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Item 1. Financial Statements

2025-10-30 compared with 2025-07-31 · 109 added, 92 removed, 541 unchanged (27% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

(in millions, except per share amounts) 2025 2024 2025 2024

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Current Assets

45 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30

Nine Months Ended September 30

($ in millions) 2025 2024

1 unchanged sentence

Net earnings $ 446 $ 427

Adjustments to reconcile net cash provided by (used in) operating activities:

Adjustments to reconcile net cash provided by operating activities:

Depreciation 164 160

10 unchanged sentences

Retiree benefits ( 116 ) ( 84 )

Net cash provided by (used in) operating activities 428 ( 211 )

Net cash provided by operating activities

Investing Activities:

2 unchanged sentences

Grant proceeds for capital expenditures 6 14

Proceeds from sale of investments 5 —

Acquisitions of businesses ( 132 ) —

6 unchanged sentences

Net borrowings on commercial paper — 396

Debt issuance costs — ( 7 )

Dividends paid ( 159 ) ( 154 )

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

Three Months Ended June 30, 2025 and 2024

Three Months Ended September 30, 2025 and 2024

($ in millions) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Balance as of March 31, 2024 $ 1 $ 2,038 $ 4,855 $ ( 2,349 ) $ ( 419 ) $ 4,126

Balance as of June 30, 2024 $ 1 $ 2,029 $ 4,977 $ ( 2,414 ) $ ( 415 ) $ 4,178

Net earnings — — 101 — — 101

4 unchanged sentences

Treasury stock activity — — — ( 35 ) — ( 35 )

Balance as of September 30, 2024 $ 1 $ 2,037 $ 5,026 $ ( 2,449 ) $ ( 412 ) $ 4,203

Balance as of June 30, 2025 $ 1 $ 2,066 $ 5,290 $ ( 2,449 ) $ ( 26 ) $ 4,882

Balance as of March 31, 2025 $ 1 $ 2,057 $ 5,191 $ ( 2,449 ) $ ( 27 ) $ 4,773

Net earnings — — 145 — — 145

2 unchanged sentences

Stock-based compensation — 10 — — — 10

Other comprehensive income, net of tax — — — — 1 1

Balance as of June 30, 2025 $ 1 $ 2,066 $ 5,290 $ ( 2,449 ) $ ( 26 ) $ 4,882

Six Months Ended June 30, 2025 and 2024

Balance as of September 30, 2025 $ 1 $ 2,076 $ 5,382 $ ( 2,449 ) $ ( 26 ) $ 4,984

Nine Months Ended September 30, 2025 and 2024

($ in millions) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

6 unchanged sentences

Treasury stock activity — — — ( 163 ) — ( 163 )

Balance as of June 30, 2024 $ 1 $ 2,029 $ 4,977 $ ( 2,414 ) $ ( 415 ) $ 4,178

Balance as of September 30, 2024 $ 1 $ 2,037 $ 5,026 $ ( 2,449 ) $ ( 412 ) $ 4,203

Balance as of December 31, 2024 $ 1 $ 2,045 $ 5,097 $ ( 2,449 ) $ ( 28 ) $ 4,666

4 unchanged sentences

Other comprehensive income, net of tax — — — — 2 2

Balance as of June 30, 2025 $ 1 $ 2,066 $ 5,290 $ ( 2,449 ) $ ( 26 ) $ 4,882

Balance as of September 30, 2025 $ 1 $ 2,076 $ 5,382 $ ( 2,449 ) $ ( 26 ) $ 4,984

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

23 unchanged sentences

The Company maintains multiple grantor trusts to fund certain non-qualified pension plans.

These trusts were valued at $ 237 million and $ 233 million as of June 30, 2025, and December 31, 2024, respectively, and are presented within miscellaneous other assets on the unaudited condensed consolidated statements of financial position.

These trusts were valued at $ 249 million and $ 233 million as of September 30, 2025, and December 31, 2024, respectively, and are presented within miscellaneous other assets on the unaudited condensed consolidated statements of financial position.

These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy.

