Huntington Ingalls (NYSE: HII) Q2 2026 profit climbs on shipbuilding growth
Huntington Ingalls Industries delivered stronger results for Q2 2026. Sales and service revenues rose to $3.418 billion from $3.082 billion, lifting operating income to $210 million from $163 million and net earnings to $208 million from $152 million, or $5.27 per diluted share versus $3.86 a year earlier.
For the first six months, revenues increased to $6.517 billion from $5.816 billion and net earnings to $357 million from $301 million. Growth was led by Newport News, where revenue reached $1.849 billion in the quarter, and Ingalls at $845 million, reflecting higher volumes in aircraft carriers, submarines, and amphibious assault ships. Mission Technologies revenue edged down to $760 million, but segment operating income improved to $55 million, supported by higher equity income.
Long-cycle visibility remains significant: remaining performance obligations and total backlog were $57.3 billion at June 30, 2026, up from $53.1 billion at year-end 2025, with about 35% of remaining performance obligations expected to convert to revenue through 2027. Cash generation weakened, as operating activities used $421 million in the first half versus providing $428 million a year earlier and free cash flow was negative $611 million, largely due to unfavorable trade working capital and the timing of billings on U.S. Navy contracts. Cash and cash equivalents were $12 million, and long-term debt was $2.702 billion.
Positive
- Revenue and profit growth were strong: sales and service revenues increased 11–12% year over year, with operating income up 29% and net earnings up 37% in Q2 2026 compared with Q2 2025.
Negative
- Cash generation deteriorated: first-half 2026 operating activities used $421 million versus providing $428 million a year earlier, and free cash flow swung to -$611 million, mainly from unfavorable trade working capital and billing timing.
Filing Explained
Management says existing cash, operations, and borrowing facilities should cover obligations and capital needs for at least twelve months from July 1, 2026.
This Form 10-Q is an unaudited quarterly report for the period ended
At that date, total backlog was
Funded backlog consists of firm orders with contractually obligated customer funding, while unfunded backlog consists of firm orders without that current funding obligation; unexercised options and unfunded indefinite-delivery/indefinite-quantity orders are excluded.
Management states that cash generated from operations, current cash and existing borrowing facilities are expected to be sufficient to service debt and retiree benefits, meet contractual obligations, and fund capital expenditures for at least the twelve months beginning
A specified uncertainty remains the fiscal-year 2027 U.S. defense budget process, which was ongoing at the reporting date; the company says it cannot predict its outcome or whether short-term funding will be needed before
Key Figures
Q2 2026 Sales and Service Revenues: $3,418 million
Q2 2026 Net Earnings: $208 million
Q2 2026 Diluted EPS: $5.27 per share
+5 more
8 metrics
Q2 2026 Sales and Service Revenues
$3,418 million
Three months ended June 30, 2026 consolidated sales and service revenues
Q2 2026 Net Earnings
$208 million
Net earnings for the three months ended June 30, 2026
Q2 2026 Diluted EPS
$5.27 per share
Diluted earnings per share for the three months ended June 30, 2026
H1 2026 Operating Cash Flow
-$421 million
Net cash provided by (used in) operating activities, six months ended June 30, 2026
H1 2026 Free Cash Flow
-$611 million
Free cash flow for the six months ended June 30, 2026
Backlog June 30, 2026
$57,322 million
Total funded and unfunded backlog as of June 30, 2026
Remaining Performance Obligations
$57.3 billion
Remaining performance obligations as of June 30, 2026
Long-term Debt
$2,702 million
Long-term debt outstanding as of June 30, 2026
Key Terms
cumulative catch-up revenue adjustments, Operating FAS/CAS Adjustment, remaining performance obligations, unrecognized tax benefits, +2 more
6 terms
cumulative catch-up revenue adjustments financial
"The following table presents the effect of net cumulative catch-up revenue adjustments"
Operating FAS/CAS Adjustment financial
"The following table reconciles operating income to segment operating income including the Operating FAS/CAS Adjustment"
remaining performance obligations financial
"As of June 30, 2026, the Company had $57.3 billion of remaining performance obligations"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
unrecognized tax benefits financial
"The Company's unrecognized tax benefits increased by $1 million and $4 million during the three and six months"
free cash flow financial
"Free cash flow represents cash provided by (used in) operating activities less capital expenditures"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Pillar Two regulatory
"administrative guidance on Pillar Two’s 15% global minimum tax including a side-by-side system"
Pillar Two is an international tax framework that sets a global minimum tax rate for large multinational companies and requires extra payments when profits booked in low-tax locations fall below that floor. For investors, it matters because it raises the likely tax bill, reduces after-tax earnings and cash available for dividends or reinvestment, and can change company valuations—think of it as a tax “price floor” that limits how much a firm can lower its effective tax rate.
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FAQ
How did Huntington Ingalls (HII) perform financially in Q2 2026?
HII’s Q2 2026 sales and service revenues rose to $3.418 billion from $3.082 billion, and net earnings increased to $208 million from $152 million. Diluted EPS was $5.27, up from $3.86, as shipbuilding volume and segment operating income improved.
What were HII’s year-to-date 2026 results compared with 2025?
For the first six months of 2026, HII generated $6.517 billion in sales and service revenues versus $5.816 billion in 2025. Net earnings were $357 million, compared with $301 million, reflecting higher volumes at Newport News and Ingalls and better Mission Technologies profitability.
What is Huntington Ingalls (HII) backlog and revenue visibility?
As of June 30, 2026, HII reported total backlog and remaining performance obligations of $57.3 billion, up from $53.1 billion at December 31, 2025. The company expects to recognize about 35% of remaining performance obligations as revenue through 2027 and another 35% through 2029.
Why was HII’s operating cash flow negative in the first half of 2026?
Net cash from operating activities was - $421 million in the first half of 2026, versus +$428 million a year earlier. Management attributes the decline mainly to an unfavorable change in trade working capital driven by the timing of billings across U.S. Navy programs.
How did HII’s Mission Technologies segment perform in Q2 2026?
Mission Technologies revenue slipped to $760 million from $791 million in Q2 2025, reflecting lower All-Domain Operations and Global Security volumes. However, segment operating income increased to $55 million from $36 million, helped by higher equity income from nuclear and environmental joint ventures.
What key legal matters affect Huntington Ingalls (HII) now?
HII agreed in March 2026 to resolve a class action antitrust lawsuit, recording a liability that management states is not material. The company is also appealing an April 2026 adverse summary judgment on COVID‑19 insurance claims and continues working with the U.S. Navy on disclosed welding quality issues.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
FORM 10-Q
______________________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ________ to ________
Commission file number 001-34910
______________________________________________________________
(Exact name of registrant as specified in its charter)
______________________________________________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices and zip code)
(757 ) 380-2000
(Registrant’s telephone number, including area code)
______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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.
☒ | 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 July 24, 2026, 39,404,598 shares of the registrant's common stock were outstanding.
