HII

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Huntington Ingalls Industries stock has delivered a 63.5% return over the past 5 years, yet current checks suggest the market price may still sit below what its cash flows imply. Both the Discounted Cash Flow (DCF) intrinsic value estimate and the market multiple view currently point to the shares screening as undervalued. Huntington Ingalls Industries has returned 63.5% over 5 years, which makes the current discount to intrinsic value especially important for long term holders to weigh. Recent progress on major programs such as the John F. Kennedy aircraft carrier trials and the SOUTHCOM STRINGRAI contract can support expectations for future cash flows, while execution and cost risk on these complex defense projects may still affect how much of that value ultimately reaches shareholders. The company scores highly on the broader valuation checks and is assessed as undervalued in 6 of 6 tests, which points to a broad based case that the current price is below estimated worth. For investors, the debate is whether Huntington Ingalls Industries' current discount to intrinsic value offers a margin of safety that compensates for the execution and contract risks tied to its defense programs. Find out why Huntington Ingalls Industries' 15.0% return over the last year is lagging behind its peers. The Discounted Cash Flow (DCF) model here uses projected free cash flows to estimate what Huntington Ingalls Industries might be worth today. The latest twelve month free cash flow shows an outflow of about $66 million, and the model assumes recovering and then growing cash generation over the coming decade based on analyst projections. On that basis, the 2 Stage Free Cash Flow to Equity model points to an estimated intrinsic value of about $479 per share in $. Compared with the current share price, this DCF outcome implies the stock screens as roughly 37.1% undervalued. The recent acceptance sea trials of the John F. Kennedy carrier highlight that major shipbuilding milestones can influence longer term cash flow expectations, while execution risk on complex defense work remains a key consideration. Overall, the Discounted Cash Flow view indicates that Huntington Ingalls Industries stock appears undervalued relative to the cash flows analysts expect it to generate. Our Discounted Cash Flow (DCF) analysis suggests Huntington Ingalls Industries is undervalued by 37.1%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Huntington Ingalls Industries. The P/E ratio is a useful way to value Huntington Ingalls Industries because earnings are a key focus for defense contractors with long term programs and contracts. Huntington Ingalls Industries currently trades on about 18.0x earnings, compared with an Aerospace & Defense industry average P/E of around 39.9x and a peer group average near 30.5x. That puts the stock on a materially lower earnings multiple than many listed defense peers. The fair P/E ratio implied by its fundamentals is about 25.8x, which is above the current 18.0x level. This gap suggests the share price does not fully reflect the earnings profile that the model expects for Huntington Ingalls Industries, even after taking its risks into account. On this earnings multiple, Huntington Ingalls Industries stock appears undervalued relative to both its tailored fair P/E and typical sector peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Huntington Ingalls Industries connect the valuation puzzle above with the assumptions that sit behind it. They spell out the growth, margin and earnings paths that would need to hold for Huntington Ingalls Industries' stock to be worth significantly more or less than today’s price, and turn each single ratio or model output into a clear future scenario that you can watch unfold on the Community page. One of the top community narratives on Huntington Ingalls Industries: 22% undervalued Read one of the top narratives on Huntington Ingalls Industries Do you think there's more to the story for Huntington Ingalls Industries? Head over to our Community to see what others are saying! For Huntington Ingalls Industries, both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings multiple work in the same direction. Each points to a stock that screens as undervalued rather than fully priced. The broader valuation checks are strong, so the key question now is whether execution on complex defense contracts allows the expected cash flows and earnings to come through. The crux for investors is whether the current discount reflects an opportunity or a fair cushion for the cost and delivery risks that remain. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HII. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Thursday, July 30, 2026, at 9 a.m. ET Vice President of Investor Relations - Christie Thomas President and Chief Executive Officer - Christopher Douglas Kastner Executive Vice President and President of Ingalls Shipbuilding - Brian D. Blanchette Executive Vice President and Chief Financial Officer - Thomas E. Stiehle Need a quote from a Motley Fool analyst? Email [email protected] Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 26 HII Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Please be advised that today's conference is being recorded. If you need further assistance, please press *1 on your telephone keypad. I would now like to hand the call over to Christie Thomas. Vice president of investor relations. Mrs. Thomas, you may begin. Christie Thomas: Thank you, operator, and good morning, everyone. Welcome to the HII Second Quarter 26 Conference Call. Matters discussed on today's call that constitute forward-looking statements including our estimates regarding the company's outlook, involve risks and uncertainties and reflect the company's judgment based on information available at the time of this call. These risks and uncertainties may cause our actual results to differ materially. Additional information regarding these factors is contained in today's press release and the company's SEC filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to comparable GAAP measures, please see the slides that accompany this webcast which are available on the Investor Relations page of our website at ir.hii.com. On the call today are Christopher Douglas Kastner, President and Chief Executive Officer Brian D. Blanchette, Executive Vice President and President of Ingalls Shipbuilding and Thomas E. Stiehle, Executive Vice President and Chief Financial Officer. Now I will turn the call over to Christopher. Christopher Douglas Kastner: Thanks, Christie. Good morning, everyone. This morning, we released our second quarter results which reflect our continued focus and progress on increasing throughput. And delivering ships and mission solutions to the nation's sailors, marines, warfighters. I will start today by providing the Q2 results, highlights from Newport News Shipbuilding and Mission Technologies, and an update on our operational initiatives. Brian D. Blanchette, president of Ingalls Shipbuilding, has joined me to discuss Ingalls updates and then Tim will provide more details on our financial performance and outlook. Now turning to our results, we reported second quarter sales of $3.4 billion and diluted earnings per share of $5.27. Shipbuilding sales were $2.7 billion, 16% ahead year over year and reflect our fourth consecutive quarter of double-digit growth. Given this momentum and our plans to deliver 5 ships over the next year, we are raising our 2026 shipbuilding revenue guidance to between $10.2 billion and $10.4 billion and our 2026 shipbuilding margin guidance to between 6% and 6.5%. At the same time, customer demand for our products and services remains strong, Second quarter contract awards were $6.7 billion At Newport News, CVN 79 Kennedy successfully completed builders trials earlier this year and we expect to achieve preliminary acceptance later this year with final ship delivery in 2027. CVN 80 Enterprise continues to gain momentum and has achieved 64% erected. We expect to lay the keel for CVN 81 later this year. And on submarines, SSN-800 Arkansas is progressing towards delivery later this year. Shifting to Mission Technologies, we delivered another strong quarter with $760 million in sales and an above 10% EBITDA margin. Reflecting steady demand and disciplined execution. The division secured several major awards this quarter, including a recompete award of $418 million to continue supporting shipboard-based elevators across U. S. Navy aircraft carriers and amphibious ships. A ROMULUS unmanned surface vessel advanced to US Navy's MUSV at-sea testing phase scheduled for September, a major milestone in this development. We also broadened our MUSV industrial base through new partnerships with Bayou Metals and Halimar Shipbuilding, strengthening production capacity and scalability. Additionally, we secured the next production option for the Navy's Lionfish small unmanned undersea vehicle program further demonstrating how our commercial REMUS-300 has successfully evolved into the Navy's preferred next generation UUV. The growth in budgets for autonomous products, coupled with a strong domestic and international pipeline, point to a potential significant growth in this market space. Our proven products and technologies, along with our partnerships with commercial technology leaders put us in a position to take advantage of this market inflection. For example, we recently announced our partnership with Applied Intuition to develop and integrate AI-defined capabilities for next-generation naval platforms and maritime manned-unmanned teaming. Moving to an update on our operational initiatives, increasing shipbuilding throughput continues to be a main focus. Year to date, we have achieved a 12% improvement over 2025, with plans in place to meet our full year goal of 15%. Throughput improvements are expected to accelerate in the second half of the year, as we hit more milestones and deliveries. Year to date, we have hired over 3.5 thousand shipbuilders, We continue to gain traction with attracting new shipbuilders from pipeline programs, providing a foundation for our future workforce. Also, we are on track to increase distributed shipbuilding by 30% this year, We continue to evaluate meaningful opportunities to bring more capacity into the shipbuilding space including additional shipyard facilities. Finally, an agreement has been reached on VCS Block VI and the next Columbia submarine contracts. These contracts represent critical demand signals and stability not just for our workforce, but for the thousands of suppliers across the country that provide parts for these submarines. Turning to activities in Washington, the president submitted his fiscal year 27 budget request in April which is now under consideration by Congress. As bills progress through both chambers, we continue to see bipartisan support for our programs reflected in the Defense Authorization and Appropriation Bills in the house and the senate. The house appropriations bill adds funding for the submarine industrial base to invest in critical areas, including supplier capacity and capability strategic outsourcing, workforce training technology and infrastructure. We await the Senate appropriations position, and final outcomes will depend on eventual respective conference committee negotiations. Now to summarize my remarks, we had a solid second quarter and are beginning to see positive momentum from continued investments in shipbuilding in the maritime industrial base. We are focused every day on meeting our operational commitments to the Navy, and delivering 5 ships over the next 12 months. And now I will turn the call over to Brian for his remarks on Ingalls. Brian D. Blanchette: Thank you, Christopher and good morning, everyone. With 13 ships currently in construction, Ingalls Shipbuilding has had a productive first half of the year. The shipyard is building 6 destroyers 3 LPDs, 2 LHAs, and supporting work on DDG-1 thousand and DDG-1 thousand. We are also purchasing material and doing preproduction work for an additional 12 ships under contract. Today, I will provide an update on our ship delivery progress, our distributed shipbuilding strategy, and our continued focus on workforce readiness. On the destroyer program, we ended 2025 with a successful delivery of DDG-128 Ted Stevens. The ship sailed away in the second quarter of 26 marking the 36th DDG 51 Arleigh Burke class destroyer and second Flight III destroyer Ingalls has delivered to the fleet. This year, we also loaded fuel and lit off generators on DDG-129 Jeremiah Denton. As we prepare for her planned delivery in 2027. Across the destroyer line, we continue to make steady progress. We launched and christened DDG-131 George M. Neal, achieved stern release and 100% butt-weld complete, on DDG-133 Sam Nunn and loaded main machinery on DDG-135 THAAD Cochrane. We also reached 25% butt-weld complete on DDG 135 and have received all 4 units from our distributed shipbuilding partners. DDG-137 John F. Lehman, received 2 additional outsourced units, and celebrated her first milestone, start fab, capitalizing on the growing value of this production approach. On the amphib programs, LPD 30, Harrisburg, powered up main engines in the second quarter and is progressing towards delivery this year. On LPD-31, Pittsburgh, the forward and aft deck houses were landed, and we laid the keel of LPD-32 Philadelphia. On LHA 8 Bougainville, we continue to ramp up the test program as we prepare for her planned delivery in 2027. We also completed sea trials for DDG-1 thousand USS Zumwalt, and achieved crew move-aboard earlier this year. And finally, in April, Ingalls was awarded the frigate lead yard support contract to procure long-lead-time material execute design work, and begin pre-construction activities for the first ship. Ingalls is also continuing to increase production capability through new technology investments and additional distributed shipbuilding partners along the Gulf Coast. This strategy allows selected units to be built offsite and integrated in Pascagoula creating a dual production path that supports greater throughput. Inside our shipyard, we remain focused on workforce development By pairing targeted hiring with advanced training and onboarding technologies, we are working to build a stronger workforce pipeline increase readiness, and improve retention. Supporting these efforts, we successfully reached an updated collective bargaining agreement with our union partners in March. And we are seeing early indications that the higher wages have a positive impact on our ability to hire and retain skilled shipbuilders. In summary, the Ingalls team is focused on delivering 3 ships over the next 12 months. Increasing production pace, through distributed shipbuilding, and strengthening the workforce required to deliver on our commitments. Now I will hand the call over to Tim for some remarks on our financial results. Tim? Thomas E. Stiehle: Thanks, Brian, and good morning. Let me start by discussing our second quarter results. And then I will provide some color on our expectation for the remainder of the year. For more detail, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on Slide 5 of the presentation, our second quarter revenues of approximately $3.4 billion, increased 10.9% compared to the same period last year. The higher revenue was attributable to stronger year over year growth at both shipyards. Ingalls revenues were $845 million and increased by 16.7% compared to the second quarter of 25 driven primarily by higher volumes in amphibious assault ships. Newport News revenues of $1.8 billion increased by 15.3% compared to the second quarter of 25, driven by higher volumes across aircraft carriers and submarines. Together, shipbuilding revenue was $2.7 billion up 15.7% year over year. Mission Technologies revenues of $760 million, decreased by 3.9% compared to the second quarter of 25, primarily due to lower volumes in all-domain operations and global security, partially offset by higher volumes in warfare systems and unmanned systems. This result is modestly better than the guidance we had given for the quarter. As the prior year results included approximately $45 million of revenue related to a non recurring contract resolution. Excluding that impact, Mission Technologies revenues grew modestly year over year on an organic basis. Moving on to Slide 6, segment operating income of $224 million and segment operating margin of 6.6% in the second quarter of 26. Compared to $172 million and 5% in the second quarter of 25. At Ingalls, segment operating income was $58 million and operating margin was 6.9%, compared to $54 million and 7.5% in the second quarter of last year. The increase in segment operating income was driven by higher volumes in Amphibious Assault ships, partially offset by favorable contract adjustments in surface combatants in the second quarter of 25. The second quarter net cumulative adjustment at Ingalls was a negative $2 million and none of the adjustments were individually significant. At Newport News, segment operating income was $111 million an operating margin of 6%. Compared to $82 million and 5.1% in the second quarter of 25. The increase in segment operating income was primarily driven by contract adjustments and incentives in aircraft carriers