The estimated fair values of the Company's total long-term debt, including the current portion of long-term debt and excluding finance lease liabilities, as of June 30, 2025, and December 31, 2024, were $ 2,690 million and $ 3,110 million, respectively.

There was no current portion of long-term debt, excluding finance lease liabilities, as of June 30, 2025.

The estimated fair value of the Company's total long-term debt as of September 30, 2025 was $ 2,707 million.

There was no current portion of long-term debt and no finance lease liabilities as of September 30, 2025.

The estimated fair value of the Company's total long-term debt, including the current portion of long-term debt and excluding finance lease liabilities, as of December 31, 2024 was $ 3,110 million.

The estimated fair value of the current portion of the Company's long-term debt, excluding finance lease liabilities, was $ 497 million as of December 31, 2024.

4 unchanged sentences

Recently Adopted Guidance

There were no new Accounting Standard Updates (“ASU”) adopted during the six months ended June 30, 2025 that had a material impact on the Company’s consolidated financial statements.

Accounting Guidance Issued But Not Adopted as of June 30, 2025

There were no new Accounting Standards Updates (“ASU”) adopted during the nine months ended September 30, 2025 that had a material impact on the Company’s consolidated financial statements.

Accounting Guidance Issued But Not Adopted as of September 30, 2025

In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

Among other targeted improvements, the new guidance amends existing software cost capitalization guidance by removing all references to software project development stages and providing criteria that clarify the threshold for software cost capitalization to begin.

The new guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The new guidance may be applied on a prospective basis, retrospective basis, or modified basis for in-process projects.

The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.

Other accounting pronouncements issued but not effective until after December 31, 2025, are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

In January 2025, the Company acquired substantially all of the assets of W International SC, LLC and Vivid Empire SC, LLC (collectively “W International”), a South Carolina-based complex metal fabricator specializing in the manufacture of shipbuilding structures, modules, and assemblies, for a purchase price of $ 133 million, subject to customary purchase price adjustments.

The acquired manufacturing facility expands the Company’s shipbuilding capacity and operates within the Newport News segment.

2 unchanged sentences

There have been no other changes to the Company's goodwill since December 31, 2024.

The Company is in the process of completing its accounting for working capital and the income tax effects of the acquisition.

The assets, liabilities, and results of operations of W International are not material to the Company’s consolidated financial position, results of operations, or cash flows.

2 unchanged sentences

Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws.

For the six months ended June 30, 2025, the Company did not repurchase any shares.

For the six months ended June 30, 2024, the Company repurchased 473,438 shares at an aggregate cost of $ 128 million, including $ 1 million of accrued excise tax.

For the nine months ended September 30, 2025, the Company did not repurchase any shares.

For the nine months ended September 30, 2024, the Company repurchased 607,841 shares at an aggregate cost of

$ 163 million, including $ 1 million of accrued excise tax.

The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position.

Dividends - The Company paid cash dividends totaling $ 106 million and $ 102 million for the six months ended June 30, 2025 and 2024, respectively.

Dividends - The Company paid cash dividends totaling $ 159 million and $ 154 million for the nine months ended September 30, 2025 and 2024, respectively.

Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings.

The accumulated other comprehensive loss

was comprised of unamortized benefit plan costs of $ 26 million and $ 28 million as of June 30, 2025, and December 31, 2024, respectively.

The changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2025 and 2024, were as follows:

The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $ 26 million and $ 28 million as of September 30, 2025, and December 31, 2024, respectively.

The changes in accumulated other comprehensive loss by component for the three and nine months ended September 30, 2025 and 2024, were as follows:

($ in millions) Benefit Plans Total

Balance as of March 31, 2024 $ ( 419 ) $ ( 419 )

Balance as of June 30, 2024 $ ( 415 ) $ ( 415 )

Amounts reclassified from accumulated other comprehensive loss

Amortization of prior service cost 1

Amortization of net actuarial loss 1

Tax expense for items of other comprehensive income ( 2 ) ( 2 )

Net current period other comprehensive income 3 3

Balance as of September 30, 2024 $ ( 412 ) $ ( 412 )

Balance as of June 30, 2025 $ ( 26 ) $ ( 26 )

Balance as of March 31, 2025 $ ( 27 ) $ ( 27 )