Table of Contents
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | Page | |||||||||||||
| Item 1. | Financial Statements (Unaudited) | |||||||||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | 1 | |||||||||||||
Condensed Consolidated Statements of Financial Position | 2 | |||||||||||||
Condensed Consolidated Statements of Cash Flows | 3 | |||||||||||||
Condensed Consolidated Statements of Changes in Equity | 4 | |||||||||||||
Notes to Condensed Consolidated Financial Statements | 5 | |||||||||||||
| 1. | Description of Business | 5 | ||||||||||||
| 2. | Basis of Presentation | 5 | ||||||||||||
| 3. | Accounting Standards Updates | 6 | ||||||||||||
| 4. | Stockholders' Equity | 6 | ||||||||||||
| 5. | Earnings Per Share | 8 | ||||||||||||
| 6. | Revenue | 8 | ||||||||||||
| 7. | Segment Information | 12 | ||||||||||||
| 8. | Income Taxes | 15 | ||||||||||||
| 9. | Investigations, Claims, and Litigation | 15 | ||||||||||||
| 10. | Commitments and Contingencies | 17 | ||||||||||||
| 11. | Employee Pension and Other Postretirement Benefits | 18 | ||||||||||||
| 12. | Stock Compensation Plans | 18 | ||||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 | ||||||||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 35 | ||||||||||||
| Item 4. | Controls and Procedures | 36 | ||||||||||||
| PART II – OTHER INFORMATION | ||||||||||||||
| Item 1. | Legal Proceedings | 37 | ||||||||||||
| Item 1A. | Risk Factors | 37 | ||||||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||||||||||
| Item 3. | Defaults Upon Senior Securities | 37 | ||||||||||||
| Item 4. | Mine Safety Disclosures | 37 | ||||||||||||
| Item 5. | Other Information | 38 | ||||||||||||
| Item 6. | Exhibits | 38 | ||||||||||||
Signatures | 39 | |||||||||||||
Table of Contents
HUNTINGTON INGALLS INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (in millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Sales and service revenues | ||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Service revenues | ||||||||||||||||||||||||||
| Sales and service revenues | ||||||||||||||||||||||||||
| Cost of sales and service revenues | ||||||||||||||||||||||||||
| Cost of product sales | ||||||||||||||||||||||||||
| Cost of service revenues | ||||||||||||||||||||||||||
| Income from operating investments, net | ||||||||||||||||||||||||||
| Other income and gains, net | — | — | ||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Non-operating retirement benefit | ||||||||||||||||||||||||||
| Other, net | ||||||||||||||||||||||||||
| Earnings before income taxes | ||||||||||||||||||||||||||
| Federal and foreign income tax expense | ||||||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average common shares outstanding | ||||||||||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average diluted shares outstanding | ||||||||||||||||||||||||||
| Dividends declared per share | $ | $ | $ | $ | ||||||||||||||||||||||
| Net earnings from above | $ | $ | $ | $ | ||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||
| Change in unamortized benefit plan costs | ||||||||||||||||||||||||||
| Tax expense for items of other comprehensive income | — | — | ( | — | ||||||||||||||||||||||
| Other comprehensive income, net of tax | ||||||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
| ($ in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Current Assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net of allowance for expected credit losses of $ | ||||||||||||||
| Contract assets | ||||||||||||||
| Inventoried costs | ||||||||||||||
| Income taxes receivable | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
Property, plant, and equipment, net of accumulated depreciation of $ | ||||||||||||||
| Operating lease assets | ||||||||||||||
| Goodwill | ||||||||||||||
Other intangible assets, net of accumulated amortization of $ | ||||||||||||||
| Pension plan assets | ||||||||||||||
| Miscellaneous other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||
| Current Liabilities | ||||||||||||||
| Trade accounts payable | $ | $ | ||||||||||||
| Accrued employees’ compensation | ||||||||||||||
| Current portion of postretirement plan liabilities | ||||||||||||||
| Current portion of workers’ compensation liabilities | ||||||||||||||
| Contract liabilities | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Pension plan liabilities | ||||||||||||||
| Other postretirement plan liabilities | ||||||||||||||
| Workers’ compensation liabilities | ||||||||||||||
| Long-term operating lease liabilities | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and Contingencies (Note 10) | ||||||||||||||
| Stockholders’ Equity | ||||||||||||||
Common stock, $0.01 par value; | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Treasury stock | ( | ( | ||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Six Months Ended June 30 | ||||||||||||||
| ($ in millions) | 2026 | 2025 | ||||||||||||
| Operating Activities: | ||||||||||||||
| Net earnings | $ | $ | ||||||||||||
| Adjustments to reconcile net cash provided by (used in) operating activities: | ||||||||||||||
| Depreciation | ||||||||||||||
| Amortization of purchased intangibles | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Deferred income taxes | ( | |||||||||||||
| Gain on investments in marketable securities | ( | ( | ||||||||||||
| Other non-cash transactions, net | ||||||||||||||
| Change in | ||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||
| Contract assets | ( | ( | ||||||||||||
| Inventoried costs | ( | ( | ||||||||||||
| Prepaid expenses and other assets | ( | |||||||||||||
| Accounts payable and accruals | ( | |||||||||||||
| Retiree benefits | ( | ( | ||||||||||||
| Net cash provided by (used in) operating activities | ( | |||||||||||||
| Investing Activities: | ||||||||||||||
| Capital expenditures | ||||||||||||||
| Capital expenditure additions | ( | ( | ||||||||||||
| Grant proceeds for capital expenditures | ||||||||||||||
| Acquisitions of businesses | — | ( | ||||||||||||
| Other investing activities, net | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Financing Activities: | ||||||||||||||
| Repayment of long-term debt | — | ( | ||||||||||||
| Proceeds from line of credit borrowings | — | |||||||||||||
| Repayment of line of credit borrowings | ( | — | ||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Employee taxes on certain share-based payment arrangements | ( | ( | ||||||||||||
| Other financing activities, net | — | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Change in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents, beginning of period | ||||||||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||||||||
| Supplemental Cash Flow Disclosure | ||||||||||||||
| Cash paid for income taxes (net of refunds) | $ | $ | ||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
| Non-Cash Investing and Financing Activities | ||||||||||||||
| Capital expenditures accrued in accounts payable | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| Three Months Ended June 30, 2026 and 2025 ($ in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 and 2025 ($ in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | ( | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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HUNTINGTON INGALLS INDUSTRIES, INC.
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 $263 million and $249 million as of June 30, 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 June 30, 2026 and December 31, 2025 were $2,699 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.
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3. ACCOUNTING STANDARDS UPDATES
Recently Adopted Guidance
There were no new Accounting Standards Updates (“ASU”) adopted during the six months ended June 30, 2026 that had a material impact on the Company’s consolidated financial statements.
Accounting Guidance Issued But Not Adopted as of June 30, 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 six months ended June 30, 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 $109 million and $106 million for the six months ended June 30, 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 $50 million and $53 million as of June 30, 2026, and December 31, 2025, respectively.
