HUNTINGTON INGALLS INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended September 30 Nine Months Ended September 30 (in millions, except per share amounts) 2025 2024 2025 2024 Sales and service revenues Product sales $ 2,072 $ 1,761 $ 5,742 $ 5,474 Service revenues 1,120 988 3,266 3,057 Sales and service revenues 3,192 2,749 9,008 8,531 Cost of sales and service revenues Cost of product sales 1,815 1,556 4,962 4,720 Cost of service revenues 983 871 2,863 2,682 Income from operating investments, net 12 12 33 35 Other income and gains, net — — 1 — General and administrative expenses 245 252 732 739 Operating income 161 82 485 425 Other income (expense) Interest expense ( 23 ) ( 23 ) ( 79 ) ( 68 ) Non-operating retirement benefit 48 44 143 134 Other, net 18 9 30 21 Earnings before income taxes 204 112 579 512 Federal and foreign income tax expense 59 11 133 85 Net earnings $ 145 $ 101 $ 446 $ 427 Basic earnings per share $ 3.69 $ 2.56 $ 11.35 $ 10.81 Weighted-average common shares outstanding 39.3 39.5 39.3 39.5 Diluted earnings per share $ 3.68 $ 2.56 $ 11.35 $ 10.81 Weighted-average diluted shares outstanding 39.4 39.5 39.3 39.5 Dividends declared per share $ 1.35 $ 1.30 $ 4.05 $ 3.90 Net earnings from above $ 145 $ 101 $ 446 $ 427 Other comprehensive income Change in unamortized benefit plan costs 1 5 3 14 Tax expense for items of other comprehensive income ( 1 ) ( 2 ) ( 1 ) ( 4 ) Other comprehensive income, net of tax — 3 2 10 Comprehensive income $ 145 $ 104 $ 448 $ 437 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ($ in millions) September 30, 2025 December 31, 2024 Assets Current Assets Cash and cash equivalents $ 312 $ 831 Accounts receivable, net of allowance for expected credit losses of $ 2 million as of 2025 and 2024 374 212 Contract assets 1,869 1,683 Inventoried costs 221 208 Income taxes receivable 227 204 Prepaid expenses and other current assets 75 90 Total current assets 3,078 3,228 Property, plant, and equipment, net of accumulated depreciation of $ 2,713 million as of 2025 and $ 2,583 million as of 2024 3,635 3,450 Operating lease assets 269 239 Goodwill 2,650 2,618 Other intangible assets, net of accumulated amortization of $ 1,196 million as of 2025 and $ 1,118 million as of 2024 720 782 Pension plan assets 1,526 1,422 Miscellaneous other assets 431 402 Total assets $ 12,309 $ 12,141 Liabilities and Stockholders' Equity Current Liabilities Trade accounts payable $ 680 $ 598 Accrued employees’ compensation 371 392 Current portion of long-term debt — 503 Current portion of postretirement plan liabilities 124 124 Current portion of workers’ compensation liabilities 202 201 Contract liabilities 893 774 Other current liabilities 432 399 Total current liabilities 2,702 2,991 Long-term debt 2,698 2,700 Pension plan liabilities 142 142 Other postretirement plan liabilities 195 209 Workers’ compensation liabilities 451 443 Long-term operating lease liabilities 228 205 Deferred tax liabilities 501 378 Other long-term liabilities 408 407 Total liabilities 7,325 7,475 Commitments and Contingencies (Note 11) Stockholders’ Equity Common stock, $0.01 par value; 150,000,000 shares authorized; 53,825,817 shares issued and 39,241,108 shares outstanding as of 2025, and 53,714,128 shares issued and 39,129,419 shares outstanding as of 2024 1 1 Additional paid-in capital 2,076 2,045 Retained earnings 5,382 5,097 Treasury stock ( 2,449 ) ( 2,449 ) Accumulated other comprehensive loss ( 26 ) ( 28 ) Total stockholders’ equity 4,984 4,666 Total liabilities and stockholders’ equity $ 12,309 $ 12,141 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30 ($ in millions) 2025 2024 Operating Activities: Net earnings $ 446 $ 427 Adjustments to reconcile net cash provided by operating activities: Depreciation 164 160 Amortization of purchased intangibles 78 82 Stock-based compensation 43 15 Deferred income taxes 121 ( 55 ) Gain on investments in marketable securities ( 28 ) ( 22 ) Other non-cash transactions, net 15 7 Change in Accounts receivable ( 162 ) 31 Contract assets ( 186 ) ( 177 ) Inventoried costs ( 13 ) ( 19 ) Prepaid expenses and other assets ( 23 ) ( 9 ) Accounts payable and accruals 207 ( 354 ) Retiree benefits ( 116 ) ( 84 ) Net cash provided by operating activities 546 2 Investing Activities: Capital expenditures Capital expenditure additions ( 268 ) ( 253 ) Grant proceeds for capital expenditures 6 14 Proceeds from sale of investments 5 — Acquisitions of businesses ( 132 ) — Other investing activities, net 2 1 Net cash used in investing activities ( 387 ) ( 238 ) Financing Activities: Repayment of long-term debt ( 