Company Overview - Huntington Ingalls Industries (HII) is based in Newport News, VA, and specializes in designing, building, and maintaining nuclear-powered ships, including aircraft carriers and submarines, as well as non-nuclear ships for the U.S. Navy and Coast Guard [11] - The company also provides after-market services for military ships globally [11] Investment Ratings - HII holds a Zacks Rank of 2 (Buy) and has a VGM Score of A, indicating strong potential for investment [11] - The company is considered a top pick for growth investors due to its favorable ratings [12] Growth Potential - HII has a Growth Style Score of B, with a forecasted year-over-year earnings growth of 12.4% for the current fiscal year [12] - In the last 60 days, five analysts have revised their earnings estimates higher for fiscal 2026, with the Zacks Consensus Estimate increasing by $0.18 to $17.30 per share [12] - HII has an average earnings surprise of +17.7%, further indicating its strong performance potential [12]

Workforce and Employment - The company has approximately 44,000 employees, making it the largest industrial employer in Virginia and the largest private employer in Mississippi[59] - In 2025, the company hired approximately 8,000 new employees to meet increasing talent demand[64] - The company operates two apprentice schools that have graduated over 15,500 individuals since their inception, critical for training its workforce[65] - Approximately 45% of employees are covered by 13 collective bargaining agreements, with no work stoppages in over 26 years at Newport News and over 18 years at Ingalls[61][62] - The company has a robust succession planning process, filling approximately 80% of newly created vice president positions with internal hires[67] - The company emphasizes the importance of attracting, retaining, and training a qualified workforce to maintain competitive advantage[10] Competitive Position and Operations - The company is one of only two capable of designing and building nuclear-powered submarines for the U.S. Navy, indicating a strong competitive position in the defense sector[54] - The performance of subcontractors and suppliers, along with the availability and pricing of raw materials, is critical to the company's operational success[10] Financial Position and Risks - The company has a $1.7 billion revolving credit facility and a $1.7 billion commercial paper program, with no outstanding indebtedness as of December 31, 2025, resulting in no interest rate risk for these instruments[335] - Macroeconomic factors are contributing to increasing cost inflation for raw materials, components, and supplies, which may adversely impact the company's financial position and cash flows if persistent over the long term[336] - The company mitigates cost inflation risk by negotiating long-term agreements with certain suppliers and incorporating price escalation provisions in customer contracts[336] - Significant delays or reductions in appropriations for programs may affect the company's ability to perform contracts effectively and recover costs[10] - Adverse economic conditions in the U.S. and globally could negatively affect the company's performance and market position[10] Compliance and Regulatory Environment - The company is subject to various laws and regulations, including cybersecurity and data privacy, which may increase costs and compliance risks[46] - The company faces risks related to changes in business practices, procurement processes, and government regulations, which may impact compliance and operational effectiveness[10] - Legal proceedings and investigations may pose risks to the company's reputation and ability to conduct business effectively[10] Environmental and Safety Practices - The company has made investments to comply with environmental laws, expecting future capital and operating costs but does not anticipate a material effect on financial position[51] - The company prioritizes environmental, health, and safety (EH&S) practices, integrating them into operational metrics and employee training programs[69] - The company maintains limited insurance coverage for losses in excess of the coverage of nuclear facility operators, indicating risk management strategies in nuclear operations[48] Security Risks - The company is exposed to security threats, including cybersecurity risks, which could disrupt operations and impact reputation[10]