the higher volumes I described earlier, partially offset by lower performance in aircraft carriers. For the second quarter of 26, Newport News shipbuilding's net cumulative adjustment was a positive $8 million The quarterly result did include meaningful positive and negative adjustments within the Carrier Refueling and Complex Overhaul program, as we incorporated change settlements and realigned risk and expectations across that program. As Chris mentioned, we reached agreement on the submarine contracts. The contract definitization is contemplated our third quarter guidance. Moving on, Mission Technologies segment operating income was $55 million and operating margin was 7.2%. Compared to $36 million and 4.6% in the second quarter of 25. The increase in segment operating income was primarily due to higher equity income from Nuclear and Environmental joint ventures. For the second quarter of 26, Mission Technologies' net cumulative adjustment was a positive $4 million. None of the adjustments in the quarter were individually significant. Consolidated operating income for the quarter was $210 million and operating margin was 6.1%, compared to $163 million and 5.3% in the same period last year. The increase in operating income was driven by the favorable segment operating income that I just reviewed partially offset by higher non-current state income tax expense, the operating FAS/CAS adjustment. Net earnings in the quarter were $208 million and diluted earnings per share were $5.27 up from $152 million and $3.86 in the same period last year. The effective tax rate in the second quarter was 18.1%. This was below the guidance of 21% that we previously provided, primarily due to favorable tax impacts related to stock award settlement activity. Turning to Slide 7, Cash used in operations was $31 million in the quarter. Net capital expenditures were $119 million or 3.5% of revenues. Free cash flow results in the quarter came in below the forecast we provided on the last earnings call largely due to timing of receipts and disbursements between quarters. there is no change to our free cash flow expectation for the year which I will provide some more color on in a moment. During the quarter, we did not repurchase any shares. We did pay a cash dividend of $1.38 per share, which or $55 million in aggregate. Turning to liquidity and the balance sheet, we ended the quarter with a cash balance of $12 million and liquidity of approximately $1.7 billion. Moving on to our outlook on Slide 8. We are increasing our expectation for shipbuilding revenue for the year. As well as bringing up the bottom end of the shipbuilding operating margin range for 2026. We now expect shipbuilding revenue between $10.2 billion and $10.4 billion and expect shipbuilding operating margin in the range between 6% and 6.5%. We are reiterating all other aspects of our guidance for 2026. Including the expectations for Mission Technologies revenue of $3 billion and $3.2 billion and a margin of approximately 5%. I will note that we continue to see the new battleship and frigate programs as meaningful upside opportunities to our medium term outlook. Though we will need additional details before we can include those in our guidance outlook. Moving on to the third quarter look ahead outlined on Slide 8. Expect shipbuilding revenue of approximately $2.6 billion and shipbuilding operating margin that is similar to the second quarter result of 6.3%. For Mission Technologies, we expect revenues will be similar to the second quarter results of $760 million and operating margin of approximately 4%. Inclusive of strategic investments that we expect to make in our unmanned capability and production capacity. We expect free cash flow in the third quarter to be approximately $100 million This does mean that we expect significant free cash flow generation in the fourth quarter to meet our guidance for the full year of between $500 million and $600 million We are reiterating that outlook and do expect meaningful positive cash impacts from contract advances and incentives as well as favorable cash tax impacts in the fourth quarter. Regarding the effective tax rate, we believe it is prudent to use our tax rate of 21% for the third quarter. We still believe 17% is appropriate for 2026 with an expected research and development tax credit expected in the fourth quarter at the end of the year. To close, it was another good quarter as we continue to make steady progress and execute against our 2026 operational initiatives. We are pleased to improve the shipbuilding expectations for the year and remain focused on executing our plan. With that, I will turn the call back over to Christie to manage Q&A. Christie Thomas: Thanks, Tim. As a reminder to everyone on the call, please limit yourself to 1 initial question and 1 follow-up so we can get as many people through the queue as possible. Operator, I will turn it over to you to manage the Q&A. Operator: Thank you, Christie. As a reminder, if you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, remember to unmute your device. Your first question comes from the line of Judd Goddin. with Citi. Your line is open. Please go ahead. Judd Goddin: Hey, guys. Thank you for taking my question. Obviously, a great kind of margin quarter. You raised shipbuilding and you are tracking in line with the full year guidance. I was hoping you could shed some light on how to think about shipbuilding margins through the remainder of the year, just by quarter? And at the same time, it would be helpful to step through any of the remaining just to calibrate everybody's expectations on timing. Christopher Douglas Kastner: Sure, John. I think Tim indicated where we think we are going to be in Q3. And then if you look at the full year, you can kind of see how we are thinking about margin. For the balance of the year. But from a--from a milestone standpoint, delivery of 30 will be towards the end of the year. It will go to trials here. In Q3. 2079 is actually gonna go to trials here in a couple weeks or a week or 2. And we expect that to proceed, and that is on schedule. 800 is towards the end of the year, some real critical milestones coming up, in the summer here. Or the latter part of the summer related to 800. So those are the remaining milestones, laying the keel of 81 is on schedule towards the back half of the year. But I do not anticipate a lot of margin related to that. So Those are the 2026 milestones. 2027 is all still in place, and we are proceeding on those as well. Judd Goddin: Okay. Got it. And, clearly, you know, executing well operationally, trends are moving in the right direction. But are there any additional data points you can share on improving throughput, productivity, reducing costs? Just to help paint a picture of how far you have come and how much more there is to go. Christopher Douglas Kastner: Yeah. We have made real good progress. Right? We had 14% last year in throughput. We expect 15% this year. Newport News has had a great start of the year over the first 2 quarters relative to throughput, primarily on the submarine programs, Ingalls had a bit of a slow start this year. Related to labor and labor growth. And that is really tied to getting their labor agreement done in March. I actually fortunately enough, have Brian here. Blanchett from Ingalls Shipbuilding. He can talk about what they are doing from a labor standpoint and how the how the ships are progressing through the factory there. Brian D. Blanchette: Thanks, Christopher. As Chris said, we signed an updated collective bargaining agreement at the, end of the first quarter, and it was really a win. Agreement, good for the workforce, good for us, good for the Navy. And we saw immediate benefit from a retention standpoint. But there is a little bit of a lag from a hiring standpoint, just as Newport News saw when they did some wage adjustments last year. But we are starting to see some good positive indicators on hiring We have all of our pipeline all of our pipeline programs are going really well. Our apprentice school is near full capacity. The next class that we take in the next month or so should put us there. Our high school programs are going great. How do excellent signing day ceremony, in the spring. And our biggest class ever for that. So we are excited about, where we are headed As Chris said, it was a bit of a slow start, but we are positive about the second half of the year. Christopher Douglas Kastner: Yeah. I can add that we are delivering 5 shifts over the next 12 months. I said that in my script as well. 3 of those in Ingles, so critical we get through those on schedule to get those ships to the Navy, but also critical to rotate those crews to the next ships in the production line. So that is also very important. Judd Goddin: Thanks, guys. Appreciate the color. Christopher Douglas Kastner: Yeah. Thank you. Operator: Your next question comes from the line of Noah Poponak with Goldman Sachs. Your line is open. Please go ahead. Noah Poponak: Hey. Good morning, everyone. Morning. Thanks. The updated guidance. A few questions on the updated guidance. So the new shipbuilding range, revenue range implies the back half Q3 and Q4 combined are kind of flat year over year. Can you help us out with why it would be flat in the back half versus the double digit growth in the first half? And specifically, I think it implies Q3 is up about 6% and Q4 is down about 6%. What drives Q4 down And then on the shipbuilding margin, forecasting it kind of flattish sequentially, could you talk a little bit more about the moving pieces there? Because I thought you had explained previously that whenever you captured the contracts on the next batch of subs, there were you know, maybe payments associated with that plus the retroactive catch up of having had booked long lead at very low margin. If you could help out with those. Thanks. Thomas E. Stiehle: Hey, I appreciate that, Noah. On the revenue side, you know, as you mentioned and said in the remarks, we did up upscale the expectations for shipbuilding by $500 million, both the low end and the top end. It is true when you do the math, the actuals now in Q1, Q2, plus the guide for Q3 where we could land in Q4, you know, that ranges from the $10.4 billion plus the whole year. You know, the Q4, that would be anywhere from $2.5 billion to $2.7 billion and you are right. If you look at it compared to where we just finished up almost at $2.7 billion with a guide at $2.6 billion, And then compared to Q4 of last year, it seems like it is flat, if anything, kind of pulls back a little bit. But a couple of points to come back on that. 1 in Q4 of last year was a big material quarter. For both sides, specifically down at Ingalls. So that is a positive guide. And then, also, you know, there is probably a little conservatism in there. We want to see both the material, the labor continue to inflect up at Ingalls. Material as planned to come in here. I would not overly focus the year over year guide being flat or maybe slightly negative to Q4, but the fact of the matter that we have had 4 now quarters in a row, both for HII and in shipbuilding, 4 quarters in a row of double digit growth. So we are out in front of our 6%, you know, medium term guide. And, you know, I feel really comfortable about that. I think we just wanna see it occur and happen. And, again, it is a tough comp against Q4 to 25 in shipbuilding. On the on the margin side there, you know, again, it is the same story. We have given the same 6.3% for Q3. Kind of guidance that we just came through for 6.3% for this quarter. You know, you heard last night that we did get the subawards. Which bring meaningful revenue more commitment, and statement of work, and CapEx. And incentive opportunities in that too. I would tell you that a piece of Q2 has incentives in there. We did not want to wait. We had an agreement with the Navy to get started on those incentives. So the Q2 has a piece of the incentives baked into it. And going forward, there is additional incentives that come about with the award in Q3. I would tell you it is on the early side. You know, you could imagine just putting that on contract, adjusting the booking rates, more contract value, more statement work, more capital commitment. Then the time to actually even though there is capital incentives on there, there is time and contract incentives. We need time to actually, know, meet the milestones, meet the criteria and be able to kinda book that and eventually get the cash at the end of the year. So I am quite comfortable with that. A perspective again, just like I gave you on the revenue, on the margin side, if you look, at the march up that we have had, whether we talk about where we have been in quarterly shipbuilding from 5.8% to 6% to now 6.3%. That is the nice incremental march that we have kind of forecasted that was coming about as the portfolio would change over and with these subcontract vote awards. And then just from a fiscal perspective, you know, we have seen 5.2% ROS in shipbuilding in 2024, 5.9 in 2025. And now raising the guidance from 6% to 6.5% to now 6.0% to 6.5%. You know, a mid point of 6.25%. Again, a progression both quarterly and annually. On how the company's moving forward here as we you know, the investments are paying off in input output, top line's growing, incremental improvement on the bottom line. So I am quite comfortable with both, you know, the quarter itself and where we are projecting the end of the year is going to be. Noah Poponak: Great, Tommy. I appreciate all that detail. Yeah. I guess just should we think of last night's contracts as in the Outlook you are providing today or incremental to the outlook you are providing today? Because I guess you are technically giving us this post the contracts, but you are also, I assume, not formulating your earnings report and guidance only the night prior. Thomas E. Stiehle: Yeah. So I will square that up for you. As I mentioned earlier, in the Q2 results already was a cadre of the incentives. Right? We had an agreement. And that was booked in Q2. And then with the awards last night, there is Additional incentives that come about that, and that is rolled into the guidance of Q3. We had an expectation and understanding. We have been saying for a while that, you know, first and goal of getting the mods over the goal line, actually have mods in hand. That has occurred last night. But both the actuals that we had with the agreement in Q2 are in place and rolled in there. And then with the anticipation of what was gonna be awarded, which was aligned with our expectations, that was already baked into the forecast as we go forward. Noah Poponak: Okay. Thank you. Noah. I am sorry. Operator: Your next question comes from the line of Scott Mikus with Melius Research. Your line is open. Please go ahead. Scott Mikus: Morning, Christopher, Tim, and Brian. Very nice results and congrats on the submarine contract. I have a couple quick clarifications on it. Of the 76.6 billion of contract mods, how much of that goes to Newport News versus Electric Boat? Do you have a ballpark figure there? And is there a reason why it was only 9 Virginias instead of 10? Thomas E. Stiehle: Yeah. So on the part 1 there, yes, $76.6 billion. When it comes to Newport News, it is approximately $25 billion of that. And about $5.5 billion on the Columbia program. The rest of that is, related with the Block VI. Contract award. Obviously, it goes on the VCS contract. And then the capital incentives that benefit both the Virginia class, the Columbia class, and Newport News operations in totality. Those incentives are spread over various contracts. Christopher Douglas Kastner: Relative to yeah, the 9-ship. The 9-ship, there is material for the 10th ship bought as well, I believe. So that is not gonna impact production of the class. it is more of a funding mechanism. So there is 10 shipsets of material. Right? And then there is 9 shipsets cost wise for the integration and test and delivery of the boats. Right? And the 10th ship could be used for spares or could eventually be pushed up with a boat line as another integrated ship. Scott Mikus: Okay. that is helpful context. And then, Christopher, you have done a lot of work increasing the outsourcing. Distributed shipbuilding. With your outsourcing partners so far. How has the quality of work been? Has it been in line with expectations, better than hoped, or maybe are there areas for improvement? Just curious how that is going. Christopher Douglas Kastner: Yeah. Well, we have a long history of outsourcing, in both shipyards. So we unfortunately made mistakes in the past. We have learned from that in each shipyard. We have rolled those lessons learned into our process for outsourcing again, in both shipyards. Now it is not perfect, we still have some issues, but all in all, in each, we have had pretty positive results. When we do find issues, we have our QA and our engineering team. Out there right away. We have in process inspections. To ensure that we execute with our outsourced partners. So it is not been perfect, and we need to continue our outsourcing. And we have been pretty successful over the last 2 years doing that, and we will continue to do additional outsourcing related to distributed shipbuilding. Thomas E. Stiehle: So it is it is been positive. There have been issues we have had to deal with. We