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Item 1. Financial Statements

2026-05-05 compared with 2025-10-30 · 106 added, 242 removed, 408 unchanged (46% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

(in millions, except per share amounts) 2026 2025

7 unchanged sentences

Income from operating investments, net 5 13

Other income and gains, net — — 1 —

General and administrative expenses 258 246

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

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

($ in millions) March 31, 2026 December 31, 2025

Current Assets

Cash and cash equivalents $ 216 $ 774

Accounts receivable, net of allowance for expected credit losses of $ 2 million as of 2025 and 2024

Accounts receivable, net of allowance for expected credit losses of $ 3 million as of 2026 and $ 2 million as of 2025

Contract assets 1,989 1,758

14 unchanged sentences

Accrued employees’ compensation 345 443

Current portion of long-term debt — 503

Current portion of postretirement plan liabilities 119 119

25 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30

Three Months Ended March 31

($ in millions) 2026 2025

1 unchanged sentence

Net earnings $ 149 $ 149

Adjustments to reconcile net cash provided by operating activities:

Adjustments to reconcile net cash used in operating activities:

Depreciation 55 54

2 unchanged sentences

Deferred income taxes 43 ( 11 )

Gain on investments in marketable securities ( 28 ) ( 22 )

Loss (gain) on investments in marketable securities 3 ( 3 )

Other non-cash transactions, net 3 3

5 unchanged sentences

Retiree benefits ( 45 ) ( 38 )

Net cash provided by operating activities

Net cash used in operating activities ( 390 ) ( 395 )

Investing Activities:

2 unchanged sentences

Grant proceeds for capital expenditures 3 —

Proceeds from sale of investments 5 —

Acquisitions of businesses — ( 133 )

Other investing activities, net 2 1

Proceeds from disposition of assets — 1

Net cash used in investing activities ( 71 ) ( 199 )

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 )

Proceeds from line of credit borrowings 15 —

Repayment of line of credit borrowings ( 15 ) —

Dividends paid ( 54 ) ( 53 )

Repurchases of common stock — ( 162 )

Employee taxes on certain share-based payment arrangements ( 43 ) ( 14 )

5 unchanged sentences

Supplemental Cash Flow Disclosure

Cash paid for income taxes (net of refunds) $ 71 $ 170

Cash paid for interest $ 35 $ 8

4 unchanged sentences

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

Three Months Ended March 31, 2026 and 2025

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

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 — — — — 1 1

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

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

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

Balance as of December 31, 2025 $ 1 $ 2,087 $ 5,487 $ ( 2,449 ) $ ( 53 ) $ 5,073

4 unchanged sentences

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

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

Balance as of March 31, 2026 $ 1 $ 2,070 $ 5,577 $ ( 2,449 ) $ ( 52 ) $ 5,147

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

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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.

Additionally, certain prior year amounts have been reclassified to conform to the current year presentation.

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, 2025 (the "2025 Annual Report on Form 10-K").

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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 were valued at $ 244 million and $ 249 million as of March 31, 2026, and December 31, 2025, 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 estimated fair values of the Company's total long-term debt as of March 31, 2026 and December 31, 2025 were $ 2,688 million and $ 2,730 million, respectively.

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.

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.

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

There were no new Accounting Standards Updates (“ASU”) adopted during the three months ended March 31, 2026 that had a material impact on the Company’s consolidated financial statements.

Accounting Guidance Issued But Not Adopted as of March 31, 2026

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 December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.

The new standard establishes authoritative guidance for the recognition, measurement, and presentation of a grant received by a business entity from a government, including guidance for a grant related to an asset and a grant related to income.

The new guidance also amends certain existing disclosure requirements for government assistance provided to business entities.

The new guidance is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The new guidance may be applied on a modified prospective basis, modified retrospective basis, or full retrospective basis.

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, 2026, 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 $ 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.

STOCKHOLDERS' EQUITY

1 unchanged sentence

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

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

For each of the three months ended March 31, 2026 and 2025, the Company did not repurchase any shares.

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.

Dividends - The Company paid cash dividends totaling $ 54 million and $ 53 million for the three months ended March 31, 2026 and 2025, 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

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 )

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 ( 1 ) ( 1 )

Net current period other comprehensive income — —

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

The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $ 52 million and $ 53 million as of March 31, 2026, and December 31, 2025, respectively.

