term to December 31, 2028.
During the quarter ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
The following financial information for the Company, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Statements of Financial Position, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in Equity, and (v) the Notes to Condensed Consolidated Financial Statements.
104
The cover page from the Company’s Quarterly Report on Form 10-Q, formatted in Inline XBRL and contained in Exhibit 101.
*Indicates management contract or compensatory plan or arrangement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date:
May 5, 2026
Huntington Ingalls Industries, Inc.
(Registrant)
By:
/s/ Nicolas Schuck
Nicolas Schuck
Corporate Vice President, Controller and Chief Accounting Officer
(Duly Authorized Officer and Principal Accounting Officer)