Amounts reclassified from accumulated other comprehensive loss

1 unchanged sentence

Amortization of net actuarial loss 1

Tax expense for items of other comprehensive income ( 1 ) ( 1 )

Net current period other comprehensive income — —

Balance as of June 30, 2025 $ ( 26 ) $ ( 26 )

Balance as of September 30, 2025 ( 26 ) ( 26 )

($ in millions) Benefit Plans Total

5 unchanged sentences

Net current period other comprehensive income 10 10

Balance as of June 30, 2024 $ ( 415 ) $ ( 415 )

Balance as of September 30, 2024 $ ( 412 ) $ ( 412 )

Balance as of December 31, 2024 $ ( 28 ) $ ( 28 )

2 unchanged sentences

Amortization of net actuarial loss 1

Tax expense for items of other comprehensive income ( 1 ) ( 1 )

Net current period other comprehensive income 2 2

Balance as of June 30, 2025 $ ( 26 ) $ ( 26 )

Balance as of September 30, 2025 $ ( 26 ) $ ( 26 )

1 These accumulated comprehensive loss components are included in the computation of net periodic benefit cost.

Employee Pension and Other Postretirement Benefits.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the three months ended June 30, 2025 and 2024, was less than $ 1 million.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the six months ended June 30, 2025 and 2024, was less than $ 1 million and $ 2 million, respectively.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended

September 30, 2025 and 2024, was $ 1 million and $ 2 million, respectively.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the nine months ended September 30, 2025 and 2024, was $ 1 million and $ 4 million, respectively.

EARNINGS PER SHARE

Basic and diluted earnings per common share were calculated as follows:

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

(in millions, except per share amounts) 2025 2024 2025 2024

5 unchanged sentences

Earnings per share - diluted $ 3.68 $ 2.56 $ 11.35 $ 10.81

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.4 million Restricted Performance Stock Rights ("RPSRs") for each of the three and six months ended June 30, 2025 and 2024, 0.1 million and 0.2 million Restricted Stock Rights ("RSRs") for the three and six months ended June 30, 2025, respectively, and 0.1 million RSRs for each of the three and six months ended June 30, 2024.

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.4 million Restricted Performance Stock Rights ("RPSRs") for each of the three and nine months ended September 30, 2025 and 2024 and 0.1 million Restricted Stock Rights ("RSRs") for each of the three and nine months ended September 30, 2025, and 2024.

Disaggregation of Revenue

The following tables present revenues on a disaggregated basis:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

6 unchanged sentences

Commercial — — 3 — 3

State and local government agencies — — 1 — 1

Intersegment 3 — 37 ( 40 ) —

7 unchanged sentences

Sales and service revenues $ 828 $ 1,617 $ 787 $ ( 40 ) $ 3,192

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

6 unchanged sentences

Commercial — — 2 — 2

State and local government agencies — — 1 — 1

Intersegment 2 — 34 ( 36 ) —

7 unchanged sentences

Sales and service revenues $ 664 $ 1,412 $ 709 $ ( 36 ) $ 2,749

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

16 unchanged sentences

Sales and service revenues $ 2,189 $ 4,616 $ 2,313 $ ( 110 ) $ 9,008

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

16 unchanged sentences

Sales and service revenues $ 2,031 $ 4,381 $ 2,224 $ ( 105 ) $ 8,531

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

($ in millions) 2025 2024 2025 2024

14 unchanged sentences

Sales and service revenues $ 3,192 $ 2,749 $ 9,008 $ 8,531

As of June 30, 2025, the Company had $ 56.9 billion of remaining performance obligations.

As of September 30, 2025, the Company had $ 55.7 billion of remaining performance obligations.

The Company expects to recognize approximately 30 % of its remaining performance obligations as revenue through 2026, an additional 30 % through 2028, and the balance thereafter.

1 unchanged sentence

The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share:

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

($ in millions, except per share amounts) 2025 2024 2025 2024

1 unchanged sentence

Effect on diluted earnings per share $ ( 0.06 ) $ ( 1.42 ) $ ( 0.26 ) $ ( 0.91 )

For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $ 32 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.