500 ) ( 229 ) Proceeds from revolving credit facility borrowings — 42 Repayment of revolving credit facility borrowings — ( 42 ) Net borrowings on commercial paper — 396 Debt issuance costs — ( 7 ) Dividends paid ( 159 ) ( 154 ) Repurchases of common stock — ( 162 ) Employee taxes on certain share-based payment arrangements ( 14 ) ( 25 ) Other financing activities, net ( 5 ) ( 3 ) Net cash used in financing activities ( 678 ) ( 184 ) Change in cash and cash equivalents ( 519 ) ( 420 ) Cash and cash equivalents, beginning of period 831 430 Cash and cash equivalents, end of period $ 312 $ 10 Supplemental Cash Flow Disclosure Cash paid for income taxes (net of refunds) $ 71 $ 170 Cash paid for interest $ 86 $ 66 Non-Cash Investing and Financing Activities Capital expenditures accrued in accounts payable $ 7 $ 12 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) 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 June 30, 2024 $ 1 $ 2,029 $ 4,977 $ ( 2,414 ) $ ( 415 ) $ 4,178 Net earnings — — 101 — — 101 Dividends declared ($ 1.30 per share) — — ( 52 ) — — ( 52 ) Stock-based compensation — 8 — — — 8 Other comprehensive income, net of tax — — — — 3 3 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 Net earnings — — 145 — — 145 Dividends declared ($ 1.35 per share) — — ( 53 ) — — ( 53 ) Stock-based compensation — 10 — — — 10 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 Balance as of December 31, 2023 $ 1 $ 2,045 $ 4,755 $ ( 2,286 ) $ ( 422 ) $ 4,093 Net earnings — — 427 — — 427 Dividends declared ($ 3.90 per share) — — ( 154 ) — — ( 154 ) Stock-based compensation — ( 8 ) ( 2 ) — — ( 10 ) Other comprehensive income, net of tax — — — — 10 10 Treasury stock activity — — — ( 163 ) — ( 163 ) 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 Net earnings — — 446 — — 446 Dividends declared ($ 4.05 per share) — — ( 159 ) — — ( 159 ) Stock-based compensation — 31 ( 2 ) — — 29 Other comprehensive income, net of tax — — — — 2 2 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. 4 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. DESCRIPTION OF BUSINESS Huntington Ingalls Industries, Inc. ("HII" or the "Company") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. HII is organized into three reportable segments: Ingalls Shipbuilding ("Ingalls"), Newport News Shipbuilding ("Newport News"), and Mission Technologies. For more than a century, the Company's Ingalls segment in Mississippi and Newport News segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making HII America's largest shipbuilder. The Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force. 2. BASIS OF PRESENTATION Principles of Consolidation - The unaudited condensed consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Condensed Consolidated Financial Statements (Unaudited), the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report on Form 10-K"). The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is management's long-standing practice to establish interim closing dates using a "fiscal" calendar, which requires the businesses to close their books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice only exists for interim periods within a reporting year. Accounting Estimates - The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates. Fair Value of Financial Instruments - Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments that are recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties. The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. 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 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. The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 of the fair value hierarchy. 5 Table of Contents Debt - On May 1, 2025, the Company repaid $ 500 million aggregate principal amount of its 3.844 % senior notes upon their maturity. The repayment was funded using a combination of cash on hand and proceeds from the Company’s commercial paper program. 3. ACCOUNTING STANDARDS UPDATES Recently Adopted Guidance 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): Disaggregation of Income Statement Expenses. The new guidance requires, among other things, tabular and qualitative disclosure of disaggregated expense information that is included in certain expense line items presented on the consolidated statement of operations. The new guidance also requires that the total amount and definition of selling expenses be disclosed. The new guidance is effective on a prospective basis for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption and retrospective application permitted. 