Core Insights - Huntington Ingalls Industries, Inc. (HII) reported a fourth-quarter 2025 earnings per share (EPS) of $4.04, reflecting a 28.3% increase from $3.15 in the same quarter last year, surpassing the Zacks Consensus Estimate of $3.72 by 8.6% [1] - For the full year 2024, HII's EPS was $15.39, exceeding the Zacks Consensus Estimate of $15.06 and up from $13.96 in the previous year [2] Total Revenues - HII's total revenues for the fourth quarter reached $3.48 billion, exceeding the Zacks Consensus Estimate of $3.06 billion by 13.7% and showing a 15.7% increase from $3 billion in the prior year, driven by higher sales across all major business segments [3] - For the full year 2025, revenues amounted to $12.48 billion, beating the Zacks Consensus Estimate of $12.07 billion and increasing by 8.2% from $11.54 billion in the previous year [4] Operational Performance - The company reported segmental operating income of $195 million in the fourth quarter, up from $103 million in the same quarter last year, with an operating margin expansion of 218 basis points to 5.6% [5] - The growth in operating income was attributed to strong performance across all three business segments [5] Segmental Performance - **Newport News Shipbuilding**: Revenues totaled $1.89 billion, a 19.1% year-over-year increase, with operating income rising 121.1% to $84 million, driven by higher volumes in submarines and aircraft carriers [6] - **Ingalls Shipbuilding**: Revenues reached $889 million, up 20.8% year over year, with operating earnings of $68 million, a 47.8% increase, primarily due to higher sales volumes from amphibious assault ships and surface combatants [7] - **Mission Technologies**: Revenues were $731 million, reflecting a 2.5% year-over-year increase, driven by higher volumes from warfare systems, global security, and unmanned systems [8] Financial Update - As of December 31, 2025, cash and cash equivalents totaled $774 million, down from $831 million a year earlier, while long-term debt remained stable at $2.70 billion [11] - Cash generated from operating activities was $1.20 billion, significantly higher than $0.39 billion a year ago, with free cash flow of $800 million compared to $40 million in the prior year [11] 2026 Guidance - HII expects shipbuilding revenues to be between $9.7 billion and $9.8 billion, with Mission Technologies revenues projected between $3.0 billion and $3.2 billion [12] - The company anticipates capital expenditures to be 4-5% of sales and free cash flow in the range of $500 million to $600 million [12]

Core Viewpoint - U.S. military shipbuilder Huntington Ingalls reported that it anticipates negative free cash flow for the current quarter, despite exceeding quarterly profit estimates, which negatively impacted its share price [1] Group 1: Financial Performance - Huntington Ingalls beat quarterly profit estimates, indicating strong operational performance [1] - The expectation of negative free cash flow suggests potential liquidity challenges in the near term [1] Group 2: Market Reaction - The announcement of expected negative free cash flow led to a decline in the company's share price, reflecting investor concerns [1]

Group 1: Company Performance - Huntington Ingalls (HII) has gained approximately 21.5% year-to-date, outperforming the average return of 7.1% for Aerospace companies [4] - The Zacks Consensus Estimate for HII's full-year earnings has increased by 1.2% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - HII currently holds a Zacks Rank of 2 (Buy), suggesting a favorable investment outlook [3] Group 2: Industry Comparison - Huntington Ingalls is part of the Aerospace - Defense industry, which includes 30 companies and has an average year-to-date gain of 7.4%, indicating HII's superior performance [6] - In contrast, Moog (MOG.A), another Aerospace stock, has returned 32.2% year-to-date and is part of the Aerospace - Defense Equipment industry, which has a lower average gain of 6.4% [5][7] - The Aerospace sector as a whole ranks 1 in the Zacks Sector Rank, reflecting strong overall performance among its 68 individual stocks [2]

Group 1 - Huntington Ingalls Industries reported a decline in stock price by 5% following the announcement of its fourth-quarter earnings [1]

Financial Data and Key Metrics Changes - In Q4 2025, revenues reached $3.5 billion, an increase of approximately 16% compared to the same period last year, driven by growth across all segments [18] - For the full year 2025, total revenues were $12.5 billion, an increase of $949 million or 8.2% from 2024 [21] - Diluted earnings per share for 2025 were $15.39, compared to $13.96 in 2024 [24] Business Line Data and Key Metrics Changes - Ingalls' Q4 2025 revenues were $889 million, up $153 million or 21% year-over-year, primarily due to higher volumes in amphibious assault ships and surface combatants [18] - Newport News' Q4 2025 revenues were $1.9 billion, an increase of $303 million or 19% from Q4 2024, driven by higher volumes in submarines and aircraft carriers [18] - Mission Technologies reported Q4 2025 revenues of $731 million, a 2.5% increase from the previous year, mainly due to higher volumes in warfare systems and unmanned systems [19] Market Data and Key Metrics Changes - The company expects shipbuilding revenues for 2026 to be between $9.7 billion and $9.9 billion, with margins in the range of 5.5% to 6.5% [15] - Mission Technologies anticipates revenues between $3 billion and $3.2 billion for 2026, with margins around 5% [16] Company Strategy and Development Direction - The company is raising its medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6% [15] - A focus on increasing shipbuilding throughput by 15% in 2026, following a 14% increase in 2025, is part of the operational strategy [12] - The company plans to continue ramping its distributed shipbuilding strategy and increase outsourcing by 30% in 2026 [13] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of increasing shipbuilding throughput to meet urgent customer needs in a challenging global security environment [17] - The company expressed confidence in its operational improvements and the strong support from the U.S. government for shipbuilding programs [17] Other Important Information - The company hired over 6,600 shipbuilders in 2025 and plans to hire at least the same number in 2026 to support increased throughput [12] - Free cash flow for 2025 was $800 million, exceeding guidance, with expectations for 2026 free cash flow between $500 million and $600 million [25][28] Q&A Session Summary Question: Productivity numbers and Virginia-class program - Management noted broad-based improvement across shipbuilding programs, with the Virginia-class performing well in 2025, and emphasized the need for increased throughput to achieve two submarines per year [36][37] Question: Long-term CAPEX expectations - Management indicated that while specific guidance beyond 2026 is not available, elevated CAPEX is expected due to ongoing opportunities [38][39] Question: Newport News margins and program improvements - Management discussed the need to stabilize performance and improve margins across programs, with a focus on working off existing contracts and improving hiring and attrition rates [45][48] Question: Industrial base funding and throughput - Management confirmed that the Block 5 contract has assisted in increasing throughput, but additional capital will be required to continue ramping up production [50][51] Question: Shipbuilding margin outlook - Management acknowledged that margins are expected to remain flat in the near term due to ongoing investments and the need to work through existing contracts, with a potential improvement expected as new contracts are awarded [67][70] Question: Frigate program and growth potential - Management expressed confidence in the frigate program, noting that material from previous contracts will help mitigate upfront costs, with revenue expected to ramp up in 2027 [76][90]