For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included unfavorable adjustments of $ 42 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment and $ 20 million on the Bougainville (LHA 8) construction contract at the Company's Ingalls segment.

For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $ 33 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.

For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included an unfavorable adjustment of $ 43 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment.

For the three months ended June 30, 2024, cumulative catch-up revenue adjustments included a favorable adjustment of $ 28 million for contract adjustments and incentives on the refueling and complex overhaul ("RCOH") of USS John C.

Stennis (CVN 74) at the Company's Newport News segment.

For the six months ended June 30, 2024, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2024, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2025, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2025, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2024, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three months ended September 30, 2024, cumulative catch-up revenue adjustments included unfavorable adjustments of $ 34 million on Block IV of the Virginia class (SSN 774) submarine program, $ 14 million on the refueling and complex overhaul ("RCOH") of USS John C.

Stennis (CVN 74), and $ 16 million on the construction of Enterprise (CVN 80) and Doris Miller (CVN 81) at the Company's Newport News segment.

For the nine months ended September 30, 2024, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

Contract Balances

1 unchanged sentence

Net contract assets were comprised as follows:

($ in millions) June 30, 2025 December 31, 2024

($ in millions) September 30, 2025 December 31, 2024

Contract assets $ 1,869 $ 1,683

1 unchanged sentence

Net contract assets $ 976 $ 909

The Company’s net contract assets decreased $ 67 million from December 31, 2024 to June 30, 2025, primarily as a result of the timing of billings across programs on certain U.S.

The Company’s net contract assets increased $ 67 million from December 31, 2024 to September 30, 2025, primarily as a result of the timing of billings across programs on certain U.S.

Navy contracts.

For the three and six months ended June 30, 2025, the Company recognized revenue of $ 52 million and $ 604 million, respectively, related to its contract liabilities as of December 31, 2024.

For the three and six months ended June 30, 2024, the Company recognized revenue of $ 283 million and $ 924 million, respectively, related to its contract liabilities as of December 31, 2023.

For the three and nine months ended September 30, 2025, the Company recognized revenue of $ 11 million and $ 615 million, respectively, related to its contract liabilities as of December 31, 2024.

For the three and nine months ended September 30, 2024, the Company recognized revenue of $ 6 million and $ 930 million, respectively, related to its contract liabilities as of December 31, 2023.

SEGMENT INFORMATION

The following tables present the Company's operating results by segment:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

16 unchanged sentences

Total operating income $ 161

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

16 unchanged sentences

Total operating income $ 82

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

16 unchanged sentences

Total operating income $ 485

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

22 unchanged sentences

The following tables present the Company's capital expenditures, as presented to the chief operating decision maker, and depreciation and amortization by segment:

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

($ in millions) 2025 2024 2025 2024

7 unchanged sentences

1 Net of grant proceeds for capital expenditures

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

($ in millions) 2025 2024 2025 2024

7 unchanged sentences

Asset information by segment is not disclosed because it is not a key measure of performance used by the chief operating decision maker.

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended June 30, 2025 and 2024, were comparable at 19.1 % and 19.9 %, respectively.

For the six months ended June 30, 2025 and 2024, the Company's effective income tax rates on earnings from operations were 19.7 % and 18.5 %, respectively.

The higher effective tax rate for the six months ended June 30, 2025, was primarily attributable to excess tax benefits recognized on stock-based compensation recorded in the prior period.

For the three and six months ended June 30, 2025, the Company’s effective tax rate differed from the federal statutory corporate income tax rate of 21 % primarily due to research and development tax credits for the current periods.

The Company's unrecognized tax benefits increased by $ 3 million and $ 6 million during the three and six months ended June 30, 2025, respectively.

As of June 30, 2025, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $ 116 million.

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended September 30, 2025 and 2024, were 28.9 % and 9.8 %, respectively.

For the nine months ended September 30, 2025 and 2024, the Company's effective income tax rates on earnings from operations were 23.0 % and 16.6 %, respectively.

The higher effective tax rates for the three and nine months ended September 30, 2025, were primarily attributable to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.