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. 4. ACQUISITIONS 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 $ 132 million. The acquired manufacturing facility expands the Company’s shipbuilding capacity and operates within the Newport News segment. The transaction closed using cash on hand and qualifies as a business combination under FASB Accounting Standards Codification Topic 805 – "Business Combinations." The Company recognized $ 32 million of goodwill, which includes expected synergies and the value of W International’s acquired workforce, all of which was allocated to the Newport News segment and is tax deductible. There have been no other changes to the Company's goodwill since December 31, 2024. 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. 5. STOCKHOLDERS' EQUITY Treasury Stock - In January 2024 , the Company's board of directors authorized an increase in the Company's stock repurchase program from $ 3.2 billion to $ 3.8 billion and an extension of the term of the program to December 31, 2028. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. 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 6 Table of Contents $ 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 $ 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 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 June 30, 2024 $ ( 415 ) $ ( 415 ) Amounts reclassified from accumulated other comprehensive loss Amortization of prior service cost 1 4 4 Amortization of net actuarial loss 1 1 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 ) Amounts reclassified from accumulated other comprehensive loss Amortization of prior service cost 1 3 3 Amortization of net actuarial loss 1 ( 2 ) ( 2 ) Tax expense for items of other comprehensive income ( 1 ) ( 1 ) Net current period other comprehensive income — — Balance as of September 30, 2025 ( 26 ) ( 26 ) ($ in millions) Benefit Plans Total Balance as of December 31, 2023 $ ( 422 ) $ ( 422 ) Amounts reclassified from accumulated other comprehensive loss Amortization of prior service cost 1 11 11 Amortization of net actuarial loss 1 3 3 Tax expense for items of other comprehensive income ( 4 ) ( 4 ) Net current period other comprehensive income 10 10 Balance as of September 30, 2024 $ ( 412 ) $ ( 412 ) Balance as of December 31, 2024 $ ( 28 ) $ ( 28 ) Amounts reclassified from accumulated other comprehensive loss Amortization of prior service cost 1 11 11 Amortization of net actuarial loss 1 ( 8 ) ( 8 ) Tax expense for items of other comprehensive income ( 1 ) ( 1 ) Net current period other comprehensive income 2 2 Balance as of September 30, 2025 $ ( 26 ) $ ( 26 ) 1 These accumulated comprehensive loss components are included in the computation of net periodic benefit cost. See Note 12: Employee Pension and Other Postretirement Benefits. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended 7 Table of Contents 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. 6. EARNINGS PER SHARE Basic and diluted earnings per common share were calculated as follows: Three Months Ended September 30 Nine Months Ended September 30 (in millions, except per share amounts) 2025 2024 2025 2024 Net earnings $ 145 $ 101 $ 446 $ 427 Weighted-average common shares outstanding 39.3 39.5 39.3 39.5 Net dilutive effect of stock awards 0.1 — — — Dilutive weighted-average common shares outstanding 39.4 39.5 39.3 39.5 Earnings per share - basic $ 3.69 $ 2.56 $ 11.35 $ 10.81 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 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. 7. REVENUE Disaggregation of Revenue The following tables present revenues on a disaggregated basis: Three Months Ended September 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 697 $ 1,330 $ 45 $ — $ 2,072 Service revenues 128 287 705 — 1,120 Intersegment 3 — 37 ( 40 ) — Sales and service revenues $ 828 $ 1,617 $ 787 $ ( 40 ) $ 3,192 Customer Type Federal $ 825 $ 1,617 $ 747 $ — $ 3,189 Commercial — — 3 — 3 Intersegment 3 — 37 ( 40 ) — Sales and service revenues $ 828 $ 1,617 $ 787 $ ( 40 ) $ 3,192 Contract Type Firm fixed-price $ 6 $ 1 $ 96 $ — $ 103 Fixed-price incentive 692 819 1 — 1,512 Cost-type 127 797 618 — 1,542 Time and materials — — 35 — 35 Intersegment 3 — 37 ( 40 ) — Sales and service revenues $ 828 $ 1,617 $ 787 $ ( 40 ) $ 3,192 8 Table of Contents Three Months Ended September 30, 2024 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 569 $ 1,163 $ 29 $ — $ 1,761 Service revenues 93 249 646 — 988 Intersegment 2 — 34 ( 36 ) — Sales and service revenues $ 664 $ 1,412 $ 709 $ ( 36 ) $ 2,749 Customer Type