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The changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2026 and 2025, were as follows:
| ($ in millions) | Benefit Plans | Total | ||||||||||||||||||
| Balance as of March 31, 2025 | $ | ( | $ | ( | ||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
| Amortization of prior service cost⁽¹⁾ | ||||||||||||||||||||
| Amortization of net actuarial gain⁽¹⁾ | ( | ( | ||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | ||||||||||||||||
| Balance as of March 31, 2026 | $ | ( | $ | ( | ||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
| Amortization of prior service cost⁽¹⁾ | ||||||||||||||||||||
| Amortization of net actuarial gain⁽¹⁾ | ( | ( | ||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | ( | ||||||||||||||||
| ($ in millions) | Benefit Plans | Total | ||||||||||||||||||
| Balance as of December 31, 2024 | $ | ( | $ | ( | ||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
| Amortization of prior service cost⁽¹⁾ | ||||||||||||||||||||
| Amortization of net actuarial gain⁽¹⁾ | ( | ( | ||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | ||||||||||||||||
| Balance as of December 31, 2025 | $ | ( | $ | ( | ||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ||||||||||||||||||||
| Amortization of prior service cost⁽¹⁾ | ||||||||||||||||||||
| Amortization of net actuarial gain⁽¹⁾ | ( | ( | ||||||||||||||||||
| Tax expense for items of other comprehensive income | ( | ( | ||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | ( | ||||||||||||||||
(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 each of the three months ended June 30, 2026 and 2025 was less than $1 million. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the six months ended June 30, 2026 and 2025 was $1 million and less than $1 million, respectively.
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5. EARNINGS PER SHARE
Basic and diluted earnings per common share were calculated as follows:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (in millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average common shares outstanding | ||||||||||||||||||||||||||
| Net dilutive effect of stock awards | — | — | — | — | ||||||||||||||||||||||
| Dilutive weighted-average common shares outstanding | ||||||||||||||||||||||||||
| Earnings per share - basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings per share - diluted | $ | $ | $ | $ | ||||||||||||||||||||||
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 each of the three and six months ended June 30, 2026 and 2025, respectively. The Company has also excluded the effects of 0.1 million Restricted Stock Rights ("RSRs") for each of the three and six months ended June 30, 2026, and 0.1 million and 0.2 million RSRs for the three and six months ended June 30, 2025, respectively.
6. REVENUE
Disaggregation of Revenue
The following tables present revenues on a disaggregated basis:
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Revenue Type | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Customer Type | ||||||||||||||||||||||||||||||||
| Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Commercial | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Contract Type | ||||||||||||||||||||||||||||||||
| Firm fixed-price | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Fixed-price incentive | — | |||||||||||||||||||||||||||||||
| Cost-type | — | |||||||||||||||||||||||||||||||
| Time and materials | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
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| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Revenue Type | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Customer Type | ||||||||||||||||||||||||||||||||
| Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Commercial | — | — | ||||||||||||||||||||||||||||||
| State and local government agencies | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Contract Type | ||||||||||||||||||||||||||||||||
| Firm fixed-price | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Fixed-price incentive | — | |||||||||||||||||||||||||||||||
| Cost-type | — | |||||||||||||||||||||||||||||||
| Time and materials | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Revenue Type | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Customer Type | ||||||||||||||||||||||||||||||||
| Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Commercial | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Contract Type | ||||||||||||||||||||||||||||||||
| Firm fixed-price | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Fixed-price incentive | — | |||||||||||||||||||||||||||||||
| Cost-type | — | |||||||||||||||||||||||||||||||
| Time and materials | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
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| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Revenue Type | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Customer Type | ||||||||||||||||||||||||||||||||
| Federal | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Commercial | — | — | ||||||||||||||||||||||||||||||
| State and local government agencies | — | — | — | |||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Contract Type | ||||||||||||||||||||||||||||||||
| Firm fixed-price | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Fixed-price incentive | — | |||||||||||||||||||||||||||||||
| Cost-type | — | |||||||||||||||||||||||||||||||
| Time and materials | — | — | ||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Major Programs | ||||||||||||||||||||||||||
| Amphibious assault ships | $ | $ | $ | $ | ||||||||||||||||||||||
| Surface combatants and coast guard cutters | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total Ingalls | ||||||||||||||||||||||||||
| Aircraft carriers | ||||||||||||||||||||||||||
| Submarines | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total Newport News | ||||||||||||||||||||||||||
| All-domain operations and warfare systems | ||||||||||||||||||||||||||
| Global security, unmanned systems, and other | ||||||||||||||||||||||||||
| Total Mission Technologies | ||||||||||||||||||||||||||
| Intersegment eliminations | ( | ( | ( | ( | ||||||||||||||||||||||
| Sales and service revenues | $ | $ | $ | $ | ||||||||||||||||||||||
As of June 30, 2026, the Company had $57.3 billion of remaining performance obligations. The Company expects to recognize approximately 35 % of its remaining performance obligations as revenue through 2027, an additional 35 % through 2029, and the balance thereafter.
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Cumulative Catch-up Revenue Adjustments
The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Effect on operating income(1) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Effect on diluted earnings per share (net of tax) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
(1) For each of the three and six months ended June 30, 2026 and 2025, 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 June 30, 2026, cumulative catch-up revenue adjustments included a favorable adjustment of $28 million on the refueling and complex overhaul ("RCOH") of USS John C. Stennis (CVN 74) at the Company's Newport News segment.
For the three months ended June 30, 2026, cumulative catch-up revenue adjustments included an unfavorable adjustment of $48 million on the RCOH of USS George Washington (CVN 73) at the Company's Newport News segment.
For the six months ended June 30, 2026, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.
For the six months ended June 30, 2026, cumulative catch-up revenue adjustments included an unfavorable adjustment of $48 million on the RCOH of USS George Washington (CVN 73) at the Company's Newport News segment.
For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $32 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.
For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included unfavorable adjustments of $42 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment and $20 million on the Bougainville (LHA 8) construction contract at the Company's Ingalls segment.
For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $33 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.
For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included an unfavorable adjustment of $43 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment.
