Huntington Ingalls Industries (HII -3.39%), America’s largest naval shipbuilder, released earnings results on July 31, 2025. It reported GAAP revenue of $3.08 billion, ahead of analyst estimates, and GAAP earnings per share of $3.86, which beat forecasts by 17.7%. Operating and segment income both decreased from a year ago, reflecting continuing cost and margin pressures. Free cash flow (non-GAAP) turned positive year over year. Overall, the quarter showed strong headline results offset by lower margins in several business lines, and management reaffirmed its full-year outlook.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $3.86 | $3.28 | $4.38 | (11.9%) |
| Revenue (GAAP) | $3.08 billion | $2.92 billion | $2.98 billion | 3.4% |
| Operating Income | $163 million | $189 million | (13.8%) | |
| Segment Operating Income | $172 million | $203 million | (15.3%) | |
| Free Cash Flow | $730 million | $(99) million | NM |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Huntington Ingalls Industries: Business Profile and Key Drivers
Huntington Ingalls Industries is the largest shipbuilder for the U.S. military, specializing in nuclear-powered aircraft carriers, submarines, and naval destroyers. Its business depends heavily on large, multi-year contracts with the Department of Defense and related partners. With roughly 44,000 employees, it plays a central role in U.S. naval defense infrastructure.
Recent years have seen the company broaden its focus, with significant emphasis on technology integration under its Mission Technologies arm. Maintaining contract flow and healthy backlog, managing complex projects, adopting new digital tools, and developing skilled workers through rigorous apprentice programs are all viewed as crucial to long-term success.
Quarterly Results: Revenue Outperformance, Margin Pressure, and Contract Wins
GAAP revenue outpaced analyst predictions. Notably, revenue (GAAP) increased to $3.08 billion, with performance besting consensus by over $175 million. This headline growth came alongside diluted earnings per share (GAAP) of $3.86, which exceeded expectations by 17.7%, though it fell shy of the level reached a year ago.
Looking at the business segments, each area saw different results. Ingalls Shipbuilding, which produces destroyers and amphibious assault ships, recorded a 1.7% revenue increase, but segment operating margin at Ingalls Shipbuilding slipped to 7.5% from the prior-year’s 7.9%. Lower performance and lower contract incentives on amphibious assault ships offset higher production of surface combatants.
Newport News Shipbuilding posted the highest revenue growth across segments, supported by work on the Columbia-class and Virginia-class submarine programs. However, segment operating income at Newport News dropped significantly, with margins fell more than two percentage points year-over-year. Delays in key supplier equipment and performance issues in submarine and carrier builds were noted as the primary drivers.
The Mission Technologies division, which delivers services like command, control, communications, computers, cyber, intelligence, surveillance, and reconnaissance (collectively known as C5ISR), as well as cyber defense and uncrewed undersea vehicles, reported 3.4% revenue growth. While contract wins were robust—highlighted by delivery of the Lionfish small uncrewed undersea vehicles and progress in simulation and training systems—the segment’s margin edged only slightly lower, as costs for technology development and heavy amortization persisted.
Contract momentum stood out. New contract awards reached $11.9 billion, taking the total backlog to a record $56.9 billion as of June 30, 2025. Major new orders were secured on submarine and destroyer programs, signaling a strong visibility for future work. The company’s tracking of free cash flow—cash generated by operations after capital spending—turned sharply positive, reaching $730 million (non-GAAP). The quarter also saw solid capital expenditure, dividend payments, and funding dedicated to innovation partnerships, such as a Memorandum of Understanding with a leading Korean shipbuilder and new projects involving artificial intelligence.
On the dividend front, The quarterly payout was $1.35 per share, a 3.8% increase from $1.30 in Q2 FY2024.
Looking Forward: Guidance and Trends to Watch
For fiscal 2025, management reaffirmed its guidance for both Shipbuilding and Mission Technologies segments. Shipbuilding revenue is expected in the range of $8.9 billion to $9.1 billion, with a non-GAAP operating margin between 5.5% and 6.5%. The technology segment is expected to generate $2.9 billion to $3.1 billion in revenue, with segment operating margins ranging from 4.0% to 4.5%. Free cash flow (non-GAAP) guidance was raised to $500 million–$600 million, an upward move from prior projections.
Management described results as “largely in line with our expectations as we continue to make steady progress on our operational initiatives for 2025.” The historic backlog, progress in defense technology, and steady contract wins show resilience in future revenue. Still, ongoing labor market pressures and supply chain delays loom as ongoing risks, especially for the large and technically complex submarine and aircraft carrier programs. Developments in contract types, continued focus on workforce stability, and progress on technology initiatives will remain major points of interest for investors in the coming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