Federal $ 662 $ 1,412 $ 673 $ — $ 2,747 Commercial — — 2 — 2 Intersegment 2 — 34 ( 36 ) — Sales and service revenues $ 664 $ 1,412 $ 709 $ ( 36 ) $ 2,749 Contract Type Firm fixed-price $ — $ 1 $ 83 $ — $ 84 Fixed-price incentive 568 753 3 — 1,324 Cost-type 94 658 543 — 1,295 Time and materials — — 46 — 46 Intersegment 2 — 34 ( 36 ) — Sales and service revenues $ 664 $ 1,412 $ 709 $ ( 36 ) $ 2,749 Nine Months Ended September 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 1,833 $ 3,809 $ 100 $ — $ 5,742 Service revenues 346 806 2,114 — 3,266 Intersegment 10 1 99 ( 110 ) — Sales and service revenues $ 2,189 $ 4,616 $ 2,313 $ ( 110 ) $ 9,008 Customer Type Federal $ 2,179 $ 4,614 $ 2,204 $ — $ 8,997 Commercial — 1 9 — 10 State and local government agencies — — 1 — 1 Intersegment 10 1 99 ( 110 ) — Sales and service revenues $ 2,189 $ 4,616 $ 2,313 $ ( 110 ) $ 9,008 Contract Type Firm fixed-price $ 11 $ 5 $ 297 $ — $ 313 Fixed-price incentive 1,823 2,393 4 — 4,220 Cost-type 345 2,216 1,806 — 4,367 Time and materials — 1 107 — 108 Intersegment 10 1 99 ( 110 ) — Sales and service revenues $ 2,189 $ 4,616 $ 2,313 $ ( 110 ) $ 9,008 9 Table of Contents Nine Months Ended September 30, 2024 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 1,786 $ 3,602 $ 86 $ — $ 5,474 Service revenues 240 777 2,040 — 3,057 Intersegment 5 2 98 ( 105 ) — Sales and service revenues $ 2,031 $ 4,381 $ 2,224 $ ( 105 ) $ 8,531 Customer Type Federal $ 2,026 $ 4,378 $ 2,120 $ — $ 8,524 Commercial — 1 5 — 6 State and local government agencies — — 1 — 1 Intersegment 5 2 98 ( 105 ) — Sales and service revenues $ 2,031 $ 4,381 $ 2,224 $ ( 105 ) $ 8,531 Contract Type Firm fixed-price $ 2 $ 5 $ 250 $ — $ 257 Fixed-price incentive 1,784 2,353 8 — 4,145 Cost-type 240 2,021 1,735 — 3,996 Time and materials — — 133 — 133 Intersegment 5 2 98 ( 105 ) — Sales and service revenues $ 2,031 $ 4,381 $ 2,224 $ ( 105 ) $ 8,531 Three Months Ended September 30 Nine Months Ended September 30 ($ in millions) 2025 2024 2025 2024 Major Programs Amphibious assault ships $ 375 $ 358 $ 1,031 $ 1,123 Surface combatants and coast guard cutters 448 304 1,144 901 Other 5 2 14 7 Total Ingalls 828 664 2,189 2,031 Aircraft carriers 854 768 2,406 2,391 Submarines 617 522 1,796 1,601 Other 146 122 414 389 Total Newport News 1,617 1,412 4,616 4,381 C5ISR; cyber, electronic warfare & space; live, virtual, and constructive training solutions 665 593 1,961 1,857 Other 122 116 352 367 Total Mission Technologies 787 709 2,313 2,224 Intersegment eliminations ( 40 ) ( 36 ) ( 110 ) ( 105 ) Sales and service revenues $ 3,192 $ 2,749 $ 9,008 $ 8,531 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. 10 Table of Contents Cumulative Catch-up Revenue Adjustments The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share: Three Months Ended September 30 Nine Months Ended September 30 ($ in millions, except per share amounts) 2025 2024 2025 2024 Effect on operating income $ ( 3 ) $ ( 72 ) $ ( 13 ) $ ( 46 ) Effect on diluted earnings per share $ ( 0.06 ) $ ( 1.42 ) $ ( 0.26 ) $ ( 0.91 ) 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 The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Net contract assets were comprised as follows: ($ in millions) September 30, 2025 December 31, 2024 Contract assets $ 1,869 $ 1,683 Contract liabilities 893 774 Net contract assets $ 976 $ 909 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 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. 11 Table of Contents 8. SEGMENT INFORMATION The following tables present the Company's operating results by segment: Three Months Ended September 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 697 $ 1,330 $ 45 $ — $ 2,072 Service revenues 128 287 705 — 1,120 Intersegment 3 — 37 ( 40 ) — Total sales and service revenues 828 1,617 787 ( 40 ) 3,192 Segment Operating Income Income from operating investments, net — — 12 — 12 Less: Cost of sales and service revenues Product 603 1,163 41 — 1,807 Service 112 244 626 — 982 Intersegment 3 — 37 ( 40 ) — Other segment items 45 130 61 — 236 Total segment operating income $ 65 $ 80 $ 34 $ — 179 Non-segment factors affecting operating income Operating FAS/CAS Adjustment ( 9 ) Non-current state income taxes ( 9 ) Total operating income $ 161 Three Months Ended September 30, 2024 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 569 $ 1,163 $ 29 $ — $ 1,761 Service revenues 93 249 646 — 988 Intersegment 2 — 34 ( 36 ) — Total sales and service revenues 664 1,412 709 ( 36 ) 2,749 Segment Operating Income Income from operating investments, net 1 — 11 — 12 Less: Cost of sales and