The changes in accumulated other comprehensive loss by component for the three months ended March 31, 2026 and 2025, were as follows:

($ in millions) Benefit Plans Total

3 unchanged sentences

Amortization of net actuarial loss (1)

Tax expense for items of other comprehensive income ( 4 ) ( 4 )

Net current period other comprehensive income 1 1

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

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

Balance as of December 31, 2025 $ ( 53 ) $ ( 53 )

4 unchanged sentences

Net current period other comprehensive income 1 1

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

Balance as of March 31, 2026 $ ( 52 ) $ ( 52 )

(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 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.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2026 and 2025, was $ 1 million and less than $ 1 million, respectively.

EARNINGS PER SHARE

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

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

(in millions, except per share amounts) 2026 2025

5 unchanged sentences

Earnings per share - diluted $ 3.79 $ 3.79

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.

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.3 million and 0.4 million Restricted Performance Stock Rights ("RPSRs") for the three months ended March 31, 2026 and 2025, respectively, and 0.1 million and 0.2 million Restricted Stock Rights ("RSRs") for the three months ended March 31, 2026, and 2025, respectively.

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

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

Three Months Ended September 30, 2024

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

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

Three Months Ended March 31, 2026

($ 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 — 36 ( 39 ) —

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Sales and service revenues $ 725 $ 1,665 $ 748 $ ( 39 ) $ 3,099

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

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

6 unchanged sentences

Commercial — — 4 — 4

State and local government agencies — — 1 — 1

Intersegment 4 — 30 ( 34 ) —

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Sales and service revenues $ 637 $ 1,396 $ 735 $ ( 34 ) $ 2,734

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

($ in millions) 2026 2025

2 unchanged sentences

Surface combatants and coast guard cutters 377 299

Other 5 2 14 7

Total Ingalls 725 637

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Total Newport News 1,665 1,396

cyber, electronic warfare & space;

live, virtual, and constructive training solutions 665 593 1,961 1,857

Other 122 116 352 367

All-domain operations and warfare systems 492 485

Global security, unmanned systems, and other 256 250

Total Mission Technologies 748 735

1 unchanged sentence

Sales and service revenues $ 3,099 $ 2,734

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

As of March 31, 2026, the Company had $ 54.0 billion of remaining performance obligations.

The Company expects to recognize approximately 40 % of its remaining performance obligations as revenue through 2027, an additional 35 % through 2029, and the balance thereafter.

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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

Three Months Ended March 31

($ in millions, except per share amounts) 2026 2025

Effect on operating income (1)

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.

Effect on diluted earnings per share (net of tax) $ 0.02 $ —

(1) For the three months ended March 31, 2026, the effect of net cumulative catch-up revenue adjustments on

operating income is materially consistent with the effect on revenue.

For the three months ended March 31, 2026, no individual favorable or unfavorable 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 March 31, 2025, cumulative catch-up revenue adjustments netted to zero, and did not have an effect on operating income or diluted earnings per share.

The Company's Newport News segment experienced performance challenges in the construction of aircraft carriers and Virginia class (SSN 774) submarines.

For the three months ended March 31, 2025, cumulative catch-up revenue adjustments included significant unfavorable performance adjustments on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract and the Virginia class (SSN 774) submarine program, which were offset by contract incentives.

Contract Balances

1 unchanged sentence

Net contract assets were comprised as follows:

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

($ in millions) March 31, 2026 December 31, 2025

Contract assets $ 1,989 $ 1,758

1 unchanged sentence

Net contract assets $ 1,167 $ 538

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.

The Company’s net contract assets increased $ 629 million from December 31, 2025 to March 31, 2026, 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.

The Company recognized revenue related to its prior year-end contract liabilities of $ 758 million and $ 552 million for the three months ended March 31, 2026 and 2025, respectively.

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

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

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

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

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

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Total operating income $ 155

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

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

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Sales transactions between segments are generally recorded at cost.

Other segment items consists of general and administrative expenses and other income and gains, net.

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 segment items consist of general and administrative expenses.

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

Three Months Ended March 31

($ in millions) 2026 2025

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(1) Net of grant proceeds for capital expenditures

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

($ in millions) 2026 2025

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 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.

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended March 31, 2026 and 2025, were 20.7 % and 20.3 %, respectively.

For the three months ended March 31, 2026, the Company’s effective tax rate did not differ materially from the federal statutory corporate income tax rate of 21 %.

The Company's unrecognized tax benefits increased by $ 3 million during the three months ended March 31, 2026.