jumped right on them. And we remediate the issue. But all in all, it is been very positive. And to piggyback on that, our ships are follow on ships that are in production. Both Newport News and Ingalls provides the engineering package and the package of parts as well. So it is not first of class or first new bills. The vendors are at times doing for the first time, but we have program project management oversight. We have quality and engineering support. And then when they are finishing their products, it is more of in a pilot range that we would pilot initial construction or fabrication. And then as they are able to prove out, get good quality and they are on cost and schedule, then we provide more work packages. Christopher Douglas Kastner: Yeah. Maybe Brian could talk about their process and how they evaluate distributed shipbuilding partners. Brian D. Blanchette: Yeah. As Christopher said, we worked really hard to incorporate all the lessons learned from past efforts, and we have worked hand in hand with our navy partners down on the Gulf Coast. So it is not a throw it over the fence kind of mentality. We are there, as Tim said, hand in hand with our suppliers. We have incremental checkpoints. Just like we would for ourselves, both with our inspectors and our navy inspectors. And, you know, the proof's in the pudding. We just erected our first 2 ground blocks. And as we talked about in a release, we just put out from our distributed shipbuilding partners. And, they were incorporated into the ship, as expected. And so, you know, it is it takes staying on top of it, and working hand in hand with the suppliers but we are really positive about the results so far. Scott Mikus: Alright. Appreciate the color. Thank you. Operator: Your next question comes from the line of Gautam Khanna. TD Cowen. Your line is open. Please go ahead. Gautam Khanna: Hey, guys. Congrats on the submarine contracts, by the way. Great. Yeah. I was curious just was there anything about the terms when once it was finalized that surprised you or made you think the 9% to 10% eventual goal at shipbuilding is not consistent with the terms of the submarine contracts that were agreed to last night? Christopher Douglas Kastner: No. No, nothing different or special about the terms. It was a lot of work. it is a very big contract. The Navy, the EB, and the Newport News team worked very hard to get it over the goal line. But it is very consistent with what we expect from a profitability standpoint. So nothing really special. Obviously, we had to incorporate kind of lessons learned, from coming through COVID and the economic environment we dealt with there. So I do obviously expect it to perform better than those contracts, but I think it is very consistent with the long term margin profile that we expect. Gautam Khanna: Okay. that is great to hear. And because we are all kind of asking the same question on what the size of the EAC was in Q2 related to it, or will be in Q3. Is there any way you can give us some way to assess how big that was? Related to signing these contracts? And then also the cash impact presumably their advances and the like that are in the guidance for the year. So any quantification would be helpful. Thomas E. Stiehle: Yeah. there is a lot of moving parts in there. Obviously, as I stated earlier, very topically, you know, more contract value, more statement of work, capital commitments, incentives on the contract. So it is early, and we normally do not provide that type of visibility into the contract. Now as we go forward a year. there is always timing issues related to incentives on the contract. But we have included all that within our guidance. Gautam Khanna: Maybe just to put a finer point on it, is should we expect a bigger not knowing what the absolute numbers are, should we expect a bigger adjustment favorably in Q3 versus Q2 related to the contracts being signed? Thomas E. Stiehle: So I will take that. Yeah. The, you know, the contract is itself is in very early stages. it is so we gotta make progress on the revenue side, see how performance plays out. His milestones and responsibilities we have to meet, obviously, on the contract and cost and schedule and relative to the incentives, things we have to do and evidence completion on that. So I would expect that we would just like we Before you buy stock in Huntington Ingalls Industries, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Huntington Ingalls Industries wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 4, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. Huntington Ingalls (HII) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: $3.4 billion, up 10.9% year over year. Diluted Earnings Per Share: $5.27, up from $3.86 in the same period last year. Shipbuilding Revenue: $2.7 billion, up 15.7% year over year. Ingalls Revenue: $845 million, up 16.7% year over year. Newport News Revenue: $1.8 billion, up 15.3% year over year. Mission Technologies Revenue: $760 million, down 3.9% year over year. Segment Operating Income: $224 million, with a segment operating margin of 6.6%. Ingalls Operating Income: $58 million, with an operating margin of 6.9%. Newport News Operating Income: $111 million, with an operating margin of 6%. Mission Technologies Operating Income: $55 million, with an operating margin of 7.2%. Consolidated Operating Income: $210 million, with an operating margin of 6.1%. Net Earnings: $208 million. Cash Used in Operations: $31 million in the quarter. Net Capital Expenditures: $119 million, or 3.5% of revenues. Dividend: Paid a cash dividend of $1.38 per share, or $55 million in aggregate. Contract Awards: $6.7 billion in the second quarter. 2026 Shipbuilding Revenue Guidance: Raised to between $10.2 billion and $10.4 billion. 2026 Shipbuilding Margin Guidance: Raised to between 6% and 6.5%. 2026 Mission Technologies Revenue Guidance: Reiterated at between $3 billion and $3.2 billion. 2026 Mission Technologies Operating Margin Guidance: Reiterated at approximately 5%. 2026 Free Cash Flow Guidance: Reiterated at between $500 million and $600 million. Warning! GuruFocus has detected 5 Warning Signs with HII. Is HII fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Huntington Ingalls Industries Inc (NYSE:HII) reported strong second-quarter results with shipbuilding sales up 16% year-over-year, marking the fourth consecutive quarter of double-digit growth. The company raised its 2026 shipbuilding revenue guidance to between $10.2 billion and $10.4 billion and its shipbuilding margin guidance to between 6% and 6.5%. Huntington Ingalls Industries Inc (NYSE:HII) secured a major $76.6 billion submarine contract award (Block VI and Columbia), with approximately $25 billion allocated to Newport News, providing long-term stability and demand signals. The company achieved a 12% year-to-date improvement in shipbuilding throughput, with plans in place to meet its full-year goal of 15%. Huntington Ingalls Industries Inc (NYSE:HII) is making significant progress in its unmanned systems business, with the ROMULUS USV advancing to at-sea testing and the Lionfish UUV program securing its next production option. The company successfully reached a new collective bargaining agreement at Ingalls, which is already showing positive early impacts on hiring and retention of skilled shipbuilders. Mission Technologies revenue decreased 3.9% year-over-year in the second quarter, primarily due to lower volumes in All-Domain Operations and Global Security. Huntington Ingalls Industries Inc (NYSE:HII) experienced lower performance in its aircraft carrier programs, partially offsetting positive contract adjustments and incentives. The company's free cash flow in the second quarter came in below forecast due to timing of receipts and disbursements, with significant cash generation expected only in the fourth quarter. Ingalls Shipbuilding had a slow start to the year regarding labor and labor growth, tied to the timing of finalizing its collective bargaining agreement in March. Huntington Ingalls Industries Inc (NYSE:HII) noted that the new battleship and frigate programs remain upside opportunities but are not yet included in guidance due to lack of details. The company expects shipbuilding revenue to be relatively flat in the second half of the year compared to the first half, with a tough year-over-year comparison in the fourth quarter. Q: Can you provide details on the recently awarded submarine contracts, including the value allocated to Newport News and the reason for nine Virginia-class submarines instead of ten?A: Tom Stiehle (CFO) confirmed that of the $76.6 billion in contract modifications, approximately $25 billion is allocated to Newport News for the Virginia-class program and about $5.5 billion for the Columbia program. Chris Kastner (CEO) clarified that material for a 10th submarine was purchased, but the contract covers nine integrated shipsets, with the 10th potentially used for spares or converted to a full ship later. The structure is a funding mechanism and will not impact production of the class. Q: How should we think about shipbuilding margins through the remainder of the year, and what are the remaining milestones to calibrate expectations?A: Chris Kastner (CEO) indicated that Q3 shipbuilding margins are expected to be similar to Q2's 6.3%. Key milestones include LPD 30 Harrisburg delivery towards year-end, CVN 79 Kennedy trials in the coming weeks, SSN 800 Arkansas delivery later this year, and the keel laying for CVN 81 in the back half of the year. The company raised its 2026 shipbuilding margin guidance to 6%-6.5%, reflecting confidence in execution. Q: The updated shipbuilding revenue guidance implies flat year-over-year growth in the back half. What drives this, and are the submarine contract awards included in the current outlook?A: Tom Stiehle (CFO) explained that Q4 2025 was a significant material quarter, creating a tough comparison. The guidance reflects some conservatism as the company wants to see continued labor and material inflection, particularly at Ingalls. Regarding the submarine contracts, a portion of the incentives was booked in Q2 based on prior agreements, and the additional incentives from the formal award are incorporated into Q3 guidance. The awards were aligned with expectations and already baked into the forecast. Q: What are the contract incentives tied to, and why are they recognized in margin at the time of award rather than during execution?A: Chris Kastner (CEO) stated the incentives are broad, tied to labor investments, capital investments, and performance under the contract, with specific milestones to improve ship performance. Tom Stiehle (CFO) added that the majority will be recognized on a go-forward basis, but some were booked in Q2 because the company had already made bilateral commitments to start capital projects and hiring. The urgency to begin investments justified the early recognition of certain incentives. Q: Are the underlying margins at Newport News improving excluding incentives, or is the improvement mainly incentive-driven?A: Tom Stiehle (CFO) noted that excluding the positive $8 million cumulative adjustment, the running EAC is consistent at approximately 5.5%. However, the value of the new awards lies in the additional investments in throughput, capacity, capital, and training. Chris Kastner (CEO) added that transitioning from current ships to new contracts, combined with solid submarine program throughput, should naturally improve margins over time. Q: Can you provide an update on the mix of pre-COVID versus post-COVID shipbuilding revenue and the outlook for the next couple of years?A: Tom Stiehle (CFO) confirmed the company remains on track to reach a 50-50 split by the end of 2026 and have more post-COVID revenue than pre-COVID by the end of 2027. Each ship delivery retires a pre-COVID effort, and new awards, such as the recent DDG contract, incorporate better cost understanding, material alignment, and balanced risk, supporting improved margins on post-COVID contracts. Q: How is the company retaining labor, and what has worked beyond pay to improve retention?A: Brian Blanchette (President of Ingalls Shipbuilding) highlighted the new collective bargaining agreement, which had an immediate positive impact on attrition and is now improving hiring, particularly rehires. The company has invested over 1 million square feet of covered space to improve working conditions, implemented busing, and focused on employee engagement, especially placing the right frontline supervisors. These efforts are critical to increasing throughput and delivering ships. Q: How significant is the unmanned systems opportunity relative to the company's larger shipbuilding programs?A: Chris Kastner (CEO) described unmanned systems as the fastest-growing business unit, though currently modest in revenue. The company is competing for the MUSV program, secured the next production option for Lionfish, and has a strong domestic and international pipeline. While it won't reach the scale of a $1 billion battleship, the firm-fixed-price contracts offer solid profitability, and the company will continue investing in this growth area. Q: Can you discuss the dynamics within the aircraft carrier programs, including the mix of incentives and lower performance, and any discussions about carrier redesign?A: Tom Stiehle (CFO) explained that capital project incentives were placed on various contracts, providing assistance, while performance on CVN 80 Enterprise is being evaluated as the ship returns to the build cadence after machinery equipment installation. Chris Kastner (CEO) addressed carrier redesign discussions, stating no direction has been received from the Navy, but the company will work to mitigate impacts and reset cost/schedule if changes are made. Q: With the strong Q4 cash flow expectation, how should we think about earnings-to-cash conversion going forward, especially without major contract signings?A: Tom Stiehle (CFO) reiterated the $500-$600 million free cash flow guidance, with Q3 at approximately $100 million and a robust Q4. The Q4 strength is driven by performance, top-line growth, a tax credit agreement with the IRS, and incentives. He emphasized that cash follows margin, and with consistent Navy payment terms, the company expects a cash conversion of 1.0x. The five ship deliveries over the next 12 months are critical to achieving these targets. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Huntington Ingalls (HII) reported $3.42 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 10.9%. EPS of $5.27 for the same period compares to $3.86 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $3.14 billion, representing a surprise of +8.74%. The company delivered an EPS surprise of +38.68%, with the consensus EPS estimate being $3.80. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Huntington Ingalls performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Sales and Service Revenues- Ingalls: $845 million compared to the $761.39 million average estimate based on 10 analysts. The reported number represents a change of +16.7% year over year. Sales and Service Revenues- Newport News: $1.85 billion compared to the $1.66 billion average estimate based on 10 analysts. The reported number represents a change of +15.4% year over year. Sales and Service Revenues- Mission Technologies: $760 million compared to the $764.19 million average estimate based on 10 analysts. The reported number represents a change of -3.9% year over year. Sales and Service Revenues- Intersegment eliminations: $-36 million compared to the $-38 million average estimate based on 10 analysts. The reported number represents a change of 0% year over year. Sales and Service Revenues- Newport News- Other: $168 million compared to the $152.44 million average estimate based on three analysts. Sales and Service Revenues- Newport News- Aircraft carriers: $976 million versus the three-analyst average estimate of $829.04 million. Sales and Service Revenues- Ingalls- Other: $4 million versus the three-analyst average estimate of $2.76 million. Sales and Service Revenues- Ingalls- Surface combatants and coast guard cutters: $394 million versus $419.87 million estimated by three analysts on average. Sales and Service Revenues- Ingalls- Amphibious assault ships: $447 million versus the three-analyst average estimate of $359.41 million. Sales and Service Revenues- Newport News- Submarines: $705 million versus $654.69 million estimated by three analysts on average. Sales and Service Revenues- Mission Technologies- All-domain operations and warfare systems: $518 million versus $622.13 million estimated by two analysts on average. Sales and Service Revenues- Mission Technologies- Global security, unmanned systems, and other: $242 million versus the two-analyst average estimate of $120.09 million. View all Key Company Metrics for Huntington Ingalls here>>> Shares of Huntington Ingalls have returned +9.7% over the past month versus the Zacks S&P 500 composite's -0.5% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026, at 9 a.m. ET Vice President of Investor Relations - Christie Thomas President and Chief Executive Officer - Christopher Douglas Kastner Executive Vice President and President of Ingalls Shipbuilding - Brian D. Blanchette Executive Vice President and Chief Financial Officer - Thomas E. Stiehle Need a quote from a Motley Fool analyst? Email [email protected] Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 26 HII Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Please be advised that today's conference is being recorded. If you need further assistance, please press *1 on your telephone keypad. I would now like to hand the call over to Christie Thomas. Vice president of investor relations. Mrs. Thomas, you may begin. Christie Thomas: Thank you, operator, and good morning, everyone. Welcome to the HII Second Quarter 26 Conference Call. Matters discussed on today's call that constitute forward-looking statements including our estimates regarding the company's outlook, involve risks and uncertainties and reflect the company's judgment based on information available at the time of this call. These risks and uncertainties may cause our actual results to differ materially. Additional information regarding these factors is contained in today's press release and the company's SEC filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these non-GAAP measures, including reconciliations to comparable GAAP measures, please see the slides that accompany this webcast which are available on the Investor Relations page of our website at ir.hii.com. On the call today are Christopher Douglas Kastner, President and Chief Executive Officer Brian D. Blanchette, Executive Vice President and President of Ingalls Shipbuilding and Thomas E. Stiehle, Executive Vice President and Chief Financial Officer. Now I will turn the call over to Christopher. Christopher Douglas Kastner: Thanks, Christie. Good morning, everyone. This morning, we released our second quarter results which reflect our continued focus and progress on increasing throughput. And delivering ships and mission solutions to the nation's sailors, marines, warfighters. I will start today by providing the Q2 results, highlights from Newport News Shipbuilding and Mission Technologies, and an update on our operational initiatives. Brian D. Blanchette, president of Ingalls Shipbuilding, has joined me to discuss Ingalls updates and then Tim will provide more details on our financial performance and outlook. Now turning to our results, We reported second quarter sales of $3.4 billion and diluted earnings per share of $5.27 Shipbuilding sales were $2.7 billion 16% ahead year over year and reflect our fourth consecutive quarter of double digit growth. Given this momentum and our plans to deliver 5 ships over the next year, we are raising our 2026 shipbuilding revenue guidance to between $10.2 billion and $10.4 billion and our 2026 shipbuilding margin guidance to between 6% and 6.5%. At the same time, customer demand for our products and services remains strong, Second quarter contract awards were $6.7 billion. At Newport News, CVN 79 Kennedy successfully completed builders trials earlier this year and we expect to achieve preliminary acceptance later this year with final ship delivery in 2027. CVN 80 Enterprise continues to gain momentum and has achieved 64% erected. We expect to lay the keel for CVN 81 later this year. And on submarines, SSN-800 Arkansas is progressing towards delivery later this year. Shifting to Mission Technologies, we delivered another strong quarter with $760 million in sales and an above 10% EBITDA margin, reflecting steady demand and disciplined execution. The division secured several major awards this quarter, including a recompete award of $418 million to continue supporting shipboard-based elevators across U. S. Navy aircraft carriers and amphibious ships. A ROMULUS unmanned surface vessel advanced to US Navy's MUSV at-sea testing phase scheduled for September, a major milestone in this development. We also broadened our MUSV industrial base through new partnerships with Bayou Metals and Halimar Shipbuilding, strengthening production capacity and scalability. Additionally, we secured the next production option for the Navy's Lionfish small unmanned undersea vehicle program further demonstrating how our commercial REMUS-300 has successfully evolved into the Navy's preferred next generation UUV. The growth in budgets for autonomous products, coupled with a strong domestic and international pipeline, point to a potential significant growth in this market space. Our proven products and technologies, along with our partnerships with commercial technology leaders put us in a position to take advantage of this market inflection. For example, we recently announced our partnership with Applied Intuition to develop and integrate AI-defined capabilities for next generation naval platforms and maritime manned-unmanned teaming. Moving to an update on our operational initiatives, increasing shipbuilding throughput continues to be a main focus. Year to date, we have achieved a 12% improvement over 2025, with plans in place to meet our full year goal of 15%. Throughput improvements are expected to accelerate in the second half of the year, as we hit more milestones and deliveries. Year to date, we have hired over 3.5 thousand shipbuilders, We continue to gain traction with attracting new shipbuilders from pipeline programs, providing a foundation for our future workforce. Also, we are on track to increase distributed shipbuilding by 30% this year. We continue to evaluate meaningful opportunities to bring more capacity into the shipbuilding space including additional shipyard facilities. Finally, an agreement has been reached on VCS Block VI and the next Columbia submarine contracts. These contracts represent critical demand signals and stability not just for our workforce, but for the thousands of suppliers across the country that provide parts for these submarines. Turning to activities in Washington, the president submitted his fiscal year 27 budget request in April which is now under consideration by Congress. As bills progress through both chambers, we continue to see bipartisan support for our programs reflected in the Defense Authorization and Appropriation Bills in the house and the senate. The house appropriations bill adds funding for the submarine industrial base to invest in critical areas including supplier capacity and capability strategic outsourcing, workforce training technology and infrastructure. We await the senate appropriations position, and final outcomes will depend on eventual respective conference committee negotiations. Now to summarize my remarks, we had a solid second quarter and are beginning to see positive momentum from continued investments in shipbuilding in the maritime industrial base. We are focused every day on meeting our operational commitments to the Navy, and delivering 5 ships over the next 12 months. And now I will turn the call over to Brian for his remarks on Ingalls. Brian D. Blanchette: Thank you, Christopher and good morning, everyone. With 13 ships currently in construction, Ingalls Shipbuilding has had a productive first half of the year. The shipyard is building 6 destroyers 3 LPDs, 2 LHAs, and supporting work on DDG-1 thousand and DDG-1 thousand. We are also purchasing material and doing preproduction work for an additional 12 ships under contract. Today, I will provide an update on our ship delivery progress, our distributed shipbuilding strategy, and our continued focus on workforce readiness. On the destroyer program, we ended 2025 with a successful delivery of DDG-128 Ted Stevens. The ship sailed away in the second quarter of 26 marking the 36th DDG 51 Arleigh Burke class destroyer and second Flight III destroyer Ingalls has delivered to the fleet. This year, we also loaded fuel and lit off generators on DDG-129 Jeremiah Denton. As we prepare for her planned delivery in 2027. Across the destroyer line, we continue to make steady progress. We launched and christened DDG-131 George M. Neal, achieved stern release and 100% butt-weld complete, on DDG-133 Sam Nunn and loaded main machinery on DDG-135 THAAD Cochrane. We also reached 25% butt-weld complete on DDG 135 and have received all 4 units from our distributed shipbuilding partners. DDG-137 John F. Lehman, received 2 additional outsourced units, and celebrated her first milestone, start fab, capitalizing on the growing value of this production approach. On the amphib programs, LPD 30, Harrisburg, powered up main engines in the second quarter and is progressing towards delivery this year. On LPD-31, Pittsburgh, the forward and aft deck houses were landed, and we laid the keel of LPD-32 Philadelphia. On LHA 8 Bougainville, we continue to ramp up the test program as we prepare for her planned delivery in 2027. We also completed sea trials for DDG-1 thousand USS Zumwalt, and achieved crew move-aboard earlier this year. And finally, in April, Ingalls was awarded the frigate lead yard support contract to procure long-lead-time material execute design work, and begin pre-construction activities for the first ship. Ingalls is also continuing to increase production capability through new technology investments and additional distributed shipbuilding partners along the Gulf Coast. This strategy allows selected units to be built offsite and integrated in Pascagoula creating a dual production path that supports greater throughput. Inside our shipyard, we remain focused on workforce development By pairing targeted hiring with advanced training and onboarding technologies, we are working to build a stronger workforce pipeline increase readiness, and improve retention. Supporting these efforts, we successfully reached an updated collective bargaining agreement with our union partners in March. And we are seeing early indications that the higher wages have a positive impact on our ability to hire and retain skilled shipbuilders. In summary, the Ingalls team is focused on delivering 3 ships over the next 12 months. Increasing production pace, through distributed shipbuilding, and strengthening the workforce required to deliver on our commitments. Now I will hand the call over to Tom for some remarks on our financial results. Tom? Thomas E. Stiehle: Thanks, Brian, and good morning. Let me start by discussing our second quarter results. And then I will provide some color on our expectation for the remainder of the year. For more detail, please refer to the earnings release issued this morning and posted to our website. Beginning with our consolidated results on Slide 5 of the presentation, our second quarter revenues of approximately $3.4 billion, increased 10.9% compared to the same period last year. The higher revenue was attributable to stronger year over year growth at both shipyards. Ingalls revenues were $845 million and increased by 16.7% compared to the second quarter of 25 driven primarily by higher volumes in amphibious assault ships. Newport News revenues of $1.8 billion increased by 15.3% compared to the second quarter of 25, driven by higher volumes across aircraft carriers and submarines. Together, shipbuilding revenue was $2.7 billion up 15.7% year over year. Mission Technologies revenues of $760 million, decreased by 3.9% compared to the second quarter of 25, primarily due to lower volumes in all-domain operations and global security, partially offset by higher volumes in warfare systems and unmanned systems. This result is modestly better than the guidance we had given for the quarter. As the prior year results included approximately $45 million of revenue related to a non recurring contract resolution. Excluding that impact, Mission Technologies revenues grew modestly year over year on an organic basis. Moving on to Slide 6, segment operating income of $224 million and segment operating margin of 6.6% in the second quarter of 26. Compared to $172 million and 5% in the second quarter of 25. At Ingalls, segment operating income was $58 million and operating margin was 6.9%, compared to $54 million and 7.5% in the second quarter of last year. The increase in segment operating income was driven by higher volumes in Amphibious Assault ships, partially offset by favorable contract adjustments in surface combatants in the second quarter of 25. The second quarter net cumulative adjustment at Ingalls was a negative $2 million and none of the adjustments were individually significant. At Newport News, segment operating income was $111 million an operating margin of 6%. Compared to $82 million and 5.1% in the second quarter of 25. The increase in segment operating income was primarily driven by contract adjustments and incentives in aircraft carriers the higher volumes I described earlier, partially offset by lower performance in aircraft carriers. For the second quarter of 26, Newport News shipbuilding's net cumulative adjustment was a positive $8 million The quarterly result did include meaningful positive and negative adjustments within the Carrier Refueling and Complex Overhaul program, as we incorporated change settlements and realigned risk and expectations across that program. As Chris mentioned, we reached agreement on the submarine contracts. The contract definitization is contemplated our third quarter guidance. Moving on, Mission Technologies segment operating income was $55 million and operating margin was 7.2%. Compared to $36 million and 4.6% in the second quarter of 25. The increase in segment operating income was primarily due to higher equity income from Nuclear and Environmental joint ventures. For the second quarter of 26, Mission Technologies' net cumulative adjustment was a positive $4 million None of the adjustments in the quarter were individually significant. Consolidated operating income for the quarter was $210 million and operating margin was 6.1%, compared to $163 million and 5.3% in the same period last year. The increase in operating income was driven by the favorable segment operating income that I just reviewed partially offset by higher non-current state income tax expense, the operating FAS/CAS adjustment. Net earnings in the quarter were $208 million and diluted earnings per share were $5.27 up from $152 million and $3.86 in the same period last year. The effective tax rate in the second quarter was 18.1%. This was below the guidance of 21% that we previously provided, primarily due to favorable tax impacts related to stock award settlement activity. Turning to Slide 7, Cash used in operations was $31 million in the quarter. Net capital expenditures were $119 million or 3.5% of revenues. Free cash flow results in the quarter came in below the forecast we provided on the last earnings call largely due to timing of receipts and disbursements between quarters. there is no change to our free cash flow expectation for the year which I will provide some more color on in a moment. During the quarter, we did not repurchase any shares. We did pay a cash dividend of $1.38 per share, which or $55 million in aggregate. Turning to liquidity and the balance sheet, we ended the quarter with a cash balance of $12 million and liquidity of approximately $1.7 billion Moving on to our outlook on Slide 8. We are increasing our expectation for shipbuilding revenue for the year. As well as bringing up the bottom end of the shipbuilding operating margin range for 2026. We now expect shipbuilding revenue between $10.2 billion and $10.4 billion and expect shipbuilding operating margin in the range between 6% and 6.5%. We are reiterating all other aspects of our guidance for 2026. Including the expectations for Mission Technologies revenue of $3 billion and $3.2 billion and a margin of approximately 5%. I will note that we continue to see the new battleship and frigate programs as meaningful upside opportunities to our medium term outlook. Though we will need additional details before we can include those in our guidance outlook. Moving on to the third quarter look ahead outlined on Slide 8. Expect shipbuilding revenue of approximately $2.6 billion and shipbuilding operating margin that is similar to the second quarter result of 6.3%. For Mission Technologies, we expect revenues will be similar to the second quarter results of $760 million and operating margin of approximately 4%. Inclusive of strategic investments that we expect to make in our unmanned capability and production capacity. We expect free cash flow in the third quarter to be approximately $100 million This does mean that we expect significant free cash flow generation in the fourth quarter to meet our guidance for the full year of between $500 million and $600 million We are reiterating that outlook and do expect meaningful positive cash impacts from contract advances and incentives as well as favorable cash tax impacts in the fourth quarter. Regarding the effective tax rate, we believe it is prudent to use our tax rate of 21% for the third quarter. We still believe 17% is appropriate for 2026 with an expected research and development tax credit expected in the fourth quarter at the end of the year. To close, it was another good quarter as we continue to make steady progress and execute against our 2026 operational initiatives. We are pleased to improve the shipbuilding expectations for the year and remain focused on executing our plan. With that, I will turn the call back over to Christie to manage Q&A. Christie Thomas: Thanks, Tom. As a reminder to everyone on the call, please limit yourself to 1 initial question and 1 follow-up so we can get as many people through the queue as possible. Operator, I will turn it over to you to manage the Q&A. Operator: Thank you, Christie. As a reminder, if you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, remember to unmute your device. Your first question comes from the line of Judd Goddin. with Citi. Your line is open. Please go ahead. Judd Goddin: Hey, guys. Thank you for taking my question. Obviously, a great kind of margin quarter. You raised shipbuilding and you are tracking in line with the full year guidance. I was hoping you could shed some light on how to think about shipbuilding margins through the remainder of the year, just by quarter? And at the same time, it would be helpful to step through any of the remaining just to calibrate everybody's expectations on timing. Christopher Douglas Kastner: Sure, John. I think Tim indicated where we think we are going to be in Q3. And then if you look at the full year, you can kind of see how we are thinking about margin. For the balance of the year. But from a--from a milestone standpoint, delivery of 30 will be towards the end of the year. It will go to trials here. In Q3. 