For the three and nine months ended September 30, 2025, the Company’s effective tax rates differed from the federal statutory corporate income tax rate of 21 % primarily due to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.

The Company's unrecognized tax benefits decreased by $ 6 million during the three months ended September 30, 2025, and increased by less than $ 1 million during the nine months ended September 30, 2025.

As of September 30, 2025, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $ 110 million.

Assuming a sustainment of these tax positions, a reversal of $ 86 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense.

For the three and six months ended June 30, 2025, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $ 1 million and $ 3 million, respectively.

For the three and nine months ended September 30, 2025, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $ 2 million and $ 5 million, respectively.

Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities and the tax expense or benefit associated with changes in state unrecognized tax benefits in the relevant period.

1 unchanged sentence

Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income.

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law.

IRS Audits - The Company has reached an agreement in principle with the IRS on the research and development tax credits for the 2016-2021 tax years.

The agreement is going through IRS administrative review processes and is subject to review by the Joint Committee on Taxation.

The Company believes that its unrecognized tax benefits are adequate and will cover the expected impact of the agreement with the IRS.

On July 4, 2025, Public Law 119-21 (the “Act”) was signed into law.

The Act provides for significant changes to the U.S.

2 unchanged sentences

These unamortized expenditures can be deducted over one or two years .

The Company expects the immediate expensing of domestic research expenditures retroactive to January 1, 2025, coupled with increased bonus depreciation and the acceleration of the deduction for previously capitalized domestic research expenditures, to decrease 2025 federal cash tax payments by $ 147 million.

While the Company does not anticipate any material impacts to total tax expense or the effective tax rate, the Company is still evaluating provisions of the Act to determine the full effect on its financial position, results of operations, and cash flows.

The Company recorded the impact of the following significant items as of September 30, 2025:

Domestic research and development expenditures :

The Company recorded a current tax benefit of $ 109 million based on its intent to expense all current year domestic research and development expenditures and to accelerate the deduction for the remaining unamortized domestic research and development expenditures capitalized during the 2022 through 2024 tax years over a two year period.

This resulted in an increase of approximately $ 109 million to the Company’s current income taxes receivable and a corresponding increase in its net deferred tax liability.

Bonus Depreciation:

While the Company has not completed its analysis of all capital expenditures that may qualify for immediate expensing, the Company recorded an estimated current tax benefit of $ 33 million based on its intent to fully expense all qualified property acquired and placed into service after January 19, 2025.

This resulted in an increase of approximately $ 33 million to the Company’s current income taxes receivable and a corresponding increase in its net deferred tax liability.

INVESTIGATIONS, CLAIMS, AND LITIGATION

14 unchanged sentences

In July 2021, the Vermont court granted the reinsurers’ motion for judgment on the pleadings, which would have ended the Company’s claim.

The Company appealed the decision to the Vermont Supreme Court, which reversed and remanded the lower court’s decision in September 2022, allowing the Company’s claim to proceed.

The Company appealed the decision to the Vermont Supreme Court, which reversed and remanded the lower court’s

decision in September 2022, allowing the Company’s claim to proceed.

No assurances can be provided regarding the ultimate resolution of this matter.

10 unchanged sentences

In some instances, partial or full insurance coverage is available for the Company's liabilities.

The costs to resolve cases during the six months ended June 30, 2025 and 2024, were not material individually or in the aggregate.

The costs to resolve cases during the nine months ended September 30, 2025 and 2024, were not material individually or in the aggregate.

The Company’s estimate of asbestos-related liabilities is subject to uncertainty because such liabilities are influenced by many variables that are inherently difficult to predict.

14 unchanged sentences

The Company does not record insurance recoveries before collection is probable.

As of June 30, 2025 and December 31, 2024, the Company did not have any accrued receivables related to insurance reimbursements or recoveries for environmental matters.

As of September 30, 2025 and December 31, 2024, the Company did not have any accrued receivables related to insurance reimbursements or recoveries for environmental matters.

The Company’s environmental liability accruals do not include any litigation costs related to environmental matters, nor do they include amounts recorded as asset retirement obligations.

Management estimates that as of June 30, 2025, the probable estimable future cost for environmental remediation is not material.