Contract Balances
The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Net contract assets were comprised as follows:
| ($ in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Contract assets | $ | $ | ||||||||||||
| Contract liabilities | ||||||||||||||
| Net contract assets | $ | $ | ||||||||||||
The Company’s net contract assets increased $926 million from December 31, 2025 to June 30, 2026, primarily as a result of the timing of billings across programs on certain U.S. Navy contracts. For the three and six months ended June 30, 2026, the Company recognized revenue of $197 million and $955 million, respectively, related to its contract liabilities as of December 31, 2025. For the three and six months ended June 30, 2025, the Company
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7. SEGMENT INFORMATION
The following tables present the Company's operating results by segment:
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Sales and Service Revenues | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Total sales and service revenues | ( | |||||||||||||||||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||||||||||||||
| Income from operating investments, net | — | — | — | |||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Cost of sales and service revenues | ||||||||||||||||||||||||||||||||
| Product | — | |||||||||||||||||||||||||||||||
| Service | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Other segment items | — | |||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | — | |||||||||||||||||||||||||||
| Non-segment factors affecting operating income | ||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | ( | |||||||||||||||||||||||||||||||
| Non-current state income taxes | ( | |||||||||||||||||||||||||||||||
| Total operating income | $ | |||||||||||||||||||||||||||||||
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| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Sales and Service Revenues | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Total sales and service revenues | ( | |||||||||||||||||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||||||||||||||
| Income from operating investments, net | — | — | — | |||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Cost of sales and service revenues | ||||||||||||||||||||||||||||||||
| Product | — | |||||||||||||||||||||||||||||||
| Service | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Other segment items | — | |||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | — | |||||||||||||||||||||||||||
| Non-segment factors affecting operating income | ||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | ( | |||||||||||||||||||||||||||||||
| Non-current state income taxes | ( | |||||||||||||||||||||||||||||||
| Total operating income | $ | |||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Sales and Service Revenues | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Total sales and service revenues | ( | |||||||||||||||||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||||||||||||||
| Income from operating investments, net | — | — | — | |||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Cost of sales and service revenues | ||||||||||||||||||||||||||||||||
| Product | — | |||||||||||||||||||||||||||||||
| Service | — | |||||||||||||||||||||||||||||||
| Intersegment | — | ( | — | |||||||||||||||||||||||||||||
| Other segment items | — | |||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | — | |||||||||||||||||||||||||||
| Non-segment factors affecting operating income | ||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | ( | |||||||||||||||||||||||||||||||
| Non-current state income taxes | ( | |||||||||||||||||||||||||||||||
| Total operating income | $ | |||||||||||||||||||||||||||||||
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| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| ($ in millions) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |||||||||||||||||||||||||||
| Sales and Service Revenues | ||||||||||||||||||||||||||||||||
| Product sales | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Service revenues | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Total sales and service revenues | ( | |||||||||||||||||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||||||||||||||
| Income from operating investments, net | — | — | — | |||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Cost of sales and service revenues | ||||||||||||||||||||||||||||||||
| Product | — | |||||||||||||||||||||||||||||||
| Service | — | |||||||||||||||||||||||||||||||
| Intersegment | ( | — | ||||||||||||||||||||||||||||||
| Other segment items | — | |||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | — | |||||||||||||||||||||||||||
| Non-segment factors affecting operating income | ||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | ( | |||||||||||||||||||||||||||||||
| Non-current state income taxes | ( | |||||||||||||||||||||||||||||||
| Total operating income | $ | |||||||||||||||||||||||||||||||
Sales transactions between segments are generally recorded at cost.
Other segment items consist of general and administrative expenses and other income and gains, net.
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:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Capital Expenditures(1) | ||||||||||||||||||||||||||
| Ingalls | $ | $ | $ | $ | ||||||||||||||||||||||
| Newport News | ||||||||||||||||||||||||||
| Mission Technologies | ||||||||||||||||||||||||||
| Total segment capital expenditures | ||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | ||||||||||||||||||||||
(1) Net of grant proceeds for capital expenditures
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| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||||||||
| Ingalls | $ | $ | $ | $ | ||||||||||||||||||||||
| Newport News | ||||||||||||||||||||||||||
| Mission Technologies | ||||||||||||||||||||||||||
| Total segment depreciation and amortization | ||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||||||||||||
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 June 30, 2026 and 2025, were 18.1 % and 19.1 %, respectively. For the six months ended June 30, 2026 and 2025, the Company's effective income tax rates on earnings from operations were 19.2 % and 19.7 %, respectively. The lower effective tax rates for the three and six months ended June 30, 2026, were primarily attributable to income tax benefits associated with stock award settlement activity.
For the three and six months ended June 30, 2026, the Company’s effective tax rate differed from the federal statutory corporate income tax rate of 21 % primarily due to income tax benefits associated with stock award settlement activity.
The Company's unrecognized tax benefits increased by $1 million and $4 million during the three and six months ended June 30, 2026, respectively. As of June 30, 2026, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $109 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 and six months ended June 30, 2026, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $1 million and $3 million, respectively.
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
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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 April 2026, the lower court granted the reinsurers' motion for summary judgment. The Company has appealed the lower court's decision to the Vermont Supreme Court and 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 six months ended June 30, 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
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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 June 30, 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 June 30, 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 June 30, 2026, the Company had $10 million in issued but undrawn letters of credit and $283 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 45,000 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
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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 each of the three and six months ended June 30, 2026 and 2025, were as follows:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | Pension Benefits | Other Benefits | |||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||
| Components of net periodic benefit cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | — | — | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Amortization of prior service cost (credit) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss (gain) | — | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit (income) cost | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30 | ||||||||||||||
| ($ in millions) | 2026 | 2025 | ||||||||||||
| Pension plans | ||||||||||||||
| Discretionary | ||||||||||||||
| Qualified | $ | $ | — | |||||||||||
| Non-qualified | ||||||||||||||
| Other benefit plans | ||||||||||||||
| Total contributions | $ | $ | ||||||||||||
As of June 30, 2026, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2026.
12. STOCK COMPENSATION PLANS
During the six months ended June 30, 2026 and 2025, the Company issued new stock awards as follows:
Restricted Performance Stock Rights - For the six months ended June 30, 2026, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $433.96 . These rights are subject to cliff vesting on December 31, 2028. For the six months ended June 30, 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 six months ended June 30, 2026, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $434.27 . For the six months ended June 30, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $168.92 . These rights vest 33 1/3% upon each of the first, second, and third anniversaries of the grant date.
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Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company. For the six months ended June 30, 2026, the Company granted approximately 1,900 retention RSRs at a weighted average share price of $363.70 , with cliff vesting two years from the grant date. For the six months ended June 30, 2025, the Company granted approximately 1,300 retention RSRs at a weighted average share price of $189.38 , 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 six months ended June 30, 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 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Adjusted due to performance | ||||||||||||||||||||
| Vested | ( | |||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||
| Outstanding at June 30, 2025 | $ | |||||||||||||||||||
| Outstanding at December 31, 2025 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Adjusted due to performance | ||||||||||||||||||||
| Vested | ( | |||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||
| Outstanding at June 30, 2026 | $ | |||||||||||||||||||
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 45,000 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.
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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").
Business Environment
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 President submitted the fiscal year 2027 budget request on April 3, 2026, which is now under consideration by Congress. The budget request reflects continued investment in shipbuilding, recommending $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. The discretionary request funds 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 Frigate class (FF(X)) ship. 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.
Congressional consideration of the fiscal year 2027 budget request began following its release and is ongoing. The House Appropriations Committee voted out a defense appropriations measure that supports the President’s topline budget request. The Senate Appropriations Committee has yet to conduct markups, and the timing of committee action remains uncertain. The House and Senate Armed Services Committees have each acted on their respective National Defense Authorization bills for fiscal year 2027. We cannot predict the outcome of the fiscal year 2027 budget process or whether a short-term funding measure will be provided in the event annual appropriations measures are not finalized by the October 1 start of the fiscal year.