2079 is actually gonna go to trials here in a couple weeks or a week or 2. And we expect that to proceed, and that is on schedule. 800 is towards the end of the year, some real critical milestones coming up, in the summer here. Or the latter part of the summer related to 800. So those are the remaining milestones, laying the keel of 81 is on schedule towards the back half of the year. But I do not anticipate a lot of margin related to that. So Those are the 2026 milestones. 2027 is all still in place, and we are proceeding on those as well. Judd Goddin: Okay. Got it. And, clearly, you know, executing well operationally, trends are moving in the right direction. But are there any additional data points you can share on improving throughput, productivity, reducing costs? Just to help paint a picture of how far you have come and how much more there is to go. Christopher Douglas Kastner: Yeah. We have made real good progress. Right? We had 14% last year in throughput. We expect 15% this year. Newport News has had a great start of the year over the first 2 quarters relative to throughput, primarily on the submarine programs, Ingalls had a bit of a slow start this year. Related to labor and labor growth. And that is really tied to getting their labor agreement done in March. I actually fortunately enough, have Brian here. Blanchett from Ingalls Shipbuilding. He can talk about what they are doing from a labor standpoint and how the how the ships are progressing through the factory there. Brian D. Blanchette: Thanks, Christopher. As Chris said, we signed an updated collective bargaining agreement at the, end of the first quarter, and it was really a win. Agreement, good for the workforce, good for us, good for the Navy. And we saw immediate benefit from a retention standpoint. But there is a little bit of a lag from a hiring standpoint, just as Newport News saw when they did some wage adjustments last year. But we are starting to see some good positive indicators on hiring We have all of our pipeline all of our pipeline programs are going really well. Our apprentice school is near full capacity. The next class that we take in the next month or so should put us there. Our high school programs are going great. How do excellent signing day ceremony, in the spring. And our biggest class ever for that. So we are excited about, where we are headed As Chris said, it was a bit of a slow start, but we are positive about the second half of the year. Christopher Douglas Kastner: Yeah. I can add that we are delivering 5 shifts over the next 12 months. I said that in my script as well. 3 of those in Ingles, so critical we get through those on schedule to get those ships to the Navy, but also critical to rotate those crews to the next ships in the production line. So that is also very important. Judd Goddin: Thanks, guys. Appreciate the color. Christopher Douglas Kastner: Yeah. Thank you. Operator: Your next question comes from the line of Noah Poponak with Goldman Sachs. Your line is open. Please go ahead. Noah Poponak: Hey. Good morning, everyone. Morning. Thanks. The updated guidance. A few questions on the updated guidance. So the new shipbuilding range, revenue range implies the back half Q3 and Q4 combined are kind of flat year over year. Can you help us out with why it would be flat in the back half versus the double digit growth in the first half? And specifically, I think it implies Q3 is up about 6% and Q4 is down about 6%. What drives Q4 down And then on the shipbuilding margin, forecasting it kind of flattish sequentially, could you talk a little bit more about the moving pieces there? Because I thought you had explained previously that whenever you captured the contracts on the next batch of subs, there were you know, maybe payments associated with that plus the retroactive catch up of having had booked long lead at very low margin. If you could help out with those. Thanks. Thomas E. Stiehle: Hey, I appreciate that, Noah. On the revenue side, you know, as you mentioned and said in the remarks, we did up upscale the expectations for shipbuilding by $500 million, both the low end and the top end. It is true when you do the math, the actuals now in Q1, Q2, plus the guide for Q3 where we could land in Q4, you know, that ranges from the $10.4 billion plus the whole year. You know, the Q4, that would be anywhere from $2.5 billion to $2.7 billion and you are right. If you look at it compared to where we just finished up almost at $2.7 billion with a guide at $2.6 billion, And then compared to Q4 of last year, it seems like it is flat, if anything, kind of pulls back a little bit. But a couple of points to come back on that. 1 in Q4 of last year was a big material quarter. For both sides, specifically down at Ingalls. So that is a positive guide. And then, also, you know, there is probably a little conservatism in there. We want to see both the material, the labor continue to inflect up at Ingalls. Material as planned to come in here. I would not overly focus the year over year guide being flat or maybe slightly negative to Q4, but the fact of the matter that we have had 4 now quarters in a row, both for HII and in shipbuilding, 4 quarters in a row of double digit growth. So we are out in front of our 6%, you know, medium term guide. And, you know, I feel really comfortable about that. I think we just wanna see it occur and happen. And, again, it is a tough comp against Q4 to 25 in shipbuilding. On the on the margin side there, you know, again, it is the same story. We have given the same 6.3% for Q3. Kind of guidance that we just came through for 6.3% for this quarter. You know, you heard last night that we did get the subawards. Which bring meaningful revenue more commitment, and statement of work, and CapEx. And incentive opportunities in that too. I would tell you that a piece of Q2 has incentives in there. We did not want to wait. We had an agreement with the Navy to get started on those incentives. So the Q2 has a piece of the incentives baked into it. And going forward, there is additional incentives that come about with the award in Q3. I would tell you it is on the early side. You know, you could imagine just putting that on contract, adjusting the booking rates, more contract value, more statement work, more capital commitment. Then the time to actually even though there is capital incentives on there, there is time and contract incentives. We need time to actually, know, meet the milestones, meet the criteria and be able to kinda book that and eventually get the cash at the end of the year. So I am quite comfortable with that. A perspective again, just like I gave you on the revenue, on the margin side, if you look, at the march up that we have had, whether we talk about where we have been in quarterly shipbuilding from 5.8% to 6% to now 6.3%. that is the nice incremental march that we have kind of forecasted that was coming about as the portfolio would change over and with these subcontract vote awards. And then just from a fiscal perspective, you know, we have seen 5.2% ROS in shipbuilding in 2024, 5.9 in 2025. And now raising the guidance from 6% to 6.5% to now 6.0% to 6.5%. You know, a mid point of 6.25%. Again, a progression both quarterly and annually. On how the company's moving forward here as we you know, the investments are paying off in input output, top line's growing, incremental improvement on the bottom line. So I am quite comfortable with both, you know, the quarter itself and where we are projecting the end of the year is going to be. Noah Poponak: Great, Tommy. I appreciate all that detail. Yeah. I guess just should we think of last night's contracts as in the Outlook you are providing today or incremental to the outlook you are providing today? Because I guess you are technically giving us this post the contracts, but you are also, I assume, not formulating your earnings report and guidance only the night prior. Thomas E. Stiehle: Yeah. So I will square that up for you. As I mentioned earlier, in the Q2 results already was a cadre of the incentives. Right? We had an agreement. And that was booked in Q2. And then with the awards last night, there is Additional incentives that come about that, and that is rolled into the guidance of Q3. We had an expectation and understanding. We have been saying for a while that, you know, first and goal of getting the mods over the goal line, actually have mods in hand. That has occurred last night. But both the actuals that we had with the agreement in Q2 are in place and rolled in there. And then with the anticipation of what was gonna be awarded, which was aligned with our expectations, that was already baked into the forecast as we go forward. Noah Poponak: Okay. Thank you. Noah. I am sorry. Operator: Your next question comes from the line of Scott Mikus with Melius Research. Your line is open. Please go ahead. Scott Mikus: Morning, Christopher, Tim, and Brian. Very nice results and congrats on the submarine contract. I have a couple quick clarifications on it. Of the 76.6 billion of contract mods, how much of that goes to Newport News versus Electric Boat? Do you have a ballpark figure there? And is there a reason why it was only 9 Virginias instead of 10? Thomas E. Stiehle: Yeah. So on the part 1 there, yes, $76.6 billion. When it comes to Newport News, it is approximately $25 billion of that. And about $5.5 billion on the Columbia program. The rest of that is, related with the Block VI. Contract award. Obviously, it goes on the VCS contract. And then the capital incentives that benefit both the Virginia class, the Columbia class, and Newport News operations in totality. Those incentives are spread over various contracts. Christopher Douglas Kastner: Relative to yeah, the 9-ship. The 9-ship, there is material for the 10th ship bought as well, I believe. So that is not gonna impact production of the class. it is more of a funding mechanism. So there is 10 shipsets of material. Right? And then there is 9 shipsets cost wise for the integration and test and delivery of the boats. Right? And the 10th ship could be used for spares or could eventually be pushed up with a boat line as another integrated ship. Scott Mikus: Okay. that is helpful context. And then, Christopher, you have done a lot of work increasing the outsourcing. Distributed shipbuilding. With your outsourcing partners so far. How has the quality of work been? Has it been in line with expectations, better than hoped, or maybe are there areas for improvement? Just curious how that is going. Christopher Douglas Kastner: Yeah. Well, we have a long history of outsourcing, in both shipyards. So we unfortunately made mistakes in the past. We have learned from that in each shipyard. We have rolled those lessons learned into our process for outsourcing again, in both shipyards. Now it is not perfect, we still have some issues, but all in all, in each, we have had pretty positive results. When we do find issues, we have our QA and our engineering team. Out there right away. We have in process inspections. To ensure that we execute with our outsourced partners. So it is not been perfect, and we need to continue our outsourcing. And we have been pretty successful over the last 2 years doing that, and we will continue to do additional outsourcing related to distributed shipbuilding. Thomas E. Stiehle: So it is it is been positive. There have been issues we have had to deal with. We jumped right on them. And we remediate the issue. But all in all, it is been very positive. And to piggyback on that, our ships are follow on ships that are in production. Both Newport News and Ingalls provides the engineering package and the package of parts as well. So it is not first of class or first new bills. The vendors are at times doing for the first time, but we have program project management oversight. We have quality and engineering support. And then when they are finishing their products, it is more of in a pilot range that we would pilot initial construction or fabrication. And then as they are able to prove out, get good quality and they are on cost and schedule, then we provide more work packages. Christopher Douglas Kastner: Yeah. Maybe Brian could talk about their process and how they evaluate distributed shipbuilding partners. Brian D. Blanchette: Yeah. As Christopher said, we worked really hard to incorporate all the lessons learned from past efforts, and we have worked hand in hand with our navy partners down on the Gulf Coast. So it is not a throw it over the fence kind of mentality. We are there, as Tim said, hand in hand with our suppliers. We have incremental checkpoints. Just like we would for ourselves, both with our inspectors and our navy inspectors. And, you know, the proof's in the pudding. We just erected our first 2 ground blocks. And as we talked about in a release, we just put out from our distributed shipbuilding partners. And, they were incorporated into the ship, as expected. And so, you know, it is it takes staying on top of it, and working hand in hand with the suppliers but we are really positive about the results so far. Scott Mikus: Alright. Appreciate the color. Thank you. Operator: Your next question comes from the line of Gautam Khanna. TD Cowen. Your line is open. Please go ahead. Gautam Khanna: Hey, guys. Congrats on the submarine contracts, by the way. Great. Yeah. I was curious just was there anything about the terms when once it was finalized that surprised you or made you think the 9% to 10% eventual goal at shipbuilding is not consistent with the terms of the submarine contracts that were agreed to last night? Christopher Douglas Kastner: No. No, nothing different or special about the terms. It was a lot of work. it is a very big contract. The Navy, the EB, and the Newport News team worked very hard to get it over the goal line. But it is very consistent with what we expect from a profitability standpoint. So nothing really special. Obviously, we had to incorporate kind of lessons learned, from coming through COVID and the economic environment we dealt with there. So I do obviously expect it to perform better than those contracts, but I think it is very consistent with the long term margin profile that we expect. Gautam Khanna: Okay. that is great to hear. And because we are all kind of asking the same question on what the size of the EAC was in Q2 related to it, or will be in Q3. Is there any way you can give us some way to assess how big that was? Related to signing these contracts? And then also the cash impact presumably their advances and the like that are in the guidance for the year. So any quantification would be helpful. Thomas E. Stiehle: Yeah. there is a lot of moving parts in there. Obviously, as I stated earlier, very topically, you know, more contract value, more statement of work, capital commitments, incentives on the contract. So it is early, and we normally do not provide that type of visibility into the contract. Now as we go forward a year. there is always timing issues related to incentives on the contract. But we have included all that within our guidance. Gautam Khanna: Maybe just to put a finer point on it, is should we expect a bigger not knowing what the absolute numbers are, should we expect a bigger adjustment favorably in Q3 versus Q2 related to the contracts being signed? Thomas E. Stiehle: I'll take that. Yeah. The contract itself is in very early stages. We got to make progress on the revenue side, see how performance plays out. There are milestones and responsibilities we have, obviously, to execute the contract and cost and schedule, relative to the incentives and things we have to go do and evidence completion on that. I would expect that we would, just like we saw an incremental improvement here, we find our footing once the contract's been awarded, we'll establish our baseline, we'll get that out. Then we're off to the race. It's just managing performance every 13 weeks and making our commitments in those contracts. I think it's aligned. The guidance kind of incorporates that. You can see after a meaningful kind of step up in shipbuilding at 5.7% to 6.3%, we're telling you 6.3% for Q4. You can do the high and low against that at now 6%-6.5%. Steady performance and staying on schedule. It's a piece of the portfolio at Newport News gets us to the top end, and if we were to run into some headwinds on the