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Huntington Ingalls Industries, Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 5 May 2026: press release. Guidance figures: 16 kept. The quarter’s numbers.

Key takeaways

  • Revenue rose 13.4% to $3.1 billion: Sales and service revenues were $3,099 million, up from $2,734 million, with growth at Newport News Shipbuilding, Ingalls Shipbuilding and Mission Technologies. Source
  • Operating margin fell to 5.0%: Operating income was $155 million, down $6 million, and operating margin was 5.0%, down 89 basis points from 5.9% a year earlier. Source
  • Newport News margin fell 80 bps: Segment margin was 5.3% against 6.1%. Higher volumes drove the income increase, partly offset by Virginia-class contract adjustments and incentives recorded in Q1 2025 and lower carrier construction performance. Source
  • Amphibious ship performance lowered Ingalls margin: Ingalls segment operating income rose $3 million to $49 million on surface combatant volumes, partly offset by lower performance in amphibious assault ships. Source
  • Carrier John F. Kennedy completed sea trials: Newport News completed builder’s sea trials for aircraft carrier John F. Kennedy (CVN 79), listed among the key first-quarter milestones. Source
  • Total backlog stood at $54.0 billion: Total backlog was $54.0 billion at March 31, 2026, after the quarter's new contract awards. Source
  • Free cash flow was negative $461 million: Operating cash use was $390 million, and free cash flow was negative $461 million, against $395 million and negative $462 million a year earlier. Source

“We made good progress on our 2026 operational initiatives in the first quarter.”

Chris Kastner, HII’s president and CEO

Guidance

AreaPeriodFigureAgainst last quarter
Shipbuilding revenue SourceFY26$9.7B - $9.9BKept
Shipbuilding operating margin SourceFY265.5% - 6.5%Kept
Mission Technologies revenue SourceFY26$3.0B - $3.2BKept
Mission Technologies segment operating margin SourceFY26~5%Kept
Mission Technologies EBITDA margin SourceFY268.4% - 8.6%Kept
Operating FAS/CAS adjustment SourceFY26($44M)Kept
Non-current state income tax expense SourceFY26~($20M)Kept
Interest expense SourceFY26($105M)Kept
Non-operating retirement benefit SourceFY26$213MKept
Effective tax rate SourceFY26~17%Kept
Depreciation and amortization SourceFY26~$330MKept
Capital expenditures SourceFY264% - 5% of salesKept
Free cash flow SourceFY26$500M - $600MKept
Medium-term HII revenue growth SourceMedium term, three to five years (compound annual growth rate)approximately 6%Kept
Medium-term shipbuilding revenue growth SourceMedium term, three to five years (compound annual growth rate)approximately 6%Kept
Medium-term Mission Technologies revenue growth SourceMedium term, three to five years (compound annual growth rate)approximately 5%Kept

Results and growth drivers

  • Revenue rose 13.4% to $3.1 billion: Sales and service revenues were $3,099 million, up from $2,734 million, with growth at Newport News Shipbuilding, Ingalls Shipbuilding and Mission Technologies. Source
  • Operating margin fell to 5.0%: Operating income was $155 million, down $6 million, and operating margin was 5.0%, down 89 basis points from 5.9% a year earlier. Source
  • Net earnings and EPS flat: Net earnings were $149 million and diluted EPS was $3.79, both unchanged from the first quarter of 2025. Source

Segment results

  • Newport News revenue up 19.3%: Revenues were $1.7 billion, up $269 million, on higher aircraft carrier, submarine and naval nuclear support volumes; segment operating income was $88 million, up $3 million. Source
  • Newport News margin fell 80 bps: Segment margin was 5.3% against 6.1%. Higher volumes drove the income increase, partly offset by Virginia-class contract adjustments and incentives recorded in Q1 2025 and lower carrier construction performance. Source
  • Ingalls revenue up 13.8%: Ingalls revenues were $725 million, up $88 million, on higher surface combatant volumes; segment operating margin was 6.8%, down from 7.2%. Source
  • Amphibious ship performance lowered Ingalls margin: Ingalls segment operating income rose $3 million to $49 million on surface combatant volumes, partly offset by lower performance in amphibious assault ships. Source
  • Mission Technologies revenue up 1.8%: Revenues were $748 million, up $13 million, from All-Domain Operations, Unmanned Systems and Global Security; Warfare Systems volumes were lower. Source
  • Mission Technologies profit fell on joint ventures: Segment operating income fell $5 million to $35 million and segment margin was 4.7% against 5.4%, mainly on lower equity income from nuclear and environmental joint ventures. Source

