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.
Financial Results and Updated Outlook
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.
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.
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.
Shipbuilding Progress and Submarine Awards
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 Deliveries and Workforce Efforts
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 and Cash Flow
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.
About Huntington Ingalls Industries (NYSE:HII)
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.
