Key Highlights

  • Revenue of USD 3.54 billion rose 10.8% year over year, ahead of the consensus estimate of USD 3.38 billion.
  • Diluted EPS of USD 5.48 beat the consensus estimate of USD 4.36 and compared with USD 3.68 a year earlier.
  • New contract awards reached USD 32.4 billion in the quarter, lifting total Backlog to USD 86.2 billion.
  • Segment Operating Margin widened to 7.4% from 5.6%, while free Cash Flow reached USD 429 million.

Huntington Ingalls Industries, Inc. (NYSE:HII) reported third quarter 2026 sales and service revenues of USD 3,537 million, up 10.8% from USD 3,192 million and above the consensus estimate of USD 3.38 billion. Diluted Earnings per Share were USD 5.48 against a consensus estimate of USD 4.36, and net earnings were USD 217 million versus USD 145 million in the prior year period.

President and Chief Executive Officer Chris Kastner called it a record third quarter for sales and described an unprecedented quarter for awards, led by Block VI Virginia class and two Columbia class submarine build contracts, plus long lead materials for the CVN-82 aircraft carrier.

Shipyard Revenue and Margin Detail

Shipbuilding revenue was USD 2.8 billion, up 13.9% and ahead of the company guidance for the quarter, helped by higher material receipts, wage investments and more outsourcing. Newport News revenue rose 18.1% to USD 1.9 billion with Operating Income of USD 132 million at a 6.9% margin, aided by a net favorable cumulative adjustment of USD 72 million that included a USD 65 million favorable item on the Columbia class. Ingalls revenue rose 5.8% to USD 876 million, but operating income fell to USD 59 million at a 6.7% margin from 7.9%, reflecting surface combatant performance.

Mission Technologies revenue was USD 792 million, roughly flat, with operating income of USD 71 million at a 9.0% margin compared with 4.3% a year ago. Awards in that segment totaled USD 1.9 billion, a book to bill of 2.4 times, and the segment was awarded the USD 2.2 billion STINGRAI program in late July. Consolidated operating income was USD 246 million at a 7% margin.

Guidance and Cash Position

The Chief Financial Officer said shipbuilding revenue guidance for 2026 was raised to USD 10.5 billion to USD 10.7 billion, while the shipbuilding operating margin range of 6% to 6.5% was reiterated. Mission Technologies revenue guidance of USD 3.0 billion to USD 3.2 billion was unchanged, but its segment operating margin is now projected near 6% and EBITDA margin near 9%. The effective tax rate guidance of about 17% includes a Research and Development tax Credit approved by the IRS this month.

Cash from operations was USD 520 million and net capital expenditures were USD 91 million, producing free cash flow of USD 429 million, which exceeded prior guidance because of timing of receipts and disbursements. No shares were repurchased, and a Dividend of USD 1.38 per share, or USD 54 million, was paid. Cash stood at USD 387 million with Liquidity of about USD 2.1 billion. Cumulative free cash flow for 2026 and 2027 is guided to USD 1.2 billion to USD 1.3 billion.

Data Points Behind the Next Report

The USD 5.1 billion refueling and complex overhaul of the USS Harry S. Truman, finalized in September, is excluded from the USD 86.2 billion backlog and is recognized in the fourth quarter. Delivery of the Arkansas submarine and the LPD 30 Harrisburg is scheduled for this year, with LHA-8 and DDG 129 following in 2027.

Labor metrics are also on the list: more than 6,000 shipbuilders hired year to date, a net gain of 576 at Ingalls in the quarter, and apprentice school enrollment above 800. Management plans to present full 2027 guidance on the fourth quarter call, and Newport News gross favorable adjustments of USD 210 million remain larger than the historical norm.