service revenues Product 485 1,036 22 — 1,543 Service 83 208 577 — 868 Intersegment 2 — 34 ( 36 ) — Other segment items 46 153 54 — 253 Total segment operating income $ 49 $ 15 $ 33 $ — 97 Non-segment factors affecting operating income Operating FAS/CAS Adjustment ( 16 ) Non-current state income taxes 1 Total operating income $ 82 12 Table of Contents Nine Months Ended September 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 1,833 $ 3,809 $ 100 $ — $ 5,742 Service revenues 346 806 2,114 — 3,266 Intersegment 10 1 99 ( 110 ) — Total sales and service revenues 2,189 4,616 2,313 ( 110 ) 9,008 Segment Operating Income Income from operating investments, net — — 33 — 33 Less: Cost of sales and service revenues Product 1,581 3,279 81 — 4,941 Service 302 671 1,886 — 2,859 Intersegment 10 1 99 ( 110 ) — Other segment items 131 418 170 — 719 Total segment operating income $ 165 $ 247 $ 110 $ — 522 Non-segment factors affecting operating income Operating FAS/CAS Adjustment ( 25 ) Non-current state income taxes ( 12 ) Total operating income $ 485 Nine Months Ended September 30, 2024 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 1,786 $ 3,602 $ 86 $ — $ 5,474 Service revenues 240 777 2,040 — 3,057 Intersegment 5 2 98 ( 105 ) — Total sales and service revenues 2,031 4,381 2,224 ( 105 ) 8,531 Segment Operating Income Income from operating investments, net 1 — 34 — 35 Less: Cost of sales and service revenues Product 1,509 3,091 80 — 4,680 Service 208 645 1,821 — 2,674 Intersegment 5 2 98 ( 105 ) — Other segment items 145 435 162 — 742 Total segment operating income $ 165 $ 208 $ 97 $ — 470 Non-segment factors affecting operating income Operating FAS/CAS Adjustment ( 48 ) Non-current state income taxes 3 Total operating income $ 425 Sales transactions between segments are generally recorded at cost. Other segment items consists of general and administrative expenses and other income and gains, net. 13 Table of Contents The Operating FAS/CAS Adjustment represents the difference between the service cost component of the Company's pension and other postretirement benefit plan expense determined in accordance with GAAP ("FAS") and the Company's pension and other postretirement expense under U.S. Cost Accounting Standards ("CAS"). Other Financial Information 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 September 30 Nine Months Ended September 30 ($ in millions) 2025 2024 2025 2024 Capital Expenditures 1 Ingalls $ 19 $ 16 $ 49 $ 40 Newport News 80 55 203 181 Mission Technologies 2 6 4 11 Total segment capital expenditures 101 77 256 232 Corporate 1 — 6 7 Total capital expenditures $ 102 $ 77 $ 262 $ 239 1 Net of grant proceeds for capital expenditures Three Months Ended September 30 Nine Months Ended September 30 ($ in millions) 2025 2024 2025 2024 Depreciation and Amortization Ingalls $ 20 $ 20 $ 60 $ 58 Newport News 34 34 103 101 Mission Technologies 25 27 76 82 Total segment depreciation and amortization 79 81 239 241 Corporate 1 1 3 1 Total depreciation and amortization $ 80 $ 82 $ 242 $ 242 Asset information by segment is not disclosed because it is not a key measure of performance used by the chief operating decision maker. 9. INCOME TAXES 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. 14 Table of Contents The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. 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. These amounts are recorded within operating income. Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income. 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. Internal Revenue Code of 1986, as amended, that impact corporations, including making certain business deductions permanent, such as bonus depreciation and immediate expensing of domestic research and development expenditures. In addition, the Act allows an acceleration of the deduction for the remaining unamortized domestic research and development expenditures capitalized during the 2022 through 2024 tax years. These unamortized expenditures can be deducted over one or two years . 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. 