Financial Data and Key Metrics Changes - In Q4 2025, revenues reached $3.5 billion, an increase of approximately 16% compared to the same period last year, driven by growth across all segments [18] - For the full year 2025, total revenues were $12.5 billion, up $949 million or 8.2% from 2024, with each segment contributing to the increase [21] - Net earnings for Q4 2025 were $159 million, compared to $123 million in Q4 2024, with diluted earnings per share rising to $4.04 from $3.15 [21] - The company reported a free cash flow of $800 million for 2025, exceeding guidance [25] Business Line Data and Key Metrics Changes - Ingalls' Q4 2025 revenues were $889 million, an increase of $153 million or 21% from Q4 2024, primarily due to higher volumes in amphibious assault ships and surface combatants [18] - Newport News' Q4 2025 revenues were $1.9 billion, up $303 million or 19% from Q4 2024, driven by higher volumes in submarines and aircraft carriers [18] - Mission Technologies reported Q4 2025 revenues of $731 million, an increase of $18 million or 2.5% from Q4 2024, mainly due to higher volumes in warfare systems and unmanned systems [19] Market Data and Key Metrics Changes - The company expects shipbuilding revenues for 2026 to be between $9.7 billion and $9.9 billion, with margins projected in the range of 5.5% to 6.5% [15] - For Mission Technologies, anticipated revenues for 2026 are between $3 billion and $3.2 billion, with margins around 5% [16] Company Strategy and Development Direction - The company is raising its medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6% due to increased demand and operational improvements [15] - A focus on increasing shipbuilding throughput by 15% in 2026, following a 14% increase in 2025, is part of the operational strategy [12] - The company plans to continue investing in workforce, facilities, and technology to support growth and efficiency [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of responding to the urgent needs of defense customers in a challenging global security environment [17] - The company expressed confidence in its ability to meet future demand, citing strong bipartisan support for shipbuilding programs in the recent National Defense Authorization Act [16] - Management noted that the current operational initiatives and investments are expected to yield positive results in the coming years [17] Other Important Information - The company plans to increase outsourcing by another 30% in 2026, building on a 100% increase in 2025 [13] - Capital expenditures for 2026 are expected to be approximately 4%-5% of sales, representing an investment of $500 million to $600 million [29] Q&A Session Summary Question: Productivity numbers and Virginia-class program - Management indicated broad-based improvement across shipbuilding programs, with the Virginia-class performing well in 2025, and noted the need for increased throughput to achieve two submarines per year [36][37] Question: Long-term CAPEX expectations - Management expects CAPEX to remain elevated due to ongoing opportunities, but no specific guidance beyond the current year was provided [38][39] Question: Newport News margins and program improvements - Management acknowledged the need for margin improvements at Newport News and discussed the impact of existing contracts and the transition to post-COVID programs [45][48] Question: Industrial base funding and throughput - Management confirmed that the Block 5 contract has assisted in capital and throughput increases, but additional capital will be required to ramp up production [50][51] Question: Shipbuilding margin outlook - Management explained that margins are expected to remain stable in the near term, with improvements anticipated as new contracts are awarded and existing contracts are finalized [67][70] Question: Frigate program and growth potential - Management expressed confidence in the frigate program's potential for growth, with material from previous contracts expected to support initial production [76][90] Question: Supply chain and CVN 80 program status - Management confirmed that all necessary materials for the CVN 80 program have been received, and efforts are underway to get back on schedule [82][85]