existing contracts as we're trying to get those completed and pushed back, there's always the possibility of some step backs in those. We did clip off half the bottom range here, and we feel good here with just a little less than half year to go, now standing at 6%-6.5% for shipbuilding at year's end. Gautam Khanna: Thanks, guys. Operator: Your next question comes from the line of Doug Harned with Bernstein. Your line is open. Please go ahead. Doug Harned: Good morning. Thank you. Christopher Douglas Kastner: Hi, Doug. Doug Harned: I'd like to just go back to Noah's question. Just trying to understand the shipbuilding guidance, because this is an industry you don't get a lot of surprises. The fact that you took guidance up by a pretty large amount, $500 million, quarter-over-quarter, how much of that was due to this new award? How much might be due to something else, like a change in a milestone or something like that? Christopher Douglas Kastner: Top line was related, I'll let Tom talk about the award, but the top line was related just confidence that we're going to execute in our programs over the balance of the year. Throughput's up 12%, materials proceeding. The milestones are staying in place. From my perspective, that's just confidence in execution under our programs. Obviously, we got a large contract award, Tom, I don't think he's going to give you specific numbers in that regard because we had that in our guidance, or we knew that we were going to get that under contract anyway. Tom can comment on the top line. Thomas E. Stiehle: Yeah. It's much more, Doug, on the former here right now. It's the run rates that we're seeing both at Newport News and Ingalls. We see good inflection on hiring and insourcing, outsourcing at both yards, then expectation down at Ingalls that, as Chris said earlier, a little flat at the beginning of the year. What we're seeing in throughput and capacity, insourcing, outsourcing, job shop labor, just the actual numbers. As I mentioned earlier, we've seen HII have double-digit growth across the company, HII across three divisions, but specifically in shipbuilding it follows suit as well, 18%, 19.6%, 9.7%, and now 15.8% respectively year-over-year on a quarterly basis there. There's good footing there. We're executing. Yes? Is there a question out there? Doug Harned: On that, Tom, one of the things that you've gotten, some of it came out of that previous Block V award for the last two ships, was additional support for labor, higher labor wage rates. I guess two things on that. One is, that's presumably a contributor to the near-term revenue growth when the additional labor cost flows through. Can you comment on that, how important that has been in taking these revenue numbers up? I know you're getting support at Ingalls too for this. First, how important it is on the revenue side, that should be a pass-through, as a second part, how that's helping you improve your performance and your throughput. Thomas E. Stiehle: Relative to the revenue growth, obviously, there's a timing of that. Newport News pushed that over the goal line of Q2 of last year. In the comparisons, that's already kind of baked into that. Ingalls just went over the goal line into February timeframe, meaningfully it's just working itself through the revenue side now. I still say organically the growth's happening because of higher material and higher labor, we have more ships in flow, more people either in the yards and/or more work being outsourced. That's what's really driving that. I'm with you that as that takes hold and the comparisons year-over-year, it'll be baked in the higher wages, that's less than half of the growth rate differential of what's happening right now. It's just more capacity and throughput through both yards. Christopher Douglas Kastner: Doug, to provide a little bit more detail relative to how it's helping us improve throughput, we have some really good data on experienced craftsmen and women, first-class craftsmen and women, and their retention rates. It's improving in both shipyards. There's nothing better than having a first-class welder, ship fitter, electrician being retained and staying employed and rolling ship over ship. That's what we've been looking for. The wages and the support by the Navy on the wages on the nuclear programs has really been beneficial in that regard, we're starting to see that as well at Ingalls on some initial indicators that first-class labor is starting to stay, that's very positive. Doug Harned: Thank you. Operator: Your next question comes from the line of Scott Deuschle with Deutsche Bank. Your line is open. Please go ahead. Scott Deuschle: Hi. Good morning. Chris, what are these contract incentives tied to? What do you have to do from a performance perspective to fully earn them out? Christopher Douglas Kastner: Yeah. They're very broad, right? They're related to labor investments, capital investments, performance under the contract. I don't want to get into specifics on what they are. Each of them have specific milestones that need to be accomplished with the goal, ultimately, of improving performance on the ships and making sure we meet our commitments to the Navy. They've been very well thought out and negotiated between us, EB, and the Navy. We're comfortable we'll be able to execute against them and achieve the baseline contract. Scott Deuschle: Okay. From an accounting perspective, why do they get recognized in margin at the time of award rather than the period of execution against those milestones? Thomas E. Stiehle: The majority of them will be kind of recognized on a go-forward basis here, right? As we booked a couple of the incentives in Q2 there, it's just the value equation there as far as what the incentive was based on. Again, we're not going to get into the details on the phone call here, the urgency of wanting to get started on the investment's important. Hiring, infrastructure, throughput, long lead on capital projects, all those go into the construct of when we recognize the commitment, it's a bilateral commitment that was put on contract, as we execute going forward, we're allowed to kind of book that. Scott Deuschle: Okay. Are there cases where you've accomplished some of the milestones before the award, and that's what allows that treatment? Thomas E. Stiehle: On a couple of the incentives, as an example, there may be an advancement to get started on a capital project. It's a commitment that, from an accounting perspective, we can take that, a piece of that may have been booked in Q2. Scott Deuschle: Okay. Thank you. Tom, just to clarify, are the underlying margins at Newport News, excluding incentives, improving as well? Or is this mainly incentive-driven margin improvement? Thank you. Thomas E. Stiehle: I think it's a mix. Obviously, you can subtract that. We told you what the QEM adjustments were at Newport News. They were single digit, a positive $8 million. If you subtract that out, the running EAC without the adjustments is about consistent at 5.5%. I think the value equation here of the awards is the additional investments that go into the yard, right? Throughput capacity, capital, hiring, infrastructure, training. I'm excited by it. We've been talking about these awards for a while here. It's good to get the full complement of both the ship boat package as well as the incentives completely on contract now going forward. Christopher Douglas Kastner: Yeah, Scott, I could add to that. I've said this previously. The most important thing is that we transition out of the ships we're working on now and into the new contracts. This new contract is a step in the right direction. The Newport News throughput over the first part of the year has been very solid, and as I mentioned, in the submarine programs as well. As they continue to make progress, make the ship deliveries, reposition into the future ships, I think margin will naturally improve. Scott Deuschle: Thank you very much. Nice results. Christopher Douglas Kastner: Thanks. Operator: Your next question comes from the line of David Strauss with Wells Fargo. Your line is open. Please go ahead. Ben Tenzer: Hi. Good morning. This is Ben Tenzer going for David. I was just wondering could you guys give us an update on the mix of pre-COVID versus post-COVID shipbuilding revenue today, and then where you think you will be over the next couple of years? Thomas E. Stiehle: On costs, we've set the trajectory several years ago that when we got to 2027, by the end of the year, we'd have more post than pre, nothing has changed on that. We're kind of in the march down, the end of this year and getting into next, we'll be right at the 50/50 mark, by the end of the year, we'll actually have more post-COVID than pre-COVID. It's good to retire that. Every time you hear a milestone of us either putting a boat in the water, or a ship, and taking the seat and selling it off, that's one pre-COVID effort that's behind us, and we're continually getting awards, whether it's these sub-awards. We had a DDG that was fully awarded just a couple of weeks ago. That's a new start program, a contract that has a better mix of understanding the statement of work, the schedule, the overall bid cost, the materials in line with what we're seeing in the business environment, the labor and labor efficiency associated with what's in the yards right now is incorporated into that. A much better balanced risk and opportunity set so that we can achieve our intended and expected outcome on these post-COVID contracts. Ben Tenzer: Got it. How are you thinking about the frigate program with the battleship opportunity? Is there any upside to guidance there? Christopher Douglas Kastner: Yeah. Not yet. We're evaluating the acquisition approaches to each of those. As we come to our plan this year, we'll incorporate those into the plan based on the latest information. If we update anything, it'll be in 2027. I would say on the frigate, we started that build on a preliminary basis. We expect to be put under contract for that potentially later this year, and we've done the initial start of the design work for the battleship as well on a limited basis with support and cooperation with the Navy. Ben Tenzer: Great. Thank you. Christopher Douglas Kastner: Sure. Operator: Your next question comes from the line of Ron Epstein with Bank of America. Your line is open. Please go ahead. Ron Epstein: Hey, just maybe I have two follow-up questions for you. On your prepared remarks, you talked about all the preparation you're doing with the workforce. Can you talk about how you're retaining labor? You mentioned you hired 3,500 shipbuilders. Did you lose any in the quarter? What was your net add? What's really worked to retaining them besides just pay? Are there things that you've changed in terms of work conditions? I know there were complaints about parking far, far away and having to take buses and that sort of stuff. What have you changed in terms of the work environment, and how is retaining going? Christopher Douglas Kastner: Ron, thanks for that. I think you've been in my all hands meeting relative to the parking question, which is kind of always the first one. Rather than I take a shot at that, let me talk to a shipyard president, he can talk about what he's doing from a labor standpoint. Brian Blanchette: Thanks, Chris. Ron, it's front and center in just about every discussion, what we can do to support the workforce, both the retention of the workers that we already have, as well as attracting the next set of workers, both skilled and unskilled. We have done just about everything over the years, starting with massive capital investment in the yard of Pascagoula. We put over a million square feet under cover. If you've been to Pascagoula in the summertime, that shade makes a tremendous amount of difference, protection from the elements when it rains, et cetera. The collective bargaining agreement was a huge win. As we said earlier, we saw immediate impacts on attrition with the CBA being signed, we're starting to see a real benefit on hiring as well, particularly with rehires, people who know who we are and people that we know are good shipbuilders. That's been a positive as well. We have done busing both inside and outside the shipyard. We do a lot of work on employee engagement, really putting a lot of focus on putting the right leaders in the right place because it all starts with the foreman and frontline supervisor. Pretty much every day, that's at the front of what we think about as a leadership team, trying to make the conditions optimal for increasing throughput and delivering these ships. Ron Epstein: Got you. Maybe Chris, just one follow on. In your prepared remarks, you talked about the opportunities with unmanned surface vehicles, maybe unmanned underwater vehicles. How much of the naval fleet do you see that actually becoming? If you look at the overall budgets in the Navy and given the price tag- Christopher Douglas Kastner: Ron, you're cutting out Ron Epstein: a lot of the Yeah. When you- Christopher Douglas Kastner: Ron, sorry, you're cutting out a bit Ron Epstein: Here. Hang on. Hey, sorry about that. Can you hear me now? Christopher Douglas Kastner: That's okay. Yeah. Yes, we can. Ron Epstein: Yep. Yeah, great. When you look at unmanned systems, surface vehicles and underwater, and you compare that to a lot of the big stuff you make, the blue water stuff, ultimately, how much of the Navy is that really? How big an opportunity is that really relative to a lot of the other stuff you do? Christopher Douglas Kastner: From a revenue standpoint right now, it's pretty modest. We know it's going to become more of the Navy fleet because they just can do excess missions and expand the fleet size such that they can do things that large capital ships can't do and take the place of large capital ships in some of the missions. I don't really want to comment on how large it's going to be, but I'll tell you one thing, it's the fastest-growing business unit we have. We have had some very positive results on our Lionfish program where we just re-upped the next option year. We're competing for the MUSV program. I've talked about that, it's a competitive program, so I'd rather not go into too much details. The international and domestic pipeline is strong, we're going to pursue those. We have really world-class autonomy. It's a good business unit. It's a growing business unit. The profitability should be solid because it's firm fixed price contracts. We think we're very competitive, and we're going to continue to invest in it and watch it grow. Now, is it going to be a billion-dollar battleship? No. We think it's going to grow. We think there's significant opportunity, and we think it's going to be a greater part of the fleet. Ron Epstein: Got it. All right. Thank you very much. Christopher Douglas Kastner: Sure. Operator: Your next question comes from the line of Emilee Deutschman with Wolfe Research. Your line is open. Please go ahead. Emilee Deutchman: Hey, good morning, everyone. Quick question- Thomas E. Stiehle: Hi, Emilee. Emilee Deutchman: On carriers. Hey, good morning. It looks like at Newport News, there was a mix of positive incentives and adjustments as well as, on the opposite end, lower performance on the programs. Are you able to speak to more about the dynamics within carriers and which ships are reflected in that? Secondarily, these public comments that keep coming out about redesigning the carrier, is that something that's just sort of hanging in the ether and doesn't have teeth yet, or is that something that's in discussions now? Thomas E. Stiehle: Yeah, sure. Thanks, Emilee. I appreciate the question. Yeah. On carriers, we did say that in the remarks there. On the incentive side, I mentioned earlier on the award that we've talked about, there's some capital projects that just benefit the facility as a whole. They were put on various contracts, and there was an assistance there on that front. On the performance side, as we work our way through with 80 and 81, we talked to you about getting that machinery equipment last year, and we decked over the Q3/Q4 timeframe. As we just work ourselves through now getting that ship back into the cadence of the build cycle of what's left to go, we're continually evaluating performance and what the revised plan, the unique plan as we put 80 back, trying to kind of get it back into the rhythm of the construction there, what that affects and means to the EAC there. All that was rolled into the performance of it, and it was both puts and takes on the carrier front. Crystal, answer. Christopher Douglas Kastner: Yeah, I'll take the second one, Emily. Yeah, there's always discussions or comments about potential new technology implementation into aircraft carriers or redesign. We'll work with the Navy in whatever's chosen, and if there's a decision to make a change, we'll work with them to ensure that we mitigate any impact as much as we can and reset the cost and schedule to make sure the aircraft carrier is successful. Nothing as yet. We've received no direction on any change. If it is, we'll make sure that we work closely with the Navy. Emilee Deutchman: Great. Then one quick follow-up. With the high operating tempo with Operation Prosperity Guardian now and the follow-on kinetic operations, the naval fleet is working overtime, to say the least. Are you all