“Shipbuilding throughput has continued to improve with meaningful year over year growth in the first quarter as our team remains focused on driving efficiency and expanding the industrial base network”

Chris Kastner, HII’s president and CEO

Programs, milestones and labor

  • Carrier John F. Kennedy completed sea trials: Newport News completed builder’s sea trials for aircraft carrier John F. Kennedy (CVN 79), listed among the key first-quarter milestones. Source
  • Zumwalt completed builder's sea trials: Ingalls completed builder’s sea trials for USS Zumwalt (DDG 1000) in the quarter. Source
  • Philadelphia keel authenticated: Ingalls authenticated the keel of amphibious transport dock Philadelphia (LPD 32) in the quarter. Source
  • Ingalls labor agreements ratified through 2031: New collective bargaining agreements at Ingalls Shipbuilding were ratified and extend through 2031. Source
  • U.K. unmanned operations facility expanded: Mission Technologies completed expansion of its U.K. unmanned operations facility, adding capacity and support for the U.K. Royal Navy and European partners. Source

Orders, backlog and competitions

  • New contract awards of $4.0 billion: New contract awards in the first quarter were $4.0 billion. Source
  • Total backlog stood at $54.0 billion: Total backlog was $54.0 billion at March 31, 2026, after the quarter's new contract awards. Source
  • Competing for ATSP5 microelectronics contract: Mission Technologies was selected to compete on the $25.4 billion ATSP5 multi-award microelectronics contract. Source

Costs and other income

  • G&A expense rose to $258 million: General and administrative expenses were $258 million, up from $246 million, while income from operating investments fell to $5 million from $13 million. Source
  • Interest expense fell to $22 million: Interest expense was $22 million against $28 million in the first quarter of 2025. Source
  • Retirement benefit income rose: Non-operating retirement benefit income was $53 million, up from $48 million; federal and foreign tax expense was $39 million on $188 million of pre-tax earnings. Source
  • Amortization of intangibles declined: Amortization of purchased intangibles was $21 million against $25 million in the first quarter of 2025. Source

Full-year guidance reaffirmed

  • Segment ranges unchanged: Shipbuilding and Mission Technologies revenue and margin ranges were kept, as listed in the guidance section. Source
  • Medium-term growth expectations kept: Medium-term growth expectations, defined as compound annual growth over the next three to five years, were kept at the prior levels. Source

Cash flow and working capital

  • Free cash flow was negative $461 million: Operating cash use was $390 million, and free cash flow was negative $461 million, against $395 million and negative $462 million a year earlier. Source
  • Contract assets and payables absorbed cash: Contract assets rose $231 million and accounts payable and accruals fell $338 million in the cash flow statement; contract liabilities fell to $822 million from $1,220 million. Source
  • Capital expenditures rose modestly: Capital expenditure additions were $74 million against $67 million, with $3 million of grant proceeds for capital expenditures. Source
  • Cash balance fell to $216 million: Cash and cash equivalents were $216 million at March 31, 2026, down from $774 million at the start of the period. Source

Capital and shareholder payouts

  • Dividend declared rose to $1.38: Dividends declared per share were $1.38, against $1.35 a year earlier. Source
  • Dividends paid stayed near $54 million: Dividends paid were $54 million, against $53 million in the first quarter of 2025. Source
  • Share-based tax payments rose: Employee taxes on certain share-based payment arrangements were $43 million, against $14 million. Source
  • Debt steady, small credit line draw: Long-term debt was $2.7 billion at March 31, 2026, and a $15 million line of credit borrowing was repaid within the quarter. Source
  • No acquisition spending this quarter: No businesses were acquired in the quarter, compared with $133 million of acquisitions in the first quarter of 2025. Source

Figures management reported

FigureReported
New contract awards Source$4.0 billion
Total backlog Source$54.0 billion as of March 31, 2026

Risks management discussed

  • Operational: Newport News cited lower aircraft carrier construction performance as one factor in segment results. Source
  • Operational: Mission Technologies segment income was reduced by lower equity income from nuclear and environmental joint ventures. Source
  • Financial: Operating cash use of $390 million and negative free cash flow of $461 million were reported for the quarter. Source

Earlier plans management reported on

  • Not stated: The prior release set a 2026 shipbuilding throughput target of about 15%; the current release reports meaningful year-over-year growth without a percentage.

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.