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.
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As of June 30, 2026, there had been no material changes to the foregoing critical accounting policies, estimates, and judgments since December 31, 2025.
Program Descriptions
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.
As of June 30, 2026, Frigate class (FF(X)) ships are included in the Glossary of Programs in this section. Frigate class (FF(X)) ships are included as part of surface combatants described Part I, Item 1 in the 2025 Annual Report on Form 10-K.
CONSOLIDATED OPERATING RESULTS
The following table presents selected financial highlights:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Sales and service revenues | $ | 3,418 | $ | 3,082 | $ | 336 | 11 | % | $ | 6,517 | $ | 5,816 | $ | 701 | 12 | % | ||||||||||||||||||||||||||||||||||
| Cost of product sales and service revenues | 2,987 | 2,687 | 300 | 11 | % | 5,678 | 5,027 | 651 | 13 | % | ||||||||||||||||||||||||||||||||||||||||
| Income from operating investments, net | 21 | 8 | 13 | 163 | % | 26 | 21 | 5 | 24 | % | ||||||||||||||||||||||||||||||||||||||||
| Other income and gains, net | — | 1 | (1) | (100) | % | — | 1 | (1) | (100) | % | ||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 242 | 241 | 1 | — | % | 500 | 487 | 13 | 3 | % | ||||||||||||||||||||||||||||||||||||||||
| Operating income | 210 | 163 | 47 | 29 | % | 365 | 324 | 41 | 13 | % | ||||||||||||||||||||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (27) | (28) | 1 | 4 | % | (49) | (56) | 7 | 13 | % | ||||||||||||||||||||||||||||||||||||||||
| Non-operating retirement benefit | 53 | 47 | 6 | 13 | % | 106 | 95 | 11 | 12 | % | ||||||||||||||||||||||||||||||||||||||||
| Other, net | 18 | 6 | 12 | 200 | % | 20 | 12 | 8 | 67 | % | ||||||||||||||||||||||||||||||||||||||||
| Federal and foreign income taxes | 46 | 36 | 10 | 28 | % | 85 | 74 | 11 | 15 | % | ||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 208 | $ | 152 | $ | 56 | 37 | % | $ | 357 | $ | 301 | $ | 56 | 19 | % | ||||||||||||||||||||||||||||||||||
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
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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 June 30, 2026, increased $336 million, or 11%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls. Sales and service revenues for the six months ended June 30, 2026, increased $701 million, or 12%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls.
Net Cumulative Catch-up Revenue Adjustments
For the three and six months ended June 30, 2026 and 2025, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Gross favorable adjustments | $ | 168 | $ | 138 | $ | 234 | $ | 218 | ||||||||||||||||||
| Gross unfavorable adjustments | (158) | (148) | (223) | (228) | ||||||||||||||||||||||
| Net adjustments | $ | 10 | $ | (10) | $ | 11 | $ | (10) | ||||||||||||||||||
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 and six months ended June 30, 2026 increased $1 million and $13 million, respectively, from the same periods in 2025, primarily due to higher non-current state income taxes.
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.
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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 June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 210 | $ | 163 | $ | 47 | 29 | % | $ | 365 | $ | 324 | $ | 41 | 13 | % | ||||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | 8 | 6 | 2 | 33 | % | 17 | 16 | 1 | 6 | % | ||||||||||||||||||||||||||||||||||||||||
| Non-current state income taxes | 6 | 3 | 3 | 100 | % | 14 | 3 | 11 | 367 | % | ||||||||||||||||||||||||||||||||||||||||
| Segment operating income | $ | 224 | $ | 172 | $ | 52 | 30 | % | $ | 396 | $ | 343 | $ | 53 | 15 | % | ||||||||||||||||||||||||||||||||||
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 June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| FAS benefit | $ | 30 | $ | 25 | $ | 5 | 20 | % | $ | 61 | $ | 50 | $ | 11 | 22 | % | ||||||||||||||||||||||||||||||||||
| CAS cost | 15 | 16 | (1) | (6) | % | 28 | 29 | (1) | (3) | % | ||||||||||||||||||||||||||||||||||||||||
| FAS/CAS Adjustment | 45 | 41 | 4 | 10 | % | 89 | 79 | 10 | 13 | % | ||||||||||||||||||||||||||||||||||||||||
| Non-operating retirement benefit | (53) | (47) | (6) | (13) | % | (106) | (95) | (11) | (12) | % | ||||||||||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment expense | $ | (8) | $ | (6) | $ | (2) | (33) | % | $ | (17) | $ | (16) | $ | (1) | (6) | % | ||||||||||||||||||||||||||||||||||
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The Operating FAS/CAS Adjustment was a net expense of $8 million and $6 million for the three months ended June 30, 2026 and 2025, respectively. The Operating FAS/CAS Adjustment was a net expense of $17 million and $16 million for the six months ended June 30, 2026 and 2025, respectively. The unfavorable change in the Operating FAS/CAS Adjustment for each period 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 $6 million and $3 million for the three months ended June 30, 2026 and 2025, respectively. 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.
Non-current state income tax expense was $14 million and $3 million for the six months ended June 30, 2026 and 2025, respectively. The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and a change in state unrecognized tax benefits for the prior period.
SEGMENT OPERATING RESULTS
Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.
The following table presents segment operating results:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Sales and Service Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ingalls | $ | 845 | $ | 724 | $ | 121 | 17 | % | $ | 1,570 | $ | 1,361 | $ | 209 | 15 | % | ||||||||||||||||||||||||||||||||||
| Newport News | 1,849 | 1,603 | 246 | 15 | % | 3,514 | 2,999 | 515 | 17 | % | ||||||||||||||||||||||||||||||||||||||||
Mission Technologies | 760 | 791 | (31) | (4) | % | 1,508 | 1,526 | (18) | (1) | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment eliminations | (36) | (36) | — | — | % | (75) | (70) | (5) | (7) | % | ||||||||||||||||||||||||||||||||||||||||
| Sales and service revenues | $ | 3,418 | $ | 3,082 | $ | 336 | 11 | % | $ | 6,517 | $ | 5,816 | $ | 701 | 12 | % | ||||||||||||||||||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ingalls | $ | 58 | $ | 54 | $ | 4 | 7 | % | $ | 107 | $ | 100 | $ | 7 | 7 | % | ||||||||||||||||||||||||||||||||||
| Newport News | 111 | 82 | 29 | 35 | % | 199 | 167 | 32 | 19 | % | ||||||||||||||||||||||||||||||||||||||||
Mission Technologies | 55 | 36 | 19 | 53 | % | 90 | 76 | 14 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Segment operating income | 224 | 172 | 52 | 30 | % | 396 | 343 | 53 | 15 | % | ||||||||||||||||||||||||||||||||||||||||
| Non-segment factors affecting operating income | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating FAS/CAS Adjustment | (8) | (6) | (2) | (33) | % | (17) | (16) | (1) | (6) | % | ||||||||||||||||||||||||||||||||||||||||
| Non-current state income taxes | (6) | (3) | (3) | (100) | % | (14) | (3) | (11) | (367) | % | ||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 210 | $ | 163 | $ | 47 | 29 | % | $ | 365 | $ | 324 | $ | 41 | 13 | % | ||||||||||||||||||||||||||||||||||
Key Segment Financial Measures
Refer to Consolidated Operating Results in this section for details related to sales and service revenues and segment operating income.
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Net Cumulative Catch-up Revenue Adjustments by Segment
For the three and six months ended June 30, 2026 and 2025, net cumulative catch-up revenue adjustments by segment were as follows:
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Ingalls | $ | (2) | $ | 4 | $ | (5) | $ | 4 | ||||||||||||||||||
| Newport News | 8 | (17) | (1) | (23) | ||||||||||||||||||||||
| Mission Technologies | 4 | 3 | 17 | 9 | ||||||||||||||||||||||
| Net adjustments | $ | 10 | $ | (10) | $ | 11 | $ | (10) | ||||||||||||||||||
See Note 6: Revenue and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.
Ingalls
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Sales and service revenues | $ | 845 | $ | 724 | $ | 121 | 17 | % | $ | 1,570 | $ | 1,361 | $ | 209 | 15 | % | ||||||||||||||||||||||||||||||||||
| Segment operating income | 58 | 54 | 4 | 7 | % | 107 | 100 | 7 | 7 | % | ||||||||||||||||||||||||||||||||||||||||
| As a percentage of segment sales | 6.9 | % | 7.5 | % | 6.8 | % | 7.3 | % | ||||||||||||||||||||||||||||||||||||||||||
Sales and Service Revenues
Ingalls revenues, including intersegment sales, for the three months ended June 30, 2026, increased $121 million, or 17%, from the same period in 2025, primarily driven by higher volumes in amphibious assault ships.
Ingalls revenues, including intersegment sales, for the six months ended June 30, 2026, increased $209 million, or 15%, from the same period in 2025, primarily driven by higher volumes in amphibious assault ships and surface combatants.
Segment Operating Income
Ingalls segment operating income for the three months ended June 30, 2026, was $58 million, compared to segment operating income of $54 million for the same period in 2025. The increase was primarily driven by higher volumes in amphibious assault ships, partially offset by contract adjustments in surface combatants in 2025.
Ingalls segment operating income for the six months ended June 30, 2026, was $107 million, compared to segment operating income of $100 million for the same period in 2025. The increase was primarily driven by higher volumes in amphibious assault ships and surface combatants, partially offset by contract adjustments in surface combatants in 2025.
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Newport News
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Sales and service revenues | $ | 1,849 | $ | 1,603 | $ | 246 | 15 | % | $ | 3,514 | $ | 2,999 | $ | 515 | 17 | % | ||||||||||||||||||||||||||||||||||
| Segment operating income | 111 | 82 | 29 | 35 | % | 199 | 167 | 32 | 19 | % | ||||||||||||||||||||||||||||||||||||||||
| As a percentage of segment sales | 6.0 | % | 5.1 | % | 5.7 | % | 5.6 | % | ||||||||||||||||||||||||||||||||||||||||||
Sales and Service Revenues
Newport News revenues, including intersegment sales, for the three months ended June 30, 2026, increased $246 million, or 15%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers and submarines.
Newport News revenues, including intersegment sales, for the six months ended June 30, 2026, increased $515 million, or 17%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers and submarines.
Segment Operating Income
Newport News segment operating income for the three months ended June 30, 2026, was $111 million, compared to segment operating income of $82 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in aircraft carriers and the higher volumes described above, partially offset by lower performance in aircraft carriers.
Newport News segment operating income for the six months ended June 30, 2026, was $199 million, compared to segment operating income of $167 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in aircraft carriers and the higher volumes described above, partially offset by lower performance in aircraft carriers.
Mission Technologies
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Sales and service revenues | $ | 760 | $ | 791 | $ | (31) | (4) | % | $ | 1,508 | $ | 1,526 | $ | (18) | (1) | % | ||||||||||||||||||||||||||||||||||
| Segment operating income | 55 | 36 | 19 | 53 | % | 90 | 76 | 14 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| As a percentage of segment sales | 7.2 | % | 4.6 | % | 6.0 | % | 5.0 | % | ||||||||||||||||||||||||||||||||||||||||||
Sales and Service Revenues
Mission Technologies revenues, including intersegment sales, for the three months ended June 30, 2026, decreased $31 million, or 4%, from the same period in 2025, primarily due to lower volumes in All-Domain Operations and Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems.
Mission Technologies revenues, including intersegment sales, for the six months ended June 30, 2026, decreased $18 million, or 1%, from the same period in 2025, primarily due to lower volumes in All-Domain Operations and Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems.
Segment Operating Income
Mission Technologies segment operating income for the three months ended June 30, 2026, was $55 million, compared to segment operating income of $36 million for the same period in 2025. The increase was primarily due to higher equity income from nuclear and environmental joint ventures.
Mission Technologies segment operating income for the six months ended June 30, 2026, was $90 million, compared to segment operating income of $76 million for the same period in 2025. The increase was primarily due
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to lower purchased intangible amortization, higher performance in Warfare Systems, and higher equity income from nuclear and environmental joint ventures.
PRODUCT AND SERVICE REVENUES AND COST ANALYSIS
The following tables present segment sales and service revenues and segment cost of sales and service revenues by both product and service:
| Sales and Service Revenues | Segment Cost of Product Sales and Service Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | Three Months Ended June 30 | 2026 vs. 2025 | Three Months Ended June 30 | 2026 vs. 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Ingalls | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | $ | 721 | $ | 610 | $ | 111 | 18 | % | $ | 631 | $ | 526 | $ | 105 | 20 | % | ||||||||||||||||||||||||||||||||||
| Service | 122 | 111 | 11 | 10 | % | 111 | 100 | 11 | 11 | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | 2 | 3 | (1) | (33) | % | 2 | 3 | (1) | (33) | % | ||||||||||||||||||||||||||||||||||||||||
| Total Ingalls | 845 | 724 | 121 | 17 | % | 744 | 629 | 115 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Newport News | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | 1,520 | 1,319 | 201 | 15 | % | 1,327 | 1,145 | 182 | 16 | % | ||||||||||||||||||||||||||||||||||||||||
| Service | 329 | 283 | 46 | 16 | % | 275 | 234 | 41 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | — | 1 | (1) | (100) | % | — | 1 | (1) | (100) | % | ||||||||||||||||||||||||||||||||||||||||
| Total Newport News | 1,849 | 1,603 | 246 | 15 | % | 1,602 | 1,380 | 222 | 16 | % | ||||||||||||||||||||||||||||||||||||||||
| Mission Technologies | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | 30 | 28 | 2 | 7 | % | 20 | 20 | — | — | % | ||||||||||||||||||||||||||||||||||||||||
| Service | 696 | 731 | (35) | (5) | % | 615 | 656 | (41) | (6) | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | 34 | 32 | 2 | 6 | % | 34 | 32 | 2 | 6 | % | ||||||||||||||||||||||||||||||||||||||||
| Total Mission Technologies | 760 | 791 | (31) | (4) | % | 669 | 708 | (39) | (6) | % | ||||||||||||||||||||||||||||||||||||||||
| Segment Totals | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | $ | 2,271 | $ | 1,957 | $ | 314 | 16 | % | $ | 1,978 | $ | 1,691 | $ | 287 | 17 | % | ||||||||||||||||||||||||||||||||||
| Service | 1,147 | 1,125 | 22 | 2 | % | 1,001 | 990 | 11 | 1 | % | ||||||||||||||||||||||||||||||||||||||||
Total Segment(1) | $ | 3,418 | $ | 3,082 | $ | 336 | 11 | % | $ | 2,979 | $ | 2,681 | $ | 298 | 11 | % | ||||||||||||||||||||||||||||||||||
(1) Operating FAS/CAS Adjustment is excluded from segment cost of product sales and service revenues.