seeing this lead to more scope for maintenance and overhaul demand? That's for both the nuclear side and the surface side? Or is it still kind of too early to tell in the process? Christopher Douglas Kastner: I think it's too early to tell, and we've got a lot of new construction work, so there could potentially be more service and support work out there. I think we're focused on new construction right now. Emilee Deutchman: Great. Thank you. Christopher Douglas Kastner: Sure. Operator: Your next question comes from the line of Seth Seifman with JPMorgan. Your line is open. Please go ahead. Seth Seifman: Hey, thanks very much. Good morning. Just one this morning. With regard to the cash flow, we'll see the strong Q4, I think it was Q, and some relation to the contract signing there. We saw Q2 of last year, I think, contract signing driving some really significant cash flow, and those have been the two really big periods of cash flow generation over these two years, 2025 and 2026. If there aren't major contract signings, how do we think about the potential to convert earnings into cash? Thomas E. Stiehle: Yeah. You are right. If you look back at Q2 of last year with the awards, that assisted it. I wouldn't say it's the only piece that's driving that. Right now, what we found, in this Q2 over last Q2, is unlike last year, where working capital improved. We did get the awards last year for FY 2024. The meaningful awards here are in Q3 with the boats themselves. Working capital actually kind of backed up, which it usually does in the first half of the year. We've seen that go from about 4% at the end of last year to 8% in Q1, and now we're sitting around just under 11%. That's natural as we work ourselves through. We sprint at the end of last year. Then the working capital kind of swings back. I see that improving as we get into Q3, Q4. The ramp and the top line that we've talked about assists cash flow. The improvement, obviously, on the bottom line, it provides assistance there. As we continue to make our milestones, we've had the milestone chart in here. It hasn't really been talked about on this call, but we give you religiously the milestone chart in Q2 and Q4. We reiterated that all milestones are in play right now. There's a couple of significant milestones and deliveries as well as in my remarks, I mentioned, there's a tax credit that we anticipate to kind of get back. We have agreement with the IRS for that. It's working itself through the system, and that's at the very end of this year. That meaningfully contributes as well. All that conspires, the performance, the awards, top-line growth, bottom-line growth, tax credit, and then a couple of dollars on the incentives that we've talked about, has us feeling good and reiterating five to 600, $100 million in Q3, and then a very robust $1 billion-dollar Q4 cash collection quarter. Seth Seifman: Okay. Great. Moving forward, if there's not a large contract in 2027 on the order of what we've seen, does that have any impact on cash conversion and how we think about cash going forward? Thomas E. Stiehle: No, it doesn't. No. As I say, I would not hang our hat on it because of these awards. An award every year has to come through here. You're running a +$10 billion operations here, cash follows margin. I know if you look back historically, maybe one year's high or low, but we expect a cash conversion of 1.0. We've had the same payment terms with the Navy. As you make progress, you get cost and a piece of fee. As you make more progress, those percentages change here. It's tried and true. It works. It's equitable for both sides. As we make progress, we are able to collect cost and a piece of fee on that. I don't see that changing. As I say, it's just us kind of working through. I think as we make progress on these COVID ships, on the milestone chart, we show five awards in this year and next year. A lot of ships going through integration and test. Two steps forward, one step back on passing tests, spare parts, things of that nature. It just creates some headwinds a little bit there. Seeing what we did for the first half of the year, the work scope that's in front of us, and the plans that we have, I feel good about the guide right now between 500 and 600. Plans are in place. We know the 50 or so milestones and steps that have to happen for us to achieve our perspective and guide. Christopher Douglas Kastner: Yeah. I would focus on the deliveries. Those five deliveries over the next 12 months are really important. Seth Seifman: Got it. That's very helpful. Thank you. Christopher Douglas Kastner: Thanks, Seth. Operator: I am not showing any further questions at this time. I would now like to hand the call back over to Mr. Kastner for any closing remarks. Christopher Douglas Kastner: Okay. Thank you for your continued interest. I look forward to seeing many of you over the next quarter. Have a good afternoon. Operator: That concludes today's conference call. Thank you for attending. You may now disconnect. Before you buy stock in Huntington Ingalls Industries, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Huntington Ingalls Industries wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,081!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,166,221!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Huntington Ingalls (HII) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Huntington Ingalls Industries, Inc.? Here are five stocks we like better. Strong second-quarter results: HII reported $3.4 billion in sales and diluted EPS of $5.27, while shipbuilding revenue rose 16% to $2.7 billion. Contract awards totaled $6.7 billion. Shipbuilding outlook raised: The company increased its 2026 shipbuilding revenue forecast to $10.2 billion–$10.4 billion and lifted its operating-margin outlook to 6%–6.5%, citing improved operating performance at Newport News and Ingalls. Execution and investment continue: HII is improving shipbuilding throughput, hiring more than 3,500 workers year to date and advancing major Virginia- and Columbia-class submarine programs, while maintaining 2026 free-cash-flow guidance of $500 million–$600 million. Defense Budget Expansion: 3 Mid-Cap Names in a Sweet Spot Huntington Ingalls Industries (NYSE:HII) reported second-quarter 2026 sales of $3.4 billion and diluted earnings per share of $5.27, as higher volumes at its shipbuilding operations helped drive revenue growth and prompted the company to raise its full-year shipbuilding outlook. Chief Executive Officer Chris Kastner said shipbuilding sales reached $2.7 billion, up 16% from a year earlier and marking the company’s fourth consecutive quarter of double-digit growth. HII received $6.7 billion in contract awards during the quarter. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now U.S. Shipbuilding Revival: 3 Stocks to Watch Now “We had a solid second quarter and are beginning to see positive momentum from continued investments in shipbuilding in the maritime industrial base,” Kastner said. Consolidated revenue increased 10.9% year over year to approximately $3.4 billion. Net earnings rose to $208 million from $152 million in the prior-year quarter, while diluted EPS increased from $3.86 to $5.27. → Microsoft Just Flipped the AI Spending Narrative Overnight These 3 Underrated ETFs Could Boom in 2026 Segment operating income was $224 million, compared with $172 million a year earlier, and segment operating margin rose to 6.6% from 5.6%. Consolidated operating income was $210 million, with a 6.1% operating margin, compared with $163 million and a 5.3% margin in the second quarter of 2025. HII raised its 2026 shipbuilding revenue forecast to between $10.2 billion and $10.4 billion and increased the low end of its shipbuilding operating-margin outlook. The company now expects shipbuilding operating margin of 6% to 6.5% for the year. → Carrier Earnings Could Send the Stock to a New All-Time High Chief Financial Officer Tom Stiehle said the higher outlook reflected operating run rates at Newport News Shipbuilding and Ingalls Shipbuilding, including labor, materials, insourcing and outsourcing activity. He said the company expects third-quarter shipbuilding revenue of about $2.6 billion and shipbuilding operating margin similar to the second-quarter result of 6.3%. HII reiterated its forecast for Mission Technologies revenue of $3 billion to $3.2 billion and segment operating margin of approximately 5% for 2026. The company expects Mission Technologies third-quarter revenue to be similar to the second-quarter level of $760 million, with an operating margin of about 4%, including planned investments in unmanned capabilities and production capacity. At Newport News Shipbuilding, the aircraft carrier John F. Kennedy, or CVN 79, completed builder’s trials earlier in the year. HII expects preliminary acceptance later in 2026 and final delivery in 2027. The Enterprise, or CVN 80, is 64% erected, and the company plans to lay the keel for CVN 81 later this year. On the submarine side, the company said the Virginia-class submarine Arkansas, or SSN 800, remains on track for delivery later this year. HII also said agreements were reached for Virginia-class Block VI and the next Columbia-class submarine contracts. Stiehle said the $76.6 billion in contract modifications included approximately $25 billion for Newport News, including about $5.5 billion associated with the Columbia program. The award covers nine Virginia-class ship sets for integration, testing and delivery, while material has been purchased for a 10th ship, according to management. Kastner said the contract terms were consistent with the company’s expectations for its long-term profitability profile. Management said contract incentives are tied to areas including labor investments, capital investments and performance milestones. The company expects to transition to a majority of post-COVID shipbuilding work by the end of 2027. Stiehle said HII expects the mix to approach 50-50 between pre- and post-COVID work around the end of 2026 before shifting toward post-COVID programs. Ingalls Shipbuilding currently has 13 ships under construction, including six destroyers, three amphibious transport docks and two amphibious assault ships. The yard also supports work on the DDG 1000 and DDG 1002 programs. Ingalls delivered the destroyer Ted Stevens, or DDG 128, at the end of 2025, and the ship sailed away during the second quarter. The company is preparing the Jeremiah Denton, or DDG 129, for planned delivery in 2027. Amphibious transport dock Harrisburg, or LPD 30, powered up its main engines during the quarter and is progressing toward delivery this year. Ingalls President Brian Blanchette said the business is focused on delivering three ships over the next 12 months. Across HII, Kastner said the company plans to deliver five ships during that period. HII said year-to-date shipbuilding throughput improved 12% over 2025 and that it remains on track for a 15% full-year improvement. The company has hired more than 3,500 shipbuilders year to date and expects distributed shipbuilding to increase 30% this year. Blanchette said an updated collective bargaining agreement reached in March has produced early improvements in retention and hiring indicators. He said the company is also investing in covered work areas, employee transportation, workforce engagement, apprenticeship programs and frontline leadership. Management said distributed shipbuilding partners have generally produced positive results, though the process has not been without issues. The company said it uses engineering, quality assurance and inspection support to oversee work performed by partners before units are integrated at its shipyards. Mission Technologies recorded second-quarter sales of $760 million, down 3.9% year over year. Stiehle said the decline reflected lower volumes in all-domain operations and global security, partly offset by higher volumes in warfare systems and unmanned systems. Excluding approximately $45 million tied to a nonrecurring contract resolution in the prior-year period, the segment posted modest organic revenue growth. Mission Technologies operating income rose to $55 million from $36 million, while operating margin increased to 7.2% from 4.6%, primarily because of higher equity income from nuclear and environmental joint ventures. The segment secured a $418 million recompete award to support shipboard elevators on U.S. Navy aircraft carriers and amphibious ships. Its ROMULUS unmanned surface vessel is scheduled to enter the Navy’s medium unmanned surface vessel at-sea testing phase in September. HII also announced partnerships with Bayou Metals, Halimar Shipyard and Applied Intuition and secured the next production option for the Navy’s Lionfish small unmanned undersea vehicle program. Cash used in operations was $31 million in the quarter, while free cash flow fell below the company’s prior forecast due largely to the timing of receipts and disbursements. HII reiterated full-year free cash flow guidance of $500 million to $600 million, including an expectation for about $100 million in the third quarter and significant generation in the fourth quarter. The company ended the quarter with $12 million in cash and approximately $1.7 billion of liquidity. Huntington Ingalls Industries (NYSE: HII) is America's largest military shipbuilding company and a leading provider of professional services to the U.S. government. Headquartered in Newport News, Virginia, HII designs, constructs and maintains nuclear-powered aircraft carriers, submarines and other complex vessels for the U.S. Navy. The company's products include nuclear aircraft carriers, Virginia-class and Columbia-class submarines, as well as amphibious assault ships, destroyers and cutters. Established in 2011 as a spin-off from Northrop Grumman's shipbuilding operations, HII traces its heritage to two historic builders: Newport News Shipbuilding, founded in the 19th century, and Ingalls Shipbuilding, founded in 1938. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Huntington Ingalls Industries Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved a 12% improvement in shipbuilding throughput year-to-date, driven by increased operational focus and progress toward a 15% full-year target. Secured critical demand signals through finalized contracts for VCS Block VI and the next Columbia-class submarine, providing long-term stability for the workforce and supplier base. Leveraged a 'distributed shipbuilding' strategy and is on track to increase distributed shipbuilding volume by 30% this year., utilizing offsite unit construction to create dual production paths and mitigate shipyard congestion. Reported a fourth consecutive quarter of double-digit shipbuilding revenue growth, attributed to higher volumes in aircraft carriers, submarines, and amphibious assault ships. Attributed improved workforce stability to a new collective bargaining agreement at Ingalls, which has shown early positive indicators for skilled labor retention and hiring. Positioned Mission Technologies to capitalize on an inflection in the autonomous market, specifically through the evolution of the Lionfish UUV and ROMULUS USV programs. Raised 2026 shipbuilding revenue guidance to $10.2 billion–$10.4 billion and operating margin to 6%–6.5% based on current execution momentum. Anticipates the delivery of 5 ships over the next 12 months, including LPD 30 and SSN-800 Arkansas by the end of 2026. The company expects significant free cash flow generation in the fourth quarter to meet its full-year guidance of between $500 million and $600 million., dependent on the timing of contract advances and R&D tax credits. Expects throughput improvements to accelerate in the second half of the year as key milestones and ship deliveries are reached. Identifies the new battleship and frigate programs as meaningful medium-term upside opportunities not yet included in formal guidance. Incorporated change settlements and realigned risk expectations within the Carrier Refueling and Complex Overhaul program, resulting in mixed positive and negative adjustments. Noted a $45 million non-recurring revenue headwind in Mission Technologies compared to the prior year due to a previous contract resolution. Acknowledged a 'slow start' to the year at Ingalls regarding labor growth, though management expects a recovery in the second half following the March labor agreement. Flagged that while distributed shipbuilding is expanding, it requires intensive oversight and quality assurance to manage risks associated with third-party fabrication. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that Q4 revenue may appear flat year-over-year due to a difficult comparison against a high-material quarter in 2025. Confirmed a steady 'incremental march' in shipbuilding margins from 5.8% toward the new 6.25% midpoint as the portfolio transitions to newer contracts. Newport News Shipbuilding's portion of the award is approximately $25 billion, with an additional $5.5 billion specifically for the Columbia program. The contract includes capital incentives and performance milestones that were partially recognized in Q2 and will continue into Q3 and beyond. Management explained the 9-ship count is primarily a funding mechanism; however, long-lead material for a 10th ship has been procured to maintain production continuity. The 10th shipset of material can be utilized for spares or integrated into a future boat line without impacting current class production.

