Huntington Ingalls Industries NYSE: HII reported record third-quarter 2026 revenue of approximately $3.5 billion, up 10.8% from a year earlier, as growth at its Newport News and Ingalls shipyards drove higher shipbuilding sales. Diluted earnings per share rose to $5.48 from $3.68 in the prior-year quarter, while net earnings increased to $217 million from $145 million.
President and Chief Executive Officer Chris Kastner said the company’s shipbuilding revenue reached about $2.8 billion during the quarter, a 14% year-over-year increase. The performance led HII to raise its 2026 shipbuilding revenue outlook to between $10.5 billion and $10.7 billion, while maintaining its shipbuilding operating-margin forecast of 6% to 6.5%.
“Our portfolio turnover and throughput increases continue to drive incremental margin expansion,” Kastner said, adding that the midpoint of the shipbuilding margin range would represent a 35-basis-point improvement from 2025.
Contract awards lift backlog
HII recorded $32.4 billion in new contract awards during the quarter, bringing total backlog to $86.2 billion. The awards included contracts for Block VI Virginia-class submarines, the second Columbia-class submarine, and long-lead materials for CVN-82.
The company also finalized a $5.1 billion contract for the refueling and complex overhaul of the USS Harry S. Truman, or CVN-75, at the end of September. Chief Financial Officer Tom Stiehle said the award was not included in the third-quarter awards or backlog figures and will be recognized in fourth-quarter results.
Kastner said approximately 90% of expected shipbuilding revenue through 2030 was already under contract. He said the company’s priorities are execution, workforce growth, throughput improvement and delivery of ships and mission technologies.
Shipyard progress and workforce efforts
At Newport News, the CVN-79 John F. Kennedy completed preliminary acceptance trials and remains on track for final delivery in 2027, according to Kastner. The CVN-80 and CVN-81 aircraft carriers are progressing, while SSN-800 Arkansas, the company’s final Block IV Virginia-class submarine, is expected to be delivered later in 2026.
At Ingalls, HII is preparing three ships for delivery: LPD-30 Harrisburg in 2026, followed by LHA-8 Bougainville and DDG-129 Jeremiah Denton in 2027. Kastner said LPD-30 had gone to sea for trials, while the shipyard continued testing work on the other two vessels.
Shipbuilding throughput rose about 9% year to date compared with 2025. Kastner said Newport News was executing in line with expectations, while Ingalls experienced a slower labor recovery after wage increases introduced near the end of the first quarter. Still, Ingalls added a net 576 shipbuilders during the third quarter, its highest net increase in 10 quarters.
Across both yards, HII hired more than 6,000 shipbuilders year to date. Enrollment at its apprentice schools surpassed 800, up 14% from the prior year. The company also expects distributed shipbuilding to grow more than 30% year over year.
Mission Technologies raises margin outlook
Mission Technologies generated $792 million of third-quarter revenue, slightly above the prior-year period, and reported a 2.4-times book-to-bill ratio on $1.9 billion of awards. Segment operating income rose to $71 million from $34 million, while operating margin expanded to 9% from 4.3%.
The segment’s performance benefited from a milestone related to testing HII’s ROMULUS offering for the Navy’s Medium Unmanned Surface Vessel program, higher unmanned-systems volumes and increased equity income from nuclear and environmental joint ventures, Stiehle said.
Mission Technologies President Andy Green highlighted several strategic awards, including the $2.2 billion STINGRAI program supporting U.S. Southern Command’s intelligence, surveillance and reconnaissance capabilities; a follow-on production order for Lionfish unmanned underwater vehicles; and an award for 10 ROMULUS 150-foot unmanned surface vessels.
The segment also received a $332 million, five-year Air Force contract for enterprise artificial intelligence capabilities, including analytics and data engineering. HII expanded its Massachusetts autonomous-systems production facility by 25% to support manufacturing, testing and integration capacity for unmanned systems.
Given year-to-date results, HII raised Mission Technologies’ full-year operating-margin outlook to about 6% and EBITDA-margin expectation to about 9%. It maintained the segment’s revenue guidance of $3 billion to $3.2 billion, with Stiehle saying the midpoint was the most likely outcome based on the company’s current view.
Cash flow and margin outlook
Third-quarter cash from operations totaled $520 million, while free cash flow was $429 million after $91 million in net capital expenditures. HII ended the quarter with $387 million in cash and approximately $2.1 billion of liquidity.
Stiehle said free cash flow exceeded the company’s prior quarterly expectation largely because of the timing of receipts and disbursements, though HII did not change its full-year free-cash-flow forecast. The company expects cumulative free cash flow of $1.2 billion to $1.3 billion across 2026 and 2027.
Looking ahead, management said it expects continued incremental improvement in shipbuilding margin in 2027. Kastner said he continues to view shipbuilding as a business that should ultimately generate returns on sales of 9% to 10%, while Stiehle said the company expects a transition toward a greater share of post-COVID work by the end of 2027.
About Huntington Ingalls Industries (NYSE:HII)
Huntington Ingalls Industries, Inc NYSE: HII is an American defense company that designs, builds, maintains and modernizes ships for the U.S. Navy and other government customers. Its shipbuilding activities include nuclear-powered aircraft carriers, submarines, amphibious assault ships, destroyers and other surface vessels, along with fleet sustainment and modernization services.
HII operates through its Newport News Shipbuilding and Ingalls Shipbuilding divisions. Newport News Shipbuilding is involved in the construction and maintenance of nuclear-powered aircraft carriers and submarines, while Ingalls Shipbuilding builds surface combatants and amphibious ships.
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