As of March 31, 2026, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $ 108 million.

Assuming a sustainment of these tax positions, a reversal of $ 85 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 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.

For the three months ended March 31, 2026, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $ 2 million.

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.

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.

Internal Revenue Service ("IRS") Audits - The Company reached an agreement in principle with the IRS on the research and development tax credits for the 2016-2021 tax years in 2025.

This resolution was submitted to the Joint Committee on Taxation for approval in March 2026.

Also, in the first quarter of 2026, the IRS initiated an audit of the research and development tax credits claimed on the Company's filed returns for the 2022-2023 tax years.

The Company believes that its unrecognized tax benefits are adequate and will cover the expected impact of the agreement with the IRS and any adjustments resulting from the IRS audit of the 2022-2023 research and development tax credits.

INVESTIGATIONS, CLAIMS, AND LITIGATION

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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 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 District Court dismissed the lawsuit against all defendants in April 2024 on statute of limitations grounds without addressing the motions to dismiss filed by the defendants on other grounds.

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.

In November 2025, the District Court denied the defendants' remaining motions to dismiss the lawsuit.

In March 2026, the Company reached agreement with the plaintiffs to resolve their claims.

The Company has recorded a liability related to the agreement that is not material to the Company's consolidated financial position, results of operations, or cash flows.

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.

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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.

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

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.

In 2025, the parties filed dispositive motions and await the court’s decision.

The Company cannot at this time predict the outcome of this matter.

Government Investigations and Claims - Departments and agencies of the U.S.

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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.

In 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.

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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 costs to resolve cases during the three months ended March 31, 2026 and 2025, 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.

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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.

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.

However, the Company cannot predict what new or revised claims, litigation, or other proceedings might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of these matters.

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.

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.

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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.

As of March 31, 2026 and December 31, 2025, 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 September 30, 2025, the probable estimable future cost for environmental remediation is not material.

Management estimates that as of March 31, 2026, 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.

As of March 31, 2026, 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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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.

Collective Bargaining Agreements - Of the Company's approximately 44,000 employees, 45 % are covered by a total of 13 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 2031.

Approximately 15 Mission Technologies employees in Klamath Falls, Oregon are covered by one collective bargaining agreement that expires in June 2029.

Mission Technologies has a total of 80 employees covered by five collective bargaining agreements, which expire in September 2026, December 2027, September 2028, and two that expire in August 2027.

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.

Purchase Obligations - Periodically the Company enters into agreements to purchase goods or services that are enforceable and legally binding on the Company and specify all significant terms, including:

fixed or minimum quantities to be purchased;

fixed, minimum, or variable price provisions;

and the approximate timing of the transaction.

These obligations are primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts.

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

The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2026 and 2025, were as follows:

Three Months Ended March 31

Pension Benefits Other Benefits

($ in millions) 2026 2025 2026 2025

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Net periodic benefit (income) cost $ ( 33 ) $ ( 27 ) $ 2 $ 2

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

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31

($ in millions) 2026 2025

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Total contributions $ 14 $ 13

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

For the year ending December 31, 2026, the Company expects its cash contributions to its qualified defined benefit pension plans to be approximately $ 2 million, all of which will be discretionary.

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 .

During the three months ended March 31, 2026 and 2025, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the three months ended March 31, 2026, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 435.58 .

These rights are subject to cliff vesting on December 31, 2028.

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 .

For the three months ended March 31, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $ 168.81 .

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

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 .

Compensation Restricted Stock Rights - For the three months ended March 31, 2026, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 435.58 .

For the three months ended March 31, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 168.81 .

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.

For the three months ended March 31, 2026, the Company did not grant any retention stock awards.

For the three months ended March 31, 2025, the Company granted approximately 1,300 retention RSRs at a weighted average share price of $ 189.40 , 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 nine months ended September 30, 2025, and 2024, was as follows:

Stock award activity for the three months ended March 31, 2026, and 2025, was as follows:

(in thousands) Weighted-Average

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Forfeited ( 4 ) 288.33

Outstanding at September 30, 2024 546 $ 221.91 1.0 year

Outstanding at March 31, 2025 672 $ 199.42 1.6 years

Outstanding at December 31, 2025 663 $ 199.43 1.0 year

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Forfeited ( 8 ) 204.33

Outstanding at September 30, 2025 661 $ 198.79 1.1 years

Outstanding at March 31, 2026 558 $ 242.54 1.4 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