Huntington Ingalls (HII) came out with quarterly earnings of $5.27 per share, beating the Zacks Consensus Estimate of $3.8 per share. This compares to earnings of $3.86 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +38.68%. A quarter ago, it was expected that this shipbuilder would post earnings of $3.7 per share when it actually produced earnings of $3.79, delivering a surprise of +2.43%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Huntington Ingalls, which belongs to the Zacks Aerospace - Defense industry, posted revenues of $3.42 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 8.74%. This compares to year-ago revenues of $3.08 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Huntington Ingalls shares have lost about 17.6% since the beginning of the year versus the S&P 500's gain of 6.9%. While Huntington Ingalls has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Huntington Ingalls was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.53 on $3.28 billion in revenues for the coming quarter and $17.31 on $12.97 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Aerospace - Defense is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Draganfly Inc. (DPRO), has yet to report results for the quarter ended June 2026. This company is expected to post quarterly loss of $0.11 per share in its upcoming report, which represents a year-over-year change of +75%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Draganfly Inc.'s revenues are expected to be $3.28 million, up 114.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report Draganfly Inc. (DPRO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Huntington Ingalls Industries, Inc. HII reported second-quarter 2026 earnings of $5.27 per share, up 36.5% year over year and 39.1% above the Zacks Consensus Estimate of $3.79.Revenues rose 10.9% to $3.42 billion and beat the consensus mark of $3.14 billion by 8.9%. Higher aircraft carrier, submarine and amphibious assault ship volumes drove growth.New contract awards totaled $6.7 billion, lifting backlog to $57.3 billion. Huntington Ingalls reported segmental operating income of $224 million compared with $172 million in the second quarter of 2026. The segmental operating margin expanded 100 basis points from the prior-year figure to 5.6%. Huntington Ingalls Industries, Inc. price-consensus-eps-surprise-chart | Huntington Ingalls Industries, Inc. Quote Newport News Shipbuilding remained the largest revenue contributor. Revenues increased to $1.85 billion from $1.60 billion, driven by higher aircraft carrier and submarine volumes. Segment operating income rose to $111 million from $82 million, while margin improved to 6% from 5.1% on contract adjustments, incentives and stronger volumes.Ingalls Shipbuilding revenues advanced to $845 million from $724 million, primarily due to higher amphibious assault ship volumes. Segment operating income increased to $58 million from $54 million, though margin declined to 6.9% from 7.5%.Mission Technologies revenues fell to $760 million from $791 million. Lower All-Domain Operations and Global Security volumes more than offset growth in Warfare Systems and Unmanned Systems. Segment operating income improved to $55 million from $36 million, while margin expanded to 7.2% from 4.6% on higher equity income from nuclear and environmental joint ventures. Cash flow remained pressured in the second quarter. Net cash used in operating activities was $31 million against net cash provided by operating activities of $823 million in the year-ago quarter. Free cash flow was negative $150 million against positive $730 million a year earlier. Net capital expenditures totaled $119 million in the quarter. On capital deployment, HII paid $55 million in dividends and did not repurchase shares during the quarter. The company ended June 2026 with $12 million in cash and cash equivalents and $1.7 billion in liquidity. Management reaffirmed its full-year expectations and maintained its medium-term growth framework. For 2026, HII continues to project shipbuilding revenues of $10.20-$10.40 billion with a shipbuilding operating margin of 6.0-6.5%.Mission Technologies revenues are still expected at $3.0-$3.2 billion, with segment operating margin around 5% and EBITDA margin of 8.4-8.6%.The company also reiterated free cash flow guidance of $500-$600 million and capital expenditures of 4-5% of sales. Huntington Ingalls currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Teledyne Technologies Inc. TDY reported second-quarter 2026 adjusted earnings of $6.28 per share, which surpassed the Zacks Consensus Estimate of $5.78 by 8.7%. The bottom line also improved 20.8% from $5.20 recorded in the year-ago quarter.Total sales were $1.66 billion, which beat the Zacks Consensus Estimate of $1.57 billion by 5.9%. The top line also jumped 9.8% from $1.51 billion reported in the year-ago quarter.Northrop Grumman Corporation NOC reported second-quarter 2026 adjusted earnings of $7.68 per share, which beat the Zacks Consensus Estimate of $6.84 by 12.3%. The bottom line, however, declined 5.8% from the year-ago quarter’s level of $8.15.NOC’s total sales of $10.88 billion in the second quarter beat the Zacks Consensus Estimate of $10.80 billion by 0.7%. The top line also improved 5.1% from $10.35 billion reported in the year-ago quarter.AAR Corp. AIR reported fourth-quarter fiscal 2026 adjusted earnings of $1.53 per share, which topped the Zacks Consensus Estimate of $1.41 by 8.5%. The bottom line also improved 31.9% from the year-ago quarter’s level of $1.16.In the fourth quarter, AAR generated net sales of $928 million. The reported figure beat the Zacks Consensus Estimate of $892 million by 4%. The figure also increased 23% from $754.5 million recorded in the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report Northrop Grumman Corporation (NOC) : Free Stock Analysis Report AAR Corp. (AIR) : Free Stock Analysis Report Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NEWPORT NEWS, Va., July 30, 2026 (GLOBE NEWSWIRE) -- HII (NYSE: HII) today reported results for the second quarter of fiscal 2026. Highlights Second quarter revenues were $3.4 billion Second quarter net earnings were $208 million or $5.27 diluted earnings per share Company raises the FY26 shipbuilding revenue guidance range to between $10.2 and $10.4 billion1 Company raises the low end of the FY26 shipbuilding operating margin2 guidance range1 Company reaffirms previously issued free cash flow2 outlook1 Second Quarter ResultsSecond quarter 2026 revenues of $3.4 billion were up 10.9% from the second quarter of 2025, driven by growth at Newport News Shipbuilding and Ingalls Shipbuilding. Operating income in the second quarter of 2026 was $210 million and operating margin was 6.1%, compared to $163 million and 5.3%, respectively, in the second quarter of 2025. Segment operating income2 in the second quarter of 2026 was $224 million and segment operating margin2 was 6.6%, compared to $172 million and 5.6%, respectively, in the second quarter of 2025. Net earnings in the second quarter of 2026 were $208 million, compared to $152 million in the second quarter of 2025. Diluted earnings per share in the quarter was $5.27, compared to $3.86 in the second quarter of 2025. Net cash used in operating activities in the quarter was $31 million and free cash flow2 was negative $150 million, compared to net cash provided by operating activities of $823 million and free cash flow2 of $730 million in the second quarter of 2025. New contract awards in the second quarter of 2026 were $6.7 billion, bringing total backlog to $57.3 billion as of June 30, 2026. “We continued to make good progress on our 2026 operational initiatives, with plans in place to achieve our shipbuilding throughput improvement goal of 15%. Given the significant shipbuilding demand and our proven ability to drive higher throughput, we are pleased to increase our top line expectations for the full year while lifting the lower end of our margin expectations as we remain focused on execution," said Chris Kastner, HII’s president and CEO. 1The financial outlook, expectations, and other forward-looking statements provided by the company for 2026 and beyond reflect the company's judgment based on information available at the time of this release. Please see the "Forward-looking Statements" section in this release and our Form 10-Q for factors that may impact the company's ability to meet expectations. 2Non-GAAP measures. See Exhibit B for definitions and reconciliations. Results of Operations Segment Operating Results Ingalls Shipbuilding Ingalls Shipbuilding revenues for the second quarter of 2026 were $845 million, an increase of $121 million, or 16.7%, from the same period in 2025, primarily driven by higher volumes in amphibious assault ships. Ingalls Shipbuilding segment operating income for the second quarter of 2026 was $58 million, an increase of $4 million from the same period in 2025. Segment operating margin in the second quarter of 2026 was 6.9%, compared to 7.5% in the same period last year. The increase in operating income was primarily driven by higher volumes in amphibious assault ships, partially offset by favorable contract adjustments in surface combatants in the second quarter of 2025. Key Ingalls Shipbuilding milestones for the quarter: Awarded Frigate class (FF(X)) lead yard support services contract to procure long lead time material, execute design work and begin pre-construction activities for the first ship Began fabrication of guided missile destroyer John F. Lehman (DDG 137), the seventh Flight III destroyer to be constructed at Ingalls Newport News Shipbuilding Newport News Shipbuilding revenues for the second quarter of 2026 were $1.8 billion, an increase of $246 million, or 15.3%, from the same period in 2025. The increase was primarily driven by higher volumes in aircraft carriers and submarines. Newport News Shipbuilding segment operating income for the second quarter of 2026 was $111 million, an increase of $29 million from the same period in 2025. Segment operating margin in the second quarter of 2026 was 6.0% compared to 5.1% in the same period last year. The increase in segment operating income 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. Key Newport News Shipbuilding milestones for the quarter: Redelivered Virginia-class submarine USS New Jersey (SSN 796) following completion of post-shakedown availability, a maintenance period that typically follows delivery of new ships and includes combat systems and electronics upgrades, as well as general maintenance on the submarine Celebrated the opening of the Carrier Refueling Overhaul Workcenter, a new facility that enhances the work environment for sailors and shipbuilders during refueling and complex overhaul of nuclear-powered aircraft carriers Mission Technologies Mission Technologies revenues for the second quarter of 2026 were $760 million, a decrease of $31 million, or 3.9%, from the same period in 2025. The decrease was primarily due to lower volumes in All-Domain Operations, largely related to the impact of a favorable non-recurring settlement in the second quarter of 2025, as well as lower volumes in Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems. Mission Technologies segment operating income for the second quarter of 2026 was $55 million, an increase of $19 million from the same period in 2025. Segment operating margin in the second quarter of 2026 was 7.2%, compared to 4.6% in the same period last year. The increase in segment operating income was primarily due to higher equity income from nuclear and environmental joint ventures. Mission Technologies results included approximately $17 million of amortization of purchased intangible assets in the second quarter of 2026, compared to approximately $23 million in the same period last year. Mission Technologies EBITDA margin1 in the second quarter of 2026 was 10.1%, compared to 8.1% in the second quarter of 2025. Key Mission Technologies milestones for the quarter: U.S. Navy selected HII’s ROMULUS Unmanned Surface Vessel to advance to the evaluation phase of the Medium Unmanned Surface Vessel program Delivered the first REMUS 130 unmanned underwater vehicle to the U.S. Department of War 1Non-GAAP measures. See Exhibit B for definitions and reconciliations. HII Financial Outlook1 FY26 shipbuilding revenue between $10.2 and $10.4 billion; expect shipbuilding operating margin2 between 6.0% and 6.5% FY26 Mission Technologies revenue between $3.0 and $3.2 billion FY26 Mission Technologies segment operating margin of approximately 5%; and Mission Technologies EBITDA margin2 between 8.4% and 8.6% FY26 free cash flow2 between $500 and $600 million 1The financial outlook, expectations, and other forward-looking statements provided by the company for 2026 and beyond reflect the company's judgment based on the information available at the time of this release. Please see the "Forward-looking Statements" section in this release and our Form 10-Q for factors that may impact the company's ability to meet expectations. 2Non-GAAP measures. See Exhibit B for definitions. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results. 3Outlook is based on current tax law. Variability exists based on how and when individual states conform to recent federal tax law changes. About HII HII is America’s largest shipbuilder, delivering the world’s most powerful ships and all-domain mission technologies, including unmanned systems, to U.S. and allied defense customers. HII is the largest producer of unmanned underwater vehicles for the U.S. Navy and the world. With a more than 140-year history of advancing U.S. national security, HII builds and integrates defense capabilities extending from the core fleet to C6ISR, AI/ML, EW and synthetic training. Headquartered in Virginia, HII’s workforce is 45,000 strong. For more information, visit www.HII.com. Conference Call Information HII will webcast its earnings conference call at 9 a.m. Eastern time today. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the company’s website: www.HII.com. A replay of the call will be available on the website for a limited time. Cautionary Statement Regarding Forward-Looking Statements and Projections Statements in this earnings release 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 cyber-security threats, and related disruptions; natural and environmental disasters and political instability; health epidemics, pandemics and similar outbreaks; and other risk factors discussed herein and in our other filings with the SEC. 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. This release also contains non-GAAP financial measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Exhibit A: Financial Statements HUNTINGTON INGALLS INDUSTRIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) HUNTINGTON INGALLS INDUSTRIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) HUNTINGTON INGALLS INDUSTRIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Exhibit B: Non-GAAP Measures Definitions & Reconciliations This earnings release contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures as defined by SEC Regulation G and indicated by a footnote in the text of this release. Definitions for the non-GAAP measures, and related reconciliations, are provided below. Because not all companies use identical definitions or calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies. Segment Operating Income and Segment Operating Margin. We internally manage our operations by reference to segment operating income and segment operating margin and use these measures to evaluate our core operating performance. We believe that segment operating income and segment operating margin reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes. Segment operating margin is defined as segment operating income as a percentage of sales and service revenues. Shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin. We use shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin to evaluate our core operating performance. We believe these measures reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. Shipbuilding operating margin is defined as the combined segment operating income of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment as a percentage of shipbuilding revenue. Shipbuilding revenue is the sum of revenues of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment. Mission Technologies EBITDA is defined as Mission Technologies segment operating income before interest expense, income taxes, depreciation, and amortization. Mission Technologies EBITDA margin is defined as Mission Technologies EBITDA as a percentage of Mission Technologies revenues. Free cash flow. We 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. We believe free cash flow is an important measure that may be useful to investors and other users of our financial statements because it provides insight into our current and period-to-period performance and our ability to generate cash from continuing operations. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results. Reconciliations of Segment Operating Income and Segment Operating Margin Reconciliation of Free Cash Flow Reconciliation of Mission Technologies EBITDA and EBITDA Margin