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| Sales and Service Revenues | Segment Cost of Product Sales and Service Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | Six Months Ended June 30 | 2026 vs. 2025 | Six Months Ended June 30 | 2026 vs. 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Ingalls | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | $ | 1,335 | $ | 1,136 | $ | 199 | 18 | % | $ | 1,162 | $ | 978 | $ | 184 | 19 | % | ||||||||||||||||||||||||||||||||||
| Service | 230 | 218 | 12 | 6 | % | 207 | 190 | 17 | 9 | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | 5 | 7 | (2) | (29) | % | 5 | 7 | (2) | (29) | % | ||||||||||||||||||||||||||||||||||||||||
| Total Ingalls | 1,570 | 1,361 | 209 | 15 | % | 1,374 | 1,175 | 199 | 17 | % | ||||||||||||||||||||||||||||||||||||||||
| Newport News | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | 2,884 | 2,479 | 405 | 16 | % | 2,506 | 2,116 | 390 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Service | 630 | 519 | 111 | 21 | % | 530 | 427 | 103 | 24 | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | — | 1 | (1) | (100) | % | — | 1 | (1) | (100) | % | ||||||||||||||||||||||||||||||||||||||||
| Total Newport News | 3,514 | 2,999 | 515 | 17 | % | 3,036 | 2,544 | 492 | 19 | % | ||||||||||||||||||||||||||||||||||||||||
| Mission Technologies | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | 56 | 55 | 1 | 2 | % | 44 | 40 | 4 | 10 | % | ||||||||||||||||||||||||||||||||||||||||
| Service | 1,382 | 1,409 | (27) | (2) | % | 1,212 | 1,260 | (48) | (4) | % | ||||||||||||||||||||||||||||||||||||||||
| Intersegment | 70 | 62 | 8 | 13 | % | 70 | 62 | 8 | 13 | % | ||||||||||||||||||||||||||||||||||||||||
| Total Mission Technologies | 1,508 | 1,526 | (18) | (1) | % | 1,326 | 1,362 | (36) | (3) | % | ||||||||||||||||||||||||||||||||||||||||
| Segment Totals | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Product | $ | 4,275 | $ | 3,670 | $ | 605 | 16 | % | $ | 3,712 | $ | 3,134 | $ | 578 | 18 | % | ||||||||||||||||||||||||||||||||||
| Service | 2,242 | 2,146 | 96 | 4 | % | 1,949 | 1,877 | 72 | 4 | % | ||||||||||||||||||||||||||||||||||||||||
Total Segment(1) | $ | 6,517 | $ | 5,816 | $ | 701 | 12 | % | $ | 5,661 | $ | 5,011 | $ | 650 | 13 | % | ||||||||||||||||||||||||||||||||||
(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 June 30, 2026, increased $314 million, or 16%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and amphibious assault ships at Ingalls.
Segment cost of product sales for the three months ended June 30, 2026, increased $287 million, or 17%, compared with the same period in 2025, primarily due to the higher volumes described above.
Product sales for the six months ended June 30, 2026, increased $605 million, or 16%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and amphibious assault ships and surface combatants at Ingalls.
Segment cost of product sales for the six months ended June 30, 2026, increased $578 million, or 18%, 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 June 30, 2026, increased $22 million, or 2%, 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 Warfare Systems at Mission Technologies, partially offset by lower volumes in All-Domain Operations and Global Security at Mission Technologies.
Segment cost of service revenues for the three months ended June 30, 2026, increased $11 million, or 1%, compared with the same period in 2025, primarily due to the higher volumes described above.
Service revenues for the six months ended June 30, 2026, increased $96 million, or 4%, from the same period in 2025, primarily due to higher volumes in naval nuclear support services and aircraft carriers at Newport News, and
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higher volumes in Warfare Systems at Mission Technologies, partially offset by lower volumes in All-Domain Operations and Global Security at Mission Technologies.
Segment cost of service revenues for the six months ended June 30, 2026, increased $72 million, or 4%, compared with the same period in 2025, primarily due to the higher volumes described above, partially offset by lower purchased intangible amortization.
OTHER FINANCIAL INFORMATION
Interest Expense
Interest expense for the three months ended June 30, 2026, was $27 million, compared to $28 million for the same period in 2025.
Interest expense for the six months ended June 30, 2026, was $49 million, compared to $56 million for the same period in 2025. The decrease in interest expense was driven by a decrease in outstanding long-term debt compared to the prior year 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 and six months ended June 30, 2026, the non-operating retirement benefit was $53 million and $106 million, respectively, compared with $47 million and $95 million, respectively, for the same periods in 2025. The favorable change in the non-operating retirement benefit for both periods was primarily driven by higher asset returns in 2025.
Other, Net
Other, net income for the three and six months ended June 30, 2026, was $18 million and $20 million, respectively, compared with other, net income of $6 million and $12 million, respectively, for the same periods in 2025. The increase in other, net income for both periods was primarily driven by an increase in unrealized gains on investments.
Federal and Foreign Income Taxes
Our effective income tax rates on earnings from operations for the three months ended June 30, 2026 and 2025, were 18.1 % and 19.1 %, respectively. Our effective income tax rates on earnings from operations for the six months ended June 30, 2026 and 2025, were 19.2 % and 19.7 %, respectively. The lower effective tax rates for the three and six months ended June 30, 2026, were primarily attributable to income tax benefits associated with stock award settlement activity.
For each of the three and six months ended June 30, 2026, our effective tax rates differed from the federal statutory corporate income tax rate of 21 % primarily due to income tax benefits associated with stock award settlement activity.