10. INVESTIGATIONS, CLAIMS, AND LITIGATION The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations. The Company accrues for losses associated with legal proceedings when, and to the extent that, loss amounts related to the legal proceedings are probable and can be reasonably estimated. The actual losses that might be incurred to resolve such legal proceedings may be higher or lower than the amounts accrued. The Company also provides footnote disclosure for matters for which a material loss is reasonably possible but a reserve has not been accrued because the likelihood of a material loss is not probable. Antitrust Complaint - In October 2023, a class action antitrust lawsuit was filed against the Company and other defendants in the U.S. District Court for the Eastern District of Virginia. The lawsuit names several HII companies, among other companies, as defendants. The named plaintiffs generally allege that the defendant companies have adhered to a “gentlemen’s agreement” that prohibits any defendant from actively recruiting naval engineers from other defendants. The complaint seeks class certification, treble damages, and any other relief to which the plaintiffs are entitled. The District Court dismissed the lawsuit against all defendants in April 2024. The Fourth Circuit Court of Appeals reversed the dismissal and remanded the case to the District Court for further proceedings. The Company cannot at this time predict or reasonably estimate the outcome of this matter. Insurance Claim - In September 2020, the Company filed a complaint against 32 reinsurers in the Superior Court, State of Vermont, Franklin Unit, seeking a judgment declaring that the Company's business interruption and other losses associated with COVID-19 are covered by the Company's property insurance program. The Company also initiated arbitration proceedings against six other reinsurers seeking similar relief. 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 15 Table of Contents decision in September 2022, allowing the Company’s claim to proceed. No assurances can be provided regarding the ultimate resolution of this matter. U.S. Government Investigations and Claims - Departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil, or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory, treble, or other damages. U.S. Government regulations provide that certain findings against a contractor may also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. Any suspension or debarment would have a material effect on the Company because of its reliance on government contracts. During the third quarter of 2024, the Company identified certain quality issues involving noncompliance with welding procedures at Newport News. The Company commenced an investigation and disclosed the matter to the U.S. Government. The Company continues to work with its U.S. Navy customer to evaluate the full extent of the matter and cannot at this time predict or reasonably estimate the ultimate outcome of this matter. Asbestos Related Claims - HII and its predecessors-in-interest are defendants in a longstanding series of cases that have been and continue to be filed in various jurisdictions around the country, wherein former and current employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII. In some instances, partial or full insurance coverage is available for the Company's liabilities. 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. Although the Company believes the ultimate resolution of current cases will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows, it cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of asbestos related litigation. Other - The Company is party to various other claims, arbitrations, investigations, and other legal proceedings that arise in the ordinary course of business, including U.S. Government investigations and claims that could result in administrative, civil, or criminal proceedings involving the Company. The Company is a contractor with the U.S. Government, and such proceedings can therefore include False Claims Act allegations against the Company. Although, based on the information available to the Company to date, the Company believes that the resolution of these other claims, legal proceedings, and investigations will not have a material effect on its condensed consolidated financial position, results of operations, or cash flows, the Company cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of these matters. 11. COMMITMENTS AND CONTINGENCIES Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs. These estimates are based upon management's best assessment of the underlying causal events and circumstances and recognized to the extent of expected recovery based upon contractual entitlements and the probability of successful negotiation with the customer. The Company believes its outstanding customer settlements will be resolved without material impact to its financial position, results of operations, or cash flows. Environmental Matters - The estimated costs to complete environmental remediation are accrued when it is probable that the Company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by another environmental agency, and the related costs can be reasonably estimated by management. When only a range of costs is established and no amount within the range is more probable than another, the minimum amount in the range is accrued. Environmental liabilities are recorded on an undiscounted basis and are expensed or capitalized as appropriate. Capitalized expenditures, if any, relate to long-lived improvements in currently operating facilities. The Company does not record insurance recoveries before collection is probable. 