Financial Data and Key Metrics Changes - In Q4 2025, revenues reached $3.5 billion, an increase of approximately 16% compared to the same period last year, driven by growth across all segments [17][18] - For the full year 2025, total revenues were $12.5 billion, reflecting an 8.2% increase from 2024, with net earnings of $605 million and diluted EPS of $15.39, up from $13.96 in 2024 [20][23] Business Line Data and Key Metrics Changes - Ingalls' Q4 2025 revenues were $889 million, up $153 million or 21% year-over-year, primarily due to higher volumes in amphibious assault ships and surface combatants [17] - Newport News' Q4 2025 revenues were $1.9 billion, an increase of $303 million or 19% from Q4 2024, driven by higher volumes in submarines and aircraft carriers [18] - Mission Technologies reported Q4 2025 revenues of $731 million, a 2.5% increase from the previous year, mainly due to higher volumes in warfare systems and unmanned systems [18] Market Data and Key Metrics Changes - The company expects shipbuilding revenues for 2026 to be between $9.7 billion and $9.9 billion, with margins projected in the range of 5.5% to 6.5% [13] - For Mission Technologies, anticipated revenues for 2026 are between $3 billion and $3.2 billion, with margins around 5% [14] Company Strategy and Development Direction - The company is focused on increasing shipbuilding throughput by 15% in 2026, following a 14% increase in 2025, and plans to hire at least 6,600 shipbuilders in 2026 [11][12] - A balanced capital allocation strategy is emphasized, with hundreds of millions targeted for capital investment in shipyards to support higher throughput [12][13] - The company is raising its medium-term shipbuilding revenue growth guidance from approximately 4% to approximately 6% [13] Management's Comments on Operating Environment and Future Outlook - Management highlighted the urgent need for U.S. Navy ships and technologies due to the global security environment, emphasizing the importance of operational efficiency and throughput [16][17] - The company expressed confidence in its ability to meet customer needs and capitalize on the unprecedented demand for its products and services [16] Other Important Information - The National Defense Authorization Act for fiscal year 2026 supports the company's shipbuilding programs, including funding for various classes of submarines and aircraft carriers [14][15] - The company ended 2025 with $774 million in cash and cash equivalents, and liquidity of approximately $2.5 billion [24] Q&A Session Summary Question: Productivity numbers and Virginia-class program performance - Management noted broad-based improvement across shipbuilding programs, with the Virginia-class performing well in 2025, but highlighted the need for increased throughput to achieve two submarines per year [34] Question: Long-term CAPEX expectations - Management indicated that while specific guidance beyond 2026 is not provided, CAPEX is expected to remain elevated due to ongoing opportunities [35] Question: Newport News margins and program improvement - Management acknowledged the need for margin improvement at Newport News and discussed the impact of existing contracts and the transition to post-COVID programs on future performance [41][42] Question: Industrial base funding and throughput - Management confirmed that the Block 5 contract has assisted in capital and throughput increases, but additional capital will be required to meet future demands [45] Question: Shipbuilding margin outlook - Management explained that while margins are expected to remain flat in the near term, improvements are anticipated as new contracts are awarded and existing contracts are worked off [60][66] Question: Frigate program and growth potential - Management expressed confidence in the frigate program's potential for growth, with expectations for ramp-up starting in 2027 [69][70]

分组1 - Huntington Ingalls (HII) reported quarterly earnings of $4.04 per share, exceeding the Zacks Consensus Estimate of $3.72 per share, and showing an increase from $3.15 per share a year ago, resulting in an earnings surprise of +8.53% [1] - The company achieved revenues of $3.48 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 13.73%, compared to $3 billion in the same quarter last year [2] - Huntington Ingalls has outperformed the S&P 500, with shares increasing about 21.5% since the beginning of the year, while the S&P 500 gained only 0.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $3.75 on revenues of $2.87 billion, and for the current fiscal year, it is $17.30 on revenues of $12.69 billion [7] - The Aerospace - Defense industry, to which Huntington Ingalls belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - The estimate revisions trend for Huntington Ingalls was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [6]