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 June 30, 2026, and December 31, 2025, was $57.3 billion and $53.1 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and
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unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded indefinite delivery/indefinite quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer as of June 30, 2026 and December 31, 2025, respectively.
The following table presents funded and unfunded backlog by segment as of June 30, 2026, and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| ($ in millions) | Funded | Unfunded | Total Backlog | Funded | Unfunded | Total Backlog | ||||||||||||||||||||||||||||||||
| Ingalls | $ | 16,883 | $ | 2,470 | $ | 19,353 | $ | 14,925 | $ | 2,856 | $ | 17,781 | ||||||||||||||||||||||||||
| Newport News | 15,849 | 16,639 | 32,488 | 15,337 | 14,588 | 29,925 | ||||||||||||||||||||||||||||||||
Mission Technologies | 1,862 | 3,619 | 5,481 | 1,723 | 3,710 | 5,433 | ||||||||||||||||||||||||||||||||
| Total backlog | $ | 34,594 | $ | 22,728 | $ | 57,322 | $ | 31,985 | $ | 21,154 | $ | 53,139 | ||||||||||||||||||||||||||
We expect approximately 22% 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 June 30, 2026 and December 31, 2025.
Contract Awards
The value of new contract awards during the six months ended June 30, 2026, was approximately $10.7 billion, primarily driven by awards at Newport News and Ingalls.
LIQUIDITY AND CAPITAL RESOURCES
We seek to efficiently convert operating results into cash for deployment in operating our businesses, implementing our business strategy, and maximizing stockholder value. We use various financial measures to inform our capital deployment strategy, including net cash provided by (used in) operating activities and free cash flow. We believe these measures are useful to investors in assessing our financial performance.
The following table summarizes key components of cash flow provided by (used in) operating activities:
| Six Months Ended June 30 | 2026 vs. 2025 | |||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | |||||||||||||||||||||||
| Net earnings | $ | 357 | $ | 301 | $ | 56 | ||||||||||||||||||||
| Depreciation and amortization of purchased intangibles | 155 | 162 | (7) | |||||||||||||||||||||||
| Stock-based compensation | 31 | 33 | (2) | |||||||||||||||||||||||
| Deferred income taxes | 89 | (19) | 108 | |||||||||||||||||||||||
| Gain on investments in marketable securities | (19) | (10) | (9) | |||||||||||||||||||||||
| Other non-cash transactions, net | 12 | 9 | 3 | |||||||||||||||||||||||
| Retiree benefits | (90) | (77) | (13) | |||||||||||||||||||||||
| Change in trade working capital | (956) | 29 | (985) | |||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (421) | $ | 428 | $ | (849) | ||||||||||||||||||||
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.
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Cash Flows
Operating Activities
Cash used in operating activities for the six months ended June 30, 2026, was $421 million, compared with cash provided by operating activities of $428 million for the same period in 2025. The change in operating cash flow was primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs.
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 July 1, 2026, and beyond such twelve-month period based on our current business plans.
Investing Activities
Cash used in investing activities for the six months ended June 30, 2026, was $189 million, compared to $291 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 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 six months ended June 30, 2026, was $152 million, compared with $625 million used in financing activities for the same period in 2025. The change in cash used in financing activities was primarily due to the repayment of long-term debt in 2025.
Free Cash Flow
Free cash flow represents cash provided by (used in) operating activities less capital expenditures net of related grant proceeds. Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net earnings as a measure of our performance or net cash provided by (used in) operating activities as a measure of our liquidity. We believe free cash flow is an important liquidity measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.
The following table reconciles net cash provided by (used in) operating activities to free cash flow:
| Six Months Ended June 30 | 2026 vs. 2025 | |||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | |||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (421) | $ | 428 | $ | (849) | ||||||||||||||
| Less capital expenditures: | ||||||||||||||||||||
| Capital expenditure additions | (193) | (163) | (30) | |||||||||||||||||
| Grant proceeds for capital expenditures | 3 | 3 | — | |||||||||||||||||
| Free cash flow | $ | (611) | $ | 268 | $ | (879) | ||||||||||||||
Free cash flow for the six months ended June 30, 2026, decreased $879 million from the same period in 2025, primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs.
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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 June 30, 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 June 30, 2026, $10 million in letters of credit were issued but undrawn and $283 million of surety bonds were outstanding. As of June 30, 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;
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•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.
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GLOSSARY OF PROGRAMS
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. | |||||||
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Frigate class (FF(X)) ships | Design and build frigate ships that provide small blue-water surface combatants, producible in volume, and designed to fit within the Golden Fleet’s High/Low fleet architecture, complementing larger, multi-mission capable platforms. Frigate will be a vanguard of the Navy’s Hedge Strategy within the General-Purpose Force, handling routine missions across the globe and freeing the Main Battle Force to remain focused on high-end combat. Frigate will act as the command ship for Tailored Offsets, specifically Robotic and Autonomous Systems (RAS), and integrating with RAS to lead Tailored Forces into a cohesive warfighting approach. In 2026, we were awarded a lead yard services contract to begin Frigate class baseline design engineering and included funding for long-lead-material procurements and preconstruction efforts on the first ship in the class. | |||||||
Legend class National Security Cutter | 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 June 30, 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.
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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.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
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 June 30, 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 June 30, 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.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
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 June 30, 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) | ||||||||||||||||||||||
| April 1, 2026 to April 30, 2026 | — | $ | — | — | $ | 1,352.3 | ||||||||||||||||||||
| May 1, 2026 to May 31, 2026 | — | — | — | 1,352.3 | ||||||||||||||||||||||
| June 1, 2026 to June 30, 2026 | — | — | — | 1,352.3 | ||||||||||||||||||||||
| Total | — | $ | — | — | $ | 1,352.3 | ||||||||||||||||||||
(1) From the stock repurchase program's inception through June 30, 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.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
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Item 5. Other Information
(c) Adoption or Termination of Trading Arrangements
Consistent with Item 408 of Regulation S-K, the following table reflects Rule 10b5-1 trading arrangements and non-Rule 10b5-1 trading arrangements (as defined in Item 408) entered into by any director or officer (as defined in Rule 16a-1(f) of the Exchange Act) during the quarter ended June 30, 2026.
| Name (Title) | Type of Trading Arrangement | Date of Adoption | Expiration Date of Trading Arrangement | Aggregate Number of Securities to Be Purchased or Sold | ||||||||||||||||||||||
Item 6. Exhibits
| 3.1 | Restated Certificate of Incorporation of Huntington Ingalls Industries, Inc., dated April 30, 2025 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 5, 2025, File No. 001-34910). | |||||||
| 3.2 | Restated Bylaws of Huntington Ingalls Industries, Inc., dated April 30, 2025 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 5, 2025, File No. 001-34910). | |||||||
| 31.1 | Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2 | Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1 | Certificate of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.2 | Certificate of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101 | 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. | |||||||
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SIGNATURES
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: | July 30, 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) | |||||||||||
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