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. 16 Table of Contents 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 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 September 30, 2025, the Company had $ 11 million in issued but undrawn letters of credit and $ 368 million of surety bonds outstanding. U.S. Government Claims - From time to time, the U.S. Government communicates to the Company potential claims, disallowed costs, and penalties concerning prior costs incurred by the Company with which the U.S. Government disagrees. When such preliminary findings are presented, the Company and U.S. Government representatives engage in discussions, from which the Company evaluates the merits of the claims and assesses the amounts being questioned. Although the Company believes that the resolution of any of these matters will not have a material effect on its consolidated financial position, results of operations, or cash flows, it cannot predict the ultimate outcome of these matters. Other Matters - The Company previously disclosed an issue regarding the degree of corrosion of certain steel plates used to fabricate Friedman (NSC 11). During the second quarter of 2025, the Company reached an agreement with the customer to resolve the matter. The resolution of the matter did not have a material impact to the Company's consolidated financial position, results of operations, or cash flows. Collective Bargaining Agreements - Of the Company's approximately 44,000 employees, 45 % are covered by a total of nine collective bargaining agreements. Newport News has three collective bargaining agreements covering represented employees, which expire in February 2030, December 2030 and April 2031. Ingalls has five collective bargaining agreements covering represented employees, all of which expire in March 2026. Approximately 15 Mission Technologies employees in Klamath Falls, Oregon are covered by one collective bargaining agreement that expires in June 2029. Collective bargaining agreements generally expire after three to five years and are subject to renegotiation at that time. The Company believes its relationship with its employees is satisfactory. 12. EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS 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 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 ($ in millions) 2025 2024 2025 2024 2025 2024 2025 2024 Components of net periodic benefit cost Service cost $ 22 $ 28 $ 1 $ 1 $ 65 $ 82 $ 3 $ 4 Interest cost 84 80 5 5 252 241 14 14 Expected return on plan assets ( 138 ) ( 134 ) — — ( 412 ) ( 403 ) — — Amortization of prior service cost (credit) 4 4 ( 1 ) — 12 12 ( 1 ) ( 1 ) Amortization of net actuarial loss (gain) 1 4 ( 3 ) ( 3 ) 1 13 ( 9 ) ( 10 ) Net periodic benefit (income) cost $ ( 27 ) $ ( 18 ) $ 2 $ 3 $ ( 82 ) $ ( 55 ) $ 7 $ 7 17 Table of Contents 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 Pension plans Discretionary Qualified $ — $ — Non-qualified 11 9 Other benefit plans 31 27 Total contributions $ 42 $ 36 As of September 30, 2025, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2025. 13. STOCK COMPENSATION PLANS 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 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 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 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. 18 Table of Contents Stock award activity for the nine months ended September 30, 2025, and 2024, was as follows: Stock Awards (in thousands) Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (in years) Outstanding at December 31, 2023 535 $ 189.98 1.0 year Granted 171 287.29 Adjusted due to performance 58 287.29 Vested ( 206 ) 181.58 Forfeited ( 12 ) 231.76 Outstanding at September 30, 2024 546 $ 221.91 1.0 year Outstanding at December 31, 2024 550 $ 221.59 1.0 year Granted 311 170.07 Adjusted due to performance 19 170.07 Vested ( 194 ) 215.39 Forfeited ( 25 ) 221.83 Outstanding at September 30, 2025 661 $ 198.79 1.1 years