Management estimates that as of September 30, 2025, the probable estimable future cost for environmental remediation is not material.

Although management cannot predict whether new information gained as remediation progresses or the Company incurs additional remediation obligations will materially affect the estimated liability accrued, management does not believe that future remediation expenditures will have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

Financial Arrangements - In the ordinary course of business, HII uses letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support the Company's self-insured workers' compensation plans.

As of June 30, 2025, the Company had $ 11 million in issued but undrawn letters of credit and $ 380 million of surety bonds outstanding.

As of September 30, 2025, the Company had $ 11 million in issued but undrawn letters of credit and $ 368 million of surety bonds outstanding.

Government Claims - From time to time, the U.S.

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The Company provides eligible employees defined benefit pension plans, defined contribution benefit plans, and other postretirement benefit plans.

The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three and six months ended June 30, 2025 and 2024, were as follows:

Three Months Ended June 30 Six Months Ended June 30

The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three and nine months ended September 30, 2025 and 2024, were as follows:

Three Months Ended September 30 Nine Months Ended September 30

Pension Benefits Other Benefits Pension Benefits Other Benefits

7 unchanged sentences

Net periodic benefit (income) cost $ ( 27 ) $ ( 18 ) $ 2 $ 3 $ ( 82 ) $ ( 55 ) $ 7 $ 7

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30

($ in millions) 2025 2024

5 unchanged sentences

Total contributions $ 42 $ 36

As of June 30, 2025, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2025.

As of September 30, 2025, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2025.

STOCK COMPENSATION PLANS

During the six months ended June 30, 2025 and 2024, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the six months ended June 30, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $ 168.81 .

During the nine months ended September 30, 2025 and 2024, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the nine months ended September 30, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $ 168.89 .

These rights are subject to cliff vesting on December 31, 2027.

For the six months ended June 30, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 288.33 .

For the nine months ended September 30, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 288.26 .

These rights are subject to cliff vesting on December 31, 2026.

All of the RPSRs are subject to the achievement of performance-based targets at the end of the respective vesting periods and will ultimately vest between 0 % and 200 % of grant date value.

Compensation Restricted Stock Rights - For the six months ended June 30, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 168.92 .

For the six months ended June 30, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 288.26 .

Compensation Restricted Stock Rights - For the nine months ended September 30, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 169.78 .

For the nine months ended September 30, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 287.91 .

These rights vest 33 1/3% upon each of the first, second, and third anniversaries of the grant date.

Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company.

For the six months ended June 30, 2025, the Company granted approximately 1,300 retention RSRs at a weighted average share price of $ 189.38 , with cliff vesting one to two years from the grant date.

For the six months ended June 30, 2024, the Company granted approximately 1,200 retention RSRs at a weighted average share price of $ 288.53 , with cliff vesting one to two years from the grant date.

For the nine months ended September 30, 2025, the Company granted approximately 1,300 retention RSRs at a weighted average share price of $ 189.38 , with cliff vesting one to two years from the grant date.

For the nine months ended September 30, 2024, the Company granted approximately 2,200 retention RSRs at a weighted average share price of $ 281.01 , with cliff vesting one to two years from the grant date.

The Company also received transfers of stock awards from employees in satisfaction of tax withholding obligations associated with the vesting of stock awards during the period.

Because the stock awards are surrendered in lieu of payments of cash to settle tax obligations and the stock is not issued, the Company does not account for these transfers as treasury stock.

Stock award activity for the six months ended June 30, 2025, and 2024, was as follows:

Stock award activity for the nine months ended September 30, 2025, and 2024, was as follows:

(in thousands) Weighted-Average

6 unchanged sentences

Forfeited ( 12 ) 231.76

Outstanding at June 30, 2024 550 $ 221.69 1.2 years

Outstanding at September 30, 2024 546 $ 221.91 1.0 year

Outstanding at December 31, 2024 550 $ 221.59 1.0 year

3 unchanged sentences

Forfeited ( 25 ) 221.83

Outstanding at June 30, 2025 657 $ 198.68 1.3 years

Outstanding at September 30, 2025 661 $ 198.79 1.1 years

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements